Fairwood Holdings Limited (FRWDF) Inactive
Filed: 24 Oct 01, 12:00am
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event reported: October 9, 2001
Fairwood Corporation
(Exact name of registrant as specified in charter)
| Delaware (State of Incorporation) | 0-18446 (Commission File Number) | 13-3472113 (I.R.S. Employer Identification No.) |
Item 2. Acquisition or Disposition of Assets
(a) On October 9, 2001, pursuant to an Exchange Agreement, Consolidated Furniture Corporation, a Delaware corporation (“Consolidated Furniture”) and wholly-owned direct subsidiary of Fairwood Corporation (“Fairwood”) transferred all of the outstanding capital stock of its wholly-owned direct subsidiary Furniture Comfort Corporation, a Delaware corporation (“Furniture Comfort”) to Court Square Capital Limited, a Delaware corporation (“CSCL”) as payment in full of $24 million of the principal amount outstanding under the Revolving Credit Note dated September 22, 1989 and issued by Consolidated Furniture (then Mohasco Corporation) and certain of its affiliates to CSCL (then known as Citicorp Capital Investors Limited). The assets of Consolidated Furniture and its subsidiaries, including the stock and assets of Furniture Comfort, were pledged to CSCL as security for this obligation. The amount of the consideration received by Consolidated Furniture was determined after a third party investment bank issued an opinion to Consolidated Furniture as to the fairness of the consideration offered by CSCL for the stock of Furniture Comfort. Furniture Comfort, through its sole operating division, the Barcalounger Division, manufactures upholstered stationary and motion furniture, such as modular living room groups, recliners, rockers and glider chairs.
CSCL is an affiliate of Citicorp Venture Capital Limited, which owns 99.98% of the Common Stock of Fairwood. M. Saleem Muqaddam, who serves as a director of each of Fairwood, Consolidated Furniture and Furniture Comfort, also serves as an officer of CSCL.
Fairwood is a holding company with no operations. Fairwood’s sole asset is the stock of its wholly-owned subsidiary, Consolidated Furniture.
Item 7. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Not Applicable.
(b) PRO FORMA FINANCIAL INFORMATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements (the “Pro Forma Financial Statements”) are based on the historical consolidated financial statements of Fairwood Corporation (the “Company”).
The unaudited pro forma condensed balance sheet gives effect to the disposition as if it was consummated on June 30, 2001. The unaudited pro forma condensed consolidated statements of operations give effect to the disposition as if it was consummated on January 1, 2000. The pro forma adjustments are described more fully in the accompanying notes.
The Pro Forma Financial Statements are presented for informational purposes only and do not purport to be indicative of the results of operations that actually would have been achieved had the disposition been consummated on the date for the periods indicated and do not purport to be indicative of the financial position or results of operations as of any future date or for any future period. The Pro Forma Financial Statements should be read in connection with the Company’s Annual Report on Form 10-K for the year ended December 31, 2000, the Consolidated Financial Statements of the Company and related notes thereto.
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FAIRWOOD CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheets
June 30, 2001
(Dollars in thousands)
| Pro Forma | |||||||||||||||||||
| Adjust- | |||||||||||||||||||
| Assets | Historical | ments | Pro Forma | ||||||||||||||||
| Current Assets: | |||||||||||||||||||
| Cash and cash equivalents | $ | 6,531 | ( 6,280 | ) | (a | ) | 251 | ||||||||||||
| Accounts receivable: | |||||||||||||||||||
| Trade | 7,710 | ( 7,710 | ) | (a | ) | — | |||||||||||||
| 7,710 | ( 7,710 | ) | — | ||||||||||||||||
| Less allowance for discounts and doubtful accounts | 331 | ( 331 | ) | (a | ) | — | |||||||||||||
| 7,379 | ( 7,379 | ) | — | ||||||||||||||||
| Inventories | 7,966 | ( 7,966 | ) | (a | ) | — | |||||||||||||
| Prepaid expenses and other current assets | 268 | ( 182 | ) | (a | ) | 86 | |||||||||||||
| Total current assets | 22,144 | ( 21,807 | ) | 337 | |||||||||||||||
| Property, plant and equipment, at cost | 8,353 | ( 8,353 | ) | (a | ) | — | |||||||||||||
| Less accumulated depreciation and amortization | 5,655 | ( 5,655 | ) | (a | ) | — | |||||||||||||
| 2,698 | ( 2,698 | ) | — | ||||||||||||||||
| Other assets | 40 | — | 40 | ||||||||||||||||
| $ | 24,882 | ( 24,505 | ) | 377 | |||||||||||||||
(Continued)
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
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FAIRWOOD CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheets (continued)
June 30, 2001
(Dollars in thousands)
| Pro Forma | ||||||||||||||||||||
| Adjust- | ||||||||||||||||||||
| Liabilities and Deficit | Historical | ments | Pro Forma | |||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Current maturities of long-term debt: | ||||||||||||||||||||
| Revolving credit | $ | 457,463 | ( 24,000 | ) | (a | ) | 433,463 | |||||||||||||
| Debentures: | ||||||||||||||||||||
| Senior subordinated | 80,000 | — | 80,000 | |||||||||||||||||
| Senior subordinated pay-in-kind | 105,853 | — | 105,853 | |||||||||||||||||
| Merger | 62,928 | — | 62,928 | |||||||||||||||||
| Accrued interest | 190,056 | — | 190,056 | |||||||||||||||||
