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Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 30, 1999
BROTHERS GOURMET COFFEES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-23024 52-1681708
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(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
2255 Glades Road
Suite 100E
Boca Raton, Florida 33431
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(Address of Principal (Zip Code)
Executive Offices)
(561) 995-2600
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITIONS OR DISPOSITION OF ASSETS
1. On Friday, April 30, 1999, the Registrant and its affiliates
(collectively, the "Debtors"), closed the sale transactions
described in the Asset Purchase Agreement by and between the
Registrant and The Procter & Gamble Company, dated as of March 8,
1999. Pursuant to the Asset Purchase Agreement, P&G purchased
certain of the Registrant's finished product inventory and all of
its green coffee inventory, intellectual property, accounts
receivable, in-store equipment and other intangibles (i.e.,
contracts, goodwill, etc.) for $20.3 million, of which (a) $18.8
million was paid to the Registrant in cash at the closing and (b)
$1.5 million was placed in escrow to be released to the Registrant
as it satisfied its post-closing obligations to ship finished
product inventory. The $1.5 million held in escrow was released to
the Registrant on Tuesday, May 4, 1999. The portion of the purchase
price paid for the Registrant's green coffee inventory, in-store
inventory and accounts receivable may be adjusted (up or down) after
the closing. If the amount of the net post-closing adjustment
exceeds the estimated payment made for these assets at the closing,
P&G will pay the difference to the Registrant as additional purchase
price. If the amount of the net adjustment is less than the
estimated payment made for these assets at the closing, the
Registrant will return the difference to P&G as a purchase price
reduction. In addition, P&G assumed $1.3 million of the Registrant's
liabilities.
2. In connection with the closing of the Asset Purchase Agreement, the
parties entered into a Transitional Supply and Services Agreement,
dated as of April 30, 1999, pursuant to which Registrant will roast,
package and ship nine (9) million pounds of coffee for P&G during
the twelve (12) month period immediately following the closing of
the transaction in return for which P&G will pay the Registrant $2.4
million in excess of Registrant's production costs.
3. The Debtors have retained ownership of all of their roasting and
packaging assets located at their Houston, Texas, manufacturing
facility. The Debtors will continue to operate the Houston facility
during the term of the Transitional Supply and Services Agreement
while, at the same time, looking for a buyer for the facility. The
Transitional Supply and Services Agreement is fully assignable with
P&G's consent.
4. The Registrant used $15.6 million of the sales proceeds received at
closing to repay the entire outstanding balance under its Amended
and Restated Post-Petition Revolving Loan and Security Agreement
with Goldman Sachs Credit Partners, L.P.
5. Based on the information currently available, the Debtors do not
believe that the combined net proceeds from the sale of assets to
P&G and the anticipated proceeds from the disposition of the Houston
facility will be sufficient to repay all of their remaining
indebtedness. Accordingly, it is not anticipated that any
distributions will be made to Registrant's stockholders.
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6. Copies of the definitive Asset Purchase Agreement and Transitional
Supply and Services Agreement are attached as Exhibits 99.2 and
99.3, respectively, to the Registrant's Current Report on Form 8-K,
dated March 10, 1999, as filed with the Securities and Exchange
Commission on March 12, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits: None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BROTHERS GOURMET COFFEES, INC.
(Registrant)
/s/ Barry Bilmes
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Date: May 6, 1999 By: Barry Bilmes
Title: Vice President Finance and
Administration