UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report Date (Date of earliest event reported) September 3, 1996
ITHACA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-52852 56-1385842
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification NO.)
Highway 268 West, P.O. Box 620, Wilkesboro, NC 28697
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (910) 667-5231
Item 5. Other Events.
Waiver.
On September 1, the banks (the "Bank Group") party to Ithaca's Credit
Agreement, dated as of December 1, 1992 (the "Credit Agreement"), granted an
additional default waiver through and including October 31, 1996. The Bank Group
also waived payment of three $5.7 million term loan payments due under the
Credit Agreement through and including October 31, 1996. Ithaca is currently out
of compliance with certain financial covenants in the Credit Agreement and does
not anticipate that it would be in compliance with certain of the financial
covenants in the Credit Agreement for the foreseeable future.
Also, as reported earlier, Ithaca has not paid the interest payments due on
December 15, 1995 and June 15, 1996, on its 11.125% Senior Subordinated Notes
due 2002 (the "Notes"). The waiver from Ithaca's banks provides that the failure
to make such interest payments does not constitute a default or event of default
under the Credit Agreement unless and until the indebtedness pursuant to the
Notes shall have become due prior to its stated maturity by reason of such
failure, or any holder of Notes ("Noteholder") (or the Trustee under the Note
Indenture) shall have exercised any remedy under the Note Indenture, or shall
have initiated any legal proceeding, in respect of, or relation to, such
failure. The bank waiver also provides that in order for Ithaca to make all or a
portion of the interest payments due December 15, 1995 and June 15, 1996 under
the Notes, Ithaca must have received a subordinated, unsecured loan for an equal
amount of immediately available funds pursuant to a promissory note in form and
substance reasonably satisfactory to the Agent and the Co-Agent banks under the
Credit Agreement.
Ithaca's Plan of Reorganization.
Summary of Classification and Treatment under the Plan of
Reorganization.
As described below under "- Disclosure Statement" and "- The Solicitation",
Ithaca is soliciting approval for the Plan of Reorganization, dated August 29,
1996 (the "Plan"), under chapter 11 of title 11 of the United States Code
"U.S.C. ss.101 et. seq. (the "Bankruptcy Code"), attached as Exhibit A to the
Disclosure Statement, dated August 29, 1996 (the "Disclosure Statement"). The
effect of confirmation of the Plan will be to cause, among other things, the
following to occur: (i) each $1,000 principal amount of Notes will be exchanged
for 80 shares of reorganized Ithaca common stock, which represents each Note's
proportionate share of 100% of the equity of reorganized Ithaca (subject to
dilution by equity distributed under employee incentive plans or as may be
otherwise authorized pursuant to reorganized Ithaca's charter), and Ithaca's
Certificate of Incorporation and By-laws, each as currently in effect, will be
amended and restated, (ii) the Credit Agreement will be restructured, and (iii)
all outstanding equity interests in Ithaca will be canceled. In addition, should
Ithaca commence a voluntary chapter 11 case, it intends to seek authority from
the bankruptcy court with jurisdiction over Ithaca's case (the "Bankruptcy
Court") to pay all pre-petition trade and other debt in the ordinary course of
business. Under the Plan, to the extent not previously satisfied, all general
unsecured claims against Ithaca will either be reinstated, paid in full in
accordance with their respective terms or otherwise rendered unimpaired.
Disclosure Statement.
The Disclosure Statement has not been filed with or approved by the
Bankruptcy Court. In the event Ithaca files a petition for relief under chapter
11 of the Bankruptcy Code and seeks confirmation of the Plan, the Disclosure
Statement will be submitted to the Bankruptcy Court for approval.
The Disclosure Statement, the Plan and the other appendices to the
Disclosure Statement, and the related materials delivered together therewith,
copies of which are attached as exhibits to the Disclosure Statement (unless
previously filed with the Securities and Exchange Commission) and incorporated
by reference herein, have been mailed by Ithaca to registered Noteholders, and
to all other impaired creditors known to Ithaca, pursuant to sections 1125(a)
and 1126(b) of the Bankruptcy Code, in connection with the solicitation by
Ithaca of votes to accept or reject, as the case may be, the Plan (and the
transactions contemplated thereby), as described therein.
