SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-
1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. 1)
Halsey Drug Co., Inc.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
406369 10 8
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(CUSIP Number)
George Abrahams, Esq.
Wolf, Block, Schorr and Solis-Cohen, LLP
250 Park Avenue
New York, New York 10177
Tel. No. (212) 986-1116
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 12, 1998
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box .
Note. Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1 (a) for other parties to whom copies are to
be sent.
(Continued on the following pages)
(Page 1 of 12 Pages)
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* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to the "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SCHEDULE 13D
CUSIP No. 406369 10 8
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Partners III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[ ] (b)[X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE
VOTING POWER
16,830,644
8. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SHARED
VOTING POWER
0
9. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE
DISPOSITIVE POWER
16,830,644
10. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SHARED
DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,830,644
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.1%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 406369 10 8
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Employee Fund III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[ ] (b)[X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE
VOTING POWER
73,683
8. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SHARED
VOTING POWER
0
9. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE
DISPOSITIVE POWER
73,683
10. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SHARED
DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
73,683
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.2%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 406369 10 8
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Partners International III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[ ] (b)[X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE
VOTING POWER
1,628,772
8. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SHARED
VOTING POWER
0
9. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE
DISPOSITIVE POWER
1,628,772
10. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SHARED
DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,628,772
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.0%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Item 1. Security and Issuer.
Item 1 is amended to read in its entirety as follows:
"This Statement covers a total of 18,533,099 shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Halsey Drug Co., Inc., a New York
corporation (the "Company"). As of July 17, 1998 the Reporting Persons (as
defined in Item 2 hereof) hold (i) 5% Convertible Senior Secured Debentures due
March 15, 2003, of the Company in the aggregate principal amount of $21,334,616
(the "Debentures"), which as of such date are convertible into an aggregate of
14,223,078 shares of Common Stock, (ii) warrants for the purchase of an
aggregate of 2,155,011 shares of Common Stock at an initial purchase price of
$1.50 per share (the "$1.50 Warrants") and (iii) warrants for the purchase of an
aggregate of 2,155,011 shares of Common Stock at an initial purchase price of
$2.375 per share (the "$2.375 Warrants" and together with the $1.50 Warrants,
the "Warrants"). The Debentures and Warrants are referred to herein,
collectively, as the "Securities."
The Company's principal executive offices are located at 1827 Pacific
Street, Brooklyn, New York 11233."
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is amended to read in its entirety as follows:
"The funds for the acquisition of the Securities were allocated from the
working capital of the Reporting Persons and were not obtained by means of a
loan or other borrowing arrangement.
The Securities were acquired by the Reporting Persons at a purchase price
equal to the principal amount of Debentures comprising a part of the Securities
which were purchased. The purchase prices paid by each of Galen, Galen Intl and
GEF on March 10, 1998 for the Securities purchased on such date were
$15,423,195, $1,709,167 and $67,638, respectively, and were all paid in cash.
In June, 1998 the Reporting Persons made additional purchases of Securities
for cash pursuant to the option granted to them under the Purchase Agreement
described in Item 4 hereof to purchase additional Securities. The purchase
prices for the additional Securities purchased by Galen, Galen Intl and GEF in
June, 1998 were $3,754,809, $363,369 and $16,438, respectively.
In July 1998 Galen International sold to Galen and GEF for a cash purchase
price (a) Debentures in the principal amounts of $196,809 and $745,
respectively, (b) $1.50 Warrants to purchase 19,880 and 75 shares of Common
Stock, respectively and (c) $2.375 Warrants to purchase 19,880 and 75 shares of
Common Stock, respectively."
Item 4. Purpose of Transaction.
