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Delaware | 3448 | 76-0127701 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Mark Gordon David K. Lam Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 (212) 403-1000 | James H.M. Sprayregen Paul M. Basta Christopher J. Marcus Kirkland & Ellis LLP 601 Lexington Avenue New York, New York 10022 (212)446-4800 |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
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The information in this prospectus/disclosure statement may change. We may not complete the exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus/disclosure statement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
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Offer to Exchange Cash and Shares of Common Stock for 2.125% Convertible Senior Subordinated Notes due 2024 (CUSIP No. 628852AG0) | Disclosure Statement for Solicitation of Acceptances of Prepackaged Plan of Reorganization |
• | an out-of-court financial restructuring, which we refer to as the recapitalization plan, consisting of: |
• | this exchange offer to acquire any and all of the convertible notes for cash and shares of our common stock, par value $0.01 per share, in accordance with the terms and subject to the conditions set forth in this prospectus/disclosure statement and in the related letter of transmittal; | |
• | a $250.0 million investment, which we refer to as the CD&R investment, by Clayton, Dubilier & Rice Fund VIII, L.P., which we refer to as the CD&R Fund, a fund managed by Clayton, Dubilier & Rice, Inc., which we refer to as CD&R, a leading private equity investment firm, involving a private placement to the CD&R Fund of a newly created series of our preferred stock, par value $1.00 per share, to be designated as the Series B Cumulative Convertible Participating Preferred Stock, which we refer to as the Series B convertible preferred stock; | |
• | the refinancing of our existing credit facility, which we refer to as the term loan refinancing, under which we and the lenders under our existing credit agreement will enter into an amendment to our existing credit agreement, providing for, among other things, the repayment of approximately $143.3 million of the $293.3 million in principal amount of term loans outstanding under our existing credit facility and a modification of the terms and maturity of the $150.0 million balance; and | |
• | the ABL financing, pursuant to which we will enter into an agreement for a $125.0 million asset-based loan facility; |
• | an in-court financial restructuring, through which we would seek to accomplish the results contemplated by the recapitalization plan through the effectiveness of a prepackaged plan of reorganization, which we refer to as the prepackaged plan, acceptances for which we are soliciting in compliance with chapter 11 of title 11 of the United States Code, which we refer to as the Bankruptcy Code, pursuant to this prospectus/disclosure statement. |
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Q: | What is the purpose of the restructuring? | |
A: | The purpose of the restructuring is to address the Company’s immediate need for liquidity in light of a potentially imminent default under, and acceleration of, our existing credit facility, which may occur as early as November 6, 2009 (which may, in turn, also lead to a default under, and acceleration of, our other indebtedness, including the convertible notes indenture), and the high likelihood that we will be required to repurchase the convertible notes on November 15, 2009, the first scheduled mandatory repurchase date under the convertible notes indenture. | |
The restructuring consists of four related transactions: | ||
• the CD&R investment, which involves the sale and issuance to the CD&R Fund of 250,000 shares of Series B convertible preferred stock for $250.0 million; | ||
• the retirement of the convertible notes; | ||
• the term loan refinancing, which involves the refinancing of our existing credit facility under which we will repay approximately $143.3 million of the $293.3 million in principal amount of term loans outstanding under our existing credit facility and enter into an amendment to our existing credit agreement providing for a modification of the terms and maturity of the $150.0 million balance; and | ||
• the ABL financing, which involves our entry into a $125.0 million asset-based loan facility. | ||
Each of the transactions comprising the restructuring may be accomplished through either the out-of-court recapitalization plan or, in the alternative, the in-court prepackaged plan. If the restructuring is being accomplished through the recapitalization plan, the retirement of the convertible notes tendered in the exchange offer would be accomplished through this exchange offer and the refinancing of our existing credit facility would be accomplished through an amendment to our existing credit agreement. In the alternative, if the restructuring is being accomplished through the prepackaged plan, the retirement of the convertible notes as well as the refinancing of our existing credit facility would be accomplished through the effectiveness of the prepackaged plan. See “The Restructuring.” |
Q: | What is the recapitalization plan? | |
A: | The recapitalization plan is one method to accomplish the restructuring. Under the recapitalization plan: |
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• the CD&R investment would be effected through a private placement transaction; | ||
• the retirement of the convertible notes tendered in this exchange offer would be effected through this exchange offer, pursuant to which the Company is offering to acquire any and all of its outstanding convertible notes in exchange for cash and shares of common stock; | ||
• the term loan refinancing would be effected through an amendment to our existing credit agreement by us and the lenders under our existing credit agreement; and | ||
• the ABL financing would be effected through our entry into the ABL agreement. | ||
If the restructuring is accomplished through the recapitalization plan, we intend, but are not required, to retire any remaining convertible notes outstanding after the consummation of this exchange offer by exercising our redemption right under the convertible notes indenture on or after November 20, 2009; if we do not so exercise our redemption right, such remaining convertible notes will otherwise be retired pursuant to the terms of the convertible notes indenture. | ||
See “The Restructuring” and “The Exchange Offer.” | ||
Q: | What is the prepackaged plan? | |
A: | The prepackaged plan is an alternative to the recapitalization plan for accomplishing the restructuring. In the event that the conditions to the recapitalization plan are not satisfied or, with the prior consent of the CD&R Fund, waived (including, for example, the minimum tender condition) but we receive acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired class of claims, as an alternative to the recapitalization plan, we may elect and, under the terms of the investment agreement, we may be required, to seek confirmation of the prepackaged plan in a chapter 11 proceeding. See “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Commencement of a Reorganization Case in Connection with the Prepackaged Plan Covenant.” | |
Under the prepackaged plan, holders of convertible notes and the lenders under our existing credit agreement (as well as the holders of all other claims and interests) would receive the same treatment with respect to their claims (and interests) as they would receive in the recapitalization plan, the CD&R Fund would receive the same 250,000 shares of Series B convertible preferred stock contemplated by the CD&R investment and the Company would enter into the ABL agreement. Existing holders of our common stock would continue to hold such common stock. | ||
See “The Prepackaged Plan.” | ||
Q: | In what circumstances will we file the prepackaged plan instead of close the exchange offer? |
A: | We will file the prepackaged plan instead of close the exchange offer if: (1) we are unable to complete the recapitalization plan because the minimum tender condition is not satisfied or waived (which minimum tender condition requires that at least 95% of the aggregate principal amount of outstanding convertible notes are validly tendered and not withdrawn), or because less than all of the lenders under our existing credit facility consent to entering into the amended credit agreement, but (2) holders of convertible notes or obligations under our credit agreement holding, in either case, at leasttwo-thirds (2/3) in amount and more thanone-half (1/2) in number of the claims in the applicable class who actually cast ballots vote to accept the prepackaged plan. In such circumstances, we will seek to accomplish the restructuring, on the same economic terms as the recapitalization plan, by way of the prepackaged plan. See “Questions and Answers About the Restructuring—What is the Prepackaged Plan?” and “Summary—The Prepackaged Plan.” |
For the prepackaged plan to be confirmed by the bankruptcy court without invoking the “cram-down” provisions of the Bankruptcy Code, each class of claims or interests that is impaired must vote to accept the prepackaged plan. An impaired class of claims is deemed to accept a plan of reorganization if the holders of at leasttwo-thirds (2/3) in amount and more thanone-half (1/2) in number of the claims in such class who actually cast ballots vote to accept the prepackaged plan. |
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Pursuant to the lock-up agreement, each holder of convertible notes and obligations under our credit agreement that executed the lock-up agreement has irrevocably agreed, in accordance with the terms of the lock-up agreement, to vote all of its convertible notes and obligations under our existing credit facility in favor of the prepackaged plan. Such holders who are parties to the lock-up agreement represent more than 79% of the aggregate principal amount of the outstanding convertible notes. If such holders also represent more thanone-half (1/2) of the number of the claims in each class who actually cast ballots (which cannot be determined until all ballots have been cast), then we will have received sufficient votes from the convertible noteholders to approve the prepackaged plan with respect to the impaired class of convertible notes claims. |
The confirmation and effectiveness of the prepackaged plan are subject to certain conditions that may not be satisfied and are different from those under the recapitalization plan (including the exchange offer). We cannot assure you that all requirements for confirmation and effectiveness of the prepackaged plan will be satisfied or that the bankruptcy court will conclude that the requirements for confirmation and effectiveness of the prepackaged plan have been satisfied. See “The Prepackaged Plan—Confirmation of the Prepackaged Plan” and “The Prepackaged Plan—Conditions to Effective Date of the Prepackaged Plan.” | ||
The effective date of the prepackaged plan will not occur until the conditions set forth below have been satisfied or waived: (1) the confirmation order has been entered and no stay of such order is in effect; (2) the receipt of proceeds from the CD&R investment; (3) the consummation of the term loan refinancing; and (4) the consummation of the ABL financing. See “The Prepackaged Plan—Conditions to the Effective Date of the Prepackaged Plan.” | ||
Q: | What are the expected results of the restructuring, either accomplished through the recapitalization plan or the prepackaged plan? | |
A: | The restructuring, if successful, will increase the Company’s capital and liquidity levels and reduce the amount of our outstanding debt. Specifically, upon the completion of the restructuring, we expect our indebtedness to be reduced from approximately $473.7 million as of August 2, 2009 to approximately $150.4 million at the closing of the restructuring, consisting of $150.0 million in principal amount of term loans under the amended credit agreement and $0.4 million of our industrial revenue bond. See “Capitalization” and “Source and Use of Proceeds.” |
The ABL financing contemplated by the restructuring will provide us with up to $125.0 million in liquidity, subject to availability under a borrowing base, for working capital purposes and future expansion. Based on its discussions with prospective lenders under the ABL agreement, the Company expects that because of borrowing base constraints, initial availability under the ABL agreement will be substantially less than the $125.0 million commitment, and may be as low as $45.0 million. Although we have been in discussions with prospective lenders under the ABL agreement, no loan commitment letter from any such prospective lender has been received by the Company. |
Assuming we are able to complete the restructuring, we expect that, for the foreseeable future, cash generated from operations, together with the proceeds of the ABL financing, will be sufficient to allow us to fund our operations, to increase working capital as necessary to support our strategy and to fund planned capital expenditures and expansions (including approximately $5 million expected for the remainder of fiscal 2009). | ||
Q: | What is thelock-up agreement? | |
A: | We have entered into alock-up agreement with the holders of more than 79% of the aggregate principal amount of the outstanding convertible notes. Pursuant to thelock-up agreement, each holder of convertible notes that executed thelock-up agreement has irrevocably agreed, in accordance with the terms of thelock-up agreement, (1) to tender its convertible notes in this exchange offer, (2) to the extent that such holder holds obligations under our existing credit agreement, to support the term loan refinancing by accepting its portion of the repayment contemplated thereby and by executing an amendment to our existing credit agreement in the form of the amended credit agreement attached hereto as Annex J, and (3) to vote all of its convertible notes and obligations under our existing credit facility in favor of the prepackaged plan, among other things. See “The Restructuring—TheLock-Up Agreement.” |
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Q: | Why is it important that I tender my convertible notes and vote to accept the prepackaged plan? | |
A: | If we do not complete the restructuring either through the recapitalization plan or the prepackaged plan, because the conditions to the recapitalization plan and the prepackaged plan have not been satisfied or waived or otherwise, we will face an immediate liquidity crisis. If we do not complete the restructuring, we do not expect, and we cannot assure you, that we will have, or have access to, sufficient liquidity (1) to meet our debt repayment/repurchase obligations, including any potential acceleration of our existing credit facility, which may occur as early as November 6, 2009 (which may, in turn, also lead to a default under, and acceleration of, our other indebtedness, including the convertible notes indentures) and (2) to meet our obligation to repurchase the convertible notes at the option of the holders thereof on November 15, 2009, the next scheduled repurchase date. | |
Due to our non-compliance as of August 2, 2009 with the required leverage, senior leverage and interest coverage ratios in our existing credit agreement, our outstanding indebtedness of approximately $293.3 million thereunder may be declared immediately due and payable as early as November 6, 2009, the date the current waiver from the lenders under our existing credit agreement expires. In the event that we do not repay such borrowings upon acceleration, the lenders under our existing credit agreement could exercise their remedies as secured creditors with respect to the collateral securing such borrowings. A failure to pay or refinance such borrowings will also result in a default under the convertible notes indenture, which convertible notes could also then be declared immediately due and payable, and under our swap agreement, which could then be terminated by the counterparty thereto. If all such indebtedness, which totaled approximately $473.7 million as of August 2, 2009 and such amounts payable pursuant to the termination of the swap agreement were to become due and payable on November 6, 2009, it would result in a material adverse effect on our financial condition, operations and debt service capabilities. As of August 2, 2009, excluding restricted cash, we had a current cash balance of approximately $105.4 million to address our liquidity needs. For a description of our non-compliance with the financial ratio covenants under our existing credit agreement, see our quarterly report onForm 10-Q for the quarter ended August 2, 2009, our current reports onForm 8-K filed on May 21, 2009, July 15, 2009 and August 27, 2009 and “Incorporation of Certain Documents by Reference.” | ||
In the event that we experience a liquidity crisis as described above, it could likely result in our filing for bankruptcy protection pursuant to the Bankruptcy Code on terms other than as contemplated by the prepackaged plan. If we commence such a bankruptcy filing, holders of convertible notes may receive consideration that is substantially less than what is being offered under the restructuring. See “Risk Factors—Risk Relating to NOT Accepting the Exchange Offer or Rejecting the Prepackaged Plan” for more information on the possible consequences if the restructuring is not successfully completed. | ||
Both this exchange offer and the prepackaged plan are subject to certain conditions. In particular, this exchange offer is subject to the satisfaction of the minimum tender condition that at least 95% of the aggregate principal amount of the outstanding convertible notes must have been validly tendered and not withdrawn in this exchange offer, and confirmation and effectiveness of the prepackaged plan requires the receipt of acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes. | ||
Accordingly, it is important that you tender your convertible notes for exchange in this exchange offer and vote to accept the prepackaged plan to avoid the adverse consequences described above. |
Q: | Who is making this exchange offer? | |
A: | NCI Building Systems, Inc. (the issuer of the convertible notes) is making this exchange offer. | |
Q: | What amount of convertible notes are you seeking in this exchange offer? | |
A: | We are seeking to acquire any and all outstanding convertible notes. |
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Q: | What will I receive in this exchange offer if I tender my convertible notes and they are accepted? | |
A: | For each $1,000 principal amount of convertible notes that you tender and not withdraw in this exchange offer and that we accept, you will, upon the terms and subject to the conditions set forth in this prospectus/disclosure statement and the letter of transmittal, receive $500 in cash and 390 shares of common stock. The cash payment and the shares of common stock to be issued pursuant to this exchange offer will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of this exchange offer on, the convertible notes so tendered and accepted. |
Assuming that all Series B convertible preferred stock were converted to common stock and an equity value based on the midpoint enterprise valuation of the Company of $450 million, the cash and stock consideration offered in this exchange offer represents value of approximately $987.50 per $1,000 in principal amount of convertible notes. |
Q: | Who may participate in this exchange offer? | |
A: | All holders of convertible notes may participate in this exchange offer. | |
Q: | Does the success of this exchange offer depend on the participation of any minimum number of holders of convertible notes? | |
A: | Yes. This exchange offer is subject to the satisfaction of the minimum tender condition, which means that at least 95% of the aggregate principal amount of the outstanding convertible notes must have been validly tendered and not withdrawn in this exchange offer. The satisfaction of the minimum tender condition is a condition to the closing of the CD&R investment and the term loan refinancing under the recapitalization plan. If this condition is not met, subject to applicable laws and our obligation under the investment agreement, we may amend this exchange offer at any time before the acceptance of the convertible notes for exchange. Under the investment agreement, however, we are prohibited from waiving any condition to this exchange offer or making any changes to the terms and conditions to this exchange offer without the prior consent of the CD&R Fund. In addition, any change to the minimum tender condition could result in a termination of thelock-up agreement. | |
We may extend this exchange offer beyond the initial expiration date without the prior consent of the CD&R Fund for a period of not more than 10 business days if, at such date, any of the conditions to this exchange offer have not been satisfied or, with the prior written consent of the CD&R Fund, waived, and, subject to the termination of the investment agreement, we are required to extend this exchange offer if it expires before the registration statement of which this prospectus/disclosure statement forms a part is declared effective. | ||
Q: | How do I tender my convertible notes in this exchange offer? | |
A: | Please follow the procedures for tendering your convertible notes in this exchange offer described in “The Exchange Offer—Procedures for Tendering Convertible Notes.” For further information contact the information agent or the dealer-manager at the addresses or telephone numbers on the back cover of this prospectus/disclosure statement or consult your broker, dealer, commercial bank, trust company or other nominee for assistance. | |
Q: | How long will this exchange offer remain open? | |
A: | This exchange offer and the withdrawal rights will expire at 11:59 p.m., New York City time, on October 7, 2009, or any subsequent time or date to which this exchange offer is extended. | |
As more fully described below, we may extend the expiration date or amend any of the terms or conditions of this exchange offer for any reason, subject to applicable laws and our obligations under the investment agreement (see “The Restructuring—Description of the CD&R Investment—The Investment Agreement—The Exchange Offer; Solicitation of Acceptances of the Prepackaged Plan”). The last date on which tenders will be accepted, whether on October 7, 2009, or any later date to which this exchange offer may be extended, is referred to as the expiration date. |
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Subject to our obligations under the investment agreement and applicable laws, we have the right to: | ||
• extend the expiration date and retain all tendered convertible notes, subject to your right to withdraw your tendered convertible notes; and | ||
• waive any condition in our sole discretion or otherwise amend any of the terms or conditions of this exchange offer in any respect. | ||
Under the investment agreement, we are prohibited from waiving any condition to this exchange offer or making any changes to the terms and conditions to this exchange offer without the prior consent of the CD&R Fund. We may extend this exchange offer beyond the initial expiration date without the prior consent of the CD&R Fund for a period of not more than 10 business days, if, at such date, any of the conditions to this exchange offer have not been satisfied or, with the prior written consent of the CD&R Fund, waived, and, subject to the termination of the investment agreement, we are required to extend this exchange offer if it expires before the registration statement of which this prospectus/disclosure statement forms a part is declared effective. See “The Restructuring—Description of the CD&R Investment—The Investment Agreement—The Exchange Offer; Solicitation of Acceptances of the Prepackaged Plan.” Any change to the minimum tender condition could result in the termination of the lock-up agreement. | ||
If we extend the expiration date, we will issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the scheduled expiration date. If we extend the expiration date, you must tender your convertible notes on or prior to the date identified in such press release or public announcement if you wish to participate in this exchange offer. If we amend any of the terms or conditions of this exchange offer, we will issue a press release or other public announcement. See “The Exchange Offer—Extensions; Amendments.” | ||
We expressly reserve the right, in our sole discretion, to terminate this exchange offer and not accept for exchange any convertible notes (1) if any of the conditions to this exchange offer have not been satisfied or validly waived by us, subject to applicable laws and our obligations under the investment agreement or (2) in order to comply in whole or in part with any applicable law. See “The Exchange Offer—Extensions; Amendments.” | ||
Q: | When will I receive cash and shares of common stock if I tender my convertible notes in the exchange offer? | |
A: | Upon satisfaction or waiver of all of the conditions to this exchange offer, all convertible notes validly tendered to the exchange agent by 11:59 p.m., New York City time, on the expiration date will be accepted for exchange. The cash and shares of common stock will be delivered promptly after the expiration date. See “The Exchange Offer—Acceptance of Convertible Notes for Exchange; Delivery of Cash and Shares of Common Stock.” | |
Q: | Can I withdraw my tender of convertible notes? | |
A: | Unless you are a party to thelock-up agreement and are otherwise restricted by thelock-up agreement, you may withdraw tendered convertible notes at any time prior to 11:59 p.m., New York City time, on the expiration date. You must send a written withdrawal notice to the exchange agent, or comply with the appropriate procedures of DTC’s Automated Tender Offer Program, which we refer to as ATOP. If you change your mind, you may re-tender your convertible notes by again following the tender procedures at any time prior to 11:59 p.m., New York City time, on the expiration date. See “The Exchange Offer—Withdrawal Rights.” | |
Q: | What risks should I consider in deciding whether or not to tender my convertible notes? | |
A: | In deciding whether to participate in this exchange offer, you should carefully consider the discussion of risks and uncertainties affecting the Company, this exchange offer, the prepackaged plan and the common stock described in the section titled “Risk Factors” and the documents incorporated by reference into this prospectus/disclosure statement. |
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Q: | If this exchange offer is consummated, but I do not tender my convertible notes, how will my rights be affected? |
A: | If this exchange offer is consummated and you do not exchange your convertible notes in this exchange offer, or if your convertible notes are not accepted for exchange, unless the restructuring is being accomplished through the prepackaged plan, you will continue to hold your convertible notes and will be entitled to all the rights and subject to all the limitations applicable to the convertible notes. If you continue to hold your convertible notes, you have the right to require that we repurchase the convertible notes (1) upon the closing of the exchange offer because such closing would result in a designated event under the convertible notes indenture, at a repurchase price equal to 100% of their principal amount, plus accrued and unpaid interest, including additional amounts, if any, plus under certain circumstances, if the restructuring occurs on or prior to November 15, 2009, a make-whole premium payable solely in shares of our common stock (other than cash paid in lieu of fractional shares) and (2) after five, 10 and 15 years from the date of the issuance of the convertible notes, at 100% of their principal amount, plus accrued and unpaid interest, if any, beginning November 15, 2009, and we will be required to repurchase any outstanding convertible notes for which you deliver a written repurchase notice to the paying agent, subject to certain conditions in the indenture under which the convertible notes are issued. |
Unless we consummate the restructuring, however, we do not expect, and we cannot assure you, that we will have, or have access to, sufficient liquidity to meet our debt obligations, including any potential acceleration of our indebtedness and our obligation to repurchase the convertible notes at the option of the holders thereof on November 15, 2009, the next scheduled repurchase date. Furthermore, due to our non-compliance as of August 2, 2009 with the required leverage, senior leverage and interest coverage ratios in our existing credit agreement, our outstanding indebtedness of approximately $293.3 million thereunder, which is senior to the convertible notes, may be declared immediately due and payable as early as November 6, 2009, the date of expiration of the current waiver from the lenders under our existing credit agreement. In the event that we do not repay such borrowings upon acceleration, lenders under our existing credit agreement could exercise their remedies as secured creditors with respect to the collateral securing such borrowings. A failure to pay or refinance such borrowings will also result in a default under the convertible notes indenture, which could also then be declared immediately due and payable, and under our swap agreement, which could then be terminated by the counterparty thereto. If all such indebtedness, which totaled approximately $473.7 million as of August 2, 2009, and such amounts payable pursuant to the termination of the swap agreement, were to become due and payable on November 6, 2009, it would result in a material adverse effect on our financial condition, operations and debt service capabilities. As of August 2, 2009, excluding restricted cash, we had a current cash balance of approximately $105.4 million to address our liquidity needs. For a description of our non-compliance with the financial ratio covenants under our existing credit agreement, see our quarterly report onForm 10-Q for the quarter ended August 2, 2009, our current reports onForm 8-K filed on May 21, 2009, July 15, 2009 and August 27, 2009 and “Incorporation of Certain Documents by Reference.” | ||
See “Risk Factors—Risks Relating to NOT Accepting the Exchange Offer or Rejecting the Prepackaged Plan.” | ||
Q: | What happens if my convertible notes are not accepted in this exchange offer? | |
A: | If we do not accept your convertible notes for exchange for any reason, the unaccepted convertible notes will be returned to you without expense and the convertible notes tendered by book-entry transfer into the account of the exchange agent at DTC will be credited to your account at DTC. See “The Exchange Offer—Return of Convertible Notes Not Accepted for Exchange.” | |
Q: | What is the source for the financial resources to make payment? | |
A: | Assuming 100% of the convertible notes are tendered and accepted in this exchange offer, approximately $90.0 million is required to pay the cash consideration for all of the convertible notes. | |
We expect to use a portion of the proceeds from the CD&R investment to fund the aggregate cash payment in this exchange offer. If we are unable to consummate the CD&R investment, we will not be able to accomplish the restructuring. |
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Q: | If I decide to tender my convertible notes, will I have to pay any fees or commissions in connection with this exchange offer? | |
A: | If you are the record owner of your convertible notes and you tender your convertible notes directly to the exchange agent, you will not have to pay any fees or commissions. If you hold your convertible notes through a custodian or nominee, and your custodian or nominee tenders the convertible notes on your behalf, your custodian or nominee may charge you a fee for doing so. You should consult with your custodian or nominee to determine whether any charges will apply. Additionally, we will pay all other expenses related to this exchange offer and the solicitation of acceptances to the prepackaged plan, except any commissions or concessions of any broker or dealer other than the dealer-manager. The Company will also pay any transfer taxes applicable to the exchange of the convertible notes pursuant to the exchange offer, except in circumstances described in the letter of transmittal. | |
Q: | Are there dissenters’ rights in connection with this exchange offer? | |
A: | Holders of convertible notes do not have dissenters’ rights of appraisal in connection with this exchange offer. | |
Q: | Whom do I call if I have any questions about how to tender my convertible notes or any other questions relating to this exchange offer? | |
A: | Questions and requests for assistance with respect to the procedures for tendering convertible notes pursuant to this exchange offer may be directed to Morrow & Co., LLC, as the information agent, at its address and telephone number set forth on the back cover of this prospectus/disclosure statement. | |
You may also contact Greenhill & Co., LLC, as the dealer-manager, at its address and telephone number set forth on the back over of this prospectus/disclosure statement with any questions you may have regarding this exchange offer. |
Q: | Who is soliciting votes on the prepackaged plan? | |
A: | NCI Building Systems, Inc. is soliciting votes on the prepackaged plan. | |
Q: | Why is NCI soliciting votes on the prepackaged plan if the restructuring can be accomplished through the recapitalization plan? | |
A: | We have prepared the prepackaged plan as an alternative to the recapitalization plan for accomplishing the restructuring, if the conditions to completion of the recapitalization plan, including, for example, the minimum tender condition, are not met or waived, but we receive acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes. The prepackaged plan consists of a plan of reorganization under chapter 11 of the Bankruptcy Code that would effect the same transactions contemplated by the recapitalization plan, including the issuance of shares of Series B convertible preferred stock in connection with the CD&R investment, the payment of cash and the issuance of shares of common stock in exchange for convertible notes, the term loan refinancing and the ABL financing. Under the prepackaged plan, holders of convertible notes and the lenders under our existing credit agreement (as well as the holders of all other claims and interests) would receive the same treatment with respect to their claims (and interests) as they would receive in the recapitalization plan, the CD&R Fund would receive the same 250,000 shares of Series B convertible preferred stock contemplated by the CD&R investment and the Company would enter into the ABL agreement. Existing holders of our common stock would continue to hold such common stock. See “The Prepackaged Plan.” | |
For the prepackaged plan to be confirmed by the bankruptcy court without invoking the “cram-down” provisions of the Bankruptcy Code, each class of claims or interests that is impaired must vote to accept the prepackaged plan. An impaired class of claims (such as holders of convertible notes) is deemed to accept a plan of reorganization if the holders of at least two-thirds (2/3) in amount and more than one-half (1/2) in |
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number of the claims in such class who actually cast ballots vote to accept the prepackaged plan. If the prepackaged plan is confirmed by the bankruptcy court, it will bind all holders of claims and equity interests in the Company regardless of whether they voted for, against, or did not vote at all on, the prepackaged plan. | ||
Therefore, assuming the prepackaged plan satisfies the other requirements of the Bankruptcy Code, a significantly smaller number of claim holders can bind other claim holders to the terms of the prepackaged plan to accomplish the restructuring than are required to effect this exchange offer and the other transactions contemplated by the recapitalization plan. | ||
The confirmation and effectiveness of the prepackaged plan are subject to certain conditions that may not be satisfied and are different from those under the recapitalization plan. We cannot assure you that all requirements for confirmation and effectiveness of the prepackaged plan will be satisfied or that the bankruptcy court will conclude that the requirements for confirmation and effectiveness of the prepackaged plan have been satisfied. See “The Prepackaged Plan—Confirmation of the Prepackaged Plan” and “The Prepackaged Plan—Conditions to Effective Date of the Prepackaged Plan.” | ||
Q: | Who is eligible to vote for the prepackaged plan? | |
A: | Generally, holders of claims or interests in classes that are impaired (other than classes that receive nothing under the prepackaged plan and are, therefore, deemed to reject it) are eligible to vote on the prepackaged plan. As more fully explained in this prospectus/disclosure statement, a claim or equity interest is impaired, generally speaking, if its treatment under a plan of reorganization alters the terms of, or rights associated with, that claim or interest. The rights in respect of the convertible notes would be altered by the prepackaged plan and consequently holders of convertible notes may vote on the prepackaged plan. |
For the purposes of the prepackaged plan, we have organized the various claims and interests against the Company into different classes. Holders of claims impaired by the prepackaged plan that are entitled to vote on the prepackaged plan will vote on the prepackaged plan by class. Under the prepackaged plan, members of the same class are treated the same. The claims of the lenders under our existing credit agreement are classified under the prepackaged plan as Class 3 claims, and the claims of holders of convertible notes are separately classified under the prepackaged plan as Class 5 claims. The holders of Class 3 claims and Class 5 claims are impaired and are eligible to vote on the prepackaged plan. The holders of all other claims (other than holders of certain claims relating to section 510(b) of the Bankruptcy Code who are deemed to reject the prepackaged plan and are not entitled to vote) are unimpaired and are not eligible to vote on the prepackaged plan. See “The Prepackaged Plan of Reorganization—Summary of Classification and Treatment of Claims and Equity Interests under the Prepackaged Plan” and “The Prepackaged Plan—Summary of Distributions under the Prepackaged Plan,” for a description of the various classes of claims and equity interests under the prepackaged plan and their treatment. |
Q: | What will I receive under the prepackaged plan if it is confirmed and consummated? | |
A: | For each $1,000 principal amount of convertible notes, you will, upon the terms and subject to the conditions set forth in this prospectus/disclosure statement and the prepackaged plan, receive $500 in cash and 390 shares of common stock. The cash payment and shares of common stock to be issued pursuant to the prepackaged plan will be in full satisfaction of the claims with respect to the convertible notes, including principal and accrued interest. | |
Q: | What vote is needed to confirm the prepackaged plan? | |
