Registration Statement File No. 333-134698
Filed pursuant to Rule 424(b)(3)
Prospectus Supplement No. 1, dated August 31, 2006
To Prospectus, dated August 15, 2006 (the "Prospectus")
PRG-SCHULTZ INTERNATIONAL, INC.
$24,858,433 IN PRINCIPAL AMOUNT OF 11.0% SENIOR NOTES DUE 2011
$28,776,480 IN PRINCIPAL AMOUNT OF 10.0% SENIOR CONVERTIBLE NOTES DUE 2011
57,406 SHARES ($6,888,720 LIQUIDATION PREFERENCE, WHICH MAY
INCREASE TO UP TO $10,697,972 TO SATISFY DIVIDENDS OTHERWISE PAYABLE IN
CASH) OF 9.0% SENIOR SERIES A
CONVERTIBLE PARTICIPATING PREFERRED STOCK, AND
3,561 SHARES OF COMMON STOCK, NO PAR VALUE PER SHARE
This prospectus supplement relates to the potential offer and sale from
time to time of the above referenced securities by the securityholders
identified on page 84 of the Prospectus or in any accompanying post-effective
amendment or supplement to this prospectus. This prospectus supplement may also
be used by the selling securityholders to offer:
o UP TO $18,097,373.66 IN PRINCIPAL AMOUNT OF ADDITIONAL 10.0% SENIOR
CONVERTIBLE NOTES THAT MAY BE ISSUED IN PAYMENT OF INTEREST ON OUTSTANDING
10.0% SENIOR NOTES;
o UP TO 10,977,733 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE
10.0% NOTES AND/OR 9.0% SENIOR SERIES A PREFERRED STOCK.
This Supplement No. 1 serves to update the "Selling Securityholder"
information beginning on page 84 of the Prospectus to reflect a distribution of
securities by one of the named selling securityholders, Stinson Capital Partners
S, L.P. ("Stinson S"), to SAI Hedge Fund Holdings LLC ("SAI"), the sole limited
partner in Stinson S, and Blum Capital Partners, L.P. ("Blum Capital"), which is
the general partner of Stinson S and a selling securityholder already named in
the Prospectus. The securities were distributed in a pro-rata distribution to
the limited partner and general partner of Stinson S for no consideration and no
sale was made. All of the securities were included in the registration statement
which contained the Prospectus. As a result of the distribution, Stinson S is no
longer offering securities under the prospectus, and the amounts of securities
held and offered for sale by Blum Capital have changed. The changes for Blum
Capital are reflected in the supplemental Selling Securityholder Table on the
second page of this prospectus supplement.
THIS SUPPLEMENT IS PART OF THE PROSPECTUS DATED AUGUST 15, 2006, AND MUST
ACCOMPANY THAT PROSPECTUS TO SATISFY PROSPECTUS DELIVERY REQUIREMENTS UNDER THE
SECURITIES ACT OF 1933.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. THEY HAVE NOT MADE, AND WILL NOT MAKE, ANY
DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Supplemental Selling Securityholder Table
PERCENTAGE PERCENTAGE
PRINCIPAL OF 11% OF SHARES OF PERCENTAGE
AMOUNT OF SENIOR PRINCIPAL 10% SENIOR SERIES A OF SERIES A
11% SENIOR NOTES AMOUNT OF CONVERTIBLE PREFERRED PREFERRED
NOTES OUT- 10% SENIOR PRINCIPAL NOTES STOCK SHARES
BENE- STANDING CONVERTIBLE AMOUNT OF OUTSTANDING BENE- OUTSTANDING
FICIALLY AFTER NOTES 10% SENIOR AFTER FICIALLY AFTER
OWNED AND COMPLETION BENE- CONVERTIBLE COMPLETION OWNED AND COMPLETION
OFFERED OF OFFERING FICIALLY NOTES OF OFFERING OFFERED OF OFFERING
NAME HEREBY (1) OWNED OFFERED HEREBY (1) HEREBY (1)
-------------------- ----------- ----------- ----------- -------------- ----------- ----------- -----------
Blum Capital
Partners, L. P.(2) 14,929,734 0% 17,282,880 28,151,990.37 0% 36,006 0%
Stinson Capital
Partners S, L.P. 0 0% 0 0 0% 0 0%
PERCENTAGE OF COMMON STOCK
SHARES OF COMMON STOCK OUTSTANDING AFTER
BENEFICIALLY OWNED PRIOR SHARES OF COMMON STOCK COMPLETION OF THE OFFERING
