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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) JULY 6, 1999
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SEL-DRUM INTERNATIONAL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
NEW YORK 0-22964 84-1236134
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
501 AMHERST STREET, BUFFALO, NEW YORK 14207-2913
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (905) 335-2766
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER
On July 15 1999, the Registrant was notified by receipt of a Schedule
13D from certain principal shareholders of the following event:
During the last month, Brian F. Turnbull, Chairman of the Board of
Directors of Sel-Drum International, Inc. (the "Corporation"), and
Robert E. Asseltine, an advisor of Mr. Turnbull's and a consultant to
the Corporation, had advised the Board of Directors of the Corporation
that they were considering a number of alternatives directed at
maximizing the value of their respective direct and beneficial holdings
of the Corporation's Common Stock and their Preferred Stock holdings in
the Corporation's Sel-Drum Imaging Corporation subsidiary and to
facilitate their personal Estate Planning. Messrs. Turnbull and
Asseltine have indicated that some of these alternatives involved
disposition of their interests as a block to one or more buyers which
could result in a "change of control" as that term is used under the
Federal Securities laws.
On July 6, 1999, Messrs. Turnbull and Asseltine delivered an executed
original Term Sheet (the "Term Sheet") among themselves, Cotran
Holding Inc. and Desigraphix Kopi Inc. (the "Purchasers"). Pursuant to
the Term Sheet, Messrs. Asseltine and Turnbull have agreed to sell to
the Purchasers all of the shares of the Corporation's Common Stock
beneficially held by them at a price of $.40 per share. Additionally,
Messrs. Asseltine and Turnbull have agreed to deliver and sell to the
Purchasers an additional 1,119,000 shares of Common Stock held by family
members or related parties.
The Term Sheet further provides for the Purchasers' acquisition of all
outstanding shares of Preferred Stock held by Messrs. Asseltine and
Turnbull (or their affiliates) in the Corporation's Sel-Drum Imaging
Corporation subsidiary. The purchase price for the Preferred Stock is
$457.90 per share.
Messrs. Turnbull and Asseltine will each indemnify the Purchasers in the
event that any of the following occur:
a. The Corporation does not report at least $5,200,000 of
shareholders' equity at July 31, 1999;
b. The Corporation's July 31, 1999 pre-tax earnings is not at least
$100,000; and
c. The Corporation's current reserve for doubtful accounts receivable
at July 31, 1999 exceeds $100,000 at July 31, 2000.
The proposed transaction is contingent upon several items including but
not limited to: the repayment of indebtedness to the Corporation owed by
related parties (approximately $159,820 owed by two corporations
controlled by Mr. Turnbull); the resignation of the current members of
the Board of Directors, and the execution of a definitive agreement.
The parties are currently securing the release of any of Mr. Turnbull's
personal guarantees of the Corporation's indebtedness, as well as the
consent of the National Bank of Canada and Western Economic
Diversification Fund and any other third party consents. The parties have
further agreed that, if the transaction does not close, an amount of
$400,000 shall be paid by the party who refuses to proceed for reasons
other than a breach of
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representation or warranties in the definitive agreement or refusal of
any regulatory authority to proceed with the transaction.
The parties expect the closing of the definitive agreement will take
place on or before July 30, 1999. At the closing of the transaction, the
departing current Board of Directors will name their successors to serve
until the next Annual Meeting of Shareholders.
The Registrant, C. Cotran Holding Inc. and Densigraphix Kopi Inc. issued
the following Joint Statement on July 15, 1999:
"Certain principal shareholders of Sel-Drum International,
Inc. have entered into a Term Sheet for the acquisition by C.
Cotran Holding Inc. and Densigraphix Kopi Inc. of
approximately 90% of the outstanding shares of Common Stock
of Sel-Drum International, Inc. and all of the Preferred
Stock of Sel-Drum's Canadian subsidiary, Sel-Drum Imaging
Corporation.
Camille Cotran, Chairman and Chief Executive Officer of C.
Cotran Holding Inc. and Densigraphix Kopi Inc. stated: "We
are extremely excited at the prospects of joining two
tremendous companies as industry leaders in the toner,
copier, printer and facsimile replacement part marketplace.
Our acquisition of a controlling interest in Sel-Drum will,
in effect, create two very strong leaders in their respective
markets. In the long-term, our enhanced and complimentary
product offerings should position Sel-Drum and Densigraphix
for growth in an increasingly challenging and rapidly
consolidating industry. We expect Densigraphix and Sel-Drum's
employees and customers and, most importantly, shareholders to
be the ultimate beneficiaries."
Brian Turnbull, Chairman of Sel-Drum International, Inc.
stated: "The Densigraphix/Sel-Drum marriage should serve to
enhance Sel-Drum's longer-term strategy of enhancing
shareholder value through increased economies of scale and
sales and earnings growth."
Sel-Drum International, Inc. is a publicly-held independent
distributor of high mortality copier and printer replacement parts and
supplies. The Corporation's Common Stock currently trades on the NASD's
OTC Bulletin Board under the symbol SDUM.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
Not Applicable
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
SEL-DRUM INTERNATIONAL, INC.
July 16, 1999 By: /s/ Raymond C. Sparks
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Raymond C. Sparks
President and CEO
July 16, 1999 By: /s/ John C. Hall
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John C. Hall
Vice President-Finance
