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
Date of report (date of earliest event reported): November 18, 2004
Phibro Animal Health Corporation
(Exact name of registrant as specified in its charter)
New York 333-64641 13-1840497
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
ONE PARKER PLAZA
FORT LEE, NEW JERSEY 07024
(Address of principal executive offices) (Zip Code)
(201) 944-6020
(Registrant's telephone number, including area code)
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 (17 CFR
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 7.01 Regulation FD Disclosure
Phibro Animal Health Corporation (the "Company") is announcing (i) the
commencement of a consent solicitation on the terms and conditions set forth in
the Consent Solicitation Statement, dated November 18, 2004 (the "Statement"),
to solicit consents of the registered holders, as of the record date specified
in the Statement, of units (the "Units") consisting of 13% Senior Secured Notes
due 2007 (the "U.S. Notes") of the Company and 13% Senior Secured Notes due 2007
(the "Dutch Notes" and, together with the U.S. Notes, the "Existing Notes") of
Philipp Brothers Netherlands III B.V. (the "Dutch Issuer" and, together with the
Company, the "Issuers"), to the adoption of proposed amendments and waivers to
the Indenture, under which the Notes were issued and (ii) the commencement of a
private offering of $22.491 million of Units (the "Additional Units") consisting
of $18.207 million of U.S. Notes and $4.284 million of Dutch Notes.
The solicitation is subject to the satisfaction of a number of conditions,
as described in the Statement. A copy of the Statement is attached to this
Report as Exhibit 99.1. Certain matters regarding the Company that have not
previously been disclosed are disclosed in the preliminary offering circular for
the Additional Units and underlying senior secured notes, excerpts of which are
attached as Exhibit 99.2 to this Current Report.
CONSENT SOLICITATION
The Company is commencing a consent solicitation with respect to the
registered holders of the Existing Notes to amend the indenture governing the
Existing Notes to permit the sale of substantially all of the facilities owned
by Phibro Animal Health SA (formerly Phibro Animal Health (Belgium) SPRL
("Phibro Belgium"), a wholly owned subsidiary of the Dutch Issuer, in Rixensart,
Belgium (the "Belgium Plant"), to reduce excess manufacturing capacity and to
reduce operating expenses and, in furtherance thereof, to permit the Company to
issue up to $22.5 million of aggregate principal amount of new U.S. Notes and
Dutch Notes to refinance a portion of the domestic senior credit facility to
fund inventory build-up and to make investments relating to the production of
virginiamycin and to permit the other transactions described in the Statement.
The consent solicitation is being made in accordance with and subject to the
terms and conditions stated in the Statement.
The solicitation will expire at 12:00 p.m., New York City time, on
Tuesday, November 23, 2004, unless extended or earlier terminated (the
"Expiration Date").
PRIVATE OFFERING
The Company is commencing an offering of $22.491 million aggregate
principal amount of additional units consisting of $4.284 million of senior
secured notes due 2007 of the Company and $18.207 million senior secured notes
due 2007 of the Dutch issuer (the "New Notes"). Such units and underlying New
Notes will be issued in a private placement and are expected to be resold by the
initial purchaser to qualified institutional buyers pursuant to Rule 144A and
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"). The units and underlying New Notes to be offered have not been registered
under the Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from such registration
requirements. This news release shall not constitute an offer to sell or a
solicitation of an offer to buy such notes in any jurisdiction in which such
offer or sale would be unlawful and is issued pursuant to Rule 135c under the
Securities Act.
The receipt by the Company in the consent solicitation of consents from
holders of a majority in aggregate principal amount of the outstanding Existing
Notes (and not validly revoked) prior to the Expiration Date is a condition to
the consummation of the offering of the units and underlying New Notes.
REFINANCING OF DOMESTIC SENIOR CREDIT FACILITY WITH THE PROCEEDS OF THE UNITS.
To provide the necessary funds to build inventory of virginiamycin until
the Brazil plant or alternative supplier is able to produce production
quantities of virginiamycin and to finance the purchase of capital equipment to
fit out the Brazilian plant with equipment to produce virginiamycin, other than
equipment transferred from the Belgium Plant, the Company needs to have the
maximum amount of indebtedness under its domestic senior credit facility
permitted under the Indenture increased from $15.0 million to $37.5 million. The
Company intends to issue New Notes in the aggregate principal amount not to
exceed $22.5 million to refinance a portion of the domestic senior credit
facility and, therefore, needs to have the debt incurrence test modified for the
issuance of the New Notes. The issuance of the New Notes will have the effect of
reducing the maximum amount of indebtedness under the Company's domestic senior
credit facility permitted under the Indenture by the aggregate principal amount
of the New Notes issued. Borrowings under the domestic senior credit facility
will continue to be subject to a borrowing base formula under the credit
facility based on percentages of eligible domestic receivables and eligible
domestic inventory.
