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) June 28, 2004
-------------
Jarden Corporation
------------------
(Exact name of registrant as specified in its charter)
Delaware 0-21052 35-1828377
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
555 Theodore Fremd Avenue, Rye, New York 10580
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 967-9400
--------------
(Former name or former address, if changed since last report.)
Item 2. Acquisition of Assets
On June 28, 2004, we acquired The United States Playing Card Company
("USPC"), the world's largest manufacturer and distributor of playing cards. The
international holdings of Bicycle Holding, Inc. ("BHI"), the indirect parent
company of USPC, include Naipes Heraclio Fournier, S.A., a leading playing card
manufacturer in Europe.
Pursuant to the terms of an amended and restated securities purchase
agreement, dated as of April 19, 2004 (the "Securities Purchase Agreement"),
Jarden Corporation (the "Company") acquired approximately 75% of the issued and
outstanding capital stock of BHI. We intend to purchase the remaining 25% of
BHI's issued and outstanding common stock pursuant to the terms of an amended
and restated put and call agreement (the "Put and Call Agreement"). The
aggregate purchase price (including expenses and excluding contingent
consideration) for 100% of BHI's issued and outstanding common stock is
approximately $236 million, which has been, or will be, paid as follows:
o On June 28, 2004, a cash payment (including repayment of BHI
debt) of approximately $186 million;
o upon exercise of our rights under the Put and Call Agreement,
payment of approximately $30 million for 25% of the BHI's common
stock;
o during April 2005, payment of $10 million of the holdback for
securing indemnification claims; and
o during April 2006, payment of the remaining $10 million of the
holdback for securing indemnification claims.
In addition to the purchase price, the Securities Purchase Agreement
includes an earn-out provision with a total potential payment in cash or our
common stock, generally at our election, payable in 2007, with certain
exceptions, of an amount up to $10 million based on achieving certain EBITDA
targets. If paid, the Company expects to capitalize the cost of the earn-out.
Our acquisition of BHI was financed at closing with the combination of
our available cash and borrowings under our credit facility, which we have
amended and restated to, among other things, increase our available borrowings.
Further, we obtained an irrevocable letter of credit issued under such credit
facility that secures the performance of our obligations with respect to the
holdbacks referred to above. See "Item 5 - Other Events" set forth below.
The gaming industry is highly regulated, and USPC and, in certain
cases, the Company are subject to extensive regulation under the laws, rules and
regulations of the jurisdictions where its products are used in gaming
operations. These laws, rules and regulations generally concern the
responsibility, financial stability and character of the owners, managers and
persons with financial interests in the gaming operations, such as USPC.
Regulatory authorities at the
federal, state and local levels have broad powers with respect the licensing of
USPC's operations and, among other things, may revoke, suspend, condition or
limit USPC's gaming licenses or impose substantial fines on USPC for violations
of those laws, rules or regulations. USPC and the Company must maintain USPC's
licenses to continue their operations.
Copies of the Securities Purchase Agreement and the Put and Call
Agreement were filed along with the Company's Form 10-Q filed with the SEC on
May 7, 2004 as Exhibits 10.1 and 10.2 thereto, respectively, and are
incorporated herein by reference as though fully set forth herein. The foregoing
summary description of the Securities Purchase Agreement, the Put and Call
Agreement and the transactions contemplated thereby are not intended to be
complete and are qualified in their entirety by the complete texts of the
Securities Purchase Agreement and the Put and Call Agreement.
Item 5. Other Events
On June 28, 2004, we refinanced our existing senior indebtedness by
closing on an amendment and restatement to our existing credit agreement (the
"Existing Agreement"), pursuant to the Second Amended and Restated Credit
Agreement, dated as of June 11, 2004 (the "Second Amended and Restated Credit
Agreement"), among the Company, the lenders party thereto, Canadian Imperial
Bank of Commerce., as Administrative Agent (the "Administrative Agent"),
Citigroup North America, Inc., as Syndication Agent, and National City Bank of
Indiana and Bank of America, N.A., as Co-Documentation Agents.
