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
Date of Report (date of earliest event reported): May 27, 2005
TRIARC COMPANIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-2207 38-0471180
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(Commission File Number) (IRS Employer Identification No.)
280 PARK AVENUE
NEW YORK, NY 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 451-3000
NOT APPLICABLE
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(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):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| 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.
Triarc Companies, Inc. ("Triarc" or the "Company") has entered
into definitive agreements to acquire RTM Restaurant Group ("RTM"). Triarc is
the parent of Arby's Franchise Trust, the franchisor of the Arby's(R) restaurant
system, which consists of approximately 3,500 restaurants, and through its
subsidiaries, is the operator of 233 Arby's restaurants. RTM is Arby's largest
franchisee, with 775 Arby's restaurants in 21 states.
Triarc entered into the following definitive agreements, each
dated as of May 27, 2005:
o an Agreement and Plan of Merger (the "RTMRG Merger
Agreement") with Arby's Acquisition Co., a direct
wholly owned subsidiary of Triarc ("Merger Sub
Corp."), Arby's Restaurant, LLC, a direct wholly
owned subsidiary of Triarc ("Merger Sub LLC"), RTM
Restaurant Group, Inc. ("RTMRG") and Russell V.
Umphenour, Jr., Dennis E. Cooper and J. Russell Welch
(collectively, the "RTM Representatives");
o a Membership Interest Purchase Agreement (the "RTMAC
Purchase Agreement") with Arby's Restaurant Group,
Inc., an indirect wholly owned subsidiary of Triarc
("ARG"), each of the members of RTM Acquisition
Company, L.L.C. ("RTMAC") and the RTM
Representatives;
o an Asset Purchase Agreement (the "RTMMC Purchase
Agreement") with ARG, RTMMC Acquisition, LLC, a
direct wholly owned subsidiary of Triarc ("RTMMC
Acquisition"), RTM Management Company, L.L.C.
("RTMMC"), each of the members of RTMMC and the RTM
Representatives; and
o a Transaction Support Agreement (the "Transaction
Support Agreement") with certain principal
shareholders of RTMRG (the "RTMRG Principal
Shareholders"), who collectively beneficially own
approximately 87.1% of the outstanding shares of the
RTMRG common stock, and the RTM Representatives.
In addition, ARG and Arby's Restaurant Holdings, LLC, an
indirect wholly owned subsidiary of Triarc (collectively, the "Borrowers")
entered into a Commitment Letter, dated as of May 27, 2005 (the "Commitment
Letter") with Citicorp North America, Inc., Citigroup Global Markets Inc., Bank
of America, N.A., Banc of America Securities LLC and Credit Suisse
(collectively, the "Lenders") relating to a $700 million senior secured credit
facility to be made available by the Lenders to the Borrowers in connection with
the acquisition of RTM.
Set forth below are brief descriptions of the material terms
and conditions of each of these definitive agreements. The descriptions set
forth below do not purport to be complete and are qualified in their entirety by
reference to the definitive agreements, which will be included in a subsequent
filing with the Securities and Exchange Commission.
RTMRG MERGER AGREEMENT
Upon the terms and subject to the conditions set forth in the
RTMRG Merger Agreement, subsidiaries of Triarc will engage in two mergers
involving RTMRG and Triarc will indirectly contribute the surviving entity in
the two mergers to ARG, the result of which will be that RTMRG will become an
indirect wholly-owned subsidiary of Triarc (the "Mergers").
The aggregate merger consideration payable by Triarc under the
RTMRG Merger Agreement will consist of (i) $175 million in cash and (ii) at the
election of the RTM Representatives to be made at least five business days prior
to the anticipated closing date of the Mergers, either (x) 10,000,000 shares of
Triarc Class B Common Stock, Series 1, par value $0.10 per share (the "Triarc
Class B-1 Common Stock") or (y) 10,000,000 shares of Triarc Class B Common
Stock, Series 2, par value $0.10 per share (the "Triarc Class B-2 Common
Stock").
