Page 1 of 17 Pages
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PARTY CITY CORPORATION
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
702145103
(CUSIP Number)
Michael A. Correale Robert J. Small
Amscan Holdings, Inc. c/o Berkshire Partners LLC
80 Grasslands Road One Boston Place
Elmsford, NY 10523 Suite 3300
(914) 345-2020 Boston, MA 02108
(617) 227-0050
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 26, 2005
------------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box: [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in the prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP No. 702145103 SCHEDULE 13D Page 2 of 17 Pages
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NUMBERS
Amscan Holdings, Inc.
IRS IDENTIFICATION No.: 13-3911462
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH ------------------------------------------------------
REPORTING PERSON WITH 8 SHARED VOTING POWER
5,824,481 shares*
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
SHARED VOTING POWER
5,824,481 shares*
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.3% (18.83% of outstanding common stock, excluding beneficially owned
shares subject to options and warrants)**
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
* Beneficial ownership of the common stock, par value $.01 per share, of
Party City Corporation ("Common Stock") referred to herein is being
reported hereunder solely because the reporting person may be deemed to
have beneficial ownership of such Common Stock as a result of the Voting
Agreement described in Items 3 and 4 hereof. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an
admission by any of the reporting persons that it is the beneficial owner
of any Common Stock referred to herein for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended, or for any other purpose, and
such beneficial ownership is expressly disclaimed. The 5,824,481 shares
reflected in items 8, 11 and 13 above include 58,000 shares issuable upon
the exercise of certain stock options and 2,496,000 shares issuable upon
the exercise of certain warrants, in each case, subject to the Voting
Agreement referred to above.
** The calculations of the percentages referred to herein are based on
17,319,386 shares of Common Stock issued and outstanding as of September
26, 2005, which number is based on the representation regarding outstanding
shares of Common Stock made by Party City Corporation in the Agreement and
Plan of Merger described in Items 3 and 4 hereof, together with 2,554,000
shares issuable upon exercise of certain stock options and warrants.
CUSIP No. 702145103 SCHEDULE 13D Page 3 of 17 Pages
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NUMBERS
AAH Holdings Corporation IRS IDENTIFICATION No.: 20-1033029
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH -----------------------------------------------------
REPORTING PERSON WITH 8 SHARED VOTING POWER
5,824,481 shares*
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
SHARED VOTING POWER
5,824,481 shares*
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.3% (18.83% of outstanding common stock, excluding beneficially owned
shares subject to options and warrants)**
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
* Beneficial ownership of the common stock, par value $.01 per share, of
Party City Corporation ("Common Stock") referred to herein is being
reported hereunder solely because the reporting person may be deemed to
have beneficial ownership of such Common Stock as a result of the Voting
Agreement described in Items 3 and 4 hereof. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an
admission by any of the reporting persons that it is the beneficial owner
of any Common Stock referred to herein for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended, or for any other purpose, and
such beneficial ownership is expressly disclaimed. The 5,824,481 shares
reflected in items 8, 11 and 13 above include 58,000 shares issuable upon
the exercise of certain stock options and 2,496,000 shares issuable upon
the exercise of certain warrants, in each case, subject to the Voting
Agreement referred to above.
** The calculations of the percentages referred to herein are based on
17,319,386 shares of Common Stock issued and outstanding as of September
26, 2005, which number is based on the representation regarding outstanding
shares of Common Stock made by Party City Corporation in the Agreement and
Plan of Merger described in Items 3 and 4 hereof, together with 2,554,000
shares issuable upon exercise of certain stock options and warrants.
