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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 333-53791
SIMCALA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 34-1780941
(State of incorporation) (I.R.S. Employer Identification No.)
1940 OHIO FERRO ROAD
MT. MEIGS, ALABAMA 36057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (334) 215-7560
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the registrant's Common Stock outstanding as of
May 15, 2001 was 10,889.
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PART I. FINANCIAL INFORMATION*
ITEM 1. FINANCIAL STATEMENTS
SIMCALA, INC.
CONDENSED BALANCE SHEETS
31-MAR-01 31-DEC-00
-------------- --------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 4,744,601 989,201
Accounts receivable 5,536,506 5,318,822
Inventories 3,342,701 7,862,051
Other current assets 813,893 435,741
-------------- --------------
Total current assets $ 14,437,701 $ 14,605,815
Restricted Cash 6,164,037 6,214,883
Property, Plant and Equipment, net of accumulated
depreciation of $12,803,051 and $11,666,262, at
March 31, 2001 and December 31, 2000, respectively 48,018,050 47,845,256
Intangible Assets, net of accumulated amortization of
$6,152,976 and $5,647,715, at March 31, 2001
and December 31, 2000, respectively 34,108,356 34,613,617
-------------- --------------
Total Assets $ 102,728,144 $ 103,279,571
============== ==============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 3,926,161 $ 4,567,595
Accrued expenses 685,518 724,603
Accrued interest payable 3,330,785 1,548,441
Current maturities of long-term debt and capital leases 10,280 13,038
-------------- --------------
Total current liabilities 7,952,744 6,853,677
Long Term Debt and Capital Leases - Net of Current Portion 81,004,457 81,007,030
Deferred Income Taxes 8,068,836 8,453,688
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Total Liabilities $ 97,026,037 $ 96,314,395
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Stockholder's Equity
Preferred Stock (Series B preferred stock, 3,000 shares authorized,
none issued and outstanding, $1.00 par value) -- --
Common stock, 20,000 shares authorized - 10,889 shares
issued and outstanding, par value $.01 per share 109 109
Additional paid-in capital 18,806,891 18,806,891
Accumulated deficit (13,104,893) (11,841,824)
-------------- --------------
Total shareholder's equity 5,702,107 6,965,176
-------------- --------------
Total Liabilities and Stockholder's Equity $ 102,728,144 $ 103,279,571
============== ==============
See Notes to Condensed Financial Statements.
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SIMCALA, INC.
CONDENSED STATEMENTS OF INCOME
Three months ended Three months ended
March 31, 2001 March 31, 2000
(unaudited) (unaudited)
------------------ ------------------
Net Sales $ 14,600,438 $ 12,209,277
Cost of Goods Sold 13,394,501 10,563,115
------------- -------------
Gross Profit 1,205,937 1,646,162
Selling and Administrative Expenses 926,021 967,652
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Operating Income 279,916 678,510
Interest Expense 2,047,899 2,074,961
Other Income, Net (123,671) (254,964)
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Loss before Income Taxes (1,644,312) (1,141,487)
Income Tax Benefit (381,243) (212,656)
------------- -------------
Net Loss (1,263,069) (928,831)
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See Notes to Condensed Financial Statements.
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SIMCALA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
(unaudited) (unaudited)
------------------ ------------------
Cash Flows from Operating Activities:
Net loss (1,263,069) (928,831)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,642,050 1,596,544
Deferred income taxes (381,243) (212,656)
Change in certain assets and liabilities:
(Increase) decrease in accounts receivable (217,684) 556,008
(Increase) decrease in inventories 4,519,350 (787,045)
(Increase) in other assets (378,153) (255,814)
Increase in accounts payable and accrued expenses 1,095,460 1,765,242
------------- -------------
Net cash provided by operating activities 5,016,711 1,733,448
------------- -------------
Cash Flows from Investing Activities - Purchase of property, plant and equipment (1,309,584) (455,545)
Cash Flows from Financing Activities -
Decrease (increase) in restricted cash 50,846 (89,070)
Payments on non-interest-bearing debt (2,573) (5,241)
Change in Cash and Cash Equivalents 3,755,400 1,183,592
Cash and Equivalents at Beginning of Period 989,201 9,819,378
------------- -------------
Cash and Equivalents at End of Period $ 4,744,601 $ 11,002,970
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 100,441 $ 133,912
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Income taxes $ 0 $ 0
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See Notes to Condensed Financial Statements.
