SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1994
Date of Report (Date of earliest event reported): March 22, 1996
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Tyco Toys, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-9357 13-3319358
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6000 Midlantic Drive
Mount Laurel, New Jersey 08054
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 234-7400
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N/A
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Former name or former address,
if changed since last report
Total Number of Sequentially Numbered Pages: _______
Item 5. Other Events.
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In February and March 1995 the company entered into $290,000,000 of
new credit facilities (the New Credit Facilities). The New Credit
Facilities consist of three separate three-year revolving credit
facilities with General Electric Capital Corporation and affiliates in
an aggregate amount of $90,000,000 and a $200,000,000 five-year
receivables securitization facility arranged by General Electric
Capital Corporation. Borrowings under the New Credit Facilities were
used to refinance outstanding indebtedness under the prior credit
facility and certain credit facilities of foreign subsidiaries. The
credit facilities were recently amended to revise certain financial
covenants and the interest rate charged under the New Credit
Facilities.
The revolving credit facilities consist of up to $35,000,000 for
certain domestic entities (of which up to $10,000,000 may be used for
letters of credit), $20,000,000 for Tyco (Canada), Inc. and
$35,000,000 for the Company's subsidiaries in the United Kingdom (UK).
Availability under the domestic revolving credit is based upon
inventory, as defined, and availability under the foreign revolving
credit facilities are based upon an aggregate of eligible accounts
receivable and inventory, as defined. The revolving credit facilities
are secured by a lien on substantially all of the Company's domestic
assets and are also guaranteed by certain foreign subsidiaries.
Subject to the maximum commitment under each of these facilities,
borrowings are permitted up to sixty percent (60%) of eligible
inventory and, in the Canadian and UK agreements, up to eighty percent
(80%) of eligible accounts receivable. Interest rates on borrowings
are determined at the option of the borrower based on various indices,
including LIBOR or bankers' acceptance rate(s), plus an additional
percentage. As a result of the amendments effective February 15,
1996, this additional percentage increases by one quarter percent
(.25%) to two and three quarters percent (2.75%) over the various
indices, provided that the rate will decrease if the Company meets
certain tangible net worth and minimum debt service coverage ratio
targets as of December 31, 1996.
Under the securitization facility, Tyco Industries and Tyco
Manufacturing Corp. sell and transfer substantially all of their
accounts receivable to Tyco Funding I Corporation (TFC I) and Tyco
Funding II Corporation (TFC II). These companies are newly-formed
bankruptcy-remote subsidiaries of Tyco Industries and are consolidated
in the financial statements of the Company. TFC I and TFC II purchase
the accounts receivable with proceeds from their borrowings under a
commercial paper facility (limited to a maximum of seventy-
2
five percent (75%) of eligible accounts receivable, as defined) and
certain deferred payments. The interest rate on the securitization
facility is the market rate for the lender's commercial paper plus one
and three-tenths percent (1.30%) which was increased to one and fifty-
five one hundredths percent (1.55%), as a result of the amendment
effective February 15, 1996; this rate will decrease if the Company
meets certain tangible net worth and minimum debt service coverage
ratio targets as of December 31, 1996. The accounts receivable sold
and/or transferred are solely the assets of TFC I or TFC II and are
pledged as security for their borrowings. In the event of liquidation
of TFC I or TFC II, the creditors of TFC I or TFC II would be entitled
to satisfy their claims from the assets of TFC I or TFC II prior to
any distribution by these subsidiaries to Tyco Industries.
Under the terms of the New Credit Facilities, the Company and its
subsidiaries are (1) subject to covenants and conditions relating to
the maintenance of net worth, fixed charge coverage and income; (2)
restricted from incurring additional indebtedness or certain
obligations and from acquiring any other entities, whether by asset
purchase, merger or otherwise; (3) restricted in the ability to pay
dividends on capital stock subject to certain limitations; and (4)
permitted to guarantee additional amounts of debt incurred by certain
of its subsidiaries up to an aggregate of $70,000,000. During the
fourth quarter of 1995, the Company was not in compliance with certain
financial covenants under the New Credit Facilities and received
waivers from General Electric Capital Corporation and affiliates. The
amendments effective February 15, 1996 reflect the requested revisions
to the financial covenants in the New Credit Facilities.
SIGNATURE
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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.
Dated: April 4, 1996 TYCO TOYS, INC.
By: /s/ R. Michael Kennedy, Jr.
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Name: R. Michael Kennedy, Jr.
Title: Senior Vice President
and General Counsel
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EXHIBIT INDEX
Exhibit
Number Description of Document
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10.54 Amendment No. 2 to Receivables Funding and Servicing Agreement, dated
as of February 15, 1996, among Tyco Funding I Corporation and Tyco
Funding II Corporation (each a "Borrower" and jointly and severally,
the "Borrowers"), Redwood Receivables Corporation (the "Lender"),
General Electric Capital Corporation (the "Operating Agent" and
"Collateral Agent"), Financial Security Assurance Inc. ("FSA") and
Tyco Industries, Inc. (the "Servicer").
10.55 Amendment No. 2 to Credit Agreement, dated as of February 15, 1996,
among Tyco Distribution Corp. and Tyco Manufacturing Corp. (each a
"Borrower" and jointly and severally, the "Borrowers"), Tyco Toys,
Inc., the lenders party hereto (the "Lenders") and General Electric
Capital Corporation, as Agent (the "Agent").
10.56 First Amendment to Credit Agreement, dated as of February 15, 1996
(this "First Amendment"), between Tyco Toys (Canada) Inc., a Canada
corporation ("Borrower"), the lender party hereto ("Lender") and
General Electric Capital Canada Inc., a Canada corporation, as agent
for Lender (in such capacity, together with its successors in such
capacity, "Agent").
10.57 Amendment No. 2 to Guarantee and Revolving Credit Facility Agreement
made on the 25th day of March 1996, deemed to be effective as from
February 15, 1996, by Tyco Toys (UK) Limited and Matchbox Toys Limited
(each a "Borrower" and together the "Borrowers"), the Lenders as
defined, General Electric Capital Corporation (the "Issuing Bank") and
General Electric Capital Corporation (the "Agent").
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