Item 4 is amended to read in its entirety as follows:
"The Company, the Reporting Persons and certain other persons entered into
a Debenture and Warrant Purchase Agreement, dated as of March 10, 1998 (the
"Purchase Agreement") providing for the purchase by the Reporting Persons and
other persons (collectively, the "Investors") of an aggregate of $20,800,000
principal amount of Debentures, $1.50 Warrants to purchase an aggregate of
2,101,010 shares of Common Stock and $2.375 Warrants to purchase an aggregate of
2,101,010 shares of Common
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Stock and the issuance and delivery to the Investors of instruments evidencing
the Debentures and Warrants. The Debentures were at the time of issuance
convertible into Common Stock at the rate of one share of Common Stock for each
$1.50 principal amount of Debentures (an aggregate of 13,866,666 shares of
Common Stock for the Debentures issued to all Investors and 11,466,667 shares of
Common Stock for the Debentures issued to the Reporting Persons). The $1.50
Warrants and $2.375 Warrants issued to the Reporting Persons are exercisable for
a period of seven years commencing on the issue date thereof.
In June 1998, the Reporting Persons and certain other persons exercised
their options under the Purchase Agreement to purchase a rata portion of
additional Securities having an aggregate purchase price of $5,000,000 on the
same terms and conditions as set forth in the Purchase Agreement. Pursuant to
such option exercise, the Reporting Persons purchased Debentures in the
aggregate principal amount of $4,134,616 (which Debentures were at the time of
issuance convertible into an aggregate of 2,756,411 shares of Common Stock) and
$1.50 Warrants to purchase an aggregate of 417,637 shares of Common Stock and
$2.375 Warrants to purchase an aggregate of 417,637 of Common Stock.
The conversion rates of the Debentures into Common Stock and the exercise
prices of the Warrants and the number of shares of Common Stock issuable upon
conversion or exercise thereof are subject to adjustment to protect the holders
thereof against dilution. In addition, the conversion rates and exercise prices
of such Securities are subject to a downward adjustment in the event the
liabilities of the Company and its subsidiaries as of February 28, 1998 exceed
$27,640,000.
Pursuant to the Purchase Agreement, the Purchasers designated two persons
to become directors of the Company and such persons were elected as directors on
March 10, 1998. The Purchasers also had the right to designate an additional
person to be a member of the Board of Directors commencing with the first Annual
Meeting of Shareholders of the Company to be held after the closing of the
Purchase Agreement, which the Company agreed in the Purchase Agreement to hold
on or prior to June 30, 1998 (the "Next Shareholders Meeting").
The Company also agreed in the Purchase Agreement to present for approval
by shareholders at the Next Shareholders Meeting, proposals to amend the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 20,000,000 to 40,000,000 Shares and to provide that
the Debentures shall have the right to vote as part of a single class with all
holders of Common Stock of the Company on all matters with the holders of
Debentures to have such number of votes as shall equal the number of votes they
would have had they converted the entire principal amount of their Debentures
into Common Stock immediately prior to the record date relating to such vote.
The Next Shareholders Meeting was duly held on June 30, 1998. At the Next
Shareholders Meeting, a designee of the Purchasers was elected as a director of
the Company and the proposals to amend the Certificate of Incorporation of the
Company were approved by the shareholders.
Pursuant to the Purchase Agreement each Investor, including the Reporting
Persons, has been given a right of first refusal, subject to certain
limitations, to purchase additional equity securities of the Company (including
convertible debt securities) offered for sale by the Company. Such right is
exercisable on a pro rata basis among all Investors and certain other persons
holding other convertible debentures of the Company.
Each of the Reporting Persons acquired its Securities as long-term
investments. Except as set forth herein, none of the Reporting Persons presently
intends to acquire additional securities of the
6
Company. However, if any Reporting Person believes that further investment in
the Company is attractive, whether because of the market price of the Company's
securities or otherwise, such Reporting Person may acquire additional securities
of the Company. Similarly, any Reporting Person, subject to applicable law and
depending upon market and other factors, may from time to time determine to
dispose some or all of the Securities.
Except as set forth herein, the Reporting Persons have no present intention
to engage or cause the Company to engage in any of the transactions or
activities specified in paragraphs (a) through (j) of Item 4 of Schedule 13D.
However, each Reporting Person reserves the right, either individually or
together with other persons, to act in respect of its interest in the Company in
accordance with its best judgment in light of the circumstances existing at that
time."
Item 5. Interest in Securities of the Issuer.