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SIMCALA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASICS OF PRESENTATION
The accompanying condensed financial statements of SIMCALA, Inc. have been
prepared in accordance with the instructions for Form 10-Q and therefore, do not
include all information on footnotes that generally accepted accounting
principles require for complete financial statements. The unaudited condensed
financial statements should be read in conjunction with the audited financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000. In the opinion of management, the
unaudited condensed financial statements contain all necessary adjustments
(which include only normal, recurring adjustments) for a fair presentation of
the Interim period presented. Operating results for the three-months ended March
31, 2001, are not necessarily indicative of operating results for the entire
fiscal year ended December 31, 2001.
NOTE 2 - ORGANIZATION AND OPERATIONS
The Company is a producer of silicon metal for sale to the aluminum and
silicones industries. The Company sells to customers in the metal industry who
are located primarily throughout the United States. Credit is extended based on
an evaluation of the customer's financial condition. During the three months
ended March 31, 2001 and the three months ended March 31, 2000, three customers
accounted for 48%, 26%, and 12% and 49%, 26%, and 10% of net sales,
respectively. At March 31, 2001 and December 31, 2000, three customers accounted
for 34%, 29%, and 14% and 34%, 32% and 12%, respectively, of outstanding
receivables. The Company maintains credit insurance for all customer accounts
receivable.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For a summary of the Company's accounting policies, please refer to the
Company's Form 10-K for the year ended December 31, 2000.
NOTE 4 - INVENTORIES
As of March 31, 2001 and December 31, 2000, inventories consisted of the
following:
March 31, December 31,
2001 2000
(unaudited) (audited)
------------ ------------
Raw Materials $ 562,155 $ 714,551
Finished Goods 2,484,546 6,851,500
Supplies 296,000 296,000
------------ ------------
$ 3,342,701 $ 7,862,051
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NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. ("SFAS") 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 (as amended by SFAS' 137 and 138)
was effective January 1, 2001. The Company's adoption of SFAS 133 on January 1,
2001 had no impact on its financial position or results of operations, as the
Company has no derivative instruments.
NOTE 6 - RECLASSIFICATIONS
Certain prior period amounts have been reclassified for comparative purposes.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
The following is a discussion of the Company's results of operations. The
discussion is based upon the three-month period ended March 31, 2001 in
comparison to the three-month period ended March 31, 2000. Percentage changes
included in the following narrative paragraphs of this Item 2 are based on the
figures included in the consolidated financial statements.
The table below sets forth certain statement of operations information as a
percentage of net sales during the quarters ended March 31, 2001 and March 31,
2000:
Three months ended Three months ended
March 31, March 31,
2001 2000
------------------ ------------------
Net sales 100.0% 100.0%
Cost of goods sold 91.7 86.5
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Gross profit 8.3 13.5
Selling and administrative expenses 6.4 7.9
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Operating income (loss) 1.9 5.6
Interest expense 14.0 17.0
Other income, net (0.8) (2.1)
------ ------
Loss before income taxes (11.3) (9.3)
Income tax benefit (2.6) (1.7)
------ ------
Net loss (8.7)% (7.6)%
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THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
NET SALES
Net sales increased by $2.4 million in the three months ended March 31, 2001, or
19.7%, to $14.6 million from $12.2 million for the same period in 2000. This
increase was due principally to increased sales volume in the first quarter of
2001. This volume increase was partially offset by a reduction in average
selling prices for all grades of silicon metal. Production of silicon metal in
the first quarter of 2001 was 7,125 metric tons, compared with 10,014 metric
tons produced in the first quarter of 2000. The lower production tonnage
resulted from the shutdown of one of the Company's furnaces for most of the
first quarter of 2001. During the shutdown, the Company completed extensive
maintenance on two of its three submerged-arc electric furnaces.