CUSIP No. 702145103 SCHEDULE 13D Page 4 of 17 Pages
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NUMBERS
Berkshire Fund V, Limited Partnership
IRS IDENTIFICATION No.: 04-3423237
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
--------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH -----------------------------------------------------
REPORTING PERSON WITH 8 SHARED VOTING POWER
5,824,481 shares*
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
SHARED VOTING POWER
5,824,481 shares*
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.3% (18.83% of outstanding common stock, excluding beneficially owned
shares subject to options and warrants)**
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
* Beneficial ownership of the common stock, par value $.01 per share, of
Party City Corporation ("Common Stock") referred to herein is being
reported hereunder solely because the reporting person may be deemed to
have beneficial ownership of such Common Stock as a result of the Voting
Agreement described in Items 3 and 4 hereof. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an
admission by any of the reporting persons that it is the beneficial owner
of any Common Stock referred to herein for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended, or for any other purpose, and
such beneficial ownership is expressly disclaimed. The 5,824,481 shares
reflected in items 8, 11 and 13 above include 58,000 shares issuable upon
the exercise of certain stock options and 2,496,000 shares issuable upon
the exercise of certain warrants, in each case, subject to the Voting
Agreement referred to above.
** The calculations of the percentages referred to herein are based on
17,319,386 shares of Common Stock issued and outstanding as of September
26, 2005, which number is based on the representation regarding outstanding
shares of Common Stock made by Party City Corporation in the Agreement and
Plan of Merger described in Items 3 and 4 hereof, together with 2,554,000
shares issuable upon exercise of certain stock options and warrants.
CUSIP No. 702145103 SCHEDULE 13D Page 5 of 17 Pages
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NUMBERS
Berkshire Fund VI, Limited Partnership
IRS IDENTIFICATION No.: 04-3968397
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
--------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH ------------------------------------------------------
REPORTING PERSON WITH 8 SHARED VOTING POWER
5,824,481 shares*
------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
SHARED VOTING POWER
5,824,481 shares*
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.3% (18.83% of outstanding common stock, excluding beneficially owned
shares subject to options and warrants)**
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
* Beneficial ownership of the common stock, par value $.01 per share, of
Party City Corporation ("Common Stock") referred to herein is being
reported hereunder solely because the reporting person may be deemed to
have beneficial ownership of such Common Stock as a result of the Voting
Agreement described in Items 3 and 4 hereof. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an
admission by any of the reporting persons that it is the beneficial owner
of any Common Stock referred to herein for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended, or for any other purpose, and
such beneficial ownership is expressly disclaimed. The 5,824,481 shares
reflected in items 8, 11 and 13 above include 58,000 shares issuable upon
the exercise of certain stock options and 2,496,000 shares issuable upon
the exercise of certain warrants, in each case, subject to the Voting
Agreement referred to above.
** The calculations of the percentages referred to herein are based on
17,319,386 shares of Common Stock issued and outstanding as of September
26, 2005, which number is based on the representation regarding outstanding
shares of Common Stock made by Party City Corporation in the Agreement and
Plan of Merger described in Items 3 and 4 hereof, together with 2,554,000
shares issuable upon exercise of certain stock options and warrants, in
each case, subject to the Voting Agreement referred to above.
CUSIP No. 702145103 SCHEDULE 13D Page 6 of 17 Pages
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NUMBERS
Berkshire Investors LLC
IRS IDENTIFICATION No.: 04-3309729
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
--------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH -----------------------------------------------------
REPORTING PERSON WITH 8 SHARED VOTING POWER
5,824,481 shares*
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
SHARED VOTING POWER
5,824,481 shares*
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.3% (18.83% of outstanding common stock, excluding beneficially owned
shares subject to options and warrants)**
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
* Beneficial ownership of the common stock, par value $.01 per share, of
Party City Corporation ("Common Stock") referred to herein is being
reported hereunder solely because the reporting person may be deemed to
have beneficial ownership of such Common Stock as a result of the Voting
Agreement described in Items 3 and 4 hereof. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an
admission by any of the reporting persons that it is the beneficial owner
of any Common Stock referred to herein for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended, or for any other purpose, and
such beneficial ownership is expressly disclaimed. The 5,824,481 shares
reflected in items 8, 11 and 13 above include 58,000 shares issuable upon
the exercise of certain stock options and 2,496,000 shares issuable upon
the exercise of certain warrants, in each case, subject to the Voting
Agreement referred to above.
