This
Report on Form 8-K includes forward-looking statements within the meaning
of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the
Securities Exchange Act of 1934, as amended. In some cases, you can identify
forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “ expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue, ” or
the negative of such terms or other similar expressions. These forward-looking
statements include, but are not limited to, statements regarding whether
the
transaction will be completed, the expected timing of the closing, and the
expected benefits of the acquisition to General
Finance Corporation of the acquisition described herein. Readers
are cautioned that these forward-looking statements involve certain risks
and
uncertainties. These risks and uncertainties, which could cause these
forward-looking statements to not be realized, include delays in or failure
to
obtain necessary regulatory approvals for the parties to complete the
acquisition, material changes in the business and financial condition of
RWA
Holdings Pty Limited and its subsidiaries (collectively, “Royal
Wolf”),
increased competition in the markets in which Royal
Wolf
competes, adverse changes in financial markets and the markets for Royal
Wolf’s
products, and unanticipated adverse developments regarding Royal
Wolf
such as
litigation or the loss of key personnel. General
Finance Corporation
disclaims any obligation to update any information contained in any
forward-looking statement.
The
financial terms and provisions of the acquisition agreement described below
in
this Report are denominated in Australian dollars. For convenience, these
Australian dollar amounts have been converted throughout the text of this
Report
into U.S. dollars. One Australian dollar was equivalent to $0.788 U.S. dollar
based on currency exchange rates in effect on March 1, 2007. Statements in
this Report regarding equivalent U.S. dollars are based on this currency
exchange rate. The currency exchange rate in effect as of the closing of
the
Royal Wolf acquisition or at any future date may differ. Because Royal
Wolf’s
business is presently conducted entirely within Australia, assuming the
acquisition is completed, our future consolidated financial results stated
in
U.S. dollars will fluctuate in accordance with changes in currency exchange
rates.
Terminology
References
in this Report to “Royal Wolf” mean RWA holdings Pty Limited, or “RWA,” and its
subsidiaries, Royal Wolf Trading Australia Pty Limited and Hi-Tech Pty
Limited.
References
in this Report to “GFN Australasia” mean GFN Australasia Finance Pty Limited,
our indirect wholly owned Australian subsidiary. References to “we,” “us,”
“our,” and “ours” mean General Finance Corporation and its
subsidiaries.
The
shareholders of RWA include Bison Capital Australia LP, a Delaware limited
partnership, which we refer to in this Report as “Bison-GE.” Bison-GE is
affiliated with Bison Capital Management, LLC, a private equity firm, which
we
refer to in this Report as “Bison Capital” and GE Pension Trust, which we refer
to as “GE”. The other current shareholders of RWA are all of the directors or
“founders” and some of the executive officers of RWA, whom we refer to in this
Report as the “management shareholders.”
References
in this Report to “Equity Partners” means Equity Partners Two Pty Limited, an
Australian private equity firm.
Item 1.01
Entry into a Material Definitive Agreement
Amended
Royal Wolf Acquisition Agreement
General
As
we
announced previously, on September 12, 2006 we entered into an acquisition
agreement with the management shareholders and Equity Partners under which
we
agreed to purchase all of the shares of capital stock of RWA. The terms of
our
original acquisition agreement to purchase the RWA shares were determined
by
arm’s-length negotiations between us and the management shareholders and Equity
Partners.
On
March
29, 2007, we entered into an amended acquisition agreement with the management
shareholders, Equity Partners and a new party, Bison-GE. Pursuant to the
amended
acquisition agreement, on March 29, 2007 Bison-GE acquired approximately
80% of
the shares of RWA, consisting of all of the RWA shares owned by Equity Partners
and approximately 50% of the management shareholders’ RWA shares, for purchase
consideration equivalent to the consideration that we negotiated with Equity
Partners and the management shareholders as set forth in the original
acquisition agreement. The terms of Bison-GE’s participation and the other terms
of the amended acquisition agreement and related agreements also were determined
by arm’s-length negotiations among the parties. References in this Report to the
acquisition agreement mean the amended acquisition agreement, unless the
context
indicates otherwise.
Under
the
acquisition agreement, we have agreed to purchase from Bison-GE and the
management shareholders, and they have agreed to sell to us, all of their
RWA
shares at a subsequent closing to be held as soon as practicable, assuming
the
acquisition is approved by our stockholders. The closing under the
acquisition agreement remains subject to approval of our
stockholders.
Consideration
and Funding
At
the
closing under the acquisition agreement, we will acquire the RWA shares through
GFN Australasia. The purchase price of the RWA shares will be $58.4 million,
plus $876,500 per month from March 29, 2007 until the closing. The purchase
price includes deposits of $1,005,000 previously paid by us in connection
with
the acquisition. If the acquisition is not completed for any reason, we will
forfeit the deposits. We will pay the purchase price of the RWA shares, less
the
deposits, by a combination of cash and issuance to Bison-GE of shares of
capital
stock of GFN Australasia constituting 13.8% of the outstanding capital stock
of
GFN Australasia immediately following the acquisition. As a result, we will
own
indirectly 86.2% of Royal Wolf, rather than 100% as contemplated under the
original acquisition agreement, and Bison-GE will own indirectly the remaining
13.8%.