The Second Amended and Restated Credit Agreement, among other things,
amended our letter of credit sublimit to the Revolving Credit Facility and
provided for an additional term B loan in the amount of $116 million (the "Term
Loan B Add On"). In general, the Second Amended and Restated Credit Agreement
provides for a senior credit facility for up to $385.5 million of senior secured
loans, consisting of a $70 million five-year revolving credit facility (the
"Revolving Credit Facility"), a five-year term loan facility in an initial
principal amount of $60 million (the "Term Loan A Facility") and two term loan
facilities in an aggregate initial principal amount of $266 million (the "Term
Loan B Facility").
The Revolving Credit Facility includes a sublimit of up to an aggregate
of $40 million in standby and commercial letters of credit and a sublimit of up
to an aggregate of $10 million in swing line loans. As of June 28, 2004, we have
drawn $6.9 million under the Revolving Credit Facility and we have used
approximately $22 million of availability under the Revolving Credit Facility
for the issuance of letters of credit. The holdback associated with the USPC
acquisition is secured by a standby letter of credit that, as of June 28, 2004,
was $15.2 million. Also, as of June 28, 2004, we borrowed $116 million under the
Term Loan B Add On. The funds that we borrowed under the Revolving Credit
Facility and the Term Loan B Add On, combined with cash on hand, were used
principally to pay the cash consideration for the acquisition of approximately
75% of the issued and outstanding common stock of BHI under the Securities
Purchase Agreement. See "Item 2 - Acquisition of Assets" set forth above.
Payments of principal under the Term Loan B Facility and the Term Loan B Add On
are payable quarterly in
accordance with specified amortization schedules. The final payment of all
amounts outstanding under the Term Loan B Facility, including all amounts under
the Term Loan B Add On, is due on April 24, 2008.
The Revolving Credit Facility, the Term Loan A Facility and the Term
Loan B Facility bear interest at a rate equal to (i) the eurodollar rate (as
determined by the Administrative Agent) pursuant to an agreed formula or (ii) a
base rate equal to the higher of (a) the federal funds rate plus 0.50% and (b)
the reference rate of Canadian Imperial Bank of Commerce, plus, (x) for loans
under each of the Revolving Credit Facility and the Term Loan A Facility, an
applicable margin ranging from 0.75% to 1.50% for base rate loans and from 2.00%
to 2.75% for eurodollar rate loans and (y) for loans made under the Term Loan B
Facility, 2.25% per annum with respect to eurodollar rate loans and 1.50% per
annum with respect to base rate loans.
Interest under the Revolving Credit Facility, the Term Loan A Facility
and the Term Loan B Facility are payable quarterly if a loan is a base rate loan
or on a date which is one, two or three months from the date of disbursement, as
selected by us, if the loan is a eurodollar rate loan; provided, that for
six-month eurodollar rate loans, interest shall be paid quarterly.
The Second Amended and Restated Credit Agreement contains certain
restrictions on the conduct of our business, including, among other things,
restrictions, generally, on:
o incurring debt;
o disposing of certain assets;
o making investments;
o exceeding certain agreed capital expenditures;
o creating or suffering liens on our assets;
o completing certain mergers, consolidations, and with permitted
exceptions, acquisitions (other than the acquisition of BHI);
o declaring dividends;
o redeeming or prepaying other debt; and
o transactions with affiliates.
