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): April 15, 2003
SVI Solutions, Inc.
--------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
--------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-23049 33-0896617
----------------------------- ----------------------------
(Commission File Number) (IRS Employer Identification No.)
5607 Palmer Way, Carlsbad, California 92008
----------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(877) 784-7978
--------------------------------------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
ITEM 5. OTHER EVENTS.
SVI Solutions, Inc. ("SVI") entered into a Securities Purchase
Agreement dated March 31, 2003 with Midsummer Investment, Ltd., Omicron Master
Trust, and Islandia, L.P. (collectively, the "Investors") for the sale by SVI to
the Investors of 9% debentures, convertible into shares of SVI common stock, for
an aggregate amount of up to $5,500,000, to be sold in two separate closings.
The debentures are accompanied by a number of warrants to purchase shares of SVI
common stock equal to 40% of (a) the dollar amount of debentures purchased by
the Investors, (b) divided by the daily volume weighted average price of SVI's
common stock on the American Stock Exchange for the ten consecutive days
immediately prior to the closing date the debentures were sold (the "Closing
Price"). At the first closing, the Closing Price was $0.8901. The Closing Price
for the second closing will be determined at that time. The terms of this
transaction are summarized below, but this summary is qualified entirely by the
Securities Purchase Agreement (and its exhibits) and related agreements attached
as exhibits to this report.
The first closing for the sale of debentures aggregating $3,500,000
occurred on March 31, 2003. If SVI elects, additional debentures aggregating up
to $2,000,000 can be sold to the Investors in a second closing if within one
year after the date of first sale of debentures there occurs a period of 15
consecutive trading days during which the daily volume weighted average closing
price of the SVI common stock is maintained at a price at or above $1.75 per
share, subject to certain conditions. The debentures bear an interest rate of 9%
per annum, and they provide for interest only payments on a quarterly basis,
payable, at SVI's option, in cash or shares of SVI common stock. The debentures
sold in the first closing for $3,500,000 mature 26 months after that closing,
and the additional debentures that may be sold for up to $2,000,000 in the
second closing mature 30 months after the first closing date. The debentures are
convertible into shares of SVI common stock at a conversion price equal to 115%
of the daily volume weighed average price of the SVI common stock on the
American Stock Exchange on the date the debentures were sold. The debentures
sold at the first closing have a conversion price of $1.0236. If certain
conditions are met, the Company has the option to redeem the debentures at 110%
of their face value, plus accrued interest. The Company must redeem the
debentures at the initial monthly amount of $218,750, commencing on February 1,
2004. If the second closing occurs, this redemption amount will be increased to
$300,000, commencing on the later of February 1, 2004 or the fifth month
following the second closing. Furthermore, if the daily volume weighed average
price of the SVI common stock on the American Stock Exchange exceeds the Closing
Price (which was $0.8901 at the first closing) by more than 200% for 15
consecutive trading days, SVI will have the option to convert the debentures
into SVI common stock at the conversion price then in effect.
At the first closing, Midsummer Investment was issued 629,143 warrants,
Omicron Master Trust was issued 674,082 warrants, and Islandia, L.P. was issued
269,633 warrants. These warrants, as well as the warrants to be issued in the
second closing, are for a 5-year term, with an exercise price equal to 115% of
the daily volume weighed average price of the SVI common stock on the American
Stock Exchange on the date the accompanying debentures were sold. The warrants
issued in the first closing have an exercise price of $1.0236.
The Investors were granted the right of first refusal to participate in
certain future offerings by SVI of its common stock or equivalent securities so
long as any Investor owns at least 5% of the debentures purchased on the first
closing. The Investors were also given registration rights under a Registration
Rights Agreement requiring SVI to file a registration statement respecting the
common stock issuable upon the conversion of the debentures and the warrants
2
within 30 days after the first closing, and to use best efforts to have the
registration statement declared effective at the earliest date. If the
registration statement is not filed within these timeframes or declared
effective within 90 days following the closing date of the debentures sold in
the first phase, or within 120 days in the event of a review by the Securities
and Exchange Commission, SVI shall be obligated to pay liquidated damages to the
Investors equal to 2% of the sum of the amount of debentures subscribed to by
the Investors and the value of the warrants for each month until the
registration statement becomes effective.
From the proceeds of the sale of debentures, $2,800,000 were paid
directly to SVI's primary lender, Union Bank of California, N.A.("UBOC"), under
that certain Discounted Loan Payoff Agreement dated March 31, 2003 by and among
UBOC, SVI, SVI Retail, Inc., Sabica Ventures, Inc. and SVI Training Products,
Inc. That payment, combined with SVI's issuance to UBOC of 1,000,000 shares of
SVI common stock and a $500,000 one-year unsecured non-interest bearing
convertible note payable in either cash or stock, at SVI's option, was accepted
by UBOC as full satisfaction of SVI's $7.1 million debt to it. UBOC also
cancelled options to purchase 1.5 million shares of SVI common stock of which
565,500 had vested as of the first closing, and it returned all collateral held
by it, including 10,700,000 shares of SVI common stock pledged as security. This
summary of the transaction with UBOC is qualified entirely by the Discounted
Loan Payoff Agreement attached as an exhibit to this report.
Subsequent to the first closing of the sale of debentures, SVI entered
into a similar Securities Purchase Agreement with MBSJ Investors LLC ("MBSJ")
for the sale by SVI to MBSJ of 9% debentures, convertible into shares of SVI
common stock at a conversion price of $1.0236, for $400,000. These debentures
were accompanied by 5-year warrants to purchase 156,311 shares of SVI common
stock. MBSJ was also granted registration rights under a Registration Rights
Agreement similar to those granted to Midsummer Investment, Ltd., Omicron Master
Trust, and Islandia, L.P. This summary of the transaction with MBSJ is qualified
entirely by the Securities Purchase Agreement (and its exhibits) and related
agreements attached as exhibits to this report.
3
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Securities Purchase Agreement dated as of March 31, 2003 by
and among SVI, Midsummer Investment, Ltd., Omicron Master
Trust and Islandia, L.P*
2.2 Securities Purchase Agreement dated as of April 1, 2003
between SVI and MBSJ Investors LLC*
4.1 Registration Rights Agreement dated as of March 31, 2003 by
and among SVI, Midsummer Investment, Ltd., Omicron Master
Trust and Islandia, L.P
4.2 Registration Rights Agreement dated as of April 1, 2003
between SVI and MBSJ Investors LLC
10.3 Discounted Loan Payoff Agreement dated March 31, 2003 by and
among Union Bank of California, N.A., SVI, SVI Retail, Inc.,
Sabica Ventures, Inc. and SVI Training Products, Inc.
99.1 Press Release dated April 2, 2003
*Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of
Regulation S-K, but a copy will be furnished to the Securities and Exchange
Commission upon request.
4
SIGNATURES
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 hereto duly authorized.
SVI Solutions, Inc.
Date: April 15, 2003 By: /S/ Barry Schechter
---------------------------
Name: Barry Schechter
Title: Chairman of the Board
5