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: April 5, 2002
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Date of the Earliest Event Reported: March 22, 2002
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RIGHT MANAGEMENT CONSULTANTS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania
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(State or other jurisdiction of incorporation)
0-15539 23-2153729
(Commission (IRS Employer Identification
file number) Number)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 988-1588
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 22, 2002, we concluded our acquisition of all of the shares
("Shares") of Atlas Group Holdings Limited ("Atlas"), the parent company of
Coutts Consulting Group Limited ("Coutts"). Coutts is a London based career
transition and organizational consulting firm with operations in Europe, Japan
and Canada. The purchaser of the Shares was our wholly owned U.K. subsidiary
Right Associates Limited ("RAL"). The acquisition was made pursuant to a Share
Purchase Agreement entered into on February 28, 2002.
The consideration paid for the Shares was (pound)41,556,876
(approximately $59,010,764). Of this amount (pound)37,743,680 (approximately
$53,596,026) was paid in cash and an aggregate of (pound)3,813,196
(approximately $5,414,738) by the issuance of Loan Notes by RAL to four
individual sellers of the Shares. The Loan Notes are payable in seven years and
bear interest at the rate of 4% per annum.
In connection with the acquisition the Company also provided funds to
repay all external financial debt of Atlas, which debt totaled (pound)31,421,113
(approximately $44,617,980).
Coutts' 2001 revenue was approximately (pound)63,000,000 (approximately
$92,000,000). The purchase price was based on a multiple of Atlas' 2001 earnings
before interest, taxes, depreciation and amortization.
The sellers of the Shares were seven institutions and five individuals.
3i Group plc and certain of its affiliates owned approximately 81% of the
Shares, and held approximately 74% of the debt. No relationship existed between
any seller and the Company prior to the acquisition. The five individual sellers
are continuing employment by the Company, one of whom, Andrew McRae, will be
responsible for the combined European businesses of the Company and Coutts, and
another of whom, Stephen Johnson, has been nominated for election to the Board
of Directors of the Company at the Company's Annual Meeting of Shareholders to
be held on May 2, 2002.
Also on March 22, 2002, in connection with the Company's acquisition of
the Shares, the Company entered into a Credit Agreement with a syndicate of
banks including First Union National Bank as Administrative Agent (the "New
Credit Agreement"). The New Credit Agreement provides for a maximum of
$180,000,000 of total borrowings, consisting of a revolving loan commitment of
$90,000,000 (the "Revolving Loan"), and a term loan of $90,000,000 (the "Term
Loan"). The Revolving Loan and Term Loan are together referred to herein as the
"Loans". The Loans require the Company to meet certain financial and
non-financial covenants as defined in the New Credit Agreement.
Initial proceeds of the Loans of $130,000,000 together with Company
cash were used to finance the acquisition and repay the Company's outstanding
indebtedness under an existing credit agreement which has been terminated.
Thereafter, the Company may borrow, repay and re-borrow funds during the
five-year term of the Revolving Loan, subject to the financial covenants of the
New Credit Agreement. As of March 25, 2002, approximately $37,000,000 remained
available under the Revolving Loan. Future borrowings under the Revolving Loan
will be used to finance working capital and other general corporate purposes,
including permitted acquisitions. The Term Loan provides for repayment over its
five-year term, and provides for mandatory and voluntary prepayments during its
term.
The Loans are secured by a pledge of substantially all of the tangible
and intangible assets of the Company, including the pledge of shares of certain
principal subsidiaries. Under the New Credit Agreement acquisitions in the
future may be subject to certain dollar amount limits. The limits range from an
annual limit of $15,000,000 to no limit based on the Leverage Ratio as defined
and as set forth in the New Credit Agreement.
Interest on the Loans is variable and will be determined either by
London interbank offered rates (LIBOR) plus a margin ranging from 1.50% to 2.25%
based on the relationship of funded debt to the Company's EBITDA, as defined in
the New Credit Agreement, or the interest on the Loans will be determined by the
greater of prime or the Federal Funds Effective Rate plus one half of 1% plus up
to a margin of 0.75% based on the relationship of funded debt to the Company's
EBITDA, as defined in the New Credit Agreement. The initial rate on Loans as of
March 22, 2002 was 4.15%.
The foregoing are brief descriptions of the Share Purchase Agreement
and New Credit Agreement, copies of which have been filed as exhibits as noted
below in Item 7. These descriptions are qualified by the terms of the Share
Purchase Agreement and Credit Agreement which are incorporated herein in their
entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired:
It is impractical to provide the required financial statements
for Atlas Group Holdings Limited at the date of this report. The required
financial statements will be provided as soon as practicable but not later than
sixty days after the date of this Form 8-K.
(b) Pro forma financial information:
It is impractical to provide the required pro forma financial
statements for the Company at the date of this report. The required pro forma
financial statements will be provided as soon as practicable but not later than
sixty days after the date of this Form 8-K.
(c) Exhibits:
Exhibit No. Description
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2.1 Purchase Agreement between and among Right Management
Consultants, Inc. and its subsidiary Right
Associates, Limited and Atlas Group Holdings Limited,
dated February 28, 2002. (Incorporated by reference
to Exhibit 10.25 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2001, filed
March 28, 2002).
2.2 Credit Agreement between Right Management
Consultants, Inc. and its United States wholly owned
subsidiaries and UBS Warburg LLC, Fleet National
Bank, Suntrust Bank, Bank of America N.A., and First
Union National Bank, dated March 22, 2002.
(Incorporated by reference to Exhibit 10.26 to the
Company's Annual Report on Form 10-K for the year
ended December 31, 2001, filed March 28, 2002).
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 hereunto duly authorized.
RIGHT MANAGEMENT CONSULTANTS, INC.
(Registrant)
Date: April 5, 2002 By: /S/ CHARLES J. MALLON
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Charles J. Mallon
Executive Vice President and
Chief Financial Officer