Attached files
| file | filename |
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| EX-99.1 - CONGOLEUM CORP | ex99-1.htm |
| EX-99.2 - CONGOLEUM CORP | ex99-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
Current
Report Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
October 22,
2009
Date
of Report (Date of earliest event reported)
Congoleum
Corporation
(Exact
name of registrant as specified in its charter)
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Delaware
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01-13612
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02-0398678
|
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(State
or other jurisdiction of
incorporation)
|
(Commission
File
Number)
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(I.R.S.
Employer
Identification
No.)
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3500
Quakerbridge Road
P.O.
Box 3127
Mercerville, NJ
08619-0127
(Address
of principal executive offices and zip code)
609-584-3000
(Registrant’s
telephone number, including area code)
N/A
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:
|
¨
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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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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
On
October 22, 2009, the Asbestos Claimants' Committee, the Bondholders’ Committee
and Congoleum Corporation (“Congoleum”) jointly filed a revised plan of
reorganization (the “Second Amended Joint Plan”) and disclosure statement with
the United States District Court for the District of New Jersey (the “District
Court”). The District Court has scheduled a hearing to consider the adequacy of
the disclosure statement for the Second Amended Joint Plan for November 19,
2009.
The
Second Amended Joint Plan, if approved by the District Court and accepted
by the requisite creditor constituencies, would permit Congoleum to exit
Chapter 11 free of liability for existing and future asbestos claims as
provided in the Second Amended Joint Plan. Under the proposed terms
of the Second Amended Joint Plan, it is contemplated that a Plan Trust would be
created that would assume the liability for Congoleum’s current and future
asbestos claims. The Plan Trust would receive the proceeds of various
settlements Congoleum has reached with a number of insurance carriers and would
be assigned Congoleum’s rights under its remaining insurance policies covering
asbestos product liability. The Plan Trust also would receive 50.1%
of the newly issued common stock in reorganized Congoleum when the Second
Amended Joint Plan takes effect.
Holders
of Congoleum’s $100 million in 8.625% Senior Notes due in August 2008 would
receive on a pro rata basis $33 million in new 9% senior secured notes (the “New
Senior Notes”) maturing December 31, 2017. The New Senior Notes would
not accrue or earn interest for the first six months after the effective date of
the Second Amended Joint Plan, after which they would accrue interest at the
rate of 9% per annum payable semi-annually in cash. During the period
beginning with the interest payment due 12 months after the effective date of
the Second Amended Joint Plan to and including the interest payment due 30
months after the effective date of the Second Amended Joint Plan, at Congoleum’s
option, interest may be paid in kind by the issuance of additional New Senior
Notes in the aggregate amount of the interest then due and payable on each such
payment date, in which case the interest rate applicable during the period for
which the payment applies would be 11%.
The
indenture governing the New Senior Notes also will provide for the annual
issuance of additional New Senior Notes ("Additional Notes"), with the amount of
Additional Notes to be issued being determined as of the end of Congoleum’s
fiscal year ending December 31, 2011, and on an annual basis at the end of each
of the succeeding five years (each such date, a "Determination Date"), according
to the following procedure. As soon as practicable after each
Determination Date, the average EBITDA for the two-year period ending on the
Determination Date shall be calculated. An assumed net debt capacity
("Net Debt Capacity") shall then be determined as of each such Determination
Date by multiplying this two-year average annual EBITDA by four. Additional
Notes shall be issuable to holders of New Senior Notes with respect to a
Determination Date to the extent that the Net Debt Capacity as of such
Determination Date, plus any cash amount on Congoleum's balance sheet as of such
Determination Date, exceeds the sum of (i) the amount of the balance of
Reorganized Congoleum's working capital loan (determined as the
daily
average
of such loan for the year ending on such Determination Date); (ii) the $33
million of New Senior Notes to be issued on the effective date of the Second
Amended Joint Plan; (iii) the amount of Additional Notes issued with respect to
all prior Determination Dates; and (iv) the amount of other interest-bearing
debt outstanding as of such Determination Date. The calculation of
the amount of Additional Notes to be issued shall take place within three months
after each Determination Date, and the issuance of such Additional Notes shall
be deemed to have occurred as of the first day of the fiscal year following the
Determination Date. The indenture governing the New Senior Notes will
provide that in no event will the cumulative amount of Additional Notes issued
under the procedures described in this paragraph exceed $37
million.
The
New Senior Notes would be subordinated to the working capital facility providing
Congoleum’s financing upon exiting reorganization. In addition,
holders of the $100 million in 8.625% Senior Notes due in August 2008 would
receive 49.9% of the common stock in reorganized
Congoleum. Congoleum’s obligations for the $100 million in 8.625%
Senior Notes due in August 2008, including accrued pre-petition interest (which
amounted to $3.6 million) would be satisfied by the New Senior Notes and 49.9%
of the common stock issued if the Second Amended Joint Plan takes
effect.
