form8k.htm
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
Earliest Report Event: February 16, 2010
RICK'S
CABARET INTERNATIONAL, INC.
(Exact
Name of Registrant As Specified in Its Charter)
|
Texas
|
001-13992
|
76-0037324
|
|
(State
Or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
10959
Cutten Road
Houston,
Texas 77066
(Address
Of Principal Executive Offices, Including Zip Code)
(281)
397-6730
(Registrant's
Telephone Number, Including Area Code)
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:
x Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
On
February 16, 2010, Rick's Cabaret International, Inc. (the "Company"), VCG
Holding Corp. (“VCG"), Troy Lowrie, VCG's Chairman and Chief Executive Officer,
and Lowrie Management, LLLP (“Lowrie Management” and, together with Mr. Lowrie,
“Lowrie”), entered into a non-binding (except as to certain provisions,
including exclusivity and confidentiality) letter of intent (the "Letter of
Intent"). Pursuant to the Letter of Intent, the Company has agreed to
acquire all of the outstanding shares of common stock of VCG and VCG will merge
with and into the Company or a wholly-owned subsidiary of the Company (the
"Merger"). In the event the Merger is consummated, VCG will become a
subsidiary of the Company and VCG's shareholders will become shareholders of the
Company. The parties intend that the Merger will be structured to
qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as
amended.
Pursuant
to the Letter of Intent, VCG's shareholders will receive shares of common stock
of the Company in exchange for their shares of VCG's common stock based on an
exchange ratio that values each share of VCG's common stock between $2.20 and
$3.80 per share. The applicable exchange ratio will be determined
based on the weighted average closing price of the Company’s common stock on the
Nasdaq Global Market for the 20 consecutive trading days ending on the second
trading day prior to the closing of the Merger. In the event the
price per share of the Company's common stock as determined by this formula is
below $8.00, the Company may terminate the Merger agreement, subject to the
payment to VCG of a termination fee to be negotiated by the parties in
connection with the preparation of the Merger agreement. As of
February 16, 2010 (assuming the Merger were to close on such date and the
weighted average closing price per share of the Company’s common stock for the
20 consecutive trading days ending on February 11, 2010 was equal to the closing
price of the Company's common stock on February 11, 2010 of $11.76 per share),
the value of each share of VCG's common stock under this formula would be $2.66
per share.
Contemporaneously
with the closing of the Merger, the Company has agreed to acquire 5,770,197
shares of VCG's common stock held by Troy Lowrie and his affiliates (the "Lowrie
Common Stock") for cash in an amount equal to the lesser of $2.44 per share or
the per share value of the common stock received by VCG's shareholders in the
Merger. At Lowrie's election, Lowrie may receive the Company's common
stock, at the same exchange ratio received by VCG's shareholders in the Merger,
for up to 30% of the Lowrie Common Stock. In addition, Mr. Lowrie
will (i) refinance (at a lower interest rate) and continue to carry a $5.7
million note from VCG (as acquired by the Company), (ii) continue to personally
guarantee certain VCG obligations in exchange for a to-be-determined fair market
value cash payment for such guarantees, (iii) sell to the Company the
outstanding capital stock of Club Licensing, Inc., a wholly-owned subsidiary of
Lowrie Management, LLLP that owns the trademarks "Diamond Cabaret" and "PT's,"
(the "Trademarks") and (iv) enter into a three-year consulting agreement with
the Company (collectively, the "Lowrie Transactions"). In exchange
for the Lowrie Transactions, Mr. Lowrie shall receive the following: (a) a
to-be-determined amount equal to the fair market value of the restructuring of
the $5.7 million note and continued personal guarantees (currently estimated to
be $2,000,000); (b) a to-be-determined amount equal to the fair market value of
the Trademarks (currently estimated to be $5,000,000); and (c) payment of
$1,000,000 over three years and a monthly expense allowance equal to $1,500
under the consulting agreement. Assuming Mr. Lowrie elects to be paid
solely in cash at a price of $2.44 per share of VCG's common stock and the fair
market value of the Lowrie Transactions is as set forth above (totaling $7.0
million), Lowrie will receive aggregate payments of approximately $26.8 million
(which amount includes the restructuring of the existing $5.7 million note held
by Mr. Lowrie and excludes payments under the consulting agreement) in
connection with the Merger, of which approximately $16.8 million will be payable
in cash at the closing of the Merger and $10.0 million will be payable pursuant
to a four-year promissory note from the Company bearing interest at 8.0% per
annum.
The
Letter of Intent also provides for a binding exclusivity period through March
12, 2010, during which time VCG has agreed, on behalf of itself and its
representatives, to negotiate exclusively with the Company and has further
agreed not to solicit any offer or engage in any negotiations other than with
the Company for the merger, sale of the business or assets of VCG or tender or
exchange offer for VCG's common stock. In the event VCG receives an
unsolicited offer that is superior to the terms of the Merger (a "Superior
Proposal") and the Company does not amend its offer within five business days of
the date on which it receives notice of such Superior Proposal to be superior to
the Superior Proposal, then VCG may terminate the Letter of
Intent. If VCG terminates the Letter of Intent due to its receipt of
a Superior Proposal, it has agreed to reimburse the Company for its
out-of-pocket expenses and fees incurred in evaluating and negotiating the
Merger in an amount not to exceed $250,000 in the aggregate. If a
definitive Merger agreement is not entered into by March 12, 2010, the Letter of
Intent will automatically terminate, unless extended by the
parties.
