SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 1995
SILGAN HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-28409 06-1269834
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State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
4 Landmark Square, Stamford, Connecticut 06901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 975-7110
Item 2: Acquisition or Disposition of Assets.
On August 1, 1995 (the "Closing Date"), pursuant to the Asset
Purchase Agreement (the "Purchase Agreement"), dated as of June 2, 1995, between
American National Can Company, a Delaware corporation ("ANC"), and Silgan
Containers Corporation ("Containers"), a Delaware corporation and an indirect
wholly owned subsidiary of Silgan Holdings Inc. ("Holdings"), a Delaware
corporation, Containers acquired from ANC substantially all of the assets of
ANC's Food Metal and Specialty business (the "Business"). Pursuant to the
Purchase Agreement, Containers acquired (i) substantially all of the assets of
the Business (other than the fixed assets of the Business located in California
and Washington and other than certain fixed assets of the Business located at
ANC's St. Louis, Missouri facility (the "St. Louis Assets")) (such assets so
acquired being herein called the "ANC Assets") and (ii) all of the issued and
outstanding capital stock (the "Shares") of SCCW Can Corporation ("SCCW Can"), a
California corporation and the owner of substantially all of the fixed assets of
the Business located in California and Washington (the "SCCW Assets," together
with the ANC Assets, the "Acquired Assets"). The Acquired Assets included (i)
real property located in Hoopeston, Illinois, Evansville, Indiana, Coloma,
Michigan, Savage, Minnesota, St. Paul, Minnesota and Edison, New Jersey, (ii)
substantially all of the machinery and equipment used by the Business, and (iii)
substantially all of the inventories and receivables of the Business.
Additionally, pursuant to the Purchase Agreement, Containers assumed specified
limited liabilities of ANC relating to the Business. Under the Purchase
Agreement, Containers may acquire the St. Louis Assets at a later date, all as
provided in the Purchase Agreement.
On the Closing Date, pursuant to the Purchase Agreement, in
consideration for the ANC Assets and the Shares and the assumption by Containers
of certain specified limited liabilities of the Business, Containers paid to ANC
an aggregate purchase price (the "Purchase Price") of $336,298,000, which amount
included $157,698,000 for the net working capital of the Business. The Purchase
Price is subject to adjustment as provided in the Purchase Agreement. The
Purchase Price was paid in cash and was determined as a result of an arm's
length negotiation between unrelated parties.
The Acquired Assets were used by ANC to design, develop,
manufacture, market and sell metal and rigid plastic food containers and metal
caps and closures. Containers intends to continue such use of the Acquired
Assets.
On the Closing Date, to finance the acquisition of the ANC
Assets and the Shares, Silgan Corporation ("Silgan"), a Delaware corporation and
a wholly owned subsidiary of Holdings, Containers, a wholly owned subsidiary of
Silgan, and Silgan Plastics Corporation ("Plastics," and, together with Silgan
and Containers, the "Borrowers"), a Delaware corporation and wholly
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owned subsidiary of Silgan, entered into a $675 million credit facility pursuant
to a Credit Agreement, dated as of August 1, 1995 (the "Credit Agreement") with
the lenders from time to time party thereto (the "Banks"), Bankers Trust Company
("Bankers Trust"), as Administrative Agent and as a Co-Arranger, and Bank of
America Illinois ("Bank of America"), as Documentation Agent and as a
Co-Arranger. Containers used funds borrowed under the Credit Agreement to
finance in full the Purchase Price for its acquisition from ANC of the Acquired
Assets.
Item 5: Other Events.
Description of the Credit Agreement
On August 1, 1995, Silgan, Containers and Plastics entered
into the Credit Agreement with the Banks, Bankers Trust, as Administrative Agent
and as a Co-Arranger, and Bank of America, as Documentation Agent and as a
Co-Arranger, to (i) refinance and repay in full all amounts owing under their
previous Credit Agreement, dated as of December 21, 1993 (the "Previous Credit
Agreement"), among the Borrowers, various lenders party thereto, Bank of America
National Trust and Savings Association, as Co-Agent, and Bankers Trust, as
Agent, and (ii) finance the acquisition by Containers from ANC of the Acquired
Assets. Additionally, Silgan will use funds borrowed under the Credit Agreement
to (i) prepay in full its $50,000,000 Senior Secured Floating Rate Notes due
1997 (the "Secured Notes") by August 31, 1995, all as provided in the Credit
Agreement, and (ii) pay dividends to Holdings in an amount not to exceed
$75,000,000, which dividends may be paid by Silgan to Holdings at any time
through June 30, 1996 and are to be used by Holdings to repurchase its 13-1/4%
Senior Discount Debentures due 2002 (the "Debentures"). With such dividends
received from Silgan, Holdings intends to complete its repurchase of up to
$75,000,000 of its Debentures no later than June 30, 1996. The following is a
summary of the terms of the Credit Agreement and is qualified in its entirety by
reference to the Credit Agreement, a copy of which is filed herewith.