GROSS PROFIT
Gross profit decreased by $0.4 million, or 26.7%, to $1.2 million in the first
quarter of 2001 as compared to $1.6 million in the same period in 2000. The
gross profit margin decreased to 8.3% in the first quarter of 2001 from 13.5% in
the same period in 2000. These decreases were principally due to the lower sales
prices discussed above.
Average selling price per metric ton decreased to $1,362 in the first quarter of
2001 from $1,400 in the same period in 2000 due to continued weakness in the
secondary aluminum market and a continued influx of imported silicon, a
condition which existed for most of 2000. Average production cost per metric ton
decreased to $1,095 in the first quarter of 2001 from $1,107 in the same period
in 2000. This decrease resulted primarily from improved production
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efficiencies which led to increased production volumes coupled with an
aggressive cost control program implemented by the Company in the first quarter
of 2001.
SELLING AND ADMINISTRATIVE EXPENSES
The change in selling and administrative expenses in the first quarter of 2001
as compared to in the same period in 2000 was not significant.
OPERATING INCOME
Income from operations decreased $0.4 million, or 58.7%, to $0.3 million in the
first quarter of 2001 as compared to $0.7 million in the same period of 2000,
while the operating margin decreased to 1.9% from 5.6% for the same period in
the prior year. The decrease was primarily due to lower sales prices in the
first quarter of 2000, partially offset by lower production costs.
INTEREST EXPENSE
Interest expense was materially unchanged for the quarter ended March 31, 2001
when compared to the same period in 2000.
OTHER INCOME - NET
Other income - net decreased $0.2 million, or 51.6%, to $0.1 million in the
first quarter of 2001 from $0.3 million in the same period in 2000. The decrease
in other income was primarily due to lower interest income earned on short term
investments due to reduced levels of cash available for investment and reduced
"Mercedes" benefits realized by the Company in the first quarter of 2001. The
"Mercedes" benefits recorded as Other Income stem from payroll withholding for
Alabama income tax that is retained by the Company pursuant to an Alabama state
law. The on-going strike by the United Steel Workers Union has significantly
reduced the wages paid to eligible employees and as a result, the amount of
withholding for Alabama income tax.
INCOME TAX BENEFIT
The income tax benefit increased $0.2 million, or 78.9%, to $0.4 million in the
first quarter of 2001 as compared to $0.2 million in the same period of 2000.
The increase was primarily due to a larger taxable loss in the first quarter of
2001, as compared to the same period in 2000.
NET LOSS
As a result of the above factors, the net loss for the three months ended March
31, 2001 was $1.3 million compared to a net loss of $0.9 million for the same
period in 2000, an increase of $0.4 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash flow from operations and a
portion of the net proceeds from the Offering. The Company's principal uses of
liquidity are to fund operations and to meet debt service requirements.
Cash Flow from Operations
The Company's cash flows from its operations are influenced by selling prices of
its products, the volume of products sold, and raw materials costs. The
Company's cash flows are subject to wide fluctuation due to market supply
factors driven by imports and other domestic market forces. Historically, the
Company's silicon metal business has experienced price fluctuations principally
due to the competitive nature of two of its markets, the primary and secondary
aluminum markets. In 1998, additional domestic production capacity was added by
two competitors at a time when demand was not growing at historical rates. This
additional capacity created an over
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supply of silicon metal in the domestic markets. This excess supply brought
about significant price decreases in all aluminum markets in which the Company
competes.
Cash and cash equivalents were $4.7 million and $1.0 million at March 31, 2001
and December 31, 2000, respectively. The increase in cash in the first quarter
of 2001 is the result of a significant decrease in the Company's levels of
finished goods inventory. The decrease in inventory resulted from improved sales
volumes in the first quarter of 2001 coupled with the shutdown of one of the
Company's furnaces for extended maintenance for most of the first quarter.