The
Merger agreement is expected to contain customary representations and warranties
including the absence of a material adverse change in the business of the
Company and VCG prior to closing and other customary closing conditions,
including but not limited to, the receipt of material consents, the approval of
the Merger by the shareholders of the Company and VCG, and the effectiveness of
a registration statement containing a joint proxy statement/prospectus filed
with the Securities and Exchange Commission (the "SEC") on Form S-4 to be filed
by the Company, which, among other things, registers the shares of common stock
to be issued to VCG's shareholders in the Merger. There can be no
assurance that VCG, the Company and Lowrie will enter into a definitive Merger
agreement, that the entry into a definitive Merger agreement, if any, will
result in the closing of any transaction or that the terms of any definitive
Merger documents will reflect the terms of the proposed Merger as outlined in
the Letter of Intent.
The
foregoing description of the Letter of Intent is qualified in its entirety by
the Letter of Intent attached hereto as Exhibit 99.1 and incorporated by
reference herein.
On
February 16, 2010, VCG issued a press release regarding the Letter of
Intent. A copy of the press release is attached hereto as
Exhibit 99.2 and incorporated herein by reference.
The
Company, in its earnings call at 4:30 Eastern Time on February 16, 2010,
discussed slides from a power point presentation, and a copy of such
presentation is attached hereto as Exhibit 99.3 and incorporated herein by
reference.
Additional
Information and Where to Find It
In
connection with the proposed Merger, VCG and the Company intend to file
documents relating to the transaction with the SEC, including the registration
statement to be filed by the Company containing the joint proxy/statement
prospectus. Investors are urged to read the joint
proxy statement/prospectus regarding the proposed Merger, if and when it becomes
available, because it will contain important information. When it becomes
available, shareholders and other investors will be able to obtain a free copy
of the joint proxy statement/prospectus, and are able to obtain free copies of
other filings and furnished materials containing information about VCG and the
Company, at the SEC's internet website at www.sec.gov. Copies of the
joint proxy statement/prospectus when it becomes available and any SEC filings
incorporated by reference in the joint proxy statement/prospectus can also be
obtained, without charge, by directing a request to VCG Holding Corp., 390 Union
Boulevard, Suite 540, Lakewood, Colorado 80228, telephone (303) 934-2424,
Attention: Courtney Cowgill, or to Rick’s Cabaret International, Inc., 10959
Cutten Road, Houston, Texas, 77066, telephone (281) 397-6730, Attention: Phil
Marshall.
Interests
of Participants in the Solicitation of Proxies
Each of
VCG and the Company and their respective directors and executive officers may be
deemed to be "participants" in the solicitation of proxies in respect of the
proposed transaction under SEC rules. Information regarding VCG's
directors and executive officers is available in its definitive proxy statement
on Schedule 14A filed with the SEC on April 30, 2009, and information regarding
the Company’s directors and executive officers is available in its definitive
proxy statement on Schedule 14A filed with the SEC on July 7, 2009 and in its
annual report on Form 10-K filed with the SEC on December 17,
2009. Copies of these documents can be obtained, without charge, at
the SEC's internet website at www.sec.gov or by directing a request to VCG or
the Company, as applicable, at the addresses above. Other information
regarding the participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
Forward-Looking Statements
Certain
statements contained in this Current Report on Form 8-K regarding the proposed
Merger not constituting historical fact are "forward-looking statements" subject
to the safe harbor created by the Private Securities Litigation reform Act of
1995. Where possible, the words "believe," "expect," "anticipate," "intend,"
"would," "will," "planned," "estimated," "potential," "goal," "outlook," and
similar expressions, as they relate to the Company, its management or the
proposed Merger have been used to identify such forward-looking statements. All
forward-looking statements reflect only current beliefs and assumptions with
respect to future business plans, prospects, decisions and results, and are
based on information currently available to the Company. Accordingly, the
statements are subject to significant risks, uncertainties and contingencies,
which could cause the Company's actual operating results, performance or
business plans or prospects to differ materially from those expressed in, or
implied by, these statements. Such risks, uncertainties and contingencies
include, but are not limited to, statements about whether the Company will enter
into and close a definitive Merger agreement and other intentions and other
statements that are not historical facts. The following factors, among others,
could cause actual results to differ from those set forth in the forward-looking
statements: (1) the occurrence of any event, change or other circumstance that
could give rise to the termination of the Letter of Intent; (2) the outcome of
any legal proceedings that may be instituted against the Company and others in
connection with the proposed Merger; (3) the inability to complete the Merger
due to the failure to obtain stockholder approval or satisfy other conditions to
the closing of the Merger; (4) risks that the proposed Merger, including the
uncertainty surrounding the closing of the Merger, will disrupt the current
plans, operations and relationships of the Company, including as a result of
undue distraction of management and personnel retention problems; (5) the risk
that the businesses would not be integrated successfully; and (6) the amount of
the costs, fees, expenses and charges related to the proposed
Merger. Additional factors that could cause the Company's results to
differ materially from those described in the forward-looking statements are
described in the Company's Annual Report on Form 10-K filed with the SEC
December 17, 2009 and the Company's other periodic and current reports filed
with the SEC from time to time and available on the SEC's internet website at
www.sec.gov<http://www.sec.gov>.
Unless required by law, the Company undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events, or otherwise.
|
ITEM
9.01
|
FINANCIAL
STATEMENTS AND EXHIBITS
|
|
|
Letter
of Intent between Rick’s Cabaret International, Inc. and VCG Holding
Corp.
|
|
|
Press
Release dated February 16, 2010
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report on Form 8-K to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
RICK'S
CABARET INTERNATIONAL, INC.
|
|
|
|
|
|
/s/
Eric Langan
|
|
|
By: Eric
Langan
|
|
Date: February
16, 2010
|
Chairman,
President, Chief Executive Officer
|
5