** The calculations of the percentages referred to herein are based on
17,319,386 shares of Common Stock issued and outstanding as of September
26, 2005, which number is based on the representation regarding outstanding
shares of Common Stock made by Party City Corporation in the Agreement and
Plan of Merger described in Items 3 and 4 hereof, together with 2,554,000
shares issuable upon exercise of certain stock options and warrants.
Page 7 of 17 pages
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (this "Schedule 13D") relates to the shares
of common stock, par value $0.01 per share (together with options and warrants
to purchase common stock, the "Common Stock"), of Party City Corporation, a
Delaware corporation ("Party City"). The address of Party City's principal
executive office is 450 Commons Way, Building C, Rockaway, NJ 07860.
ITEM 2. IDENTITY AND BACKGROUND
(A) NAME
This statement is being filed jointly by the following: (each a "Reporting
Person" and collectively, the "Reporting Persons"): (i) Amscan Holdings, Inc., a
Delaware corporation ("AHI"), (ii) AAH Holdings Corporation, a Delaware
corporation ("AAH"), (iii) Berkshire Fund V, Limited Partnership, a
Massachusetts limited partnership ("Fund V"), (iv) Berkshire Fund VI, Limited
Partnership, a Massachusetts limited partnership ("Fund VI"), and (v) Berkshire
Investors LLC, a Massachusetts limited liability company ("Berkshire
Investors").
Fifth Berkshire Associates LLC, a Massachusetts limited liability company
("Fifth Berkshire"), is the general partner of Fund V. Sixth Berkshire
Associates LLC, a Massachusetts limited liability company ("Sixth Berkshire"),
is the general partner of Fund VI. The managing members of Fifth Berkshire are:
Bradley M. Bloom, J. Christopher Clifford, Kevin T. Callaghan, Richard K. Lubin,
Carl Ferenbach, Jane Brock-Wilson, David R. Peeler, Robert J. Small, and Ross M.
Jones (the "Berkshire Principals"). The Berkshire Principals are also the
managing members of Sixth Berkshire and Berkshire Investors.
Fund V, Fund VI and Berkshire Investors collectively own a majority of the
outstanding capital stock of AAH. AAH owns all of the outstanding capital stock
of AHI.
Based on the foregoing and the transactions and relationships described
herein, the Reporting Persons may be deemed to constitute a "group" for purposes
of Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act").
The filing of this statement shall not be construed as an admission that the
Reporting Persons are a group, or have agreed to act as a group.
(B) BUSINESS ADDRESS
The principal business address of AHI and AAH is 80 Grasslands Road,
Elmsford, NY 10523. The following address is the business address of each of the
Berkshire Principals and the address of the principal executive offices and
principal business of Fund V, Fund VI, Berkshire Investors, Fifth Berkshire and
Sixth Berkshire: One Boston Place, Suite 3300, Boston, Massachusetts 02108 (in
the case of the Berkshire Principals, c/o Berkshire Partners LLC).
Page 8 of 17 pages
(C) PRINCIPAL BUSINESS
AHI, together with its subsidiaries, designs, manufactures and
distributes party goods, including paper and plastic tableware, stationary
products, decorative accessories and novelties, with designs available for all
everyday and seasonal occasions. AAH owns all of the outstanding equity
securities of AHI and does not engage in any other business.
The principal business of each of Fund V, Fund VI, and Berkshire Investors
is to make investments in, buy, sell, hold, pledge and assign securities. The
principal business of Fifth Berkshire is to act as general partner of Fund V and
certain other affiliated funds. The principal business of Sixth Berkshire is to
act as general partner of Fund VI and certain other affiliated funds. The
principal occupations of each of the Berkshire Principals is Managing Director
of Berkshire Partners LLC, the managing entity of Fund V, Fund VI and Berkshire
Investors.