A: | The Bankruptcy Code provides that only holders of claims entitled to vote and who actually cast a ballot will be counted for purposes of determining whether acceptances from a sufficient number of holders of impaired claims in an impaired class of claims have been received to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes. Failure by a holder to deliver an original, duly completed and signed ballot will not be counted as a vote to accept or reject the prepackaged plan. See “The Prepackaged Plan—Vote Required for Class Acceptance of the Prepackaged Plan.” |
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For the prepackaged plan to be confirmed by the bankruptcy court without invoking the “cram-down” provisions of the Bankruptcy Code, each class of claims or interests that is impaired must vote to accept the prepackaged plan. An impaired class of claims (such as holders of convertible notes) is deemed to accept a plan of reorganization if the holders of at least two-thirds (2/3) in amount and more than one-half (1/2) in number of the claims in such class who actually cast ballots vote to accept the prepackaged plan. Under the prepackaged plan, the claims held by the lenders under our existing credit agreement and the claims held by holders of convertible notes constitute separate impaired classes of claims. Under the prepackaged plan, other classes of claims against and interests in the Company (other than holders of certain claims relating to section 510(b) of the Bankruptcy Code who are deemed to reject the prepackaged plan and are not entitled to vote) are unimpaired and, therefore, conclusively presumed to accept the prepackaged plan. These other classes deemed to be unimpaired include existing holders of our common stock, which, as permitted by our restated certificate of incorporation, is subject to dilution on account of the issuance of common stock, including issuances to holders of the convertible notes and the Series B convertible preferred stock to the CD&R Fund. Thus, the prepackaged plan leaves unaltered the legal, equitable and contractual rights to which such common stock entitles the holders of such common stock. See “The Prepackaged Plan—Confirmation of the Prepackaged Plan Without Acceptance by All Classes of Impaired Claims.” |
If the prepackaged plan is confirmed by the bankruptcy court, it would bind all holders of claims and equity interests in the Company regardless of whether they voted for, against, or did not vote at all on, the prepackaged plan. Therefore, assuming the prepackaged plan satisfies the other requirements of the Bankruptcy Code, a significantly smaller number of claim holders can bind other claim holders to the terms of the prepackaged plan than are required to effect this exchange offer and the other transactions contemplated by the recapitalization plan. Additionally, since claims and equity interests are grouped in classes for the purpose of voting on the prepackaged plan, holders of claims and interests may be bound by the decisions of other claim or interest holders in a way that they otherwise would not outside of bankruptcy. | ||
If we do not receive acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes, the prepackaged plan will not be confirmed or become effective. | ||
Q: | What are the effects of the prepackaged plan? | |
Under the prepackaged plan, holders of convertible notes and the lenders under our existing credit agreement (as well as the holders of all other claims and interests) would receive the same treatment with respect to their claims (and interests) as they would receive in the recapitalization plan, the CD&R Fund would receive the same 250,000 shares of Series B convertible preferred stock contemplated by the CD&R investment and the Company would enter into the ABL agreement. Existing holders of our common stock would continue to hold such common stock. See “Summary—Liquidity” and “The Prepackaged Plan.” | ||
Q: | When is the deadline for submitting ballots? | |
A: | The ballots must be received by the voting agent by 11:59 p.m., New York City time, on the voting deadline, or October 7, 2009. If the voting deadline is extended, then the ballots must be received by the voting agent by any such extended voting deadline. In the case of an extension, we will notify the voting agent and issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the scheduled voting deadline. Ballots must be sent by mail, hand delivery or overnight courier to the |
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voting agent, Financial Balloting Group LLC, by the voting deadline. Electronic and facsimile ballots will not be accepted. | ||
See “The Prepackaged Plan—Holders of Claims Entitled to Vote; Voting Record Date” and “The Prepackaged Plan—Solicitation and Voting Procedures—Voting Deadline.” | ||
Q: | How do I vote on the prepackaged plan? | |
A: | Please follow the procedures for voting on the prepackaged plan described in the section titled “The Prepackaged Plan—Solicitation and Voting Procedures—Voting Instructions.” | |
For further information, contact the voting agent at its address and telephone number on the back cover of this prospectus/disclosure statement or consult your broker, dealer, commercial bank, trust company or other nominee for assistance. | ||
Only the beneficial owners of convertible notes and/or term loans and other obligations under our existing credit agreement (or their authorized signatories) as of the voting record date are eligible to vote on the prepackaged plan. | ||
Q: | Can I revoke my vote? | |
A: | Unless you are a party to thelock-up agreement or are otherwise restricted by thelock-up agreement, any party who has previously submitted to the voting agent prior to the voting deadline a properly completed ballot may revoke such ballot and change its vote by submitting to the voting agent, prior to the voting deadline, a subsequent properly completed ballot for acceptance or rejection of the prepackaged plan. | |
Q: | Whom do I call if I have any questions about how to submit ballots or any other questions relating to the prepackaged plan? | |
A: | Questions and requests for assistance with respect to the procedures for voting on the prepackaged plan, as well as requests for additional copies of this prospectus/disclosure statement and the ballot, may be directed to Financial Balloting Group, LLC, as the voting agent, at its address and telephone number set forth on the back cover of this prospectus/disclosure statement. | |
Q: | What risks should I consider in deciding whether to accept or reject the prepackaged plan? | |
A: | In deciding whether to vote to accept or reject the prepackaged plan, you should carefully consider the discussion of risks and uncertainties affecting the Company, this exchange offer, the prepackaged plan and the common stock described in the section titled “Risk Factors” and the risk factors described in the documents incorporated by reference into this prospectus/disclosure statement. |
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The Restructuring | This exchange offer and solicitation of acceptances to the prepackaged plan are part of, and are being conducted pursuant to, the restructuring, which may be accomplished through an out-of-court recapitalization plan or, in the alternative, if the conditions to the recapitalization plan are not satisfied or waived, through an in-court prepackaged plan. The restructuring consists of four related transactions: | |
• the CD&R investment, which involves the sale and issuance to the CD&R Fund of 250,000 shares of Series B convertible preferred stock for $250.0 million; | ||
• the retirement of all convertible notes; | ||
• the term loan refinancing, which involves the refinancing of our existing credit facility under which we will repay approximately $143.3 million of the $293.3 million in principal amount of term loans outstanding under our existing credit facility and enter into an amendment to our existing credit agreement providing for a modification of the terms and maturity of the $150.0 million balance; and | ||
• the ABL financing, which involves our entry into a $125.0 million asset-based loan facility. | ||
Each of the transactions comprising the restructuring may be accomplished through either the out-of-court recapitalization plan or, in the alternative, the in-court prepackaged plan. If the restructuring is accomplished through the recapitalization plan, the retirement of the convertible notes tendered in the exchange offer would be accomplished through this exchange offer and the refinancing of our existing credit facility would be accomplished through an amendment to our existing credit agreement. In the alternative, if the restructuring is accomplished through the prepackaged plan, the retirement of the convertible notes as well as the refinancing of our existing credit facility would be accomplished through the effectiveness of the prepackaged plan. See “The Restructuring.” | ||
The closing of the exchange offer is conditioned on the satisfaction or, with the consent of the CD&R Fund, waiver of the minimum tender condition, which requires that at least 95% of the aggregate principal amount of outstanding convertible notes are validly tendered and not |
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withdrawn in this exchange offer. If the restructuring is accomplished through the recapitalization plan, we intend, but are not required, to retire any remaining convertible notes outstanding after the consummation of this exchange offer by exercising our redemption right under the convertible notes indenture on or after November 20, 2009; if we do not so exercise our redemption right, such remaining convertible notes will otherwise be retired pursuant to the terms of the convertible notes indenture. | ||
For a more detailed description of this exchange offer, see “The Exchange Offer.” | ||
See “—Liquidity” above and “The Restructuring” for a discussion of the anticipated effects of the restructuring. | ||
Pro Forma Capitalization | Assuming that we complete the restructuring and all outstanding convertible notes are retired through the exchange offer or the prepackaged plan, based on the number of shares of common stock authorized, issued and outstanding as of September 4, 2009, at the closing of, and after giving effect to, the restructuring: | |
• holders of convertible notes would receive 70,200,000 shares of our common stock in the aggregate (or approximately 24.5% of our voting power); |
• the CD&R Fund would receive 250,000 shares of Series B convertible preferred stock convertible into 196,109,194 shares of common stock based on the initial conversion price (assuming that we have sufficient authorized but unissued shares to permit such conversion, which, after giving effect to the restructuring, we do not expect to have (see “Summary—The Restructuring—CD&R Investment”)) (or approximately 68.5% of our voting power); and |
• our current stockholders would continue to hold approximately 19,981,585 shares of our common stock in the aggregate (or approximately 7.0% of our voting power). | ||
See “Capitalization.” | ||
Lock-Up Agreement | We have entered into alock-up and voting agreement with the holders of more than 79% of the aggregate principal amount of the outstanding convertible notes. Pursuant to thelock-up agreement, each holder of convertible notes that executed thelock-up agreement has irrevocably agreed, in accordance with the terms of thelock-up agreement, (1) to tender its convertible notes in this exchange offer, (2) to the extent that such holder holds obligations under our existing credit agreement, to support the term loan refinancing by accepting its portion of the repayment contemplated thereby and by executing an amendment to our existing credit agreement in the form of the amended credit agreement attached hereto as Annex J, and (3) to vote all of its convertible notes and obligations under our existing credit facility in favor of the prepackaged plan, among other things. See “The Restructuring—TheLock-Up Agreement.” | |
CD&R Investment | Pursuant to the investment agreement, the CD&R Fund has agreed to purchase from the Company an aggregate of 250,000 shares of Series B convertible preferred stock, which represents approximately |
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68.5% of our voting power after giving effect to the restructuring (based on the number of shares of common stock authorized, issued and outstanding as of September 4, 2009), for a total purchase price of $250.0 million in cash. See “The Restructuring—Description of the CD&R Investment.” | ||
The obligation of the CD&R Fund to purchase the shares of Series B convertible preferred stock is subject to certain conditions, including the satisfaction or, with the consent of the CD&R Fund, waiver, of the conditions to this exchange offer or the effectiveness of the prepackaged plan, the consummation of the term loan refinancing (see “—Term Loan Refinancing” below) and the ABL financing (see “—ABL Financing” below) and the expiration or termination of any waiting period required to consummate the CD&R investment under the Austrian Act. The investment agreement may be terminated by the CD&R Fund or the Company under specified circumstances. See “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Conditions to the CD&R Investment” and “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Termination of the Investment Agreement.” | ||
Holders of Series B convertible preferred stock will participate equally and ratably with the holders of common stock in all cash dividends paid on the shares of the common stock on an as-converted basis. In addition to such dividends, the Series B convertible preferred stock will accrue dividends at a rateper annumof 12.00% if paid in kind or at a rateper annumof 8.00% if paid in cash, which would be reduced to a rateper annum of 0.00% if, at any time after the30-month anniversary of the closing of the restructuring, the trading price per share of common stock equals or exceeds two times a specified target price (which is equal to $1.2748 at the closing of the restructuring, but is subject to adjustments thereafter) for each trading day during any period of 20 consecutive trading days. Upon the occurrence of a default under the terms of the Series B convertible preferred stock, the applicable dividend rate will increase by: | ||
• 6.00%per annum, if the default is the result of a failure by us after June 30, 2011 to reserve and keep available for issuance a number of shares of common stock equal to 110% of the number of shares of common stock issuable upon conversion of all outstanding shares of Series B convertible preferred stock; or | ||
• 3.00%per annum for any other default. | ||
See “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Dividends” and “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Defaults.” | ||
The Series B convertible preferred stock is convertible into common stock at an initial conversion price of $1.2748, which conversion price is subject to anti-dilution adjustments, including adjustments if the Company issues common stock or other securities below the then-current market price or, during the first three years after the closing of the restructuring, below the then-current conversion price. See “The Restructuring—Description of the CD&R Investment—Certain |
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Terms of the Series B Convertible Preferred Stock—Convertibility and Anti-Dilution Adjustments.” | ||
On and after the 10th anniversary of the closing of the restructuring: | ||
• each holder of shares of Series B convertible preferred stock will have the right to require that the Company redeem all of such holder’s shares of Series B convertible preferred stock; and | ||
• the Company will have the right to redeem all, but not less than all, of the then issued and outstanding shares of Series B convertible preferred stock. | ||
In either case, the redemption price for each share of Series B convertible preferred stock redeemed will be an amount equal to the sum of (1) the liquidation preference of such share of Series B convertible preferred stock to be redeemed and (2) the accrued dividends of such share as of the date on which the redemption of such share occurs. See “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Milestone Redemption.” | ||
After giving effect to the restructuring, we do not expect to have sufficient authorized but unissued shares of common stock to enable the conversion of all 250,000 shares of Series B convertible preferred stock to be issued to the CD&R Fund pursuant to the CD&R investment. Pursuant to the stockholders agreement to be entered into between the Company and the CD&R Fund in connection with the CD&R investment (see “The Restructuring—Description of the CD&R Investment—The Stockholders Agreement”), from and after the closing of the restructuring, we will use our best efforts and take all corporate actions necessary to obtain approval from holders of our common stock of an amendment to Article FOURTH, section 1 of our restated certificate of incorporation to increase the number of authorized shares of common stock. In the event that we do not obtain such approval prior to June 30, 2010, the dividend rate with respect to the Series B convertible preferred stock will increase by 3.00%per annum (and by an additional 3.00%per annum if such approval is not obtained prior to June 30, 2011, for an aggregate increase of 6.00%per annum) as further described in “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Dividends—Default Dividend Rate.” See “The Restructuring—Description of the CD&R Investment—The Stockholders Agreement—Agreement to Seek Amendments to our Restated Certificate of Incorporation.” | ||
Retirement of Convertible Notes | As part of the restructuring, we are seeking to retire all of the convertible notes. See —This Exchange Offer” below with respect to the retirement of convertible notes under the recapitalization plan and “—The Prepackaged Plan” below with respect to the retirement of convertible notes under the prepackaged plan. | |
Term Loan Refinancing | As part of the restructuring, we expect to enter into an amendment to our existing credit agreement, providing for, among other things, the repayment of approximately $143.3 million of the $293.3 million in principal amount of term loans outstanding as of August 2, 2009 under |
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our existing credit facility and a modification of the terms and maturity of the $150.0 million balance. See “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The Term Loan Refinancing.” | ||
The closing of the term loan refinancing through the recapitalization plan requires 100% of the lenders under our existing credit agreement to enter into the amended credit agreement. Confirmation and effectiveness of the prepackaged plan requires lenders under our existing credit facility holding at least two-thirds (2/3) in amount and more than one-half (1/2) in number of the claims in respect of the obligations under our existing credit agreement who actually cast ballots to vote to accept the prepackaged plan. See “Summary of Terms of the Restructuring—The Prepackaged Plan.” | ||
ABL Financing | As part of the restructuring, we expect to enter into an ABL agreement providing for a $125.0 million asset-based loan facility. See “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The ABL Financing.” | |
Whether the restructuring is accomplished through the recapitalization plan or the prepackaged plan, the closing of the ABL financing requires the approval and execution of the ABL agreement by all lenders providing revolving credit commitments thereunder. | ||
Importance of Tendering in this Exchange Offer and Voting to Acceptthe Prepackaged Plan | Both the recapitalization plan and the prepackaged plan are subject to certain conditions. In particular, the consummation of the recapitalization plan requires that the conditions to this exchange offer are met, including the minimum tender condition. The confirmation and effectiveness of the prepackaged plan requires the receipt of acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes. | |
See also “Questions and Answers About the Restructuring—General Why is it important that I tender my convertible notes and vote to accept the prepackaged plan?” | ||
Risk Factors | You should carefully consider the matters described in this prospectus/disclosure statement under “Risk Factors,” and the risk factors described in the documents incorporated by reference into this prospectus/disclosure statement. |
Material U.S. Federal Income Tax Considerations | For a discussion of the material U.S. federal income tax considerations for holders of convertible notes, see “Material U.S. Federal Income Tax Considerations.” |
Accounting Treatment | For a description of the accounting treatment of the restructuring, see “Accounting Treatment.” | |
Fees and Expenses | We will pay all fees and expenses associated with this exchange offer and the solicitation of acceptances to the prepackaged plan, other than |
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any commissions or concessions of any broker or dealer. Excluding fees and expenses related to the CD&R Investment and the other transactions contemplated by the investment agreement separate from the exchange offer and this consent solicitation, we expect that we will incur fees and expenses of approximately $7.3 million, based on estimated legal, accounting, exchange agent, voting agent, dealer-manager, trustee, printing and other expenses associated with this exchange offer and the solicitation of acceptances to the prepackaged plan. See “The Exchange Offer—Fees and Expenses.” | ||
Listing | We intend to apply for the shares of common stock to be issued pursuant to this exchange offer, or in the alternative, pursuant to the prepackaged plan, to be listed on the NYSE. | |
Transferability; Registration Rights | Other than for any shares issued in respect of convertible notes subject to thelock-up agreement, the shares of common stock to be issued pursuant to this exchange offer will be freely transferable and not subject to any transfer restrictions unless held by our “affiliates” as that term is defined under Rule 144 under the Securities Act. If the restructuring is accomplished through the prepackaged plan, we expect that the confirmation order of the bankruptcy court will provide that the issuance of the shares of common stock distributed under the prepackaged plan shall be exempt from the registration requirements of the Securities Act in accordance with section 1145 of the Bankruptcy Code and therefore will be freely transferable by most recipients thereof, and all resales and subsequent transactions in the new securities will be exempt from registration under federal and state securities laws, unless the holder is an “underwriter” with respect to such securities. | |
In thelock-up agreement, we agreed to enter into a registration rights agreement containing customary indemnification provisions for selling shareholders that will provide registration rights to the noteholders who are parties to thelock-up agreement in the event that this exchange offer is consummated. Under such registration rights agreement, and subject to customary blackout periods in connection with earnings releases and material corporate developments, we will: | ||
• no later than five business days following the closing of the CD&R investment, file with the SEC a shelf registration statement covering resales of the common stock received by such noteholders on a delayed or continuous basis; and | ||
• use our best efforts to maintain the effectiveness of such registration until the earlier of (a) six months after the closing of the CD&R investment (subject to an extension to 12 months after the closing in certain limited circumstances) and (b) the date on which all such common stock held by such noteholders can be resold pursuant to Rule 144 under the Securities Act without limitation as to volume or compliance with any manner of sale requirements. | ||
For more information with respect to the terms of the lock-up agreement, see “The Restructuring—The Lock-Up Agreement.” |
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Securities Subject to this Exchange Offer | Any and all of our $180.0 million aggregate principal amount of 2.125% Convertible Senior Subordinated Notes due 2024, which we refer to as the convertible notes. | |
Exchange Offer | We are offering to acquire any and all of the convertible notes for cash and shares of common stock, in accordance with the terms and subject to the conditions set forth in this prospectus/disclosure statement and in the letter of transmittal. You may tender your convertible notes for exchange by following the procedures described in the section titled “The Exchange Offer—Procedures for Tendering Convertible Notes.” | |
For each $1,000 principal amount of convertible notes that you tender and that we accept in this exchange offer, you will, upon the terms and subject to the conditions set forth in this prospectus/disclosure statement and the letter of transmittal, receive $500 in cash and 390 shares of common stock. The cash payment and the shares of common stock to be issued pursuant to this exchange offer will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of this exchange offer on, the convertible notes so tendered and accepted. See “The Exchange Offer—Terms of the Exchange Offer.” | ||
Minimum Tender Condition; Other Conditions to thisExchange Offer | This exchange offer is subject to certain conditions, including, among others, (1) the satisfaction of the minimum tender condition, which requires that at least 95% of the aggregate principal amount of outstanding convertible notes are validly tendered and not withdrawn in this exchange offer, (2) the receipt of proceeds from the purchase by the CD&R Fund of the Series B convertible preferred stock pursuant to the investment agreement, which purchase itself is subject to several conditions, including the satisfaction of the conditions to this exchange offer, the consummation of the term loan refinancing and the ABL financing and the expiration or termination of any waiting period required to consummate the CD&R investment under the Austrian Act, and (3) the effectiveness of the registration statement of which this prospectus/disclosure statement forms a part. See “The Exchange Offer—Conditions to Completion of the Exchange Offer.” | |
Information Agent | Morrow & Co., LLC. | |
Exchange Agent | Computershare Trust Company, N.A. | |
Dealer-Manager | Greenhill & Co., LLC. | |
Use of Proceeds | We will not receive any cash proceeds from this exchange offer. Convertible notes that are validly tendered and exchanged pursuant to this exchange offer will be retired and canceled. See “Source and Use of Proceeds.” |
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Prepackaged Plan | We have prepared the prepackaged plan as an alternative to the recapitalization plan for accomplishing the restructuring if the conditions to completion of the recapitalization plan, including, for example, the minimum tender condition, are not satisfied or waived, but we receive acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes. | |
The prepackaged plan consists of a plan of reorganization under chapter 11 of the Bankruptcy Code that would effect the same transactions contemplated by the recapitalization plan, including the issuance of shares of Series B convertible preferred stock in connection with the CD&R investment, the issuance of shares of common stock in exchange for convertible notes, the term loan refinancing and the ABL financing. If confirmed, the prepackaged plan would be binding on all of our creditors regardless of whether such creditors voted to accept or reject the prepackaged plan. See “The Prepackaged Plan.” | ||
Under the prepackaged plan, holders of convertible notes and the lenders under our existing credit agreement (as well as the holders of all other claims and interests) would receive the same treatment with respect to their claims (and interests) as they would receive in the recapitalization plan, the CD&R Fund would receive the same 250,000 shares of Series B convertible preferred stock contemplated by the CD&R investment and the Company would enter into the ABL agreement. Existing holders of our common stock would continue to hold such common stock. See “The Prepackaged Plan.” | ||
If we do not receive acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes, the prepackaged plan will not be confirmed or become effective. | ||
Voting Record Date | The voting record date for determining the holders of claims entitled to vote on the prepackaged plan is August 28, 2009. See “The Prepackaged Plan—Holders of Claims Entitled to Vote; Voting Record Date.” | |
Conditions to the Effective Date of the Prepackaged Plan | The effective date of the prepackaged plan will not occur until the conditions set forth below have been satisfied or waived: | |
• the confirmation order has been entered and no stay of such order is in effect; | ||
• the receipt of proceeds from the CD&R investment; | ||
• the consummation of the term loan refinancing; and | ||
• the consummation of the ABL financing. |
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We retain the right to waive any condition in our sole and absolute discretion, subject to our obligations under the investment agreement. See “The Prepackaged Plan—Conditions to the Effective Date of the Prepackaged Plan” and “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Commencement of a Reorganization Case in Connection With the Prepackaged Plan Covenant.” | ||
Voting Agent | Financial Balloting Group LLC. |
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As of August 2, 2009 | ||||||||
Actual | As Adjusted | |||||||
(Unaudited, in thousands, | ||||||||
except for share data) | ||||||||
Cash and cash equivalents(1)(4) | $ | 105,376 | $ | 63,124 | ||||
Restricted Cash(2) | 13,224 | 13,224 | ||||||
Note Payable | 962 | 962 | ||||||
Debt | ||||||||
$125 Million Senior Secured Revolving Credit Facility | — | — | ||||||
$400 Million Term Loan, due 2010 ($150 Million Term Loan, due 2014, amended and restated) | 293,290 | 150,000 | ||||||
2.125% Convertible Senior Subordinated Notes, Due 2024 | 180,000 | — | ||||||
Industrial Revenue Bond | 420 | 420 | ||||||
Total Debt | 473,710 | 150,420 | ||||||
Series B Convertible Preferred Stock: $1.00 par value per share, 250,000 shares authorized, issued and outstanding, as adjusted | — | 212,579 | ||||||
Stockholders’ equity (deficit): | ||||||||
Series A Preferred Stock: $1.00 par value per share, 1,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common Stock: $0.01 par value per share, 100,000,000 shares authorized; 22,683,165 issued; and 19,982,173 outstanding, actual; 100,000,000 shares authorized; 93,217,165 issued; and 90,516,173 outstanding as adjusted(3)(4) | 227 | 929 | ||||||
Additional paid-in capital(4) | 203,401 | 384,974 | ||||||
Retained earnings (deficit)(4) | (103,882 | ) | (215,324 | ) | ||||
Accumulated other comprehensive income (loss)(4) | (917 | ) | 975 | |||||
Treasury stock, at cost | (117,050 | ) | (117,050 | ) | ||||
Total stockholders’ equity (deficit) | (18,221 | ) | 54,504 | |||||
Total capitalization | $ | 456,451 | $ | 418,465 | ||||
Book Value per share | ||||||||
Basic | (0.91 | ) | 0.60 | |||||
Diluted | (0.91 | ) | 0.60 |
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(1) | Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash equivalents are highly liquid debt instruments with an original maturity of three months or less and may consist of time deposits with a number of commercial banks with high credit ratings, Eurodollar time deposits, certificates of deposit and commercial paper. | |
(2) | Restricted cash is stated at cost plus accrued interest, which approximates fair value. Restricted cash is held as deposited collateral for letters of credit. | |
(3) | Share amounts as presented reflect the 70,200,000 shares of common stock to be issued to repay a portion of the convertible notes and the 334,000 shares of common stock to be issued related to the accelerated vesting of shares issued under the 2003 Long-Term Stock Incentive Plan. If fully converted, the Series B convertible preferred stock would result in an additional 196,109,194 shares of common stock outstanding. | |
(4) | See “Unaudited Pro Forma Condensed Consolidated Balance Sheet” and “Notes to Unaudited Pro Forma Condensed Balance Sheet” for explanations of significant adjustments to cash and cash equivalents, additional paid-in capital, accumulated other comprehensive loss, and retained deficit. |
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Nine Months Ended | Fiscal Year | |||||||||||||||||||||||||||
August 2, 2009 | July 27, 2008 | 2008(1) | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Sales | $ | 723,522 | $ | 1,255,228 | $ | 1,764,159 | $ | 1,625,068 | $ | 1,571,183 | $ | 1,130,066 | $ | 1,084,863 | ||||||||||||||
Cost of sales | 568,773 | 940,095 | 1,325,624 | 1,221,463 | 1,187,151 | 850,699 | 822,722 | |||||||||||||||||||||
Lower of cost or market adjustment | 39,986 | — | — | — | — | — | — | |||||||||||||||||||||
Asset impairment | 5,944 | — | — | — | — | — | — | |||||||||||||||||||||
Gross Profit | 108,819 | 315,133 | 438,535 | 403,605 | 384,032 | 279,367 | 262,141 | |||||||||||||||||||||
Selling, general and administrative expenses | 158,564 | 210,501 | 283,825 | 271,871 | 246,044 | 174,897 | 165,165 | |||||||||||||||||||||
Goodwill and other intangible asset impairments | 622,564 | — | — | — | — | — | — | |||||||||||||||||||||
Restructuring charge | 7,488 | 909 | — | — | — | — | — | |||||||||||||||||||||
Income (loss) from operations | (679,797 | ) | 103,723 | 154,710 | 131,734 | 137,988 | 104,470 | 96,976 | ||||||||||||||||||||
Interest income | 360 | 917 | 1,085 | 725 | 5,432 | 5,019 | 68 | |||||||||||||||||||||
Interest expense | (13,029 | ) | (17,859 | ) | (23,535 | ) | (28,829 | ) | (24,915 | ) | (14,459 | ) | (15,126 | ) | ||||||||||||||
Loss on debt refinancing | — | — | — | — | — | — | (9,879 | ) | ||||||||||||||||||||
Other (expense) income, net | 757 | 1,022 | (1,880 | ) | 1,195 | 527 | 1,181 | 2,618 | ||||||||||||||||||||
Income (loss) before income taxes | (691,709 | ) | 87,803 | 130,380 | 104,825 | 119,032 | 96,211 | 74,657 | ||||||||||||||||||||
Provision (benefit) for income taxes | (46,863 | ) | 33,536 | 51,499 | 41,096 | 45,236 | 40,260 | 29,767 | ||||||||||||||||||||
Net income (loss) | (644,846 | ) | 54,267 | 78,881 | 63,729 | 73,796 | 55,951 | 44,890 | ||||||||||||||||||||
Earnings (loss) per share: | ||||||||||||||||||||||||||||
Basic | $ | (33.12 | ) | $ | 2.81 | $ | 4.08 | $ | 3.25 | $ | 3.70 | $ | 2.73 | $ | 2.28 | |||||||||||||
Diluted | $ | (33.12 | ) | $ | 2.79 | $ | 4.05 | $ | 3.06 | $ | 3.45 | $ | 2.68 | $ | 2.24 | |||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||||
Basic | 19,468 | 19,308 | 19,332 | 19,582 | 19,959 | 20,501 | 19,709 | |||||||||||||||||||||
Diluted | 19,468 | 19,455 | 19,486 | 20,793 | 21,395 | 20,857 | 19,996 | |||||||||||||||||||||
Ratio of Earnings to Fixed Charges(2) | — | (3) | 5.40 | 5.95 | 4.27 | 5.30 | 6.93 | 5.48 |
(1) | Fiscal 2008 includes 53 weeks of operating activity. |
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(2) | For purposes of calculating the ratio of earnings to fixed charges: (a) “earnings” are defined as earnings (loss) from continuing operations before provision for income taxes and fixed charges; and (b) “fixed charges” consist of net interest expense on all indebtedness, deferred financing charges and an estimate of the interest within rental expense. | |
(3) | The pre-tax loss from continuing operations for the fiscal nine months ended August 2, 2009 were not sufficient to cover fixed charges by a total of $676,787. As a result, the ratio of earnings to fixed charges has not been computed for this period. |
Nine Months Ended | Fiscal Year | |||||||||||||||||||||||||||
August 2, 2009 | July 27, 2008 | 2008(1) | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Statement of Cash Flows and Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash flow from operating activities | $ | 75,340 | $ | 3,224 | $ | 40,194 | $ | 137,625 | $ | 121,514 | $ | 118,267 | $ | 23,730 | ||||||||||||||
Total assets | 627,635 | 1,396,696 | 1,380,701 | 1,343,058 | 1,299,701 | 990,219 | 786,426 | |||||||||||||||||||||
Total debt | 473,710 | 474,630 | 474,400 | 497,037 | 497,984 | 373,000 | 216,700 | |||||||||||||||||||||
Stockholders’ equity (deficit) | (18,221 | ) | 598,650 | 623,829 | 539,696 | 498,409 | 444,144 | 401,177 | ||||||||||||||||||||
Cash dividends per share(2) | — | — | — | — | — | — | — |
(1) | Fiscal 2008 includes 53 weeks of operating activity. | |
(2) | We did not pay dividends on our common stock for any of the periods referred to above. |
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• | 100% of the convertible notes are exchanged for a combination of $500 in cash and 390 shares of common stock for each $1,000 principal amount of the convertible notes and accrued and unpaid interest thereon; | |
• | the conversion price of the Series B convertible preferred stock to be issued in the CD&R investment is $1.2748 per share of common stock; | |
• | the restructuring is effected through the consummation of the recapitalization plan as opposed to the prepackaged plan; | |
• | the market price for common stock for all computations is $2.61 per share, which was the closing market price on September 4, 2009; and | |
• | the fair market value of the derivative liability related to default dividend rates is expected to be $7.5 million ($4.6 million net of tax) in all periods. |
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Pro Forma (unaudited) | ||||||||
Nine Months | Year Ended | |||||||
Ended August 2, | November 2, | |||||||
2009 | 2008 | |||||||
(In thousands, except per share data) | ||||||||
Statement of Operations Data: | ||||||||
Sales | $ | 723,522 | $ | 1,764,159 | ||||
Net income (loss) | (642,241 | ) | 89,214 | |||||
Dividends and accretion on Series B convertible preferred stock | 28,898 | 35,119 | ||||||
Net income (loss) available to common stockholders | $ | (671,139 | ) | 54,095 | ||||
Earnings (loss) per share: | ||||||||
Basic | $ | (2.15 | ) | $ | 0.18 | |||
Diluted | $ | (2.15 | ) | $ | 0.18 | |||
Weighted average shares outstanding: | ||||||||
Basic | 90,002 | 89,866 | ||||||
Diluted | 90,002 | 89,866 |
Pro Forma (unaudited) | ||||
As of August 2, 2009 | ||||
(In thousands, except per share data) | ||||
Balance Sheet Data: | ||||
Total assets | $ | 591,154 | ||
Total debt | 150,420 | |||
Series B convertible preferred stock | 212,579 | |||
Stockholders’ equity | 54,504 |
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• | such a bankruptcy filing could erode our customers’ confidence in our ability to provide our products and services and, as a result, there could be a significant and precipitous decline in our revenues, profitability and cash flow; | |
• | employees could be distracted from performance of their duties, or more easily attracted to other career opportunities; | |
• | it may be more difficult to attract or replace key employees; | |
• | lenders and other partners could seek to terminate their relationship with us, require financial assurances or enhanced performance, or refuse to provide credit on the same terms as prior to the reorganization case; | |
• | we could be forced to operate in bankruptcy for an extended period of time while we tried to develop a reorganization plan that could be confirmed, which we believe may impair our business and prospects; | |
• | our suppliers, vendors, and service providers could terminate their relationship with us or require financial assurances or enhanced performance; | |
• | we may not be able to obtaindebtor-in-possession financing to sustain us during the bankruptcy case under the Bankruptcy Code; or | |
