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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
Date of Report (Date of earliest event reported): October 1, 1997
CLARK REFINING & MARKETING, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11392 43-1491230
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification NO.)
8182 Maryland Avenue 63105-3721
St. Louis, Missouri (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (314)854-9696
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Item 5. Other Events
On October 1, 1997 Clark USA, Inc., ("Clark USA"), the direct parent of
Clark Refining & Marketing, Inc. (the "Company"), completed certain transactions
related to its capital stock. Clark USA, Trizec Hahn Corporation ("TrizecHahn"),
Tiger Management Corporation ("Tiger") and certain affiliates of Tiger (the
"Tiger Funds") reclassified all of the Class A Common Stock of Clark USA (the
"Class A Common Stock") owned by the Tiger Funds (representing approximately 31%
of the total voting power of all classes of Clark USA stock) as a new class of
common stock designated Class E Common Stock (the "Class E Common Stock").
TrizecHahn then purchased all of the Class E Common Stock for $7.00 per share in
cash, resulting in a total purchase price of $63 million.
Clark USA subsequently reclassified all of the Class E Common Stock into
63,000 shares ($1,000 Liquidation Preference Per Share) of 11 1/2% Senior
Cumulative Exchangeable Preferred Stock, par value $0.01 per share (including
any additional shares paid in lieu of cash dividends, the "Exchangeable
Preferred Stock"). Dividends accrue on the Exchangeable Preferred Stock from
October 1, 1997 and are payable semi-annually commencing April 1, 1998 at a rate
per annum of 11 1/2% of the liquidation preference per share. Dividends may be
paid, at Clark USA's option, on any dividend payment date occurring prior to
October 1, 2002, either in cash or in additional shares of Exchangeable
Preferred Stock. The Exchangeable Preferred Stock is redeemable at Clark USA's
option, in whole or in part, at any time on or after October 1, 2002 at
specified redemption prices plus accrued and unpaid dividends to the date of
redemption. In addition, prior to October 1, 2000, Clark USA may, at its option,
redeem the Exchangeable Preferred Stock, in whole or in part, with the net cash
proceeds from one or more equity offerings at specified redemption prices. Clark
USA is required, subject to certain conditions, to redeem all of the
Exchangeable Preferred Stock outstanding on October 1, 2009. Subject to certain
conditions the Exchangeable Preferred Stock is exchangeable, in whole or in
part, into 11 1/2% Subordinated Exchange Debentures due October 1, 2009. On
October 1, 1997 the Exchangeable Preferred Stock was sold to qualified
institutional buyers in reliance on Rule 144A under the Securities Act.
Also on October 1, 1997, Clark USA and Occidental C.O.B. Partners ("OXY")
agreed to exchange all shares of common stock of Clark USA owned by Oxy for an
equal number of shares of a new class of convertible common stock designated as
Class F Common Stock (the "Class F Common Stock") having voting rights limited
as a class to the lesser of (a) the aggregate voting power of such shares on a
one vote per share basis and (b) 19.9% of the total voting power of all classes
of Clark USA voting stock. The Class F Common Stock will be convertible at any
time to Common Stock, on a one-for-one basis, at the option of any holder other
than Occidental Petroleum Corporation and its affiliates. Pursuant to an
existing Stockholders' Agreement between Clark USA and OXY (the "Oxy
Stockholders' Agreement"), Clark USA was obligated to issue additional shares of
common stock to Oxy if Clark USA effected an underwritten registered public
offering at less than a specified price per share. In connection with the above
transaction, Clark USA issued to Oxy an additional 545,455 shares Class F Common
Stock in full satisfaction of Clark USA's obligation to issue shares under the
Oxy Stockholders' Agreement.
As a result of the above transactions, the total economic interest in Clark
USA is held as follows: TrizecHahn 65.0%, Oxy 28.9%, Gulf Resources 5.9% and
Paul D. Melnuk 0.2%. The total voting power in Clark USA is held as follows:
TrizecHahn 73.3%, Oxy 19.9%, Gulf Resources 6.6% and Paul D. Melnuk, 0.2%
TrizecHahn has informed Clark USA that it intends to distribute to its
shareholders (the "TrizecHahn Spinoff") all of its shares of Clark USA common
stock by the end of 1997. In connection with the TrizecHahn Spinoff, it is
contemplated that Clark USA common stock would be quoted on the Nasdaq Stock
Market or on a national securities exchange. However, there can be no assurance
that the TrizecHahn Spinoff will be completed or that Clark USA common stock
will be so quoted.
