-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OSKlHnlfpjpuoWftt1qIOR1K2J8gPxIyNkb9/WYN2VlG0tGkNdQJXopWkzvCcYa0 pYTY76l7yP4sIz34FANFkg== 0000950152-02-000744.txt : 20020414 0000950152-02-000744.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950152-02-000744 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020201 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACORN PRODUCTS INC CENTRAL INDEX KEY: 0001036713 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 223265462 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22717 FILM NUMBER: 02527477 BUSINESS ADDRESS: STREET 1: 390 W NATIONWIDE BLVD CITY: COLUMBUS STATE: OH ZIP: 43215-1930 BUSINESS PHONE: 6142224400 MAIL ADDRESS: STREET 1: 390 W NATIONWIDE BLVD CITY: COLUMBUS STATE: OH ZIP: 43215-1930 8-K 1 l92526ae8-k.txt ACORD PRODUCTS, INC. FORM 8-K 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: FEBRUARY 1, 2002 ACORN PRODUCTS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 0-22717 22-3265462 - --------------- ------------------------- ------------------- (STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER JURISDICTION OF IDENTIFICATION NUMBER) INCORPORATION OR ORGANIZATION) 390 W. Nationwide Boulevard Columbus, Ohio 43215 (614) 222-4400 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) None (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ITEM 5. OTHER EVENTS. On February 1, 2002, Acorn Products, Inc. (the "Company") issued a press release announcing that it had entered into a Letter of Intent with entities representing a majority of the Company's shareholders that would lead to a financial restructuring and a strengthening of its balance sheet. The full text of the Letter of Intent is attached in its entirety as exhibit 10.1 to this Form 8-K and is incorporated herein by this reference. The press release is included as Exhibit 99.1 to this form 8-K and is incorporated herein by this reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) EXHIBITS. Exhibit No. Description 10.1 Letter of Intent dated as of February 1, 2002 by and between Acorn Products, Inc. as issuer and TCW Special Credits and Oaktree Capital Management, LLC as purchasers. 99.1 Press Release, dated February 1, 2002, entitled "Acorn Products Announces Letter of Intent for Financial Restructuring." -2- 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. ACORN PRODUCTS, INC. Date: February 1, 2002 By: /s/ John G. Jacob -------------------------------- John G. Jacob, Vice President and Chief Financial Officer -3- EXHIBIT INDEX ------------- Exhibit No. Description 10.1 Letter of Intent dated as of February 1, 2002 by and between Acorn Products, Inc. as issuer and TCW Special Credits and Oaktree Capital Management, LLC as purchasers. 99.1 Press Release, dated February 1, 2002, entitled "Acorn Products Announces Letter of Intent for Financial Restructuring." -4- EX-10.1 3 l92526aex10-1.txt EXHIBIT 10.1 Exhibit 10.1 February 1, 2002 Acorn Products, Inc. 390 West Nationwide Blvd. Columbus, OH 43215 Attention: Special Committee of Board of Directors Gentlemen: The undersigned existing stockholders of Acorn Products, Inc. ("ACORN") representing funds and accounts managed by TCW Special Credits and Oaktree Capital Management, LLC (the "PRINCIPAL HOLDERS") are pleased to submit the following preliminary proposal for a recapitalization of UnionTools, Inc. (the "COMPANY") that provides for the purchase of newly-issued stock of Acorn by the Principal Holders or, at the election of Acorn, a purchase of the Company by the Principal Holders, or an entity they control, that would afford existing holders of Acorn common stock a continuing direct or indirect equity interest in the Company with the equivalent economic effects as described herein (the "TRANSACTION"). Among other things, the Transaction would result in the repayment of the Company's obligations under its existing credit agreement. We are extremely interested in pursuing the Transaction. We understand that the Company is obligated under its existing credit agreement (the "EXISTING CREDIT AGREEMENT") to deliver to the lenders under that agreement a certified copy of a letter of intent acceptable to Acorn's board of directors (the "ACORN BOARD") by the date hereof. We also understand that the Acorn Board established a committee of its members (the "SPECIAL COMMITTEE") to monitor, review, consider and negotiate the terms of a proposed transaction between Acorn and the Principal Holders and to determine whether to