UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 24, 1997
MENDOCINO BREWING COMPANY, INC.
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(Exact name of registrant as specified in its charter)
California 1-13636 68-0318293
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State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File number) Identification No.)
13351 South Highway 101, Hopland, CA 95449
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(Address of Principal Executive Offices) (Zip Code)
Registrant's phone number, including area code: 707-744-1015
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 1. Changes of Control of Registrant.
On October 24, 1997, the registrant, Mendocino Brewing Company, Inc., a
California corporation (the "Company"), entered into a series of agreements with
United Breweries of America, Inc., a Delaware corporation ("UBA"). The
agreements included an Investment Agreement with UBA whereby (a) the Company
issued 1,600,000 shares of common stock to UBA at a purchase price of $4.25 per
share in exchange for $1,800,000 cash and $5,000,000 in assets in the form of
100% of the outstanding interests of Releta Brewing Company LLC, a limited
liability company formed by UBA for the purpose of acquiring a brewery in
Saratoga Springs, New York; and (b) UBA unconditionally agreed to purchase an
additional 517,647 shares for cash at $4.25 per share ($2,200,000 in the
aggregate) on or before November 30, 1997. The foregoing shares were in addition
to 2,000 the Company issued to UBA on October 24, 1997, pursuant to a Refundable
Deposit Agreement with The UB Group dated May 2, 1997, in consideration of a
$250,000 refundable deposit toward the purchase of the foregoing securities.
The Investment Agreement also granted UBA the following rights, among others:
(a) a right of first offer with respect to future sales of Company securities to
ensure that UBA may purchase a number of shares offered by the Company
sufficient to maintain UBA's percentage of ownership on a fully-diluted basis at
45%; (b) a prohibition on the issuance by the Company of securities that would
enable any other party to exceed the percentage ownership of the voting
securities owned by UBA; (c) a prohibition on issuing senior securities without
the consent of UBA; and (d) prohibitions on purchases or sales of assets in
amounts in excess of 50% of the book value of the Company's assets. The
restrictions terminate when UBA's share ownership falls below certain levels as
specified in the Investment Agreement.
In connection with, and as a condition to, UBA's investment in the Company, (a)
the Board of Directors increased the size of the Board from five to seven
persons as permitted by the bylaws of the Company; (b) Norman H. Franks and
Michael F. Lovett resigned from the Board of Directors; (c) Vijay Mallya, O'Neil
Nalavadi, Jerome G. Merchant, and Yashpal Singh were appointed to fill the
resulting vacancies on the Board of Directors; (d) Eric G. Bradley and Daniel R.
Moldenhauer agreed to resign as directors effective December 31, 1997; and (e)
Mr. Mallya was elected Chairman of the Board and Chief Executive Officer of the
Company. As of the date of this report, Management has not identified any
candidates to replace Messrs. Bradley and Moldenhauer as directors.
Also in connection with, and as a condition to, UBA's investment in the Company,
UBA and Messrs. Laybourn, Franks, Lovett, John Scahill, and Don Barkley entered
into a Shareholders' Agreement that requires the parties to vote their shares in
any election of Company directors in favor of four individuals designated by
UBA, two independent directors acceptable to UBA, and one individual selected by
Michael Laybourn. The Shareholders' Agreement also grants UBA a right of first
refusal with respect to any sale of the Company's capital stock by the other
parties to the Agreement. The Shareholders' Agreement expires on December 31,
2004.
Immediately before the transaction, the Company's officers, directors, and
founders and their spouses owned, in the aggregate, 963,926 shares of the
Company's outstanding Common Stock,
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which represented 41.1% of the outstanding Common Stock (disregarding 300,000
shares of stock issued to BDM Construction Co., Inc. ("BDM") subject to
substantial restrictions as security for a debt). Upon completion of the
transaction, and the anticipated repayment of the Company's indebtedness to BDM
resulting in the cancellation of 300,000 shares held by BDM, UBA will own
2,119,647 shares representing 47.5% of the outstanding shares of Common Stock.
The cash used by UBA to make the investment was generated by contributions to
capital from UBA's shareholder and its affiliates. The shares of UBA are owned
by a foreign corporation, the shares of which are controlled by fiduciaries who
may exercise discretion in Mr. Mallya's favor amongst others. Mr. Mallya is the
Chairman and Chief Executive Officer of UBA.
Item 2. Acquisition or Disposition of Assets.
On October 24, 1997, as part of UBA's investment in the Company, the Company
acquired 100% of the outstanding interests of Releta Brewing Company LLC
("Releta"), a limited liability company formed by UBA for the purpose of
acquiring a brewery in Saratoga Springs, New York. The brewery was approximately
one year old, and was built at an original investment of $8.7 million. The
Company paid UBA $5 million in Common Stock valued at $4.25 per share for the
interests in Releta. UBA represented to the Company that the $5 million
represented UBA's actual combined out of pocket costs incurred in taking
possession of the brewery and in connection with certain related transactions,
plus a commitment to assume certain obligations.
UBA also agreed to provide funding for the working capital requirements of
Releta in an amount not to exceed $1 million until October 24, 1999 or until
Releta's operations are profitable, whichever comes first. The funding may be
provided directly by UBA or UBA may arrange for such financing by a third party.
Any amounts funded will be evidenced by a credit agreement in form customary for
such financings and will be secured by a first position security interest in the
equity interest in and assets of Releta. The terms of the funding are to be
mutually agreeable between UBA and the Company and are to be approved by a
majority of the disinterested members of the Board of Directors of the Company.
Before it was acquired by UBA, the Saratoga Springs brewery brewed and bottled
ales sold under the following trademarks: NORTH COUNTRY ALES, WHITE FACE,
WHITEFACE, FAT BEAR, and NORTHERN EXPOSURE. Releta filed intent to use
applications with the U.S. Patent and Trademark Office for those marks following
their abandonment by their previous owner. The Company intends to continue to
brew the foregoing brands under those marks, and to brew the Company's own
brands at the facility.
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<TABLE>
Items 3-6. (Not Applicable)
Item 7. Financial Statements and Exhibits
The following exhibits are filed as part of this report.
<CAPTION>
Exhibit
Number Description of Document
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<S> <C>
2.1 (A) Investment Agreement between the Company and United Breweries of America, Inc. dated October
24, 1997
2.2 (A) Shareholders' Agreement among the Company, United Breweries of America, Inc., H. Michael
Laybourn, Norman H. Franks, Michael F. Lovett, John Scahill, and Don Barkley dated October
24, 1997
2.3 (B) Refundable Deposit Agreement with The UB Group dated May 2, 1997
<FN>
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(A) Incorporated by reference from the Schedule 13D filed with the Commission on November 3,
1997 by United Breweries of America, Inc. and Vijay Mallya.
(B) Incorporated by reference from the Company's Report on Form
10-QSB for the quarterly period ended March 31, 1997
previously filed with the Commission.
</FN>
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Items 8-9. (Not Applicable)
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.
MENDOCINO BREWING COMPANY, INC.
Date: November 13, 1997 By /s/ H. Michael Laybourn
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H. Michael Laybourn, President
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