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) March 19, 2002
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GALEY & LORD, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-20080 56-1593207
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(Commission File Number) (IRS Employer Identification Number)
980 Avenue of the Americas, New York, NY 10008
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (212) 465-3000
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ITEM 5. OTHER EVENTS
As previously reported, on February 19, 2002, (the "Filing Date") Galey &
Lord, Inc. (the "Company") and each of its domestic subsidiaries filed voluntary
petitions under Chapter 11 of Title 11, United States Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Southern District of New
York (Case Nos. 02-40445 through 02-40456 (ALG)). The Company and such
subsidiaries remain in possession of their assets and properties and continue to
operate their businesses and manage their properties as debtors-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. On February 19,
2002, the Company and such subsidiaries filed a motion seeking to enter into a
credit facility of up to $100 million in debtor-in-possession ("DIP") financing
with First Union National Bank (the "Agent") and Wachovia Securities, Inc. On
February 21, 2002, the Bankruptcy Court entered an interim order approving the
facility and authorizing immediate access to $30 million. On March 19, 2002, the
Bankruptcy Court entered a final order approving the entire $100 million DIP
financing.
Under the terms of the final DIP financing agreement (the "DIP Agreement"),
the Company, as borrower, may make revolving credit borrowings (including up to
$15 million for post-petition letters of credit) in an amount not exceeding the
lesser of $100 million or the Borrowing Base (as defined in the DIP Agreement).
The DIP Agreement will terminate and the borrowings thereunder will be due and
payable upon the earliest of (i) August 19, 2003, (ii) the date of the
substantial consummation of a plan of reorganization that is confirmed pursuant
to an order by the Bankruptcy Court and (iii) the acceleration of the revolving
credit loans made by any of the banks who are a party to the DIP Agreement and
the termination of the total commitment under the DIP Agreement. Amounts
borrowed under the DIP Agreement bear interest at the rate per annum at the
Company's option, of either (i) (a) the higher of the prime rate or the federal
funds rate plus .50% plus (b) a margin of 2.00% or (ii) LIBOR plus a margin of
3.25%. There is an unused commitment fee of (A) at such time as First Union is
no longer the sole bank, at the rate of (i) .75% per annum on the average daily
unused total commitment at all times during which the average total commitment
usage is less than 25% of the total commitment and (ii) .5% per annum on the
average daily unused total commitment at all times during which the average
total commitment usage is more than or equal to 25% of the total commitment; or
(B) at all times that First Union is the sole bank, at a rate of .50% per annum
on the average daily unused total commitment. There are letter of credit fees
payable to the Agent equal to LIBOR plus 3.25% on the daily average letters of
credit outstanding and to a fronting bank, its customary fees plus .25% for each
letter of credit issued by such fronting bank.
Borrowings under the DIP Agreement are guaranteed by each of the Company's
domestic subsidiaries (the "Guarantors"). In general, such borrowings constitute
allowed super-priority administrative expense claims, and are secured by (i) a
perfected first priority lien pursuant to Section 364(c)(2) of the Code, upon
all property of the Company and the Guarantors that was not subject to a valid,
perfected and non-avoidable lien on the Filing Date, (ii) a perfected junior
lien, pursuant to Section 364(c)(3) of the Code upon all property of the Company
and the Guarantors already subject to valid, perfected, non-avoidable liens, and
(iii) a perfected first priority senior priming lien, pursuant to Section
364(d)(1) of the Code, upon all property of the Company and
the Guarantors already subject to a lien that presently secures the Company's
and the Guarantors' pre-petition indebtedness under the existing pre-petition
credit agreement, whether created prior to or after the Filing Date (subject to
certain specific existing or subsequently perfected liens). This security
interest is subject to certain explicit exceptions.
The DIP Agreement contains covenants restricting the Company and the
Guarantors from consolidating or merging with and into another person, disposing
of assets, incurring additional indebtedness and guarantees, creating liens and
encumbrances on properties, modifying its or their business, making capital
expenditures in excess of $22.5 million through the maturity date or $15.2
million during any 12 month period, declaring and paying dividends, making
investments, loans or advances, and creating super-priority claims. There are
certain limitations on affiliate transactions and on costs and expenses incurred
in connection with the closing of production facilities. The DIP Agreement also
requires the Company and the Guarantors to achieve certain levels of EBITDA (as
defined) as specified therein. The DIP Agreement also provides for the mandatory
prepayment of all or a portion of outstanding borrowings upon repatriation of
funds from foreign subsidiaries or the sale of assets, or in the event
outstanding loans exceed the Borrowing Base.
A copy of the approved DIP Agreement and subsequent amendments are attached
hereto and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
99.1 Revolving Credit and Guaranty Agreement, dated as of
February 20, 2002, among Galey & Lord, Inc. (the
"Company"), the Company's direct and indirect domestic
subsidiaries and First Union National Bank.
99.2 First Amendment to Revolving Credit and Guaranty Agreement
dated as of March 13, 2002, among the Company, the
Company's direct and indirect domestic subsidiaries and
First Union National Bank.
99.3 Second Amendment to Revolving Credit and Guaranty
Agreement, dated as of March 22, 2002, among the Company,
the Company's direct and indirect domestic subsidiaries
and First Union National Bank.
99.4 Security and Pledge Agreement, dated as of February 20,
2002, among the Company, the Company's domestic
subsidiaries and First Union National Bank.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
GALEY & LORD, INC.
By: /s/ Leonard F. Ferro
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Leonard F. Ferro
Vice President
Date: April 4, 2002