-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ROmo6E8ceLPIkDe/Izpn7zvw59D/AXkKbj+anVAY6B2QlW9vhT+gS7A8+IlE2LKr GnWPR3XIM5e6MtrrR+okew== 0000950144-97-000810.txt : 19970203 0000950144-97-000810.hdr.sgml : 19970203 ACCESSION NUMBER: 0000950144-97-000810 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970131 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROOKE GROUP LTD CENTRAL INDEX KEY: 0000059440 STANDARD INDUSTRIAL CLASSIFICATION: CIGARETTES [2111] IRS NUMBER: 510255124 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05759 FILM NUMBER: 97516133 BUSINESS ADDRESS: STREET 1: 100 S E SECOND ST CITY: MIAMI STATE: FL ZIP: 33131 BUSINESS PHONE: 3055798000 FORMER COMPANY: FORMER CONFORMED NAME: LIGGETT GROUP INC DATE OF NAME CHANGE: 19900815 FORMER COMPANY: FORMER CONFORMED NAME: LIGGETT & MYERS INC DATE OF NAME CHANGE: 19760602 FORMER COMPANY: FORMER CONFORMED NAME: LIGGETT & MYERS TOBACCO CO DATE OF NAME CHANGE: 19690528 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BGLS INC CENTRAL INDEX KEY: 0000927388 STANDARD INDUSTRIAL CLASSIFICATION: CIGARETTES [2111] IRS NUMBER: 133593483 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-93576 FILM NUMBER: 97516134 BUSINESS ADDRESS: STREET 1: 100 SE SECOND ST STREET 2: 32ND FLOOR CITY: MIAMI STATE: FL ZIP: 33131 BUSINESS PHONE: 3055798000 MAIL ADDRESS: STREET 1: 100 SE SECOND ST STREET 2: 32ND FLOOR CITY: MIAMI STATE: FL ZIP: 33131 8-K 1 BROOKE GROUP AND BGLS 8-K 01/31/97 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K JOINT CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): JANUARY 31, 1997 BROOKE GROUP LTD. BGLS INC. (Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter) 1-5759 33-93576 (Commission File Number) (Commission File Number) 51-0255124 13-3593483 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) DELAWARE DELAWARE (State or other jurisdiction of incorporation (State or other jurisdiction of incorporation or organization) or organization) 100 S.E. SECOND STREET 100 S.E. SECOND STREET MIAMI, FLORIDA 33131 MIAMI, FLORIDA 33131 (Address of principal executive offices including Zip Code) (Address of principal executive offices including Zip Code) 305/579-8000 305/579-8000 (Registrant's telephone number, including area code) (Registrant's telephone number, including area code) (NOT APPLICABLE) (NOT APPLICABLE) (Former name or former address, (Former name or former address, if changed since last report) if changed since last report)
2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On January 31, 1997, Brooke (Overseas) Ltd. ("BOL"), a wholly-owned subsidiary of BGLS Inc. ("BGLS"), which is wholly-owned by Brooke Group Ltd. ("Brooke"), entered into a stock purchase agreement (the "Purchase Agreement") with New Valley Corporation (the "Purchaser"), pursuant to which BOL sold 10,483 shares of the common stock of BrookeMil Ltd. ("BML") to the Purchaser, comprising 99.1% of the outstanding shares of BML (the "Shares"). The Purchaser paid to BOL for the Shares a purchase price of $55 million, consisting of $21.5 million in cash and a $33.5 million 9% promissory note of the Purchaser (the "Note"). The Note is secured by the Shares and is payable $21.5 million on June 30, 1997 and $12 million on December 31, 1997. The transaction was approved by the independent members of the Board of Directors of Brooke. Brooke retained independent legal counsel in connection with the evaluation and negotiation of the transaction. Brooke indirectly controls the Purchaser through its indirect ownership of an approximate 42% voting interest therein. Bennett S. LeBow, Chairman of the Board, President and Chief Executive Officer of Brooke and BGLS and the controlling stockholder of Brooke, serves as Chairman of the Board and Chief Executive Officer of the Purchaser. Howard M. Lorber, a consultant to Brooke and BGLS and a stockholder of Brooke, serves as President and Chief Operating Officer and is a director of the Purchaser. Richard J. Lampen, Executive Vice President of Brooke and BGLS, serves as Executive Vice President and is a director of the Purchaser. Richard S. Ressler, a greater than 5% stockholder of Brooke and a former consultant to Brooke and its subsidiaries, serves as a director of the purchaser. The foregoing summary of the acquisition is qualified in its entirety by reference to the text of the Purchase Agreement, which is incorporated by reference as Exhibit 2.1 to this report and is incorporated herein by reference, and Brooke's Press Release dated January 31, 1997, which is attached hereto as Exhibit 99.1, and is incorporated herein by reference. 