Depreciation and amortization remained unchanged for the first quarter of 2001
at $1.6 million, compared to $1.6 million for the same period in 2000.
In the first quarters of 2001 and 2000, net cash provided by operating
activities was $5.0 million and $1.7 million, respectively. The increase in the
first quarter of 2001 resulted primarily from the Company's depreciation and
amortization, decrease in inventory and increase in accounts payable and accrued
expenses offset by the Company's net loss in that same period. In the first
quarters of 2001 and 2000, net cash used in investing activities was $1.3
million and $0.5 million, respectively. The changes primarily reflect different
levels of capital spending during the corresponding quarters of each year. In
the first quarters of 2001 and 2000, net cash used in financing activities was
insignificant.
The Senior Notes
On March 31, 1998 (the "Acquisition Date"), SAC Acquisition Corp., a Georgia
corporation ("SAC") and then wholly owned subsidiary of SIMCALA Holdings, Inc.,
a Georgia corporation ("Holdings"), acquired all of the outstanding capital
stock of the Company (the "Acquisition") from its stockholders for a cash
payment of approximately $65.3 million. The aggregate purchase price paid by SAC
for the acquisition was financed in part with the net proceeds of a $75,000,000
offering (the "Offering") of the Company's 9 5/8% Senior Notes due 2006 (the
"Notes"). Immediately following the Acquisition, SAC merged with and into the
Company, with the Company being the surviving corporation (the "Merger"). As a
result of the Merger, the Company became the obligor of the Notes and a
wholly-owned, direct subsidiary of Holdings.
Ongoing interest payments on the Notes represent significant liquidity
requirements for the Company. With respect to the $75.0 million borrowed under
the Notes, the Company is required to make semiannual interest payments of
approximately $3.6 million over the life of the Notes. On April 16, 2001, the
Company failed to pay to the Bank of New York, the trustee for the Notes (the
"Trustee"), a semi-annual interest payment of approximately $3.6 million. By
letter dated April 18, 2001, the Company notified the Trustee of the missed
interest payment and indicated that the Company would make a payment of the
overdue interest, as well as interest on the overdue interest, on May 15, 2001
(the "New Payment Date"). So long as the Company makes such payment on the New
Payment Date, the failure to make a timely payment on April 16, 2001 will not
constitute an Event of Default under the terms of the indenture (the
"Indenture") governing the Notes. As of the filing of this report, the Company
has provided the funds for payment of the overdue interest, and interest on the
overdue interest, to the Trustee, with instructions that the funds shall be
distributed to the bondholders on the New Payment Date.
On April 19, 2001, at the Company's request, the Trustee notified the holders of
the Notes of the missed interest payment and the New Payment Date. For further
information concerning this issue, see the Form 8-K filed by the Company on
April 18, 2001.
Credit Agreements
On March 31, 1998, in connection with the acquisition of the Company by
Holdings, the Company entered into a Credit Agreement (the "Bank of America
Credit Facility") with NationsBank, N.A. (now Bank of America). The Bank of
America Credit Facility provided revolving borrowings and letters of credit in
an aggregate principal amount of $15.0 million. As of December 31, 2000, the
Company had no outstanding borrowings under the Bank of America Credit Facility
and had a $6.1 million letter of credit collateralizing the Company's $6.0
million industrial development bonds. The letter of credit is cash
collateralized, matured on April 15, 2001, and allowed for automatic annual
renewals unless otherwise notified by Bank of America. The Bank of America
Credit Facility included certain covenants regarding the Company's financial
performance. The Company was unable to satisfy these financial covenants as of
December 31, 2000. On or about January 12, 2001, Bank of America notified the
Company that it would waive any default triggered by the Company's inability to
satisfy the financial covenants contained in the Credit Facility as of December
31, 2000. In exchange for such waiver, Bank of America asked that Simcala agree
to replace the Bank of America Credit Facility with a reimbursement agreement
(the "Reimbursement
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Agreement") governing the letter of credit. Subject to the condition that the
letter of credit remain fully cash collateralized, Bank of America renewed the
letter of credit.