The Available Credit Facility. Pursuant to the Credit
Agreement, the Banks loaned to Silgan (i) $175,000,000 of term loans designated
as "A Term Loans" and (ii) $225,000,000 of term loans designated as "B Term
Loans", (the A Term Loans and the B Term Loans being herein collectively
referred to as the "Term Loans"), and agreed to lend (i) to Silgan $50,000,000
of additional A Term Loans to be used by Silgan to prepay in full its Secured
Notes and (ii) to Containers or Plastics up to an aggregate of $225,000,000 of
revolving loans (the "Revolving Loans"). As part of the Revolving Loans, Bankers
Trust agreed to lend to Containers or Plastics up to an aggregate of $10,000,000
of revolving loans (the "Swingline Loans") and to issue to Containers or
Plastics for the account of Containers or Plastics up to an aggregate of
$20,000,000 of letters of credit, such
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Swingline Loans and letters of credit outstanding being deducted from the amount
of Revolving Loans available to be borrowed by Containers or Plastics.
The aggregate amount of Revolving Loans which may be
outstanding at any time is subject to a borrowing base limitation of the sum of
(i) 85% of eligible accounts receivable of Containers and its subsidiaries and
Plastics and (ii) 50% of eligible inventory of Containers and its subsidiaries
and Plastics.
Each of the Term Loans and each of the Revolving Loans, at the
respective Borrower's election, consists of loans designated as Eurodollar rate
loans or as Base Rate (as defined in the Credit Agreement) loans. Subject to
certain conditions, each of the Term Loans and each of the Revolving Loans can
be converted from a Base Rate loan into a Eurodollar rate loan and vice versa.
As of the Closing Date, the outstanding principal amounts of A
Term Loans, B Term Loans and the Revolving Loans under the Credit Agreement were
$175 million, $225 million and $112.8 million, respectively.
Security and Guarantees. To secure the obligations of the
Borrowers under the Credit Agreement: (i) Silgan pledged to the Banks all of the
capital stock of Containers and Plastics held by Silgan; (ii) Plastics pledged
to the Banks 65% of the capital stock of 827599 Ontario Inc. ("Canadian Holdco")
held by Plastics; (iii) Containers pledged to the Banks all of the capital stock
of SCCW Can held by Containers; (iv) Containers pledged to the Banks all of the
capital stock of California- Washington Can Corporation ("C-W Can"), a
California corporation and a wholly-owned subsidiary of Containers, held by
Containers; (iv) Silgan, Containers, Plastics, C-W Can and SCCW Can each granted
to the Banks security interests in substantially all of their respective real
and personal property; and (v) Holdings pledged to the Banks all of the capital
stock of Silgan held by Holdings. Such collateral (other than the collateral
described in (v)) also secures on an equal and ratable basis the Secured Notes,
subject to intercreditor arrangements, until the Secured Notes are repaid in
full.
Holdings, each of the Borrowers, C-W Can and SCCW Can have
guaranteed on a secured basis all of the obligations of the Borrowers under the
Credit Agreement.
Payment of Loans. Generally, the Revolving Loans can be
borrowed, repaid and reborrowed from time to time until December 31, 2000, on
which date all Revolving Loans mature and are payable in full. Amounts repaid
under the Term Loans cannot be reborrowed.
