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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
Date of Report (Date of earliest event reported): July 21, 1999 (July 15, 1999)
DeVlieg-Bullard, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-18198 62-1270573
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(State or Other Jurisdiction of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
1900 Case Parkway South, Twinsburg, Ohio 44807
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (330) 963-0699
One Gorham Island, Westport, CT 06880
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On July 15, 1999, the Registrant filed a voluntary petition
in the United States Bankruptcy Court for the Northern
District of Ohio for reorganization under Chapter 11 of the
United States Bankruptcy Code (Case No. 99-52111). At a
hearing held on July 15, 1999, the Bankruptcy Court entered
an order granting Registrant preliminary authority to pay
employee wages, salaries and benefits through July 16, 1999.
A further hearing on motions for authority to pay all
remaining pre-petition wages, salaries, employee benefits,
trust fund taxes and workers' compensation premiums, and
other ancillary relief is scheduled for July 21, 1999.
On July 16, 1999, the Bankruptcy Court also approved interim
financing in conjunction with the Registrant's proposed $30.0
million debtor in possession credit facility (the "Credit
Facility") with The CIT Group/Business Credit, Inc. and BNY
Factoring LLC (collectively, the "Lenders") to refinance
existing senior secured indebtedness and to provide loans for
working capital and general corporate purposes. Pursuant to
the Credit Facility, the Lenders will receive a superpriority
claim and first and exclusive lien on all the assets of the
Registrant.
The interim financing entered July 16, 1999 provides for a
$6.0 million line of credit until entry of a final order by
the Bankruptcy Court approving the Credit Facility (the
"Final Financing Order"). It is anticipated that the Final
Financing Order will be entered on August 3, 1999. The $6.0
million line of credit provides $4.1 million of borrowings in
excess of the borrowing base (taking into account both
borrowings outstanding under the Credit Facility and
pre-petition indebtedness of the Registrant to the Lenders).
The borrowing base is equal to the sum of (i) 85% of the
Registrant's eligible domestic accounts receivable plus the
lesser of $1.0 million or 40% of eligible unbilled accounts
receivable and (ii) the lesser of $16.0 million or 50% of
eligible inventory (which includes up to $700,000 of work in
process inventory, reducing by $100,000 per week beginning
October 1, 1999).
Following entry of the Final Financing Order, the amount of
the Credit Facility increases to $30 million, comprised of a
$7.0 million term loan, with the remainder available for
revolving loans and up to $1.2 million of letters of credit
(with availability of revolving loans and letters of credit
subject to the borrowing base). It is contemplated that all
or substantially all of the Registrant's pre-petition
indebtedness to the Lenders will be repaid from proceeds from
the Credit Facility following entry of the Final Financing
Order. Following entry of the Final Financing Order, the
Credit Facility provides $2.0 million of borrowings in excess
of the borrowing base through August 30, 1999, reducing to
$1.0 million at August 31, 1999 and reducing by $250,000 on
the last day of each month thereafter. The term loan bears
interest at the prime rate plus 4.0% and is amortized at the
rate of $50,000 per month. The revolving loans bear interest
at the prime rate plus 3.0%. All
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amounts due under the Credit Facility mature on the first to
occur of January 11, 2000 or consummation of the Registrant's
plan of reorganization.
The obligations of the Lenders under the Credit Facility are
subject to certain conditions, including the requirement that
the Lenders receive by October 13, 1999 (i) a guaranty of the
obligations under the Credit Facility by D.V. Associates,
L.P. ("D.V. Associates") to be secured by a pledge of the
intellectual property subject to the License Agreement dated
March 22, 1990 between the Registrant and D.V. Associates and
a pledge by the partners of their partnership interests in
D.V. Associates and (ii) guaranties of the obligations under
the Credit Facility by Charles E. Bradley and John G. Poole
in the amount of $2.5 million each. Mr. Bradley has a 15.5%
and Mr. Poole has a 4.5% limited partnership interest in D.V.
Associates. Mr. Bradley is Chairman of the Board of the
Registrant and Mr. Poole is a director. It is unlikely that
the Registrant will be able to satisfy the foregoing
conditions and, accordingly, the Registrant is seeking
alternative sources of financing. The Credit Facility
provides for a fee of $300,000 in the event the Registrant
terminates the Credit Facility prior to maturity.
This Current Report on Form 8-K may include certain
forward-looking statements. Actual results could differ
materially from those reflected by the forward-looking
statements contained in this document and a number of factors
may affect future results, liquidity and capital resources.
These factors include the ability of the Company to obtain
adequate financing to fund ongoing operations and repay past
due payables and Bankruptcy Court confirmation of a plan of
reorganization; the ability of the Company to increase its
liquidity through divestiture of certain non-core assets; the
ability of the Company to obtain sufficient parts from its
vendors; the ability of the Company to obtain trade credit
from those vendors on favorable terms; the fact that the
Company derives a substantial portion of its sales from
cyclical industries, including the automotive, aerospace and
housing industries; the ability to introduce new products in
a timely fashion; the pace of technological changes affecting
the products manufactured and services provided by the
Company; the Company's substantial debt service requirements,
much of which are based on variable rates; and the ability to
continue to minimize operating expenses.
ITEM 5. OTHER INFORMATION.
On July 8, 1999, the Registrant's Board of Directors
appointed John Haggerty of Argus Management Corp. as the
Registrant's interim Chief Executive Officer. Argus
Management Corp. will provide services to the Registrant
under the terms of a management agreement which is subject to
Bankruptcy Court approval. Richard Sappenfield will continue
to serve as the Registrant's President.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
10.1 Post-Petition Loan and Security Agreement dated July
15, 1999 among The CIT Group/Business Credit, Inc.,
BNY Factoring LLC and DeVlieg-Bullard, Inc.
99.1 Press Release dated July 15, 1999
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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.
DEVLIEG-BULLARD, INC.
Date: July 20, 1999 By: /s/ Richard W. Sappenfield
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Richard W. Sappenfield
President
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EXHIBIT INDEX
NO. EXHIBIT
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10.1 Post-Petition Loan and Security Agreement dated July 15, 1999 among The
CIT Group/Business Credit, Inc. BNY Factoring LLC and DeVlieg-Bullard,
Inc.
99.1 Press Release dated July 15, 1999