UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) September 26, 2005
PARTY CITY CORPORATION
(Exact name of Registrant
as Specified in Charter)
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| Delaware
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0-27826
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22-3033692 |
(State or Other
Jurisdiction of
Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.) |
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400 Commons Way, Rockaway, NJ
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07866 |
(Address of Principal Executive Offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (973) 983-0888
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement
Merger Agreement and Voting Agreement
Party City Corporation (the “Company”) announced that it has entered into an Agreement and
Plan of Merger, dated as of September 26, 2005 (the “Merger Agreement”), by and among the
Company, Amscan Holdings, Inc., a Delaware corporation (“Parent”), and BWP Acquisition,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”),
pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing
after the merger as the surviving corporation and a wholly owned subsidiary of Parent (the
“Merger”). Parent and Merger Sub are entities affiliated with the private equity investment
firms of Berkshire Partners LLC and Weston Presidio.
Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding
share of common stock, par value $0.01 per share, of the Company (the “Shares”), other than
Shares owned by the Company, Parent, Merger Sub or any wholly owned subsidiary of the Company,
Parent or Merger Sub, or by any stockholders who are entitled to and who properly exercise
appraisal rights under Delaware law, shall be cancelled and shall be converted automatically into
the right to receive $17.50 in cash, without interest, for total
consideration of approximately $360 million, which includes the
cash-out of stock options and warrants. All outstanding options and
warrants to purchase shares of common stock, restricted shares and
similar rights to purchase shares of common stock will be canceled
and converted into the right to receive $17.50 per restricted share
or share of common stock underlying such option or warrant, less, in
the case of options and warrants, the exercise price thereof, without
interest.
The Company, Parent and Merger Sub have made customary representations and warranties and covenants in the Merger
Agreement.
The Company’s board of directors and a special committee of the board of directors have approved
the Merger Agreement. The Merger is conditioned on, among other things, the approval and adoption
of the Merger Agreement by the Company’s stockholders, the termination or expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the receipt
of debt financing contemplated by a commitment letter obtained by
Parent. The Company, Parent and Merger Sub have each agreed to use
commercially reasonable efforts and, subject to certain limitations,
take actions required in connection with obtaining such approvals. The Company’s board of directors and special
committee recommended that the Company’s stockholders approve and adopt the Merger Agreement.
The Merger
Agreement contains certain termination rights and provides that, upon
termination of the Merger Agreement under specified circumstances,
the Company may be required to pay Parent a termination fee equal to
$15,000,000. Upon termination of the Merger Agreement under other
specified circumstances, Parent may be required to refund 5% of
expenditures by the Company, its affiliates and franchisees, for
goods or services supplied by Parent or any of its subsidiaries, for
a three-year period following such termination.
Amscan, Inc., a subsidiary of Parent, is a supplier of paper products to the Company.
In
connection with the Merger, on September 26, 2005, 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 (collectively, the “Principal Stockholders”)
and Parent entered into a Voting Agreement (the “Voting Agreement”), which provides that
the Principal Stockholders will, among other things, vote all of their respective shares of Company
common stock (the “Covered Shares”) in favor of the adoption
of the Merger Agreement. The Principal Stockholders beneficially own
over 27% of the outstanding common stock of the Company. The Voting
Agreement will terminate upon the earliest of (i) the effective time
of the Merger, (ii) the termination of the Merger Agreement in
accordance with its terms, or (iii) written notice of termination of
the Voting Agreement by Parent to the Principal Stockholders. Upon
termination of the Merger Agreement pursuant to certain conditions,
and the subsequent sale or other disposition of Covered Shares to a
third party, the Principal Stockholders will be required to pay to Parent 50% of
any increase in consideration paid to the Principal Stockholders in
respect of such Covered Shares over the amounts that would be
otherwise payable pursuant to the Merger Agreement. The Principal
Stockholders also granted an irrevocable proxy to the President and
Secretary of Parent to vote on the Merger and the Merger Agreement.
The
foregoing description of the Merger Agreement and Voting Agreement is not complete and is qualified in its entirety by
reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto and is incorporated herein
by reference, and the Voting Agreement, which is filed as Exhibit 10.1 hereto and is incorporated
herein by reference. The Merger Agreement has been included to provide
information regarding its
terms. It is not intended to provide any other factual information about the Company. Such
information can be found elsewhere in this Form 8-K and in the other public filings the Company
makes with the Securities and Exchange Commission (the “SEC”), which are available without
charge at www.sec.gov.
Item 8.01. Other Events
On
September 27, 2005, the Company issued a press release announcing the execution of the Merger
Agreement, a copy of which is filed as Exhibit 99.1 and incorporated herein by reference.
Important Additional Information Will be Filed with the SEC
The Company plans to file with the SEC and mail to its stockholders a Proxy Statement in connection
with the Merger. The Proxy Statement will contain important information about the Company, the
Merger and related matters. Investors and security holders are urged to read the Proxy Statement and any other relevant documents
carefully when it is available.
Investors and security holders will be able to obtain free copies of the Proxy Statement and other
documents filed with the SEC by the Company through the web site maintained by the SEC at
www.sec.gov.
In addition, investors and security holders will be able to obtain free copies of the Proxy
Statement from the Company by contacting Investor Relations, Party City Corporation, 400 Commons
Way, Rockaway, New Jersey 07866, (973) 983-0888 ext. 8333.
The Company and its directors and executive officers may be deemed to be participants in the
solicitation of proxies in respect of the transactions contemplated by the Merger Agreement.
Information regarding the Company’s directors and executive officers is contained in the Company’s
Annual Report on Form 10-K for the year ended July 2, 2005 and its proxy statement dated October 13, 2004
for its 2004 annual meeting of shareholders, which are filed with the SEC. As of September 22, 2005, the Company’s directors and
executive officers beneficially owned 7,024,189 shares, or
approximately 32.6%, of the
Company’s common stock.
Cautionary Note Regarding Forward-Looking Statements
Statements in this document regarding the proposed Merger, the expected effects, timing and
completion of the proposed transaction and any other statements about Party City’s future
expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not
statements of historical fact (including statements containing the words “believes,” “plans,”
“anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be
forward-looking statements. There are a number of important factors that could cause actual results
or events to differ materially from those indicated by such forward-looking statements, including:
the ability to consummate the proposed transaction due to the failure to obtain stockholder
approval, the failure of Parent to consummate the necessary debt financing arrangements set forth
in a commitment letter received by Parent or the failure to satisfy other conditions to the closing
of the proposed transaction, the ability to recognize the benefits of the transaction, intense
competition in Party City’s industry, changes in government regulation, failure to manage the
integration of acquired companies and other risks that are contained in documents and the other
factors described in Party City’s Annual Report on Form 10-K for the year ended July 2, 2005. In
addition, any forward-looking statements represent Party City’s