Assuming
the closing occurs on May 31, 2007, the aggregate acquisition consideration
will
be approximately $101.2 million, including a total of $2.4 million in cash
payable by us in two equal installments on the first and second anniversaries
of
the closing in exchange for a non-compete covenant. The aggregate consideration
for Royal Wolf also includes the indebtedness under Royal Wolf’s existing credit
facilities with New Zealand Banking Group. There was $37.9 million of
indebtedness outstanding under these facilities as of February 28, 2007.
The
actual amount outstanding as of the closing will be different, but will in
no
event exceed $39.4 million of principal.
We
will
finance a portion of the cash payable by us at the closing by GFN Australasia’s
sale and issuance to Bison Capital or its affiliates of $15.76 million principal
amount of senior subordinated promissory notes.
Shareholders
Agreement
As
noted
above, we will pay a portion of the purchase price of the RWA shares by issuing
to Bison-GE 13.8% of the capital stock of GFN Australasia. At the closing
under
the acquisition agreement, we will enter into a shareholders agreement with
Bison-GE setting forth our rights and obligations with respect to our respective
shares of GFN Australasia. Under the shareholders agreement, Bison-GE will
have
the right to require us to purchase all, but not less than all, of its GFN
Australasia shares at any time after the second anniversary of the closing
at a
cash price specified in the shareholders agreement. We will have a corresponding
right to require Bison-GE to sell to us its GFN Australasia shares at any
time
after the third anniversary of the closing at a price specified in the
shareholders agreement, provided that Bison-GE has not previously exercised
its
right to require us to purchase its GFN Australasia shares.
We
and
Bison-GE also will agree in the shareholders agreement to various restrictions
relating to GFN Australasia and our respective GFN Australasia shares, including
a restriction against selling or otherwise disposing of our respective GFN
Australasia shares unless we sell or dispose of all of our shares and obtain
the
other’s approval.
Termination
and Backup Purchase Agreement
The
acquisition agreement can be terminated by us or Bison-GE if the acquisition
is
not approved by our stockholders at the special meeting of our stockholders
that
we will call for this purpose, or otherwise by September 1, 2007.
As
an
inducement to Bison-GE and the management shareholders to enter into the
acquisition agreement, Ronald F. Valenta, our Chief Executive Officer, has
entered into a backup purchase agreement with Bison-GE and the management
shareholders under which he agrees that, if the acquisition agreement is
terminated for any reason, he will purchase from Bison-GE and the management
shareholders all of the RWA shares at a purchase price equivalent to the
purchase price payable by us under the acquisition agreement. The terms of
the
backup purchase agreement were determined by arm’s-length negotiations among Mr.
Valenta, Bison-GE and the management shareholders. Mr. Valenta will not be
entitled to a fee or other compensation for agreeing to the backup purchase
agreement.
Line
of Credit
On
March
29, 2007, we entered into an amendment to our limited recourse revolving
line of
credit from Mr. Valenta to increase the maximum amount of our borrowings
under
the line from $2,000,000 to $3,000,000.
Participants
in the Solicitation
Our
directors and officers may be deemed participants in the solicitation of
proxies
from stockholders in connection with the Royal Wolf acquisition. Information
about our directors and officers and their ownership of our common stock
may be
obtained by reading the proxy statement regarding the proposed acquisition
when
it becomes available.
For
Additional Information
This
Report is not a substitute for the proxy statement that we have filed on
March
30 or will file thereafter with the Securities and Exchange Commission (“SEC”)
in connection with the proposed Royal Wolf acquisition. Investors
are urged to read the proxy statement when it becomes available, which will
contain important information, including risk factors relating to Royal Wolf’s
business and to the acquisition. The proxy statement, when filed, and other
documents we filed with the SEC, will be available free of charge at the
SEC’s
website, www.sec.gov.
Item 8.01
Other Events
Special
Meeting of Stockholders
Our
board
of directors has called a special meeting of stockholders to consider and
vote
on the Royal Wolf acquisition for May 29, 2007; the record date for such
meeting will be April 20, 2007.
Press
Release
On
March
30, 2007, we issued a press release announcing the amended acquisition agreement
and the new record date and meeting date for the May 29, 2007 special meeting
of
stockholders. A copy of our press release is attached as Exhibit 99.1 to
this
Report and incorporated herein by reference.
Item 9.01
Financial Statement and Exhibits
The
following exhibit is contained in this Report:
99.1
General Financial Press Release dated March 30, 2007.