recommend such transaction for approval by the Acorn Board. We are submitting this letter to Acorn and the Special Committee with the understanding that, even if it is executed by Acorn, it will not obligate Acorn to consummate the transactions contemplated hereby. Rather, it will form the basis for discussions and negotiations between Acorn and the Special Committee, on the one hand, and the Principal Holders, on the other, with respect to the terms of a Transaction, as the Special Committee undertakes the responsibilities which have been delegated to it by the Acorn Board. The principal terms of our preliminary proposal are outlined below: 1. OUTLINE OF TRANSACTION. On the terms and subject to the conditions described herein, the Principal Holders would (a) purchase for cash from Acorn 7,000,000 newly-issued shares of Acorn common stock at a price of $1.00 per share (the "SHARE PURCHASE"), and (b) exchange all of their outstanding participation interests in the Company's 12% Exchangeable Notes, representing approximately $8,000,000 of principal and accrued interest as of April 30, 2002, for approximately 8,000,000 additional shares of Acorn common stock (the "NOTE -5- EXCHANGE"). Acorn would advance to the Company cash in the amount of $7,000,000 that would be applied, together with borrowings under a new secured credit facility, to repay all outstanding obligations of the Company (then due and payable) under the Existing Credit Agreement. Following the consummation of such transactions, the holders of Acorn common stock (other than the Principal Holders and their affiliates) would receive rights (at the rate of 350 rights per 100 shares of Acorn common stock held as of a record date to be established) to purchase one share of Acorn common stock at $1.00 per share for each right received (the "RIGHTS OFFERING"). Assuming that the number of Acorn shares of common stock held by persons other than Principal Holders is approximately 1,800,000, then such rights offer would entitle holders (other than Principal Holders and their affiliates) to purchase up to 6,300,000 shares of Acorn common stock for aggregate consideration of $6,300,000. The Principal Holders would act as stand-by purchasers to the extent that less than 3,000,000 shares are issued upon completion of the Rights Offering. 2. NEW CREDIT FACILITY. The new credit facility would be comprised of a revolving loan facility, providing for advance rates of 85% against eligible receivables and 60% of eligible inventory, and a $13 million term loan at Closing which would be subject to a $3 million prepayment without penalty by the Company upon completion of the Rights Offering. The new credit facility would have a maturity of not less than three years; a weighted average LIBOR spread of not more that 3.75%; other terms not less favorable than currently in effect under the Existing Credit Agreement and other terms satisfactory to the Principal Holders and Acorn. 3. CONDITIONS. The obligations of the Principal Holders to consummate the Transaction will be subject to the satisfaction of customary conditions, including (i) the negotiation and execution of definitive agreements and related documents contemplated by such agreement on terms satisfactory to the Principal Holders, (ii) receipt of all necessary governmental and material third party approvals (to be mutually identified and agreed upon) which are required to consummate the transactions contemplated hereby, (iii) funding of the new credit facility on terms and conditions satisfactory to the Principal Holders, (iv) absence of a material adverse change in the financial condition, results of operations, business, assets, properties or prospects of Acorn and Company, taken together, including the actual or potential loss or reduction of business with any material customer, (v) Acorn's stockholders shall have approved the Transaction, (vi) the Principal Holders' determination in good faith that the Company's net operating tax losses and other tax attributes will not be adversely affected by consummation of the Transaction and/or subsequent Rights Offering, and (vii) fees and expenses of the transaction payable by the Company not exceeding $250,000 (inclusive of fees and expenses relating to legal, accounting and advisory work already performed (but not yet paid) or to be performed on behalf of Acorn, the Company, the Board of Directors and the Special Committee). We would expect definitive documentation for the Transaction to contain