• | if we are not able to confirm and implement a plan of reorganization or if sufficientdebtor-in-possession financing is not available, we may be forced to liquidate under chapter 7 of the Bankruptcy Code. |
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• | holders of convertible notes would receive 70,200,000 shares of common stock, or approximately 24.5% of our voting power; |
• | the CD&R Fund would receive 250,000 shares of Series B convertible preferred stock convertible into 196,109,194 shares of common stock based on the initial conversion price (assuming that we have sufficient authorized but unissued shares to permit such conversion, which, after giving effect to the restructuring, we do not expect to have (see “Summary—The Restructuring—CD&R Investment”)), or approximately 68.5% of our voting power; |
• | our current stockholders would continue to hold approximately 19,981,585 shares of common stock, or approximately 7.0% of our voting power. |
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• | 6.00%per annum, if the default is the result of a failure by us after June 30, 2011 to reserve and keep available for issuance a number of shares of common stock equal to 110% of the number of shares of common stock issuable upon conversion of all outstanding shares of Series B convertible preferred stock; or | |
• | 3.00%per annum for any other default. |
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• | variations in quarterly operating results; | |
• | deviations in our earnings from publicly disclosed forward-looking guidance; | |
• | changes in earnings estimates by analysts; | |
• | our announcements of significant contracts, acquisitions, strategic partnerships or joint ventures; | |
• | general conditions in the metal components and engineered building systems industries; | |
• | uncertainty about current global economic conditions; | |
• | fluctuations in stock market price and volume; and | |
• | other general economic conditions. |
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• | customers could seek alternative suppliers; |
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• | such a bankruptcy filing could erode our customers’ confidence in our ability to provide our products and services and, as a result, there could be a significant and precipitous decline in our revenues, profitability and cash flow; | |
• | it may be more difficult to attract or replace key employees; | |
• | employees could be distracted from performance of their duties or more easily attracted to other career opportunities; and | |
• | our suppliers, vendors, and service providers could terminate their relationship with us or require financial assurances or enhanced performance. |
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• | the plan of reorganization be transmitted to substantially all creditors and other interest holders entitled to vote; | |
• | the time prescribed for voting is not unreasonably short; and |
• | the solicitation of votes is in compliance with any applicable nonbankruptcy law, rule or regulation governing the adequacy of disclosure in such solicitation, including the Exchange Act andRules 13e-4(d),13e-4(e)(3),14e-1 and14e-4 promulgated under the Exchange Act. If no such law, rule or regulation exists, votes be solicited only after the disclosure of adequate information. |
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• | customers could seek alternative sources of products from our competitors, including competitors that have comparatively greater financial resources and that are in little or no relative financial distress; | |
• | employees could be distracted from performance of their duties or more easily attracted to other career opportunities; and | |
• | business partners could terminate their relationship with us or require financial assurances or enhanced performance. |
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• | at any time after eight weeks after the filing of the prepackaged plan, the bankruptcy court has not entered the confirmation order with respect to the prepackaged plan on or prior to such date; or | |
• | the bankruptcy court enters an order denying confirmation of the prepackaged plan or the confirmation order is vacated or reversed and does not become a final order within four weeks and ten days after the entry of the |
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confirmation order. See “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Termination of the Investment Agreement.” |
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• | our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or additional financing may not be available on favorable terms; | |
• | we must use a portion of our cash flow to pay the principal and interest on our debt. These payments reduce the funds that would otherwise be available for our operations and future business opportunities; | |
• | a substantial decrease in our net operating cash flows could make it difficult for us to meet our debt service requirements and force us to modify our operations; and | |
• | we may be more vulnerable to a downturn in our business or the economy generally. |
• | incur additional indebtedness; | |
• | make restricted payments, including dividends or other distributions; | |
• | incur liens; | |
• | make investments, including joint venture investments; | |
• | sell assets; | |
• | repurchase our debt, including our convertible notes, and our capital stock; and | |
• | merge or consolidate with or into other companies or sell substantially all our assets. |
• | incur additional indebtedness; | |
• | incur guarantee obligations; | |
• | make dividends and other restricted payments; | |
• | create liens; | |
• | make investments; | |
• | dispose of assets; | |
• | prepay other indebtedness; | |
• | make acquisitions; | |
• | engage in mergers; |
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• | change the nature of our business; and | |
• | engage in certain transactions with affiliates. |
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• | quality; | |
• | service; | |
• | on-time delivery; | |
• | ability to provide added value in the design and engineering of buildings; | |
• | price; | |
• | speed of construction in buildings and components; and | |
• | personal relationships with customers. |
• | the risk of incorrect assumptions or estimates regarding the future results of the acquired business or expected cost reductions or other synergies expected to be realized as a result of acquiring the business; | |
• | diversion of management’s attention from existing operations; | |
• | unexpected losses of key employees, customers and suppliers of the acquired business; | |
• | conforming the financial, technological and management standards, processes, procedures and controls of the acquired business with those of our existing operations; and | |
• | increasing the scope, geographic diversity and complexity of our operations. |
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• | industry cyclicality and seasonality and adverse weather conditions; | |
• | ability to service or refinance our debt; | |
• | fluctuations in customer demand and other patterns; | |
• | raw material pricing and supply; | |
• | competitive activity and pricing pressure; | |
• | the ability to make strategic acquisitions accretive to earnings; | |
• | general economic conditions affecting the construction industry; | |
• | the current financial crisis and U.S. recession; | |
• | changes in laws or regulations; | |
• | our ability to obtain, on reasonable terms, if at all, the financing we will need in the future to meet our debt maturities and debt service obligations and to execute our business strategies; | |
• | the volatility of our stock price and the potential risk of delisting from the NYSE; | |
• | the potential dilution associated with future equity or equity-linked financings that we may undertake to raise additional capital and the risk that the equity pricing may not be favorable to us; | |
• | our ability to comply with the financial tests and covenants in our existing and future debt obligations; | |
• | the significant demands on our liquidity while current economic and credit conditions are severely affecting our operations, including the potential for acceleration on our outstanding indebtedness and our potential obligation to repurchase convertible notes upon consummation of the CD&R investment and on November 15, 2009 if this exchange offer is not fully subscribed and we do not have sufficient cash to satisfy the obligation of the remaining amount of convertible notes outstanding and of our other outstanding indebtedness; | |
• | the satisfaction of the conditions to consummate the recapitalization plan or, in the alternative, the prepackaged plan; | |
• | the impact of the prepackaged plan on our operations, credibility and valued relationships; |
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• | the uncertainty surrounding the restructuring, including our ability to retain employees, customers and vendors; | |
• | the occurrence of any event, change or other circumstances that could give rise to the termination of the investment agreement; | |
• | the failure of the CD&R investment to close for any other reason; | |
• | the failure of the Company to enter into or consummate the term loan refinancingand/or the ABL financing for any reason; | |
• | the amount of the costs, fees, expenses and charges related to the restructuring; and | |
• | other risks detailed in the section titled “Risk Factors” and other factors and matters contained or incorporated in this prospectus/disclosure statement. |
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• | the CD&R investment, which involves a $250.0 million investment by the CD&R Fund in the form of a private placement to the CD&R Fund of 250,000 shares of Series B convertible preferred stock (see “The Restructuring—Description of the CD&R Investment”); | |
• | a retirement of all of the convertible notes (see “The Restructuring—Retirement of the Convertible Notes”); | |
• | the term loan refinancing, which involves the refinancing of our existing credit facility under which we will repay approximately $143.3 million of the $293.3 million in principal amount of term loans outstanding under our existing credit facility and enter into an amendment to our existing credit agreement providing for a modification of the terms and maturity of the $150.0 million balance (see “The Restructuring— Description of the Term Loan Refinancing and the ABL Financing—The Term Loan Refinancing”); and | |
• | the ABL financing, which involves our entry into an ABL agreement for a $125.0 million asset-based loan facility (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The ABL Financing”). |
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• | it was not likely that holders of convertible notes would exercise their rights to require the Company to repurchase their convertible notes in November 2009 instead of converting their convertible notes into common stock; | |
• | the Company could refinance the convertible notes on commercially acceptable terms in the event that such holders were to exercise their rights; and | |
• | it was not likely that the Company would have difficulty obtaining a new credit facility or an extension of the existing credit facility on commercially acceptable terms at the expiration of the existing credit facility. |
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• | the Company would offer to pay down approximately $143.0 million in principal amount of term loans outstanding under our existing credit facility and seek agreement of the term loan lenders to extend the maturity of the remaining $150.0 million for a period of five years on amended terms; | |
• | the Company would seek the agreement of a group of lenders to commit to a new asset-backed revolving credit facility, in the amount of at least $125.0 million; | |
• | the Company would launch an exchange offer to acquire substantially all of the convertible notes in exchange for a combination of cash and equity consideration; and | |
• | if the foregoing steps and transactions could be accomplished, at the concurrent closings of such transactions, CD&R would purchase from the Company $250.0 million of preferred stock, which would be convertible into 75% of the outstanding common stock on a fully diluted basis, but before giving effect to dilution in respect of any common stock required to be issued in such exchange offer to holders of convertible notes. |
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• | reviewed the investment agreement, dated as of August 14, 2009, by and between the Company and the CD&R Fund, as amended by an amendment thereto, dated August 28, 2009, and as proposed to be amended by a draft of Amendment No. 2 thereto (including certain related documents), which as amended by such draft Amendment No. 2, we refer to as the draft investment agreement; | |
• | reviewed a draft of the form of certificate of designations, preferences and rights of the Series B convertible preferred stock included as an exhibit to the draft investment agreement; | |
• | reviewed the form of the amended credit agreement attached hereto as Annex J; | |
• | reviewed a draft of the ABL term sheet attached hereto as Annex K; | |
• | reviewed the form of the stockholders agreement attached hereto as Annex F; | |
• | reviewed the form of the indemnification agreement attached hereto as Annex I; | |
• | reviewed the form of the registration rights agreement attached hereto as Annex H; | |
• | reviewed a draft of thelock-up and voting agreement; | |
• | reviewed certain publicly available financial statements of the Company; | |
• | reviewed certain other publicly available business and financial information relating to the Company that Greenhill deemed relevant; | |
• | reviewed certain information, including financial forecasts and other financial and operating data concerning the Company, prepared by the management of the Company; |
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• | discussed the past and present operations and financial condition and the prospects of the Company with senior executives of the Company; | |
• | compared the equity value implied by the consideration to be paid for the Series B convertible preferred stock pursuant to the investment agreement with the trading valuations of certain publicly traded companies that Greenhill deemed relevant; | |
• | compared the equity value implied by the consideration to be paid for the Series B convertible preferred stock pursuant to the investment agreement with that received in certain publicly available transactions that Greenhill deemed relevant; | |
• | compared the equity value implied by the consideration to be paid for the Series B convertible preferred stock pursuant to the investment agreement to the valuation derived by discounting future cash flows and a terminal value of the business at discount rates Greenhill deemed appropriate; | |
• | reviewed the illustrative bankruptcy recoveries by the Company’s stockholders and creditors implied by management’s projections under various scenarios; | |
• | participated, at the written request of the Company, in discussions and negotiations among representatives of the Company and its legal advisors and representatives of the CD&R Fund and its legal advisors; and | |
• | performed such other analyses and considered such other factors as Greenhill deemed appropriate. |
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FY2009 (P) | FY2010 (P) | FY2011 (P) | FY2012 (P) | |||||||||||||
($ in millions) | ||||||||||||||||
Revenue | $ | 961 | $ | 861 | $ | 1,084 | $ | 1,331 | ||||||||
Gross Profit | $ | 161 | $ | 190 | $ | 252 | $ | 335 | ||||||||
Margin (%) | 16.8 | % | 22.1 | % | 23.2 | % | 25.2 | % | ||||||||
Adjusted EBIT(1) | $ | (3 | ) | $ | 1 | $ | 36 | $ | 93 | |||||||
Margin (%) | (0.3 | )% | 0.1 | % | 3.4 | % | 7.0 | % | ||||||||
Adjusted EBITDA(1) | $ | 36 | $ | 36 | $ | 73 | $ | 127 | ||||||||
Margin (%) | 3.8 | % | 4.1 | % | 6.7 | % | 9.6 | % | ||||||||
Capital Expenditures | $ | (23 | ) | $ | (9 | ) | $ | (50 | ) | $ | (40 | ) |
Building Products | Steel Producers with Businesses Comparable to the Company | |
Kingspan Group | Nucor | |
Acuity Brands | Bluescope Steel | |
Armstrong World Industries | ||
Worthington Industries | ||
Simpson Manufacturing | ||
Interface | ||
Gibraltar Industries | ||
Apogee | ||
Quanex Building Products |
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Current Trading | Equity Value per | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comparable Company | Multiples | Enterprise Valuation Range | Equity Value Range | Share Range(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Methodology | Low | - | High | EBITDA | Low | - | High | Net Debt(1) | Low | - | High | Low | - | High | ||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 EBITDA | 7.0 | x | - | 9.5 | x | $ | 36 | $ | 253 | - | $ | 343 | $ | 375 | $ | (122 | ) | - | $ | (32 | ) | $ | (6.11 | ) | - | $ | (1.60 | ) | ||||||||||||||||||||||||||||
2010 EBITDA | 7.0 | x | - | 9.5 | x | $ | 36 | $ | 249 | - | $ | 337 | $ | 375 | $ | (126 | ) | - | $ | (37 | ) | $ | (6.31 | ) | - | $ | (1.87 | ) |
(1) | Based on $474 million debt outstanding less $99 million in projected cash at November 1, 2009. | |
(2) | Based on 20.0 million fully-diluted shares outstanding. |
Date | Target | Acquiror | ||
03/13/2008 | Pavestone Co. | CRH | ||
12/19/2007 | IMSA Acero | Bluescope Steel | ||
02/09/2007 | ElkCorp | Building Materials Corp. | ||
09/25/2006 | Alcoa Home Exteriors | Ply Gem Industries | ||
06/19/2006 | APAC, Inc. | Oldcastle Materials | ||
03/02/2006 | Material Service Corp. | Hanson Aggregates | ||
07/10/2002 | Kiewit Materials | Rinker Materials | ||
08/11/2000 | Republic Group | Premier Construction Products | ||
06/20/2000 | Justin Industries | Berkshire Hathaway | ||
06/02/2000 | Celotex Ceiling Products | BPB |
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Date | Target | Acquiror | ||
09/04/2008 | Beta Steel | NLMK | ||
07/28/2008 | AmeriCast Technologies | Bradken Limited | ||
06/16/2008 | Bayou Steel | Arcelor Mittal | ||
05/20/2008 | Esmark | Severstal | ||
12/09/2007 | Claymont Steel | Evraz Group S.A. | ||
06/21/2007 | Novamerican Steel | Barzel Industries | ||
06/13/2007 | The Techs Holdings | Steel Dynamics | ||
02/28/2007 | Steel Technologies | Mitsui & Co. | ||
12/29/2006 | Harris Steel | Nucor Corp. | ||
11/10/2006 | Tube City IMS | Onex Corp. | ||
04/26/2006 | MMI Products | Oldcastle (CRH) | ||
05/30/2002 | Birmingham Steel | Nucor Corp. | ||
05/25/2000 | Steelscape | IMSA Acero |
Transaction | Enterprise | Equity Value | Equity Value per | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Comparable Transaction | Multiples | Valuation Range | Range | Share Range(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Methodology | Low | - | High | EBITDA | Low | - | High | Net Debt(1) | Low | - | High | Low | - | High | ||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 EBITDA | 7.5 | x | - | 9.0 | x | $ | 36 | $ | 271 | - | $ | 325 | $ | 375 | $ | (104 | ) | - | $ | (50 | ) | $ | (5.21 | ) | - | $ | (2.50 | ) | ||||||||||||||||||||||||||||
2010 EBITDA | 7.5 | x | - | 9.0 | x | $ | 36 | $ | 266 | - | $ | 320 | $ | 375 | $ | (109 | ) | - | $ | (55 | ) | $ | (5.43 | ) | - | $ | (2.76 | ) |
(1) | Based on $474 million debt outstanding less $99 million in projected cash at November 1, 2009. |
(2) | Based on 20 million fully-diluted shares outstanding. |
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• | the Company will issue, sell and deliver to the CD&R Fund, and the CD&R Fund will purchase from the Company, an aggregate of 250,000 shares of Series B convertible preferred stock for an aggregate purchase price of $250.0 million, upon the terms and subject to the conditions of the investment agreement; | |
• | the Company and our subsidiaries, as applicable, will execute and deliver an amendment to our existing credit agreement (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The Term Loan Refinancing”); and | |
• | the Company and our subsidiaries, as applicable, will execute and deliver an ABL agreement (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The ABL Financing”). |
• | repay $143.3 million in principal amount of term loans outstanding under our existing credit agreement that are not rolled into the amended credit agreement, together with all accrued and unpaid interest and all other interest due and payable as of the closing, and cash collateralize or backstop in full, or replace with or roll over and novate into letters of credit issued and outstanding under the ABL agreement, all letters of credit outstanding under our existing credit agreement; | |
• | pay all fees, costs, expenses and other obligations (including under the amended credit agreement, the ABL agreement and related documents) that are due and payable as of the closing; | |
• | (1) if the restructuring is being accomplished through the recapitalization plan, accept the convertible notes validly tendered and not withdrawn pursuant to this exchange offer and (2) if the restructuring is being accomplished through the prepackaged plan, pay the claims with respect to the convertible notes pursuant to the prepackaged plan; | |
• | reimburse the CD&R Fund for transaction expenses up to $14.5 million (net of any transaction expenses that were previously reimbursed); and | |
• | pay CD&R a deal fee in an amount equal to $8.25 million. |
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• | to use our reasonable best efforts to obtain acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes; and | |
• | if the conditions to this exchange offer are not satisfied or, with the prior written consent of the CD&R Fund waived, by the expiration date, but we have received, as of the expiration date, acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes: |
• | to file chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware and commence the prepackaged plan proceeding under the Bankruptcy Code; | |
• | to file certain first day motions and seek to obtain entry of the orders approving such motions; | |
• | to schedule a hearing in the U.S. Bankruptcy Court for the District of Delaware on the earliest date possible to consider confirmation of the prepackaged plan and approve this prospectus/disclosure statement; | |
• | to send notices to all persons to whom such notices are required to be sent under the Bankruptcy Code and to such other persons as ordered by the bankruptcy court, as soon as practicable after the commencement of the prepackaged plan proceeding; | |
• | to use our reasonable best efforts to obtain confirmation of the prepackaged plan by the U.S. Bankruptcy Court for the District of Delaware; | |
• | to use our reasonable best efforts to obtain the dismissal of any and all appeals and motions for reconsideration filed with respect to the prepackaged plan or with respect to the confirmation order relating to the prepackaged plan; and | |
• | to cause the prepackaged plan to become effective and the distributions provided for under the prepackaged plan to be commenced as promptly as possible on or following the day on which conditions to effectiveness set forth in the prepackaged plan have been satisfied or waived. |
• | the expiration or termination of any waiting period required to consummate the CD&R investment under the HSR Act (which condition was satisfied on September 8, 2009, when the U.S. Federal Trade Commission granted early termination of the waiting period under the HSR Act) and the Austrian Act; | |
• | the absence of (1) any provision of any applicable law and any issued injunction, judgment, decree or other order that prohibits the closing, that restricts the CD&R Fund or its affiliates from owning, voting, or |
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converting or exercising any Series B convertible preferred stock in accordance with its terms, or exercising the CD&R Fund’s consent rights contemplated by the stockholders agreement and (2) any lawsuit by a governmental entity seeking to effect any of the foregoing; |
• | the NYSE’s confirmation that the issuance of the Series B convertible preferred stock and the restructuring are in compliance with the NYSE’s stockholder approval policy; and the Company’s proper, unconditional obtainment of an exception under Paragraph 312.05 of the NYSE Listed Company Manual to issue the Series B convertible preferred stock without stockholder approval (which confirmation was provided to the Company on August 13, 2009, subject to the Audit Committee’s determination that the delay necessary in securing stockholder approval prior to the issuance of the Series B convertible preferred stock and of the common stock pursuant to the exchange offer would seriously jeopardize the financial viability of the Company and its approval of the Company’s reliance on the exception contained in Paragraph 312.05 of the NYSE Listed Company Manual, which determination was made by the Audit Committee on August 13, 2009 and on August 31, 2009); | |
• | the Company’s provision of notice to its stockholders as required by, and in compliance with, Paragraph 312.05 of the NYSE Listed Company Manual, and the expiration of theten-day notice period set forth in such paragraph; | |
• | the Company’s filing with the Secretary of State of the State of Delaware of the certificate of designations for the Series B convertible preferred stock; | |
• | the expiration of this exchange offer and the satisfaction or waiver, with the prior consent of the CD&R Fund, of all of the conditions to this exchange offer; and | |
• | the sufficiency for the following applications of the proceeds from the CD&R investment, together with the Company’s available cash, which sufficiency we refer to as the sufficiency of proceeds condition: |
• | to repay $143.3 million in principal amount of term loans outstanding under our existing credit agreement that are not rolled into the amended credit agreement, together with all accrued and unpaid interest and all other interest due and payable as of the closing; | |
• | to cash collateralize or backstop in full all letters of credit outstanding under our existing credit agreement that are not replaced with or rolled over and novated into letters of credit issued and outstanding under the ABL agreement; | |
• | to pay all fees, costs, expenses and other obligations relating to the recapitalization plan (including under the amended credit agreement, the ABL agreement and related documents) that are due and payable as of the closing; | |
• | to pay the cash consideration for all convertible notes validly tendered and not withdrawn under this exchange offer; and | |
• | to pay the maximum consideration necessary to repurchase or redeem all convertible notes not so tendered under this exchange offer pursuant to the convertible notes indenture. |
• | the truth and correctness (without regard to materiality or material adverse effect qualifications) of the representations and warranties of the CD&R Fund contained in the investment agreement (excluding the private placement representations (see “—Representation and Warranties” below)) as of the date of the investment agreement and at and as of the date of the closing as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, a material adverse effect on the ability of the CD&R Fund to consummate the CD&R investment; |
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• | the truth and correctness in all respects of the private placement representations at and as of the date of the investment agreement and at and as of the date of the closing as if made at and as of such time; | |
• | the receipt by the Company of a customary certificate of a senior officer of the CD&R Fund certifying to the satisfaction of the conditions described in the immediately preceding two bullet points; | |
• | the CD&R Fund’s performance of and compliance in all material respects with all covenants and obligations in the investment agreement that are to be performed or complied with by it at or prior to the closing; and | |
• | the CD&R Fund’s due execution and delivery of each of the stockholders agreement, the registration rights agreement and the indemnification agreement. |
• | the truth and correctness (without regard to materiality or material adverse effect qualifications) of the representations and warranties of the Company contained in the investment agreement (excluding those relating to capitalization and the lack of a material adverse change) as of the date of the investment agreement and at and as of the date of the closing as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, a material adverse effect; | |
• | the truth and correctness in all butde minimisrespects of the representations and warranties of the Company relating to capitalization at and as of the date of the investment agreement and at and as of the date of the closing as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date); | |
• | the truth and correctness in all respects of the representations and warranties of the Company relating to the lack of a material adverse change at and as of the date of the closing as if made at and as of such time; | |
• | the Company’s performance of, and compliance in, all material respects with all covenants and obligations in the investment agreement that are to be performed or complied with by it at or prior to the closing; | |
• | the Company’s due execution and delivery of each of the stockholders agreement, the registration rights agreement and the indemnification agreement; | |
• | the Company’s due authorization, execution and delivery of the amended credit agreement either (1) in the form of the amended credit agreement attached hereto as Annex J with such changes thereto deemed advisable by the CD&R Fund in its sole discretion (exercised in good faith) (see “The Restructuring— Description of the Term Loan Refinancing and the ABL Financing—Term Loan Refinancing”), or (2) on terms and conditions that are, in the CD&R Fund’s sole discretion (exercised in good faith), (x) no less favorable (as to each item (other than immaterial items) and in the aggregate) to the Company and the CD&R Fund (as a prospective shareholder of the Company) than the terms and conditions contemplated in the form of the amended credit agreement attached hereto as Annex J or (y) otherwise acceptable to the CD&R Fund; | |
• | the amended credit agreement and other related documents being in full force and effect; | |
• | the satisfaction of all conditions precedent to the effectiveness of the amended credit agreement and the other related documents; | |
• | the receipt by the CD&R Fund of copies of the amended credit agreement and the other related documents; | |
• | subject to the consummation of the CD&R investment, (1) the termination of the revolving commitments under our existing credit agreement, and (2) to the extent required by the amended credit agreement and the ABL agreement, the subordination of the security interests arising under the amended credit agreement and related documents with respect to the collateral securing the ABL financing on a first-priority basis to the security interests in such collateral; | |
• | the Company’s due authorization, execution and delivery of the ABL agreement on terms and conditions that either (1) reflect the terms and conditions summarized in the ABL term sheet attached as Annex K or (2) are, |
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in the CD&R Fund’s sole discretion (exercised in good faith), no less favorable (as to each item and in the aggregate) to the Company and the CD&R Fund (as a prospective shareholder of the Company) than the terms and conditions summarized in the ABL term sheet and, in each case described in clauses (1) and (2), otherwise are either (a) in the CD&R Fund’s reasonable discretion (exercised in good faith), consistent with and no less favorable (as to each item (other than immaterial items) and in the aggregate) to the Company and the CD&R Fund (as a prospective shareholder of the Company) than the terms and conditions of asset-based revolving credit financing transactions for companies sponsored by CD&R, or (b) in the CD&R Fund’s sole discretion (exercised in good faith), acceptable to the CD&R Fund (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The ABL Financing”); |
• | the ABL agreement and the other related documents being in full force and effect; | |
• | the satisfaction of all conditions precedent to (1) the effectiveness of the ABL agreement and the other related documents, (2) the initial borrowings and any other extensions of credit thereunder other than delivery of a borrowing notice, and (3) the effectiveness of the documents related to the ABL agreement; | |
• | the receipt by the CD&R Fund of copies of the ABL agreement and the other related documents; | |
• | the due authorization, execution and delivery of each ancillary refinancing document contemplated by the term loan refinancing and the ABL financing on terms that are (1) consistent with the amended credit agreement and the ABL agreement, as applicable, and (2) otherwise either (a) in the CD&R Fund’s reasonable discretion (exercised in good faith), consistent with and no less favorable (as to each item (other than immaterial items) and in the aggregate) to the Company and the CD&R Fund (as a prospective shareholder of the Company) than the terms and conditions of such agreement or document for companies sponsored by CD&R, or (b) in the CD&R Fund’s sole discretion (exercised in good faith), acceptable to the CD&R Fund; | |
• | on the date of the closing, after giving effect to the closing, (A) the absence of (1) any breach or default under the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing, (2) any allegations of breach or default by a person with the right to cause an acceleration of, or with the right to exercise any other remedy under the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing, and (3) any notice of intention to terminate the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing and (B) the absence of any default or event or circumstance that, with or without notice or lapse of time or both, would (1) constitute a breach, default or event of default under the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing, (2) result in a termination of the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing, (3) cause or permit the acceleration or any other change of the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing, (4) cause or permit the acceleration or any other change in any right or obligation under the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing, or (5) cause or permit the acceleration or any other change in the loss or impairment of any benefit under the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing; | |
• | the Company reasonably believing that we and our subsidiaries will be able to satisfy all terms and conditions to be satisfied by any of them under the amended credit agreement, the ABL agreement or the ancillary refinancing documents contemplated by the term loan refinancing and the ABL financing; | |
• | no more than $150.0 million in term loans being outstanding under the amended credit agreement after giving effect to the term loan refinancing; | |
• | the revolving credit commitments provided for under the ABL agreement being not less than $125.0 million in aggregate; |
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• | the available revolving credit commitments under the ABL agreement and the unrestricted cash available to the Company after applying any cash of the Company to the purposes set forth in the sufficiency of proceeds condition being not less than $90.0 million in the aggregate; | |
• | the ability of the Company to satisfy all conditions to borrowings and other extensions of credit under the ABL agreement; | |
• | the approval by our board of directors, including the approval by the disinterested directors serving on our board pursuant to Article TENTH of our restated certificate of incorporation, of the investment agreement, the other transaction documents and the transactions contemplated thereby (which such approval, with respect to the agreements and transactions related to the CD&R investment and with respect to this exchange offer, was received on August 13, 2009); | |
• | to the extent that the Company has authorized and unissued shares of common stock sufficient to permit the conversion of all or a portion of the shares of Series B convertible preferred stock to be issued at the closing, (1) the due authorization for listing, subject to official notice of issuance, on the NYSE or such other exchange on which the common stock is then listed or quoted, of such shares of common stock and (2) the number of such shares of common stock issuable upon conversion of the Series B convertible preferred stock that are so duly authorized for listing is no less than 7.8 million shares; | |
• | the adoption and declaration of advisability, and the approval and recommendation, by our board of directors, of certain amendments to our restated certificate of incorporation to increase the number of authorized shares (see “The Restructuring—Description of the CD&R Investment— The Stockholders Agreement—Agreement to Seek Amendments to our Restated Certificate of Incorporation”); and | |
• | the receipt by the CD&R Fund of customary certificates of certain senior officers of the Company certifying to the satisfaction of certain of the conditions, including a certificate of our Chief Executive Officer or Chief Financial Officer certifying to the satisfaction of the sufficiency of proceeds condition. |
• | the confirmation order has been entered and no stay of such order is in effect; and | |
• | the satisfaction or waiver of all other conditions to the effectiveness of the prepackaged plan (see “The Prepackaged Plan—Conditions to the Effective Date of the Prepackaged Plan”), |
• | the NYSE’s confirmation that the issuance of the Series B convertible preferred stock and the restructuring are in compliance with the NYSE’s stockholder approval policy; and the Company’s proper, unconditional obtainment of an exception under Paragraph 312.05 of the NYSE Listed Company Manual to issue the Series B convertible preferred stock without stockholder approval; | |
• | the Company’s provision of notice to its stockholders as required by, and in compliance with, Paragraph 312.05 of the NYSE Listed Company Manual, and the expiration of theten-day notice period set forth in such paragraph; and | |
• | the expiration of this exchange offer and the satisfaction or waiver, with the prior consent of the CD&R Fund, of all of the conditions to this exchange offer. |
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(1) | by either the CD&R Fund or the Company, if: |
• | by November 12, 2009: |
• | the closing of this exchange offer has not occurred; and | |
• | acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes have not been received; or | |
• | the prepackaged plan proceeding has been commenced and the effective date of the prepackaged plan has not occurred by a date that is no later than four weeks and ten days after the entry of the order confirming the prepackaged plan; |
• | restraining, enjoining or otherwise prohibiting the closing; | |
• | prohibiting or restricting the CD&R Fund or its affiliates from owning and exercising in full all exchange, conversion and voting rights of the Series B convertible preferred stock contemplated to be exercisable by the CD&R Fund; or | |
