This excerpt taken from the CRGI 6-K filed Nov 20, 2006.
Background of the Acquisition, the Merger and the Private Placement
During the fall of 2005, the Chief Executive Officer of Corgi held preliminary discussions with the executive officers of several companies with respect to potential business combinations.
During the fall of 2005 and the spring of 2006, the Chief Executive Officer of Corgi met with the executive officers of Cards and Master Replicas to discuss a potential business combination among the three companies.
In the spring of 2006, the Board decided to retain McGettigan Wick & Co. to serve as our financial advisor in the potential business combination. Charles McGettigan, one of our current directors, was not a member of our Board at the time McGettigan Wick & Co. was retained.
In May 2006, Corgi and Master Replicas attended a meeting at which the parties determined the general terms of the merger. On June 28, 2006, we entered into an exclusivity agreement with Master Replicas for the proposed merger.
Pursuant to an engagement letter dated June 30, 2006, the Board retained Houlihan Lokey Howard & Zukin Financial Advisors, Inc. (Houlihan Lokey) to render an opinion as to the fairness to us of the consideration that we proposed to pay for Master Replicas and Cards. Houlihan Lokey was not engaged to provide any financial advisory services other than to render a fairness opinion, The team from Houlihan Lokey proceeded to meet with the management teams from each of the companies and reviewed certain information provided by each of the companies and the then-proposed terms of the Cards and Master Replicas transactions in connection with their services.
During the summer of 2006, Josh Huffard, a member of the Board of Directors of Master Replicas and a principal of Consor Capital, contacted certain investors who had previously expressed an interest in providing financing to us regarding a private placement of equity to fund the proposed acquisition and merger and the combined company following consummation of the transactions. In addition, Mr. McGettigan contacted certain of our existing investors regarding their potential participation in the private placement.
In July 2006, we began negotiating the letter of intent relating to the acquisition of Cards and the merger agreement relating to the merger with Master Replicas. From July through September 2006, additional meetings and conference calls were held to discuss open issues and to conduct further legal, business, accounting and financial due diligence on the companies. During this time, our management team and representatives of Cooley Godward Kronish LLP, our legal advisors, and representatives of McGettigan Wick & Co., our financial advisor, continued to analyze the business, legal and regulatory issues arising from the acquisition of Cards and a potential merger of Corgi and Master Replicas. In addition, our management team met with Cards and Master Replicas management teams to analyze in detail the potential synergies and the near- and long-term value creation that would result from the transactions.
On August 13, 2006, with our boards approval, we signed a letter of intent with Cards for the proposed Cards acquisition.
On August 22, 2006, we held a telephonic meeting of our Board to consider the Master Replicas and Cards transactions. Representatives of Houlihan Lokey joined the telephonic Board meeting and rendered Houlihan Lokeys oral opinion to our Board, which Houlihan Lokey subsequently confirmed in writing by delivery of its written opinion dated as of August 22, 2006, that, as of that date and based upon and subject to the assumptions, qualifications, limitations and other matters described in its written opinion, the consideration to be paid by us in the Master Replicas transaction pursuant to the terms proposed by the August 4, 2006 draft of the merger agreement (the Draft Merger Agreement) and the Cards transaction pursuant to the terms proposed by the Cards letter of intent (together with the Draft Merger Agreement, the August Proposed Terms), was fair to us from a financial point of view. Members of our Board asked questions of the representatives of Houlihan Lokey in connection with the presentation of their oral opinion. The representatives of Houlihan Lokey then left the telephonic Board meeting. Our legal counsel reviewed with our Board the terms of the proposed final drafts of the merger agreement and related documents and the corporate actions required to approve the merger. Our Board then unanimously approved and adopted the Draft Merger Agreement and the transactions contemplated by the Draft Merger Agreement and
agreed to recommend to our shareholders the adoption of the Draft Merger Agreement and approval of the transactions contemplated by the Draft Merger Agreement.
In August 2006, we also began negotiating a draft share purchase agreement to acquire all of the outstanding share capital of Cards.
In early September 2006, Master Replicas determined that it was unwilling to go forward with the merger on the terms proposed by the Draft Merger Agreement and required that we dispose of or otherwise shut down our Zindart Manufacturing division on terms acceptable to Master Replicas. In September 2006, we explored a variety of strategic alternatives pertaining to our Zindart Manufacturing division, including a sale of the division to Christopher Franklin, the manager of the division.
On October 4, 2006, we held a telephonic meeting of our Board to review the changes to the Draft Merger Agreement that had been negotiated since August 22, 2006. Our Board then unanimously approved and adopted the merger agreement and the transactions contemplated by the merger agreement and agreed to recommend to our shareholders the adoption of the merger agreement and approval of the transactions contemplated by the merger agreement. We and Master Replicas signed the merger agreement later that day. Shortly thereafter, we announced by press release the execution of the merger agreement and the Cards letter of intent. Representatives of Houlihan Lokey were not present at our October 4, 2006, Board meeting and did not render any opinion as to the fairness of the consideration to be paid by us in the Master Replicas transaction or the Cards transaction, each on the terms approved by our Board on October 4, 2006.
In October 2006, we negotiated the terms of an agreement pursuant to which Mr. Franklin would purchase our Zindart Manufacturing division, referred to herein as the Zindart sale agreement, and engaged in discussions with potential investors in the private placement.
In addition, in the middle of October, we, together with the management of Cards and Master Replicas, began meeting with potential new investors and drafting a proposed financing term sheet.
On October 24, 2006, we held a telephonic meeting of our Board to review the terms of the proposed final drafts of the Cards acquisition agreement and related documents and corporate actions required to approve the acquisition. After discussion with our legal counsel, our Board unanimously approved and adopted the acquisition agreement and the transactions contemplated thereby and agreed to recommend to our shareholders the adoption of the acquisition agreement and the transactions contemplated thereby.
In late October 2006, we agreed with the investors in the private placement on a term sheet describing the terms of the private placement. In late October and early November, we negotiated the terms of the definitive financing agreement with such investors.
On November 2, 2006, we and the Cards shareholders signed the acquisition agreement.
On November 3, 2006, we entered into the Zindart sale agreement.
On November 14, 2006, we entered into the financing agreement.
On November 15, 2006, we announced our execution of the acquisition agreement, the Zindart sale agreement and the financing agreement.