The Second Amended and Restated Credit Agreement also requires us to
maintain the following financial covenants:
o our consolidated net worth may not be at any time less than the
sum of:
o $181,000,000;
o an amount equal to 50% of our consolidated net income earned in
each fiscal quarter ending after March 30, 2004 (with no
deduction for a net loss in any such fiscal quarter); and
o an amount equal to 100% of the aggregate increases in the
stockholders' equity of the Company and our subsidiaries after
September 2, 2003, by reason of the issuance and sale of our
capital stock (including upon any conversion of our debt
securities into our capital stock);
o our total leverage ratio as of the end of any four-quarter period may
not be greater than the ratio set forth below opposite such
four-quarter period:
----------------------------------------------------------------------
Four-Quarter Period ending closest to: Maximum Total Leverage Ratio
-------------------------------------- ------------------------------
March 31, 2004;
June 30, 2004; 3.50 to 1.00
September 30, 2004;
December 31, 2004; and
March 31, 2005
-------------------------------------- ------------------------------
June 30, 2005;
September 30, 2005; 3.25 to 1.00
December 31, 2005; and
March 31, 2006
-------------------------------------- ------------------------------
June 30, 2006 and thereafter 3.00 to 1.00
----------------------------------------------------------------------
o our senior leverage ratio as of the end of any four-quarter period may
not be greater than the ratio set forth below opposite such
four-quarter period:
----------------------------------------------------------------------
Four-Quarter Period ending closest to: Maximum Senior Leverage Ratio
-------------------------------------- ------------------------------
March 31, 2004;
June 30, 2004; 2.25 to 1.00
September 30, 2004;
December 31, 2004; and
March 31, 2005
-------------------------------------- ------------------------------
June 30, 2005;
September 30, 2005; 2.00 to 1.00
December 31, 2005; and
March 31, 2006
-------------------------------------- ------------------------------
June 30, 2006 and thereafter 1.75 to 1.00
----------------------------------------------------------------------
; and
o our fixed charge ratio as of the end of any applicable period may not
be less than 1.25 to 1.00.
However, the Second Amended and Restated Credit Agreement does not make
any significant restrictions on our or our domestic subsidiaries' ability to
obtain funds from their respective subsidiaries by dividend or loan.
The occurrence of certain events or conditions described in the Second
Amended and Restated Credit Agreement (subject to grace periods in certain
cases) constitutes an event of default. If an event of default occurs, the
Administrative Agent may, at the request or consent of the Lenders, among other
things, declare the entire outstanding balance of principal and interest of all
outstanding loans to be immediately due and payable. The events of default
include, among other things:
o our failure to pay any principal, interest, or other fees on the loans
made under the Second Amended and Restated Credit Agreement when due;
o our failure to make payment on other indebtedness or contingent
liabilities when due;
o any material judgment or order entered against us;
o any inaccuracy in the representations and warranties;
o we incur any of certain specified liabilities under the Employee
Retirement Income Security Act of 1974;
o any of the loan documents under the Second Amended and Restated Credit
Agreement cease to be in full force and effect;
o failure to observe certain covenants under the Second Amended and
Restated Credit Agreement (including, e.g., the financial covenants);
o bankruptcy, insolvency or receivership proceedings with respect to the
Company; and
o a change of control of the Company.
The Second Amended and Restated Credit Agreement provides that we shall
make required prepayments of the Term Loan A, the Term Loan B and the Revolving
Loan, including, among other things, upon the happening of the following events:
o in the event that our total leverage ratio is greater than 3.00 to
1.00 as of the end of any fiscal year, beginning with the fiscal year
ending December 31, 2005, we must make a prepayment in an amount equal
to fifty percent (50%) of the amount of excess cash flow, each such
prepayment to be made on the date our and our subsidiaries' financial
statements for such fiscal year are required to be delivered (or if
earlier, the date such financial statements are delivered) pursuant to
the Second Amended and Restated Credit Agreement;
o we must make, or must cause each applicable subsidiary to make, a
prepayment with respect to each private or public offering of equity