Bank of America and the Company entered into the Reimbursement Agreement as of
January 12, 2001. Under the Reimbursement Agreement, Simcala will not have
access to the additional $8.9 million of credit previously available under the
Bank of America Credit Facility. Subsequent to the replacement of the Bank of
America Credit Facility, the Company entered negotiations with CIT Business
Credit ("CIT") for a new credit facility. CIT has approved a $10.0 million
revolving credit facility (the "CIT Credit Facility") to the Company, for which
documentation is pending. Availability of funds under the CIT Credit Facility
will be based on the values of eligible accounts receivable and eligible
inventory of the Company. The CIT Credit Facility will be used to fund working
capital needs, operating expenses, and general corporate purposes.
The IDB Financing
In connection with the Company's IDB Financing, the Company has agreed to pay
the principal of, premium, if any, IDB and interest on, the IDBs, which mature
on December 1, 2019. Interest on the IDBs, which is payable monthly, currently
accrues at a rate which resets every seven days as determined by Merchant
Capital, L.L.C., the remarketing agent for the IDB Financing. Merchant Capital
evaluates certain factors, including, among others, market interest rates for
comparable securities, other financial market rates and indices, general
financial market conditions, the credit standing of the Company and the bank
issuing the letter of credit, which provides credit support for the IDBs, and
other relevant facts regarding the Facility. However, interest borne by the
IDBs cannot exceed the lower of 15% per annum and the maximum rate per annum
specified in any letter of credit which provides credit support for the IDBs.
As of March 31, 2001, interest on the IDBs accrued at a rate equal to
approximately 5.15% per annum.
Capital Resources
With respect to ongoing capital spending, the Company expects to spend
approximately $2.5 million to $3.0 million annually to properly maintain its
furnaces and other production facilities. The Company's facility presently
contains three identical 20 megawatt submerged-arc electric furnaces with an
annual capacity in excess of 36,000 metric tons of silicon metal and 16,000
metric ton of microsilica. As reported in the 10-K for the year ended December
31, 2000, the Company has recently decided not to pursue its plan to construct a
fourth furnace, in light of declining market prices and improved production
efficiencies.
Loan Covenants
The agreement governing the CIT Credit Facility, once completed, together with
the indenture governing the Notes (the "Indenture"), will likely limit the
Company's ability to incur additional indebtedness. Such restrictions, together
with the highly leveraged nature of the Company, could limit the Company's
ability to respond to market conditions, to meet its capital spending program,
to provide for unanticipated capital investments or to take advantage of
business opportunities. The covenants contained in the CIT Credit Agreement,
among other things, may restrict the ability of the Company and its subsidiaries
to dispose of assets, incur guarantee obligations, repay the Notes, pay
dividends, create liens on assets, enter into sale and leaseback transactions,
make investments, loans or advances, make acquisitions, engage in acquisitions
or consolidations, make capital expenditures or engage in certain transactions
with affiliates, and otherwise restrict corporate activities. The covenants
contained in the Indenture governing the Notes also impose restrictions on the
operation of the Company's business.
The Indenture contains a limitation on the ability of the Company and its
subsidiaries to incur additional indebtedness. This limitation is tied, in part,
to the Company's "Fixed Charge Coverage Ratio." For any period, the Fixed Charge
Coverage Ratio generally consists of the ratio of (x) the Company's consolidated
net income during such period (subject to certain adjustments), to (y) certain
fixed charges (generally determined on a consolidated basis) during such period.
