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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 OF EARLIEST EVENT REPORTED) JUNE 4, 1997
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THE LESLIE FAY COMPANY, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 1-9196 13-3197085
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(STATE OR OTHER (COMMISSION FILE NO.) (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
1412 BROADWAY
NEW YORK, NEW YORK 10018
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 221-4000
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THE LESLIE FAY COMPANIES, INC.
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(Former Name or Former Address, If Changed Since Last Report)
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THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
FORM 8 - K
ITEM 2. ACQUISITION OR DISPOSITION:
On June 4, 1997, as provided for in the Plan of Reorganization (the
"Plan") for the Registrant and its subsidiaries, the Registrant spun-off the
assets and liabilities of its Sassco Fashions Division to Sassco Fashions, Ltd.
("Sassco"), which anticipates changing its name to Kasper ASL, Ltd. as soon as
practical. The assets and liabilities of Sassco included cash, accounts
receivable, inventory, property, plant and equipment, other assets (including
the trade name Albert Nipon), accounts payable, accrued expenses and other
liabilities related to the Sassco Division. In addition, the Registrant
transferred to Sassco its 100% equity interest in several subsidiaries
associated with its Sassco Fashions Division. As provided in the Plan, the
shareholders of Sassco are the creditors of the Registrant, who also will be
issued the shares of the reorganized Registrant.
The gain on the disposition of the assets and liabilities of the
Sassco Division is a taxable event and a substantial portion of the net
operating loss carryforward available to the Registrant will be utilized to
offset a significant portion of the taxes recognized on the transaction.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP:
On June 4, 1997, the Plan was consummated by 1) assigning the equity
interest in both the Registrant and Sassco to its creditors in exchange for
relief from the aggregate amount of the claims estimated at $338,000,000; 2)
assigning to certain creditors the ownership rights to notes aggregating
$110,000,000 payable by Sassco; and 3) transferring the assets and liabilities
of the Registrant's Sassco Fashions Division to Sassco and the assets and
liabilities of its Dress and Sportswear Divisions to three wholly owned
subsidiaries of the Registrant. The Plan had been previously approved by the
creditors and confirmed by the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") on April 21, 1997. In addition,
the Registrant retained approximately $25,367,000 in cash to pay administrative
claims as defined in the Plan. As provided for in the Plan, the Registrant is
expected to issue 3,400,000 of new shares to its creditors in July 1997. All
distributions to creditors under the Plan are expected to occur as soon as
practicable, except approximately 20% of all distributions will be held back
pending the resolutions of certain litigation before the Bankruptcy Court. The
stockholders of the Registrant did not retain or receive any value for their
equity interest in the Registrant. Reference is made to the Exhibits and Item 1
- - - Recent Developments of the Registrant's Form 10-K for the fiscal year ended
December 28, 1996 for a copy of the Plan and a summary of Plan provisions,
respectively.
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THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
ITEM 5. OTHER EVENTS:
On June 2, 1997, in preparation for the consummation of the Plan, a
wholly- owned subsidiary of the Registrant entered into a two-year financing
agreement (the "CIT Credit Agreement") with The CIT Group/Commercial Services,
Inc. ("CIT") to provide direct borrowings and the issuance of letters of credit
on Registrant's behalf in an aggregate amount not exceeding $30,000,000, with a
sublimit on letters of credit of $20,000,000. The CIT Credit Agreement became
effective on June 4, 1997 with the consummation of the Plan. Direct borrowings
bear interest at prime plus 1.0% (9.5% at June 4, 1997) and the CIT Credit
Agreement requires a fee, payable monthly, on average outstanding letters of
credit at a rate of 2% annually. The CIT Credit Agreement, as amended, contains
certain reporting requirements, as well as financial and operating covenants
related to capital expenditures and the attainment of a current assets to
current liabilities ratio, an interest to earnings ratio and minimum earnings.
As collateral for borrowings under the CIT Credit Agreement, the Registrant has
granted to CIT a security interest in substantially all of its assets. In
addition, the CIT Credit Agreement contains certain restrictive covenants,
including limitations on the incurrence of additional liens and indebtedness and
a prohibition on paying dividends. The Registrant is currently in compliance
with all requirements contained in the CIT Credit Agreement.
In addition, a wholly-owed subsidiary of the Registrant also entered
into a Factoring Agreement with CIT on June 2, 1997. Under this agreement, CIT
began purchasing the accounts receivable of the Registrant and will remit the
proceeds to the Registrant as collected. In exchange for collecting the
receivables, CIT earns a factoring charge of 0.4% of receivables purchased and
assumes the credit risk for these receivables.
In connection with the consummation of the Plan, the Registrant also
entered into an agreement (the "Paydown Agreement") with its lenders under the
$60,000,000 credit agreement with The First National Bank of Boston ("FNBB"),
Heller Financial, Inc. and BankAmerica Business Credit, Inc. ("BABC"), as
Facility Agents and FNBB as Administrative Agent (the "FNBB Credit Agreement")
to paydown any remaining obligations under the FNBB Credit Agreement and
terminate the FNBB Credit Agreement on June 4, 1997. The FNBB Credit Agreement
had expired on May 31, 1997, but continued in effect until the consummation of
the Plan under the consent of both the lenders and the Registrant.
On June 2, 1997, a wholly-owned subsidiary of the Registrant and the
Union of Needle Trade and Industrial and Textile ("U.N.I.T.E.") reached an
agreement on a four-year collective bargaining agreement, which will run through
May 31, 2001 covering non-supervisory production, maintenance, packing and
shipping employees.
On June 3, 1997, the Registrant changed its name to The Leslie Fay
Company, Inc. With the consummation of the Plan on June 4, 1997, a new Board of
Directors was appointed in accordance with the Plan. The new Board of Directors
consists of John Pomerantz (Chairman), John Ward, David H. Morse, Clifford Cohn,
Larry G. Schafran, William J. Nightingale, and Robert L. Sind.
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THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS:
(a) Financial statements of businesses acquired: Not applicable.
(b) Pro Forma Financial Information: To be filed by amendment.
(c) Exhibits:
Exhibit Number Description
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1 Restated Certificate of Incorporation of The Leslie Fay
Company, Inc.
2 Restated By-Laws of the Registrant.
3 Press Release dated June 4, 1997 describing the
consummation of the Plan of Reorganization of The Leslie
Fay Companies, Inc. and the spin-off of assets and
liabilities of the Sassco Fashions Division.
4 Revolving Credit Agreement dated June 2, 1997 between
Leslie Fay Marketing, Inc., and The CIT Group/Commercial
Services, Inc.
5 Factoring Agreement dated June 2, 1997 between Leslie Fay
Marketing, Inc., and The CIT Group/Commercial Services,
Inc.
6 Paydown Agreement dated June 4, 1997 between The Leslie
Fay Company, Inc. and The First National Bank of Boston,
Heller Financial, Inc. and BankAmerica Business Credit,
Inc., as Facility Agents and FNBB as Administrative Agent.
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THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Leslie Fay has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 19, 1997 The Leslie Fay Company, Inc.
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(Company)
By: /s/ Warren T. Wishart
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Warren T. Wishart
Senior Vice President,
Chief Financial Officer and
Treasurer
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