All RTMRG stock options either will be exercised or terminated
and cancelled prior to the closing of the acquisition of RTM, except for
specified rollover stock options, which will be converted into replacement stock
options to acquire shares of Triarc Class B-1 Common Stock or Triarc Class B-2
Common Stock, as applicable. The "in-the-money" value of these replacement stock
options at the time of grant will reduce the number of shares included in the
aggregate merger consideration.
The material terms of the Triarc Class B-2 Common Stock will
be as follows:
o non-voting, other than (i) as required by law and
(ii) the right to vote, as a separate class, on any
amendment to the certificate of designation relating
to the Triarc Class B-2 Common Stock;
o non-dividend paying, other than dividends that are
attributable to Triarc's quick service restaurant
business;
o upon the earlier to occur of (i) January 3, 2006,
(ii) the determination by Triarc's board of directors
that the Trigger Event (defined below) will not occur
and (iii) the Trigger Event, each share of Triarc
Class B-2 Common Stock will automatically convert
into a number of shares of Triarc Class B-1 Common
Stock as follows:
o If such automatic conversion occurs (x) on
January 3, 2006 or (y) prior to January 3,
2006 because Triarc's board of directors has
determined that the Trigger Event will not
occur, the aggregate number of shares of
Triarc Class B-2 Common Stock will convert
into the same number of shares of Triarc
Class B-1 Common Stock, subject to reduction
for the "in-the-money" value of the
replacement stock options described above;
and
o If such automatic conversion occurs upon the
occurrence of the Trigger Event, the
aggregate number of Triarc Class B-2 Common
Stock will convert into a number of shares
of Triarc Class B-1 Common Stock
representing, in the aggregate,
approximately 16.2% of the equity of Triarc
on an adjusted fully diluted basis, subject
to reduction for the "in-the-money" value of
the replacement stock options described
above; and
o prior to the automatic conversion of the Triarc Class
B-2 Common Stock, Triarc will be limited in its
ability to declare dividends or distributions on
shares of Triarc common stock or to cause any
subsidiary engaged in its quick service restaurant
business to declare dividends or distributions on its
shares of capital stock.
"Trigger Event" is defined as the creation of Triarc as an
entity that, prior to January 3, 2006, is the direct or indirect owner of its
Arby's quick service restaurant business and all assets, properties, liabilities
and operations primarily related to it and that has no other directly or
indirectly owned material operating assets or material investments, and no
direct or indirect material general and administrative expenses, other than
those used in or arising from its Arby's quick service restaurant business, and
no cash, cash equivalents or short-term investments in excess of $15 million in
the aggregate.
Of the aggregate merger consideration, $2 million in cash and
$18 million in shares will be deposited into an escrow account (the "RTM Escrow
Fund") and available to satisfy the post-closing adjustment based on the
combined RTM net liabilities and indemnification obligations of the shareholders
of RTMRG, the members of RTMAC, RTMMC and the members of RTMMC under the RTMRG
Merger Agreement, the RTMAC Purchase Agreement and the RTMMC Purchase Agreement.
If the acquisition of RTM is completed after July 31, 2005,
the parties have agreed to make adjustments based on the consolidated ARG net
liabilities, on the one hand, and the combined RTM net liabilities, on the other
hand, as of immediately prior to the completion of the acquisition of RTM. Net
liabilities generally is the sum of current liabilities plus indebtedness minus
current assets, with specified exceptions and adjustments.
Subject to the limitations (including caps and baskets) and
qualifications contained in the RTMRG Merger Agreement, Triarc agreed to
customary indemnification provisions for the benefit of the shareholders of
RTMRG as well as to indemnify such persons from and against all losses based
upon or arising from, among other things, if the RTM Representatives elect to
receive Triarc Class B-2 Common Stock as part of the aggregate merger
consideration and the Trigger Event occurs, any liability of Triarc or its
subsidiaries unrelated to the quick-service restaurant business or the costs and
expenses of maintaining Triarc as a public company, subject to specified
exceptions.