The Indenture provides that the Company will not, and will not permit its
subsidiaries to, incur "Indebtedness" or issue "Disqualified Stock," subject to
the following exceptions. The Company may incur any amount of Indebtedness or
issue any amount of Disqualified Stock if, during its most recently ended four
fiscal quarters for which internal financial statements are available
immediately prior to such incurrence or issuance, the Company's Fixed Charge
Coverage Ratio would have been at least (A) 2.0 to 1 on or prior to April 15,
2000, and (B) 2.25 to 1 after April 15, 2000 (determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness or Disqualified Stock had been incurred or issued, as
the case may be, at the beginning of such four-quarter period). If the Company's
Fixed Charge Coverage Ratio does not meet
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these levels (i.e., the ratio is less than 2.0 to 1 and 2.25 to 1 for the
periods indicated, respectively), the Company and its subsidiaries may only
incur certain types of indebtedness. As of March 31, 2000, the Fixed Charge
Coverage Ratio for the most recently ended four fiscal quarter period would have
been less than 2.0 to 1, on a pro forma basis.
FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this document, particularly regarding
anticipating future financial performance, business prospects, growth and
operating strategies, the effects of the Acquisition on the Company and similar
matters, and those preceded by, followed by or that otherwise include the words
"may," "would," "could," "will," "believes," "expects," "anticipates," "plans,"
"intends," "estimates," or similar expressions or variations thereof may
constitute "forward-looking statements" for purposes of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended. For those statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve a number of
risks and uncertainties. A variety of factors, including without limitation
those discussed in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" herein and in Item 7 of the Company's Annual Report
on Form 10-K, and in other filings by the Company with the Securities and
Exchange Commission, may affect the future results of the Company and could
cause those results to differ materially from those expressed in the
forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
All financial instruments and positions held by the Company are held for
purposes other than trading.
The fair value of the Company's long-term debt and capital leases is affected by
changes in interest rates. The carrying value of the Company's long-term debt
and capital leases was established on March 31, 1998. The following presents the
sensitivity of the fair value of the Company's long-term debt and capital leases
to a hypothetical 10% decrease in interest rates as of March 31, 2001 and
December 31, 2000.
HYPOTHETICAL
CARRYING FAIR INCREASE IN
VALUE VALUE(A) FAIR VALUE(B)
-------- -------- -------------
March 31, 2001
- --------------
Long-term debt and capital leases,
including current portion $81,014,737 $20,039,737 $21,598,070
----------- ----------- -----------
December 31, 2000
- -----------------
Long-term debt and capital leases,
including current portion $81,020,068 $34,345,068 $37,492,290
----------- ----------- -----------
(a) Based on quoted market prices for these or similar items.
(b) Calculated based on the change in discounted cash flow.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
With respect to the $75.0 million borrowed under the Notes, the Company is
required to make semiannual interest payments of approximately $3.6 million over
the life of the Notes. On April 16, 2001, the Company failed to pay to the
Trustee a semi-annual interest payment of approximately $3.6 million. By letter
dated April 18, 2001, the Company notified the trustee of the missed interest
payment and indicated that the Company would make a payment of the overdue
interest, as well as interest on the overdue interest, the New Payment Date. So
long as the Company makes such payment on the New Payment Date, the failure to
make a timely payment on April 16, 2001 will not constitute an Event of Default
under the terms of the Indenture. As of the date of filing of this report, the
Company has provided the funds for payment of the overdue interest, and interest
on the overdue interest, to the Trustee, with directions to distribute the funds
to the bondholders as of the New Payment Date.
On April 19, 2001, at the Company's request, the Trustee notified the holders of
the Notes of the missed interest payment and the New Payment Date. For further
information concerning this issue, see the Form 8-K filed by the Company on
April 18, 2001.
The total payment to be made on the New Payment Date, including the interest on
the overdue interest, will be approximately $3.64 million.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
ITEM 5. OTHER INFORMATION.
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Notice to Trustee of New Payment Date, dated April 18, 2001.
(b) Reports on Form 8-K
Filed April 18, 2001.
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SIGNATURE
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.
SIMCALA, Inc.
Date: May 15, 2001 /s/ R. Myles Cowan
--------------------------------------------
R. Myles Cowan
Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
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