• | prohibiting or restricting the CD&R Fund from exercising its consent rights under the stockholders agreement; |
(3) | by the CD&R Fund, if: |
• | the Company terminates this exchange offer or this exchange offer expires in accordance with the terms of the investment agreement without the Company having accepted for purchase the convertible notes pursuant to this exchange offer, unless, in either case, the Company has commenced the prepackaged plan proceeding by the day following the date on which acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes have been received and this exchange offer has expired pursuant to the terms of the investment agreement; or | |
• | this exchange offer has expired on or after the outside date and the conditions to this exchange offer have not been satisfied and acceptances from a sufficient number of holders of impaired claims in an impaired class of claims to allow the prepackaged plan to be confirmed under the Bankruptcy Code, including confirmation through the nonconsensual “cram-down” provisions of section 1129(b) of the Bankruptcy Code with respect to non-accepting impaired claims classes have not been received; |
(4) | by the CD&R Fund, if our board of directors: |
• | approves or recommends to our stockholders a superior proposal (see “—Acceptance of Superior Proposal” below); | |
• | formally withdraws its support for this exchange offer; |
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• | makes a recommendation against this exchange offer or the restructuring; | |
• | recommends another company transaction proposal; or | |
• | resolves to effect any of the foregoing; |
(5) | by the CD&R Fund, if: |
• | the Company or any of our subsidiaries commence any case, proceeding or other action under any existing or future law of any jurisdiction, relating to bankruptcy, insolvency, reorganization or similar laws relating to relief of debtors, which we refer to as a bankruptcy proceeding: | |
• | seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, | |
• | seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution or composition or similar action with respect to it or its debts generally, or | |
• | seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets |
• | any bankruptcy proceeding has been commenced against any of the Company and our subsidiaries other than the prepackaged plan proceeding and such bankruptcy proceeding has not been dismissed within 30 days of such commencement; | |
• | the Company or any of our subsidiaries have become unable, admit our inability or fail generally to pay our debts as they become due; | |
• | the Company or any of our subsidiaries make a general assignment for the benefit of our creditors; | |
• | the Company fails to comply with our obligations to commence the prepackaged plan proceeding (see “—Commencement of a Reorganization Case in Connection with the Prepackaged Plan Covenant” above); | |
• | if the prepackaged plan proceeding has been commenced, at any time after 25 days after the filing of the prepackaged plan, if the bankruptcy court has not entered the order approving the motion relating to the fees and expenses payable to the CD&R Fund and CD&R under the investment agreement on or prior to such date; | |
• | if the prepackaged plan proceeding has been commenced, at any time after eight weeks after the filing of the prepackaged plan, if the bankruptcy court has not entered the confirmation order with respect to the prepackaged plan on or prior to such date; | |
• | if the prepackaged plan proceeding has been commenced, the prepackaged plan proceeding is dismissed or converted from a case under chapter 11 to one under chapter 7 of the Bankruptcy Code, or the Company files a motion or other pleading with the bankruptcy court seeking the dismissal or conversion of the prepackaged plan proceeding; | |
• | at any time, if the Company or any of our subsidiaries file a plan of reorganization or liquidation other than the prepackaged plan; or | |
• | if the prepackaged plan proceeding has been commenced, at any time, if the bankruptcy court (a) grants relief that is materially inconsistent with the investment agreement or the prepackaged plan in any respect or (b) enters an order confirming any plan of reorganization other than the prepackaged plan; |
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• | in circumstances described in clause (4) or clause (6) above under “—Termination of the Investment Agreement”; or | |
• | in circumstances described in clause (1) above under “—Termination of the Investment Agreement,” and (a) within 12 months of the date of termination, the Company enters into a definitive agreement with respect to, or consummates, a transaction contemplated by any qualifying transaction (as described below), and (b) at the time of the termination, (x) the CD&R Fund is not in material breach of any of its material covenants and agreements contained in the investment agreement or its representations and warranties contained in the investment agreement and (y) the following conditions have been satisfied: |
• | the expiration or termination of any waiting period required to consummate the CD&R investment under the HSR Act and the Austrian Act (each, as described on the front cover of this prospectus/disclosure statement); | |
• | the absence of (1) any provision of any applicable law and any issued injunction, judgment, decree or other order that prohibits the closing, that restricts the CD&R Fund or its affiliates from owning, voting, or converting or exercising any Series B convertible preferred stock in accordance with its terms, or exercising the CD&R Fund’s consent rights contemplated by the stockholders agreement and (2) any lawsuit by a governmental entity seeking to effect any of the foregoing; or |
• | in circumstances described in clause (3), clause (5) or clause (7) above under “—Termination of the Investment Agreement,” and at the time of such termination, the CD&R Fund is not in material breach of any of its material covenants and agreements contained in the investment agreement or its representations and warranties contained in the investment agreement, and within 12 months of the date of termination, the Company enters into a definitive agreement with respect to, or consummates, a transaction contemplated by any qualifying transaction; |
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• | add, provide or complete any schedule, annex, exhibit, numerical amount or other information that is omitted, missing or incomplete, or modify, alter, correct or change (including without limitation by deleting or replacing) any wording that is in brackets; | |
• | cure any ambiguity, mistake, omission or defect; | |
• | cure any inconsistency, including with any other provision of the same agreement or of the ABL agreement or any other transaction document or other agreement entered into in connection therewith; | |
• | address a material risk that (1) we will be unable to comply with the terms or conditions of the agreement or (2) by complying with the terms and conditions of the agreement we will be subject to a material risk of not complying with the terms and conditions of the ABL agreement or any other transaction document or other agreement entered into in connection therewith; | |
• | effect the intent evidenced by the form of the amended credit agreement attached hereto as Annex J; or | |
• | avoid adverse tax consequences to us or any of our subsidiaries. |
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• | will take any action that, if taken after the issuance of the Series B convertible preferred stock: |
• | would require the written consent of or vote by holders of such Series B convertible preferred stock under the certificate of designations (see “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Voting Rights”) or would require the consent of the CD&R Fund and its affiliates pursuant to the stockholders agreement (see “The Restructuring—Description of the CD&R Investment—The Stockholders Agreement—Consent Rights”); | |
• | would trigger a redemption right under the certificate of designations (see “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Change of Control Redemption Right”); or |
• | would result in an adjustment to be made under the certificate of designations (see “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Convertibility and Anti–Dilution Adjustments”); | |
• | amend, modify, terminate or otherwise make any change to, directly or indirectly, our existing credit agreement and related credit documents except we may extend (and, as described in our current report onForm 8-K filed on August 27, 2009, on August 21, 2009, have extended) the current waiver from the lenders under our existing credit agreement; |
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• | other than with respect to the prepackaged plan proceeding, commence a bankruptcy proceeding (see “—Termination of the Investment Agreement” above); or | |
• | take any action that is in furtherance of the delisting of the common stock from the NYSE or the listing of the common stock on any other stock exchange or automated quotation system. |
• | solicit, initiate or knowingly encourage any inquiry with respect to, or the making, submission or announcement of, any proposal that constitutes or could reasonably be expected to lead to a company transaction proposal; | |
• | participate in any negotiations regarding a company transaction proposal with, or furnish any nonpublic information relating to a company transaction proposal to, any person; | |
• | engage in discussions regarding a company transaction proposal with any person, except to notify such person of the restrictions in the investment agreement; | |
• | approve, endorse or recommend any company transaction proposal; | |
• | enter into any letter of intent or agreement in principle or any agreement providing for any company transaction proposal, except for a confidentiality agreement, which confidentiality provisions are no less restrictive to such person making the company transaction proposal than the provisions in the confidentiality agreement executed by the CD&R Fund with the Company is to the CD&R Fund, its affiliates, and their respective personnel and representatives; or | |
• | propose or agree to do any of the foregoing. |
• | furnish nonpublic information to the person making such company transaction proposal, if: |
• | prior to so furnishing such nonpublic information, we have (1) advised the CD&R Fund of the receipt of the company transaction proposal and made specified disclosures to the CD&R Fund regarding the terms and conditions of such company transaction proposal and (2) have received from such person making the company transaction proposal a customarily restrictive confidentiality agreement; and | |
• | all such nonpublic information has previously been provided to the CD&R Fund or is provided to the CD&R Fund prior to or substantially contemporaneously with the time it is provided to the person making such company transaction proposal; and |
• | engage in discussions or negotiations with such person with respect to the company transaction proposal. |
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• | propose a contingency plan proposal (as described below) to any person that, to our knowledge, is not considering making, and, in the case of a holder of convertible notes or a lender under our existing credit agreement, has not since April 1, 2009 made, a company transaction proposal other than a contingency plan proposal; | |
• | participate in negotiations and engage in discussions regarding a contingency plan proposal with, or furnish nonpublic information relating to a contingency plan proposal to, any person that, to our knowledge, is not considering making, and, in the case of a holder of convertible notes or a lender under our existing credit agreement, has not since April 1, 2009 made, a company transaction proposal other than a contingency plan proposal; or | |
• | propose or agree to do any of the foregoing; |
• | prior to furnishing any nonpublic information, we have (i) advised the CD&R Fund of the receipt of the contingency plan proposal and made specified disclosures to the CD&R Fund regarding the terms and conditions of such contingency plan proposal; and (ii) have received from such person making a customarily restrictive confidentiality agreement; and | |
• | all such nonpublic information has previously been provided to the CD&R Fund or is provided to the CD&R Fund prior to or substantially contemporaneously with the time it is provided to the person making such contingency plan proposal or to whom such contingency plan proposal has been made. |
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• | we have provided prior written notice to the CD&R Fund at least five calendar days in advance of our intention to take such actions and providing disclosure of the terms and conditions of such superior proposal; | |
• | during such notice period, we and our independent financial advisor and outside counsel have negotiated with the CD&R Fund in good faith (to the extent the CD&R Fund desires to negotiate) to make such adjustments in the terms and conditions of the investment agreement so that such company transaction proposal ceases to constitute a superior proposal; and | |
• | at or prior to the time of termination of the investment agreement, we have paid the termination fee (see “—Termination Fees; Transaction Expenses Following Termination” above). |
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• | our and our subsidiaries’ proper organization, good standing and existence and corporate power to operate our and their properties and conduct our and their businesses; | |
• | our ownership of certain subsidiaries; | |
• | our capitalization; | |
• | the lack of registration rights or voting agreements with respect to our securities; | |
• | our corporate power and authority to enter into the transaction documents and to consummate the restructuring; | |
• | the enforceability of the transaction documents; | |
• | the absence of any violation of or conflict with or defaults under our and our subsidiaries’ organizational documents, certain convertible notes and instruments, or applicable law as a result of entering into the transaction documents and consummating the restructuring; | |
• | the absence of any violation of law or order applicable to us or our subsidiaries or any of our and their properties or assets; | |
• | the lack of any requirements for notice to, filing with, exemption or review by, or authorization, consent or approval of, any governmental entity or any other person under any provision of any material agreement or other instrument to which we are a party in connection with the execution and delivery of the transaction documents and consummating the restructuring; | |
• | certain of our SEC filings and the consolidated financial statements included therein; | |
• | the absence of undisclosed liabilities; | |
• | our disclosure controls and procedures and internal controls over financial reporting; | |
• | the absence of any material complaints, allegations, assertions or claims regarding our accounting or auditing practices; | |
• | the absence of any change, condition, event or development since the date of the investment agreement that would have, individually or in the aggregate, a material adverse effect on the Company; | |
• | the lack of action, claim, suit, proceeding or investigation against us or any of our subsidiaries; | |
• | our compliance with laws; | |
• | our possession of all licenses and permits necessary to own or lease our properties and carry on our business; | |
• | the due authorization of the Series B convertible preferred stock and other matters relating to the Series B convertible preferred stock; | |
• | tax matters; | |
• | our employee benefit plans; | |
• | our employees and compliance with labor laws; | |
• | our intellectual property; | |
• | our real property; | |
• | our title to assets; | |
• | environmental matters; | |
• | certain of our material contracts; |
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• | the absence of undisclosed brokers’ or finders’ fees; | |
• | our compliance with the continued listing requirements of the NYSE; | |
• | our insurance policies; | |
• | our actions relating to certain state anti-takeover statutes and provisions in our restated certificate of incorporation; | |
• | approval by our board of directors of the transaction documents including the transactions contemplated thereby, including this exchange offer; | |
• | this prospectus/disclosure statement, the related registration statement and the Schedule TO filed in connection with this exchange offer; | |
• | our receipt of a fairness opinion from Greenhill; | |
• | the ABL agreement and other related credit documents contemplated by the ABL financing (including with respect to (1) the absence of any amendment or modification of such documents from and after execution and delivery thereof, (2) the validity and binding effect of such documents on the Company and each of our subsidiaries that is a party thereto, (3) the absence of default or breach (or allegations thereof) in any material respect under the terms of the ABL agreement or the other related documents, and (4) the absence of any default or event or circumstance that, with or without notice or lapse of time or both, would constitute a breach, default or event of default thereunder); | |
• | our existing credit agreement and the related credit documents (including with respect to our payment of any and all fees, expenses and other obligations that are due and payable in connection with our existing credit agreement and other related documents and the lack of revolving loans outstanding under our existing credit agreement); | |
• | the amended credit agreement and other related documents contemplated by the term loan refinancing (including with respect to (1) the absence of any amendment or modification of such documents from and after execution and delivery thereof, (2) the validity and binding effect of such documents on the Company and each of our subsidiary that are parties thereto, (3) the absence of default or breach in any material respect under (or allegations thereof) the terms of the amended credit agreement or the other related documents, and (4) the absence of any default or event or circumstance that, with or without notice or lapse of time or both, would constitute a breach, default or event of default thereunder); and | |
• | the solvency of the Company and our subsidiaries after giving effect to the closing. |
• | its status and certain acknowledgements relating to the CD&R investment, which representations and warranties we refer to as the private placement representations, including: |
• | its status as an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act; | |
• | its awareness that the sale of the Series B convertible preferred stock and the common stock issuable upon conversion of the Series B convertible preferred stock is being made in reliance on a private placement exemption from registration under the Securities Act; | |
• | its acquisition of the Series B convertible preferred stock and common stock issuable upon conversion of the Series B convertible preferred stock is for its own account; | |
• | that the Series B convertible preferred stock and common stock issuable upon conversion of the Series B convertible preferred stock are being offered in a transaction not involving any public offering within the |
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meaning of the Securities Act and that there are transfer restrictions on the Series B convertible preferred stock and common stock issuable upon conversion of the Series B convertible preferred stock; |
• | that the Series B convertible preferred stock and common stock issuable upon conversion of the Series B convertible preferred stock may bear a legend or other restriction; and | |
• | that it (1) is able to fend for itself in the transactions contemplated by the investment agreement; (2) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the Series B convertible preferred stock and the common stock issuable upon conversion of the Series B convertible preferred stock; (3) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment; (4) acknowledges that it (a) has conducted its own investigation of the Company and the terms of the Series B convertible preferred stock and the common stock issuable upon conversion of the Series B convertible preferred stock, (b) has had access to the Company’s public filings and to such financial and other information as it deems necessary to make its decision to purchase the Series B convertible preferred stock and the common stock issuable upon conversion of the Series B convertible preferred stock, and (c) has been offered the opportunity to ask questions of the Company and received answers thereto, as it deemed necessary in connection with the decision to purchase the Series B convertible preferred stock and common stock issuable upon conversion of the Series B convertible preferred stock; and (5) understands that the Company is relying upon the truth and accuracy of its representations, acknowledgements and agreements; |
• | that the common stock is listed on the NYSE and the Company is required to file reports containing certain business and financial information with the SEC pursuant to the reporting requirements of the Exchange Act of 1934, as amended, or the Exchange Act, and that it is able to obtain copies of such reports; | |
• | its corporate or other power and authority to enter into the investment agreement and related agreements (including the stockholders agreement and the registration rights agreement) and to consummate the CD&R investment; | |
• | the lack of any requirements for notice to, filing with, exemption or review by, or authorization, consent or approval of, any governmental entity or any other person under any provision of any material agreement or other instrument to which we are a party in connection with the execution and delivery of the CD&R investment and related agreements (including the stockholders agreement and the registration rights agreement) and consummating the CD&R investment; | |
• | its lack of ownership of our capital stock; | |
• | its access to and the availability of funds in an amount equal to the Cash Proceeds; | |
• | information supplied by the CD&R Fund for this prospectus/disclosure statement, the related registration statement and the Schedule TO filed in connection with this exchange offer; and | |
• | its lack of competitive businesses. |
• | is material and adverse to the business, assets, results of operations or financial condition of the Company and our subsidiaries, taken as a whole; or | |
• | would materially impair the ability of the Company to perform our obligations under the transaction documents or to consummate the restructuring. |
• | any change, development, occurrence or event affecting the businesses or industries in which the Company and its subsidiaries operate including general pricing changes (except to the extent that the effects of such |
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changes have a disproportionate impact on the Company and its subsidiaries, taken as a whole, relative to other businesses supplying to the non-residential construction industry); |
• | changes in general domestic economic conditions, including changes in the financial, securities or credit markets, or changes in such conditions in any area in which the Company or its subsidiaries operate (except to the extent that the effects of such changes have a disproportionate impact on the Company and its subsidiaries, taken as a whole, relative to other businesses supplying to the non-residential construction industry); | |
• | changes in global or national political conditions, including any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism (except to the extent that the effects of such changes have a disproportionate impact on the Company and its subsidiaries, taken as a whole, relative to other businesses supplying to the non-residential construction industry); | |
• | the announcement of the transaction documents and the transactions contemplated thereby; | |
• | the failure of the Company to meet any internal or published projections, forecasts or revenue or earning predictions for any period (provided that the underlying causes of such failure may be considered in determining whether there is a material adverse effect on the Company); | |
• | any change in the trading prices of the common stock on the NYSE or of the convertible notes (provided that the underlying causes of such change may be considered in determining whether there is a material adverse effect on the Company); or | |
• | the announcement or commencement of the prepackaged plan proceeding. |
• | CD&R losses for NCI breaches of representations and warranties, which means any and all losses, liabilities, damages and expenses arising from or relating to any inaccuracy in or breach of any representation or warranty when made or deemed made by us in or pursuant to the investment agreement; | |
• | CD&R losses for NCI breaches of covenants, which means any and all losses, liabilities, damages and expenses arising from or relating to our failure to perform any covenant or agreement under the investment agreement; or | |
• | CD&R losses for execution and performance of the investment agreement, which means any and all losses, liabilities, damages and expenses arising out of or resulting from our authorization and approval and ourand/or the CD&R Fund’s execution, delivery, performance or termination of the investment agreement or the transactions contemplated thereby (other than any losses, liabilities, damages and expenses attributable to acts, errors or omissions in violation of the investment agreement on the part of the CD&R Fund or any CD&R Indemnified Parties and other than any losses, liabilities, damages and expenses attributable to the economic risks of the CD&R Fund’s investment decision) that the CD&R Fund or the CD&R Indemnified Parties are subject to, named in or made party to any litigation by any person other than us. |
• | ade minimisexception of $50,000, under which we are not required to pay any amounts in respect of losses, liabilities, damages and expenses in connection with or related to any individual claim (or any series of related claims (including any class action)) unless such losses exceed $50,000; |
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• | a basket of $5.0 million, under which we are not required to pay any amounts in respect of losses, liabilities, damages or expenses (other than losses, liabilities, damages or expenses excluded because they do not meet thede minimis exception described in the immediately preceding bullet point) until such losses exceed $5.0 million, following which time all losses above such amount will be subject to indemnification; and | |
• | a cap of $75.0 million. |
• | NCI losses for CD&R breaches of representations and warranties, which means any and all losses, liabilities, damages or expenses arising from or relating to any inaccuracy in or breach of any representation or warranty when made or deemed made by the CD&R Fund in or pursuant to the investment agreement; or | |
• | NCI losses for CD&R breaches of covenants, which means any and all losses, liabilities, damages or expenses arising from or relating to the failure of the CD&R Fund to perform any covenant or agreement under the investment agreement. |
• | to cause all directors serving on our board of directors immediately prior to the closing (other than our Chief Executive Officer and, to the extent such individuals are chosen to serve as unaffiliated shareholder directors, two other directors (see “The Restructuring—Description of the CD&R Investment—The Stockholders Agreement—Board Representation and Other Related Matters”)) to resign from our board, effective as of the closing; | |
• | to cause vacancies on our board of directors to be filled, effective as of the closing, by persons nominated or designated by the CD&R Fund no later than three business days prior to the closing, with the directors nominated or designated by the CD&R Fund divided as nearly evenly as possible among each class of our board of directors, and to cause the representation of the directors nominated or designated by the CD&R |
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Fund, effective as of the closing, on each committee of our board of directors to be proportionate to the membership of the directors nominated or designated by the CD&R Fund on our board of directors; |
• | to ensure that the by-laws, the charters of the committees of our board of directors and any of our corporate guidelines, effective as of the closing, are consistent with the provisions of the stockholders agreement and the transactions contemplated by that agreement (see “The Restructuring—Description of the CD&R Investment—The Stockholders Agreement”); and |
• | to elect, effective as of the closing, to take advantage of the exemptions to the requirements of sections 303A.01, 303A.04 and 303A.05 of the NYSE Listed Company Manual (which exemptions would exempt us from compliance with the NYSE’s requirements for companies listed on the NYSE to have (1) a majority of independent directors, (2) a nominating/corporate governance committee and a compensation committee, in each case, composed entirely of independent directors, and (3) charters for the nominating/corporate governance committee and the compensation committee, in each case, addressing certain specified matters). |
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• | Employment Agreement with Mr. Chambers: The Company is a party to an employment agreement with Norman C. Chambers. Mr. Chambers’ employment agreement provides for payment of certain severance benefits in the event of a termination of his employment by Mr. Chambers for “good reason” (as defined in the agreement) or by the Company without “cause” (as defined in the agreement) (we refer to such terminations as qualifying terminations). As described above, the Company and Mr. Chambers have entered |
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• | Employment Agreements with Messrs. Johnson, Dobbins, Dickinson, Fischer and Other Executive Officers (other than Mr. Allen): The Company is a party to substantially similar employment agreements with Messrs. Johnson, Dobbins, Dickinson, Fischer and each of its other executive officers, other than Mr. Allen. Upon a qualifying termination within 24 months after a change in control or during a potential change in control period, the executive will be entitled to (i) certain accrued amounts, (ii) a lump sum cash payment, equal to two times the executive’s annual base salary at the highest annualized rate in effect during the one year period immediately preceding the date of the change in control or potential change in control, as applicable (in the case of Messrs. Dobbins and Dickinson, this payment is reduced by the market value of the vested portion of the 25,000 restricted shares granted to each of them on August 26, 2004) and (iii) continued medical and dental coverage at the active employee rate for up to 18 months. Assuming that the CD&R investment is consummated on November 2, 2009, and the executive has a qualifying termination immediately thereafter, the amount of cash severance that would be payable to each of Messrs. Johnson, Dobbins, Dickinson, Fischer and the other executive officers (other than Mr. Allen) (as a group), respectively, is approximately $664,000, $630,000, $581,000, $581,000 and $2,421,000. |
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• | rank senior and prior to the common stock and each other class or series of equity securities of the Company, whether currently issued or to be issued in the future, that by its terms ranks junior to the Series B convertible preferred stock; and | |
• | rank junior to each class or series of equity securities of the Company, whether currently issued or issued in the future, that by its terms ranks senior to the Series B convertible preferred stock. |
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• | the sum of (a) the aggregate liquidation preference of such holder’s shares of Series B convertible preferred stock and (b) the aggregate accrued dividends of such shares as of the date of such liquidation; and | |
• | the amount such holder would have received had such holder, immediately prior to such liquidation, converted such shares of Series B convertible preferred stock into shares of common stock in accordance with the certificate of designations (but without taking into account any limitations on convertibility that may then be applicable). |
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• | 6.00%per annum, if the default is the result of a failure by us at any time after June 30, 2011 to reserve and keep available for issuance a number of shares of common stock equal to 110% of the number of shares of common stock issuable upon conversion of all outstanding shares of Series B convertible preferred stock; or | |
• | 3.00%per annum, for all other defaults. |
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• | the Company fails to pay any participating dividend (see “— Participating Dividends” above); | |
• | following the date on which there are no convertible notes outstanding, the Company fails to pay, in cash or in kind, any Series B preferred dividend on the applicable quarterly dividend payment date; | |
• | the Company fails at any time after June 30, 2010 to reserve and keep available for issuance the number of shares of common stock equal to 110% of the number of shares of common stock issuable upon conversion of all outstanding shares of Series B convertible preferred stock; | |
• | the Company fails to maintain the listing of the common stock on the NYSE or another U.S. national securities exchange; | |
• | the Company violates any dividend payment restrictions with respect to junior securities dividends described in “—Restrictions with Respect to Junior Securities Dividends” above; | |
• | the Company fails to comply with our obligations to convert Series B convertible preferred stock in accordance with our obligations under the certificate of designations; or | |
• | the Company fails to redeem Series B convertible preferred stock in compliance with the certificate of designations. |
• | our board of directors can take a cure action which could reasonably be expected to prevent or to cure such failure; | |
• | our board of directors does not promptly take such cure action; and | |
• | at any time when our board of directors could have taken a cure action and it fails to take such cure action, the aggregate number of votes that the directors nominated or designated by the CD&R Investors are entitled to cast constitute a majority of the total number of votes that can be cast by all directors then on our board of directors or, if the failure to take such cure action was with the approval of our board of directors, the aggregate number of votes that were cast by the directors nominated or designated by the CD&R Investors constituted a majority of the total number of votes that could be cast by the directors constituting the quorum that granted such approval. |
• | result in a breach of any provision of applicable law or our restated certificate of incorporation; | |
• | result in, with notice or lapse of time or both, an event of default under, or result in the termination of, or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit under any agreement, arrangement, commitment, plan or other instrument or obligation to which the Company, or any of our subsidiaries, is a party or by which the Company or any of our subsidiaries may be bound, or to which the Company or any of our subsidiaries or any of the properties, assets, or rights of the Company or any of our subsidiaries may be subject, and such result (except with respect to any agreement, arrangement, commitment, plan or other instrument relating to indebtedness that is material to the |
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Corporation and its Subsidiaries, taken as a whole) would reasonably be expected to materially and adversely affect the business, assets, results of operations or financial condition of the Company and our subsidiaries, taken as a whole; |
• | result in a breach of any injunction, judgment, decree or other order of any court or governmental agency and such breach would reasonably be expected to materially and adversely affect the business, assets, results of operations or financial condition of the Company and our subsidiaries, taken as a whole; or | |
• | requires the consent of our stockholders or any other person (other than the CD&R Investors) and (1) if there is reasonably sufficient time to obtain such consent and our board of directors has timely authorized the seeking of such consent, (a) such consent is not obtained prior to the applicable failure and (b) if the consent required is of our stockholders, the CD&R Investors beneficially own in the aggregate less than 45% of the voting power of each group of voting securities of the Company which vote or consent is required to approve such cure action or the CD&R Investors have voted all shares of voting securities of the Company beneficially owned by it entitled to vote with respect to such cure action to approve such cure action; or (2) there is not reasonably sufficient time to obtain such consent. |
• | if the Company declares a dividend or makes a distribution on the common stock payable in shares of common stock; | |
• | if the Company subdivides, splits or combines the shares of common stock; | |
• | if the Company effects a below market price issuance, which means an issuance or sale of any common stock, convertible securities or options (subject to certain limited exceptions) without consideration or for consideration per share less than the then-current market price of the common stock; |
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• | if the Company effects a distribution of certain assets or securities, which means a distribution to all holders of shares of common stock evidences of indebtedness, shares of capital stock, securities, cash or other assets, subject to certain limited exceptions; | |
• | in a spin-off, where the Company makes a distribution to all holders of shares of common stock consisting of capital stock of any class or series, or similar equity interests of, or relating to, a subsidiary of the Company or other business unit; | |
• | if the Company effects an above marketpro ratarepurchase, which means apro ratarepurchase of common stock that involves the payment by the Company of consideration per share of common stock that exceeds the then-current average market price per share of common stock on the trading day next succeeding the effective date of suchpro ratarepurchase; or | |
• | if, during the three-year period immediately following the closing, the Company effects a below conversion price issuance, which means the issuance or sale of any common stock, convertible securities or options (subject to certain limited exceptions) without consideration or for consideration per share less than the conversion price in effect immediately prior to such issuance or sale at a time when such conversion price is greater than the then-current market price. |
• | the aggregate number of votes that the directors nominated or designated by the CD&R Investors are entitled to cast do not constitute a majority of the total number of votes that can be cast by all directors on our board of directors or the aggregate number of votes that are cast by directors nominated or designated by the CD&R Investors do not constitute a majority of the total number of votes that could be cast by the directors constituting the quorum granting such approval or recommendation; or | |