securities of the Company or any of our subsidiaries (other than
equity securities issued to the Company or a guarantor) in an amount
equal to fifty percent (50%) of the net proceeds of each issuance of
equity securities of the Company or any of our subsidiaries, each such
prepayment to be made within ten (10) business days of receipt of such
proceeds and upon not less than five (5) business days' prior written
notice to the Administrative Agent;
o we must make, or must cause each applicable subsidiary to make, a
prepayment in an amount equal to one hundred percent (100%) of the net
proceeds from each Disposition (as defined below) other than certain
Permitted Dispositions (as defined below), each such prepayment to be
made within ten (10) business days of receipt of the net proceeds
thereof and upon not less than five (5) business
days' prior written notice to the Administrative Agent. A
"Disposition" means the sale, transfer, license or other disposition
(including any sale and leaseback transaction) of any property by any
person, including any sale, assignment, transfer or other disposal,
with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith. A Disposition shall not
include (a "Permitted Disposition"):
o Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
o Dispositions of inventory in the ordinary course of business;
o Dispositions by the Company or any of our subsidiaries of equipment or
real property which is replaced by equipment or real property of
substantially equivalent or greater utility and value within ninety
(90) days of the date of disposition thereof, provided that if the
fair market value of the property so disposed of is greater than
$10,000,000, the Administrative Agent will have received notice of
such disposition from us not less than twenty (20) days prior to the
consummation of such disposition;
o Dispositions of property (i) by any of our subsidiaries to a
guarantor, (ii) by us or any guarantor to any guarantor, and (iii) by
any of our subsidiaries that is not a guarantor to any other of our
subsidiaries that is not a guarantor;
o any of our subsidiaries may merge with or transfer substantially all
its assets (upon voluntary liquidation or otherwise) to any guarantor,
provided that, if a merger, the guarantor must be the continuing or
surviving person, and provided further that if a transfer of assets in
the form of a sale by a subsidiary that is not a guarantor, the sale
shall be at fair market value and the aggregate amount of all such
sales will not exceed $10,000,000;
o any of our subsidiaries substantially all of whose assets consist of
other subsidiaries' securities or other equity securities in any
person may merge with or transfer substantially all its assets (upon
voluntary liquidation or otherwise) to us, provided that, if a merger,
we will be the continuing or surviving person, and provided further
that if a transfer of assets in the form of a sale by a subsidiary
that is not a guarantor, the sale will be at fair market value and the
aggregate amount of all such sales will not exceed $10,000,000;
o any of our subsidiaries that is not a guarantor may merge with or sell
substantially all its assets (upon voluntary liquidation or otherwise)
to any one or more subsidiaries that is not a guarantor;
o Dispositions not otherwise permitted by above, so long as the
aggregate fair market value of all such property so disposed in any
fiscal year of the Company does not exceed $50,000,000 and the net
proceeds therefrom are applied in accordance with the Second Amended
and Restated Credit Agreement; and
o in the event that the net proceeds received from insurance carried
with respect to the collateral securing our obligations under the
Second Amended and Restated Credit Agreement and the other loan
documents is not completely and fully utilized for the repair or
replacement of such collateral, we must make, or must cause each
applicable subsidiary to make, a prepayment in an amount equal to one
hundred percent (100%) of the net proceeds received with respect to
such insurance that is not so utilized.
In connection with entering into the Second Amended and Restated Credit
Agreement, the following domestic subsidiaries have agreed to guarantee our
obligations under the Second Amended and Restated Credit Agreement: Hearthmark,
LLC, Quoin, LLC, Alltrista Plastics Corporation, Alltrista Newco Corporation,
Alltrista Zinc Products, L.P., Tilia, Inc. (formerly known as Alltrista
Acquisition I, Inc.), Tilia Direct, Inc. (formerly known as Alltrista
Acquisition II, Inc.), Tilia International, Inc. (formerly known as Alltrista
Acquisition III, Inc.), Lehigh Consumer Products Corporation, Loew-Cornell,
Inc., Jarden Acquisition I, Inc., BHI, USPC Holding, Inc. and USCP (the
"Guarantors").