(D AND E) NO CONVICTIONS OR PROCEEDINGS.
During the last five years, to the best knowledge of the Reporting
Persons, none of the Reporting Persons, Fifth Berkshire, Sixth Berkshire, or the
Berkshire Principals, nor any of their executive officers, directors, or
partners, as applicable: (i) has been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in his being subject to a judgment, decree, or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(F) CITIZENSHIP
Each of AHI and AAH is organized under the laws of the State of
Delaware. Each of Fund V, Fund VI, Berkshire Investors, Fifth Berkshire, and
Sixth Berkshire is organized under the laws of the Commonwealth of
Massachusetts. Each of the Berkshire Principals is a citizen of the United
States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On September 26, 2005, AHI, BWP Acquisition, Inc., a Delaware
corporation and wholly-owned subsidiary of AHI (the "Merger Sub") and Party
City entered into an Agreement and Plan of Merger (the "Merger Agreement") which
provides that, subject to certain conditions, Merger Sub will be merged with and
into Party City (the "Merger"), with Party City continuing as the surviving
corporation after the Merger (the "Surviving Corporation"). In connection with
the Merger Agreement, as a condition to the willingness of AHI to enter into
the Merger Agreement, and as an inducement and in consideration therefore,
AHI entered into a Voting Agreement, dated as of September 26, 2005 (the
"Voting Agreement"), with Michael E. Tennenbaum, Tennenbaum Capital Partners,
LLC, Tennenbaum & Co., LLC, Special Value Bond Fund, LLC, Special Value Absolute
Return Fund, LLC and Special Value Bond
Page 9 of 17 pages
Fund II, LLC (the "Principal Stockholders"). By reason of AHI's entering into
the Voting Agreement with the Principal Stockholders, AHI may be deemed to have
acquired beneficial ownership of the shares of Party City Common Stock that are
the subject of the Voting Agreement pursuant to Rule 13d-3(a)(1). By virtue of
their direct and indirect ownership of all of AHI's capital stock, AAH, Fund V,
Fund VI and Berkshire Investors may be deemed to have acquired beneficial
ownership of the shares of Party City Common Stock that are the subject of the
Voting Agreement. The transactions contemplated by the Voting Agreement do not
require the expenditure of any funds. AHI anticipates that it will fund the
transactions contemplated by the Merger Agreement through a combination of debt
and equity financing.
ITEM 4. PURPOSE OF TRANSACTION
Merger Agreement
As noted in Item 3 above, pursuant to the Merger Agreement, in order for
AHI to fulfill its overall purpose of acquiring 100% of the outstanding common
stock of Party City, AHI, Merger Sub and Party City have agreed to consummate
the Merger in accordance with and subject to the terms and conditions of the
Merger Agreement. At the effective time of the Merger (the "Effective Time") and
as a result of the Merger, each share of common stock of Party City issued and
outstanding immediately prior to the Effective Time (other than shares owned by
AHI or Merger Sub, shares owned by any direct or indirect wholly-owned
subsidiary of Party City and any dissenting shares whose holders have perfected
their rights to dissent as described in the Merger Agreement) shall be
automatically converted into the right to receive seventeen dollars and fifty
cents ($17.50) in cash, without interest (the "Merger Consideration"). As of the
Effective Time, all such shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and subject to rights of
dissenting shares under the Merger Agreement, each holder of a certificate
representing any such shares shall cease to have any rights with respect thereto
except the right to receive Merger Consideration upon the surrender of such
certificate in accordance with the Merger Agreement, without interest.
Completion of the Merger is subject to the satisfaction of a number of
conditions, including the receipt of regulatory approvals and approval of the
Merger Agreement by a vote of the holders of not less than a majority of the
outstanding shares of common stock of Party City.