3 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) Pro Forma Financial Information. In January 1997, Brooke Group Ltd. ("BGL") and BGLS Inc. ("BGLS") consummated the sale of certain of their real estate assets constituting their indirect subsidiary, BrookeMil Ltd. ("BrookeMil") in Russia. The Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 1995 and for the nine months ended September 30, 1996 present the results of operations of BGL assuming the sale of BrookeMil had been consummated as of the beginning of the periods presented. Results of operations of BGLS do not differ materially from those results presented. The Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1996 reflects the assets, liabilities and capitalization of BGL after giving effect to the elimination of the disposed assets and liabilities of BrookeMil, the receipt of the sale proceeds and the cancellation of intercompany debt. A portion of the gain on sale has been deferred to the extent of the retained interest in the property sold through ownership interest in the Purchaser and the Purchaser's put right on a portion of the property. The Balance Sheet for BGLS does not differ materially from the balance sheet presented. The pro forma information does not purport to be indicative of the results of operations or the financial position which would have actually been obtained if the disposition transactions had been consummated as of the beginning of the periods presented or at September 30, 1996. In addition, the pro forma financial information does not purport to be indicative of results of operations or financial position which may be obtained in the future. The pro forma financial information should be read in conjunction with BGL's and BGLS' historical Consolidated Financial Statements and Notes thereto contained in the 1995 Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996. 4 BROOKE GROUP LTD. AND SUBSIDIARY PRO FORMA CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
As of September 30, 1996 ------------------------------------- Pro Forma Historical Adjustments Pro Forma ------------------------------------- ASSETS: Current assets: Cash and cash equivalents................................................ $ 2,103 $ 21,500 (A) $ 23,591 (12)(C) Accounts receivable - trade.............................................. 18,526 18,526 Other receivables........................................................ 1,788 1,788 Receivables from affiliates.............................................. 22 33,500 (B) 33,522 Inventories.............................................................. 54,370 54,370 Other current assets..................................................... 4,624 (125)(C) 4,499 --------- --------- --------- Total current assets.................................................. 81,433 54,863 136,296 Property, plant and equipment, net.......................................... 68,269 (40,140)(C) 28,129 Intangible assets, net...................................................... 4,181 4,181 Investment in affiliate..................................................... 0 0 Other assets................................................................ 9,779 (3,178)(C) 6,601 --------- --------- --------- Total assets.......................................................... $ 163,662 $ 11,545 $ 175,207 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT): Current liabilities: Notes payable and current portion of long-term debt........................ $ 52,373 $(12,360)(C) $ 40,013 Accounts payable........................................................... 27,969 (1,651)(C) 26,318 Accrued promotional expenses............................................... 28,684 28,684 Accrued taxes payable...................................................... 19,900 870 20,770 Accrued interest........................................................... 10,101 10,101 Other accrued liabilities.................................................. 27,196 (4,276)(C) 22,920 --------- --------- --------- Total current liabilities................................................. 166,223 (17,417) 148,806 Notes payable, long-term debt and other obligations, less current portion... 387,880 (10,349)(C) 377,531 Noncurrent employee benefits................................................ 30,283 30,283 Other liabilities........................................................... 13,367 (3,300)(C) 32,398 22,331 (D) Commitments and contingencies............................................... Stockholders' equity (deficit): Common stock, par value $0.10 per share, authorized 40,000,000 shares, issued 24,998,043 shares, outstanding 18,497,096 shares........... 1,850 1,850 Additional paid-in capital................................................. 90,806 90,806 Deficit..................................................................... (470,359) 20,280 (E) (450,079) Other...................................................................... (24,049) (24,049) Less: 6,500,947 shares of common stock in treasury, at cost............... (32,339) (32,339) --------- --------- --------- Total stockholders' equity (deficit)..................................... (434,091) 20,280 (413,811) --------- --------- --------- Total liabilities and stockholders' equity (deficit)..................... $ 163,662 $ 11,545 $ 175,207 ========= ========= =========
