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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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APPLIED GRAPHICS TECHNOLOGIES, INC.
(Name Of Subject Company (Issuer))
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KAGT HOLDINGS, INC.
KAGT ACQUISITION CORP.
KOHLBERG INVESTORS IV, L.P.
KOHLBERG TE INVESTORS IV, L.P.
KOHLBERG OFFSHORE INVESTORS IV, L.P.
KOHLBERG PARTNERS IV, L.P.
(Names of Filing Persons (Offerors))
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
037937208
(CUSIP Number of Class of Securities)
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Mr. Christopher Lacovara
KAGT Acquisition Corp.
c/o Kohlberg & Company
111 Radio Circle
Mt. Kisco, NY 10549
Telephone: (914) 241-7430
(Name, address and telephone number of person authorized
to receive notices and communications on behalf of filing persons)
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COPIES TO:
Daniel S. Evans, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
CALCULATION OF FILING FEE
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Transaction Valuation Amount Of Filing Fee
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Not Applicable* Not Applicable*
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* A filing fee is not required in connection with this filing as it relates
solely to primary communications made before the commencement of a tender
offer.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number or the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A
Form or Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
[X] Check the box if the filing relates to preliminary communications made
before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
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CONTACT: Joseph D. Vecchiolla, President and Chief Operating Officer
Applied Graphics Technologies, Inc.
(212) 716-6730
FOR IMMEDIATE RELEASE
APPLIED GRAPHICS TECHNOLOGIES ANNOUNCES
SIGNING OF MERGER AGREEMENT
New York, June 13, 2003 - Applied Graphics Technologies, Inc. (AMEX: AGD)
("Applied Graphics") announced today that, pursuant to the unanimous approval of
its Board of Directors, it has entered into a definitive Agreement and Plan of
Merger (the "Merger Agreement") in connection with a comprehensive
recapitalization of Applied Graphics by KAGT Holdings, Inc. and KAGT Acquisition
Corp. ("Purchaser"), affiliates of funds managed by Kohlberg & Co., LLC.
Pursuant to the Merger Agreement, Purchaser will make a tender offer for all of
the outstanding shares of Applied Graphics common stock at a price of $0.85 per
share in cash. The tender offer will be subject to customary conditions,
including a minimum condition that would require enough shares of Applied
Graphics common stock be tendered so that Purchaser would beneficially own more
than 50% of the outstanding shares of Applied Graphics common stock, on a fully
diluted basis, and a condition that Purchaser obtains the requisite financing
for the transaction pursuant to its commitment letters. The tender offer will
also be conditioned on the contemporaneous closing of the recapitalization
referred to below. Based on the last trading price of Applied Graphics common
stock on June 12, 2003, the price to be paid in the tender offer represents a
70% premium. Purchaser has obtained binding commitments, subject to certain
conditions, from holders of 33.9% of the Applied Graphics common stock, on a
fully diluted basis, for their participation in the tender offer.
Concurrent with the closing of the tender offer, and conditioned on such
closing, Purchaser will complete a comprehensive recapitalization of Applied
Graphics in which all of Applied Graphics' existing debt and preferred stock
will be purchased or redeemed at substantial discounts, resulting in reductions
in debt, and interest and principal payments. Pursuant to the recapitalization,
Applied Graphics plans to retire all of its outstanding 10% Subordinated Notes
due 2005 (the "Notes") and preference shares (the "Wace Preference Shares") of
its Wace Group Limited ("Wace") subsidiary. To facilitate these transactions,
Applied Graphics and Wace are convening meetings of the holders of the Notes and
the Wace Preference Shares, respectively, to amend the provisions that govern
the Notes and Wace Preference Shares in order to allow for Applied Graphics and
Wace to purchase the outstanding Notes and Wace Preference Shares, respectively,
at specified prices. Also concurrent with the closing of the tender offer,
Purchaser or its lenders plan to purchase all of Applied Graphics' senior debt,
or alternatively, Applied Graphics will borrow funds from Purchaser's lenders to
purchase all of its senior debt. Applied Graphics has obtained binding
commitments to effectuate such recapitalization transactions, subject to certain
conditions, from all of its senior lenders, and a sufficient number of holders
of its outstanding Notes and the Wace Preference Shares such that, assuming
satisfaction of these commitments and the applicable conditions thereto, the
recapitalization transactions will be effectuated with respect to the senior
debt and Wace Preference Shares and will most likely be effectuated with respect
to the Notes.
Following the closing of the tender offer and subject to customary conditions,
Purchaser will be merged with and into Applied Graphics, and Applied Graphics
will continue as the surviving corporation. Any shares not purchased in the
tender offer will be acquired for the same price in the second-step merger.
Purchaser has advised Applied Graphics that it intends to commence the tender
offer as soon as practicable. There can be no assurances, however, that the
conditions to the closing of the tender offer will be satisfied or that the
tender offer will be consummated.
Applied Graphics provides digital media asset management services across all
forms of media, including print, broadcast, and the Internet and is a leading
application service provider for the on-line management of brands. Applied
Graphics offers a variety of digital imaging and related services to major
corporations, which include magazine and newspaper publishers, advertisers and
their agencies, entertainment companies, catalogers, retailers, and consumer
goods and packaging companies. From locations across the United States, the
United Kingdom, and Australia, Applied Graphics supplies a complete range of
services that are tailored to provide solutions for specific customer needs,
with a focus on improving and standardizing the management and delivery of
visual communications for clients on a local, national, and international basis.
Additionally, Applied Graphics provides a wide range of advertising and
marketing-related creative services for customers, primarily in retailing.
Founded in 1987, Kohlberg & Co., LLC is a leading U.S. private equity firm with
offices in New York and California. The firm has completed more than 30 buyout
investments and over 60 add-on acquisitions, representing value in excess of $4
billion. Kolhberg & Co. and its affiliates currently manage more than $2.5
billion in investment capital.
Certain statements in this press release may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended. Such statements are inherently subject to known and unknown
risks, uncertainties, and other factors that may cause actual results,
performance or achievements of Applied Graphics to be materially different from
those expected or anticipated in the forward-looking statements. Such factors
are described in the Applied Graphics' SEC filings, including its Quarterly
Reports on Forms 10-Q and its Annual Report on Form 10-K.
This announcement is not a recommendation, an offer to purchase or a
solicitation of an offer to sell shares of Applied Graphics. Purchaser has not
commenced the tender offer for shares of Applied Graphics common stock. Upon
commencement of the tender offer, Purchaser will file with the Securities and
Exchange Commission a Schedule TO and related exhibits, including the offer to
purchase, letter of transmittal, and other related documents, and Applied
Graphics will file a solicitation/recommendation statement on Schedule 14D-9.
Shareholders should read the offer to purchase and solicitation/recommendation
statement and the Schedule TO and related exhibits, as they will contain
important information about the tender offer. When they become available,
shareholders can obtain these documents free of charge from the U.S. Securities
and Exchange Commission's website at www.sec.gov or from either Purchaser by
directing a request to Kolhberg & Co., LLC, 111 Radio Circle, Mount Kisco, New
York 10549, or from Applied Graphics, by directing a request to Applied Graphics
Technologies, Inc., 450 West 33rd Street, New York, New York 10001, Attention:
Corporate Secretary.