Voting Agreement
As noted in Item 3 above, in connection with the Merger Agreement, as a
condition to the willingness of AHI to enter into the Merger Agreement, and as
an inducement and in consideration therefore, on September 26, 2005, AHI entered
into the Voting Agreement with the Principal Stockholders. Note that our
description of the terms of the Voting Agreement focuses on voting provisions
and is not a complete description of the Voting Agreement. Please refer to the
text of the Voting Agreement incorporated by reference herein. Pursuant to the
Voting Agreement, the Principal Stockholders have agreed that, during the period
from and including September 26, 2005 through and including the earliest to
occur of (i) the Effective Time, (ii) the termination of the Merger Agreement in
accordance with its terms, or (iii) written notice of termination of the Voting
Agreement by AHI to the Principal Stockholders (the "Voting Period"), they will
vote (or cause to be voted) with respect to the Covered Shares beneficially
owned by them as of the applicable record date, at any meeting of the
stockholders of the Company, however called, or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval (including
by written consent) is sought, the Principal Stockholder shall (i) when a
Page 10 or 17 pages
meeting is held, appear at such meeting or otherwise cause the Covered Shares to
be counted as present thereat for the purpose of establishing a quorum and (ii)
vote (or cause to be voted) in person or by proxy the Covered Shares in favor of
the approval of the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement; and (iii) vote (or cause to be voted) the
Covered Shares against any extraordinary corporate transaction (other than the
Merger), such as a merger, consolidation, business combination, tender or
exchange offer, reorganization, recapitalization, liquidation, sale or transfer
of a material amount of the assets or securities of Party City or any of its
subsidiaries (other than pursuant to the Merger) or any other Takeover Proposal
(as defined below).
"Covered Shares" means all of the shares of Common Stock of which the
Principal Stockholders were beneficial owners as of September 26, 2005, as well
as any securities issued or exchanged with respect to such shares of Common
Stock upon any recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up or
combination of the securities of Party City or any other change in Party City's
capital structure or securities of which such stockholder acquires beneficial
ownership after the date of the Voting Agreement and prior to the termination
of the Voting Agreement, whether by purchase, acquisition, or upon exercise of
options, warrants, conversion of other convertible securities or otherwise.
"Takeover Proposal" means any inquiry, proposal or offer relating to (A)
any business combination with or any direct or indirect acquisition, in a single
transaction or a series of transactions and whether by way of a merger,
consolidation, business combination, reorganization, share exchange, sale of
assets, recapitalization, liquidation, dissolution or similar transaction or
otherwise, of (i) Party City, (ii) twenty-five (25) percent or more of any class
of Party City's outstanding shares of capital stock or any other voting
securities of the Party City or its subsidiaries (iii) 25% or more of the fair
market value of the assets of Party City and its subsidiaries taken as a whole;
(B) any tender offer (including a self-tender offer) or exchange offer, as
defined pursuant to the Exchange Act, that, if consummated, would result in any
Person or group beneficially owning 25% or more of any class of the capital
stock of Party City or the filing with the Securities and Exchange Commission
(the "Commission") of a Schedule TO or a registration statement under the
Securities Act in connection therewith, or (C) any combination of the foregoing.
In connection with their performance under the Voting Agreement, each of
the Principal Stockholders irrevocably appointed AHI (and the president,
secretary or any other designee of AHI) as his or its attorney-in-fact, to
vote (or cause to be voted) the Covered Shares during the Voting Period to the
extent described above. The proxy and power of attorney granted pursuant to the
Voting Agreement shall terminate automatically upon termination of the Voting
Agreement.
