Attached files
| file | filename |
|---|---|
| EX-10.3 - CAPITAL GROWTH SYSTEMS INC /FL/ | v194450_ex10-3.htm |
| EX-10.1 - CAPITAL GROWTH SYSTEMS INC /FL/ | v194450_ex10-1.htm |
| EX-10.2 - CAPITAL GROWTH SYSTEMS INC /FL/ | v194450_ex10-2.htm |
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): August 11,
2010
Capital
Growth Systems, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
|
Florida
|
0-30831
|
65-0953505
|
||
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
200 S.
Wacker, Suite 1650, Chicago, Illinois 60606
(Address
of Principal Executive Offices, Including Zip Code)
(312)
673-2400
(Registrant’s
Telephone Number, Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since 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:
|
o
|
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))
|
|
Item
1.01.
|
Entry into a Material Definitive Contract. |
Capital
Growth Systems, Inc. (CGSYQ.OB) (the “Company”), together with its wholly owned
subsidiaries Global Capacity Direct, LLC, Global Capacity Group, Inc.,
CentrePath, Inc., FNS 2007, Inc., 20/20 Technologies, Inc., 20/20 Technologies
I, LLC, Global Capacity Holdco, LLC, Nexvu Technologies, LLC, Capital Growth
Acquisition, Inc. (each a “Debtor” and collectively with the Company, the
“Debtors”) and Magenta Netlogic Limited (U.K.) (“MNL”), also a wholly owned
subsidiary of the Company, filed their Joint
Disclosure Statement (attached as Exhibit 10.1) and proposed Plan of
Reorganization (attached as Exhibit 10.2). The Plan of Reorganization
includes as an exhibit the Plan Support Agreement (attached as Exhibit 10.3)
among the Debtors and certain of the subordinated debenture holders of the
Company that have participated in the funding of debtor in possession
financing to the Company.
Summary
of the Plan
The
following is a summary of the Plan of Reorganization (“Plan”) which is intended
to provide parties in interest with a concise description of the
Plan. THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF THE PLAN AND DOES
NOT SUBSTITUTE FOR THE PLAN AND THE DISCLOSURE STATEMENT, BOTH OF WHICH SHOULD
BE READ CAREFULLY IN THEIR ENTIRETY. This summary is provided for
convenience only, and in the event of any discrepancy between this summary
overview and the terms of the Plan, the Plan controls. Capitalized
terms used herein and not otherwise defined shall have the same meaning as set
forth in the Plan.
Narrative Summary of the
Plan. Prior to filing the consolidated Chapter 11 Cases, the
Debtors, with the assistance of their financial advisor and in consultation with
certain of the pre-petition lenders, pursued a range of options to address the
Debtors’ concerns about their ability to service their debt going forward,
including new financing, refinancing and the sale of certain or all of the
Debtors’ assets or business. After exploring the strategic alternatives
available to them, the Debtors have determined that the best way at this time to
maximize the value of their assets for the benefit of their creditors, is to
seek a sale of their Assets pursuant to Section 363 of the Bankruptcy Code as
part of the Plan.
Certain
Pre-Petition Debenture Lenders and the Tranche B Lenders (funding the Tranche B
portion of the Debtors’ debtor in possession financing) have agreed to act as
the stalking horse bidder for the Acquired Assets, and their bid for the
Acquired Assets, as will be fully set forth in the form of asset purchase
agreement (“APA”) which will serve as the opening bid for such Assets subject to
a competitive bidding process that is consistent with both the timing of the
Chapter 11 Cases, as set forth in the Plan Support Agreement (discussed below)
and the Debtors’ fiduciary duties, to maximize value for their estates,
stakeholders and parties in interest. The APA provides for a Credit
Bid of a portion of the Pre-Petition Debenture Lenders’ Secured Claims by the
respective Pre-Petition Debenture Agent (as provided in the applicable
Pre-Petition Debenture Agreements from which the Company’s convertible debenture
loans were funded) and of the Tranche B Loan by the Tranche B Agent, the
assumption of certain of the Debtors’ liabilities and other Plan funding as more
fully described in the Plan and APA.