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The A Term Loans mature on December 31, 2000 and are payable
in installments as follows:
A Term Loan
Installment Repayment Date Principal Amount
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December 31, 1995...................................... $ 5,000,000
December 31, 1996...................................... 25,000,000
December 31, 1997...................................... 35,000,000
December 31, 1998...................................... 50,000,000
December 31, 1999...................................... 50,000,000
December 31, 2000...................................... 60,000,000
The B Term Loans mature on March 15, 2002 and are payable in
installments as follows:
B Term Loan
Installment Repayment Date Principal Amount
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December 31, 1995...................................... $ 2,250,000
December 31, 1996...................................... 2,250,000
December 31, 1997...................................... 2,250,000
December 31, 1998...................................... 2,250,000
December 31, 1999...................................... 2,250,000
December 31, 2000...................................... 42,500,000
December 31, 2001...................................... 100,000,000
March 15, 2002......... ............................... 71,250,000
Under the Credit Agreement, Silgan is required to repay the Terms
Loans (pro rata for each tranche of Term Loans) in an amount equal to 50% of
Silgan's Excess Cash Flow (as defined in the Credit Agreement) in any fiscal
year during the Credit Agreement (beginning with the 1996 fiscal year).
Additionally, Silgan is required to repay the Term Loans (pro rata for each
tranche of Term Loans) in an amount equal to 80% of the net sale proceeds
received from certain asset sales (increasing to 100% of such net sale proceeds
under certain circumstances as described in the Credit Agreement) and 100% of
the net equity proceeds received from certain sales of equity (subject to
certain exceptions permitting Silgan and/or Holdings to use net equity proceeds
to repay certain of their other indebtedness or to repurchase certain
outstanding capital stock of Holdings, and decreasing to 50% of net equity
proceeds received after the occurrence of certain events as described in the
Credit Agreement, all as provided in the Credit Agreement.
Interest and Fees. Interest on the Term Loans and the Revolving
Loans is payable at certain margins over certain rates as summarized below.
Interest on Term Loans maintained as Base Rate loans accrues at
floating rates of 1.5% less the then applicable Interest Reduction Discount (as
defined below) (in the case of A
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Term Loans) and 2% (in the case of B Term Loans) over the Base Rate. Interest on
Term Loans maintained as Eurodollar rate loans accrues at floating rates of 2.5%
less the then applicable Interest Reduction Discount (in the case of A Term
Loans) and 3% (in the case of B Term Loans) over a formula rate (the "Eurodollar
Rate") determined with reference to the rate offered by Bankers Trust for dollar
deposits in the New York interbank Eurodollar market. Interest on Revolving
Loans maintained as (i) Base Rate loans accrues at floating rates of 1.5%, less
the then applicable Interest Reduction Discount, plus the Base Rate or (ii)
Eurodollar Rate loans accrues at floating rates of 2.5%, less the then
applicable Interest Reduction Discount, plus the Eurodollar Rate.
Under the Credit Agreement, Silgan agreed to pay to the Banks, on a
quarterly basis, a commitment commission calculated as 1/2 of 1% per annum on
the daily average term loan commitment of the Banks until such commitment is
terminated. Each of Containers and Plastics has agreed to jointly and severally
pay to the Banks, on a quarterly basis, a commitment commission calculated as
1/2 of 1% (decreasing to 3/8 of 1% under certain circumstances, as set forth in
the Credit Agreement) per annum on the daily average unused portion of the
Banks' revolving commitment in respect of the Revolving Loans until such
revolving commitment is terminated. Additionally, Containers and Plastics are
required to pay to the Banks, on a quarterly basis in arrears, a letter of
credit fee at a rate per annum of 2.5% less the then applicable Interest
Reduction Amount, and to pay to Bankers Trust a facing fee of 1/4 of 1% per
annum, each on the average daily stated amount of each letter of credit issued
for the account of Containers or Plastics, respectively.
Certain Covenants. The Credit Agreement contains numerous financial
and operating covenants, under which Silgan and its subsidiaries must operate.
Failure to comply with any of such covenants permits the Banks to accelerate,
subject to the terms of the Credit Agreement, the maturity of all amounts
outstanding under the Credit Agreement.
