SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Information to be Included in Statements Filed Pursuant to Rule
13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a)
Under the Securities Exchange Act of 1934
(Amendment No. 1)
FRIEDMAN’S, INC.
(Name of Issuer)
CLASS A COMMON STOCK
(Title of Class of Securities)
358438109
(CUSIP Number)
KENNETH J. BARONSKY
MILBANK, TWEED, HADLEY & McCLOY LLP
601 S. FIGUEROA STREET, 30TH FLOOR
LOS ANGELES, CA 90017
TELEPHONE: 213-892-4333
(Name, address and telephone number of person authorized to receive notices and communications)
February 2, 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 which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 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 Rule 13d-7 for other parties to whom copies are to be sent.
CUSIP No. 358438109
| (1) | NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Liberation Investments, L.P. |
|||
| (2) | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x |
|||
| (3) | SEC USE ONLY
|
|||
| (4) | SOURCE OF FUNDS
WC |
|||
| (5) | CHECK BOX 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 BENEFICIALLY OWNED BY PERSON WITH |
(7) SOLE VOTING POWER
0 (8) SHARED VOTING POWER
1,523,770 (9) SOLE DISPOSITIVE POWER
0 (10) SHARED DISPOSITIVE POWER
1,523,770 |
| (11) | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,523,770 |
|||
| (12) | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
| ||
| (13) | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.3% (See Item 5(a)) |
|||
| (14) | TYPE OF REPORTING PERSON
PN |
Page 2
CUSIP No. 358438109
| (1) | NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Liberation Investments Ltd. |
|||
| (2) | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x |
|||
| (3) | SEC USE ONLY
|
|||
| (4) | SOURCE OF FUNDS
WC |
|||
| (5) | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
¨ | ||
| (6) | CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands |
| NUMBER OF SHARES BENEFICIALLY OWNED BY PERSON WITH |
(7) SOLE VOTING POWER
0 (8) SHARED VOTING POWER
815,130 (9) SOLE DISPOSITIVE POWER
0 (10) SHARED DISPOSITIVE POWER
815,130 |
| (11) | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
815,130 |
|||
| (12) | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
| ||
| (13) | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.9% (See Item 5(a)) |
|||
| (14) | TYPE OF REPORTING PERSON
CO |
Page 3
CUSIP No. 358438109
| (1) | NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Liberation Investment Group LLC |
|||
| (2) | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x |
|||
| (3) | SEC USE ONLY
|
|||
| (4) | SOURCE OF FUNDS
N/A |
|||
| (5) | CHECK BOX 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 BENEFICIALLY OWNED BY PERSON WITH |
(7) SOLE VOTING POWER
0 (8) SHARED VOTING POWER
2,338,900 (9) SOLE DISPOSITIVE POWER
0 (10) SHARED DISPOSITIVE POWER
2,338,900 |
| (11) | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,338,900 |
|||
| (12) | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
| ||
| (13) | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.3% (See Item 5(a)) |
|||
| (14) | TYPE OF REPORTING PERSON
OO, IA |
Page 4
CUSIP No. 358438109
| (1) | NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Emanuel R. Pearlman |
|||
| (2) | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x |
|||
| (3) | SEC USE ONLY
|
|||
| (4) | SOURCE OF FUNDS
N/A |
|||
| (5) | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
¨ | ||
| (6) | CITIZENSHIP OR PLACE OF ORGANIZATION
United States |
| NUMBER OF SHARES BENEFICIALLY OWNED BY PERSON WITH |
(7) SOLE VOTING POWER
0 (8) SHARED VOTING POWER
2,338,900 (9) SOLE DISPOSITIVE POWER
0 (10) SHARED DISPOSITIVE POWER
2,338,900 |
| (11) | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,338,900 |
|||
| (12) | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
| ||
| (13) | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.3% (See Item 5(a)) |
|||
| (14) | TYPE OF REPORTING PERSON
IN, HC |
Page 5
INTRODUCTORY STATEMENT
This Amendment No. 1 (this “Amendment”) supplements, pursuant to Rule 13d-2(a), the Schedule 13D (the “Schedule 13D”) of Liberation Investments L.P., Liberation Investments Ltd., Liberation Investment Group LLC and Emanuel R. Pearlman, filed with the Securities and Exchange Commission on January 21, 2005. This Amendment relates to the Class A Common Stock (the “Class A Common Stock”) of Friedman’s, Inc. (the “Company”). The principal executive offices of the Company are located at 171 Crossroads Parkway, Savannah, GA 31422.
