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 Act of 1934
Date of Report (Date of earliest event reported) September 11, 1998 (August 26,
1998)
NOXSO CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 000-17454 54-1118334
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
2414 Lytle Road
Bethel Park, PA 15102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 854-1200
Item 3. Bankruptcy and Reorganization.
Confirmation of First Amended Plan of Reorganization
At a hearing on August 26, 1998, the United States Bankruptcy Court for
the Eastern District of Tennessee (the "Bankruptcy Court") confirmed the First
Amended Plan of Reorganization (as modified, the "Plan") of NOXSO Corporation
("NOXSO"). The Bankruptcy Court entered its Order confirming the Plan on
September 2, 1998. The confirmation of the Plan represents a major step in
NOXSO's efforts to reorganize under Chapter 11 of the U.S.
Bankruptcy Code.
Pursuant to the Plan, the remaining principal elements of NOXSO's efforts
to emerge from bankruptcy are (1) to raise $15-18 million in additional equity
financing to construct a commercial-size demonstration of the NOXSO Process, and
(2) to obtain the consent of the U.S. Department of Energy ("DOE") to utilize
DOE cost-sharing funds at the new demonstration project. These elements are
conditions precedent to NOXSO's ability to consummate the Plan and make the
distributions to creditors and shareholders contemplated by the Plan. Other
conditions precedent to the consummation of the Plan include the approval by the
Bankruptcy Court of any host site agreement for a demonstration project that
NOXSO may enter into and the receipt of certain funds from the DOE for prior
projects, as set forth below. The Plan contemplates that the Debtor will
continue its business operations following confirmation and consummation of the
Plan.
Pursuant to a cooperative agreement between DOE and NOXSO (the "Cooperative
Agreement"), the DOE agreed to provide one-half of the allowable cost of
previous NOXSO projects in Indiana and Tennessee. To date, NOXSO has submitted
invoices totaling $2,376,695, which remain unpaid. NOXSO will be submitting
additional invoices to the DOE for its share of costs incurred prior to the date
of consummation of the Plan. Those additional invoices are expected to total
approximately $1,760,000. (Together, the invoices already submitted and those to
be submitted will be referred to as the "DOE Invoices").
If the Plan is not consummated, the DOE position is that none of the DOE
Invoices are payable based on a Cooperative Agreement provision which caps the
DOE liability. Similarly, NOXSO reserves the right to take the position that the
DOE Invoices are payable whether or not the Plan is consummated.
The totals in the DOE Invoices include legal fees and expenses totaling
approximately $650,000. NOXSO and DOE are engaged in discussions concerning
whether all or a portion of those legal fees and expenses are an appropriate
component of the DOE Cost Share. Depending upon the outcome of those
discussions, it is anticipated that, as part of the Amendment to the Cooperative
Agreement, the DOE will pay the DOE Invoices in an amount ranging between
approximately $3,500,000 and $4,150,000. The funds received from the DOE
pursuant to the DOE Invoices constitute the Available Cash and will be all that
is needed to effect the funding necessary to carry out the provisions of the
Plan.
Depending upon the outcome of NOXSO's objections to several claims and upon
satisfaction of certain conditions, the range of allowed general unsecured
claims will be between approximately $2,600,000 and $3,100,000. If funds are
received from DOE as described above, after payment of secured and priority
claims, approximately $3,100,000 of Available Cash will remain for payment of
allowed general unsecured claims.
The DOE has filed a proof of claim for an amount in excess of $15,000,000.
If NOXSO obtains the necessary third party funding for the demonstration project
and the DOE agrees to the Amendment to the Cooperative Agreement, it is expected
that (i) DOE will agree to a repayment agreement which would allow DOE to waive
its claim as a general unsecured claim and to provide for repayment of the DOE
Cost Share out of future revenues, and (ii) DOE will provide the Available Cash
for the implementation of the Plan.
NOXSO is attempting to obtain new equity funding (the "New Equity Funding")
on the best available terms in exchange for equity in Reorganized NOXSO.
Currently, there are approximately 4,500 holders of NOXSO Common Stock, which
hold approximately 15,400,000 shares of NOXSO Common Stock. It cannot be
determined how much equity will be available for current NOXSO shareholders (the
"Remaining Equity") after the New Equity Funding is obtained. Under the Plan,
NOXSO Common Stock will be extinguished and shareholders will receive their
Pro-rata Share of the Remaining Equity, if any. "Pro-rata Share" means the ratio
of (i) the number of shares of NOXSO Common Stock held by a specific shareholder
to (ii) the total number of shares of outstanding NOXSO Common Stock.
Holders ("Option Holders") of options and warrants of NOXSO ("Existing
Options") will receive options to purchase shares in the Reorganized NOXSO (the
"New Options") on the following basis:
(a) the number of shares subject to the Existing Options held by each
specific Option Holder will be reduced by the same percentage that the
shareholders' interests in Reorganized NOXSO are reduced as a result
of the New Equity Funding.
(b) the exercise price for each New Option will be the same as the
exercise price for the Existing Options, subject to an increase or
decrease in the exercise price to reflect the value of shares of
Reorganized NOXSO on the Distribution Date as a result of the New
Equity Funding (the "New Exercise Price") compared to the average
value of the individual shares of NOXSO computed by averaging the
closing price for NOXSO Common Shares for the six (6) month period
immediately preceding the Confirmation Date (the "Current Price").
Item 7. Financial Statements and Exhibits.
(c) Exhibits
2.1 First Amended Plan of Reorganization of NOXSO Corporation, as modified.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NOXSO CORPORATION
/s/ Edwin J. Kilpela
---------------------------
Edwin J. Kilpela
President
Date: September 11, 1998
Bethel Park, Pennsylvania