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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 5)
Distributed Energy Systems Corp.
(Name of Issuer)
Common Stock, Par Value $0.01 per Share
(Title of Class of Securities)
25475V104
(CUSIP Number)
Perseus Partners VII, L.P.
c/o Perseus, L.L.C.
2099 Pennsylvania Avenue, N.W., 9th Floor
Washington, D.C. 20006
(202) 452-0101
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 4, 2008
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
that is the subject of this Schedule 13D, and is filing this schedule because of Section
240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.
Note: Schedules filed in paper format shall include a signed original and five copies of the
schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting persons 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 be 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).
The original statement on Schedule 13D as filed on June 11, 2007 (the Schedule 13D) and
amended on August 30, 2007 (Amendment No. 1), February 6, 2008 (Amendment No. 2), March 28,
2008 (Amendment No. 3) and April 24, 2008 (Amendment No. 4), relating to the common stock, par
value $0.01 per share (the Common Stock), of Distributed Energy Systems Corp., a Delaware
corporation (the Issuer), is hereby amended as set forth in this Amendment No. 5 (this
Amendment, and together with the Schedule 13D, Amendment No. 1, Amendment No. 2, Amendment No. 3
and Amendment No. 4, this Statement).
This Amendment is being filed jointly by Perseus Partners VII, L.P. (Perseus VII) and Frank
H. Pearl (Mr. Pearl, and together with Perseus VII, the Reporting Persons, and each a,
Reporting Person) to amend Item 4.
This Amendment should be read in conjunction with, and is qualified in its entirety by
reference to, the Schedule 13D and all previous amendments thereto. Except as disclosed in and
expressly amended by this Amendment, all information set forth in the Schedule 13D and all previous
amendments thereto is unchanged by this Amendment.
Item 4 of the Schedule 13D is hereby amended as follows:
Item 4. Purpose of Transaction
Item 4 is amended to add the following information:
As reported in the Issuers Form 8-K report filed on June 6, 2008 (the Issuer 8-K), on June
4, 2008 (the Petition Date), the Issuer and its wholly owned subsidiary, Northern Power Systems,
Inc. (Northern), filed voluntary petitions for relief under chapter 11 of title 11 of the United
States Code (the Bankruptcy Code). The petitions were filed in the United States Bankruptcy
Court for the District of Delaware, in Wilmington, Delaware (the Court). The Court assumed
jurisdiction over the assets of the Issuer and Northern as of the Petition Date. Both the Issuer
and Northern will remain in possession of their respective assets and operate their businesses as
debtors-in-possession under the jurisdiction of the Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Court.
In connection with the bankruptcy filings, Perseus VII has committed to provide financing in
an aggregate principal amount not to exceed $2.0 million through a postpetition
debtor-in-possession financing facility (the DIP Facility) to assist the Issuer and Northern in
meeting their working capital requirements during the pendency of the bankruptcy cases. The terms
and conditions of this DIP Facility are subject to approval by the Court. Loans made pursuant to
the DIP Facility will bear interest at a rate of 16.5% per annum and will be secured by liens
senior in priority to all other liens (other than certain prepetition liens) on all of the assets
of the Issuer and Northern and all of their respective subsidiaries. The Issuers wholly owned
subsidiary, Proton Energy Systems, Inc. (Proton), and each of the Issuers and Northerns
respective subsidiaries will guarantee and pledge their assets to secure the DIP Facility. The DIP
Facility is scheduled to mature on August 1, 2008, but is subject to acceleration upon default, as
defined in the Secured Debtor-in-Possession Loan Agreement to be entered into among Perseus VII,
the Issuer, Northern, Proton and the other affiliates of the Issuer
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(the DIP Loan Agreement). The Issuer and Northern will use cash flow from operations and
the DIP Facility to provide working capital in accordance with the terms set forth in the budget
agreed on by the Issuer, Northern and Perseus VII. A copy of the DIP Loan Agreement was filed by
the Issuer as an exhibit to the Issuer 8-K. Perseus VII has made no commitment to provide the
Issuer with any additional capital or to take any other action. Perseus VII has reserved all of
its rights as a secured creditor of the Issuer.
As disclosed in the Schedule 13D and previous amendments thereto, Perseus VII has invested
$16.5 million in the Issuer under the terms of the Securities Purchase Agreement, dated May 10,
2007 and amended on March 13, 2008 (the Securities Purchase Agreement). In exchange, the Issuer
has issued to Perseus VII senior secured convertible promissory notes that accrue interest (payable
in cash or in kind at the Issuers discretion) at the rate of 12.5% per annum (all such notes,
including notes issued to Perseus VII to pay interest thereon, the Perseus Notes). The
Securities Purchase Agreement has previously been filed as an exhibit to the Schedule 13D and the
amendment to the Securities Purchase Agreement has previously been filed as an exhibit to Amendment
No. 3. The filing of the Chapter 11 petitions described above constitutes an event of default
under the Perseus Notes. Additionally, an event of default occurred on June 3, 2008 when the
Issuer breached certain financial covenants set forth in certain of the Perseus Notes.
Accordingly, all of the Issuers obligations due to Perseus VII are now due and payable. As of
June 4, 2008, the total amount of principal and accumulated interest due and payable under the
Perseus Notes and other amounts due and payable under the Securities Purchase Agreement was at
least $18.6 million.
On June 4, 2008, (i) the Issuer entered into a Stock Purchase Agreement (the Proton Purchase
Agreement) with Baker Companies, Inc. (Baker) pursuant to which Baker has agreed to purchase all
of the shares of the capital stock of Proton for a purchase price of $9.2 million, subject to
certain adjustments, and (ii) Northern entered into an Asset Purchase Agreement (the Northern
Purchase Agreement) with NEA Wind Acquisition Corp. (NEA Wind) pursuant to which NEA Wind has
agreed to purchase substantially all of the assets and assume specified liabilities of Northern for
a purchase price of $10.5 million, subject to a holdback of $600,000 to be held in escrow for six
months to secure indemnification obligations under the Northern Purchase Agreement. Both sales
will be subject to an auction process that will be governed by bidding procedures approved by the
Court. These procedures will allow competing bidders to submit higher offers in each auction.
Perseus VII also will have the right to bid at one or both auctions (including by way of credit
bidding). Perseus VII has not determined whether it will bid on some or all of the assets subject
to sale. Under the terms of the DIP Loan Agreement, the net sale proceeds from the Proton and
Northern sales must be used to repay amounts due and payable under the Perseus Notes, the
Securities Purchase Agreement and the DIP Facility, subject to certain prepetition claims.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this Statement is true, complete and correct.
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Dated: June 6, 2008. |
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PERSEUS PARTNERS VII, L.P. |
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By:
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Perseus Partners VII GP, L.P., |
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its general partner |
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By:
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Perseus Partners VII GP, L.L.C., |
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its general partner |
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/s/ Teresa Y. Bernstein |
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Its: Secretary |
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FRANK H. PEARL |
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/s/ Teresa Y. Bernstein |
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Teresa Y. Bernstein, Attorney-In-Fact |
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