NAME TO THE OFFERING (2) OFFERED HEREBY (2) (1)
------------------------------- ------------------------ ---------------------- ---------------------------
Blum Strategic Partners II, 2,449,962 6,693,511 30.8%
L.P.(3)
Blum Strategic Partners II 2,449,962 6,693,511 30.8%
GmbH & Co. KG(3)
Blum Capital Partners, L. P. 2,449,962 6,693,511 30.8%
Stinson Capital Partners, 2,449,962 6,693,511 30.8%
L.P.(3)
Stinson Capital Partners 2,449,962 6,693,511 30.8%
(QP), L.P.(3)
Stinson Capital Partners II, 2,449,962 6,693,511 30.8%
L.P.(3)
Stinson Capital Partners S, 0 0 0%
L.P.(3)
Footnotes (2) and (3) to the table at page 84 of the Prospectus are revised to
read as follows:
(2) Shares of Common Stock Beneficially Owned Prior to the Offering does not
include, and Shares of Common Stock Offered Hereby does include, shares of
common stock the selling security holders will have the right to acquire,
upon conversion of convertible notes acquired on March 17, 2006 and that
may be issued in payment of interest thereon, as follows: Blum Strategic
Partners II, L.P., 1,767,863 shares, Blum Strategic Partners II GmbH & Co.
KG, 36,447 shares, Blum Capital Partners, L. P., 2,064 shares, Stinson
Capital Partners, L.P., 883,751 shares, Stinson Capital Partners (QP),
L.P., 786,318 shares, Stinson Capital Partners II, L.P., 721,724 shares,
Parkcentral Global Hub Limited, 2,411,165 shares, and Petrus Securities,
L.P., 469,122 shares. Shares of Common Stock Beneficially Owned Prior to
the Offering does not include, and Shares of Common Stock Offered Hereby
does include, shares of common stock the selling security holders will have
the right to acquire upon conversion of Series A preferred stock acquired
on March 17, 2006 in connection with securities that may be deemed to be
issued upon increase in the liquidation preference of the Series A
preferred stock in payment of dividends thereon: Blum Strategic Partners
II, L.P., 343,360 shares, Blum Strategic Partners II GmbH & Co. KG, 7,079
shares, Blum Capital Partners, L. P., 402 shares, Stinson Capital Partners,
L.P., 171,645 shares, Stinson Capital Partners (QP), L.P., 152,721 shares,
Stinson Capital Partners II, L.P., 140,176 shares, Parkcentral Global Hub
Limited, 408,814 shares, and Petrus Securities, L.P., 91,108 shares. Common
Stock beneficially owned prior to this offering includes the following
shares of outstanding Common Stock: Blum Strategic Partners II, L.P.,
827,640 shares, Blum Strategic Partners II GmbH & Co. KG, 17,065 shares,
Blum Capital Partners, L. P., 53 shares, Stinson Capital Partners, L.P.,
19,529 shares, Stinson Capital Partners (QP), L.P., 17,376 shares, Stinson
Capital Partners II, L.P., 17,870 shares, Blum Strategic Partners, L. P.,
11,770 shares, Stinson Capital Fund (Cayman), Ltd., 6,170 shares, BK
Capital Partners IV, L.P., 8,300 shares, and Parkcentral Global Hub
Limited, 66,936 shares. Common Stock beneficially owned prior to this
offering includes shares of common stock the selling security holders have
the right to acquire upon conversion of Series A convertible preferred
stock acquired on March 17, 2006, as follows: Blum Strategic Partners II,
L.P., 620,948, shares, Blum Strategic Partners II GmbH & Co. KG, 12,802
shares, Blum Capital Partners, L. P., 726 shares, Stinson Capital Partners,
L.P., 310,411 shares, Stinson Capital Partners (QP), L.P., 276,189 shares,
Stinson Capital Partners II, L.P., 253,500 shares, Parkcentral Global Hub
Limited, 739,375 shares, and Petrus Securities, L.P., 164,775 shares. All
of these shares of common stock are offered for sale pursuant to this
prospectus.