Subject to the limitations (including caps and baskets) and
qualifications contained in the RTMRG Merger Agreement, the shareholders of
RTMRG (to the extent of the RTM Escrow Fund), and after the RTM Escrow Fund has
been exhausted in full, the RTMRG Principal Shareholders (jointly and severally,
pursuant to the Transaction Support Agreement), agreed to customary
indemnification provisions for the benefit of Triarc.
Triarc, on the one hand, and RTMRG, on the other hand, have
made customary representations, warranties and covenants to each other in the
RTMRG Merger Agreement. Additionally, Triarc has agreed:
o to explore in good faith the implementation of the
Trigger Event, unless Triarc's board of directors
determines that the Trigger Event will not occur, and
if Triarc's board of directors determines that it is
in the best interests of Triarc and its stockholders
(other than holders of Triarc B-2 Common Stock) to
effect the Trigger Event and to do so prior to
January 3, 2006, to use its good faith efforts to
effect the Trigger Event prior to January 3, 2006 on
such terms as Triarc's board of directors determines,
subject to applicable fiduciary duties and other
laws, the receipt of all requisite consents and
approvals and the right of Triarc's board of
directors to make at any time a determination that
the Trigger Event will not occur; and
o to appoint to its board of directors Russell V.
Umphenour, Jr. and, if the RTM Representatives elect
to receive shares of Triarc B-2 Common Stock as part
of the aggregate merger consideration and the Trigger
Event occurs, one additional individual designated by
the RTM Representatives who is acceptable to Triarc.
The RTMRG Merger Agreement also contains certain customary
termination rights for both Triarc and RTMRG, including if the closing of the
Mergers has not occurred by November 15, 2005.
The completion of the Mergers is subject to the satisfaction
or waiver of conditions customary to transactions of this type including, among
others:
o the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended;
o the simultaneous completion of the RTMAC Purchase and
the RTMMC Purchase;
o ARG's receipt of debt financing under the Commitment
Letter as a result of funding thereunder or from one
or more alternative sources on terms no less
favorable in the aggregate to ARG and those under the
Commitment Letter;
o RTMRG's receipt of specified third party consents;
o Triarc not disposing of all or a substantial part of
the equity interests or assets of ARG or its
subsidiaries or entering into a definitive agreement
to do the same; and
o Triarc agreeing to file and cause its affiliates to
file all federal income tax returns in a manner
consistent with the expected tax treatment of the
Mergers, and not take a position contrary thereto for
federal income tax purposes, unless otherwise
required to do so by a good faith resolution of a
contest or change in applicable law.
The closing of the Mergers is expected to occur in the third
quarter of 2005.
RTMAC PURCHASE AGREEMENT
Upon the terms and subject to the conditions set forth in the
RTMAC Purchase Agreement, Triarc or its assignee(s) will purchase all of the
outstanding membership interests in RTMAC (the "RTMAC Purchase") for $10.00 in
cash. Immediately after the RTMAC Purchase, Triarc will contribute, or cause to
be contributed, all such membership interests to ARG, with RTMAC becoming a
direct wholly owned subsidiary of ARG.
The RTMAC Purchase Agreement has substantially similar terms
to the RTMRG Merger Agreement and the RTMMC Purchase Agreement, and the
completion of the RTMAC Purchase is conditioned upon the simultaneous completion
of the Mergers and the RTMMC Purchase.
RTMMC PURCHASE AGREEMENT
Upon the terms and subject to the conditions set forth in the
RTMMC Purchase Agreement, RTMMC Acquisition will acquire all of the assets of
RTMMC, except specified excluded assets, and assume all of the liabilities of
RTMMC, except specified excluded liabilities (the "RTMMC Purchase"), for $10.00
in cash. Immediately
after the RTMMC Purchase, Triarc will contribute, or cause to be contributed,
all of the membership interests of RTMMC Acquisition to ARG, with RTMMC
Acquisition becoming a direct wholly owned subsidiary of ARG.
The RTMMC Purchase Agreement has substantially similar terms
to the RTMRG Merger Agreement and the RTMAC Purchase Agreement, and the
completion of the RTMMC Purchase is conditioned upon the simultaneous completion
of the Mergers and the RTMAC Purchase.