- -------------------------------------- (A) To record cash received at sale of BrookeMil (B) To record promissory note received (C) To record sale of BML (D) To record deferred gain on sale (E) Represents gain realized on the sale of BrookeMil, net of tax effect 5 BROOKE GROUP LTD. AND SUBSIDIARY PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Nine Months Ended September 30, 1996 ---------------------------------------- Pro Forma Historical Adjustments Pro Forma --------------------------------------- Revenues.................................................. $ 330,364 $ (2,006)(A) $ 328,358 Cost of goods sold........................................ 168,931 168,931 ----------- -------- ----------- Gross profit.......................................... 161,433 (2,006) 159,427 Operating, selling, general and administrative expenses... 158,482 (1,527)(A) 156,955 ----------- -------- ----------- Operating income...................................... 2,951 (479) 2,472 Other income (expenses): Interest income.......................................... 203 203 Interest expense......................................... (45,488) (634)(A) (46,122) Equity in (loss) of affiliate............................ (7,152) (7,152) Sale of assets........................................... 6,745 6,745 Other, net............................................... 1,846 1,846 ----------- -------- ----------- (Loss) from continuing operations......................... (40,895) (1,113) (42,008) Provision for income taxes................................ 1,291 1,291 ----------- -------- ----------- (Loss) from continuing operations......................... (42,186) (1,113) (43,299) ----------- -------- ----------- Proportionate share of New Valley capital transactions.... 1,782 1,782 ----------- -------- ----------- Net (loss) income applicable to common shares.......... $ (40,404) $ (1,113) $ 41,517 =========== ======== =========== Per common share(B): $ (2.18) $ (0.06) $ (2.24) =========== ======== ===========
- -------------------------------- (A) To eliminate the operations of BrookeMil (B) Weighted average number of shares used in computing loss per common share was 18,497,096. 6 BROOKE GROUP LTD. AND SUBSIDIARY PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Year Ended December 31, 1995 ----------------------------------- Pro Forma Historical Adjustments Pro Forma ---------------------------------- Revenues.................................................. $ 461,459 $ 461,459 Cost of goods sold........................................ 216,187 216,187 --------- ------- --------- Gross profit.......................................... 245,272 245,272 Operating, selling, administrative and general expenses... 237,212 (4,139)(A) 233,073 --------- ------- --------- Operating income (loss)............................... 8,060 4,139 12,199 Other income (expenses): Interest income.......................................... 989 989 Interest expense......................................... (57,505) (57,505) Equity in earnings of affiliate.......................... 678 678 Other, net............................................... 2,776 (2,675)(A) 101 --------- ------- --------- (Loss) gain from continuing operations.................... (45,002) 1,464 (43,538) Provision (benefit) for income taxes...................... 342 342 --------- ------- --------- (Loss) gain from continuing operations.................... (45,344) 1,464 (43,880) --------- ------- --------- Proportionate share of New Valley capital transaction..... 16,802 16,802 --------- ------- --------- Net (loss) income applicable to common shares......... $ (28,542) 1,464 (27,078) ========= ======= ========= Per common share(B): $ (1.56) $ 0.08 $ (1.48) ========= ======= =========
- --------------------------- (A) To eliminate operations of BrookeMil (B) Weighted average number of shares used in computing loss per common share was 18,301,186. 7 (c) Exhibits. The following Exhibits are provided in accordance with the provisions of Item 601 of Regulation S-K and are filed herewith unless otherwise noted.
EXHIBIT INDEX 2.1 Stock Purchase Agreement dated as of January 31, 1997 among BrookeMil Ltd. ("BML"), Brooke (Overseas) Ltd. ("BOL"), BGLS Inc. and New Valley Corporation ("New Valley") (incorporated by reference to Exhibit 2.1 in New Valley's Current Report on Form 8-K dated January 31, 1997 (the "New Valley Form 8-K")). 10.1 Promissory Note of New Valley dated January 31, 1997 in favor of BOL (incorporated by reference to Exhibit 10.1 in the New Valley Form 8-K). 10.2 Pledge Agreement dated as of January 31, 1997 entered into by and between BOL and New Valley (incorporated by reference to Exhibit 10.2 in the New Valley Form 8-K). 10.3 Use Agreement dated as of January 31, 1997, entered into by and between BML and Liggett-Ducat Joint Stock Company (incorporated by reference to Exhibit 10.3 in the New Valley Form 8-K). 99.1 Press Release of Brooke Group Ltd. dated January 31, 1997.