Pursuant to a securities pledge agreement entered into in connection
with the Existing Agreement, as amended by the Consolidated Security Instrument
Amendment, dated as of September 2, 2003, among the Company, the Guarantors, and
Bank of America, as Administrative Agent (the "Consolidated Security Instrument
Amendment") entered into in connection with the Existing Agreement and as
otherwise supplemented or modified on or prior to June 28, 2004, all obligations
under the Second Amended and Restated Credit Agreement are secured by a security
interest in all of the capital stock or other equity interests of each of our
existing or future direct or indirect domestic subsidiaries (other than
Immaterial Subsidiaries), and 65% of the voting capital stock or other equity
interests and 100% of the nonvoting stock or other equity interests of each of
our (or any of our direct or indirect domestic subsidiaries') existing or future
direct foreign subsidiaries. Pursuant to the terms of a security agreement and
an intellectual property security agreement, each entered into in connection
with the Existing Agreement, as amended by the Consolidated Security Instrument
Amendment and as otherwise amended, supplemented or modified on or prior to June
28, 2004 (including as amended by Amendment No. 3 to Security Agreement, dated
as of June 11, 2004, among us, the Guarantors and the Administrative Agent) the
obligations under the Second Amended and Restated Credit Agreement are also
secured by a security interest in substantially all of the personal property
owned by us and our domestic subsidiaries that are not Immaterial Subsidiaries.
Copies of the Second Amended and Restated Credit Agreement and
Amendment No. 3 to Security Agreement are attached to this report as Exhibits
10.1 and 10.2, respectively, and are incorporated herein by reference as though
fully set forth herein. Other documents entered into
by us and our subsidiaries in connection with the Existing Agreement listed as
Exhibits 10.3 through 10.8 to this report and are incorporated herein by
reference as though fully set forth herein. The foregoing summary description of
the Second Amended and Restated Credit Agreement and the transactions
contemplated thereby is not intended to be complete and is qualified in its
entirety by the complete text of the Second Amended and Restated Credit
Agreement and the other agreements listed as Exhibits 10.2 through 10.8 to this
report.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
An audited consolidated balance sheet of Bicycle Holding, Inc. and
related audited consolidated statements of income and cash flows at and for the
fiscal year ended September 28, 2003 will be filed as an amendment to this
report within 60 days of the filing hereof as permitted by Item 7 of Form 8-K.
Unaudited balance sheets of Bicycle Holding, Inc. as of March 31, 2003
and 2004 and the related unaudited consolidated statements of income and cash
flows for each of the six-months ended March 31, 2003 and 2004 will be filed as
an amendment to this report within 60 days of the filing hereof as permitted by
Item 7 of Form 8-K.
(b) For Forma financial Information.
Unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 2003 of the Company that gives effect to the
acquisition of Bicycle Holdings, Inc. as if it had occurred on January 1, 2003
will be filed as an amendment to this report within 60 days of the filing hereof
as permitted by Item 7 of Form 8-K.
Unaudited pro forma condensed consolidated balance sheet as of March
31, 2004 of the Company and condensed consolidated statement of operations for
the three months ended March 31, 2004 will be filed as an amendment to this
report within 60 days of the filing hereof as permitted by Item 7 of Form 8-K.
(c) Exhibits.
The following Exhibits are filed herewith as part of this report:
Exhibit Description
- ------- -----------
*10.1 Second Amended and Restated Credit Agreement, dated as of June 11,
2004, among the Company, the lenders party thereto, Canadian
Imperial Bank of Commerce., as Administrative Agent, Citigroup
North America, Inc., as Syndication Agent, and National City Bank
of Indiana and Bank of America, N.A., as Co-Documentation Agents.
Exhibit Description
- ------- -----------
*10.2 Amendment No. 3 to Security Agreement, dated as of June 11, 2004,
among Jarden Corporation and certain of its subsidiaries party
thereto and Canadian Imperial Bank of Commerce, as Administrative
Agent.
10.3 Amendment No. 2 to Credit Agreement and Amendment No. 1 to Security
Agreement, dated as of September 27, 2002, among the Company, the
Guarantors, Bank of America, N.A., as Administrative Agent and
Lender, and the other lenders party thereto (filed as Exhibit 10.8
to the Company's Current Report on Form 8-K, filed with the
Commission on February 14, 2003, and incorporated herein by
reference).