Item 5 is amended to read in its entirety as follows:
"(a) Each Reporting Person owns or has the right to acquire the number of
Securities shown opposite its name:
(1) (2) (3) (4) (5)
Number of Shares
Number of Shares of Common Stock Percentage of
of Common Stock which may be Outstanding
into which acquired pursuant Shares of
Debentures are to exercise of Total of Columns Common Stock
Reporting Person Convertible Warrants (2) and (3) (see Note below)
Galen ............................... 12,916,542 3,914,102 16,830,644 52.1%
Galen Intl .......................... 1,249,988 378,784 1,628,772 5.0%
GEF ................................. 56,547 17,136 73,683 0.2%
Total ............................ 14,223,077 4,310,022 18,533,099 57.3%
====================================================================================================================================
Note: The percentages shown in each row of column (5) were calculated, for
each respective row, by (i) adding the totals in the bottom row of columns (2)
and (3) to 13,777,453 (the number of shares of Common Stock outstanding as of
May 26, 1998, such number having been provided by the Company to the Reporting
Persons) (the "Total Adjusted Outstanding Shares"), then (ii) dividing the
amount in column (4) by the Total Adjusted Outstanding Shares, and then (iii)
expressing such quotient in terms of a percentage.
(b) Each Reporting Person possesses the sole power to vote and to dispose
of its respective Securities.
(c) See Item 3.
(d) None.
7
(e) Not applicable."
Item 7. Material to be filed as Exhibits.
Item 7 is amended by adding the following:
8. Joint Filing Agreement, dated July 17, 1998, by the Reporting Persons
and the Related Persons.
8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in the statement is true, complete and
correct.
Dated: July 17, 1998
GALEN PARTNERS III, L.P.
By: Claudius, L.L.C., General Partner
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, Managing Member
GALEN PARTNERS
INTERNATIONAL III, L.P.
By: Claudius, L.L.C., General Partner
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, Managing Member
GALEN EMPLOYEE FUND III, L.P.
By: Wesson Enterprises, Inc.,
General Partner
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, President
CLAUDIUS, L.L.C.
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, Managing Member
9
WESSON ENTERPRISES, INC.
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, President
/s/ William R. Grant
--------------------------------------
William R. Grant
/s/ Bruce F. Wesson
--------------------------------------
Bruce F. Wesson
/s/ L. John Wilkerson
--------------------------------------
L. John Wilkerson
/s/ David Jahns
--------------------------------------
David Jahns
/s/ Srini Conjeevaram
--------------------------------------
Srini Conjeevaram
/s/ Zubeen Shroff
--------------------------------------
Zubeen Shroff
10
EXHIBIT 8
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
the persons named below agree to the joint filing on behalf of each of them of
Amendment No. 1 to the Statement on Schedule 13D dated March 20, 1998 (including
exhibits and schedules thereto) with respect to the acquisition of, or the right
to acquire, the Common Stock of Halsey Drug Co., Inc., a New York corporation.
This Agreement shall be included as an Exhibit to such joint filing. In evidence
thereof, each of the undersigned, being duly authorized, hereby executes this
Agreement this 17th day of July, 1998.
GALEN PARTNERS III, L.P.
By: Claudius, L.L.C., General Partner
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, Managing Member
GALEN PARTNERS
INTERNATIONAL III, L.P.
By: Claudius, L.L.C., General Partner
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, Managing Member
GALEN EMPLOYEE FUND III, L.P.
By: Wesson Enterprises, Inc.,
General Partner
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, President
CLAUDIUS, L.L.C.
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, Managing Member
11
WESSON ENTERPRISES, INC.
By: /s/ Bruce F. Wesson
-----------------------------------
Bruce F. Wesson, President
/s/ William R. Grant
--------------------------------------
William R. Grant
/s/ Bruce F. Wesson
--------------------------------------
Bruce F. Wesson
/s/ L. John Wilkerson
--------------------------------------
L. John Wilkerson
/s/ David Jahns
--------------------------------------
David Jahns
/s/ Srini Conjeevaram
--------------------------------------
Srini Conjeevaram
/s/ Zubeen Shroff
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Zubeen Shroff
12
