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UNITED STATES
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
October 12, 2004
Date of Report (Date of earliest event reported)
QUAKER FABRIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1 7023 04-1933106
(State of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
941 Grinnell Street, Fall River, Massachusetts 02721
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 678-1951
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On October 12, 2004, Quaker Fabric Corporation of Fall River ("Quaker"), a
wholly-owned subsidiary of Quaker Fabric Corporation (the "Company"), and the
Company, as guarantor, entered into amendments effective as of October 1, 2004
to their Note Agreement, dated as of October 10, 1997, and their Note Purchase
and Private Shelf Agreement, dated as of February 14, 2002 (together, the "Note
Agreements"), each with Pruco Life Insurance Company and The Prudential
Insurance Company of America (together, the "Prudential Lenders"). The
amendments provide for a reduction in the Fixed Charge Coverage Ratio (as
defined in the Note Agreements) required to be maintained by Quaker from 1.75 to
1.00, to 1.50 to 1.00 for the twelve (12) month period ended on October 2, 2004
(the last day of the third fiscal quarter of 2004). In August 2004, the Company
entered into a similar amendment to the Bank Facility (as hereinafter defined)
agreement. The amendments to the Note Agreements also provide that i.) neither
Quaker nor any of its subsidiaries will create or permit to exist any Lien (as
defined in the Note Agreements) securing Quaker's revolving credit facility (the
"Bank Facility") with Bank of America (the "Bank") and ii.) prior to January 1,
2005, the Company will not declare or pay any dividends on or make any
distributions with respect, or purchase, redeem or retire, any of its capital
stock. Quaker and the Company are in discussions with the Prudential Lenders and
the Bank regarding proposed amendments to the Note Agreements and the Bank
Facility agreement seeking to reduce the financial covenant maintenance
requirements under those agreements going forward to levels that Quaker and
the Company believe will be achievable under anticipated conditions in the
industry. Any such further amendments to the Note Agreements or the Bank
Facility agreement may also include other changes to the terms of those
agreements.
The amendments to the Note Agreements and the Bank Facility, annexed hereto as
Exhibits 10.10, 10.11 and 10.12, are hereby incorporated by reference.
Item 8.01 Other Events
On July 2, 2004, the Company issued a press release in which it announced that
Quaker had entered into a purchase and sale agreement by and among Charles
McAnsin Associates, A Limited Partnership (the "Seller"), Joan Fabrics
Corporation and Main Street Textiles, L.P. (the "Agreement") to acquire for
$21.0 million or to lease a 600,000 square foot, single story industrial
building located on 33.6 acres of land in Fall River, Massachusetts (the
"Building"). On September 30, 2004, Quaker provided the Seller with a notice of
termination of the Agreement pursuant to Section 3.2 thereof, and the Deposit
made by Quaker under the Agreement was returned to the Company on the same day.
A press release issued by the Company on October 1, 2004 to report the
termination of the Agreement indicated that the Company was currently engaged in
active negotiations with the Seller to lease the Building "in stages." The
Company is now engaged in active negotiations with the Seller to lease the
entire Building, with the exception of approximately 60,000 square feet of
office space in the Building.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
10.10 Amendment effective as of October 1, 2004 to the Note Agreement dated
as of October 10, 1997 between Quaker Fabric Corporation of Fall River,
Pruco Life Insurance Company and The Prudential Insurance Company of
America.
10.11 Amendment effective as of October 1, 2004 to the Note Purchase and
Private Shelf Agreement dated as of February 14, 2002 between Quaker
Fabric Corporation of Fall River, Pruco Life Insurance Company and The
Prudential Insurance Company of America.
10.12 Amendment No. 1 to Second Amended and Restated Credit Agreement dated
as of August 16, 2004 by and among Quaker Fabric Corporation of Fall
River, Quaker Textile Corporation and Quaker Fabric Mexico, S.A. de
C.V., as Borrowers, Quaker Fabric Corporation, as Parent, and Fleet
National Bank, as the Lender.
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 thereunto duly authorized.
QUAKER FABRIC CORPORATION
(Registrant)
Date: October 13, 2004 /s/ Paul J. Kelly
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Paul J. Kelly
Vice President - Finance and Treasurer
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EXHIBIT INDEX
10.10 Amendment effective as of October 1, 2004 to the Note Agreement dated
as of October 10, 1997 between Quaker Fabric Corporation of Fall River,
Pruco Life Insurance Company and The Prudential Insurance Company of
America.
10.11 Amendment effective as of October 1, 2004 to the Note Purchase and
Private Shelf Agreement dated as of February 14, 2002 between Quaker
Fabric Corporation of Fall River, Pruco Life Insurance Company and The
Prudential Insurance Company of America.
10.12 Amendment No. 1 to Second Amended and Restated Credit Agreement dated
as of August 16, 2004 by and among Quaker Fabric Corporation of Fall
River, Quaker Textile Corporation and Quaker Fabric Mexico, S.A. de
C.V., as Borrowers, Quaker Fabric Corporation, as Parent, and Fleet
National Bank, as the Lender.