1
EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
- --------------------
For: DEP Corporation Contact: Sitrick And Company
2101 East Via Arado Michael Sitrick
Rancho Dominguez, CA 90220 Ann Julsen
(310) 764-2247
(310) 788-2850
DEP CORPORATION FILES TO RESTRUCTURE DEBT UNDER CHAPTER 11; DISCLOSURE
STATEMENT, PLAN OF REORGANIZATION INCLUDED IN FILING; PROVIDES PAYMENT IN FULL,
WITH INTEREST, TO CREDITORS
LOS ANGELES, CALIFORNIA, April 1, 1996 -- Dep Corporation (NASDAQ
SmallCap Market: DEPCA/DEPCB) said today that it has filed to reorganize and
restructure its long-term debt under Chapter 11 of the federal Bankruptcy Code.
The filing, which was made in the United States Bankruptcy Court, the District
of Delaware, included a disclosure statement and a plan of reorganization which
provides for payment in full, with interest, to its secured lenders and its
unsecured creditors.
Dep blamed the filing primarily on its acquisition of Agree and Halsa
from S. C. Johnson & Son, Inc., currently the subject of a lawsuit by Dep
against Johnson.
The Company said that the combination of cash on hand and cash flow
from operations is expected to be more than adequate for it to purchase goods
and services and to fund day-to-day operations for the foreseeable future.
Accordingly, at this time it does not require debtor-in-possession (DIP)
financing.
2
Robert Berglass, president and chief executive officer of Dep, said
that the Company has had and continues to have positive cash flow from
operations, despite the fact that for more than two years the Company's
operations and profitability have been severely affected by its purchase of
Agree and Halsa from S. C. Johnson & Son, Inc.
"Quite simply, the brands have not even generated enough sales to cover
the principal and interest on the bank debt incurred as a result of the
purchase. Accordingly, it became clear that even though we were cash flow
positive, in order to remain a viable company, we had to restructure our debt,"
he said.
Mr. Berglass said that the Company has been negotiating with its
lenders on a debt restructuring for more than two years. He said that even
though Dep has made timely payment of all of its principal and interest due
under its credit facility, as amended from time to time, it was not able to
reach an agreement which was acceptable to all concerned.
"When we finally determined that we would be unable to reach a mutually
satisfactory agreement with our secured lenders, the Company concluded that,
although it would have preferred not to have to resort to the courts, it was in
the best long-term interests of its constituents to effect a court-supervised
restructuring," he said. "By utilizing the Chapter 11 process, we believe we
can restructure the Company's debt to be consistent with our cash flow."
Mr. Berglass said that Dep will continue to pursue all legal rights
against S.C. Johnson and that Dep's breach of contract lawsuit is presently
scheduled for trial in May, 1996 in Riverside, California. At that time, Dep
shall be seeking $20 million in monetary damages, which is the maximum breach
of contract damages provided for in its purchase agreement with S.C. Johnson.
Mr. Berglass said that the severe decline in Agree and Halsa sales had not been
anticipated based
2
3
upon the information Dep received from S.C. Johnson. Since the acquisition of
Agree and Halsa, the sales of those products unexpectedly plummeted from $65
million to less than $25 million annually.
"This, when combined with the interest costs associated with their
purchase, has resulted in losses for the company," he said. "In addition, our
capital structure was adversely affected by a $25.2 million write-off of asset
value in April of 1995."
Mr. Berglass emphasized that, "the filing should have no effect on the
company's customers or its employees. Daily operations, including shipments to
our retail customers, will continue as usual and all aspects of the business
will go on as before the filing. Paychecks will be issued as before. We will
continue to rigorously support our brands through advertising and promotional
programs, as well as continue with our successful history of developing and
introducing innovative products into the marketplace."
He stated that Dep has "contacted many of our suppliers to discuss the
company's various options and they have indicated their support during this
period. While federal law prohibits the Company from paying for goods and
services received before the filing, payments for goods and services received
after the filing date are given priority status by the Bankruptcy Code."
Mr. Berglass added, "Over the past 12 months we have made many of the
tough decisions and have developed a turn-around strategy that, once fully
implemented, should result in a stronger, more efficient and profitable
business. During this period, we have reduced overhead and expenses by more
than $3 million on an annual basis, including a 20% headcount reduction. The
Company continues to review its operations and implement programs aimed at
reducing costs and improving profitability.
3
4
"We have reviewed and will continue to review every aspect of our
business with the goal of increasing sales and profitability," he stated. "We
already have begun implementing programs to achieve that objective, in addition
to developing new and creative advertising and promotional plans to enhance the
sell-through of our brands at retail. We have our work cut out for us, but I
am optimistic that, with the continued outstanding support of our suppliers,
the hard work of our employees and the loyalty of our retail customers, we will
come through this process a stronger, more competitive Company than before."
Dep Corporation is a consumer products company that develops,
manufactures and markets a wide variety of hair, oral and skin care products
under 10 major brand names: Dep, L.A. Looks, Agree, Halsa, Lilt, Topol,
Lavoris, Natures Family, Porcelana and Cuticura. It employs approximately 300
people.
###
4