customary covenants, representations and warranties, closing conditions and other customary terms in transactions of this type. -6- 4. ACCESS TO INFORMATION; PRE-CLOSING ACTIVITIES. Until this letter agreement terminates, Acorn will afford, and will cause the Company and its subsidiaries and its and their respective officers and agents to afford, to the Principal Holders and their representatives, consultants, agents, lenders, employees and investors full and complete access, during regular business hours, to the properties, business, personnel (including outside accountants and lawyers), and financial, legal, accounting, tax and other data and information relating to the Company as requested by the Principal Holders or their representatives or agents for purposes of evaluating the Transaction. Acorn will, and will cause the Company to, conduct its business and operations in the usual and ordinary course in accordance with good business practices between the date of this letter and the execution of a definitive agreement. 5. FEES AND EXPENSES. Acorn and the Principal Holders will each pay their respective fees and expenses (including the fees and expenses of legal counsel, investment bankers, brokers or other representatives or consultants) in connection with the transactions contemplated hereby; provided that upon consummation of the Transaction, Acorn or the Company will reimburse the reasonable fees and expenses incurred by the Principal Holders in connection with such transactions. 6. PUBLICITY. None of the Principal Holders, Acorn or the Company, or their respective directors, officers, employees, advisors, agents, affiliates or representatives will make any press release or public announcement concerning the existence of this proposal or of the transactions contemplated hereby without the prior written approval of the other parties hereto, except as required by law, regulation or stock exchange rule; provided that any party required to make a press release or public announcement pursuant to law, regulation or exchange rule shall give prior notice to the other party and a reasonable opportunity for the other party to review and comment on such press release or public announcement. 7. TERMINATION; NON-EXCLUSIVE. This letter will automatically terminate and be of no further force and effect upon the first to occur of (i) delivery by the Special Committee to the undersigned of a notice of termination, (ii) the execution of a definitive agreement, or (iii) the date which is 45 days from the date hereof, unless the parties hereto mutually agree to an extension hereof. Notwithstanding the foregoing, the obligations of the parties pursuant to paragraphs 5 and 6 and this paragraph 7 hereof will survive any such termination of this letter. For the avoidance of doubt, the parties acknowledge that this letter agreement does not restrict in any manner the right or ability of Acorn or the Company to engage in discussions, directly or indirectly, with any third party with respect to any transaction which conflict with or be an alternative to the Transaction. Moreover, the obligations of the Principal Holders pursuant to the terms of this letter shall be several and not joint as among such holders. -7- 8. COUNTERPARTS; OTHER. This letter may be executed in two or more counterparts (any of which may be by facsimile signature), all of which taken together will constitute one binding agreement among the parties hereto and their successors and assigns. This letter shall be governed by the substantive laws (and not the law of conflicts) of the State of Delaware. * * * * * -8- We look forward to the opportunity to discuss our proposal with you at your earliest convenience. Sincerely, By: /s/ Matthew Barrett ---------------------------------------- Matthew Barrett, as Authorized Signatory of The Entities Set forth on the Attached Schedule A By: /s/ Vincent Cebula ---------------------------------------- Vincent Cebula, Managing Director of Oaktree Capital Management, LLC, in its Capacity as General Partner of OCM Principal Opportunities Fund, L.P. ACCEPTED AND AGREED as of February 1, 2002 ACORN PRODUCTS, INC. By: /s/ A. Corydon Meyer -------------------------------------------------- Its: President and CEO ------------------------------------------------- -9- SCHEDULE A TO LETTER AGREEMENT OF FEBRUARY 1, 2002 TCW SPECIAL CREDITS FUND IIIB TCW SPECIAL CREDITS TRUST IIIB THE COMMON FUND FOR BOND INVESTMENTS, INC. DELAWARE STATE EMPLOYEES' RETIREMENT