• | if the condition in the immediately preceding bullet point is not met, then (A) so long as at least one unaffiliated shareholder director was part of the quorum granting such approval or recommendation, either (1) a majority of the unaffiliated shareholder directors voting with respect to such approval or recommendation vote in favor of such approval or recommendation or (2) each unaffiliated shareholder director that was a part of the quorum granting such approval or recommendation abstains from voting with respect thereto or (B) a majority of the directors who are independent of both the Company and the CD&R Fund does not in good faith oppose such approval or recommendation on the merits (without regard to the impact of such approval or recommendation, or the withholding thereof, on the CD&R Investors). |
• | the aggregate number of votes that the directors nominated or designated by the CD&R Investors are entitled to cast do not constitute a majority of the total number of votes that can be cast by all directors on our board of directors or the aggregate number of votes that are cast by directors nominated or designated by the CD&R Investors do not constitute a majority of the total number of votes that could be cast by the directors constituting the quorum granting such approval or recommendation; or | |
• | if the condition in the immediately preceding bullet point is not met, either (1) a majority of the unaffiliated shareholder directors votes in favor of such approval or recommendation or (2) a majority of the directors who are independent of both the CD&R Investors and the Company does not in good faith oppose such approval or recommendation on the merits (without regard to the impact of such approval or recommendation, or the withholding thereof, on the CD&R Investors) and the unaffiliated shareholder directors receive a certificate of a majority of the directors who are officers of CD&R or the CD&R Investors or otherwise not deemed independent of the CD&R Investors under the stockholders agreement certifying that, in the good faith judgment of a majority of such directors, such issuance or sale is in the best interests of the Company. |
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• | the individuals and entities that beneficially owned the outstanding voting stock of the Company immediately prior to such business combination do not beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of the entity resulting from such business combination in substantially the same |
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proportions as their ownership immediately prior to such business combination of the voting power of the outstanding voting stock of the Company; or |
• | any person (excluding the CD&R Investors and their affiliates) either (1) beneficially owns more of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity than the CD&R Investors and their affiliates so beneficially own (unless the CD&R Investors and their affiliates beneficially own more than 17.5% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity) or (2) beneficially owns 25% or more of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity. |
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• | any amendment, alteration, repeal or other modification of any provision of our restated certificate of incorporation, the certificate of designations or the by-laws that would alter or change the terms or the powers, preferences, rights or privileges of the Series B convertible preferred stock so as to affect them adversely; | |
• | any authorization, creation, increase in the authorized amount of, or issuance of any class or series of senior securities or any security convertible into, or exchangeable or exercisable for, shares of senior securities; and | |
• | any increase or decrease in the authorized number of shares of Series B convertible preferred stock or the issuance of additional shares of Series B convertible preferred stock, subject to certain limited exceptions. |
• | beginning on a redemption date in respect of a redemption described above in “—Milestone Redemption,” if the Company fails to deposit on or prior to such date money in immediately available funds sufficient to pay the aggregate purchase price as of such date for all shares of Series B convertible preferred stock to be redeemed on such date or at any time on or after a redemption date in respect of a redemption described above in “—Milestone Redemption” that the Company fails to pay the applicable full redemption price for any share of Series B convertible preferred stock to be redeemed on such date and ending at such time when the applicable full redemption price for all shares of Series B convertible preferred stock to be so redeemed has been paid; or | |
• | beginning at any time that the Company fails to pay the applicable full redemption price in respect of a redemption in connection with a business combination change of control, a board level change of control or a change of control under debt instruments (see “—Change of Control Redemption Right” above) for any share of Series B convertible preferred stock that a holder of Series B convertible preferred stock has requested be redeemed and ending at such time when the full applicable redemption price for all shares of Series B convertible preferred stock so requested to be redeemed is paid, |
• | take any of, commit, resolve or agree to take any of, or authorize or otherwise facilitate any of the actions described in “The Restructuring—Description of the CD&R Investment—The Stockholders Agreement—Consent Rights”; | |
• | take any action that would result in an adjustment to the conversion price (see “—Convertibility and Anti-Dilution Adjustments” above); |
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• | enter into any agreement or understanding, or commit, resolve or agree to enter into any agreement or understanding with respect to a business combination; | |
• | hire, terminate or change the compensation of any executive officer except for ordinary raises consistent with past practices, subject to certain conditions; or | |
• | adopt an annual budget. |
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• | acquiring any business organizations or divisions of a business organization or any assets outside the ordinary course of business; | |
• | selling or disposing of any business organizations or divisions of a business organization or any assets outside of the ordinary course of business; | |
• | authorizing, issuing, delivering, selling, pledging, disposing of, granting, awarding or encumbering any shares (or options, warrants, convertible securities or rights of any kind to acquire or receive any shares) of capital stock, ownership interests or voting securities; | |
• | redeeming, repurchasing or acquiring any shares of capital stock or securities convertible into or exercisable for shares of the capital stock; | |
• | declaring or paying any extraordinary dividend or distribution; | |
• | incurring or guaranteeing any material indebtedness; | |
• | engaging to a material extent in any business in which the Company is not currently engaged on the date of the closing or any business related, ancillary or complementary to such business; | |
• | adopting a plan or agreement of complete or partial liquidation or dissolution or commencing a bankruptcy proceeding; | |
• | increasing the size of the Company’s board of directors; or | |
• | amending, altering or repealing the Company’s charter or by-laws. |
• | to vote in favor of all director nominees nominated by our board of directors for election by the stockholders in accordance with the terms of the stockholders agreement and our by-laws, and |
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• | as recommended by our board of directors on: |
• | proposals relating to or concerning compensation or equity incentives for directors, officers or employees of the Company adopted in the ordinary course of business consistent with past practice, | |
• | proposals the subject matter of which is described under “—Consent Rights” above; and | |
• | proposals by stockholders of the Company (including underRule 14a-8 of the Exchange Act); |
• | acquiring, offering or proposing to acquire, or agreeing to acquire, in any manner, beneficial ownership of any securities of the Company or our subsidiaries (including convertible securities) if immediately following such acquisition or agreement, the CD&R Investors and such affiliates would beneficially own in the aggregate more than 80% of the voting power or economic interest of the Company, other than acquisitions of (1) term loans advanced pursuant to, or outstanding under, the amended credit agreement contemplated by the term loan refinancing, or (2) securities of the Company or our subsidiaries resulting from (a) the payment of dividends in kind in additional shares of Series B convertible preferred stock pursuant to the certificate of designations (see “The Restructuring—Description of the CD&R Investment—Certain Terms of the Series B Convertible Preferred Stock—Dividends”), (b) the exercise of subscription rights granted under the stockholders agreement (see “—Subscription Rights” above), (c) the adjustment of the conversion price pursuant to the terms of the certificate of designations (see “The Restructuring—Description of the CD&R Investment — Certain Terms of the Series B Convertible Preferred Stock—Convertibility and Anti-Dilution |
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Adjustments”), (d) any repurchase or redemption of securities by the Company or (e) any other right of the CD&R Investors or transaction contemplated by the transaction documents; or |
• | seeking, directly or indirectly, any amendment, waiver, or release of, or to contest the validity of, any of the restrictions described in the immediately preceding bullet point. |
• | acquiring, offering or proposing to acquire or agreeing to acquire, directly or indirectly, in any manner, beneficial ownership of any indebtedness or debt securities of the Company other than term loans advanced pursuant to, or outstanding under, the amended credit agreement contemplated by the term loan refinancing; or | |
• | seeking, directly or indirectly, any amendment, waiver, or release of, or to contest the validity of, any of the restrictions described in the bullet point above by the Company. |
• | to certain of its affiliates that agree to be bound by the provisions of the stockholders agreement; | |
• | to the Company; | |
• | in a qualified business combination (as described below) that is approved, or recommended to the stockholders of the Company, by our board of directors in which: |
• | the consideration received by the CD&R Investors (other than with respect to any Series B convertible preferred stock that is exchangeable for, or convertible into, preferred stock of the resulting entity of the qualified business combination in accordance with thesub-bullet point below, if applicable), on an as-converted basis, is equal to, and in the same form as, the per-share consideration received by all holders of common stock; and/or |
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• | the shares of Series B convertible preferred stock are exchangeable for, or convertible into, shares of the resulting entity of the qualified business combination having terms, preferences, rights, privileges and powers substantially similar to and no more favorable than the terms, preferences, rights, privileges and powers under the certificate of designations, and the number of shares of such preferred stock of the resulting entity are convertible in the aggregate into the same amount and form of consideration that would have been receivable in the qualified business combination if the shares of Series B convertible preferred stock had been fully converted into the underlying common stock immediately prior to such qualified business combination; or |
• | in a business combination (other than a qualified business combination) that is approved, or recommended to the stockholders of the Company, by our board of directors in which the consideration received by the CD&R Investors, on an as-converted basis, is equal to, and in the same form as, the per-share consideration received by all holders of common stock. |
• | the common stock held by it may be transferred, sold, pledged, assigned or otherwise disposed of (including by merger or otherwise by operation of law) by the CD&R Investors: |
• | in a privately negotiated transaction, provided that the transferee represents that (1) it is not a competitor of the Company, (2) it is not and will not be, after giving effect to the transfer, a holder of 10% or more of the voting power of the Company or any affiliate of such a holder and (3) it is not proposing to effect a change of control of the Company without the prior written consent of a majority of the directors who are independent of both the Company and the CD&R Investors; | |
• | in public market trades, provided that the CD&R Investors or their affiliates transferring such shares have no reason to believe that any transferee does not meet the requirements described in clauses (1) through (3) described in the sub-bullet point immediately above and the CD&R Investors or their affiliates transferring such shares have instructed their underwriters or brokers, if any, of such requirements; | |
• | in a traditional underwritten public offering in accordance with the registration rights agreement; and |
• | such shares of Series B convertible preferred stock or common stock may be transferred, sold, pledged, assigned or otherwise disposed of (including by merger or otherwise by operation of law) in the transfer restriction exceptions described in the paragraph above. |
• | the individuals and entities that were the beneficial owners of all classes and series of voting stock outstanding immediately prior to such business combination beneficially own more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of the entity resulting from such business combination in substantially the same proportions as their ownership immediately prior to such business combination; and | |
• | no person or group (excluding the CD&R Investors and their affiliates) either: |
• | beneficially owns more of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity than the CD&R Investors and their affiliates so beneficially own, and the CD&R Investors and their affiliates beneficially own more than |
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17.5% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity; or |
• | beneficially owns 25% or more of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or equivalent) of such entity. |
• | amendment to Article FOURTH, section 1 of our restated certificate of incorporation to increase the number of authorized shares of common stock; | |
• | amendment to Article FOURTH, section 1 of our restated certificate of incorporation to enable holders of a majority of the capital stock of the Company entitled to vote generally in the election of directors to vote on proposals affecting the number of authorized shares of any class or classes of stock may be increased or decreased; | |
• | amendment to Article FIFTH, section 4 of our restated certificate of incorporation to provide for the removal of directors with or without cause by the affirmative vote of the holder or holders of 80% of the outstanding voting power of the Company; | |
• | amendment to Article FIFTH, section 5 of our restated certificate of incorporation to provide for the calling of special meetings of stockholders by the Chief Executive Officer, by our board of directors pursuant to a resolution approved by a majority of the entire board of directors, or by the Secretary of the Company at the written request of the holder or holders of 25% of the outstanding voting power of the Company; | |
• | deletion of Article FIFTH, section 6 of our restated certificate of incorporation that prohibited stockholder action by written consent; | |
• | deletion of Article SEVENTH of our restated certificate of incorporation that prohibited preemptive or preferential right; | |
• | deletion of Article TENTH of our restated certificate of incorporation relating to approval of certain business combinations; and |
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• | addition of a new article to our restated certificate of incorporation relating to the number of votes that may be held by certain directors to give effect to the provisions in the stockholders agreement. |
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• | resulting from third-party claims resulting from, arising out of or in connection with, based upon or relating to the Securities Act, the Exchange Act or any other applicable securities or other laws, in connection with any future securities offering of the Company, the term loan refinancing, the ABL financing, this exchange offer or any documents relating to any of these actions; | |
• | whether incurred with respect to third parties or otherwise, resulting from, arising out of, or in connection with, based upon or relating to the performance by CD&R or its affiliates of certain transaction services; | |
• | resulting from third-party claims against an indemnitee in its capacity as an affiliate (within the meaning of the Exchange Act) or controlling person (within the meaning of the Exchange Act) of the Company or any of our subsidiaries, resulting from, arising out of or in connection with, based upon or relating to any action or inaction by the Company or any of our subsidiaries, provided that such action or inaction was not proximately caused by such indemnitee; |
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• | whether incurred with respect to third parties or otherwise, resulting from, arising out of, or in connection with, based upon or relating to any payment or reimbursement by an indemnitee pursuant to indemnification arrangements to an indemnitee acting as a director or an officer of the Company or any of our subsidiaries or having served at the request of or for the benefit of the Company or any of our subsidiaries as a director, officer, member, employee or agent of or advisor or consultant to another corporation, partnership, joint venture, trust or other enterprise, including with respect to any breach or alleged breach by an indemnitee of his or her fiduciary duty as a director or an officer of the Company or any of our subsidiaries; or | |
• | in each case including but not limited to any and all fees, costs and expenses (including without limitation fees and disbursements of attorneys and other professional advisers) incurred by or on behalf of any indemnitee in asserting, exercising or enforcing any of its rights, powers, privileges or remedies in respect of the indemnification agreement. The foregoing notwithstanding, none of the NCI entities are obligated to indemnify and hold harmless any indemnitee in respect of (1) any claim made against the indemnitee by any of its related persons, including its own directors, officers, shareholders, partners, members, employees, agents, advisors, consultants, representatives and controlling persons to the extent arising from any obligation of such indemnitee to such related person (whether arising from contract, by law or otherwise), other than to the extent such claim arises out of any indemnification obligation by such indemnitee to such related person as a result of such related person’s service as a director or an officer of the Company or any of our subsidiaries or (2) any fraud or intentional misconduct by such indemnitee. |
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• | add, provide or complete any schedule, annex, exhibit, numerical amount or other information that is omitted, missing or incomplete, or modify, alter, correct or change (including without limitation by deleting or replacing) any wording that is in brackets; | |
• | cure any ambiguity, mistake, omission or defect; | |
• | cure any inconsistency, including with any other provision of the same agreement or of the ABL agreement or any other transaction document or other agreement entered into in connection therewith; | |
• | address a material risk that (1) we will be unable to comply with the terms or conditions of the agreement or (2) by complying with the terms and conditions of the agreement we will be subject to a material risk of not complying with the terms and conditions of the ABL agreement or any other transaction document or other agreement entered into in connection therewith; | |
• | effect the intent evidenced by the form of the amended credit agreement attached hereto as Annex J; or | |
• | avoid adverse tax consequences to us or any of our subsidiaries. |
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• | the net cash proceeds of (1) certain asset sales, (2) certain debt offerings and (3) certain insurance recovery and condemnation events; and |
• | 50% of annual excess cash flow (as defined in the form of the amended credit agreement attached hereto as Annex J) for any fiscal year ending on or after October 31, 2010, unless a specified leverage ratio target is met. |
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• | certain economic terms of the restructuring are not altered or amended in a manner adverse to such holder; | |
• | the consideration (and mix of consideration) being offered in the restructuring is not altered or amended; and | |
• | certain other terms of the restructuring are not altered or amended in a manner materially adverse to such holder. |
• | certain economic terms of the restructuring are not altered or amended in a manner adverse to such holder; | |
• | the consideration (and mix of consideration) being offered in the restructuring is not altered or amended; and | |
• | certain other terms of the restructuring are not altered or amended in a manner materially adverse to such holder. |
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• | it will not solicit, support or encourage any other plan, proposal or offer of reorganization, merger, restructuring or recapitalization or otherwise delay or impede the consummation of the restructuring; and | |
• | it will not: |
• | object to, or otherwise commence any proceeding opposing, any of the terms of the transactions contemplated by the restructuring; | |
• | take any action, including, but not limited to, objecting to the prepackaged plan, which is inconsistent with, or that would delay approval, consummation or confirmation of any of the transactions contemplated by the restructuring; or | |
• | take any action that would make any representation or warranty of such holder untrue or incorrect in any material respect, or have the effect of preventing or disabling such holder from performing its obligations hereunder in any material respect. |
• | to file with the SEC a shelf registration statement no later than five business days following the closing of the restructuring covering resales of the common stock received by each such holder on a delayed or continuous basis; and | |
• | to use our best efforts to maintain the effectiveness of such registration until the earlier of (a) six months after the closing of the restructuring and (b) the date on which all such common stock held by the holders of |
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convertible notes that executed thelock-up agreement can be resold pursuant to Rule 144 of the Securities Act without limitation as to volume or compliance with any manner of sale requirements. |
• | publish or disclose the identity of any of the holders of convertible notes that executed thelock-up agreement without such holder’s consent (except the Company may disclose the aggregate amount of convertible notesand/or existing term loans held by such holders without reference to the convertible notesand/or term loans held by any such individual holder and the nature of such holder’s obligations under thelock-up agreement, subject to the right of such holder to review and comment on any such disclosure prior to publication, disclosure or filing); or | |
• | enter into any agreement or other arrangement with any holder of convertible notes or term loans under our existing credit agreement with respect to or relating in any way to the restructuring if such agreement or other arrangement contains any term or provision relating to the consideration in respect of such convertible notes or term loans (including any agreement to pay any fee or other consideration (whether or not in cash), and any conditions relating to such payments) that is more favorable to such holder than those contained in agreements and arrangements with thelock-up agreement parties without also providing such term, provision or condition for the benefit of the holders of convertible notes that executed thelock-up agreement. |
• | holders of convertible notes representing at least a majority of the outstanding convertible notes may submit proposed persons to serve as the initial unaffiliated shareholder directors, and the Company will consider in good faith any such proposed persons; | |
• | prior to the appointment of the initial unaffiliated shareholder directors, the Company will provide notice prior to the closing of the restructuring of the Company’s proposed initial unaffiliated shareholder directors; and | |
• | in the event that holders of convertible notes representing at least a majority of the outstanding convertible notes provide written notice to the Company within seven business days that they object to the proposed initial unaffiliated shareholder directors, the Company will propose (and, if necessary, continue to propose) alternative initial unaffiliated shareholder directors so that at least one of the two initial unaffiliated shareholder directors is acceptable to holders of convertible notes representing at least a majority of the outstanding convertible notes. |
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• | if an event occurs that would provide either the Company or the CD&R Fund with the right to terminate the investment agreement under the terms of the investment agreement (see “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Termination of the Investment Agreement”); | |
• | if the Company materially breaches any of our obligations set forth in thelock-up agreement; | |
• | if the investment agreement terminates in accordance with its terms (see “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Termination of the Investment Agreement”); | |
• | if certain economic terms of the restructuring are altered or amended in a manner adverse to the holders of convertible notes that executed thelock-up agreement that are lenders under our existing credit agreement; | |
• | if the consideration (or mix of consideration) being offered in the restructuring is altered or amended; | |
• | if certain other terms of the restructuring are altered or amended in a manner materially adverse to the holders of convertible notes that executed thelock-up agreement; | |
• | if the minimum tender condition is decreased or is altered or amended, or the amended credit agreement is executed and in effect and, at such time, the amended credit agreement is not binding on all lenders under our existing credit agreement; | |
• | if an event of default under the convertible notes indenture has occurred and is continuing (other than an event of default resulting from the commencement of a filing with respect to the prepackaged plan); or | |
• | at any time after 11:59 p.m. on January 15, 2010. |
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• | 100% of the convertible notes are exchanged for a combination of $500 in cash and 390 shares of common stock for each $1,000 principal amount of the convertible notes and accrued and unpaid interest thereon; | |
• | the conversion price of the Series B convertible preferred stock to be issued in the CD&R investment is $1.27 per share of common stock; | |
• | the restructuring is effected through the consummation of the recapitalization plan as opposed to the prepackaged plan; | |
• | the assumed market price for common stock for all computations is $2.61 per share, which was the closing stock price on September 4, 2009; and | |
• | the fair market value of the derivative liability related to default dividend rates is expected to be $7.5 million in all periods. |
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AS OF AUGUST 2, 2009
(In thousands)
Historical | Net Adjustment | Pro Forma | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 105,376 | $ | (42,252 | )(A) | $ | 63,124 | |||||
Restricted cash | 13,224 | — | 13,224 | |||||||||
Accounts receivable, net | 80,701 | — | 80,701 | |||||||||
Inventories, net | 75,925 | — | 75,925 | |||||||||
Deferred income taxes | 23,585 | — | 23,585 | |||||||||
Income tax receivable | 23,731 | — | 23,731 | |||||||||
Investments in debt and equity securities, at market | 5,583 | — | 5,583 | |||||||||
Prepaid expenses and other | 20,172 | (5,302 | )(B) | 14,870 | ||||||||
Total current assets | 348,297 | (47,554 | ) | 300,743 | ||||||||
Property, plant and equipment, net | 240,727 | — | 240,727 | |||||||||
Goodwill | 5,200 | — | 5,200 | |||||||||
Intangible assets, net | 28,885 | — | 28,885 | |||||||||
Other assets, net | 4,526 | 11,073 | (C) | 15,599 | ||||||||
Total assets | $ | 627,635 | $ | (36,481 | ) | $ | 591,154 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of long-term debt | $ | 473,710 | $ | (473,290 | )(D) | $ | 420 | |||||
Note payable | 962 | — | 962 | |||||||||
Accounts payable | 68,144 | — | 68,144 | |||||||||
Accrued compensation and benefits | 35,037 | — | 35,037 | |||||||||
Accrued interest | 1,456 | — | 1,456 | |||||||||
Other accrued expenses | 44,921 | (4,295 | )(E) | 40,626 | ||||||||
Total current liabilities | 624,230 | (477,585 | ) | 146,645 | ||||||||
Long-term debt | — | 150,000 | (F) | 150,000 | ||||||||
Deferred income taxes | 21,626 | (1,700 | )(G) | 19,926 | ||||||||
Other long-term liabilities | — | 7,500 | (H) | 7,500 | ||||||||
Total long-term liabilities | 21,626 | 155,800 | 177,426 | |||||||||
Series B convertible preferred stock | — | 212,579 | (I) | 212,579 | ||||||||
Stockholders’ equity (deficit): | ||||||||||||
Series A Preferred stock | — | — | — | |||||||||
Common stock | 227 | 702 | (J) | 929 | ||||||||
Additional paid-in capital | 203,401 | 181,573 | (K) | 384,974 | ||||||||
Retained earnings (deficit) | (103,882 | ) | (111,442 | )(L) | (215,324 | ) | ||||||
Accumulated other comprehensive income (loss) | (917 | ) | 1,892 | (M) | 975 | |||||||
Treasury stock, at cost | (117,050 | ) | — | (117,050 | ) | |||||||
Total stockholders’ equity (deficit) | (18,221 | ) | 72,725 | 54,504 | ||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 627,635 | $ | (36,481 | ) | $ | 591,154 | |||||
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(A) | Adjustments to cash and cash equivalents are as follows: | |||||
Proceeds from issuance of the Series B convertible preferred stock | $ | 250,000 | ||||
Payments to redeem convertible notes | (90,000 | ) | ||||
Payments to reduce our existing credit facility | (143,290 | ) | ||||
Change of control payments related to retirement plans | (3,861 | ) | ||||
Payment to CD&R of the deal fee pursuant to the measurement agreement | (8,250 | ) | ||||
Payment to the CD&R Fund for estimated reimbursement of transaction costs of the recapitalization plan, including legal and financial advisory fees | (14,500 | ) | ||||
Payment of remaining unpaid and estimated transaction costs of the recapitalization plan, including legal and financial advisory fees | (32,351 | ) | ||||
Total | $ | (42,252 | ) | |||
(B) | Balance sheet reclassification of previously paid transaction costs from other current assets to long-term debt issuance cost and equity raising costs, as applicable | (5,302 | ) | |||
(C) | Adjustments to other assets are as follows: | |||||
Write-off of unamortized debt issuance costs of the convertible notes | $ | (3,539 | ) | |||
Record additional debt issuance costs paid or to be paid to lenders under our existing credit facility | 5,910 | |||||
Record debt issuance costs related to $125 million revolving credit facility under the ABL agreement | 8,702 | |||||
Total | $ | 11,073 | ||||
(D) | Balance sheet reclassification of convertible notes and term loan from current to long-term liabilities prior to reflecting pro forma adjustments of the recapitalization plan | (473,290 | ) | |||
(E) | Adjustments to other accrued expenses are as follows: | |||||
Change of control payments related to retirement plans | (3,861 | ) | ||||
Current tax payable caused by the accelerated vesting of shares issued under the 2003 Long-Term Stock Incentive Plan | (434 | ) | ||||
Total | (4,295 | ) | ||||
(F) | Adjustments to long-term debt are as follows: | |||||
Balance sheet reclassification of convertible notes and term loan from current to long- term liabilities prior to reflecting pro forma adjustments of the recapitalization plan | $ | 473,290 | ||||
Repayment of convertible notes with cash and common stock | (180,000 | ) | ||||
Payments to reduce term loans | (143,290 | ) | ||||
Total | $ | 150,000 | ||||
(G) | Adjustments to deferred tax liabilities are as follows: | |||||
Record deferred tax asset related to derivative liability | $ | (2,880 | ) | |||
Reduce non-current deferred income taxes related to the reclassification of accumulated other comprehensive loss of interest rate swap into earnings | 1,180 | |||||
Total | (1,700 | ) | ||||
(H) | Record derivative liability related to default dividends rates in the Series B convertible preferred stock | $ | 7,500 | |||
(I) | Adjustments to Series B convertible preferred stock are as follows: | |||||
Face value of Series B convertible preferred stock | $ | 250,000 | ||||
Transaction costs to be paid to CD&R | (8,250 | ) | ||||
Transaction costs paid and to be paid to non-investors | $ | (24,551 | ) |
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Record derivative liability related to default dividends rates, net of tax | (4,620 | ) | ||||
Total | $ | 212,579 | ||||
(J) | Par value of common stock issued to pay a portion of the convertible notes | 702 | ||||
(K) | Adjustments to additional paid-in capital are as follows: | |||||
Paid-in capital of common stock issued to pay a portion of the convertible notes | 182,520 | |||||
To record impact of the accelerated vesting of shares issued under the 2003 Long-Term Stock Incentive Plan, net of income taxes | 6,361 | |||||
Record equity transaction costs related to stock issued to pay a portion of the convertible notes | (7,308 | ) | ||||
Total | $ | 181,573 | ||||
(L) | Adjustments to retained earnings (deficit) are as follows: | |||||
To record compensation expense related to accelerated vesting of shares issued under the 2003 Long-Term Stock Incentive Plan | (5,926 | ) | ||||
Debt settlement costs of the convertible notes | (93,221 | ) | ||||
Reclassification of accumulated other comprehensive loss of interest rate swap into earnings | (3,072 | ) | ||||
Write-off of unamortized debt issuance costs of the convertible notes | (3,539 | ) | ||||
Expense debt issuance costs paid or to be paid to non-creditors on the term loan | (5,684 | ) | ||||
Total | $ | (111,442 | ) | |||
(M) | Reclassification of accumulated other comprehensive loss of interest rate swap into earnings | 1,892 | ||||
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FOR THE NINE MONTHS ENDED AUGUST 2, 2009
Historical | Net Adjustment | Pro Forma | ||||||||||
Sales | $ | 723,522 | — | $ | 723,522 | |||||||
Cost of sales | 568,773 | (399 | )(N) | 568,374 | ||||||||
Lower of cost or market | 39,986 | — | 39,986 | |||||||||
Asset impairment | 5,944 | — | 5,944 | |||||||||
Gross profit | 108,819 | 399 | 109,218 | |||||||||
Selling, general and administrative expenses | 158,564 | (3,156 | )(N) | 155,408 | ||||||||
Goodwill and other intangible asset impairments | 622,564 | — | 622,564 | |||||||||
Restructuring charge | 7,488 | — | 7,488 | |||||||||
Income (loss) from operations | (679,797 | ) | 3,555 | (676,242 | ) | |||||||
Interest income | 360 | — | 360 | |||||||||
Interest expense | (13,029 | ) | (1,335 | )(O) | (14,364 | ) | ||||||
Other income, net | 757 | — | 757 | |||||||||
Income (loss) before income taxes | (691,709 | ) | 2,220 | (689,489 | ) | |||||||
Benefit for income taxes | (46,863 | ) | (385 | )(P) | (47,248 | ) | ||||||
Net income (loss) | (644,846 | ) | 2,605 | (642,241 | ) | |||||||
Dividends and accretion on Series B convertible preferred stock | — | 28,898 | (Q) | 28,898 | ||||||||
Net income (loss) available to common stockholders | (644,846 | ) | (26,293 | ) | (671,139 | ) | ||||||
Earnings (loss) per share: | ||||||||||||
Basic | (33.12 | ) | (2.15 | ) | ||||||||
Diluted | (33.12 | ) | (2.15 | ) | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 19,468 | 70,534 | (R) | 90,002 | ||||||||
Diluted | 19,468 | 70,534 | (S) | 90,002 |
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FOR THE YEAR ENDED NOVEMBER 2, 2008
Historical | Net Adjustment | Pro Forma | ||||||||||
Sales | $ | 1,764,159 | $ | — | $ | 1,764,159 | ||||||
Cost of sales | 1,325,624 | (992 | )(N) | 1,324,632 | ||||||||
Gross profit | 438,535 | 992 | 439,527 | |||||||||
Selling, general and administrative expenses | 283,825 | (8,201 | )(N) | 275,624 | ||||||||
Income from operations | 154,710 | 9,192 | 163,903 | |||||||||
Interest income | 1,085 | — | 1,085 | |||||||||
Interest expense | (23,535 | ) | 5,067 | (O) | (18,468 | ) | ||||||
Other (expense) income, net | (1,880 | ) | — | (1,880 | ) | |||||||
Income before income taxes | 130,380 | 14,259 | 144,639 | |||||||||
Provision for income taxes | 51,499 | 3,926 | (P) | 55,425 | ||||||||
Net income | 78,881 | 10,333 | 89,214 | |||||||||
Dividends and accretion on Series B convertible preferred stock | — | 35,119 | (Q) | 35,119 | ||||||||
Net income available to common stockholders | $ | 78,881 | $ | (24,786 | ) | $ | 54,095 | |||||
Earnings per share: | ||||||||||||
Basic | $ | 4.08 | — | $ | 0.18 | |||||||
Diluted | $ | 4.05 | — | $ | 0.18 | |||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 19,332 | 70,534 | (R) | 89,866 | ||||||||
Diluted | 19,486 | 70,380 | (S) | 89,866 |
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Fiscal Nine Months | Fiscal Year Ended | |||||||||
Ended August 2, 2009 | November 2, 2008 | |||||||||
(N) | To remove the impact of the amortization of stock compensation expense related to shares issued under the 2003 Long-Term Stock Incentive Plan | |||||||||
(O) | Adjustments to interest expense are as follows: | |||||||||
To remove interest related to the convertible notes | $ | 3,049 | $ | 3,804 | ||||||
To remove interest related to the term loan prior to the amendment to our existing credit agreement | 6,286 | 15,491 | ||||||||
To remove previously recorded amortization of debt issuance costs on the convertible notes | 174 | 230 | ||||||||
To record interest expense related to the term loan after the amendment to our existing credit agreement (assuming 7.5% interest) | (8,438 | ) | (11,250 | ) | ||||||
To record amortization of debt issuance cost related to the term loan and $125 million revolving credit facility under the ABL agreement (amortized over 5 year contract term) | (2,406 | ) | (3,208 | ) | ||||||
Total | $ | (1,335 | ) | $ | 5,067 | |||||
(P) | To reflect income tax impact of items (N) and (O) | (385 | ) | 3,926 | ||||||
(Q) | To record the cumulative dividend accrual of the Series B convertible preferred stock with the assumption that dividends will be paid in kind or the stated 12% rate and accretion | 28,898 | 35,119 | |||||||