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(3) Blum Capital Partners, L.P. ("BLUM L.P.") is a California limited
partnership whose principal business is acting as general partner for
investment partnerships and providing investment advisory services. BLUM
L.P. is an investment advisor registered with the Securities and Exchange
Commission. The general partner of Stinson Capital Partners, L.P., Stinson
Capital Partners II, L.P., Stinson Capital Partners (QP), L.P. and Stinson
Capital Partners S, L.P. is BLUM L. P. As general partner, BLUM L.P. has
voting and investment discretion with respect to the securities owned by
each of these entities. Therefore the securities may be deemed to be owned
indirectly by the following parties: (a) BLUM L.P., and (b) Richard C. Blum
& Associates, Inc., the sole general partner of BLUM L.P. Richard C. Blum &
Associates, Inc. and BLUM L.P. disclaim beneficial ownership of these
securities, except to the extent of any pecuniary interest therein. The
general partner of Blum Strategic Partners II, L.P. and the managing
limited partner of Blum Strategic Partners II GmbH & Co. KG is Blum
Strategic GP II, L.L.C. As general partner and managing limited partner,
Blum Strategic GP II, L.L.C. has voting and investment discretion with
respect to the securities owned by each of these entities. Therefore the
securities may be deemed to be owned indirectly by Blum Strategic GP II, L.
L.C. Blum Strategic GP II, L.L.C. disclaims beneficial ownership of these
securities, except to the extent of any pecuniary interest therein. BLUM
L.P., Richard C. Blum & Associates, Inc. and Blum Strategic GP II, L.L.C.
share voting and dispositive power over the securities reported. In
addition to the shares of common stock referenced in footnotes (1) and (2)
above, the securities reported include the following: Blum Strategic
Partners II, L.P., $6,094,050 principal amount of senior notes, $7,054,560
principal amount of senior convertible notes, and 14,697 shares of series A
preferred stock, Blum Strategic Partners II GmbH & Co. KG, $125,638
principal amount of senior notes, $145,440 principal amount of senior
convertible notes, and 303 shares of series A preferred stock, Blum Capital
Partners, L. P., $7,114 principal amount of senior notes, $8,237 principal
amount of senior convertible notes, and 17 shares of series A preferred
stock, Stinson Capital Partners, L.P., $3,046,402 principal amount of
senior notes, $3,526,560 principal amount of senior convertible notes, and
7,347 shares of series A preferred stock, Stinson Capital Partners (QP),
L.P., $2,710,539 principal amount of senior notes, $3,137,760 principal
amount of senior convertible notes, and 6,537 shares of series A preferred
stock, and Stinson Capital Partners II, L.P., $2,487,874 principal amount
of senior notes, $2,880,000 principal amount of senior convertible notes,
and 6,000 shares of series A preferred stock. The principal office for each
of Blum Strategic Partners II, L.P., Blum Strategic Partners II GmbH & Co.
KG, Blum Capital Partners, L. P., Stinson Capital Partners, L.P., Stinson
Capital Partners (QP), L.P., Stinson Capital Partners II, L.P., and Stinson
Capital Partners S, L.P. (the "Blum Sellers") is 909 Montgomery Street,
Suite 400, San Francisco, California 94133. Blum Strategic Partners, L. P.,
Stinson Capital Fund (Cayman), Ltd., and BK Capital Partners IV, L.P., are
affiliates of the Blum Sellers.
The table above should be read in conjunction with the Selling Securityholder
table (including the footnotes thereto) and related information at page 84 of
the Prospectus.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock and series A
convertible preferred stock is American Stock Transfer & Trust Company.
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