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):
February 8, 2013
TELETOUCH
COMMUNICATIONS, INC.
(Exact Name of Company as Specified in its
Charter)
DELAWARE |
001-13436 |
75-2556090 |
(State or Other Jurisdiction of
Incorporation or Organization) |
(Commission File No.) |
(I.R.S. Employer Identification No.) |
5718 Airport Freeway, Fort Worth, Texas
76117
(Address of principal
executive offices and zip code)
(800) 232-3888
(Company’s telephone
number, including area code)
Not applicable
(Former name or former address, if changed
from 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.
On
February 8, 2013, Teletouch Communications, Inc., a Delaware corporation (“Teletouch” or “Company”), and
its wholly-owned subsidiary Progressive Concepts, Inc. (“PCI”, together with “Teletouch”, the “Borrower”)
entered into a certain Loan and Security Agreement (the “Loan Agreement”) with DCP Teletouch Lender, LLC (the “Lender”).
The loan is facilitated through an initial two year, $6 million asset-based revolving credit facility with an interest rate of
14% per annum (with a default interest rate of 20%), and is subject to certain other fees
payable to Lender monthly and at the maturity of the loan. The loan initially matures on January 31, 2015 and may be extended for
an additional year at the Borrower’s sole election. The Loan Agreement contemplates interest rate reductions of 1% per quarter
(to a minimum of no less than 11%) in the event the Company achieves certain minimum quarterly EBITDA targets. The minimum amount
that may be drawn under this facility is $100,000, with such additional borrowings being subject to having availability under the
loan, which is the sum of eligible assets included in the Borrowing Base (as defined in the Loan Agreement), less any reserves,
plus cash on hand, compared to the total borrowings outstanding on such borrowing date. Amounts borrowed under the Loan Agreement
are secured by a security interest on all existing and after-acquired assets of the Borrower. In addition, the Loan Agreement contemplates
an additional multiple use short term loan facility of up to $2 million per loan for special order inventory purchase transactions
(the “Term Loans”). The Term Loans facility is designed to satisfy out-of-cycle customer orders to facilitate inventory
purchases at times and prices favorable to the Borrower. The Term Loans are not a committed credit facility by the Lender and the
financial terms, including interest and fees, of any such Term Loans will be determined on a case-by-case basis and remain
entirely within the discretion of the Lender. In conjunction with the Loan Agreement, and as is customary with this style of facility,
the Borrower also executed a Promissory Note (the “Note”) in connection with and to evidence their obligation to repay
all sums advanced by the Lender pursuant to the Loan Agreement. The Note contains other terms and provisions that are customary
for instruments of this nature.
The Loan Agreement
contains events of default and remedies customary for loan transactions of this sort including, among others, those related to
a default in the payment of principal or interest, a material inaccuracy of a representation or warranty, a default with regard
to performance of certain covenants, a material adverse change (as defined in the Loan Agreement) occurs, cross default on other
debt in excess of $250,000, change of control, default under the current AT&T agreements, among others. Upon the occurrence
of a default, in some cases following a notice and cure period, the Lender may accelerate the maturity of the loan and require
the full and immediate repayment of all borrowings under the Loan Agreement. The Loan Agreement also contains affirmative covenants
(e.g. advance notice requirements relating to changes in business and operations, material adverse effects on the Borrower’s
business, among others), and negative covenants (e.g., with respect to the Borrower’s ability to place new liens on its assets,
engage in transactions outside of the ordinary course of business, incur additional indebtedness, amend its organizational documents
in any material respect, among others).
