UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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): December 1, 2009
________
DANKA
BUSINESS SYSTEMS PLC
(Exact
name of registrant as specified in its charter)
________
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England
& Wales
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0-20828
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98-0052869
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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270
1st Avenue South
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8
Salisbury Square
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Suite
305
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and
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London
EC4Y 8BB England
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St.
Petersburg, Florida 33701
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(Addresses
of principal executive offices)
Registrant’s
telephone number, including area code:
(727)
825-3960 in the United States
011-44-207-694-1826
in the United Kingdom
Masters
House
107
Hammersmith Road
London
W14 0QH England
(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 (see General Instruction A.2. below):
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[
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
8.01. Other Events.
By
this Current Report on Form 8-K, the joint liquidators of Danka Business Systems
PLC (“Danka” or the “Company”) are providing an update to Danka shareholders
regarding certain matters relating to the members’ voluntary liquidation of
Danka (the “MVL”), which the Company entered into on February
19, 2009 following shareholder approval of the MVL at an extraordinary general
meeting of shareholders held on the same date and pursuant to which Danka is in
the process of being voluntarily wound up.
Sale
of Danka Office Imaging Company
On
June 27, 2008, the Company consummated the sale of its U.S. operating
subsidiary, Danka Office Imaging Company (“DOIC”), to Konica Minolta Business
Solutions U.S.A., Inc. (“Konica Minolta”), which sale of DOIC constituted the
disposition of the Company’s remaining operations. Pursuant to the stock
purchase agreement (the “DOIC Agreement”) among Danka, Danka Holding Company,
Danka’s wholly-owned subsidiary, and Konica Minolta governing the sale of DOIC,
the purchase price of $240 million was subject to an upward or downward net
worth adjustment following closing. The final purchase price was to be adjusted,
dollar for dollar, for each dollar by which the closing net worth of DOIC varied
from the net worth as of an earlier reference date. The purchase price
adjustment could not exceed $10 million. The sum of $10 million was held back by
Konica Minolta from the amount payable by Konica Minolta at closing as security
for the Company’s purchase price adjustment obligations.
As
Danka and Konica Minolta were unable to agree as to the amount of the closing
net worth of DOIC and concomitant purchase price adjustment, pursuant to the
terms of the DOIC Agreement, the dispute was submitted to an independent
accounting firm for arbitration. On November 13, 2009, the arbitrator issued its
binding decision on the dispute. As a result of the arbitrator’s decision,
Konica Minolta paid to Danka Holding Company an amount equal to $13,917,816.13,
which amount included the $10 million held back by Konica Minolta at closing
(plus interest). While there has been continued correspondence among Danka,
Konica Minolta and the arbitrator following the arbitrator’s decision regarding
certain aspects of the dispute, the resolution process is nearly
finalized.
In
addition, under the terms of the DOIC Agreement, $25 million of the purchase
price to be paid by Konica Minolta at closing was placed in escrow for a period
of four years following closing to satisfy any and all claims which may be made
by Konica Minolta under the DOIC Agreement. The amount of cash held in escrow is
to be reduced each year following closing (to $20 million after year one, $15
million after year two, $10 million after year three, and terminating after year
four), with certain amounts not required to satisfy claims under the DOIC
Agreement being returned to Danka on each anniversary of closing. The escrow
will step down only to the extent there are not any claims pending against such
amounts. On June 27, 2009, the amount in escrow was reduced to $20 million and
an amount equal to $5 million was released to Danka.
Creditor
Claims
Upon
their appointment as joint liquidators following entry into the MVL, Jeremy
Spratt and Finbarr O’Connell of KPMG LLP engaged in an inquiry into the
existence and value of creditors’ claims against the Company.
The
only significant claim in the MVL was received from Ricoh Europe B.V. (“Ricoh”).
Ricoh purchased Danka’s European operations in January 2007 pursuant to a share
purchase agreement among Ricoh, Danka and certain subsidiaries of Danka (the
“Ricoh Agreement”). Under the terms of the Ricoh Agreement, Danka agreed to
indemnify Ricoh for certain losses, including indemnities in relation to certain
tax matters that do not expire until 2014. Following the commencement of the
MVL, the joint liquidators received a claim from Ricoh in relation to Danka’s
tax indemnification obligations under the Ricoh Agreement, estimated at
approximately $20 million. Ricoh has also intimated that in certain
circumstances the quantum of its potential claims against Danka could rise
substantially.
The
joint liquidators have been investigating the claims made by Ricoh, including
seeking further evidence from Ricoh to substantiate its claims. The process of
adjudicating Ricoh’s claims by the joint liquidators is currently
ongoing.
Distribution
to ordinary shareholders
Pursuant
to Danka’s articles of association, the holders of Danka’s 6.50% convertible
participating shares would have been entitled to all of the surplus assets of
Danka. However, pursuant to the terms of an agreement between Danka and the
convertible participating shareholders, which agreement took effect upon
shareholder approval of the MVL, the joint liquidators have been instructed to
first distribute to holders of Danka’s ordinary shares (including American
Depository Shares (“ADSs”)) an amount equal to $0.03 per ordinary share (or
$0.12 per ADS) prior to any distribution to convertible participating
shareholders (“the Distribution”).
As
of the date of this Current Report on Form 8-K, the joint liquidators are
seeking advice with a view to confirming the amounts and manner in which they
propose to set aside a reserve for Ricoh’s claim is sufficient and that,
following the distribution of the purchase price adjustment payment of
approximately $13.9 million from Danka Holding Company to Danka, they will be
able to make the Distribution.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Dated:
December 3, 2009
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DANKA
BUSINESS SYSTEMS PLC
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By:/s/ Jeremy
Spratt
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Name:
Jeremy Spratt
Title:
Joint
Liquidator
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