PRG-SCHULTZ INTERNATIONAL, INC.
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
July 16, 2007
Date of Report (Date of earliest event reported)
PRG-Schultz International, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Georgia
(State or Other Jurisdiction of Incorporation)
|
|
|
0-28000
|
|
58-2213805 |
|
(Commission File Number)
|
|
(IRS Employer Identification No.) |
|
|
|
600 Galleria Parkway, Suite 100, Atlanta, Georgia
|
|
30339-5949 |
|
(Address of Principal Executive Offices)
|
|
(Zip Code) |
770-779-3900
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
|
|
|
o |
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
|
o |
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
|
o |
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
|
|
|
o |
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
The information set forth under Item 8.01 regarding the Amended and Restated Standstill Agreement
dated July 16, 2007 is incorporated by reference into this Item 1.01.
Item 8.01 Other Events.
PRG-Schultz International, Inc. (PRG or the Company) intends to undertake a refinancing whereby
PRG will refinance portions of its capital structure to reduce its leverage and to simplify its
capital structure. In connection with the proposed refinancing, PRG intends to replace its
existing credit facility, redeem its 11% Senior Notes (the Senior Notes) and redeem, to the
extent not previously converted into the Companys common stock, its 10% Senior Convertible Notes
(the Convertible Notes) and its 9% Series A Convertible Preferred Stock (the Preferred Stock).
PRG intends to solicit consents from holders of the Senior Notes and the Convertible Notes to amend
the indentures governing those notes to shorten the time period necessary to complete the
refinancing.
In connection with the proposed refinancing, PRG has entered into a Conversion and Support
Agreement (the Support Agreement) with Blum Capital Partners, L.P. and certain of its affiliates
(collectively Blum). Under the terms of the Support Agreement, Blum has agreed, subject to
certain terms and conditions, to support the proposed refinancing by providing its consent in
connection with the Companys consent solicitation to amend the indentures governing the Senior
Notes and the Convertible Notes and, if called for redemption by the Company, to convert all of the
Convertible Notes and shares of Preferred Stock it owns into shares of the Companys common stock.
In addition, Blum has agreed, as a lender under PRGs current credit facility, to support, if
necessary, any amendment to or waiver of the relevant provisions of the credit facility, to permit
the simultaneous redemption of the notes. Blum currently holds approximately 28% of the
outstanding Senior Notes, approximately 31% of the outstanding Convertible Notes and approximately
57% of the outstanding shares of Preferred Stock.
As
consideration for the Support Agreement, on July 16, 2007, PRG entered into an Amended and
Restated Standstill Agreement (the New Standstill Agreement) with Blum. Upon effectiveness, the
New Standstill Agreement will replace and supersede the Amended and Restated Standstill Agreement
dated November 14, 2005 between the Company and Blum (the Old Standstill Agreement).
Under the terms of the New Standstill Agreement, without the prior written consent of the board of
directors of PRG, Blum may not acquire or offer, make a proposal or agree to acquire, in any
manner, any voting stock of the Company or its subsidiaries (or beneficial ownership thereof) if,
after taking account of such acquisition, Blum will be the beneficial owner of more than 49.9% of
the Companys common stock. Previously, under the terms of the Old Standstill Agreement, Blum was
generally prohibited from beneficially acquiring any additional shares of the Companys common
stock and such limitation was lowered, on a share-for-share basis, every time Blum disposed of any
shares. If the Company completes the refinancing and, in connection therewith, all of the
Companys outstanding Convertible Notes and shares of Preferred Stock are converted into shares of
the Companys common stock, it is anticipated that Blums beneficial ownership will be
approximately 25%. The Company has also agreed under the New Standstill Agreement to amend its
Shareholder Protection Rights Agreement to make a corresponding change to Blums ownership
limitations set forth therein.
In addition, the New Standstill Agreement does not include any limitations on Blums voting of the
shares of Companys common stock and the Preferred Stock. Under the Old Standstill Agreement, any
shares owned by Blum in excess of 15% of the Companys outstanding voting power (combining the
voting power of the Common Stock and the Preferred Stock) were required to be voted by Blum in
accordance with the recommendation of PRGs board of directors.
The New Standstill Agreement will not become effective until PRG has received consent from the
lenders under its current credit facility to enter into the agreement and the earlier of (A) the
holders of the Senior Notes waive certain prohibitions under the Senior Notes indenture, to the
extent they apply, that would otherwise prohibit the Company from amending the Old Standstill
Agreement or (B) the Companys obligations under the Senior Notes indenture are terminated.
A copy of the New Standstill Agreement is filed with this Current Report as Exhibit 10.1 and is
incorporated herein by reference.
Forward Looking Statements
This Current Report includes certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, in addition to historical information. Such statements
include both implied and express statements regarding the Companys proposed refinancing, including
replacing the Companys current credit facility and the redemption of the Senior Notes, the
Convertible Notes and the Preferred Stock, the solicitation of consents to amend the indentures
governing the Senior Notes and the Convertible Notes, the conversion of the Convertible Notes and
the Preferred Stock into shares of the Companys common stock and Blums anticipated beneficial
ownership of the Companys common stock following any such refinancing. Such forward looking
statements are not guarantees of future performance and are subject to risks, uncertainties and
other factors that may cause the actual events, results, performance or achievements of the Company
to differ materially from the historical results or from any results expressed or implied by such
forward-looking statements. Risks that could affect the Companys future performance include the
Companys ability to obtain a new credit facility on terms and conditions acceptable to the
Company, market conditions relative to the Companys common stock that could affect the conversion
of the Convertible Notes and the Preferred Stock and other risks generally applicable to the
Companys business. For a discussion of other risk factors that may impact the Companys business,
please see the Companys filings with the Securities and Exchange Commission, including its Form
10-K filed on March 23, 2007. The Company disclaims any obligation or duty to update or modify
these forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
|
10.1 |
|
Amended and Restated Standstill Agreement, dated as of
July 16, 2007,
by and among PRG-Schultz International, Inc., Blum Capital Partners,
L.P. and certain of its affiliates.
|
SIGNATURES
Pursuant to the requirements of Section 12 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.
|
|
|
|
|
|
PRG-Schultz International, Inc.
|
|
|
By: |
/s/ Victor A. Allums
|
|
|
|
Victor A. Allums |
|
|
|
Senior Vice President, Secretary and General Counsel |
|
|
Dated:
July 16, 2007