| Accounts payable | 2,303 | ( 1,475 | ) | (a | ) | 828 | ||||||||||||||
| Due to affiliate | 3,963 | ( 3,963 | ) | (a | ) | — | ||||||||||||||
| Accrued expenses | 2,372 | ( 2,372 | ) | (a | ) | — | ||||||||||||||
| Federal and state income taxes | 133 | — | 133 | |||||||||||||||||
| Total current liabilities | 905,071 | ( 31,810 | ) | 873,261 | ||||||||||||||||
| Other liabilities | 3,988 | — | 3,988 | |||||||||||||||||
| Redeemable preferred stock: | ||||||||||||||||||||
| Junior preferred, cumulative, par value $.01 per share | 100 | — | 100 | |||||||||||||||||
| Common stock and other shareowners’ deficit: | ||||||||||||||||||||
| Common stock and additional paid-in capital | 55,948 | — | 55,948 | |||||||||||||||||
| Accumulated other comprehensive loss - Minimum pension liability | ( 2,102 | ) | — | ( 2,102 | ) | |||||||||||||||
| Accumulated deficit | ( 938,123 | ) | 7,305 | (a | ) | ( 930,818 | ) | |||||||||||||
| ( 884,277 | ) | 7,305 | ( 876,972 | ) | ||||||||||||||||
| $ | 24,882 | ( 24,505 | ) | 377 | ||||||||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
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Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
| (a) | - | Reflects the elimination of the assets and liabilities of Furniture Comfort Corporation transferred in settlement of $24 million under the existing Revolving Credit Note for consideration of the transfer of all of Furniture Comfort’s outstanding stock. |
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FAIRWOOD CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statements of Operations
Year ended December 31, 2000
(In thousands)
| Pro Forma | ||||||||||||||||
| Ajust- | ||||||||||||||||
| Historical | ments | Pro Forma | ||||||||||||||
| Net sales | $ | 58,670 | ( 58,670 | ) | (a | ) | — | |||||||||
| Cost of sales | 46,979 | ( 46,979 | ) | (a | ) | — | ||||||||||
| Selling, administrative and general expenses | 9,125 | ( 7,230 | ) | (a | ) | 1,895 | ||||||||||
| 56,104 | ( 54,209 | ) | 1,895 | |||||||||||||
| Operating income (loss) | 2,566 | ( 4,461 | ) | ( 1,895 | ) | |||||||||||
| Interest income | 185 | ( 126 | ) | (a | ) | 59 | ||||||||||
| Interest on indebtedness | ( 86,112 | ) | 2,547 | (b | ) | (83,565 | ) | |||||||||
| Other income (expenses), net | 15 | — | 15 | |||||||||||||
| Loss before income taxes | ( 83,346 | ) | ( 2,040 | ) | ( 85,386 | ) | ||||||||||
| Provision for income taxes | — | — | — | |||||||||||||
| Net loss | $ | ( 83,346 | ) | ( 2,040 | ) | ( 85,386 | ) | |||||||||
See accompanying notes to consolidated financial statements.
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Notes to the Unaudited Pro Forma Condensed Statement of Operations for the Year Ended December 31, 2000.
| (a) | - | Reflects the elimination of Furniture Comfort Corporation results of operations from the consolidated results of operations. |
| (b) | - | Reflects the change in interest costs as a result of reduction of borrowings under the Revolving Credit Agreement of $24 million and the elimination of Furniture Comfort Corporation’s interest costs on its capital lease. |
| Interest under Revolving Credit Agreement | $ | 2,520 | ||
| Interest costs attributable to Capital Lease | 27 | |||
| $ | 2,547 | |||
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FAIRWOOD CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statements of Operations
Six months ended June 30, 2001
(In thousands)
| Pro Forma | ||||||||||||||||
| Adjust- | ||||||||||||||||
| Historical | ments | Proforma | ||||||||||||||
| Net sales | $ | 27,260 | ( 27,260 | ) | (a | ) | — | |||||||||
| Cost of sales | 22,120 | ( 22,120 | ) | (a | ) | — | ||||||||||
| Selling, administrative and general expenses | 4,868 | ( 3,455 | ) | (a | ) | 1,413 | ||||||||||
| 26,988 | ( 25,575 | ) | (a | ) | 1,413 | |||||||||||
| Operating income (loss) | 272 | ( 1,685 | ) | ( 1,413 | ) | |||||||||||
| Interest income | 119 | ( 110 | ) | (a | ) | 9 | ||||||||||
| Interest on indebtedness | ( 41,352 | ) | 1,134 | (a | ) | ( 40,218 | ) | |||||||||
| Loss before income taxes | ( 40,961 | ) | ( 661 | ) | ( 41,622 | ) | ||||||||||
| Provision for income taxes | — | — | — | |||||||||||||
| Net loss | $ | ( 40,961 | ) | ( 661 | ) | ( 41,622 | ) | |||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
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Notes to the Unaudited Proforma Condensed Statement of Operations for the Six Months Ended June 30, 2001.
| (a) | - | Reflects the elimination of Furniture Comfort Corporation results of operations from the consolidated results of operations. |
| (b) | - | Reflects the change in interest costs as a result of reduction of borrowings under the Revolving Credit Agreement of $24 million and the elimination of Furniture Comfort Corporation’s interest costs on its capital lease. |
| Interest under Revolving Credit Agreement | $ | 1,122 | ||
| Interest costs attributable to Capital Lease | 12 | |||
| $ | 1,134 | |||
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| (c) | EXHIBITS | |
| 2.1. Exchange Agreement dated October 9, 2001 among Consolidated Furniture Corporation and Court Square Capital Limited. |
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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.
| FAIRWOOD CORPORATION | ||
| By: /s/ JOHN B. SGANGA | ||
| Name: | John B. Sganga | |
| Title: | Chief Financial Officer, | |
| Executive Vice President, Secretary | ||
| and Treasurer | ||
Date: October 24, 2001
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