SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REPORT PURSUANT TO
OR 15(d) OF THE
EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 24, 2010
POLYMER GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
9335 Harris Corners Parkway, Suite 300
Charlotte, North Carolina
(Address of Principal Executive Offices)
(Registrants Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
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
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
1.01 Entry into
a Material Definitive Agreement.
June 24, 2010, Chicopee, Inc. (Chicopee), a wholly owned subsidiary
of Polymer Group, Inc. (PGI), entered into an Equipment Lease Agreement
(the Agreement) with Gossamer Holdings, LLC, a Delaware limited liability
company (Gossamer). Pursuant to the
Agreement, Chicopee will lease an integrated manufacturing line for the
production of heat sealed polypropylene nonwoven fabrics (the Equipment) from
Gossamer for a seven-year period (the Basic Term) beginning upon acceptance
of the Equipment (the Basic Term Commencement Date), which is expected to
occur in the third quarter of 2011.
capitalized cost amount, which is subject to adjustment as described below, is
expected to approximate $53.0 million to $56.5 million (the Capitalized Lessors
Cost). From the Basic Term Commencement
Date to the fourth anniversary of the Basic Term Commencement Date, Chicopee
will make estimated annual lease payments of approximately $8.4 million to $9.0
million to Gossamer based on the Capitalized Lessors Cost. The aggregate monthly lease payments to
Gossamer under the Agreement, which is subject to adjustment as described
below, is expected to approximate
$58.8 million to $62.7 million. From the fourth anniversary of the
Basic Term Commencement Date to the end of the Basic Term, Chicopees annual
lease payments may change in accordance with an adjustment to the Basic Term Lease
Rate Factor, as defined in the Agreement.
may purchase the Equipment from Gossamer:
· On the second anniversary of the Basic Term
Commencement Date, for an amount (the First EBO Price) equal to the greater
of (1) 82.417714% of the Capitalized Lessors Cost, or (2) the fair
market value of the Equipment;
· On the fourth anniversary of the Basic Term
Commencement Date, for an amount (the Second EBO Price) equal to the greater
of (1) 61.177977% of the Capitalized Lessors Cost, or (2) the fair
market value of the Equipment; and
· At the expiration of the Basic Term, for an
amount equal to the fair market value of the Equipment plus all applicable
Basic Term Lease Rate Factor, First EBO Price and Second EBO Price and other
terms of the Agreement were calculated on the basis of certain tax and pricing
assumptions set forth in the Agreement.
If such assumptions change or if actual amounts differ from assumed
amounts, such terms may be adjusted on the Basic Term Commencement Date in
accordance with the Agreement.
actual aggregate amount of lease payments made under the Agreement is subject
to adjustment on the Basic Term Commencement Date based on actual costs
incurred during construction and the fourth anniversary of the Basic Term
Commencement Date as described above, which could cause actual lease payments
made to differ from the amounts referenced above.
Agreement also contains financial and operating covenants and remedies,
including acceleration and/or assumption of obligations, typical of
transactions of this type regarding the delivery, use, operation, maintenance
and return of the Equipment; loss or damage of the Equipment; insurance
coverage; information rights and indemnification.
connection with the Agreement, on June 24, 2010 Chicopee and Gossamer also
entered into various agreements (1) pursuant to which Chicopee, as
Gossamers construction agent, will
Gossamers obligations, other than payment obligations, under the Equipment
purchase, delivery, installation and related contracts (including the ordering,
purchase, delivery, assembly, installation, construction and completion of the
Equipment); (2) defining the rights of the parties to the site on which
the Equipment will be constructed; and (3) otherwise ancillary to
implementation of the Agreement (collectively, and together with the Agreement
and all other related consents, agreements and documents, the Operative
obligations under the Operative Documents are guaranteed in full by PGI and PGI
Polymer, Inc., a wholly owned subsidiary of PGI, pursuant to a Guaranty
Agreement executed simultaneously with the Agreement.
2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Item 1.01, which is incorporated herein by reference.