The Credit Agreement restricts or limits each of the Borrowers' and
their respective subsidiaries' abilities: (i) to create certain liens; (ii) to
consolidate, merge or sell its assets and to purchase assets, except that
Holdings and Silgan may merge under certain limited circumstances and Silgan and
its subsidiaries may make certain purchases of assets and/or stock, all as
provided in the Credit Agreement; (iii) to pay dividends on, or repurchase
shares of, its capital stock, except that, among other things: (a) Silgan may
pay dividends to Holdings under certain circumstances, including (1) dividends
in amounts to allow Holdings to pay interest due on its Debentures, (2)
dividends of up to $75,000,000, provided that such dividends are paid to
Holdings on or prior to June 30, 1996 and are used by Holdings to repurchase its
Debentures, (3) dividends with the proceeds from Retained Excess Cash Flow (as
defined in the Credit
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Agreement), Refinancing Indebtedness (as defined below) issued by Silgan, or any
registered public equity offering by Silgan, provided that such dividends are
used by Holdings to repurchase, redeem or repay its Debentures or any
Refinancing Indebtedness issued by Holdings, (4) dividends under certain
circumstances as provided in the Credit Agreement to enable Holdings to
repurchase certain of its outstanding capital stock, and (5) dividends in
amounts and at the times as provided in the Credit Agreement after the
consummation of a registered public equity offering by Holdings; (b) Containers
and Plastics may pay dividends to Silgan as long as they remain wholly owned
subsidiaries of Silgan, Canadian Holdco may pay dividends to Plastics, and
Express Plastic Containers Limited ("Express") may pay dividends to Canadian
Holdco; (c) Containers and Plastics may repurchase or redeem its respective
stock options (or common stock issuable upon exercise thereof) or SARs issued to
its management under certain circumstances; and (d) Silgan may pay dividends to
the holders of its common stock in amounts and at the times as provided in the
Credit Agreement after the consummation of a registered public equity offering
by Silgan; (iv) to lease real and personal property; (v) to create additional
indebtedness, except for, among other things: (a) certain indebtedness existing
on the date of the Credit Agreement (including Silgan's indebtedness represented
by the Secured Notes, the 11-3/4% Senior Subordinated Notes due 2002 (the
"11-3/4% Notes") and by intercompany notes); (b) indebtedness of Containers to
Plastics or Plastics to Containers; (c) unsecured subordinated indebtedness of
Silgan, the proceeds of which are used to refinance, repay or redeem Silgan's
11-3/4% Notes; and (d) under certain limited circumstances, unsecured
subordinated indebtedness of Silgan, the proceeds of which are used by Silgan to
pay a dividend to Holdings, which dividend is then used by Holdings to
refinance, redeem or repay its Debentures or any Refinancing Indebtedness of
Holdings; (vi) to make certain advances, investments and loans, except for,
among other things: (a) loans from Silgan to each of Containers and Plastics
represented by intercompany notes; (b) loans from Containers to Plastics or from
Plastics to Containers; (c) loans from Containers and/or Plastics to Silgan not
exceeding $25 million in aggregate principal amount outstanding at any time; and
(d) certain limited acquisitions and investments as provided in the Credit
Agreement; (vii) to enter into transactions with affiliates; (viii) to make
certain capital expenditures, except for, among other things, capital
expenditures which do not exceed in the aggregate for the Borrowers $50 million
for the calendar year ended December 31, 1995 and $65 million for each calendar
year thereafter during the term of the Credit Agreement; provided, however, that
to the extent capital expenditures made during any period are less than the
amounts that are permitted to be made during such period, such amount may be
carried forward and utilized to make capital expenditures in the immediately
succeeding calendar year (except that no more than $10,000,000 of capital
expenditures can be carried forward from 1995 to 1996), with any such amount
being deemed utilized first in such
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succeeding calendar year; (ix) except as otherwise permitted under the Credit
Agreement, to make any voluntary payments, prepayments, acquire for value,
redeem or exchange, among other things, any 11-3/4% Notes, any of the
Debentures, or any Refinancing Indebtedness, or to make certain amendments to
the 11-3/4% Notes, the Borrowers' or their respective subsidiaries' respective
certificates of incorporation and by-laws, or to certain other agreements; (x)
with certain exceptions, to have any subsidiaries other than Containers and
Plastics with respect to Silgan, C-W Can and SCCW Can with respect to
Containers, and Canadian Holdco and Express with respect to Plastics; (xi) with
certain exceptions, to permit its respective subsidiaries to issue capital
stock; (xii) to permit its respective subsidiaries to create limitations on the
ability of any such subsidiary to (a) pay dividends or make other distributions,
(b) make loans or advances, or (c) transfer assets; (xiii) to engage in any
business other than the packaging business; and (xiv) to designate indebtedness
as "Designated Senior Indebtedness" for purposes of the 11-3/4% Notes or any
Refinancing Indebtedness issued by Silgan.
