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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 3, 2001
Champion Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation)
1-9751 38-2743168
(Commission File Number) (IRS Employer Identification No.)
2701 Cambridge Court, Suite 300, Auburn Hills, Michigan 48326
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 248/340-9090
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Item 5. Other Events.
On July 3, 2001, Champion Enterprises, Inc., a Michigan corporation
("Champion"), completed the sale to Fletcher International, Ltd., a Bermuda
company affiliated with Fletcher Asset Management, Inc. ( "Purchaser"), of
20,000 shares of Series B-1 Cumulative Convertible Preferred Stock, no par value
per share (the "Series B-1 Preferred Stock"). The aggregate purchase price for
the Series B-1 Preferred Stock was $20.0 million, and the net proceeds from the
sale will be used for general corporate purposes.
The following description of the Series B-1 Preferred Stock is
qualified in its entirety by reference to the Certificate of Rights and
Preferences relating to the Series B-1 Preferred Stock (the "Certificate") and
the Agreement dated as of June 29, 2001 by and between Champion and Fletcher
(the "Agreement"), which are attached as exhibits hereto.
Cumulative dividends are payable on the Series B-1 Preferred Stock
quarterly in arrears. The dividend rate is 5% per annum, based on the stated
value of $1,000 per share of Series B-1 Preferred Stock. Subject to certain
conditions specified in the Certificate, dividends payable on the Series B-1
Preferred Stock may be paid at the option of Champion either in cash or by
issuing shares of Champion's Common Stock that have been registered under the
Securities Act of 1933, as amended (the "Act"). The number of shares of Common
Stock of Champion to be issued as dividends is determined by dividing the cash
amount of the dividend otherwise payable by the market value of the Common Stock
determined in accordance with the provisions of the Certificate. If Champion
fails to pay any dividends when due, those dividends will accumulate and accrue
additional dividends at the then existing dividend rate.
Subject to certain exceptions, so long as shares of the Series B-1
Preferred Stock are outstanding, no dividends may be paid on the Common Stock or
any other securities of Champion ranking junior to the Series B-1 Preferred
Stock with respect to dividends and distributions on liquidation ("Junior
Securities") or having a priority equal to the Series B-1 Preferred Stock with
respect to dividends and distributions on liquidation ("Parity Securities"). No
shares of Junior Securities or Parity Securities may be purchased or otherwise
redeemed by Champion unless all accumulated dividends on the Series B-1
Preferred Stock have been paid in full and dividends for the next four dividend
periods have been designated and set aside.
If Champion is in arrears in the payment of dividends on the Series B-1
Preferred Stock in an aggregate amount equal to more than two quarterly
dividends, the dividend rate on the Series B-1 Preferred Stock will be 15% per
annum until all accrued and unpaid dividends are paid in full.
Upon a liquidation of Champion, the holders of the Series B-1 Preferred
Stock will be entitled to receive $1,000 per share of Series B-1 Preferred Stock
plus accrued but unpaid dividends before the holders of any Junior Securities
receive any payment. The
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holders of Common Stock will receive all liquidating distributions after the
holders of the Series B-1 Preferred Stock have received their stated amounts,
unless Champion later issues additional shares of preferred stock having
priority over the Common Stock with respect to liquidating distributions.
The Series B-1 Preferred Stock will not have voting rights on ordinary
corporate matters, except as required by Michigan law. However, during the
18-month period ending and excluding January 4, 2003 if there is outstanding at
least $20,000,000 (based upon a value equal to $1,000 per share plus any accrued
and unpaid dividends) of Series B-1 Preferred Stock (including any future
issuance of additional shares of other Series B Preferred Stock pursuant to the
Agreement), approval of a majority of the Series B-1 Preferred Stock will be
required before Champion can authorize, create or issue any shares of capital
stock having a priority equal or senior to the Series B-1 Preferred Stock with
respect to dividends or distributions upon liquidation. The holders of the
Series B-1 Preferred Stock also will vote separately as a class and the approval
of a majority of the Series B-1 Preferred Stock will be required to (a) amend,
alter, or repeal the provisions of the Articles, including the Certificate, or
Bylaws of Champion so as to change any of the rights, preferences or privileges
of the Series B-1 Preferred Stock, (b) permit any subsidiary of Champion to
issue or sell any securities of such subsidiary, (c) increase or decrease, other
than by redemption or conversion, the total number of authorized shares of
preferred stock of Champion or (d) amend any provisions of any stock of Champion
with a priority equal or senior to the Series B-1 Preferred Stock with respect
to dividends or distributions on liquidation so as to make such capital stock
redeemable by Champion.