(R) | Adjustments to basic weighted average shares outstanding are as follows: | |||||||||
Common stock issued to pay a portion of the convertible notes | 70,200 | 70,200 | ||||||||
Common stock issued related to the accelerated vesting of shares issued under the 2003 Long-Term Stock Incentive Plan, net of income taxes | 334 | 334 | ||||||||
Total | 70,534 | 70,534 | ||||||||
(S) | Adjustments to diluted weighted average shares outstanding are as follows: | |||||||||
Common stock issued to pay a portion of the convertible notes | 70,200 | 70,200 | ||||||||
Common stock issued related to the accelerated vesting of shares issued under the 2003 Long-Term Stock Incentive Plan, net of income taxes | 334 | 334 | ||||||||
Effect of use of two class method | — | (154 | ) | |||||||
Total | 70,534 | 70,380 |
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Sources of Funds: | Uses of Funds: | |||||||||
(In millions) | ||||||||||
Cash and other sources | $ | 42.3 | Convertible notes(2) | $ | 90.0 | |||||
Series B convertible preferred stock(1) | 250.0 | Term loan(3) | 143.3 | |||||||
Change of control payments(4) | 3.8 | |||||||||
CD&R deal fee(5) | 8.3 | |||||||||
CD&R Fund reimbursement of transaction costs(6) | 14.5 | |||||||||
Payment of remaining unpaid and estimated transaction costs(7) | 32.4 | |||||||||
Total sources of funds | $ | 292.3 | Total uses of funds | $ | 292.3 | |||||
(1) | The proceeds from issuance of convertible preferred stock. | |
(2) | Payments to redeem convertible notes. | |
(3) | Payments to reduce existing term loan. | |
(4) | Change of control payments related to retirement plans. | |
(5) | Payment to CD&R for the deal fee of the recapitalization plan. | |
(6) | Payment to the CD&R Fund for estimated reimbursement of transaction costs of the recapitalization plan including legal and financial advisory fees. | |
(7) | Payment of remaining unpaid and estimated transaction costs of the recapitalization plan including deal, legal and financial advisory fees. |
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• | the CD&R investment through a private placement of the Series B convertible preferred stock pursuant to the investment agreement (see “The Restructuring—Description of the CD&R Investment”); | |
• | the retirement of the convertible notes, including the retirement of at least 95% of the convertible notes through this exchange offer to acquire any and all of the convertible notes in exchange for cash and shares of our common stock; | |
• | the term loan refinancing through the repayment of approximately $143.3 million of the $293.3 million in principal amount of term loans outstanding under our existing credit facility and a modification of the terms and maturity of the $150.0 million balance by amending our existing credit agreement (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The Term Loan Refinancing”); and | |
• | the ABL financing through our entry into an ABL agreement for a $125.0 million asset-based revolving credit facility (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—The ABL Financing”). |
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• | holders of convertible notes would receive 70,200,000 shares of common stock, or approximately 24.5% of our voting power; |
• | the CD&R Fund would receive 250,000 shares of Series B convertible preferred stock convertible into 196,109,194 shares of common stock based on the initial conversion price (assuming that we have sufficient authorized but unissued shares to permit such conversion, which, after giving effect to the restructuring, we do not expect to have (see “Summary—The Restructuring—CD&R Investment”)), or approximately 68.5% of our voting power; and |
• | our current stockholders would continue to hold approximately 19,981,585 shares of common stock, or approximately 7.0% of our voting power. |
• | delay the acceptance of the convertible notes tendered for exchange, for example, in order to allow for the rectification of any irregularity or defect in the tender of the convertible notes, provided that in any event we will promptly pay the cash consideration and issue the shares of common stock in this exchange offer or return tendered convertible notes after expiration or withdrawal of this exchange offer; | |
• | extend the time period during which this exchange offer is open, by giving notice of an extension to the holders of convertible notes in the manner described below, during which extension all convertible notes previously tendered and not withdrawn will remain subject to this exchange offer; | |
• | waive (to the extent waivable by us) or amend any of the terms or conditions of this exchange offer; and/or | |
• | terminate this exchange offer, as described under “—Conditions to Completion of the Exchange Offer” below. |
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• | we increase or decrease the price to be paid for convertible notes or decrease the percentage of convertible notes being sought in this exchange offer; and | |
• | this exchange offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that the notice of an increase or decrease is first published, sent or given to holders of convertible notes in the manner described below, |
• | if convertible notes are tendered in accordance with the book-entry procedures described under “—Book-Entry Transfer” below, an agent’s message, which means a message, transmitted through ATOP by DTC to, and received by, the exchange agent and forming a part of a book-entry confirmation, that states that DTC has received an express acknowledgement that the tendering holder has received, and agrees to be bound by, makes each of the representations and warranties contained in, the letter of transmittal and that we may enforce the letter of transmittal against such holder; or | |
• | a properly completed and duly executed letter of transmittal, or a facsimile copy thereof, to the exchange agent at its address on the back cover of this prospectus/disclosure statement, including all other documents required by the letter of transmittal. |
• | a timely book-entry confirmation, which means a confirmation of a book-entry transfer of convertible notes into the exchange agent’s account at DTC using the procedure for book-entry transfer described under “—Book-Entry Transfer,” along with an agent’s message or a letter of transmittal, must be received by the exchange agent; or |
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• | certificates for convertible notes, if any, must be received by the exchange agent along with the letter of transmittal. |
• | advise your broker, dealer or other nominee that you are party to thelock-up agreement and will be tendering your convertible notes for restricted shares of common stock; | |
• | complete, or have your nominee complete, the form called “Special Issuance Instructions and Form for Issuance of Restricted Shares”; and | |
• | complete the Internal Revenue ServiceForm W-9, included with the letter of transmittal, and send it to the exchange agent. |
• | by a registered holder of the convertible notes or by a participant in DTC whose name is shown on a security position listing as the owner of the convertible notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or | |
• | for the account of an eligible institution. |
• | a firm which is a member of a registered national securities exchange or a member of the Financial Industry Regulatory Authority, Inc.; | |
• | a commercial bank or trust company having an office or correspondent in the United States; or | |
• | another eligible institution within the meaning of Rule 17Ad-15 under the Securities Act. |
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• | transfer ownership of the convertible notes on the DTC book-entry transfer facility, together with all accompanying evidences of transfer and authenticity, to or upon our order; | |
• | present and deliver the convertible notes for transfer on the relevant security register; and | |
• | receive all benefits or otherwise exercise all rights and incidents of beneficial ownership of the convertible notes, all in accordance with the terms of this exchange offer. |
• | a book-entry confirmation of delivery of such convertible notes into the exchange agent’s account at the DTC book-entry transfer facility or certificates for convertible notes, if any, if proper form for transfer; | |
• | an electronic confirmation of the submitting holder’s acceptance through DTC’s ATOP system or a properly completed and duly executed letter of transmittal; and | |
• | all other required documents, if any. |
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• | specify the name of the person having tendered the convertible notes to be withdrawn; | |
• | identify the convertible notes to be withdrawn; | |
• | specify the principal amount of the convertible notes to be withdrawn; | |
• | contain a statement that the tendering holder is withdrawing its election to have such convertible notes exchanged for cash and shares of common stock; | |
• | other than a notice transmitted through DTC’s ATOP system, be signed by the holder in the same manner as the original signature on the letter of transmittal by which the convertible notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer to have the trustee with respect to the convertible notes register the transfer of the convertible notes in the name of the person withdrawing the tender; | |
• | if certificates for convertible notes have been delivered to the exchange agent, specify the name in which the convertible notes are registered, if different from that of the withdrawing holder; | |
• | if certificates for convertible notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of those certificates, specify the serial numbers of the particular certificates to be withdrawn, and, other than a notice transmitted through DTC’s ATOP system, include a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible institution; and | |
• | if the convertible notes have been tendered using the procedure for book-entry transfer described above, specify the name and number of the account at DTC from which the convertible notes were tendered and the name and number of the account at DTC to be credited with the withdrawn convertible notes, and otherwise comply with the procedures of DTC. |
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• | the minimum tender condition is not met or waived; | |
• | the receipt of proceeds from the CD&R investment (which is itself subject to several conditions, including the consummation of the term loan refinancing and the ABL financing and the expiration or termination of any waiting period required to consummate the CD&R investment under the Austrian Act) (see “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Conditions to the CD&R Investment”); | |
• | the effectiveness of the registration statement of which this prospectus/disclosure statement forms a part and the absence of a stop order suspending such effectiveness; and | |
• | the absence of any applicable law or order prohibiting consummation of this exchange offer. |
• | modify, extend or otherwise amend this exchange offer and retain all tendered convertible notes until the expiration date, as it may be extended, subject, however, to the withdrawal rights described in “—Withdrawal Rights” above; or |
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• | waive the unsatisfied conditions (if waivable by us) and accept all convertible notes tendered and not previously withdrawn. |
• | no later than five business days following the closing of the CD&R investment, file with the SEC a shelf registration statement covering resales of the common stock received by such noteholders on a delayed or continuous basis; and | |
• | use our best efforts to maintain the effectiveness of such registration until the earlier of (a) six months after the closing of the CD&R investment (subject to an extension to 12 months after the closing in certain limited circumstances) and (b) the date on which all such common stock held by such noteholders can be resold pursuant to Rule 144 under the Securities Act without limitation as to volume or compliance with any manner of sale requirements. |
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• | consult with the trustee or debtor in possession concerning the administration of the chapter 11 case; |
• | investigate the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtor’s business and the desirability of the continuance of such business, and any other matter relevant to the case or to the formulation of a plan; |
• | participate in the formulation of a plan, advise those represented by such committee of such committee’s determinations as to any plan formulated, and collect and file with the court acceptances or rejections of a plan; |
• | request the appointment of a trustee or examiner under section 1104 of the Bankruptcy Code; and |
• | perform such other services as are in the interest of those represented by the committee. |
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• | the plan of reorganization be transmitted to substantially all creditors and interest holders entitled to vote on the plan; | |
• | the time prescribed for voting to reject or accept such plan not be unreasonably short; and | |
• | the solicitation of votes be in compliance with any applicable nonbankruptcy law, rule or regulation governing the adequacy of disclosure in such solicitation or, if no such law, rule or regulation exists, votes be solicited only after the disclosure of adequate information. |
• | to file chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware, which we refer to as the bankruptcy court, and commence the prepackaged plan proceeding under the Bankruptcy Code; | |
• | to file certain first day motions and to seek to obtain entry of the orders approving such motions and to schedule a hearing in the bankruptcy court on the earliest date possible to consider confirmation of the prepackaged plan and approve this prospectus/disclosure statement; | |
• | to send notices to all persons to whom such notices are required to be sent under the Bankruptcy Code and to such other persons as ordered by the bankruptcy court, as soon as practicable after the commencement of the prepackaged plan proceeding; | |
• | to use our reasonable best efforts to obtain confirmation of the prepackaged plan by the bankruptcy court; | |
• | to use our reasonable best efforts to obtain the dismissal of any and all appeals and motions for reconsideration filed with respect to the prepackaged plan; and | |
• | to cause the prepackaged plan to become effective and the distributions provided for under the prepackaged plan to be commenced as promptly as possible on or following the day on which conditions to effectiveness set forth in the prepackaged plan have been satisfied or waived. |
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Claims and | Voting | Projected | ||||||||||
Class | Equity Interests | Treatment | Status | Rights | Recovery | |||||||
Class 1 | Priority Non-Tax Claims | Payment in full in cash on the effective date | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 2 | Secured Tax Claims | Receipt in full in (a) cash on the effective date, (b) cash commencing on the effective date and continuing over a period not to exceed five years from the petition date, with interest or (c) regular cash payments in a manner not less favorable than the most favored non-priority unsecured claim provided for in the Prepackaged Plan. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 3 | Senior Secured Claims | Receipt of (a) pro rata share of: cash in an amount equal to the credit agreement principal repayment amount, plus cash equal to accrued but unpaid interest, fees and expenses on the loans under the senior secured credit agreement up to the effective date and (b) the new term loan. | Impaired | Entitled to Vote | 100 | % | ||||||
Class 4 | Other Secured Claims | Either (a) reinstatement of allowed other secured claim or otherwise rendering such claims unimpaired for the benefit of the holders thereof. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 5 | Convertible Notes Claims | Receipt of (a) cash in an amount equal to $500 for each $1,000 of principal amount of convertible notes held by such holder and (b) 390 shares of common stock for each $1,000 of principal amount of convertible notes held by such holder, issued on the effective date. | Impaired | Entitled to Vote | 98.75 | %2 |
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Claims and | Voting | Projected | ||||||||||
Class | Equity Interests | Treatment | Status | Rights | Recovery | |||||||
Class 6 | NCIBS General Unsecured Claims | Each holder of such claim that is not due and payable on or before the effective date will receive payment in full in cash of the unpaid portion of such claim on the latest of (a) the effective date; and (b) the date such claim becomes due and payable in the ordinary course of business;provided, however, that the Debtors may seek authority from the bankruptcy court to pay certain of such claims in advance of the effective date in the ordinary course of business. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 7 | NCI Group, Inc. General Unsecured Claims | Each holder of such claim that is not due and payable on or before the effective date will receive payment in full in cash of the unpaid portion of such claim on the latest of (a) the effective date; and (b) the date such claim becomes due and payable in the ordinary course of business;provided, however, that the Debtors may seek authority from the bankruptcy court to pay certain of such claims in advance of the effective date in the ordinary course of business. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 8 | Steelbuilding.com, Inc. General Unsecured Claims | Each holder of such claim that is not due and payable on or before the effective date will receive payment in full in cash of the unpaid portion of such claim on the latest of (a) the effective date; and (b) the date such claim becomes due and payable in the ordinary course of business;provided, however, that the Debtors may seek authority from the bankruptcy court to pay certain of such claims in advance of the effective date in the ordinary course of business. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % |
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Claims and | Voting | Projected | ||||||||||
Class | Equity Interests | Treatment | Status | Rights | Recovery | |||||||
Class 9 | Robertson-Ceco II Corporation General Unsecured Claims | Each holder of such claim that is not due and payable on or before the effective date will receive payment in full in cash of the unpaid portion of such claim on the latest of (a) the effective date; and (b) the date such claim becomes due and payable in the ordinary course of business;provided, however, that the Debtors may seek authority from the bankruptcy court to pay certain of such claims in advance of the effective date in the ordinary course of business. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 10 | Intercompany Claims | All or a portion of the intercompany claims may be reinstated, capitalized or otherwise discharged in any manner as of the effective date at the Debtors’ or the Reorganized Debtors’ option. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 11 | Intercompany Interests | In full and final satisfaction, settlement, release, and discharge of and in exchange for each intercompany interest, intercompany interests shall be reinstated for the benefit of the holders thereof. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 12 | Equity Interests in NCIBS | On the effective date, all equity interests in NCIBS shall be reinstated for the benefit of the Holders thereof, provided, such equity interests shall be subject to dilution in accordance with the NCIBS charter on account of the common stock distributed to holders of the convertible notes and the series B preferred stock issued to the CD&R Investors. | Unimpaired | Not Entitled to Vote (Presumed to Accept) | 100 | % | ||||||
Class 13 | Section 510(b) Claims | Holders of section 510(b) claims shall not receive any distribution on account of such section 510(b) claims. | Impaired | Not Entitled to Vote (Deemed to Reject) | 100 | % |
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• | that is reflected in the Company’s books and records as liquidated in an amount and not disputed nor contingent and no objection to the allowance of the claim or interest or request to estimate the claim or interest has been interposed within any time period provided under the prepackaged plan or by order of any bankruptcy court; | |
• | that has been adjudicated as an allowed claim or interest; or | |
• | that is specified as an allowed claim or allowed interest under the prepackaged plan or the confirmation order. |
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• | is the subject of a timely objection or request for estimation in accordance with the Bankruptcy Code, the bankruptcy rules, any applicable order of the bankruptcy court, the prepackaged plan or applicable nonbankruptcy law, which objection or request for estimation has not been withdrawn or resolved; or | |
• | is otherwise specified as “disputed” or a “disputed claim” pursuant to the prepackaged plan. |
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• | except to the extent the prepackaged plan meets the “nonconsensual confirmation” standards discussed below under “Confirmation of the Prepackaged Plan Without Acceptance by All Classes of Impaired Claims,” the prepackaged plan be accepted by each impaired class of claims and interests by the requisite votes of holders of claims or interests in such impaired classes; | |
• | the prepackaged plan is feasible (that is, there is a reasonable probability that we will be able to perform our obligations under the prepackaged plan and continue to operate our business without the need for further financial reorganization) (see “—Feasibility of the Prepackaged Plan” below); and | |
• | the prepackaged plan meets the requirements of section 1129(a)(7) of the Bankruptcy Code, which requires that, with respect to each impaired class, each holder of a claim or interest in such class either (1) accepts the prepackaged plan or (2) receives at least as much pursuant to the prepackaged plan as such holder would receive in our liquidation under chapter 7 of the Bankruptcy Code (see “—Best Interests Test” below). |
• | the prepackaged plan is proposed in good faith; | |
• | the prepackaged plan complies with the Bankruptcy Code; | |
• | payments for services or costs and expenses in or in connection with the case, or in connection with the prepackaged plan, have been approved by or are subject to the approval of the bankruptcy court; | |
• | the individuals to serve as our officers and directors have been disclosed and their appointment or continuance in such office is consistent with the interests of creditors and interest holders; | |
• | the identity of any insider that will be employed or retained by us is disclosed, as well as any compensation to be paid to such insider; |
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• | all statutory fees have been or will be paid; and | |
• | the prepackaged plan provides for the continued maintenance of retiree benefits, if any, at a certain level. |
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• | the increased costs and expenses of a liquidation under chapter 7 arising from fees payable to a trustee in bankruptcy and professional advisors to such trustee; | |
• | the erosion in value of assets in a chapter 7 case in the context of the expeditious liquidation required under chapter 7 and the “forced sale” atmosphere that would prevail; and | |
• | substantial increases in claims which would be satisfied on a priority basis or on a parity with creditors in a chapter 11 case, |
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Assumptions | ||||
Date | 11/1/2009 | |||
Wind-Down Period (Years) | 1.0 | |||
Proceeds Received (Mid-Year) | 0.5 | |||
Discount Rate(5-Year LIBOR Swap) | 2.7 | % | ||
Chapter 7 Trustee Expenses as a % of Gross Liquidation Value | 1.5 | % |
Hypothetical Percentage | Estimated | |||||||||||||||||||||
Book Value at | Recovery | Liquidation Value | ||||||||||||||||||||
Note | 11/1/09 | Low | High | Low | High | |||||||||||||||||
($ in millions) | ||||||||||||||||||||||
Cash | A | $ | 75.7 | 100.0 | % | 100.0 | % | $ | 75.7 | $ | 75.7 | |||||||||||
Accounts receivable | B | 81.0 | 60.0 | % | 70.0 | % | 48.6 | 56.7 | ||||||||||||||
Other receivables | C | 2.3 | 70.0 | % | 75.0 | % | 1.6 | 1.8 | ||||||||||||||
Inventory | D | 81.5 | 30.0 | % | 40.0 | % | 24.4 | 32.6 | ||||||||||||||
Income tax receivable | E | 25.2 | 90.0 | % | 100.0 | % | 22.7 | 25.2 | ||||||||||||||
Prepaid expenses | F | 18.5 | 15.0 | % | 30.0 | % | 2.8 | 5.6 | ||||||||||||||
Investments in debt and equity | G | 5.6 | 80.0 | % | 90.0 | % | 4.5 | 5.0 | ||||||||||||||
Intangible assets, net | H | 29.0 | 15.0 | % | 20.0 | % | 4.4 | 5.8 | ||||||||||||||
Property, Plant & Equipment, net | I | 237.5 | 30.0 | % | 40.0 | % | 71.2 | 95.0 | ||||||||||||||
Total Assets | $ | 556.3 | $ | 255.9 | $ | 303.4 | ||||||||||||||||
Corporate Wind-Down Costs | J | (12.0 | ) | (12.0 | ) | |||||||||||||||||
Administrative Expenses—Professionals and Other | K | (12.0 | ) | (12.0 | ) | |||||||||||||||||
Administrative Expenses—Chapter 7 Trustee | L | (3.8 | ) | (4.6 | ) | |||||||||||||||||
Estimated Liquidation Proceeds net of Expenses | $ | 228.1 | $ | 274.8 | ||||||||||||||||||
Present Value of Estimated Liquidation Proceeds net of Expenses | $ | 225.0 | $ | 271.1 | ||||||||||||||||||
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Note | ||||||||||||
Industrial Revenue Bond | M | $ | 0.4 | $ | 0.4 | |||||||
Recovery Amount | $ | 0.4 | $ | 0.4 | ||||||||
% of Claim | 100.0 | % | 100.0 | % | ||||||||
Existing Credit Facility | N | $ | 300.8 | $ | 300.8 | |||||||
Recovery Amount | $ | 224.6 | $ | 270.7 | ||||||||
% of Claim | 74.7 | % | 90.0 | % | ||||||||
Priority Claims | O | $ | 50.6 | $ | 50.6 | |||||||
Recovery Amount | $ | 0.0 | $ | 0.0 | ||||||||
% of Claim | 0.0 | % | 0.0 | % | ||||||||
General Unsecured Claims & Convertible Senior Subordinated Notes | P | $ | 263.4 | $ | 263.4 | |||||||
Recovery Amount | $ | 0.0 | $ | 0.0 | ||||||||
% of Claim | 0.0 | % | 0.0 | % | ||||||||
Net Estimated Proceeds for Payment of Common Equity Interests | $ | 0.0 | $ | 0.0 | ||||||||
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• | the appropriate ballots and applicable voting instructions; | |
• | a pre-addressed, postage pre-paid return envelope; and | |
• | the prospectus/disclosure statement with all exhibits, including the prepackaged plan and any other supplements or amendments to these documents. |
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• | If your ballot has already been signed (or “prevalidated”) by your nominee (as described below), you can vote on the prepackaged plan by completing the information requested on the ballot, indicating your vote on the ballot, and returning the completed original ballot in the enclosed, pre-addressed, postage-paid envelope so that it is actually received by the voting agent before the voting deadline. | |
• | If your ballot has not been signed (or “prevalidated”) by your nominee,you can vote on the prepackaged plan by completing the information requested on the ballot, indicating your vote on the ballot, and returning the completed original ballot to your nominee in sufficient time for your nominee then to process the ballot and return it to the voting agent so that it is actually received by the voting agent before the voting deadline. If no self-addressed, postage pre-paid envelope was enclosed for this purpose, the nominee must be contacted for instructions. |
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• | If you have signed (or “prevalidated”)a ballot by: (1) signing the ballot; (2) indicating on the ballot the name of the registered holder and the amount of securities held by the nominee; and (3) forwarding such ballot together with the solicitation package and other materials requested to be forwarded, to the beneficial owner for voting; then the beneficial owner must vote on the prepackaged plan by completing the information requested on the ballot, indicating its vote on the ballot, and returning the completed original ballot in the enclosed, pre-addressed, postage-paid envelope so that it is actually received by the voting agent before the voting deadline. A list of the beneficial owners to whom “pre-validated” ballots were delivered should be maintained by the nominee for inspection for at least on year from the voting deadline. | |
• | If you have not signed (or “prevalidated”)the appropriate ballot, then you, as nominee, may obtain the votes of beneficial owners by forwarding to the beneficial owners the unsigned ballots, together with this prospectus/disclosure statement, a return envelope provided by, and addressed to, the nominee, and other materials requested to be forwarded. Each such beneficial owner may vote on the prepackaged plan by completing the information requested on the ballot, indicating its vote on the ballot, and returning the completed original ballot to you, as nominee. After collecting the ballots, you, as nominee, should, in turn, complete a master ballot compiling the votes and other information from the ballot, execute the master ballot, and deliver the master ballot to the voting agent so that it is actually received by the voting agent before the voting deadline. All ballots returned by beneficial owners should either be forwarded to the voting agent (along with the master ballot) or be retained by nominees for inspection for at least one year from the voting deadline. |
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• | be timely received by the ballot agent at its address specified on the back cover of this prospectus/disclosure statement, |
• | specify the nameand/or customer account number of the beneficial owner whose vote on the prepackaged plan of reorganization is being withdrawn or revoked, |
• | contain the description of the claim as to which a vote on the prepackaged plan of reorganization is withdrawn or revoked, and |
• | be signed by the beneficial owner of the claim who executed the ballot reflecting the vote being withdrawn or revoked, or by the nominee who executed the master ballot reflecting the vote being withdrawn or revoked, as applicable, in each case in the same manner as the original signature on the ballot or master ballot, as the case may be. |
• | the holder has received and reviewed a copy of the prospectus/disclosure statement and solicitation package and acknowledges that the solicitation is being made pursuant to the terms and conditions set forth therein; | |
• | the holder has cast the same vote with respect to all claims in the same respective class; and | |
• | no other ballots with respect to the same claim have been cast, or, if any other ballots have been cast with respect to such claim, then any such ballots are thereby revoked. |
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• | the plan does not discriminate unfairly with respect to each non-accepting impaired class; and | |
• | the plan is fair and equitable with respect to each non-accepting impaired class. |
• | each holder of an unsecured claim in the dissenting class receives or retains under such plan property of a value equal to the allowed amount of its unsecured claim; or | |
• | the holders of claims or holders of interests that are junior to the claims of the holders of such unsecured claims will not receive or retain any property under the prepackaged plan. |
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• | reviewed certain historical financial information of the Company for recent years and interim periods; | |
• | reviewed certain internal financial and operating data of the Company, including the financial projections developed by the Company’s management relating to their businesses and prospects; | |
• | met with certain members of senior management of the Company to discuss the Company’s operations and future prospects; | |
• | reviewed publicly available financial data and considered the market values of public companies deemed generally comparable to the operating businesses of the Company; | |
• | considered certain economic and industry information relevant to the Company’s operating businesses; and | |
• | conducted such other analyses as Greenhill deemed appropriate. |
• | a comparable company analysis, in which Greenhill analyzed the enterprise values of public companies that Greenhill deemed generally comparable to all or parts of the Company’s operating business as a multiple of |
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certain financial measures, including EBITDA and then applied selected multiples derived from such analysis to the projected EBITDA of the Company; |
• | a precedent transactions analysis, in which Greenhill analyzed the financial terms of certain acquisitions of companies that Greenhill believed were comparable to all or parts of the Company’s business, and then applied certain financial performance and other metrics provided by such analysis to the relevant metrics of the Company; and | |
• | a discounted cash flow analysis, in which Greenhill, using a weighted average cost of capital, computed the present value of free cash flows from the Company and the terminal value of the Company. |
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• | the confirmation order (a) has been entered in form and substance satisfactory to the debtors and the CD&R Fund and (b) no stay of such order is in effect; | |
• | the plan supplement and all schedules, documents and exhibits contained therein have been filed in form and substance acceptable to the debtors and the CD&R Fund; | |
• | the effectiveness, execution and delivery, as the case may be, of all actions, documents, certificates, and agreements necessary to implement the prepackaged plan, including documents contained in the plan supplement, and, to the extent required, the filing with the applicable governmental authorities in accordance with applicable law of the same; | |
• | the satisfaction or waiver of all conditions precedent to the obligations of the parties to the investment agreement thereunder; | |
• | the receipt of all authorizations, consents, regulatory approvals, rulings, or documents that are necessary to implement and effectuate the prepackaged plan; | |
• | the receipt of proceeds from the CD&R investment (which is itself subject to several conditions, including the consummation of the term loan refinancing and the ABL financing and the expiration or termination of any waiting period required to consummate the CD&R investment under the HSR Act and the Austrian Act see “The Restructuring—Description of the CD&R Investment—The Investment Agreement—Conditions to the CD&R Investment); | |
• | the consummation of the term loan refinancing (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—the Term Loan Refinancing”); and | |
• | the consummation of the ABL financing (see “The Restructuring—Description of the Term Loan Refinancing and the ABL Financing—the ABL Financing”); and | |
• | the occurrence of the effective date on or before the deadline set forth in the investment agreement. |
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• | commencing or continuing in any manner any action or other proceeding against our successors or our respective properties; | |
• | enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against us, our successors or our properties; | |
• | creating, perfecting or enforcing any lien or encumbrance against us, our successors or our properties; | |
• | asserting any setoff, right of subrogation or recoupment of any kind against any obligation due us, our successors or our properties; and | |
• | commencing or continuing any action in any manner, in any place that does not comply with or is inconsistent with the provisions of the plan or the confirmation order. |
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• | Wachovia Bank, as administrative agent under our existing credit agreement; | |
• | the convertible notes indenture trustee, in its capacity as such; | |
• | CD&R, the CD&R Investors and their affiliates; | |
• | with respect to each of the foregoing entities in the preceding three bullet points, such entities’ current and former affiliates, subsidiaries, officers, directors, principals, employees, agents, financial advisors, |
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attorneys, accountants, investment bankers, consultants, representatives, and other professionals, in each case in their capacity as such; and |
• | the debtors’ and the reorganized debtors’ current and former officers, directors, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, in each case in their capacity as such, |
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• | all rights, claims, causes of action, defenses, and counterclaims of or accruing to us will remain our assets, whether or not litigation relating thereto is pending on the effective date of the prepackaged plan, and whether or not any such rights, claims, causes of action, defenses, and counterclaims have been listed or referred to in the prepackaged plan, the schedules, or any other document filed with the bankruptcy court, and | |
• | we do not waive, relinquish, or abandon (nor will we be estopped or otherwise precluded from asserting) any right, claim, cause of action, defense, or counterclaim: (1) whether or not such right, claim, cause of action, defense, or counterclaim has been listed or referred to in the prepackaged plan or the schedules, or any other document filed with the bankruptcy court, (2) whether or not such right, claim, cause of action, defense, or counterclaim is currently known to us, and (3) whether or not a defendant in any litigation relating to such right, claim, cause of action, defense, or counterclaim filed a proof of claim in the reorganization case, filed a notice of appearance or any other pleading or notice in the reorganization case, voted for or against the prepackaged plan, or received or retained any consideration under the prepackaged plan. Without in any manner limiting the generality of the foregoing, notwithstanding any otherwise applicable principle of law or equity, including, without limitation, any principles of judicial estoppel,res judicata, collateral estoppel, issue preclusion, or any similar doctrine, the failure to list, disclose, describe, identify, or refer to a right, claim, cause of action, defense, or counterclaim, or potential right, claim, cause of action, defense, or counterclaim, in the prepackaged plan, the schedules, or any other document filed with the bankruptcy court will in no manner waive, eliminate, modify, release, or alter our right to commence, prosecute, defend against, settle, and realize upon any rights, claims, causes of action, defenses, or counterclaims that we have or may have, as of the confirmation date. We may commence, prosecute, defend against, settle, and realize upon any rights, claims, causes of action, defenses, and counterclaims in our sole discretion, in accordance with what is in our best interests. |
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• | any and all executory contracts or unexpired leases which are the subject of separate motions filed pursuant to section 365 of the Bankruptcy Code by us prior to the commencement of the hearing on confirmation of the prepackaged plan; and | |
