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
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Date of Report (Date of Earliest Event Reported): February 26, 2002
BONTEX, INC.
(Exact name of Registrant as specified in its charter)
Virginia 0-5200 54-0571303
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
ONE BONTEX DRIVE,
BUENA VISTA, VIRGINIA 24416-1500
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 540-261-2181
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(Former name or former address, if changed since last report)
Item 5. Other Events.
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Bontex, Inc. (the "Company") has a secured term loan and credit facility (the
"Debt") with Congress Financial Corporation ("Congress"). As previously reported
by the Company in Form 8-Ks filed on December 21, 2001 and January 22, 2002,
Congress does not intend to renew the Debt. Since January 26, 2002, Congress and
the Company have entered into various agreements (the "Interim Agreements")
extending the scheduled maturity date of the Debt to April 11, 2002. Effective
April 12, 2002, Congress agreed to extend the scheduled maturity date of the
Debt from April 12, 2002, to May 11, 2002 under the terms of an Amendment to
Loan Modification, Reaffirmation and Forbearance Agreement and Note Amendment
(the "Agreement" and, together with the Interim Agreements, the "Agreements").
Under the terms of the Agreements, among other things, (i) the interest rate
increased two percent to a fluctuating rate per annum equal to the Prime Rate
plus four percent and (ii) the monthly principal payment on the fixed portion of
the Debt increased from $16,667 to $36,667.
The Company has reduced the amount of indebtedness outstanding under the Debt
from approximately $2.7 million as of June 30, 2001, to approximately $1.73
million as of April 11, 2002. As of April 11, 2002, approximately $5.3 million
of current assets, consisting of accounts receivable and inventory, serve as the
primary collateral for the Debt. Additionally, all of the Company's other
assets, current and non-current, serve as the total collateral securing the
Debt.
Under the Company's current financing and debt structure, the Company's
wholly-owned subsidiaries Bontex S.A. (Belgium) and Bontex Italia S.r.l. each
have separate credit facilities with no cross-collateralization of assets.
Management is focused on obtaining alternative financing to repay the Debt and
provide an ongoing credit facility sufficient to meet the Company's future
operating and capital requirements. Management is currently negotiating with
several potential lenders to obtain alterative financing. In addition, the
Company has retained an outside consulting firm to provide strategic assessment
and related advice.
If the Company is unable to refinance the Debt or is unable to pay its
indebtedness to Congress in full by the maturity date, it would cause a material
adverse impact on the Company's business, financial condition, liquidity and/or
results of operations.
The Company's common stock is listed on the Nasdaq SmallCap Market. A failure by
the Company to obtain alternative financing or to meet Nasdaq listing
requirements could result in a negative impact on the trading of the Company's
common stock and/or the Company's listing status on the Nasdaq SmallCap Market.
If the Company's common stock is delisted from the Nasdaq SmallCap Market, any
trading in the common stock would thereafter be conducted in the
over-the-counter market in what are commonly referred to as the "pink sheets."
Consequently, the liquidity of the Company's common stock would likely be
impaired, not only in the number of shares which could be bought and sold, but
also through delays in the timing of transactions and a reduction in securities
analyst and the news media coverage, if any, that the Company receives. As a
result, holders of the Company's common stock might find it more difficult to
trade their common stock promptly and at reasonable prices or to obtain accurate
quotations as to its price.
The foregoing discussion may contain forward-looking statements within the
meaning of the Private Securities Litigation Act of 1995. Forward-looking
statements include, without limitation, statements about financing plans,
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cash flows, availability of capital, growth opportunities, benefits from new
technologies, financial condition, capital expenditures, future results of
operations or market conditions and involve certain risks, uncertainties and
assumptions. The words "estimate," "project," "intend," "expect," "believe," and
similar expressions are intended to identify forward-looking statements. These
and other forward-looking statements are found at various places throughout this
report, and you are cautioned not to place undue reliance on these
forward-looking statements. These forward-looking statements should, therefore,
be considered in light of various relevant factors. Actual results may differ
materially from these forward-looking statements. Factors that could cause or
contribute to those differences include, but are not limited to, excessive
worldwide footwear inventories, a shrinking U.S. domestic market for the
Company's products, decreased sales to key customers, increased competition from
non-woven materials, the reduction of prices by competitors, the increase in the
relative price of the Company's products due to foreign currency devaluations,
increased pulp and latex prices, capital illiquidity, unexpected foreign tax
liabilities, the impact of any unusual items resulting from ongoing evaluations
of the Company's business strategies, decreases in the Company's borrowing base,
trading of the Company's common stock at a level where closing bid prices are
too low to remain listed on the Nasdaq SmallCap Market, increased funding
requirements for the Company's pension plan, inability to recover deferred tax
assets, an inability by the Company to renew its current credit facilities or
obtain alternative financing, a market shift in demand from higher-quality
products to more economical grade products with lower profit margins, higher
energy prices, and increased costs of complying with environmental laws, and the
impact of changes in political, economic or other factors, legal and regulatory
changes or other external factors over which the Company has no control.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
10(viii) Fourth Amendment to Loan and Security Agreement, dated
February 26, 2002 between Congress Financial
Corporation and Bontex, Inc.
10(ix) Loan Modification, Reaffirmation and Forbearance
Agreement, dated March 11, 2002 between Congress
Financial Corporation and Bontex, Inc.
10(x) Limited Guaranty, dated March 11, 2002, by James C.
Kostelni in favor of Congress Financial Corporation.
10(xi) Amendment to Loan Modification, Reaffirmation and
Forbearance Agreement and Note Amendment, dated April
10, 2002 between Congress Financial Corporation and
Bontex, Inc.
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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.
BONTEX, INC.
By /s/ James C. Kostelni
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James C. Kostelni
President and Chief
Executive Officer
Date: April 22, 2002
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