Each of the Principal Stockholders has agreed not to, other than pursuant
to the terms of the Voting Agreement or the Merger Agreement and except with
respect to item (ii) below, without the prior written consent of AHI or as
otherwise provided in the Voting Agreement, during the term of the Voting
Agreement, such Principal Stockholder agreed to not, directly or indirectly,
(i) grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any Covered Shares or (ii) sell,
pledge, assign, transfer, encumber or otherwise dispose of (including by merger,
Page 11 of 17 pages
consolidation or otherwise by operation of law), or enter into any contract,
option or other arrangement or understanding with respect to the direct or
indirect assignment, transfer, encumbrance or other disposition of (including by
merger, consolidation or otherwise by operation of law), any Covered Shares. The
Principal Stockholders and AHI delivered joint written instructions to Party
City and Party City's transfer agent stating that the owned shares subject to
the Voting Agreement may not be sold, transferred, pledged, assigned,
hypothecated, tendered or otherwise disposed of in any manner without the prior
written consent of Parent or except in accordance with the terms and conditions
of the Voting Agreement. If any Covered Shares are acquired after the date of
the Voting Agreement by a Stockholder, the foregoing instructions shall be
delivered upon acquisition of such Covered Shares. Under the terms of the Voting
Agreement, AHI can direct the Principal Stockholder to exercise the warrant to
purchase 2,496,000 shares, at any time prior to the record date of the special
meeting of shareholders.
The voting provisions of the Voting Agreement will terminate upon the
earliest to occur of (i) the Effective Time, (ii) the termination of the Merger
Agreement in accordance with its terms, or (iii) written notice of termination
of the Voting Agreement by AHI to the Principal Stockholders as provided
therein.
Pursuant to the Merger Agreement, immediately prior to the Effective Time,
the directors of Merger Sub immediately prior to the Effective Time will be the
initial directors of the surviving corporation. The officers of Party City
immediately prior to the Effective Time shall be the officers of the surviving
corporation. Additionally, at the Effective Time, the certificate of
incorporation and bylaws of Merger Sub shall be the certificate of incorporation
and bylaws of the Surviving Corporation. Following the consummation of the
Merger, AHI intends that the Common Stock will be delisted from NASDAQ and will
become eligible for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934, as amended.
The foregoing summaries of the Merger Agreement and the Voting Agreement
are qualified in their entirety by reference to these agreements, copies of
which are incorporated herein by reference to Exhibits 2.1 and 10.1 of Party
City's 8-K filed with the Commission on September 27, 2005.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
As a result of the Voting Agreement, as of September 26, 2005, the
Reporting Persons may be deemed to beneficially own 3,270,481 shares of Common
Stock, 58,000 shares of Common Stock issuable upon the exercise of certain
options and 2,496,000 shares of Common Stock issuable upon exercise of certain
warrants, which represents approximately 29.3% of outstanding common stock,
based on 17,319,386 shares of Common Stock issued and outstanding as of
September 26, 2005 together with the 2,554,000 shares issuable upon exercise of
certain stock options and warrants, which number is based on the representation
regarding outstanding shares of Common Stock made by Party City in the Merger
Agreement. The Reporting Persons share voting power over the shares beneficially
owned pursuant to the Voting Agreement. To the best knowledge of the Reporting
Persons, other than as set forth above, none of the Berkshire Principals or the
executive officers or directors of any Reporting Person beneficially owns any
shares of Party City Common Stock. Under the terms of the Voting Agreement, AHI
can direct the Principal Stockholder to exercise the warrant to purchase
2,496,000 shares, at any time prior to the record date of the special meeting of
shareholders.
Page 12 of 17 Pages
By virtue of the relationships described herein, the Reporting Persons may
be deemed to constitute a "group" within the meaning of Rule 13d-5 under the
Exchange Act. As a member of a group, each Reporting Person may be deemed to
share voting and dispositive power with respect to, and therefore beneficially
own, the shares beneficially owned by members of the group as a whole. The
filing of this Statement shall not be construed as an admission that the
Reporting Persons beneficially own those shares held by any other members of the
group.
As the ultimate general partner of Fund V, Fifth Berkshire may be deemed
to beneficially own the securities subject to the Voting Agreement. The filing
of this statement shall not be construed as an admission that Fifth Berkshire
is, for the purpose of Section 13(d) of the Exchange Act, the beneficial owner
of such securities.