10.4 Guaranty Agreement, dated as of April 24, 2002, by Alltrista Newco
Corporation, Alltrista Plastics Corporation, Alltrista Unimark,
Inc., Alltrista Zinc Products, L.P., Caspers Tin Plate Company,
Hearthmark, Inc., Lafayette Steel & Aluminum Corporation, LumenX
Corporation, Penn Video, Inc., Quoin Corporation, Tilia, Inc.,
Tilia Direct, Inc., Tilia International, Inc., TriEnda Corporation,
and Unimark Plastics, Inc. to Bank of America, NA., as
administrative agent (filed as Exhibit 10.2 to the Company's
Current Report on Form 8-K, filed with the Commission on May 9,
2002, and incorporated herein by reference).
10.5 Security Agreement, dated as of April 24, 2002, among the Company,
Alltrista Newco Corporation, Alltrista Plastics Corporation,
Alltrista Unimark, Inc., Alltrista Zinc Products, L.P., Caspers Tin
Plate Company, Hearthmark, Inc., Lafayette Steel & Aluminum
Corporation, LumenX Corporation, Penn Video, Inc., Quoin
Corporation, Tilia, Inc., Tilia Direct, Inc., Tilia International,
Inc., TriEnda Corporation, Unimark Plastics, Inc., and Bank of
America, N.A., as administrative agent (filed as Exhibit 10.3 to
the Company's Current Report on Form 8-K, filed with the Commission
on May 9, 2002, and incorporated herein by reference).
10.6 Intellectual Property Security Agreement, dated as of April 24,
2002, among the Company, Alltrista Newco Corporation, Alltrista
Plastics Corporation, Alltrista Unimark, Inc., Alltrista Zinc
Products, L.P., Caspers Tin Plate Company, Hearthmark, Inc.,
Lafayette Steel & Aluminum Corporation, LumenX Corporation, Penn
Video, Inc., Quoin Corporation, Tilia, Inc., Tilia Direct, Inc.,
Tilia International, Inc., TriEnda Corporation, Unimark Plastics,
Inc., and Bank of America, N.A., as administrative agent (filed as
Exhibit 10.4 to the Company's Current Report on Form 8-K, filed
with the Commission on May 9, 2002, and incorporated herein by
reference).
10.7 Securities Pledge Agreement, dated as of April 24, 2002, among the
Company,
Exhibit Description
- ------- -----------
Quoin Corporation, Alltrista Newco Corporation, Caspers Tin Plate
Company, and Bank of America, NA., as administrative agent (filed
as Exhibit 10.5 to the Company's Current Report on Form 8-K, filed
with the Commission on May 9, 2002, and incorporated herein by
reference).
10.8 Consolidated Amendment to Guaranty and Security Instruments, dated
as of September 2, 2003, among the Company, the Guarantors, and
Bank of America, N.A., as administrative agent (filed as Exhibit
10.4 to the Company's Current Report on Form 8-K, filed with the
Commission on September 5, 2003, and incorporated herein by
reference).
10.9 Securities Purchase Agreement, dated as of February 24, 2004, as
amended and restated as of April 19, 2004, by and among Bicycle
Holding, Inc. the sellers identified therein, the seller
representative identified therein and Jarden Corporation (filed as
Exhibit 10.1 to the Company's Quarterly Report on form 10-Q filed
with the Commission on May 7, 2004, and incorporated herein by
reference).
10.10 Put and Call Agreement, dated as of February 24, 2004, as amended
and restated as of April 19, 2004, by and among the shareholders of
Bicycle Holding, Inc. set forth on the signature pages thereto and
Jarden Corporation (filed as Exhibit 10.2 to the Company's
Quarterly Report on form 10-Q, filed with the Commission on May 7,
2004, and incorporated herein by reference).
- --------------------
* Filed herewith
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.
Dated: July 12, 2004
JARDEN CORPORATION
By: /s/ Desiree DeStefano
----------------------------
Name: Desiree DeStefano
Title: Senior Vice President