TRANSACTION SUPPORT AGREEMENT
Pursuant to the Transaction Support Agreement, the RTMRG
Principal Shareholders, among other things, have agreed jointly and severally to
(i) pay any amounts owing from them relating to the post-closing adjustment
based on the combined RTM net liabilities and (ii) indemnify the Triarc
indemnified parties against all losses (including losses related to taxes) to
the full extent contemplated by the RTMRG Merger Agreement. In addition, each of
Russell V. Umphenour, Jr., Dennis E. Cooper and J. Russell Welch agreed to
non-competition, non-solicitation, confidentiality and non-disparagement
covenants for a period of four years beginning at the completion of the
acquisition of RTM.
COMMITMENT LETTER
The Commitment Letter provides for, among other things, a $700
million senior secured credit facility, which consists of a $600 million Senior
Term Loan B Facility and a $100 million Senior Revolving Credit Facility (with a
$30 million subfacility for letters of credit). The credit agreement is expected
to contain affirmative and negative covenants, including certain financial
covenants, and will be subject to customary closing conditions.
EMPLOYMENT AGREEMENTS
In connection with the acquisition of RTM, ARG has entered
into employment agreements with Thomas Garrett, Sharron Barton and Michael
Lippert, and Merger Sub LLC has entered into employment agreements with Michael
Abt, Jerry Ardizzone and Robert Rogers, in each case to be effective at the
completion of the acquisition of RTM. Mr. Garrett is to serve as ARG's Chief
Operating Officer. Ms. Barton is to serve as ARG's Chief Administrative Officer
and Mr. Lippert is to serve as ARG's Senior Vice President - Company Operations.
Messrs. Abt, Ardizzone and Rogers are to serve as Merger Sub LLC's Southern
Region President, Midwest Region President, and Great Lakes Region President,
respectively.
The term of each executive's employment agreements will
commence upon the completion of the acquisition of RTM for a period of three
years thereafter, unless renewed. Each executive will receive a base salary and
will be eligible to receive an annual cash bonus based upon the achievement of
performance targets. Mr. Garrett and Ms. Barton are each guaranteed to receive a
specified minimum annual cash bonus.
If the employment of any of these executives is terminated by
ARG or Merger Sub LLC, as applicable, without "cause" or by the executive due to
the occurrence of a "triggering event" (as each term is defined in the
applicable employment agreement), as applicable, then, subject to the
executive's execution of a general release, the executive will be entitled to
receive, as severance, cash payments and other benefits for a specified period
of time. Following the termination of employment, each executive will be subject
to non-competition, no-hire and non-solicitation covenants lasting for 24
months.
REGISTRATION RIGHTS AGREEMENT
Upon completion of the acquisition of RTM, Triarc and certain
current holders of RTMRG common stock (the "RTMRG Holders"), will enter into a
Registration Rights Agreement, which will provide, among other things, that
Triarc will be obligated to file, no later than (i) 30 days after the completion
of the acquisition of RTM if the RTM Representatives have elected to receive
shares of Triarc Class B-1 Common Stock as part of the aggregate merger
consideration or (ii) 60 days after the date that the Triarc Class B-2 Common
Stock automatically converts into Triarc Class B-1 Common Stock in accordance
with its terms if the RTM Representatives have elected to receive shares of
Triarc Class B-2 Common Stock as part of the aggregate merger consideration, a
registration statement to permit resales of any such shares of Triarc Class B-1
Common Stock. The Registration Rights Agreement will also provide that the RTMRG
Holders will be entitled to liquidated damages of $40,000 in the aggregate per
day for each day that Triarc has failed to file such registration statement
within the prescribed time periods.
Additionally, the Registration Rights Agreement will provide
that Triarc will be obligated the keep such registration statement effective for
a specified period following the closing of the acquisition of RTM.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Triarc has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: June 3, 2005
TRIARC COMPANIES, INC.
By: /s/ Stuart I. Rosen
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Name: Stuart I. Rosen
Title: Senior Vice President
and Secretary