As the ultimate general partner of Fund VI, Sixth Berkshire may be deemed
to beneficially own the securities subject to the Voting Agreement. The filing
of this statement shall not be construed as an admission that Sixth Berkshire
is, for the purpose of Section 13(d) of the Exchange Act, the beneficial owner
of such securities.
By virtue of their positions as managing members of Fifth Berkshire, Sixth
Berkshire and Berkshire Investors the Berkshire Principals may be deemed to
possess indirect beneficial ownership of the securities beneficially owned by
Fund V, Fund VI or Berkshire Investors. None of the Berkshire Principals, acting
alone, however, has voting or investment power with respect to the shares
beneficially owned by the Fund V, Fund VI or Berkshire Investors, and, as a
result, each Berkshire Principal disclaims beneficial ownership of such
securities.
Except as described above, none of the Reporting Persons, nor, to the best
knowledge of the Reporting Persons, none of the Berkshire Principals or the
executive officers or directors of any Reporting Person, has effected any
transactions in the securities of Party City during the past sixty days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
The responses to Items 3, 4, and 5 of this Schedule 13D and the Exhibits
to this Schedule 13D are incorporated herein by reference.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
99.1 Joint Filing Undertaking, dated as of October 4, 2005.
99.2 Agreement and Plan of Merger, dated as of September 26, 2005, by
and among Amscan Holdings, Inc., BWP Acquisition, Inc. and Party
City Corporation (incorporated by reference to Exhibit 2.1 of Party
City's 8-K filed with the Commission on September 27, 2005).
99.3 Voting Agreement, dated as of September 26, 2005, by and among
Amscan Holdings, Inc., Michael E. Tennenbaum, Tennenbaum Capital
Partners, LLC, Tennenbaum & Co., LLC, Special Value Bond Fund,
LLC, Special Value Absolute Return Fund, LLC and Special Value
Bond Fund II, LLC (incorporated by reference to Exhibit 10.1 of
Party City's 8-K filed with the Commission on September 27, 2005).
Page 13 of 17 Pages
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: October 5, 2005 AMSCAN HOLDINGS, INC.
By: /s/ Robert J. Small
--------------------------
Name: Robert J. Small
Title: Chairman of the Board
AAH HOLDINGS CORPORATION
By: /s/ Robert J. Small
--------------------------
Name: Robert J. Small
Title: Chairman of the Board
BERKSHIRE FUND V, LIMITED PARTNERSHIP
By: Fifth Berkshire Associates LLC, its
General Partner
By: /s/ Robert J. Small
--------------------------
Name: Robert J. Small
Title: Managing Director
Page 14 of 17 Pages
BERKSHIRE FUND VI, LIMITED PARTNERSHIP
By: Sixth Berkshire Associates LLC, its
General Partner
By: /s/ Robert J. Small
--------------------------
Name: Robert J. Small
Title: Managing Director
BERKSHIRE INVESTORS LLC
By: /s/ Robert J. Small
--------------------------
Name: Robert J. Small
Title: Managing Director
Page 15 of 17 Pages
EXHIBIT INDEX
99.1 Joint Filing Undertaking, dated as of October 4, 2005.
99.2 Agreement and Plan of Merger, dated as of September 26, 2005, by and
among Amscan Holdings, Inc., BWP Acquisition, Inc. and Party City
Corporation (incorporated by reference to Exhibit 2.1 of Party
City's 8-K filed with the Commission on September 27, 2005).
99.3 Voting Agreement, dated as of September 26, 2005, by and among
Amscan Holdings, Inc., Michael E. Tennenbaum, Tennenbaum Capital
Partners, LLC, Tennenbaum & Co., LLC, Special Value Bond Fund, LLC,
Special Value Absolute Return Fund, LLC and Special Value Bond Fund
II, LLC (incorporated by reference to Exhibit 10.1 of Party City's
8-K filed with the Commission on September 27, 2005).