The holders of the Series B-1 Preferred Stock will have the right to
convert all or any part of the Series B-1 Preferred Stock into Common Stock at a
price of $15.93 per share until and excluding December 29, 2001 or thereafter at
a conversion price equal to 120% of the average market price, calculated in
accordance with the Certificate, as of December 29, 2001. The conversion price
shall not be less than $7.50 nor more than $15.93, although these minimum and
maximum conversion prices are subject to adjustment for stock splits,
recombinations, stock dividends and the like. For purposes of any conversion,
each share of Series B-1 Preferred Stock will have a value equal to $1000, plus
any accrued and unpaid dividends. Champion has the right to cause the conversion
of all but not less than all of the Series B-1 Preferred Stock into Common Stock
at any time after July 3, 2006 if the daily market price (as defined) of the
Common Stock exceeds 200% of the conversion price on at least 25 business days
during any 30 business day period.
Holders of Series B-1 Preferred Stock also have the right to redeem,
from time to time, all or part of the Series B-1 Preferred Stock beginning July
3, 2003 on terms set forth in the Certificate. On July 3, 2008, Champion must
redeem all Series B-1 Preferred Stock. Champion, at its sole option, may deliver
cash or shares of registered (or, in some instances, unregistered) Common Stock
in satisfaction of its redemption obligations.
The Certificate provides the holders of Series B-1 Preferred Stock with
certain rights if Champion is involved in a "Business Combination". In a
Business Combination,
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Champion may elect to acquire the Series B-1 Preferred Stock at the closing of
the transaction in exchange for the stock and other securities, cash and
property such holder would have received if the Series B-1 Preferred Stock had
been redeemed or converted into Common Stock prior to the transaction, plus a
premium cash payment ranging from 0% to 50% of the stated value of the Series
B-1 Preferred Stock (plus any accrued and unpaid dividends), based upon the
length of time remaining in the seven year life of the Series B-1 Preferred
Stock.
If Champion does not elect to acquire the Series B-1 Preferred Stock at
the closing of the Business Combination, then each holder has the right to elect
to receive either or a combination of (a) the stock and other securities, cash
and property which the holder would have received had the holder converted or
redeemed the Series B-1 Preferred Stock into Common Stock immediately before the
transaction, (b) shares of common stock of the acquiring person or its parent
company, as elected by the holders, according to formulas contained in the
Certificate, which take into account various factors, including the acquisition
price for Champion's Common Stock, the conversion price for the Series B-1
Preferred Stock, the redemption amount for the Series B-1 Preferred Stock, the
market price of the common stock of the acquiring person or its parent, and the
market price of the Common Stock, or (c) cash in an amount equal to 133% of the
stated value of the Series B-1 Preferred Stock (plus all accrued but unpaid
dividends). This cash payment would be paid by the acquiring person and not
Champion. The acquiring person also would be required to assume, in writing, the
obligations of Champion under the Certificate and the Agreement.
