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): January 7, 2004
WRC MEDIA INC.
(Exact name of registrant as specified in its charter)
Delaware 333-96119 13-4066536
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
512 Seventh Avenue, 22nd Floor, New York, NY 10018
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(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 768-1150
ITEM 5. Other Events and Regulation FD Disclosure.
On December 30, 2003, WRC Media Inc. (the "Company") received a waiver until
March 31, 2004 from the lenders under its credit agreement for its expected
non-compliance with certain financial covenants as of December 31, 2003,
subject to certain conditions. The following summary of the waiver is
qualified in its entirety by reference to the waiver, which is attached as an
Exhibit hereto and incorporated by reference herein.
The lenders under the Company's credit agreement have granted the Company a
waiver through March 31, 2004 with respect to the Company's expected
non-compliance with certain of the financial covenants in its credit agreement
as of December 31, 2003. The waiver expires on March 31, 2004 and could
terminate earlier upon the occurrence of specified events, including the
occurrence of an event of default under the Company's credit agreement.
The Company currently has $13,000,000 in total borrowings, including revolving
loans and letters of credit, outstanding under its revolving credit facility.
Under the terms of the waiver, the Company will be permitted to borrow an
additional $13,000,000 under its revolving credit facility so long as the
conditions to future borrowings are satisfied.
Based on the Company's current forecast, if the Company is able to continue to
borrow under its revolving credit facility as provided in the waiver, the
Company believes such borrowings, together with its current cash position,
will be sufficient to pay its current obligations through April 2004, after
which it will begin to have shortfalls in liquidity, unless the Company
successfully amends or refinances its existing credit facility.
The Company is currently in discussions with its lenders with respect to
amending the existing credit facility and is pursuing the potential
refinancing of a portion of its borrowings thereunder. While we expect to
complete an amendment of the credit facility by March 31, 2004, we can give no
assurances as to whether the Company will be successful in achieving any such
amendment or refinancing, or if successful, when such transaction would be
completed, or what the impact on our costs of financing would be. Unless the
Company obtains an additional waiver or successfully amends its credit
agreement to make the financial covenants less stringent or consummates an
alternative financing or other transaction, (a) the lenders under the
Company's credit agreement will have the right upon expiration of the waiver
on March 31, 2004, to declare an event of default with respect to the
Company's expected non-compliance with certain of its financial covenants as
of December 31, 2003, and (b) the Company does not expect to be in compliance
with certain of its financial covenants as of March 31, 2004. For a
description of the risks and consequences of being in default under the credit
agreement, including an inability to borrow additional amounts, the right of
the lenders to accelerate outstanding amounts under the credit facility and
the right of holders of the Company's Notes to accelerate the Notes upon
acceleration of the credit facility, please see the disclosure set forth under
the heading "Item 2--Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity, Working Capital and
Capital Resources--General" in the Company's Form 10-Q for the fiscal quarter
ended September 30, 2003, filed with the Securities and Exchange Commission
(the "SEC") on November 14, 2003 (the "Third Quarter 10-Q").
This Report on Form 8-K contains forward-looking statements. Additional
written and oral forward-looking statements may be made by the Company from
time to time in SEC filings and otherwise. The Company cautions readers that
results predicted by forward-looking statements, including, without
limitation, those relating to the Company's future business prospects,
revenues, working capital, liquidity, capital needs, interest costs and
income, are subject to certain risks and uncertainties that could cause actual
results to differ materially from those indicated in the forward-looking
statements, including
o risks and uncertainties relating to the Company's ability to satisfy
the conditions to future borrowings under its revolving credit
facility in order to borrow all or a portion of the additional
$13,000,000 available under the revolving credit facility in the
first fiscal quarter of 2004;
o the other factors set forth under the heading "Item 2--Management's
Discussion and Analysis of Financial Condition and Results of
Operations-- Factors That May Affect the Future Results and
Financial Condition" in the Third Quarter 10-Q; and
o other risks and factors identified from time to time in the
Company's filings with the SEC.
The foregoing list of factors should not be construed as exhaustive or as any
admission regarding the adequacy of disclosures made by the Company prior to
the date hereof. The Company disclaims any intention or obligation to update
or revise forward-looking statements, whether as a result of new information,
future events or otherwise. The Company urges you to read all of its public
filings in addition to this Form 8-K to understand its financial condition,
liquidity and results of operations.
ITEM 7. Financial Statements and Exhibits.
Exhibit No. Exhibit
10.1 Waiver Agreement, dated as of December 29, 2003, by and among
Weekly Reader Corporation, a Delaware corporation,
CompassLearning, Inc., a Delaware corporation, WRC Media Inc., a
Delaware corporation, certain lenders signatory thereto, Credit
Suisse First Boston (acting through its Cayman Islands branch),
as the syndication agent for the lenders signatory thereto, and
as the lead arranger and sole book running manager, and Bank of
America, N.A., as administrative agent for the lenders signatory
thereto.
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.
WRC MEDIA INC.
(Registrant)
Date: January 7, 2004 By: /s/ Richard Nota
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Name: Richard Nota
Title: Senior Vice President, Finance
INDEX TO EXHIBITS
Exhibit No. Exhibit
10.1 Waiver Agreement, dated as of December 29, 2003, by and among
Weekly Reader Corporation, a Delaware corporation,
CompassLearning, Inc., a Delaware corporation, WRC Media Inc., a
Delaware corporation, certain lenders signatory thereto, Credit
Suisse First Boston (acting through its Cayman Islands branch),
as the syndication agent for the lenders signatory thereto, and
as the lead arranger and sole book running manager, and Bank of
America, N.A., as administrative agent for the lenders signatory
thereto.