Under
the proposed terms of the Second Amended Joint Plan, existing Class A and Class
B common shares of Congoleum would be cancelled if the Second Amended Joint Plan
takes effect and holders of those shares would not receive anything on account
of their cancelled shares. Congoleum expects existing management will continue
post-reorganization.
Copies
of the Second Amended Plan and the related proposed disclosure statement are
attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated by
reference herein. The Second Amended Joint Plan and the related
proposed disclosure statement, including all exhibits filed therewith, will be
available on the investor relations section of Congoleum’s website at
www.congoleum.com.
The
above contains certain forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, that involve risks,
uncertainties and assumptions. These statements can be identified by the use of
the words such as "anticipate," "believe," "estimate," "expect," "intend,”
"plan," "project" and other words of similar meaning. In particular, these
include statements relating to intentions, beliefs or current expectations
concerning, among other things, future performance, results of operations, the
outcome of contingencies such as bankruptcy and other legal proceedings, and
financial conditions. These statements do not relate strictly to historical or
current facts. These forward-looking statements are based on Congoleum's
expectations, as of the date of this release, of future events, and Congoleum
undertakes no obligation to update any of these forward-looking
statements.
Although
Congoleum believes that these expectations are based on reasonable assumptions,
within the bounds of its knowledge of its business and operations, there can be
no assurance that actual results will not differ materially from its
expectations. Readers are cautioned not to place undue reliance on any
forward-looking statements. Any or all of these statements may turn out to be
incorrect. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that may
or may not occur in the future. Any forward-looking statements made in this
Current Report on Form 8-K speak only as of the date of such statement. It
is not possible to predict or identify all factors that could potentially cause
actual results to differ materially from expected and historical results.
Factors that could cause actual results to differ from expectations include: (i)
the future cost and timing of estimated asbestos liabilities and payments, (ii)
the availability of insurance coverage and reimbursement from insurance
companies that underwrote the applicable insurance policies for Congoleum for
asbestos-related claims, (iii) the costs relating to the execution and
implementation of any plan of reorganization pursued by Congoleum, (iv) timely
reaching agreement with other creditors, or classes of creditors, that exist or
may emerge, (v) satisfaction of the conditions and obligations under Congoleum's
outstanding debt instruments, (vi) the response from time to time of Congoleum's
and its controlling shareholder's, American Biltrite Inc.'s, lenders, customers,
suppliers and other constituencies to the ongoing process arising from
Congoleum's strategy to settle its asbestos liability, (vii) Congoleum's ability
to maintain debtor-in-possession financing sufficient to provide it with funding
that may be needed during the pendency of its Chapter 11 case and to obtain exit
financing sufficient to provide it with funding that may be needed for its
operations after emerging from the bankruptcy process, in each case, on
reasonable terms, (viii) timely obtaining sufficient creditor and court approval
of any reorganization plan pursued by Congoleum (including the results of any
relevant appeals), (ix) compliance with the United States Bankruptcy Code,
including Section 524(g), (x) costs of, developments in, and the outcome of
insurance coverage litigation pending in New Jersey state court involving
Congoleum and certain insurers, (xi) the possible adoption of another party's
plan of reorganization which may prove to be unfeasible, (xii) increases in raw
material prices or disruption in supply, (xiii) increased competitive activity
from companies in the flooring industry, some of which have greater resources
and broader distribution channels than Congoleum, (xiv) increases in the costs
of environmental compliance and remediation or the exhaustion of insurance
coverage for such expenses, (xv) unfavorable developments in the national
economy or in the housing industry in general, including developments arising
from the war in Iraq and Afghanistan and from the tightening of credit
availability, (xvi) shipment delays, depletion of inventory and increased
production costs resulting from unforeseen disruptions of operations at any of
Congoleum's facilities or distributors, (xvii) product warranty costs, (xviii)
changes in distributors of Congoleum's products, and (xix) Congoleum's interests
may not be the same as its controlling shareholder American Biltrite, Inc. In
any event, if Congoleum is not successful in obtaining sufficient creditor and
court approval of a plan of reorganization, such failure would have a material
adverse effect upon its business, results of operations and financial condition.
Actual results could differ significantly as a result of these and other factors
discussed in Congoleum's annual report on Form 10-K for the year ended December
31, 2008 and subsequent filings made by Congoleum with the Securities and
Exchange Commission.
Item
9.01 Exhibits
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Exhibit
No.
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Description
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99.1
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Second
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy
Code of the Debtors, the Official Asbestos Claimants’ Committee and the
Official Committee of Bondholders for Congoleum Corporation, et al., dated
as of October 22, 2009.
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99.2
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Proposed
Disclosure Statement with respect to the Second Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code of the Debtors, the
Official Asbestos Claimants’ Committee and the Official Committee of
Bondholders for Congoleum Corporation, et al., dated as of October 22,
2009.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Date:
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October
28, 2009
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Congoleum
Corporation
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By:
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/s/ Howard N. Feist
III
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Name:
Howard N. Feist III
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Title:
Chief Financial Officer
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