Subject to certain market conditions and other factors, Clark USA also may
refinance its Senior Secured Zero Coupon Notes due 2000, Series A and the
Company may refinance its 10 1/2% Senior Notes
due 2001 through the issuance of new indebtedness and with available cash. Clark
USA expects the refinancing could result in a net reduction of consolidated
long-term debt of approximately $75 million to $100 million. There can be no
assurance, however, that Clark USA will refinance or reduce such long-term
indebtedness, or what the terms of any refinancing, if effected, would be.
On September 25, 1997, the Company entered into a credit agreement (the
"Credit Agreement") which provides for borrowings and letter of credit issuances
of up to the lesser of $400 million or the amount available under a defined
borrowing base calculated with respect to the Company's cash, investments,
eligible receivables and hydrocarbon inventories, provided that borrowings are
limited to the principal amount of $50 million. Borrowings under the Credit
Agreement are secured by substantially all of the Company's cash and cash
equivalents, receivables, crude oil and refined product inventories and
trademarks.
Employment Agreements
The Company has entered into employment agreements with it five senior
executives (the "Executive Employment Agreements"). The Executive Employment
Agreements are substantially similar to the Executive Employment Agreement of
Paul D. Melnuk which is attached as an exhibit hereto. The Executive Employment
Agreements have five year terms, and provide for automatic extensions on an
annual basis unless 90 days notice of cancellation is given by either party. The
Executive Employment Agreements provide that if a Change in Control occurs
within two years prior to the scheduled expiration date, then the expiration
date will be automatically extended until the second anniversary of the Change
in Control date.
The Executive Employment Agreements provide separation benefits to the
employee if the employee's employment is terminated by the Company without
"Cause" prior to the expiration date of the agreement. "Cause" is defined to
include the employee's wilful failure to substantially perform his or her
duties, wilful misconduct that materially injures Clark USA or its affiliates,
or conviction of a criminal offense involving dishonesty or moral turpitude. The
Executive Employment Agreements also provide that if the employee resigns for
"Good Reason" prior to the expiration date of the agreement, the employee will
receive separation benefits. "Good Reason" is defined to include certain
demotions, reductions in compensation, and relocation.
The separation benefits payable under the Executive Employment Agreements
generally include a lump sum payment of three times (or in certain circumstances
two times) annual salary and bonus, acceleration of stock option exercisability,
continuation of the Company's life, medical, accident and disability
arrangements for one year after termination of employment (subject to the
employee's continuing to pay the employee share of the premiums), payment of the
cost of job relocation counseling, and payment of legal fees in connection with
termination. The Executive Employment Agreements also provide for gross-up
payments to be made to the employee to cover certain penalty taxes in connection
with a Change in Control.
As used in the Executive Employment Agreements, a "Change in Control"
includes certain mergers, changes of ownership, changes in the composition of
the board of directors and events of liquidation with respect to Clark USA, and
the disposition of the Company by Clark USA, and also includes certain change of
control events relating to TrizecHahn so long as TrizecHahn continues to own at
least 25% of Clark USA, and no other stockholder owns a greater interest in
Clark USA than TrizecHahn.
EXHIBIT INDEX
10.1 Credit Agreement, dated as of September 25, 1997, among Clark Refining &
Marketing, Inc., as Borrower, Bankers Trust Company, as Administrative
Agent and Collateral Agent, The Toronto Dominion Bank, as Syndication
Agent, BankBoston, N.A., as Documentation Agent, and the other financial
institutions party thereto.
10.2 Employment Agreement of Paul D. Melnuk.
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.
Dated: October 7, 1997 CLARK REFINING & MARKETING, INC.
By: /s/ Dennis R. Eichholz
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Dennis R. Eichholz
Controller and Treasurer