2
The
Pre-Petition Debenture Holders, through their respective Pre-Petition Debenture
Agent, and the Tranche B Lenders have agreed to accept equity in a newly-formed
entity to acquire the Acquired Assets of Debtors (“Newco”) in exchange for the
consideration being offered for the Acquired Assets, and have further agreed to
gift a portion of the Plan Consideration (representing 10% of the Newco Common
Stock on a Fully Diluted basis) that would otherwise be distributed to the
respective Pre-Petition Debenture Agent on behalf of the holders of Allowed
Pre-Petition Debenture Claims for the benefit of the holders of allowed
unsecured claims and, under certain circumstances, to the holders of equity
interests in the Company (collectively, the “Legacy Holders”). The
holders of Pre-Petition Debenture Claims have further agreed among themselves to
a distribution on account of their respective deficiency claims pursuant to
various formulas set forth in the Plan.
The Plan
contemplates that the proposed sale will result in either (i) the transfer of
the Assets to the ultimate purchaser (“Purchaser”) pursuant to a sale under
section 363 of the Bankruptcy Code; or, (ii) if a Reorganization Election is
made, the issuance by the Debtors to Purchaser of 100% of the equity interest of
the Reorganized Debtors in consideration of the Sale Proceeds (and subject to
10% of Newco or of the Reorganized Debtor on a fully diluted basis allocable to
the Legacy Holders assuming the Pre-Petition Debenture Holders are the
successful Purchaser under the Plan). Either scenario will provide
for substantially similar treatment to holders of Claims and Interests as
outlined above, unless otherwise agreed to or as determined by the Bankruptcy
Court.
At the
direction of Purchaser, to implement the Plan, the applicable Debtors or
Reorganized Debtors, as the case may be, may enter into such transactions and
may take such actions as may be necessary or appropriate to effect a corporate
restructuring of their respective businesses, to otherwise simplify the overall
corporate structure of the Debtors or Reorganized Debtors, as the case may be,
or to reincorporate certain of the Debtors under the laws of jurisdictions other
than the laws of which the applicable Debtors are presently incorporated. Such
restructuring may include a debt-for-equity exchange, one or more mergers,
consolidations, restructurings, dispositions, liquidations, dissolutions or
reincorporations, as may be determined by the Purchaser to be necessary or
appropriate. The actions to effect such restructuring may include, at the
Purchaser’s option (i) the execution and delivery of appropriate agreements or
other documents of merger, consolidation, restructuring, disposition,
liquidation or dissolution containing terms that are consistent with the terms
of the Plan and that satisfy the applicable requirements of applicable state law
and such other terms to which the applicable entities may agree, (ii) the
execution and delivery of appropriate instruments of transfer, assignment,
assumption or delegation of any asset, property, right, liability, duty or
obligation on terms consistent with the terms of the Plan and having such other
terms to which the applicable entities may agree, (iii) the filing of
appropriate certificates or articles of merger, consolidation or dissolution
pursuant to applicable state law, and (iv) all other actions that the applicable
entities determine to be necessary or appropriate, including making filings or
recordings that may be required by applicable state law in connection with such
transactions.
To
accommodate the Plan structure determined by Purchaser, the Plan may be modified
at any time prior to the Effective Date.
3
The
operation of the Debtors’ business is subject to various licensing and other
requirements that require regulatory and other third-party
approvals. To allow for the occurrence of the Effective Date by
November 25, 2010, in accordance with the Plan Support Agreement and prior to
Purchaser obtaining all such approvals, the Pre-Petition Debenture Holders and
Tranche B Lenders, in their capacity as Purchaser, have agreed to a closing of
the Sale prior to obtaining such approvals and for operation of the
Non-Transferred Assets by the Plan Administrator in accordance with the terms of
the APA and the Management Agreement that is expected to be entered into to
permit the operation of Assets under their direction before necessary regulatory
approval for their operation is obtained.
|
Item
9.01
|
Financial Statements and Exhibits |
|
Exhibit
|
Description |
|
10.1
|
Joint
Disclosure Statement of Capital Growth Systems, Inc. and
Subsidiaries
|
|
10.2
|
Plan
of Reorganization of Capital Growth Systems, Inc. and
Subsidiaries
|
|
10.3
|
Plan
Support Agreement of Capital Growth Systems, Inc. and DIP
Lenders
|
4
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.
Dated:
August 17, 2010
|
CAPITAL
GROWTH SYSTEMS, INC.
|
|||
|
|
By:
|
/s/
George A. King
|
|
| George A. King | |||
|
President
|
|||
5