Ithaca is not currently a debtor (or a debtor-in-possession) in a case
under chapter 11 of the Bankruptcy Code. However, in the event Ithaca receives
properly completed ballots indicating acceptance of the Plan in sufficient
number and amount to meet the voting requirements prescribed by section 1126 of
the Bankruptcy Code, Ithaca intends to file (but has expressly reserved the
right not to file) with the Bankruptcy Court a voluntary petition for
reorganization pursuant to chapter 11 of the Bankruptcy Code and to seek, as
promptly thereafter as is practicable, confirmation by the Bankruptcy Court of
the Plan pursuant to Section 1129 of the Bankruptcy Code.
For the Plan to be confirmed by the Bankruptcy Court as a consensual plan,
the holders of claims in each impaired class who cast votes in favor of the Plan
must (a) hold at least two-thirds in aggregate amount of the claims of the
holders in such class who cast votes with respect to the Plan and (b) comprise
more than one-half in number of the holders in such class who cast votes with
respect to the Plan.
Neither the Securities and Exchange Commission nor any state securities
commission or similar public, governmental or regulatory authority has passed
upon the accuracy or adequacy of the information contained in the disclosure
statement or upon the merits of the plan. Any representation to the contrary is
a criminal offense.
The Solicitation.
Pursuant to the Disclosure Statement, Ithaca is soliciting votes for the
acceptance or rejection of the Plan from holders of: (i) the Notes and (ii)
claims of the Bank Group, who hold secured claims estimated to be approximately
$101,500,000 as of August 30, 1996 (the month end immediately prior to the
anticipated date of filing of a voluntary Chapter 11 petition with the
Bankruptcy Court), under the Credit Agreement.
Ithaca has negotiated the terms of the Plan with an informal committee of
Noteholders, which recommends that all holders of Notes vote to accept the Plan.
The Company has also negotiated the treatment of the Bank Group's claims as
contained in the Plan with the steering committee formed by the Bank Group.
Ithaca expects the members of the Bank Group to vote in favor of the Plan,
although Ithaca has been informed that such parties may not vote until an
agreement has been reached regarding the New Ithaca Bank Group Documents (as
defined in the Plan). Ithaca believes that such agreement can and will be
completed expeditiously and, therefore, does not believe there will be any
significant delay in obtaining the vote of the members of the Bank Group. In
addition, the sole shareholder of Ithaca, Ithaca Holdings, Inc., also supports
the Plan.
Although the solicitation relates to a voluntary petition for
reorganization of Ithaca under chapter 11 of the Bankruptcy Code, no such filing
has been made or is intended to be made by Ithaca unless and until (i) holders
of claims in each impaired class who cast votes in favor of the Plan (a) hold at
least two-thirds in amount of the claims of the holders in such class who cast
votes with respect to the Plan and (b) comprise more than one-half in number of
the holders in such class who cast votes with respect to the Plan, or (ii)
Ithaca otherwise determines that such filing is necessary to protect Ithaca's
property and/or interests. Ithaca anticipates that by conducting the
solicitation in advance of the commencement of a chapter 11 case, the duration
of the bankruptcy proceeding will be significantly shortened, and the
administration of such proceeding will be simplified and less costly.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Description
2.1 Disclosure Statement dated August 29, 1996
(including Plan of Reorganization dated August 29,
1996, attached as Exhibit A thereto)
10.1 Waiver dated as of September 1, 1996, among Ithaca
Holdings, Inc., Ithaca Industries, Inc., Canadian
Imperial and Kleinwort Benson Limited, as
Co-Agents, and Bankers Trust Company, as Agent
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ITHACA INDUSTRIES, INC.
Date: September 3, 1996 By: /s/ Eric N. Hoyle
-----------------------
Eric N. Hoyle
Senior Vice President - Finance
and Administration Chief Financial
and Accounting Officer
EXHIBIT INDEX
Exhibit No. Description
2.1 Disclosure Statement dated August 29, 1996 (including Plan
of Reorganization dated August 29, 1996, attached as Exhibit
A thereto)
10.1 Waiver dated as of September 1, 1996, among Ithaca Holdings,
Inc., Ithaca Industries, Inc., Canadian Imperial and
Kleinwort Benson Limited, as Co-Agents, and Bankers Trust
Company, as Agent