SALE OF BELGIUM PLANT
The Company intends to sell substantially all of its facilities in
Rixensart, Belgium to Glaxosmithkline Biologicals SA and/or affiliates thereof
("GSK") and transfer to GSK a majority of the employees of Phibro Belgium. GSK
was a previous owner of such plant, and sold it to Pfizer SA in 1995, which sold
it to Phibro Belgium in 2000. Such sale, as currently contemplated, would
include the following elements: (i) the transfer of substantially all of the
land and buildings and certain equipment of Phibro Belgium at the Belgium Plant
for a purchase price of EUR 6.2 million, payable at closing; (ii) the transfer
to GSK of a majority of the employees of Phibro Belgium and the corresponding
responsibility for statutory severance obligations; (iii) GSK agreeing to be
responsible for costs of cleaning-up, by demolition or otherwise, certain
buildings not to be used by it, but for Phibro Belgium to reimburse GSK up to a
maximum of EUR 0.7 million for such clean-up costs; (iv) in recognition of the
benefits to the Company from the proposed transaction, Phibro Belgium agreeing
to pay to GSK EUR 1.5 million within six months from the closing date, EUR 1.5
million within eighteen months from the closing date, EUR 1.5 million within
thirty months from the closing date, and EUR 0.5 million within forty-two months
from the closing date; (v) Phibro Belgium retaining certain excess land (valued
at approximately EUR 0.4 million) and being able to sell such land for its own
account; (vi) Phibro Belgium being responsible for certain plant closure costs
and legally required severance indemnities in connection with workforce
reductions, estimated in total to be EUR 7.7 million, of which an amount
estimated to be approximately EUR 4.1 million would be payable at or around
closing and an aggregate amount so estimated to be approximately EUR 3.6 million
would be payable over periods up to thirteen years; (vii) Phibro Belgium
retaining certain equipment at the Belgium Plant, and being able to sell such
equipment for the account of Phibro Belgium or transfer such equipment, together
with other assets and rights related to the production of virginiamycin, to the
Company's restricted subsidiary in Brazil that owns the facility in Guarulhos or
in connection with alternative production arrangements.
The foregoing transactions and agreements are subject to a closing that is
expected to occur no earlier than July 1, 2005 nor later than June 30, 2006.
The Dutch Notes and related guaranties are secured by a mortgage on the
Rixensart Plant which will be released in connection with the closing of the
sale of the Belgium Plant to GSK.
The information disclosed in this Current Report under this Item 7.01 is
being furnished to comply with Regulation FD and is not considered "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") and is not subject to the liabilities of that section.
Nothing in this Report shall constitute an offer to purchase or sell, or a
solicitation of an offer to purchase or sell, any securities of the Company. The
Additional Units and underlying senior secured notes to be offered by the
Company and the Dutch issuer have not been registered under the Securities Act
of 1933 (the "Securities Act") and may not be offered or sold in the United
States absent registration or an applicable exemption from such registration
requirements.
This Report includes statements that constitute forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. These statements are subject to risks and uncertainties.
Forward-looking statements include information concerning possible or assumed
future results of operations of the Company and its affiliates. These statements
may relate to, but are not limited to, information and assumptions about capital
and other expenditures, dividends, financing plans, capital structure, cash
flow, pending legal and regulatory proceedings and claims, including
environmental matters, future economic performance, operating income, cost
savings, management's plans, goals and objectives for future operations and
growth. These forward-looking statements generally are accompanied by words such
as "intend," "anticipate," "believe," "estimate," "expect," "should" or similar
expressions. It should be understood that these forward-looking statements are
necessarily estimates reflecting the best judgment of the Company's senior
management, not guarantees of future
performance. They are subject to a number of assumptions, risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements. Important assumptions
relating to the forward-looking statements include, among others, assumptions
regarding demand for the Company's products, the expansion of product offerings
geographically or through new applications, the timing and cost of planned
capital expenditures, competitive conditions and general economic conditions.
These assumptions could prove inaccurate. Forward-looking statements also
involve risks and uncertainties, which could cause actual results that differ
materially from those contained in any forward-looking statement. Many of these
factors are beyond the Company's ability to control or predict. Such factors
include, but are not limited to, the following: the Company's substantial
leverage and potential inability to service its debt; the Company's dependence
on distributions from its subsidiaries; risks associated with the Company's
international operations and significant foreign assets; the Company's
dependence on its Israeli operations; competition in each of the Company's
markets; potential environmental liability; potential legislation affecting the
use of medicated feed additives; extensive regulation by numerous government
authorities in the United States and other countries; the Company's reliance on
the continued operation and sufficiency of its manufacturing facilities; the
Company's reliance upon unpatented trade secrets; the risks of legal proceedings
and general litigation expenses; potential operating hazards and uninsured
risks; the risk of work stoppages; the Company's dependence on key personnel;
and other factors discussed in the Company's filings with the U.S. Securities
and Exchange Commission.
Undue reliance should not be placed on forward-looking statements, which
speak only as of the date of this Report.
All subsequent written and oral forward-looking statements attributable to
the Company or any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to in this Report
and any other cautionary statements that may accompany such forward-looking
statements. The Company does not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or
circumstances after the date of this document or to reflect the occurrence of
unanticipated events, unless the securities laws require the Company to do so.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description
99.1 Consent Solicitation Statement, dated November 18, 2004
99.2 Certain Excerpts from Preliminary Private Offering Circular
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.
PHIBRO ANIMAL HEALTH CORPORATION
Dated: November 18, 2004 By: /s/ Jack C. Bendheim
------------------------------------
Jack C. Bendheim,
Chairman of the Board and President
By: /s/ Gerald K. Carslon
------------------------------------
Gerald K. Carlson,
Chief Executive Officer
By: /s/ Richard G. Johnson
------------------------------------
Richard G. Johnson,
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
99.1 Consent Solicitation Statement, dated November 18, 2004
99.2 Certain Excerpts from Preliminary Private Offering Circular