Item 4 is hereby amended and supplemented as follows:
| ITEM 4. | PURPOSE OF TRANSACTION. |
On February 2, 2005, the Reporting Persons delivered a proposal to the Company (the “Restructuring Term Sheet”), setting forth the proposed terms of a reorganization of the Company. Under the proposal both the existing Class A Stock and Class B Stock would be replaced by a single new class of Common Stock. In addition to the new Common Stock issued to existing Class A and Class B stockholders, the Company would offer existing stockholders the right to purchase on a pro rata basis up to $30 million of new Common Stock. The Reporting Persons have agreed to backstop the rights offering by agreeing to lead the purchase of the new Common Stock not otherwise purchased in the rights offering. The Restructuring Term Sheet also includes, among other things, a proposal to reorganize the Board of Directors of the Company. A copy of the Restructuring Term Sheet is attached to this Amendment as Exhibit 5 and is incorporated by reference herein.
| ITEM 7. | MATERIAL TO BE FILED AS EXHIBITS |
| Exhibit No. |
Title |
| The following exhibit is filed with this Amendment: | ||
| Exhibit 5. | Restructuring Term Sheet, delivered on February 2, 2005 | |
Page 6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.
Dated: February 4, 2005
| LIBERATION INVESTMENTS, L.P. | ||
| By: |
Liberation Investment Group LLC, general partner | |
| By: | /s/ EMANUEL R. PEARLMAN | |
| Emanuel R. Pearlman | ||
| General Manager | ||
| LIBERATION INVESTMENTS LTD. | ||
| By: | /s/ EMANUEL R. PEARLMAN | |
| Emanuel R. Pearlman | ||
| Director | ||
| LIBERATION INVESTMENT GROUP LLC | ||
| By: | /s/ EMANUEL R. PEARLMAN | |
| Emanuel R. Pearlman | ||
| General Manager | ||
| EMANUEL R. PEARLMAN |
| /s/ EMANUEL R. PEARLMAN |
Page 7
Friedman’s, Inc.
Restructuring Term Sheet
The terms and conditions described herein are part of a comprehensive compromise, each element of which is consideration for the other elements and an integral aspect of the proposed restructuring. This term sheet does not constitute an offer or a legally binding obligation of the Company (as defined below), certain Shareholders (as defined below) or any other party in interest, nor does it constitute an offer of securities or a solicitation of the acceptance or rejection of a chapter 11 plan for the Company. The transactions contemplated by this term sheet are subject to conditions to be set forth in definitive documents.
| Company: | Friedman’s, Inc. (“Friedman’s”, and, as reorganized, “Reorganized Friedman’s”) and certain of its subsidiaries (together with Friedman’s, the “Company” and, as reorganized with Reorganized Friedman’s, the “Reorganized Company”). | |
| Shareholders: | As of the petition date, Friedman’s equity interests consisted of Class A Common Stock and Class B Common Stock (the “Shareholders”). | |
| Restructuring Transaction: | Friedman’s shall restructure its capital structure (the “Restructuring”) through a chapter 11 plan of reorganization (the “Plan”) filed in cases commenced by the Company under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”), the material terms and conditions of which will be set forth in this term sheet and in the restructuring support agreement to be executed by certain Shareholders and the Company (as amended, supplemented or otherwise modified, the “Restructuring Agreement”). | |
| Treatment of Claims and Interests: | ||
| Administrative, Priority Tax, And Other Priority Claims: |
On or as soon as practicable after the effective date of the Plan (the “Effective Date”), each holder of an administrative, priority tax or other priority claim shall receive cash equal to the full amount of its claim or otherwise be left unimpaired, unless otherwise agreed to by such holder. | |
| Pre-Petition Secured Loans: | ||
| Revolving Credit Loan: |
The treatment of the Revolving Credit Loan (the “Revolving Credit Loan”) made pursuant to the Second Amended and Restated Credit Agreement, dated as of September 7, 2004 (“Credit Agreement”), by and among the Company, Bank of America, N.A. (“Bank of America”), as Collateral Agent and Revolving Agent, and Jewelry Investors II, L.L.C., an affiliate of Farallon Capital Management, L.L.C. (“Farallon”), as Term Agent, shall be, at the option of the Company and with the approval of the Backstop Parties: (i) restructured on terms acceptable to the Company and the Backstop Parties; (ii) paid in full in cash in an amount acceptable to the requisite lenders thereunder, the Company and the Backstop Parties; or (iii) reinstatement. | |
| Term Loan: |
The treatment of the Term Loan (the “Term Loan”), made pursuant to the Credit Agreement shall be, at the option of the Company and with the approval of the Backstop Parties: (i) restructured on terms acceptable to the Company and the Backstop Parties; (ii) paid in full in cash in an amount acceptable to the requisite lenders thereunder, the Company and the Backstop Parties; or (iii) reinstatement. | |
| Vendor Lien Claims |
The treatment of the Vendor Lien Claims (the “Vendor Lien Claims”) established pursuant to certain trade credit program letters, entered into in September 2004 (“Trade Letters”), shall be payment in full of the allowed amount of the Vendor Lien Claims on terms and conditions to be determined by the Company and the Backstop Parties. | |