In connection with
the Loan Agreement, the Company also entered into a Subscription Agreement (the “Subscription Agreement”) and a Buyback
Right and Agreement not to Short Securities of Teletouch (the “Buyback Agreement,” and together with certain ancillary
agreements and documents, and Subscription Agreement, the “Equity Agreements”) pursuant to which the Company agreed
to issue to the Lender shares of its common stock equal to $200,000.00, based on an issue price per share computed at 90% of the
prior 60-day volume weighted average closing price preceding the February 8, 2013 closing date, calculated at 530,398 shares (the
“Teletouch Shares”). The Buyback Agreement provides for a “call” option for the Company which is the right,
but not the obligation, commencing on the effective date of the Loan Agreement and for so long as the Revolving Credit Commitments
(as defined in the Loan Agreement) have not been terminated, the Company shall have the right, but not the obligation, at its sole
discretion, to buy back all or a portion of the Teletouch Shares at the per share price of 120% of the issue price, or approximately
$0.452 per share. The Lender is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under
the Securities Act of 1933, as amended (the “Securities Act”)), and the Company sold the securities in reliance upon
an exemption from registration contained in Section 4(2) and Rule 506 under the Securities Act. The securities sold may not be
offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Teletouch has used
the initial draw-down of funds from the new loan facility to pay down a portion of its current indebtedness to Thermo Credit LLC
(“Thermo”) under the terms of the April 30, 2008 Loan and Security Agreement by and between Teletouch, PCI and Thermo,
as subsequently amended (the “Thermo Loan Agreement”); to pay the closing costs associated with the foregoing financing,
with the remainder balance to be used for general corporate and working capital purposes. In order to facilitate the payment of
the Borrower’s indebtedness to Thermo under the Thermo Loan Agreement, the parties to the Loan Agreement also entered into
several amendments, subordination and other related agreements. Specifically, Teletouch, PCI and Thermo entered a certain Sixth
Amendment (the “Thermo Amendment”) to the Thermo Loan Agreement pursuant to which Teletouch and PCI agreed to apply
$4 million from the proceeds of the financing described above to pay down, at the closing of the Loan Agreement, the current balance
on the Thermo loan of $7.148 million (including approximately $0.126 million in accrued and unpaid interest and fees since January
1, 2013), thus reducing it to the balance of $3.148 million. The foregoing payment obligation by Teletouch and PCI is evidenced
by an Amended and Restated Subordinated Promissory Note dated February 8, 2013 in the amount of $3.148 million (the “Thermo
Note”). The Thermo Amendment also contemplates the following payments to Thermo to pay off the foregoing Note balance (provided
there is no default on the loan facility with the Lender): (i) $25,000 monthly payments commencing on March 1, 2013, (ii) the principal
of the Thermo Note (as defined below) will be due and payable in 30 fully amortized payments commencing on February 1, 2014 with
the final payment due on August 1, 2016, (iii) additional potential payments in the amount of up to $1 million from the sales and/or
refinancings of Teletouch’s real estate in Texas, and (iv) certain excess proceeds from the planned sale of the Company’s
cellular subscribers to AT&T upon the expiration of the Distribution Agreement in November 2014, i.e., after all outstanding
loans against the cellular subscribers have been repaid to Lender. In addition, the parties also entered into a certain Subordination
and Intercreditor Agreement by and between Thermo and the Lender dated as of February 8, 2013 (the “Subordination Agreement”)
for the purposes of subordinating Thermo’s security interest to that of the Lender under the Loan Agreement. The Thermo Amendment
and the Subordination Agreement contain other terms and provisions that are customary for instruments of this nature.
In addition, PCI and
New Cingular Wireless PCS, LLC, (as successor to Southwestern Bell Wireless, Inc. (“AT&T”) entered into a certain
Fourth Amendment dated as of February 1, 2013 (the “AT&T Amendment”) to the Distribution Agreement dated as of
November 12, 1999 and subsequently amended (the “Distribution Agreement”). Under the terms of the AT&T Amendment,
which was required by the Lender in order to provide the loan facility, Teletouch is permitted to sell its cellular base to AT&T
prior to the November 2014 expiration of their respective arrangement and to pledge proceeds from the Distribution Agreement to
the Lender. The foregoing arrangement was evidenced by a letter agreement by and between AT&T and the Lender dated as of the
same date.
The foregoing descriptions
of the Loan Agreement, the Lender Note, the Subscription Agreement, the Buyback Agreement, the Thermo Amendment, the Thermo Note,
the Subordination and Intercreditor Agreement, and the AT&T Amendment are qualified in their entirety by reference to the full
texts of such agreements. The representations, warranties and covenants contained in such documents and agreements were made only
for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements, and may
be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged
between the parties in connection with execution of the agreements.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation
under an Off- Balance Sheet Arrangement of a Registrant. |
The information set
forth under Item 1.01 in this Form 8-K is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set
forth under Item 1.01 in this Form 8-K is incorporated herein by reference.
On February 12, 2013,
the Company issued a press release announcing the foregoing transactions. A copy of the press release is being furnished as Exhibit
99.1 hereto and is hereby incorporated in its entirety by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| 99.1 | Press Release dated February 12, 2013. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: February 12, 2013 |
By: |
/s/ Douglas E. Sloan |
|
|
|
Name: Douglas E. Sloan |
|
|
Title: Chief Financial Officer |
Teletouch Communications (CE) (USOTC:TLLEQ)
Historical Stock Chart
From Jul 2024 to Aug 2024
Teletouch Communications (CE) (USOTC:TLLEQ)
Historical Stock Chart
From Aug 2023 to Aug 2024