• | all executory contracts or unexpired leases rejected prior to the entry of the confirmation order of the bankruptcy court. Contracts or leases entered into after the date of commencement of our reorganization case will be performed by us in the ordinary course of business. In order to assume an executory contract or unexpired lease, we must, if there has been a default in such executory contract or unexpired lease, other than a default caused solely by the filing of our reorganization case, at the time of assumption (1) cure, or provide adequate assurance that we will cure such default, (2) compensate or provide adequate assurance that we will promptly compensate, a party to such contract or lease, for any actual pecuniary loss to such party resulting from such default, and (3) provide adequate assurance of future performance under such contract or lease. |
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• | an order authorizing us to obtaindebtor-in-possession financing or to use cash collateral; | |
• | an order authorizing the retention of professionals (including accountants, attorneys and financial advisors) in connection with our reorganization case; | |
• | an order authorizing the retention of ordinary course professionals without the filing of individual retention applications and affidavits; | |
• | an order authorizing us (a) to continue our current cash management system, (b) to maintain prepetition bank accounts and (c) to continue use of existing business forms and existing books and records; | |
• | an order to relieve us from the filing of certain forms and schedules otherwise required by the “U.S. Trustee Operating Guidelines and Reporting Requirements”; |
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• | an order authorizing us to continue our current investment guidelines and invest our available cash in the customary manner and consistent with past practices; | |
• | an order authorizing us to pay the CD&R Fund fees and expenses pursuant to the investment agreement; | |
• | an order fixing the dates for the hearings on approval of this prospectus/disclosure statement and the prepackaged plan solicitation and confirmation of the prepackaged plan; and | |
• | such other orders as are typical in reorganization cases or that may be necessary for the preservation of our assets or for confirmation of the prepackaged plan. |
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• | no later than five business days following the closing of the CD&R investment or, in the alternative, the confirmation of the prepackaged plan, file with the SEC a shelf registration statement covering resales of the common stock received by such noteholders on a delayed or continuous basis; and | |
• | use our best efforts to maintain the effectiveness of such registration until the earlier of (a) six months after the closing of the CD&R investment or, in the alternative, the confirmation of the prepackaged plan (subject to an extension to 12 months after the closing in certain limited circumstances) and (b) the date on which all such common stock held by such noteholders can be resold pursuant to Rule 144 under the Securities Act without limitation as to volume or compliance with any manner of sale requirements. |
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RESTRUCTURING UNDER THE PREPACKAGED PLAN
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FY2009 (P) | FY2010 (P) | FY2011 (P) | FY2012 (P) | |||||||||||||
Net income (loss) | $ | (758 | ) | $ | (8 | ) | $ | 16 | $ | 50 | ||||||
Depreciation/Amortization | 33 | 29 | 31 | 29 | ||||||||||||
Stock Compensation | 16 | 5 | 5 | 5 | ||||||||||||
Interest and Taxes | 68 | 10 | 21 | 43 | ||||||||||||
Restructuring Charges | 14 | — | — | — | ||||||||||||
Goodwill Impairment | 623 | — | — | — | ||||||||||||
LCM Inventory Reserve | 40 | — | — | — | ||||||||||||
Adjusted EBITDA | $ | 36 | $ | 36 | $ | 73 | $ | 127 | ||||||||
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Fiscal Year | ||||||||||||||||
2009 (P) | 2010 (P) | 2011 (P) | 2012 (P) | |||||||||||||
(In millions) | ||||||||||||||||
Sales (External) | $ | 961 | $ | 861 | $ | 1,084 | $ | 1,331 | ||||||||
Cost of sales | 754 | 671 | 832 | 996 | ||||||||||||
Lower of cost or market adjustment | 40 | — | — | — | ||||||||||||
Impairment charge | 6 | — | — | — | ||||||||||||
Gross Profit | $ | 161 | $ | 190 | $ | 252 | $ | 335 | ||||||||
GP % | 16.8 | % | 22.1 | % | 23.2 | % | 25.2 | % | ||||||||
Selling, general and administrative expenses | $ | 221 | $ | 189 | $ | 215 | $ | 242 | ||||||||
Goodwill and other intangible asset impairment | 623 | — | — | — | ||||||||||||
Restructuring charge | 8 | — | — | — | ||||||||||||
Income from operations | $ | (691 | ) | $ | 1 | $ | 37 | $ | 93 | |||||||
Interest income (expense), net | $ | (22 | ) | $ | (16 | ) | $ | (13 | ) | $ | (13 | ) | ||||
Debt extinguishment and refinancing costs | (103 | ) | — | — | — | |||||||||||
Other income (expense) | 1 | 1 | 1 | 1 | ||||||||||||
Earnings before tax | $ | (815 | ) | $ | (14 | ) | $ | 25 | $ | 81 | ||||||
(Provision) benefit for income taxes | 57 | 6 | (9 | ) | (31 | ) | ||||||||||
Net income (loss) | $ | (758 | ) | $ | (8 | ) | $ | 16 | $ | 50 | ||||||
Preferred stock dividends and accretion | — | 35 | 39 | 23 | ||||||||||||
Preferred stock beneficial conversion charge | 10 | 284 | 37 | 20 | ||||||||||||
Net income (loss) applicable to common shares | $ | (768 | ) | $ | (327 | ) | $ | (60 | ) | $ | 7 | |||||
Adjusted EBITDA | $ | 36 | $ | 36 | $ | 73 | $ | 127 | ||||||||
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Fiscal Year | ||||||||||||||||
2009 (P) | 2010 (P) | 2011 (P) | 2012 (P) | |||||||||||||
(In millions) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 58 | $ | 90 | $ | 71 | $ | 82 | ||||||||
Accounts receivable, net | 81 | 79 | 100 | 123 | ||||||||||||
Inventories | 82 | 85 | 105 | 126 | ||||||||||||
Deferred income taxes | 25 | 25 | 25 | 25 | ||||||||||||
Income taxes receivable | 26 | 8 | — | — | ||||||||||||
Prepaid expenses and other | 24 | 24 | 24 | 24 | ||||||||||||
Total current assets | $ | 296 | $ | 311 | $ | 325 | $ | 380 | ||||||||
Property, Plant and Equipment | 503 | 505 | 555 | 595 | ||||||||||||
Less: Accumulated Depreciation | (265 | ) | (294 | ) | (325 | ) | (354 | ) | ||||||||
Net property | $ | 238 | $ | 211 | $ | 230 | $ | 241 | ||||||||
Goodwill | 5 | 5 | 5 | 5 | ||||||||||||
Other assets | 44 | 44 | 44 | 44 | ||||||||||||
TOTAL ASSETS | $ | 583 | $ | 571 | $ | 604 | $ | 670 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||||
Current Liabilities: | ||||||||||||||||
Current portion of long-term debt | $ | 2 | $ | 2 | $ | 2 | $ | 2 | ||||||||
Accounts payable | 61 | 58 | 73 | 87 | ||||||||||||
Accrued expenses | 74 | 75 | 93 | 105 | ||||||||||||
Total current liabilities | $ | 137 | $ | 135 | $ | 168 | $ | 194 | ||||||||
Long-term debt | 149 | 146 | 127 | 112 | ||||||||||||
Deferred income taxes | 20 | 20 | 20 | 20 | ||||||||||||
Other long-term liabilities | 11 | 8 | 8 | 8 | ||||||||||||
Convertible preferred Stock | 213 | 248 | 287 | 310 | ||||||||||||
Shareholders’ equity (deficit) | 53 | 14 | (6 | ) | 27 | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 583 | $ | 571 | $ | 604 | $ | 671 | ||||||||
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Fiscal Year | ||||||||||||||||
2009 (P) | 2010 (P) | 2011 (P) | 2012 (P) | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||
Net Income | $ | (758 | ) | $ | (8 | ) | $ | 16 | $ | 50 | ||||||
Depreciation and amortization | 33 | 29 | 31 | 29 | ||||||||||||
Other non-cash adjustments | 762 | 3 | 4 | 4 | ||||||||||||
Changes to working capital | 24 | 12 | (1 | ) | (17 | ) | ||||||||||
Net Cash from Operating Activities | 61 | 36 | 50 | 66 | ||||||||||||
Investing Activities: | ||||||||||||||||
Capital expenditures | $ | (23 | ) | $ | (9 | ) | $ | (50 | ) | $ | (40 | ) | ||||
Other | 1 | 7 | — | — | ||||||||||||
Net Cash used in investing activities | (22 | ) | (2 | ) | (50 | ) | (40 | ) | ||||||||
FINANCING ACTIVITIES | ||||||||||||||||
Repayment of convertible notes | (90 | ) | — | — | — | |||||||||||
Payments on long term debt | (146 | ) | (2 | ) | (19 | ) | (15 | ) | ||||||||
Payment of refinancing costs | (31 | ) | — | — | — | |||||||||||
Net proceeds from preferred stock | 218 | — | — | — | ||||||||||||
Net cash from financing activities | $ | (49 | ) | $ | (2 | ) | $ | (19 | ) | $ | (15 | ) | ||||
Net increase (decrease) in cash | (10 | ) | 32 | (19 | ) | 11 | ||||||||||
Cash at beginning of period | 68 | 58 | 90 | 71 | ||||||||||||
Cash at end of period | $ | 58 | $ | 90 | $ | 71 | $ | 82 | ||||||||
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Name | Position | |
Norman C. Chambers | Chairman of the Board, President and Chief Executive Officer | |
William D. Breedlove | Director | |
Philip J. Hawk | Director | |
Larry D. Edwards | Director | |
Ed L. Phipps | Director | |
W. Bernard Pieper | Director | |
John K. Sterling | Director | |
Gary L. Forbes | Director | |
Max L. Lukens | Director | |
George Martinez | Director |
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• | holders of convertible notes representing at least a majority of the outstanding convertible notes may submit proposed persons to serve as the initial unaffiliated shareholder directors, and the Company will consider in good faith any such proposed persons; | |
• | prior to the appointment of the initial unaffiliated shareholder directors, the Company will provide notice prior to the closing of the restructuring of the Company’s proposed initial unaffiliated shareholder directors; and | |
• | in the event that holders of convertible notes representing at least a majority of the outstanding convertible notes provide written notice to the Company within seven business days that they object to the proposed initial unaffiliated shareholder directors, the Company will propose (and, if necessary, continue to propose) alternative initial unaffiliated shareholder directors so that at least one of the two initial unaffiliated shareholder directors is acceptable to holders of convertible notes representing at least a majority of the outstanding convertible notes. |
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Name | Position | |
Norman C. Chambers | Chairman of the Board, President and Chief Executive Officer | |
Mark E. Johnson | Executive Vice President, Chief Financial Officer and Treasurer | |
Mark W. Dobbins | Executive Vice President and Chief Operating Officer | |
Charles W. Dickinson | President of Metal Components Division | |
Bradley D. Robeson | President of NCI Buildings Division | |
John L. Kuzdal | President of Metal Coil Coating Division | |
Keith E. Fischer | President of Robertson-Ceco Division | |
Todd R. Moore | Executive Vice President, General Counsel and Secretary | |
Eric J. Brown | Executive Vice President and Chief Information Officer | |
Mark T. Golladay | Vice President, Corporate Development | |
Richard Allen | Vice President, Finance and Corporate Controller |
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Price | ||||||||
High | Low | |||||||
Fiscal Year Ended October 29, 2006 | ||||||||
First Quarter | $ | 50.54 | $ | 40.08 | ||||
Second Quarter | 68.10 | 48.65 | ||||||
Third Quarter | 70.00 | 47.31 | ||||||
Fourth Quarter | 62.50 | 45.80 | ||||||
Fiscal Year Ended October 28, 2007 | ||||||||
First Quarter | $ | 61.12 | $ | 49.74 | ||||
Second Quarter | 60.61 | 45.38 | ||||||
Third Quarter | 52.93 | 47.81 | ||||||
Fourth Quarter | 52.07 | 36.35 | ||||||
Fiscal Year Ended November 2, 2008 | ||||||||
First Quarter | $ | 39.90 | $ | 23.06 | ||||
Second Quarter | 34.13 | 19.99 | ||||||
Third Quarter | 39.81 | 23.20 | ||||||
Fourth Quarter | 40.95 | 14.25 | ||||||
Fiscal Year Ending October 31, 2009 | ||||||||
First Quarter | $ | 19.12 | $ | 11.59 | ||||
Second Quarter | 13.03 | 2.22 | ||||||
Third Quarter | 7.50 | 1.76 | ||||||
Fourth Quarter (through September 22, 2009) | 5.12 | 2.10 |
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Bid Quotation | ||||||||
High | Low | |||||||
Fiscal Year Ended October 28, 2007 | ||||||||
First Quarter | $ | 157.66 | $ | 137.46 | ||||
Second Quarter | 155.28 | 127.49 | ||||||
Third Quarter | 139.59 | 134.27 | ||||||
Fourth Quarter | 129.27 | 107.49 | ||||||
Fiscal Year Ended November 2, 2008 | ||||||||
First Quarter | $ | 108.33 | $ | 94.10 | ||||
Second Quarter | 102.37 | 90.75 | ||||||
Third Quarter | 110.51 | 95.71 | ||||||
Fourth Quarter | 108.74 | 83.00 | ||||||
Fiscal Year Ending October 31, 2009 | ||||||||
First Quarter | $ | 82.00 | $ | 65.00 | ||||
Second Quarter | 85.75 | 57.50 | ||||||
Third Quarter | 85.38 | 53.50 | ||||||
Fourth Quarter (through September 22, 2009) | 148.00 | 69.00 |
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• | 19,981,585 shares of common stock, excluding shares held by the Company as treasury stock; | |
• | 1,814,854 shares of common stock were reserved for issuance in respect of outstanding options and warrants; | |
• | no shares of preferred stock; and | |
• | an aggregate of $180,000,000 principal amount of convertible notes that would be convertible into a maximum of 10,851,687 shares of our common stock. |
• | the title of the series of preferred stock; | |
• | any limit upon the number of shares of the series of preferred stock which may be issued; | |
• | the preference, if any, to which holders of the series of preferred stock will be entitled upon our liquidation; | |
• | the date or dates on which we will be required or permitted to redeem the preferred stock; | |
• | the terms, if any, on which we or holders of the preferred stock will have the option to cause the preferred stock to be redeemed or purchased; | |
• | the voting rights, if any, of the holders of the preferred stock; | |
• | any listing of the preferred stock on any securities exchange; | |
• | the dividends, if any, which will be payable with regard to the series of preferred stock, which may be fixed dividends or participating dividends and may be cumulative or non-cumulative; | |
• | the rights, if any, of holders of preferred stock to convert the preferred stock into another class of our stock or securities, including provisions intended to prevent dilution of those conversion rights; | |
• | any provisions by which we will be required or permitted to make any payments to a sinking fund to be used to redeem preferred stock or a purchase fund to be used to purchase preferred stock; | |
• | any material U.S. federal income tax considerations applicable to the preferred stock; and | |
• | any other material terms of the preferred stock. |
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• | decrease the amount of earnings and assets available for distribution to existing common stockholders; | |
• | make removal of the present management more difficult; | |
• | result in restrictions upon the payment of dividends and other distributions to existing common stockholders; | |
• | delay or prevent a change in control of the Company; and | |
• | limit the price that investors are willing to pay in the future for our existing common stock. |
• | Section 203 of the Delaware General Corporation Law prohibits certain publicly-held Delaware corporations from engaging in a business combination with an interested stockholder for a period of three years following the time such person became an interested stockholder unless the business combination is approved in a specified manner. Generally, an interested stockholder is a person who, together with its affiliates and associates, owns 15% or more of the corporation’s voting stock, or is affiliated with the corporation and owns or owned 15% of the corporation’s voting stock within three years before the business combination. | |
• | Our restated certificate of incorporation provides for a classified board of directors, approximately one-third of which is elected annually for a three-year term. Our restated certificate of incorporation also requires a vote of holders of at least 80% of our voting stock to approve a merger, sale, lease or exchange of any of our assets having an aggregate fair market value of $5.0 million or more or certain other transactions between us and any other person or corporation holding directly or indirectly more than 10% of our voting stock, unless the merger, sale or other transaction was approved by a majority of the disinterested members of our board of directors or certain price and procedure requirements are met. The above provisions cannot be changed unless the change is approved by the affirmative vote of at least 80% of our voting stock. Further, our restated certificate of incorporation also requires a vote of holders of at least two-thirds (2/3) of our voting stock to adopt, alter, amend or repeal our by-laws. | |
• | Our restated certificate of incorporation provides that stockholder action can be taken only at an annual or special meeting of stockholders. Special meetings of stockholders may be called by the chairman of our board of directors, the chief executive officer or the secretary at the request in writing or by electronic transmission of a majority of our board of directors. | |
• | Our by-laws provide time limitations for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholders’ meetings. |
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• | an individual who is a citizen or resident of the United States; | |
• | a corporation, or other business entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state of the United States or the District of Columbia; | |
• | an estate, if its income is subject to U.S. federal income taxation regardless of its source; or |
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• | a trust, if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons (within the meaning of the Internal Revenue Code) have the authority to control all of its substantial decisions or (ii) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
• | Gain (but not loss) will be recognized on the exchange in an amount equal to the lesser of (i) the amount of gain realized (measured by the amount by which the sum of the fair market value of the shares of common stock and the amount of cash received exceeds the U.S. holder’s adjusted tax basis in the convertible note) and (ii) the amount of cash received, excluding in each case cash and common stock attributable to accrued and unpaid interest, if any. |
• | Subject to the discussion of “market discount” below, any such gain generally will be capital gain and will be long-term capital gain if the U.S. holder’s holding period for the convertible note is more than one year at the time of the exchange. |
• | The holding period of the shares of common stock (excluding common stock attributable to accrued and unpaid interest, if any) will include the holding period of the convertible note exchanged for the shares of common stock. |
• | The adjusted tax basis of the shares of common stock (excluding common stock attributable to accrued and unpaid interest, if any) will be equal to the adjusted tax basis of the convertible note decreased by the amount |
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of cash received (excluding cash attributable to accrued and unpaid interest, if any) and increased by the amount of gain recognized, if any. |
• | Gain or loss will be recognized in an amount equal to the difference between (i) the sum of the fair market value of the shares of common stock and the amount of cash received (excluding cash and common stock attributable to accrued and unpaid interest, if any) and (ii) the U.S. holder’s adjusted tax basis in the convertible note. |
• | Subject to the discussion of “market discount” below, any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder’s holding period for the convertible note is more than one year at the time of the exchange. The deduction of capital losses for U.S. federal income tax purposes is subject to limitations. |
• | The holding period of the shares of common stock will start on the day following the exchange. |
• | The adjusted tax basis of the shares of common stock generally will equal their fair market value on the day of the exchange. |
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• | the gain is effectively connected with thenon-U.S. holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment that suchnon-U.S. holder maintains or, in the case of an individual, a fixed base), in which case the gain will be subject to tax in the same manner as effectively connected income as described below under “—Income Effectively Connected with a U.S. Trade or Business”; | |
• | thenon-U.S. holder is an individual present in the United States for 183 days or more during the taxable year of the exchange and certain other conditions are met, in which case the gain generally will be subject to tax at a rate of 30%; or | |
• | thenon-U.S. holder meets certain ownership requirements and we have been a “United States real property holding corporation,” or a USRPHC, for U.S. federal income tax purposes at any time during the five-year period ending on the date of the exchange or, if shorter, thenon-U.S. holder’s holding period with respect to the convertible notes. However, we do not believe that we are currently, or have been at any time over the past five years, a USRPHC, nor do we anticipate becoming a USRPHC. |
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• | does not actually or constructively, directly or indirectly, own 10% or more of the total combined voting power of all classes of our stock entitled to vote; | |
• | is not a controlled foreign corporation that is related to us (directly or indirectly) through stock ownership; | |
• | is not a bank receiving interest on a loan agreement entered into in the ordinary course of its trade or business; and | |
• | certifies to itsnon-U.S. status on IRSForm W-8BEN (or other applicable form). |
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• | our Annual Report onForm 10-K, except for Part II, Item 8, “Financial Statements and Supplementary Data,” for the year ended November 2, 2008; | |
• | our Quarterly Reports onForm 10-Q for the quarters ended February 1, 2009, May 3, 2009 and August 2, 2009; and |
• | our Current Reports onForm 8-K filed on November 21, 2008, December 11, 2008, December 17, 2008, January 16, 2009, February 19, 2009, March 10, 2009, March 17, 2009, May 21, 2009, June 6, 2009, July 15, 2009, August 19, 2009, August 27, 2009, August 28, 2009, September 1, 2009, September 10, 2009 and September 15, 2009; and |
• | the description of our common stock contained in ourForm 8-A/A, filed on June 25, 1999, and any subsequent amendment thereto filed for the purpose of updating such description. |
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FOR THE DISTRICT OF DELAWARE
In re: NCI BUILDING SYSTEMS, INC.,et al.,1 Debtors. | ) ) ) ) ) ) ) | Chapter 11 Case No. 09- ( ) Joint Administration Requested | ||||||
NCI BUILDING SYSTEMS, INC., ET AL. PURSUANT
TO CHAPTER 11 OF THE BANKRUPTCY CODE
KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York10022-4611 Telephone:(212) 446-4800 Facsimile:(212) 446-4900 | WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 Facsimile: (212) 403-2000 | |
YOUNG CONAWAY STARGATT & TAYLOR, LLP The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 Telephone:(302) 571-6637 Wilmington, Delaware 19801 |
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ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME, AND GOVERNING LAW | A-1 | |||
A. Defined Terms. | A-1 | |||
B. Rules of Interpretation. | A-7 | |||
C. Computation of Time. | A-8 | |||
D. Governing Law. | A-8 | |||
E. Reference to Monetary Figures. | A-8 | |||
ARTICLE II. ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS | A-8 | |||
A. Administrative Claims. | A-8 | |||
B. Priority Tax Claims. | A-9 | |||
ARTICLE III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS | A-9 | |||
A. Classification of Claims and Equity Interests. | A-9 | |||
B. Treatment of Claims and Equity Interests. | A-10 | |||
C. Special Provision Governing Unimpaired Claims. | A-14 | |||
D. Acceptance or Rejection of the Plan. | A-14 | |||
E. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code. | A-14 | |||
F. Controversy Concerning Impairment. | A-14 | |||
G. Subordinated Claims. | A-15 | |||
ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN | A-15 | �� | ||
A. General Settlement of Claims. | A-15 | |||
B. Restructuring Transactions. | A-15 | |||
C. Existing Letters of Credit. | A-15 | |||
D. Sources of Consideration for Plan Distributions. | A-15 | |||
E. Management Employment Contracts. | A-16 | |||
F. Corporate Existence. | A-16 | |||
G. Vesting of Assets in the Reorganized Debtors. | A-17 | |||
H. Cancellation of Securities and Agreements. | A-17 | |||
I. Surrender of Existing Securities. | A-17 | |||
J. Corporate Action. | A-18 | |||
K. New Certificates of Incorporation and New By-Laws. | A-18 | |||
L. Directors and Officers of the Reorganized Debtors. | A-18 | |||
M. Effectuating Documents; Further Transactions. | A-19 | |||
N. Section 1146 Exemption. | A-19 | |||
O. Employee and Retiree Benefits. | A-19 | |||
P. Preservation of Causes of Action. | A-19 | |||
ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES | A-20 | |||
A. Assumption and Rejection of Executory Contracts and Unexpired Leases. | A-20 | |||
B. Claims Based on Rejection of Executory Contracts or Unexpired Leases. | A-20 | |||
C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed. | A-20 | |||
D. Insurance Policies. | A-21 | |||
E. Modifications, Amendments, Supplements, Restatements, or Other Agreements. | A-21 | |||
F. Reservation of Rights. | A-21 | |||
G. Nonoccurrence of Effective Date. | A-21 |
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H. Contracts and Leases Entered Into After the Petition Date. | A-21 | |||
ARTICLE VI. PROVISIONS GOVERNING DISTRIBUTIONS | A-22 | |||
A. Timing and Calculation of Amounts to Be Distributed. | A-22 | |||
B. Disbursing Agent. | A-22 | |||
C. Rights and Powers of Disbursing Agent. | A-22 | |||
D. Delivery of Distributions and Undeliverable or Unclaimed Distributions. | A-22 | |||
E. Manner of Payment. | A-23 | |||
F. Section 1145 Exemption. | A-23 | |||
G. Compliance with Tax Requirements. | A-24 | |||
H. Allocations. | A-24 | |||
I. No Postpetition Interest on Claims. | A-24 | |||
J. Setoffs and Recoupment. | A-24 | |||
K. Claims Paid or Payable by Third Parties. | A-24 | |||
ARTICLE VII. PROCEDURES FOR RESOLVING CONTINGENT, UNLIQUIDATED, AND DISPUTED CLAIMS | A-25 | |||
A. Allowance of Claims. | A-25 | |||
B. Proofs of Claims. | A-25 | |||
C. Prosecution of Objections to Claims. | A-25 | |||
D. Procedures Regarding Disputed Claims. | A-25 | |||
E. Disallowance of Claims or Interests. | A-26 | |||
F. No Distributions Pending Allowance. | A-26 | |||
G. Distributions After Allowance. | A-26 | |||
ARTICLE VIII. SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS | A-26 | |||
A. Discharge of Claims and Termination of Equity Interests. | A-26 | |||
B. Release of Liens. | A-27 | |||
C. Releases by the Debtors. | A-27 | |||
D. Releases by Holders of Claims and Equity Interests. | A-27 | |||
E. Exculpation. | A-28 | |||
F. Injunction. | A-28 | |||
G. Subordination Rights. | A-28 | |||
H. Rights of Internal Revenue Service. | A-29 | |||
ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN | A-29 | |||
A. Conditions Precedent to the Effective Date. | A-29 | |||
B. Waiver of Conditions. | A-29 | |||
C. Effect of Failure of Conditions. | A-29 | |||
ARTICLE X. MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN | A-30 | |||
A. Modification and Amendments. | A-30 | |||
B. Effect of Confirmation on Modifications. | A-30 | |||
C. Revocation or Withdrawal of Plan. | A-30 | |||
ARTICLE XI. RETENTION OF JURISDICTION | A-30 | |||
ARTICLE XII. MISCELLANEOUS PROVISIONS | A-32 | |||
A. Immediate Binding Effect. | A-32 | |||
B. Additional Documents. | A-32 | |||
C. Payment of Statutory Fees. | A-32 | |||
D. Payment of Fees and Expenses of the Convertible Indenture Trustee. | A-32 |
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E. Statutory Committee and Cessation of Fee and Expense Payment. | A-32 | |||
F. Reservation of Rights. | A-32 | |||
G. Successors and Assigns. | A-32 | |||
H. Notices. | A-33 | |||
I. Term of Injunctions or Stays. | A-33 | |||
J. Entire Agreement. | A-33 | |||
K. Exhibits. | A-34 | |||
L. Nonseverability of Plan Provisions. | A-34 | |||
M. Votes Solicited in Good Faith. | A-34 | |||
N. Closing of Chapter 11 Cases. | A-34 | |||
O. Waiver or Estoppel. | A-34 | |||
P. Conflicts. | A-34 |
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DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME, AND GOVERNING LAW
A. | Defined Terms. |
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B. | Rules of Interpretation. |
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C. | Computation of Time. |
D. | Governing Law. |
E. | Reference to Monetary Figures. |
ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS
A. | Administrative Claims. |
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B. | Priority Tax Claims. |
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
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Class | Claims and Equity Interests | Status | Voting Rights | |||
Class 1 | Priority Non-Tax Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 2 | Secured Tax Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 3 | Senior Secured Claims | Impaired | Entitled to Vote | |||
Class 4 | Other Secured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 5 | Convertible Notes Claims | Impaired | Entitled to Vote | |||
Class 6 | NCIBS General Unsecured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 7 | NCI Group, Inc. General Unsecured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 8 | Steelbuilding.com, Inc. General Unsecured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 9 | Robertson-Ceco II Corporation General Unsecured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 10 | Intercompany Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 11 | Intercompany Interests | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 12 | Equity Interests in NCIBS | Unimpaired | Not Entitled to Vote (Presumed to Accept) | |||
Class 13 | Section 510(b) Claims | Impaired | Not Entitled to Vote (Deemed to Reject) |
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MEANS FOR IMPLEMENTATION OF THE PLAN
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TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
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PROVISIONS GOVERNING DISTRIBUTIONS
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PROCEDURES FOR RESOLVING CONTINGENT,
UNLIQUIDATED, AND DISPUTED CLAIMS
A-25
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SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS
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CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
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MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN
RETENTION OF JURISDICTION
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MISCELLANEOUS PROVISIONS
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Houston, Texas 77064
Facsimile:(281) 477-9646
Attn.: Todd R. Moore
E-mail address: trmoore@ncilp.com
51 West 52nd Street
New York, New York 10019
Facsimile:(212) 403-2000
Attn.: Mark Gordon, Esq. and Joshua A. Feltman
E-mail Addresses:
MGordon@wlrk.com, JAFeltman@wlrk.com
601 Lexington Avenue
New York, New York10022-4611
Facsimile:(212) 446-4900
Attention: James H.M. Sprayregen, Esq., Paul M. Basta, Esq., Christopher J. Marcus, Esq., and
Brian S. Lennon, Esq.
E-mail addresses: james.sprayregen@kirkland.com, paul.basta@kirkland.com,
christopher.marcus@kirkland.com, and brian.lennon@kirkland.com
919 Third Avenue
New York, New York 10022
Facsimile:(212) 909-6836
Attn.: Franci J. Blassberg
E-mail address: fjblassberg@debevoise.com
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By: |
Title: | Executive Vice-President, Chief Financial Officer and Treasurer |
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Section1. | Authorization and Sale of Securities | C-2 | ||||
Section 2. | Closing and Delivery of Securities and Funds | C-2 | ||||
Section 3. | Closing Conditions | C-3 | ||||
Section 4. | Representations and Warranties of the Company | C-8 | ||||
Section 5. | Representations and Warranties of the Investor | C-21 | ||||
Section 6. | Certain Additional Agreements of the Parties | C-24 | ||||
Section 7. | Indemnity | C-34 | ||||
Section 8. | Termination | C-37 | ||||
Section 9. | Certain Definitions | C-39 | ||||
Section 10. | Survival of Representations, Warranties and Agreements | C-48 | ||||
Section 11. | Notices | C-48 | ||||
Section 12. | Successors and Assigns | C-49 | ||||
Section 13. | Amendments; Waiver | C-49 | ||||
Section 14. | Headings | C-49 | ||||
Section 15. | Severability | C-49 | ||||
Section 16. | Liability Limitations | C-49 | ||||
Section 17. | Integration | C-50 | ||||
Section 18. | Governing Law | C-50 | ||||
Section 19. | Counterparts | C-50 | ||||
Section 20. | Access; Information | C-50 | ||||
Section 21. | Publicity | C-50 | ||||
Section 22. | Confidentiality Agreement | C-51 | ||||
Section 23. | Specific Performance; Jurisdiction | C-51 | ||||
Section 24. | Waiver of Jury Trial | C-51 | ||||
Section 25. | Interpretation | C-52 | ||||
Section 26. | No Third Party Beneficiaries | C-52 | ||||
Section 27. | Certain Considerations Relating to Bankruptcy | C-52 |
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Exhibit A | Form of Amended Credit Agreement | |
Exhibit B | Form of Certificate of Designations, Preferences and Rights of the Series B Preferred Stock | |
Exhibit C | Form of Stockholders Agreement | |
Exhibit D | Form of Indemnification Agreement | |
Exhibit E | Terms of Registration Rights Agreement | |
Exhibit F | Form of Press Release | |
Exhibit G | Employee Benefits Covenants | |
Exhibit H | ABL Term Sheet | |
Exhibit I | Prepackaged Plan Term Sheet | |
Annex A | Terms and Conditions of the Offer |
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Attention: General Counsel
10943 North Sam Houston Parkway West
Houston, Texas 77064
Fax:(281) 477-9674
Attention: Mark Gordon
51 West 52nd Street
New York, New York 10019
Fax:(212) 403-2000
c/o Clayton, Dubilier & Rice, Inc.
Attention: Theresa Gore
375 Park Avenue, 18th Floor
New York NY 10152
Fax:(212) 407-5252
919 Third Avenue
New York, NY 10022
Attention: Franci J. Blassberg
Fax:(212) 909-6836
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By: | /s/ Theresa A. Gore |
Title: | Vice President, Treasurer and |
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By: | /s/ Norman C. Chambers |
Title: | Chief Executive Officer |
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INVESTMENT AGREEMENT
BY AND BETWEEN
NCI BUILDING SYSTEMS, INC.
AND
CLAYTON, DUBILIER & RICE FUND VIII, L.P.
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TO
INVESTMENT AGREEMENT
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By: | /s/ Theresa A. Gore |
Title: | Vice President, Treasurer and |
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By: | /s/ Todd R. Moore |
Title: | Executive Vice President, General |
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TO
INVESTMENT AGREEMENT
BY AND BETWEEN
NCI BUILDING SYSTEMS, INC.
AND
CLAYTON, DUBILIER & RICE FUND VIII, L.P.
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TO
INVESTMENT AGREEMENT
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Claims Under Convertible Notes: | Impaired; entitled to vote. Holders of Convertible Notes shall receive, on the Effective Date, in consideration of their claims (including accrued interest), cash and common stock in amounts calculated as follows: for each $1,000 of principal amount of Convertible Notes held by them a) cash in an amount equal to $500 and b) 390 shares of common stock of the reorganized Company. |
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By: | /s/ Theresa A. Gore |
Title: | Vice President, Treasurer and |
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By: | /s/ Norman C. Chambers |
Title: | Chief Executive Officer |
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Transaction: | Exchange offer to any and all holders of the Convertible Notes. | |
Type of Offer: | Registered with the Commission on Form S-4 and filed with the Commission on Schedule TO. | |
Pricing: | Tendering holders shall receive, for each $1,000 of principal amount Convertible Notes surrendered for exchange, a combination of (A) $500.00, in cash, and (B) 390 shares of Common Stock of the Company. | |
Launch Date: | On or prior to 11:59 p.m., Eastern Time, on September 9, 2009. | |
Expiration Date: | The Initial Expiration Date, extended as provided in Section 6(d)(i) of the Agreement. | |
Withdrawal Rights: | Tendering holders may withdraw tendered Convertible Notes at any time prior to the Expiration Date. | |
Settlement: | The Closing Date. | |
Exchange Offer Materials: | Schedule TO, the Form S-4, the Offer Documents and the Required Company Filings, subject to Section 6(d)(iii) of the Agreement. |
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ARTICLE I DEFINITIONS | F-1 | |||||||
Section 1.1 | Certain Definitions | F-1 | ||||||
ARTICLE II REPRESENTATIONS AND WARRANTIES | F-8 | |||||||
Section 2.1 | Representations and Warranties of the Company | F-8 | ||||||
Section 2.2 | Representations and Warranties of CD&R Fund VIII. | F-8 | ||||||
ARTICLE III GOVERNANCE MATTERS; VOTING; STANDSTILL PROVISIONS | F-9 | |||||||
Section 3.1 | Board of Directors | F-9 | ||||||
Section 3.2 | Voting | F-13 | ||||||
Section 3.3 | Standstill and Other Restrictions | F-13 | ||||||
ARTICLE IV TRANSFER AND HEDGING RESTRICTIONS | F-14 | |||||||
Section 4.1 | Transfer Restrictions | F-14 | ||||||
Section 4.2 | Hedging Restrictions | F-16 | ||||||
ARTICLE V SUBSCRIPTION RIGHTS | F-16 | |||||||
Section 5.1 | Subscription Rights | F-16 | ||||||
Section 5.2 | Notice | F-16 | ||||||
Section 5.3 | Purchase Mechanism | F-17 | ||||||
Section 5.4 | Failure to Purchase | F-17 | ||||||
Section 5.5 | Certain Qualified Offerings | F-18 | ||||||
Section 5.6 | Cooperation | F-18 | ||||||
Section 5.7 | Limitation of Rights | F-18 | ||||||
Section 5.8 | Termination of Subscription Rights | F-18 | ||||||
ARTICLE VI CONSENT RIGHTS | F-19 | |||||||
Section 6.1 | Investor Consent Rights | F-19 | ||||||
Section 6.2 | Certificate of Incorporation Amendments | F-20 | ||||||
ARTICLE VII EFFECTIVENESS AND TERMINATION | F-21 | |||||||
Section 7.1 | Termination | F-21 | ||||||
ARTICLE VIII ACCESS, INFORMATION AND CONFIDENTIALITY | F-21 | |||||||
Section 8.1 | Confidentiality | F-21 | ||||||
Section 8.2 | Access and Information | F-22 | ||||||
ARTICLE IX MISCELLANEOUS | F-22 | |||||||
Section 9.1 | Tax Matters | F-22 | ||||||
Section 9.2 | Successors and Assigns | F-23 | ||||||
Section 9.3 | Amendments; Waiver; Company Action | F-23 | ||||||
Section 9.4 | Notices | F-24 | ||||||
Section 9.5 | Governing Law | F-24 | ||||||
Section 9.6 | Specific Performance; Jurisdiction | F-24 | ||||||
Section 9.7 | Waiver of Jury Trial | F-25 | ||||||
Section 9.8 | Headings | F-25 | ||||||
Section 9.9 | Entire Agreement | F-25 | ||||||
Section 9.10 | Severability | F-25 | ||||||
Section 9.11 | Counterparts | F-25 | ||||||
Section 9.12 | Interpretation | F-25 | ||||||
Section 9.13 | No Third Party Beneficiaries | F-26 | ||||||
Section 9.14 | Investor Portfolio Companies | F-26 | ||||||
Section 9.15 | Conflicting Agreements | F-26 |
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Attention: General Counsel
10943 North Sam Houston Parkway West
Houston, Texas 77064
Fax:(281) 477-9674
Attention: Mark Gordon
51 West 52nd Street
New York, NY 10019
Fax:(212) 403-2000
c/o Clayton, Dubilier & Rice, Inc.
