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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
SEPTEMBER 4, 2001
Date of Report (Date of earliest event reported)
LPA HOLDING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 333-56239-01 48-1144353
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
LA PETITE ACADEMY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-56239 43-1243221
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
8717 WEST 110TH STREET, SUITE 300
OVERLAND PARK, KANSAS 66210
(Address of principal executive offices, including Zip Code)
(913) 345-1250
(Registrant's telephone number, including area code)
N.A.
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
LPA Holding Corp. ("Holding") and its wholly owned subsidiary, La
Petite Academy, Inc. ("La Petite" and, together with Holding and its
subsidiaries, the "Company"), based on preliminary unaudited financial
information for the fourth fiscal quarter ended June 30, 2001, are in default
under certain financial covenants contained in the Company's senior secured bank
credit agreement (the "Credit Agreement"). The Company believes based on the
preliminary unaudited financial information that the Company's revenue, EBITDA,
and operating income were approximately $385 million, $32 million, and $17
million, respectively, for the fiscal year ended June 30, 2001. EBITDA is
defined as net income before non-cash restructuring charges, extraordinary
items, net interest costs, income taxes, depreciation and amortization. Based on
the preliminary unaudited financial information, the Company is in default under
its Credit Agreement as of June 30, 2001, for failure to maintain the minimum
fixed charge coverage ratio, the maximum leverage ratio, and the minimum EBITDA.
As of June 30, 2001, the Company had $37.3 million outstanding under the term
loan facility, $13 million outstanding under the $25 million revolving credit
facility, outstanding letters of credit of $8.7 million under the Credit
Agreement and $3.2 million of remaining borrowing availability under the Credit
Agreement. At present the Company has approximately $1 million of availability
under its revolving credit facility. However, the agent bank under the Credit
Agreement has notified the Company that an event of default exists thereunder
and that no additional borrowings are permitted. Cash on hand is currently
approximately $1 million. If such default under the Credit Agreement is not
waived by the lenders thereunder, the lenders could declare all amounts
outstanding under the Credit Agreement to be immediately due and payable.
The Company is actively engaged in negotiations with its lenders to
obtain a waiver under its financial covenants as of June 30, 2001 and to amend
these financial covenants based on the Company's current operating conditions
and projections to enable the Company to be in compliance under the Credit
Agreement during the fiscal year ending June 29, 2002. Based on negotiation
discussions to date with the agent bank under the Credit Agreement, the Company
believes that it will be able to obtain the necessary waivers and amendments
from the lenders under the Credit Agreement. However, there can be no assurance
that the Company will be able to complete these negotiations with the lenders
successfully, and the failure to do so would have a material adverse effect on
the Company. Further, even if the Company is successful in obtaining a waiver
and amendment under the Credit Agreement, there can be no assurance that the
Company's cash flows from operations will be sufficient to meet its debt service
and working capital requirements in the future.
In addition, the Company has engaged the financial advisory firm of
Chanin Capital Partners LLC to assist management in analyzing and formulating
potential strategic alternatives related to a financial restructuring of the
Company. The Company or its affiliates may restructure or refinance the
Company's long-term indebtedness through an amendment or refinancing of the
Credit Agreement, through a refinancing of all or a portion of the Company's
$145 million principal amount of 10% Senior Notes due 2008 (the "Notes"), which
could include an exchange offer, a tender offer for the Notes or open-market or
privately-negotiated purchases of the Notes, through selling assets of the
Company and using the proceeds to repay indebtedness, through selling additional
equity of the Company, through seeking additional capital contributions from the
existing equity holders of the Company or through a combination of any of these
or other alternatives. There can be no assurance that a financial restructuring
of the Company, if commenced, would be successfully completed.
This report contains forward-looking statements such as
statements regarding the Company's intention and ability to obtain a waiver and
amendment from the lenders under its Credit Agreement and the intention and
ability of the Company and its affiliates to implement successfully a financial
restructuring plan. The words "may," "believe," "estimate," "expect," "plan,"
"intend," "anticipate" and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements are based on the
Company's current expectations and projections about future events, activities
or developments and are subject to a number of risks, uncertainties and
assumptions. Among the important risks, uncertainties and other important
factors that could cause actual results to differ significantly from these
expressed or implied by such forward-looking statements are general economic
conditions; the results of the Company's refinancing strategy; fluctuations in
demand for childcare services; the Company's ability to open and profitably
operate academies; significant competition; restrictions contained in the Credit
Agreement, the indenture relating to the Notes and the Company's other material
agreements; as well as the other risk factors affecting the Company detailed in
the Company's Post-Effective Amendment No. 3 to the Registration Statement on
Form S-4 (File No. 333-56239) and in other documents filed by the Company with
the Securities and Exchange Commission.
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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.
LPA HOLDING CORP.
(Registrant)
Dated: September 4, 2001 By: /s/ Jeffrey J. Fletcher
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Name: Jeffrey J. Fletcher
Title: Chief Financial Officer
and duly authorized
representative of
the registrant
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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.
LA PETITE ACADEMY, INC.
(Registrant)
Dated: September 4, 2001 By: /s/ Jeffrey J. Fletcher
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Name: Jeffrey J. Fletcher
Title: Chief Financial Officer
and duly authorized
representative of the
registrant