8 SIGNATURE 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. BROOKE GROUP LTD. By: /s/ Joselynn D. Van Siclen ------------------------------ Joselynn D. Van Siclen Vice President and Chief Financial Officer Date: January 31, 1997 9 SIGNATURE 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. BGLS INC. By: /s/ Joselynn D. Van Siclen ------------------------------- Joselynn D. Van Siclen Vice President and Chief Financial Officer Date: January 31, 1997 10 INDEX TO EXHIBITS
Exhibit No. Exhibit - ------------------------------------------------------------------------------ 2.1 Stock Purchase Agreement dated as of January 31, 1997 among BrookeMil Ltd. ("BML"), Brooke (Overseas) Ltd. ("BOL"), BGLS Inc. and New Valley Corporation ("New Valley") (incorporated by reference to Exhibit 2.1 in New Valley's Current Report on Form 8-K dated January 31, 1997 (the "New Valley Form 8-K")). 10.1 Promissory Note of New Valley dated January 31, 1997 in favor of BOL (incorporated by reference to Exhibit 10.1 in the New Valley Form 8-K). 10.2 Pledge Agreement dated as of January 31, 1997 entered into by and between BOL and New Valley (incorporated by reference to Exhibit 10.2 in the New Valley Form 8-K). 10.3 Use Agreement dated as of January 31, 1997, entered into by and between BML and Liggett-Ducat Joint Stock Company (incorporated by reference to Exhibit 10.3 in the New Valley Form 8-K). 99.1 Press Release of Brooke Group Ltd. dated January 31, 1997.
EX-99.1 2 PRESS RELEASE 1 EXHIBIT 99.1 FOR INCLUSION IN BROOKE GROUP LTD.'S AND BGLS INC.'S JOINT CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997 2 CONTACT: GEORGE SARD/ANNA CORDASCO/PAUL CAMINITI SARD VERBINNEN & CO. 212/687-8080 BROOKE GROUP DIVESTS RUSSIAN REAL ESTATE COMPANY TO FOCUS ON TOBACCO - -------------------------------------------------------------------------------- MIAMI, FL, JANUARY 31, 1997 -- Brooke Group Ltd. (NYSE: BGL) today announced it has sold its Russian real estate development business, BrookeMil Ltd., to New Valley Corporation (OTC: NVYL) for $55 million, enabling Brooke to focus on its tobacco operations. Brooke Group received $21.5 million in cash and $33.5 million in a 9% promissory note for BrookeMil, due within one year. The transaction was approved by the independent members of the Board of Directors of Brooke Group. "The sale of Brooke's Russian real estate will allow us to devote full attention to revitalizing our tobacco business," said Bennett S. LeBow, Chairman, President and CEO of Brooke Group. "Ron Fulford is making good progress restructuring Liggett, our U.S. tobacco company, and we are working to expand our Russian tobacco business through Liggett-Ducat. Brooke shareholders will continue to share in the success of the Russian real estate development projects through their 42% ownership of New Valley, which also has other real estate in its portfolio." BrookeMil is developing a three-phase complex on 2.2 acres of land in downtown Moscow, for which it has a 98-year lease. In 1993, the first phase of the project, Ducat Place I, a 46,500 sq. ft. Class-A office building, was successfully built and leased. Tenants include Citicorp, the G-7 Group of Nations and the European Bank for Reconstruction and Development. In 1995, BrookeMil began construction of Ducat Place II, a premier 150,000 sq. ft. office building. Ducat Place II has already been pre-leased to a number of leading international companies including Motorola, Lukoil-Arco and Morgan Stanley. The third phase, Ducat Place III, is planned as a 400,000 sq. ft. mixed-use complex, with construction set to begin in 1998. Brooke Group is a holding company which owns Liggett Group Inc. and controlling interests in Liggett-Ducat and New Valley Corporation. # # # -----END PRIVACY-ENHANCED MESSAGE-----