Attention: Theresa Gore
375 Park Avenue, 18th Floor
New York NY 10152
Fax:(212) 893-5252
919 Third Avenue
New York, NY 10022
Attention: Franci J. Blassberg
Fax:(212) 909-6836
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Title: |
By: | CD&R Associates VIII Ltd., its general partner | |
By: |
Title: |
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CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
SERIES B CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK
OF
NCI BUILDING SYSTEMS, INC.
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OS0 | ||||
OS1 |
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OS1 |
OS0 + (X/ACMP) | ||||
OS0 + Y |
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SP0 − FMV | ||||
SP0 |
MP0 | ||||
MP0 + MPs |
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AC + (SP0 × OS1) |
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OS0 + (X/P0) | ||||
OS0 + Y |
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Title: |
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REGISTRATION RIGHTS AGREEMENT
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Attention: General Counsel
10943 North Sam Houston Parkway West
Houston, Texas 77064
Fax:(281) 477-9674
Attention: Mark Gordon
51 West 52nd Street
New York, NY 10019
Fax:(212) 403-2000
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c/o Clayton, Dubilier & Rice, Inc.
Attention: Theresa Gore
375 Park Avenue, 18th Floor
New York NY 10152
Fax:(212) 893-5252
919 Third Avenue
New York, NY 10022
Attention: Franci J. Blassberg
Fax:(212) 909-6836
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By: |
Title: |
By: | CD&R Associates VIII Ltd., its general partner | |
By: |
Title: |
By: | CD&R Associates VIII Ltd., its general partner | |
By: |
Title: |
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INDEMNIFICATION AGREEMENT
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Attention: General Counsel
10943 North Sam Houston Parkway West
Houston, Texas 77064
Fax:(281) 477-9674
Attention: Mark Gordon
51 West 52nd Street
New York, New York 10019
Fax:(212) 403-2000
375 Park Avenue
18th Floor
New York, New York 10152
Attention: Theresa Gore
Facsimile:(212) 893-5252
375 Park Avenue
18th Floor
New York, New York 10152
Attention: Theresa Gore
Facsimile:(212) 893-5252
919 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg
Facsimile:(212) 909-6836
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By: |
By: |
By: | CD&R Associates VIII, Ltd., its general partner | |
By: |
Title: | Vice President, Treasurer and Assistant Secretary |
By: |
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AMENDED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT
among
NCI BUILDING SYSTEMS, INC.,
as Borrower,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
and
[ ],
as Administrative Agent and Collateral Agent
Dated as of [ ], 2009
[ ],
as Lead Arranger and Bookrunner
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ARTICLE I DEFINITIONS. | J-1 | |||||
Section 1.1 | Defined Terms | J-1 | ||||
Section 1.2 | Other Definitional Provisions | J-22 | ||||
ARTICLE II AMOUNT AND TERMS OF COMMITMENTS | J-22 | |||||
Section 2.1 | Term Loans | J-22 | ||||
Section 2.2 | Term Loan Notes | J-23 | ||||
Section 2.3 | Repayment of Term Loans | J-23 | ||||
Section 2.4 | Record of Term Loans | J-23 | ||||
Section 2.5 | Additional Commitments | J-23 | ||||
ARTICLE III GENERAL PROVISIONS APPLICABLE TO TERM LOANS | J-25 | |||||
Section 3.1 | Interest Rates and Payment Dates | J-25 | ||||
Section 3.2 | Conversion and Continuation Options | J-25 | ||||
Section 3.3 | Minimum Amounts of Sets | J-26 | ||||
Section 3.4 | Optional and Mandatory Prepayments | J-26 | ||||
Section 3.5 | Computation of Interest and Fees | J-28 | ||||
Section 3.6 | Inability to Determine Interest Rate | J-28 | ||||
Section 3.7 | Pro Rata Treatment and Payments | J-29 | ||||
Section 3.8 | Illegality | J-29 | ||||
Section 3.9 | Requirements of Law | J-30 | ||||
Section 3.10 | Taxes | J-31 | ||||
Section 3.11 | Indemnity | J-32 | ||||
Section 3.12 | Certain Rules Relating to the Payment of Additional Amounts | J-33 | ||||
Section 3.13 | Further Actions On or Prior to Closing | J-34 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES | J-35 | |||||
Section 4.1 | Financial Condition | J-35 | ||||
Section 4.2 | Existence; Compliance with Law. | J-35 | ||||
Section 4.3 | Power; Authorization; Enforceable Obligations | J-36 | ||||
Section 4.4 | No Legal Bar | J-36 | ||||
Section 4.5 | No Material Litigation | J-36 | ||||
Section 4.6 | Ownership of Property; Liens | J-36 | ||||
Section 4.7 | Intellectual Property | J-36 | ||||
Section 4.8 | No Burdensome Restrictions. | J-37 | ||||
Section 4.9 | Taxes. | J-37 | ||||
Section 4.10 | Federal Regulations | J-37 | ||||
Section 4.11 | ERISA. | J-37 | ||||
Section 4.12 | Collateral | J-37 | ||||
Section 4.13 | Investment Company Act; Other Regulations | J-38 | ||||
Section 4.14 | Subsidiaries | J-38 | ||||
Section 4.15 | Environmental Matters | J-38 | ||||
Section 4.16 | No Material Misstatements | J-39 | ||||
Section 4.17 | Labor Matters | J-39 | ||||
Section 4.18 | Insurance | J-39 | ||||
Section 4.19 | Anti-Terrorism | J-39 |
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ARTICLE V CONDITIONS PRECEDENT | J-40 | |||||
Section 5.1 | Conditions to Effectiveness of this Agreement | J-40 | ||||
Section 5.2 | Conditions to Each Future Extension of Credit | J-43 | ||||
ARTICLE VI AFFIRMATIVE COVENANTS | J-44 | |||||
Section 6.1 | Financial Statements | J-44 | ||||
Section 6.2 | Certificates; Other Information | J-44 | ||||
Section 6.3 | Payment of Obligations | J-45 | ||||
Section 6.4 | Conduct of Business and Maintenance of Existence | J-45 | ||||
Section 6.5 | Maintenance of Property; Insurance | J-45 | ||||
Section 6.6 | Inspection of Property; Books and Records; Discussions | J-46 | ||||
Section 6.7 | Notices | J-46 | ||||
Section 6.8 | Environmental Laws | J-47 | ||||
Section 6.9 | After-Acquired Real Property and Fixtures | J-48 | ||||
Section 6.10 | Post-Closing Security Perfection | J-49 | ||||
ARTICLE VII NEGATIVE COVENANTS | J-50 | |||||
Section 7.1 | Consolidated Leverage Ratio | J-50 | ||||
Section 7.2 | Limitation on Indebtedness | J-50 | ||||
Section 7.3 | Limitation on Liens | J-52 | ||||
Section 7.4 | Limitation on Guarantee Obligations | J-55 | ||||
Section 7.5 | Limitation on Fundamental Changes | J-56 | ||||
Section 7.6 | Limitation on Sale of Assets | J-56 | ||||
Section 7.7 | Limitation on Dividends and Share Repurchases | J-57 | ||||
Section 7.8 | Limitation on Investments, Loans and Advances | J-59 | ||||
Section 7.9 | Limitations on Certain Acquisitions | J-60 | ||||
Section 7.10 | Limitation on Transactions with Affiliates | J-61 | ||||
Section 7.11 | Limitation on Optional Payments and Modifications of Debt Instruments and Other Documents | J-62 | ||||
Section 7.12 | Limitation on Lines of Business | J-63 | ||||
ARTICLE VIII EVENTS OF DEFAULT | J-63 | |||||
Section 8.1 | Defaults | J-63 | ||||
Section 8.2 | Waiver of Notices | J-65 | ||||
ARTICLE IX THE AGENTS AND THE OTHER REPRESENTATIVES | J-65 | |||||
Section 9.1 | Appointment | J-65 | ||||
Section 9.2 | Delegation of Duties | J-65 | ||||
Section 9.3 | Exculpatory Provisions | J-66 | ||||
Section 9.4 | Reliance by the Administrative Agent | J-66 | ||||
Section 9.5 | Notice of Default | J-67 | ||||
Section 9.6 | Acknowledgements and Representations by Lenders | J-67 | ||||
Section 9.7 | Indemnification | J-67 | ||||
Section 9.8 | The Administrative Agent and Other Representatives in Their Individual Capacity | J-68 | ||||
Section 9.9 | Collateral Matters | J-68 | ||||
Section 9.10 | Successor Agent | J-69 | ||||
Section 9.11 | Other Representatives | J-69 | ||||
Section 9.12 | Withholding Tax | J-69 |
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ARTICLE X MISCELLANEOUS | J-69 | |||||
Section 10.1 | Amendments and Waivers | J-69 | ||||
Section 10.2 | Notices | J-71 | ||||
Section 10.3 | No Waiver; Cumulative Remedies | J-72 | ||||
Section 10.4 | Survival of Representations and Warranties | J-72 | ||||
Section 10.5 | Payment of Expenses and Taxes | J-72 | ||||
Section 10.6 | Successors and Assigns; Participations and Assignments | J-73 | ||||
Section 10.7 | Adjustments; Set-off; Calculations; Computations | J-76 | ||||
Section 10.8 | Judgment. | J-77 | ||||
Section 10.9 | Counterparts | J-77 | ||||
Section 10.10 | Severability | J-77 | ||||
Section 10.11 | Amendment | J-77 | ||||
Section 10.12 | Integration | J-77 | ||||
Section 10.13 | GOVERNING LAW | J-78 | ||||
Section 10.14 | Submission to Jurisdiction; Waivers | J-78 | ||||
Section 10.15 | Acknowledgements | J-78 | ||||
Section 10.16 | WAIVER OF JURY TRIAL | J-78 | ||||
Section 10.17 | Confidentiality | J-78 | ||||
Section 10.18 | Additional Indebtedness | J-79 | ||||
Section 10.19 | USA Patriot Act Notice | J-79 |
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Schedule A | — | Lenders | ||
Schedule B | — | Rollover Indebtedness | ||
Schedule C | — | Unscheduled Assumed Indebtedness | ||
Schedule D | — | Existing Mortgages | ||
Schedule 3.13(b)(1) | — | Amended and Restated Mortgages | ||
Schedule 3.13(b)(2) | — | Released Mortgages | ||
Schedule 4.5 | — | Litigation | ||
Schedule 4.6 | — | Mortgaged Properties | ||
Schedule 4.7 | — | Intellectual Property Claims | ||
Schedule 4.14 | — | Subsidiaries | ||
Schedule 4.15 | — | Environmental Matters | ||
Schedule 4.18 | — | Insurance | ||
Schedule 5.1(i) | — | Title Policies | ||
Schedule 7.2(i) | — | Existing Indebtedness | ||
Schedule 7.6(j) | — | Dispositions |
EXHIBITS | ||||
Exhibit A | — | Form of Term Loan Note | ||
Exhibit B | — | Form of Guarantee and Collateral Agreement | ||
Exhibit C | — | Form of Mortgages | ||
Exhibit D | — | Form of Intercreditor Agreement | ||
Exhibit E | — | Form of U.S. Tax Compliance Certificate | ||
Exhibit F | — | Form of Assignment and Acceptance |
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Four Fiscal Quarter Period Ending | Consolidated Leverage Ratio | |
October 30, 2011 | 5.00:1.00 | |
January 29, 2012 | 4.75:1.00 | |
April 29, 2012 | 4.50:1.00 | |
July 29, 2012 | 4.25:1.00 | |
October 28, 2012 | 4.00:1.00 | |
January 27, 2013 | 3.875:1.00 | |
April 28, 2013 | 3.75:1.00 | |
July 28, 2013 | 3.625:1.00 | |
November 3, 2013 and each fiscal quarter end date thereafter | 3.50:1.00 |
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Date | Amount | |
The last day of each March, June, September and December to occur (x) on or after the first day of the second calendar quarter to commence after the Closing Date and (y) prior to the Termination Date | 0.25% of the aggregate principal amount of all outstanding Term Loans as of such date | |
Termination Date | All unpaid aggregate principal amounts of any outstanding Term Loans |
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Houston, Texas 77064
Attention: Chief Financial Officer
Facsimile: [ ]
Telephone: [ ]
Email: mejohnson@ncilp.com
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Borrower: | NCI Group Inc., Robertson-Ceco II Corporation and/or any domestic operating subsidiaries of NCI Building Systems, Inc. (the “Company”) with assets to be included in the Borrowing Base. | |
Guarantors: | The Company and each material domestic subsidiary of the Company that is not a Borrower. | |
Credit Facility: | $125MM senior secured revolving credit facility (the “Facility” or “Revolver”) with sublimits for LC issuance ($25MM) and Swingline ($10MM). | |
Accordion: | $50MM up to a Maximum Credit of $175MM. | |
Borrowing Base: | 95% of Qualified Cash (in a blocked account at a Lender or affiliate subject to control of Agent), plus | |
85% of Eligible A/R, plus | ||
Lesser of (i) 65% of Eligible Inventory or (ii) 85% of NOLV of Eligible Inventory or (iii) 130% of A/R Availability, minus Reserves. | ||
Collateral: | Generally, first priority lien on accounts, inventory and associated intangibles, and second priority lien on the assets securing the $150MM Term Loan. (Generally, Term Loan collateral will include a second priority lien on the Revolver Collateral). | |
Tenor: | Earlier of (i) 5 years or (ii) scheduled maturity of the Term Loan. | |
Financial Covenants: | Minimum Fixed Charge Coverage Ratio of 1.0:1.0, tested when excess availability falls below the greater of (i) $20,000,000, and (ii) the lesser of (a) 18% of Facility and (b) 18% of the Borrowing Base. | |
Cash Dominion: | Required when excess availability falls below the greater of (i) $20,000,000 and (ii) the lesser of (a) 18% of Facility and (b) 18% of the Borrowing Base. | |
Availability: | The Revolver will be undrawn at close other than letters of credit. | |
Pricing: | ||
Arrangement Fee: | 1.5% of allocated commitment amount. | |
Closing Fee: | 2.0% of allocated commitment amount. | |
Unused Fee: | 1.0% if usage < 50% of Facility, otherwise 0.75%. | |
Pricing Grid: | LIBOR Grid: 425 to 475bps, opening at 450bps. Base Rate Grid: 325 to 375bps, opening at 350bps. |
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By: | /s/ Andrew K. Woeber |
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![(COMPUTERSHARE LOGO)](https://capedge.com/proxy/S-4A/0000950123-09-045275/x67839a1x6783904.gif)
By Facsimile: (Eligible Institutions Only): (617)360-6810 To Confirm Facsimile: (Eligible Institutions Only): (781)575-2332 | or | By Mail: Computershare Trust Company, N.A. P.O. Box 43011 Providence, RI 02940-3011 Attn: Corporate Actions Voluntary Offer | or | By Overnight Mail: Computershare Trust Company, N.A. c/o Computershare Inc. 250 Royall Street, Suite V Canton, MA 02021 Attn: Corporate Actions Voluntary Offer | ||||
Stamford, CT 06902
Banks and Brokerage Firms, Please Call:(203) 658-9400
Call Toll-Free:(800) 607-0088
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300 Park Avenue
New York, NY 10022
Call Toll-Free:(888) 504-7336
TO THE VOTING AGENT AT THE ADDRESS SET FORTH BELOW.
By First Class Mail, Overnight Mail, or by Hand:
757 Third Avenue, 3rd Floor
New York, NY 10017
Attn: NCI Building Systems Ballot Tabulation
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Item 20. | Indemnification of Officers and Directors. |
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Item 21. | Exhibits and Financial Statement Schedules |
Exhibit | ||||
Number | Description | |||
+1 | .1 | Dealer Manager Agreement, dated as of September 9, 2009, between NCI Building Systems, Inc. and Greenhill & Co., LLC. | ||
2 | .1 | Investment Agreement, dated as of August 14, 2009, by and between NCI and Clayton, Dubilier & Rice Fund VIII, L.P. (including the Form of Certificate of Designations, Preferences and Rights of Series B Cumulative Convertible Participating preferred stock, the Form of Stockholders Agreement by and between NCI and Clayton, Dubilier & Rice Fund VIII, L.P., the Prepackaged Plan Term Sheet and the Terms and Conditions of the Offer, each as attached thereto) (filed as Exhibit 2.1 to NCI’s Current Report on Form 8-K dated August 19, 2009 and incorporated by reference herein). | ||
2 | .2 | Amendment to Investment Agreement, dated as of August 28, 2009, by and between NCI and Clayton, Dubilier & Rice Fund VIII, L.P. (filed as Exhibit 2.1 to NCI’s Current Report on Form 8-K dated August 28, 2009 and incorporated by reference herein). | ||
2 | .3 | Amendment No. 2 to Investment Agreement, dated as of August 31, 2009, by and between NCI and Clayton, Dubilier & Rice Fund VIII, L.P. (including the amended Form of Certificate of Designations, Preferences and Rights of Series B Cumulative Convertible Participating preferred stock and the amended Terms and Conditions of the Offer, each as attached thereto) (filed as Exhibit 2.1 to NCI’s Current Report on Form 8-K dated September 1, 2009 and incorporated by reference herein). | ||
2 | .4 | Lock-Up and Voting Agreement, dated as of August 31, 2009, by and among the Persons executing the Agreement as “Consenting Noteholders,” the Persons executing the Agreement as “Consenting Lenders” and the Company (filed as Exhibit 2.2 to the Company’s Current Report onForm 8-K dated September 1, 2009 and incorporated by reference herein). | ||
3 | .1 | Restated Certificate of Incorporation, as amended through September 30, 1998 (filed as Exhibit 3.1 to NCI’s Annual Report on Form 10-K for the fiscal year ended November 2, 2002 and incorporated by reference herein). | ||
3 | .2 | Certificate of Amendment to Restated Certificate of Incorporation, effective as of March 12, 2007 (filed as Exhibit 3.2 to NCI’s Quarter Report on Form 10-Q for the quarter ended April 29, 2007 and incorporated by reference herein). | ||
3 | .3 | Amended and Restated By-Laws, effective as of December 11, 2008 (filed as Exhibit 3.1 to NCI’s Current Report on Form 8-K dated December 11, 2008 and incorporated by reference herein). | ||
4 | .1 | Form of Certificate representing NCI’s Common Stock (filed as Exhibit 1 to NCI’s registration statement on Form 8-A filed with the SEC on July 20, 1998 and incorporated by reference herein). |
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Exhibit | ||||
Number | Description | |||
4 | .2 | Credit Agreement, dated June 18, 2004, by and among NCI, certain of its subsidiaries, as guarantors, Wachovia Bank, National Association, as administrative agent, Bank of America, N.A., as syndication agent, and the several lenders named therein (filed as Exhibit 4.1 to NCI’sForm 10-Q/A, filed with the SEC on September 16, 2004, amending its quarterly report on Form 10-Q for the quarter ended July 31, 2004 and incorporated by reference herein). | ||
4 | .3 | First Amendment to Credit Agreement, dated as of November 9, 2004, between NCI Building Systems, Inc., as borrower, certain of its subsidiaries, as guarantors, Wachovia National Bank, National Association, as administrative agent and lender, and the several lenders named therein (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated November 16, 2004 and incorporated by reference herein). | ||
4 | .4 | Second Amendment to Credit Agreement, dated as of October 14, 2005, between NCI Building Systems, Inc., as borrower, certain of its subsidiaries, as guarantors, Wachovia National Bank, National Association, as administrative agent and lender, and the several lenders named therein (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated October 14, 2005 and incorporated by reference herein). | ||
4 | .5 | Third Amendment, dated April 7, 2006, to Credit Agreement, dated June 18, 2004, by and among NCI Building Systems, Inc. as borrower, certain of its subsidiaries, as guarantors, Wachovia Bank, National Association, as administrative agent and lender, and the several lenders parties thereto (filed as Exhibit 10.2 to NCI’s Current Report on Form 8-K dated April 7, 2006 and incorporated by reference herein). | ||
4 | .6 | Indenture, dated November 16, 2004, by and among NCI and The Bank of New York (filed as Exhibit 4.1 to NCI’s Current Report on Form 8-K dated November 16, 2004 and incorporated by reference herein). | ||
*5 | .1 | Opinion of Todd R. Moore, Esq. regarding legality of issuance of common stock. | ||
+8 | .1 | Form of Opinion of Wachtell, Lipton, Rosen & Katz. regarding certain tax matters. | ||
†10 | .1 | Employment Agreement, dated April 12, 2004, among the Company, NCI Group, L.P. and Norman C. Chambers (filed as Exhibit 10.1 to NCI’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2004 and incorporated by reference herein). | ||
†10 | .2 | Amended and Restated Bonus Program, as amended and restated as of September 4, 2008 (filed as Exhibit 10.2 to NCI’s Annual Report on Form 10-K for the fiscal year ended November 2, 2008 and incorporated by reference herein). | ||
†10 | .3 | Stock Option Plan, as amended and restated on December 14, 2000 (filed as Exhibit 10.4 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein). | ||
†10 | .4 | Form of Nonqualified Stock Option Agreement (filed as Exhibit 10.5 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein). | ||
†10 | .5 | 2003 Long-Term Stock Incentive Plan, as amended and restated December 7, 2006 (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated December 7, 2006 and incorporated by reference herein). | ||
†10 | .6 | Form of Nonqualified Stock Option Agreement (filed as Exhibit 4.2 to NCI’s registration statement no. 333-111139 and incorporated by reference herein). | ||
†10 | .7 | Form of Incentive Stock Option Agreement (filed as Exhibit 4.3 to NCI’s registration statementno. 333-111139 and incorporated by reference herein). | ||
†10 | .8 | Form of Restricted Stock Award Agreement for Senior Executive Officers (Electronic) (filed as Exhibit 10.2 to NCI’s Current Report on Form 8-K dated December 7, 2006 and incorporated by reference herein). | ||
†10 | .9 | Form of Restricted Stock Award Agreement for Key Employees (filed as Exhibit 10.3 to NCI’s Current Report on Form 8-K dated December 7, 2006 and incorporated by reference herein). | ||
†10 | .10 | Form of Restricted Stock Unit Agreement (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated December 7, 2006 and incorporated by reference herein). | ||
†10 | .11 | Form of Restricted Stock Award Agreement for Non-Employee Directors (filed as Exhibit 10.4 to NCI’s Current Report on Form 8-K dated October 23, 2006 and incorporated by reference herein). |
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Exhibit | ||||
Number | Description | |||
†10 | .12 | Amended and Restated Supplemental Benefit Plan as amended and restated on December 12, 2002 (filed as Exhibit 10.8 to NCI’s Annual Report on Form 10-K for the fiscal year ended November 2, 2002 and incorporated by reference herein). | ||
†10 | .13 | Supplemental Benefit Agreement, dated December 13, 2002, between NCI and A.R. Ginn, Jr. (filed as Exhibit 10.9 to NCI’s Annual Report on Form 10-K for the fiscal year ended November 2, 2002 and incorporated by reference herein). | ||
†10 | .14 | Agreement, dated October 24, 2006, between NCI and Albert R. Ginn, Jr. (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated October 23, 2006 and incorporated by reference herein). | ||
†10 | .15 | Supplemental Benefit Agreement, dated August 26, 2004, between NCI and Ken Maddox (filed as Exhibit 10.14 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 29, 2005 and incorporated by reference herein). | ||
†10 | .16 | Special Long-Term Restricted Stock Award Agreement, dated August 28, 2003, between NCI and Kelly R. Ginn (filed as Exhibit 10.21 to NCI’s Annual Report on Form 10-K for the fiscal year ended November 1, 2003 and incorporated by reference herein). | ||
†10 | .17 | First Amendment, dated May 27, 2004, to Special Long-Term Restricted Stock Award Agreement, dated August 28, 2003, between NCI and Kelly R. Ginn (filed as Exhibit 10.1 to NCI’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2005 and incorporated by reference herein). | ||
†10 | .18 | Second Amendment, dated October 24, 2005, to Special Long-Term Restricted Stock Award Agreement, dated August 28, 2003, between NCI and Kelly R. Ginn (filed as Exhibit 10.17 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 29, 2005 and incorporated by reference herein). | ||
†10 | .19 | Special Long-Term Restricted Stock Award Agreement, dated May 28, 2004, between NCI and A.R. Ginn (filed as Exhibit 10.15 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 30, 2004 and incorporated by reference herein). | ||
†10 | .20 | First Amendment, dated October 24, 2005, to Special Long-Term Restricted Stock Award Agreement, dated May 28, 2004, between NCI and A.R. Ginn (filed as Exhibit 10.19 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 29, 2005 and incorporated by reference herein). | ||
†10 | .21 | Restricted Stock Agreement, dated April 26, 2004, between NCI and Norman C. Chambers (filed as Exhibit 10.2 to NCI’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2004 and incorporated by reference herein). | ||
†10 | .22 | First Amendment, dated October 24, 2005, to Restricted Stock Agreement, dated April 26, 2004, between NCI and Norman C. Chambers (filed as Exhibit 10.21 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 29, 2005 and incorporated by reference herein). | ||
†10 | .23 | Amended and Restated NCI Building Systems, Inc. Deferred Compensation Plan (as amended and restated effective January 1, 2007) (filed as Exhibit 10.23 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 29, 2006 and incorporated by reference herein). | ||
†10 | .24 | Form of Employment Agreement between NCI and executive officers (filed as Exhibit 10.25 to NCI’s Annual Report on Form 10-K for the fiscal year ended October 28, 2007 and incorporated by reference herein). | ||
†10 | .25 | Separation and Consulting Agreement, dated February 4, 2008, between NCI and Kenneth W. Maddox (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated January 31, 2008 and incorporated by reference herein). | ||
†10 | .26 | Agreement, dated March 27, 2008, between NCI and Frances P. Hawes (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated March 27, 2008 and incorporated by reference herein). | ||
†10 | .27 | Agreement, dated March 27, 2008, between NCI and Kelly R. Ginn (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated March 27, 2008 and incorporated by reference herein). | ||
†10 | .28 | Form of Indemnification Agreement for Officers and Directors (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated October 20, 2008 and incorporated by reference herein). | ||
10 | .29 | Consent and Waiver, dated as of May 20, 2009, by and among NCI, certain of its domestic subsidiaries party thereto and Wachovia Bank, National Association, as administrative agent for the lenders named in NCI’s Credit Agreement (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated May 20, 2009 and incorporated by reference herein). |
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Exhibit | ||||
Number | Description | |||
10 | .30 | Waiver, dated as of July 15, 2009, by and among NCI, certain of its domestic subsidiaries party thereto and Wachovia Bank, National Association, as administrative agent for the lenders named in NCI’s Credit Agreement (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated July 15, 2009 and incorporated by reference herein). | ||
10 | .31 | Waiver, dated as of August 21, 2009, by and among NCI, certain of its domestic subsidiaries party thereto and Wachovia Bank, National Association, as administrative agent for the lenders named in NCI’s Credit Agreement (filed as Exhibit 10.1 to NCI’s Current Report on Form 8-K dated August 27, 2009 and incorporated by reference herein). | ||
*†10 | .32 | Form of Amendment Agreement, dated August 14, 2009, amending employment agreements with ten executive officers and restricted stock award agreements with three executive officers. | ||
*12 | .1 | Computation of Ratios of Earnings to Fixed Charges. | ||
21 | .1 | List of Subsidiaries (filed as Exhibit 21.1 to NCI’s Annual Report on Form 10-K for the fiscal year ended November 3, 2008 and incorporated by reference herein). | ||
+23 | .1 | Consent of Independent Registered Public Accounting Firm. | ||
*23 | .2 | Consent of Todd. R. Moore, Esq, (included as part of the opinion attached hereto as Exhibit 5.1). | ||
+23 | .3 | Consent of Wachtell, Lipton, Rosen & Katz (included as part of the opinion attached hereto as Exhibit 8.1). | ||
*23 | .4 | Consent of Greenhill & Co. LLC. | ||
*24 | .1 | Powers of Attorney. | ||
*99 | .1 | Form of Letter of Transmittal. | ||
*99 | .2 | Form of Ballots. | ||
*99 | .3 | Special Issuance Instructions and Form for Restricted Shares for Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. | ||
*99 | .4 | Letter to Holders of Convertible Notes. |
* | Previously filed |
+ | Filed herewith |
† | Management contracts or compensatory plans or arrangements |
Item 22. | Undertakings |
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By: | /s/ Norman C. Chambers |
Title: | Chairman of the Board of Directors, President and Chief Executive Officer |
Signature | Name and Title | Date | ||||
/s/ Norman C. Chambers Norman C. Chambers | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | September 23, 2009 | ||||
/s/ Mark E. Johnson Mark E. Johnson | Executive Vice President—Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | September 23, 2009 | ||||
/s/ William D. Breedlove* William D. Breedlove | Director | September 23, 2009 | ||||
/s/ Philip J. Hawk* Philip J. Hawk | Director | September 23, 2009 | ||||
/s/ Larry D. Edwards* Larry D. Edwards | Director | September 23, 2009 | ||||
/s/ Ed L. Phipps* Ed L. Phipps | Director | September 23, 2009 | ||||
/s/ W. Bernard Pieper* W. Bernard Pieper | Director | September 23, 2009 | ||||
/s/ John K. Sterling* John K. Sterling | Director | September 23, 2009 | ||||
/s/ Gary L. Forbes* Gary L. Forbes | Director | September 23, 2009 |
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Signature | Name and Title | Date | ||||
/s/ Max L. Lukens* Max L. Lukens | Director | September 23, 2009 | ||||
/s/ George Martinez* George Martinez | Director | September 23, 2009 | ||||
*By: /s/ Todd R. Moore Todd R. Moore | Attorney-in fact |
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