FUND WEYERHAEUSER COMPANY MASTER RETIREMENT TRUST (TCW) TCW SPECIAL CREDITS TRUST TCW SPECIAL CREDITS TRUST IV TCW SPECIAL CREDITS TRUST IV-A TCW SPECIAL CREDITS FUND IV TCW SPECIAL CREDITS PLUS FUND -10- EX-99.1 4 l92526aex99-1.txt EXHIBIT 99.1 Exhibit 99.1 FEBRUARY 1, 2002 - 1:00 P.M. FOR IMMEDIATE RELEASE ACORN PRODUCTS ANNOUNCES LETTER OF INTENT FOR FINANCIAL RESTRUCTURING COLUMBUS, OHIO - Acorn Products, Inc. (NASDAQ: ACRN) announced today that it has entered into a Letter of Intent with entities representing a majority of the Company's shareholders that would lead to a financial restructuring and a strengthening of its balance sheet. Investment funds managed by TCW Special Credits and Oaktree Capital Management, LLC, which together own approximately 71% of the outstanding shares of the Company (the "Principal Holders"), have agreed under certain conditions to purchase $15 million of newly-issued common stock of the Company for the purpose of repaying outstanding indebtedness. It is expected that subsequent to completion of these transactions, the Company will make a rights offering to unaffiliated shareholders wherein such holders will be entitled to purchase approximately $6 million of newly-issued common shares of the Company on the same terms and conditions as the Principal Holders. The Principal Holders have agreed to act as Standby Purchaser to ensure that not less than $3 million of additional equity is raised pursuant to such an offering. The potential transaction is subject to significant conditions, including the approval of unaffiliated directors, obtaining a satisfactory financing commitment, as well as negotiation and execution of definitive documentation. While the Company expects that the combined ownership stake of its existing shareholders would be substantially diluted as a result of the initial investment of the Principal Holders, the Rights Offering, if fully subscribed, would afford shareholders other than the Principal Holders an opportunity to maintain their existing ownership stake in the Company. The precise terms under which the initial investment of the Principal Holders will be made, together with the terms of the Rights Offering, are subject to further review and negotiation by the Board of Directors. The Company believes the signing and execution of this Letter of Intent has and will fully satisfy all covenants under its Amended and Restated Credit Agreement. It is expected that the initial investment of the Principal Holders could be completed by April 30, 2002, which is the expiration date of the Company's existing bank credit facility. The Rights Offering would commence sometime thereafter subject to receipt of approvals from the Securities and Exchange Commission and other entities and would likely be completed during the quarter ending September 29, 2002. If the proposed transaction is not completed by April 30, 2002, there is no agreement with the lenders that are party to the existing bank credit facility as to the terms on which they would extend the expiry of such facility. A. Corydon Meyer, President and CEO of Acorn Products, commented "We have had strong, unwavering support from both our Board of Directors and majority owners during a very difficult last two and one half years. We are pleased by their ongoing support and participation in the Company as we finish our turnaround and will now have the resources to strengthen and grow the business." Acorn Products, Inc., through its operating subsidiary UnionTools, Inc., is a leading manufacturer and marketer of non-powered lawn and garden tools in the United States. Acorn's principal products include long handle tools (such as forks, hoes, rakes and shovels), snow tools, posthole diggers, wheelbarrows, striking tools, cutting tools and watering products. Acorn sells its products under a variety of well-known brand names, including Razor-Back(TM), Union(TM), Yard 'n Garden(TM), Perfect Cut(TM) and, pursuant to a license agreement, Scotts(TM). In addition, Acorn manufactures private label products -11- for a variety of retailers. Acorn's customers include mass merchants, home centers, buying groups and farm and industrial suppliers. Razor-Back(TM), Union(TM), Yard 'n Garden(TM) and Perfect Cut(TM) are registered trademarks of Acorn. Scotts(TM) is a registered trademark of The Scotts Company. Contact: John G. Jacob, Vice President and Chief Financial Officer of Acorn Products, Inc. (614) 222-4400. -12- -----END PRIVACY-ENHANCED MESSAGE-----