| Pre-Petition Unsecured Claims (including trade claims that are not included in the Vendor Claims): |
In exchange for their allowed unsecured claims against the Company (the “Unsecured Allowed Claims”), the holders thereof shall receive on the Effective Date, on a pro rata basis, at the option of the Company with the approval of the Backstop Parties: (i) newly issued notes of Reorganized Friedman’s (the “New Notes”) in an amount equal to the amount of the Unsecured Allowed Claims with terms and conditions of the New Notes to be determined; or (ii) cash in an amount agreed upon by the Company and the Backstop Parties. | |
| Existing Equity: |
On the Effective Date of the Plan there shall be only one class of Common Stock (“New Common Stock”). The Shareholders will retain their economic interests by and through a pro rata distribution of the New Common Stock, subject to dilution for the New Common Stock of Reorganized Friedman’s in an amount to be determined and to be issued pursuant to the Rights Offering (described below). | |
| Settlement: |
All distributions to be made pursuant to the Restructuring will be in full satisfaction of, and represent a settlement of, all disputes, claims, including but not limited to satisfaction of all intercreditor agreements and interests of and between the parties receiving such distributions, including, without limitation, any litigation claims, whether known or unknown, arising between or among such parties. Releases provided | |
2
| to officers and directors shall not include any individual contractual obligations they may owe to the Company. | ||
| Other Features of the Restructuring: | ||
| The Rights Offering: |
The Company will conduct a rights offering (“Rights Offering”) of a portion of the New Common Stock for aggregate consideration equal to $30 million (The “Rights Offering Amount”). The Rights Offering will be made available to the existing Class A Shareholders other than the Backstop Parties. Other terms and conditions of the Rights Offering, including the value of Reorganized Friedman’s, are to be determined by the Company and the Backstop Parties. | |
| Backstop: |
One or more of Liberation Investments, L.P., Liberation Investments Ltd., Liberation Investment Group LLC, and Emanuel R. Pearlman, and (collectively, the “Backstop Parties”) will provide a standby commitment pursuant to which the Backstop Parties will agree to purchase all shares of New Common Stock offered pursuant to the Rights Offering but not otherwise subscribed for by the parties to the Rights Offering. In consideration for such commitment, the Backstop Parties will receive a fee, payable in cash, equal to 2% of the Rights Offering Amount. | |
| Corporate Governance: |
The Board of Directors of Reorganized Friedman’s will consist of 5 members, to be appointed as follows:
• one member [the CEO] will be appointed by Reorganized Friedman’s
• [3] members will be appointed by the Backstop Parties
• one member will be appointed by the Equity Committee (appointed officially or ad hoc) representing the shareholders of Reorganized Friedman’s in Friedman’s chapter 11 case.
In addition, there shall be additional shareholder protections to be determined by the Backstop Parties. | |
| DIP Facility: |
To be determined. | |
| Exit Facility: |
To be determined. | |
| Employment Agreements: |
Following the Effective Date the Reorganized Friedman’s will enter into employment agreements in form and substance satisfactory to the Backstop Parties with each of the key senior management. | |
| Management Incentive Plan: |
Upon the Effective Date, a management incentive plan (the “MIP”) shall be implemented to provide designated members of senior management of the Reorganized Company (i) options to purchase up to a number of share of New Common Stock equal to [__]% of the New Common Stock issued on the Effective Date, which options shall have an exercise price based upon the actual enterprise value of the Reorganized Company on the Effective Date, as determined by the Backstop Parties, and (ii) options to purchase up to a number of shares of Common Stock equal to [__]% of the New Common Stock issued | |
3
| on the Effective Date, which options shall have an exercise price based upon an enterprise value of the Reorganized Company of $[___] million. Eligibility, vesting and grants under the MIP shall be determined by Reorganized Friedman’s Board of Directors. | ||
| Backstop Parties Approval: | In addition to the Backstop Parties approvals required above, (i) all agreements, documents, pleadings and orders related to the Restructuring and the Plan including the Plan of Reorganization and Disclosure Statement and (ii) the acceptance or rejection by the Company of material contracts shall be subject to the approval of the Backstop Parties. | |
| Restructuring Expenses: | The Company shall pay the reasonable fees and expenses of (i) the legal counsel and financial advisor to the Backstop Parties, subject only to the approval of the Bankruptcy Court, if necessary. | |
4