The Agreement requires Champion to file a registration statement
covering 1.5 times the number of shares of Common Stock issuable under the
Agreement by July 22, 2001 and to use its best efforts to cause the registration
statement to be declared effective prior to October 26, 2001. Champion will be
required to increase the number of shares registered under the registration
statement if the total number of shares of Common Stock issued and issuable
under the Agreement (including future series of Series B Preferred and shares
issued or issuable as dividends within one year following the measurement date)
exceeds 80% of the number of shares then registered. Champion currently
estimates that the registration statement will initially cover approximately
5,000,000 shares of Common Stock. Champion also is required to obtain
shareholder consent if the total number of shares of Common Stock issued or
issuable to Purchaser under the Agreement would exceed 17.50% of the number of
shares outstanding on June 29, 2001 and the listing requirements or rules of the
New York Stock Exchange would require shareholder approval to issue 20% of the
number of shares outstanding on June 29, 2001, or more. If this shareholder
consent is not received within 60 days after notice is sent to Champion by
Purchaser, Purchaser may convert and redeem that number of shares of Series B
Preferred Stock that would cause the total number of shares issued under the
Agreement to exceed 9,584,638 into "Excess Rights". The Excess Rights will have
a value equal to the market price of the Common Stock on the notice date
multiplied by the number of shares of Common Stock converted into the Excess
Rights. At any time after it obtains the Excess Rights, Purchaser may convert
the Excess Rights into a new series of additional preferred shares of Champion.
The Agreement also provides that, unless
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otherwise specified by Purchaser, the number of shares that may be issued upon
conversion of the Series B-1 Preferred Stock may not exceed 4,674,849, unless
Purchaser delivers an increase notice and 65 days passes after that notice is
delivered.
With certain exceptions, the Agreement requires Champion to provide
Purchaser, its affiliates and its subsidiaries with a three business day right
of first offer with respect to the purchase of any shares of Champion's capital
stock or any securities convertible into or exchangeable for any shares of
Champion's capital stock, where the aggregate number of shares or price per
share of such capital stock issuable at closing or upon conversion, exercise,
exchange or otherwise cannot be determined as of the date such agreement is
entered into or is otherwise subject to change, with some exceptions. The right
of first offer only applies during such times as the Purchaser, its affiliates
and its subsidiaries own Series B Preferred Stock convertible or redeemable
into a number of shares of Common Stock that exceeds 3.5% of the number of
shares of Common Stock outstanding on the date of the Agreement or redeemable
for at least $15 million.
Under the Agreement, Champion granted to the Purchaser rights to
acquire up to a total of 12,000 shares of additional series of Champion Series B
Preferred Stock (e.g., Series B-2, Series B-3, etc.) having similar terms and
conditions as the Series B-1 Preferred Stock, at a price of $1,000 per share.
The dates for and conditions to the redemption, conversion and voting rights of
any such additional Series B Preferred Stock would be the same as those for the
Series B-1 Preferred Stock.
The sale of the Series B-1 Preferred Stock was made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D promulgated thereunder. The sale was made
without general solicitation or advertising, Purchaser is a sophisticated
investor with access to all relevant information necessary to evaluate an
investment in the securities, and Purchaser represented to Champion that the
securities were being acquired for investment purposes.
Item 7. Exhibits.
Exhibit
Number
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4.1 Certificate of Rights and Preferences of Series B-1 Cumulative
Convertible Preferred Stock of Champion Enterprises, Inc.,
dated July 3, 2001.
4.2 Agreement, dated as of June 29, 2001, between Champion
Enterprises, Inc. and Fletcher International, Ltd.
99 Press Release Issued by Champion on July 5, 2001.
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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.
CHAMPION ENTERPRISES, INC.
/s/ Anthony S. Cleberg
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Anthony S. Cleberg, Executive Vice President
and Chief Financial Officer
July 6, 2001
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INDEX TO EXHIBITS
Exhibit No. Description
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4.1 Certificate of Rights and Preferences of Series B-1 Cumulative
Convertible Preferred Stock of Champion Enterprises, Inc.,
dated July 3, 2001
4.2 Agreement, dated as of June 29, 2001, between Champion
Enterprises, Inc. and Fletcher International, Ltd.
99 Press Release issued July 5, 2001