UNITED STATES
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): November 20, 2002
Atlantic Premium Brands, Ltd.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-13747 36-3761400
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(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
650 Dundee Road, Suite 370, Northbrook, Illinois 60062
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(Address of Principal Executive Offices) (Zip Code)
(847) 412-6200
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
On November 20, 2002, Atlantic Premium Brands, Ltd. (the "Company") and
its subsidiaries entered into a new five-year $16.7 million senior secured
credit facility (the "Merrill Facility") with Merrill Lynch Capital, as agent.
The Merrill Facility is comprised of an $8.5 million revolving credit facility
and $8.2 million in term loans. The principal of the term loans amortizes at the
rate of $1.1 million per annum until maturity, when the balance is due. The
Merrill Facility bears interest rates between (i) LIBOR plus 300 basis points
and LIBOR plus 375 basis points or (ii) the Prime Rate plus 125 basis points and
the Prime Rate plus 200 basis points. The Merrill Facility is secured by
substantially all of the Company's assets, including the stock of its
subsidiaries. A portion of the funds provided under the Merrill Facility were
used to pay off the $5.5 million outstanding under the Company's prior senior
credit facility with Fleet Capital Corporation and to pay off the $6.5 million
in senior subordinated debt owed to Banc One Capital Partners, LLC ("BOCP")
which was accruing interest at a rate of 15%. Initially, the Company drew $4.7
million under the revolving credit facility.
The $0.7 million in senior subordinated debt owed to BOCP ABR Mezz, LLC
(the "LLC"), an entity owned by some of the Company's directors, officers and 5%
shareholders and which was formerly known as Sterling BOCP, LLC, remains
outstanding with amended terms. In connection with the Merrill refinancing, BOCP
and the LLC agreed to cancel the warrants with a put option which were issued in
connection with the senior subordinated debt. The amended terms of the senior
subordinated debt owed to the LLC changed the maturity date from March 31, 2005
to December 31, 2007 and increased the interest rate from 15% to 18%, with 10%
interest paid quarterly and the remaining 8% interest compounded monthly and
paid at maturity. The senior subordinated debt owed to the LLC continues to be
secured by substantially all of the assets of the Company, but is subordinated
to the Merrill Facility.
As part of the refinancing transaction, three junior subordinated
promissory notes in the amounts of $1.4 million, $0.9 million and $0.2 million,
respectively, which were due and accruing interest at the default rates of 11%,
8.35% and 10%, were amended to reset the maturity dates on each note to February
15, 2008 and to set the stated interest rates at 11%, 11% and 10%,
respectively. In addition, the Company's chairman agreed with the holders of
each of the $1.4 million promissory note and the $0.9 million promissory note
that he or his designees would purchase a $0.3 million interest in each
corresponding note. Another junior subordinated promissory note in the amount of
$0.2 million is not yet due and was not amended. All of the junior subordinated
noteholders agreed to have their indebtedness subordinated to the Merrill
Facility and the senior subordinated debt owed to the LLC in connection with the
refinancing transaction.
On November 20, 2002, the Company also entered into a consulting
agreement. The consulting agreement is with Sterling Advisors LP ("Sterling
Advisors"), an entity owned by some of the Company's directors and 5%
shareholders. The initial two-year term of the consulting agreement begins
January 1, 2003, with one year renewal periods thereafter unless terminated by
either party twelve months prior to the applicable termination date. Under the
terms of the consulting agreement, commencing January 1, 2003, Sterling will be
paid $200,000 per year for consulting services relating to financial, strategic
and operational matters. In addition, Sterling Advisors received $150,000 for
services rendered in connection with procurement of the Merrill Facility and the
related transactions.
The transaction with the LLC and the terms of the consulting agreement
were approved by a majority of the disinterested directors of the Company who
were informed of the interests of the Company's directors and officers in the
LLC and Sterling Advisors.
The foregoing description is qualified in its entirety by reference to
the agreements described above, each of which is included as an exhibit to this
Current Report on Form 8-K. We encourage you to read these agreements.
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.
ATLANTIC PREMIUM BRANDS, LTD.
By: /s/ Thomas M. Dalton
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Name: Thomas M. Dalton
Title: Chief Financial Officer, Chief
Operating Officer and Senior
Vice President
Dated as of November 26, 2002.
Exhibit Index
Exhibit # Description
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99.1 Credit Agreement, dated as of November 20, 2002, among
Atlantic Premium Brands, Ltd., its subsidiaries, Merrill
Lynch Capital, a Division of Merrill Lynch Business
Financial Services Inc., as Agent and as a Lender, and
the Additional Lenders from time to time party thereto
99.2 Amended and Substituted Senior Subordinated Note, dated
November 20, 2002, in favor of BOCP ABR Mezz, LLC, a
Delaware limited liability company formerly known as
Sterling BOCP, LLC
99.3 Amended and Restated Security Agreement, dated November
20, 2002, by and among Atlantic Premium Brands, Ltd.,
its subsidiaries and BOCP ABR Mezz, LLC
99.4 Subordination Agreement, dated November 20, 2002, by and
between BOCP ABR Mezz, LLC and Merrill Lynch Capital, a
Division of Merrill Lynch Business Financial Services
Inc., as Agent for certain lenders
99.5 Amended and Restated 11% Subordinated Non-Negotiable
Promissory Note, due February 15, 2008, in favor of
Franklin Roth
99.6 Amended and Restated 11% Subordinated Non-Negotiable
Promissory Note, due February 15, 2008, in favor of
Allen Pauly
99.7 Amended and Restated 11% Subordinated Non-Negotiable
Promissory Note, due February 15, 2008, in favor of J.L.
Richard
99.8 Amended and Restated 10% Subordinated Non-Negotiable
Promissory Note, due February 15, 2008, in favor of
Bobby L. Grogan and Betty R. Grogan
99.9 Consulting Agreement, dated November 20, 2002, by and
between Atlantic Premium Brands, Ltd. and Sterling
Advisors, L.P.