The Credit Agreement requires that Silgan own not less than 90% of
the outstanding common stock of Containers and Plastics and 100% of all other
outstanding capital stock of Containers and Plastics.
The Credit Agreement requires that the ratio of Consolidated
Current Assets (as defined below) to Consolidated Current Liabilities (as
defined below) may not, at any time, be less than 1.75:1, and that the ratio of
EBITDA (as defined below) to Interest Expense (as defined below) may not be, for
any period of four consecutive fiscal quarters (beginning with the period of
four consecutive fiscal quarters ending December 31, 1995) (in each case, taken
as one accounting period) ended during a period set forth below, less than the
ratio set forth opposite such period below:
Period Ratio
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Fiscal quarter ending December 31, 1995............................. 1.65:1
Fiscal quarter ending March 31, 1996................................ 1.65:1
Fiscal quarter ending June 30, 1996................................. 1.70:1
Fiscal quarter ending September 30, 1996............................ 1.75:1
Fiscal quarter ending December 31, 1996............................. 1.80:1
Fiscal quarter ending March 31, 1997................................ 1.80:1
Fiscal quarter ending June 30, 1997................................. 1.80:1
Fiscal quarter ending September 30, 1997............................ 1.80:1
Fiscal quarter ending December 31, 1997............................. 1.90:1
Fiscal quarter ending March 31, 1998................................ 1.90:1
Fiscal quarter ending June 30, 1998................................. 1.90:1
Fiscal quarter ending September 30, 1998............................ 1.90:1
Fiscal quarter ending December 31, 1998............................. 2.00:1
Fiscal quarter ending March 31, 1999................................ 2.00:1
Fiscal quarter ending June 30, 1999................................. 2.00:1
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Fiscal quarter ending September 30, 1999............................ 2.00:1
Fiscal quarter ending December 31, 1999............................. 2.20:1
Fiscal quarter ending March 31, 2000................................ 2.20:1
Fiscal quarter ending June 30, 2000................................. 2.20:1
Fiscal quarter ending September 30, 2000............................ 2.20:1
Fiscal quarter ending December 31, 2000............................. 2.40:1
Fiscal quarter ending March 31, 2001................................ 2.40:1
Fiscal quarter ending June 30, 2001................................. 2.40:1
Fiscal quarter ending September 30, 2001............................ 2.40:1
Fiscal quarter ending December 31, 2001............................. 2.50:1
and each fiscal quarter thereafter
In addition, the Credit Agreement requires that the Leverage Ratio (as defined
below) for any Test Period (as defined below) ended on the last day of a fiscal
quarter set forth below is not permitted to exceed the ratio set forth opposite
such fiscal quarter below:
Date Ratio
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Fiscal quarter ending December 31, 1995............................. 5.10:1
Fiscal quarter ending March 31, 1996................................ 5.10:1
Fiscal quarter ending June 30, 1996................................. 5.10:1
Fiscal quarter ending September 30, 1996............................ 5.10:1
Fiscal quarter ending December 31, 1996............................. 4.60:1
Fiscal quarter ending March 31, 1997................................ 4.60:1
Fiscal quarter ending June 30, 1997................................. 4.60:1
Fiscal quarter ending September 30, 1997............................ 4.60:1
Fiscal quarter ending December 31, 1997............................. 4.30:1
Fiscal quarter ending March 31, 1998................................ 4.30:1
Fiscal quarter ending June 30, 1998................................. 4.30:1
Fiscal quarter ending September 30, 1998............................ 4.30:1
Fiscal quarter ending December 31, 1998............................. 4.00:1
Fiscal quarter ending March 31, 1999................................ 4.00:1
Fiscal quarter ending June 30, 1999................................. 4.00:1
Fiscal quarter ending September 30, 1999............................ 4.00:1
Fiscal quarter ending December 31, 1999............................. 3.75:1
Fiscal quarter ending March 31, 2000................................ 3.75:1
Fiscal quarter ending June 30, 2000................................. 3.75:1
Fiscal quarter ending September 30, 2000............................ 3.75:1
Fiscal quarter ending December 31, 2000............................. 3.50:1
Fiscal quarter ending March 31, 2001................................ 3.50:1
Fiscal quarter ending June 30, 2001................................. 3.50:1
Fiscal quarter ending September 30, 2001............................ 3.50:1
Fiscal quarter ending December 31, 2001............................. 3.00:1
and each fiscal quarter thereafter
"Consolidated Current Assets" means the current assets of Holdings
and its subsidiaries determined on a consolidated basis, provided that the
unused amounts of commitments for Revolving Loans are included as current assets
of Holdings in making such determination.
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"Consolidated Current Liabilities" means the current liabilities of
Holdings and its subsidiaries determined on a consolidated basis, provided that
the current portion of loans under the Credit Agreement, the current portion of
any loans made by Silgan to Containers or Plastics, and accrued interest on the
current portion of loans under the Credit Agreement, the 11-3/4% Notes, the
Debentures or any Refinancing Indebtedness from the last regularly scheduled
interest payment date shall not be considered current liabilities for the
purposes of making such determination.
"EBIT" means for any period the consolidated net income of Holdings
and its subsidiaries, before interest expense and provision for taxes and
without giving effect to any extraordinary noncash gains or extraordinary
noncash losses and gains or losses from sales of assets (other than sales of
inventory in the ordinary course of business), or any noncash adjustments
resulting from changes in value of employee stock options.
"EBITDA" means for any period, EBIT, adjusted by adding thereto the
amount of all depreciation and all amortization of intangibles (including
covenants not to compete), goodwill and loan fees that were deducted in arriving
at EBIT for such period.
"Indebtedness" means, as to any person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such person and all drafts drawn thereunder, (iii) all liabilities secured by
any lien on any property owned by such person, whether or not such liabilities
have been assumed by such person, (iv) the aggregate amount required to be
capitalized under leases under which such person is the lessee and (v) all
contingent obligations of such person.
"Interest Expense" means, for any period, the total consolidated
interest expense of Holdings and its subsidiaries for such period (without
giving effect to any amortization of upfront fees and expenses in connection
with any debt issuance).
"Interest Reduction Discount" means initially zero, and, from and
after September 30, 1996, the percentage set forth in clause (A), (B), (C), (D),
(E) or (F) below to the extent applicable:
(A) 1/4 of 1% if, but only if, the Modified Leverage Ratio for the
current Test Period is less than or equal to 3.75:1.00;
(B) 1/2 of 1% if, but only if, the Modified Leverage Ratio for the
current Test Period is less than or equal to 3.375:1.00;
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(C) 3/4 of 1% if, but only if, the Modified Leverage Ratio for the
current Test Period is less than or equal to 3.00:1.00;
(D) 1% if, but only if, the Modified Leverage Ratio for the current
Test Period is less than or equal to 2.625:1.00;
(E) 1-1/4% if, but only if, the Modified Leverage Ratio for the
current Test Period is less than or equal to 2.25:1.00;
(F) 1-1/2% if, but only if, the Modified Leverage Ratio for the
current Test Period is less than or equal to 1.875:1.00;
Notwithstanding anything to the contrary above in this definition,
(i) if Silgan's long-term Indebtedness receives a stated "senior implied" rating
of at least BBB- from Standard & Poor's Ratings Group or at least Baa3 from
Moody's Investors Service, Inc., then from the date that is the first business
day of the fiscal quarter of Silgan following the fiscal quarter containing the
first date that either such rating is announced and for so long as such rating
remains in effect, the Interest Reduction Discount will be 1-1/2% and (ii) the
Interest Reduction Discount will be reduced to zero at all times when a default
or an event of default under the Credit Agreement exists.
"Letter of Credit Outstandings" means, at any time, the sum of (i)
the aggregate stated amount of all outstanding letters of credit issued under
the Credit Agreement and (ii) the amount of all unpaid drawings for letters of
credit issued under the Credit Agreement.
"Leverage Ratio" means, for any period, the ratio of (x) the sum of
(I) Total Indebtedness (excluding Revolving Outstandings) as of the last day of
such period plus (II) the Revolving Outstandings on the December 31st
immediately preceding the last day of such period (or, in the case of a Test
Period ended on December 31 in any fiscal year, the Revolving Outstandings on
such December 31) to (y) EBITDA for then the most recently ended Test Period.
"Modified Leverage Ratio" means, at any time, the ratio of (x) the
sum of (I) Total Consolidated Term Debt at such time plus (II) the Revolving
Outstandings on the December 31st immediately preceding the last day of the
applicable period (or, in the case of a Test Period ended on December 31 in any
fiscal year, the Revolving Outstandings on such December 31) to (y) EBITDA for
the then most recently ended Test Period.
"Refinancing Indebtedness" means (i) any Indebtedness incurred as
permitted by the Credit Agreement the proceeds of which are used to refinance,
redeem or repay outstanding 11-3/4% Notes, Debentures and/or any Refinancing
Indebtedness previously issued by Holdings or (ii) any Indebtedness of Holdings
incurred
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pursuant to the Holdings Guaranty the proceeds of which are used to refinance,
redeem or repay outstanding Debentures.
"Revolving Outstandings" means, at any time, the sum of the
aggregate principal amount of Revolving Loans and Swingline Loans then
outstanding plus the aggregate amount of all Letter of Credit Outstandings at
such time.
"Test Period" shall mean each period of four consecutive fiscal
quarters of Holdings (in each case taken as one accounting period), provided
that the first Test Period shall end on December 31, 1995.
"Total Consolidated Term Debt" means, at any time, the sum of (1)
the aggregate principal amount of Term Loans then outstanding, (2) the aggregate
accreted principal amount of Debentures then outstanding, (3) the aggregate
principal amount of 11-3/4% Notes then outstanding, (4) the aggregate principal
amount (or accreted amount if issued at a discount) of all Refinancing
Indebtedness then outstanding, (5) the aggregate principal amount of all
Indebtedness then outstanding that was assumed in connection with an acquisition
permitted under the Credit Agreement, and (6) the aggregate principal amount of
certain promissory notes then outstanding that were issued by Holdings pursuant
to the Holdings Guaranty which notes provide for the current payment of interest
in cash.
"Total Indebtedness" means the aggregate Indebtedness of Holdings
and its subsidiaries determined on a consolidated basis, provided that, in
making such determination, Indebtedness consisting of capitalized lease
obligations existing as of the effective date of the Credit Agreement or
permitted to be incurred pursuant to the Credit Agreement are excluded.
For purposes of the various computations under the Credit
Agreement, including the ratio of EBITDA to Interest Expense and the Leverage
Ratio, (i) all computations utilize accounting principles in conformity with
those used to prepare the statements of consolidated and consolidating financial
condition of Holdings and its subsidiaries and Silgan and its subsidiaries at
December 31, 1994 and the related consolidated and consolidating statements of
income and cash flow of Holdings and its subsidiaries and Silgan and its
subsidiaries for the fiscal year ended December 31, 1994, as audited by Ernst &
Young, and (ii) no effect is given to certain other matters as provided in the
Credit Agreement.
The ability of Holdings to take certain actions is restricted or
limited pursuant to the terms of the Second Amended and Restated Guaranty, dated
as of June 30, 1989, as amended and restated as of June 18, 1992, as further
amended and restated as of December 21, 1993, and as further amended and
restated as of August 1, 1995, made by Holdings in favor of the Banks, Bankers
Trust, as Administrative Agent and as a Co-Arranger, and Bank of
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America, as Documentation Agent and as a Co-Arranger (the "Holdings Guaranty").
The Holdings Guaranty restricts or limits Holdings' ability to, among other
things: (i) create certain liens, (ii) incur additional indebtedness, except
that, among other things, Holdings may incur unsecured subordinated Indebtedness
the proceeds of which are used to refinance, redeem or repay its Debentures or
any Refinancing Indebtedness of Holdings, (iii) consolidate, merge or sell its
assets and purchase or lease assets, except that Holdings may merge with Silgan
to the extent that such merger is permitted under the Credit Agreement, (iv) pay
dividends, except that, among other things, Holdings may pay dividends to the
holders of its common stock in amounts and at the times as provided in the
Credit Agreement after the consummation of a registered public equity offering
by Holdings, (v) make loans or advances, except that, among other things,
Holdings may make advances to Silgan as permitted under the Credit Agreement,
and (vi) engage in any business other than holding Silgan's common stock and
certain other limited matters permitted by the Holding Guaranty.
Events of Default. Events of default under the Credit Agreement
include, with respect to each of the Borrowers, as the case may be, among
others: (i) the failure to pay any principal on the Term Loans or the Revolving
Loans, the failure to reimburse drawings under any letters of credit when due or
the failure to pay within two business days after the date such payment is due
interest on the Term Loans, the Revolving Loans or any unpaid drawings under any
letter of credit or any fees or other amounts owing under the Credit Agreement;
(ii) subject to certain limited exceptions, any failure to pay amounts due under
certain other agreements or any defaults that result in or permit the
acceleration of certain other indebtedness; (iii) subject to certain limited
exceptions, the breach of any covenants, representations or warranties contained
in the Credit Agreement or any related document; (iv) certain events of
bankruptcy, insolvency or dissolution; (v) the occurrence of certain judgments,
writs of attachment or similar process against any of the Borrowers or any of
their respective subsidiaries; (vi) the occurrence of certain ERISA related
liabilities; (vii) a default under or invalidity of the guarantees (including an
event of default under the Holdings Guaranty) or of the security interests
granted to the Banks pursuant to the Credit Agreement; (viii) the failure of
Holdings to own 100% of the capital stock of Silgan; and (ix) a Change of
Control (as defined in the Credit Agreement) shall occur; and (x) the
requirement that Silgan repurchase 25% or more of the aggregate principal amount
of the Secured Notes then outstanding or any 11-3/4% Note or that Holdings
repurchase any Debenture, in any case as a result of a Change of Control (as
defined in the agreements and indentures relating thereto).
Upon the occurrence of any event of default under the Credit
Agreement, the Banks are permitted, among other things, to accelerate the
maturity of the Term Loans and the Revolving Loans and all other outstanding
indebtedness under the Credit Agreement
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and terminate their commitment to make any further Revolving Loans or to issue
any letters of credit.
In connection with the Credit Agreement, the Banks (including
Bankers Trust) received certain fees amounting to $17.2 million.
Item 7: Financial Statements and Exhibits.
(a) and (b) Financial Statements of Business Acquired and
Pro Forma Financial Information
It is impracticable at this time to file the financial statements
and pro forma financial information required to be filed pursuant to Item 7 of
Form 8-K. Such financial statements and pro forma financial information will be
filed, as soon as practicable, but not later than 60 days from the date hereof.
(c) Exhibits
(1) Asset Purchase Agreement, dated as of June 2, 1995, between
American National Can Company and Silgan Containers Corporation (incorporated by
reference to Exhibit 1 to Silgan's Current Report on Form 8-K, dated August 14,
1995).
(2) Credit Agreement, dated as of August 1, 1995, among Silgan
Corporation, Silgan Containers Corporation, Silgan Plastics Corporation, various
banks, Bankers Trust Company, as Administrative Agent and as a Co-Arranger, and
Bank of America Illinois, as Documentation Agent and as a Co-Arranger
(incorporated by reference to Exhibit 2 to Silgan's Current Report on Form 8-K,
dated August 14, 1995).
(3) Second Amended and Restated Guaranty, dated as of June 18,
1992, as amended and restated as of December 21, 1993, and as further amended
and restated as of August 1, 1995, made by Silgan Corporation, Silgan Containers
Corporation and Silgan Plastics Corporation (incorporated by reference to
Exhibit 3 to Silgan's Current Report on Form 8-K, dated August 14, 1995).
(4) Second Amended and Restated Guaranty, dated as of June 30,
1989, as amended and restated as of June 18, 1992, as further amended and
restated as of December 21, 1993, and as further amended and restated as of
August 1, 1995, made by Silgan Holdings Inc.
In accordance with Item 601(b)(2) of Regulation S-K, the schedules,
exhibits and annexes referenced in the Purchase Agreement, the Credit Agreement,
and the Guaranties referenced above have not been filed as part of the exhibits
to this Form 8- K. The Registrant agrees to furnish supplementary a copy of the
omitted schedules, exhibits and annexes to the Commission upon request.
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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.
SILGAN HOLDINGS INC.
By:/s/ Harley Rankin, Jr.
--------------------------
Harley Rankin, Jr.
Executive Vice President,
Chief Financial Officer
and Treasurer
Date: August 14, 1995
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