SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) FEBRUARY 26, 1999
GEOLOGISTICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
333-42607 22-3438013
(COMMISSION FILE (IRS EMPLOYER
NUMBER) IDENTIFICATION NO.)
13952 DENVER WEST PARKWAY, GOLDEN, COLORADO 80401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(303) 704-4400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
ITEM 5. OTHER EVENTS
On March 4, 1999, GeoLogistics Corporation (the "Company") issued a press
release regarding the restructuring of its GeoLogistics Americas business into
two independent operating units and the realignment of its products and services
in light of a fourth quarter operating loss that reflects continuing challenges
in its GeoLogistics Americas freight forwarding business. The Company expects
to report a fiscal 1998 consolidated operating loss of approximately $12 million
on revenues of approximately $1.5 billion primarily because of a GeoLogistics
Americas operating loss in the fourth quarter ended December 31, 1998. These
amounts are preliminary in nature and subject to audit by the Company's
independent auditors. The Company's other operating units, which continued to
perform well during both the fourth quarter and full year, would not be impacted
by the Americas restructuring, although the financial statement impact of such
actions at GeoLogistics Americas has not yet been determined. A copy of the
press release is attached hereto as Exhibit 99.1.
On February 26, 1999, the Company executed Amendment No. 3 (the
"Amendment") to the Amended and Restated Loan Agreement dated as of October 28,
1997 (as previously amended by Amendment No. 1 dated December 12, 1997 and
Amendment No. 2 dated as of July 10, 1998, the "Loan Agreement") among the
Company, certain of its subsidiaries, ING (U.S.) Capital Corporation (now known
as ING (U.S.) Capital LLC and referred to herein as "ING Capital") as sole
initial Lender and as Administrative Agent (the "Administrative Agent"), and ING
Bank, N.V. (London, England Branch), as facilitator of the United Kingdom
commitment. The Amendment includes revised financial covenants and additional
collateral that were required as a result of the recent operating results of the
Company. The description of the Amendment contained herein is qualified in its
entirety by reference to the complete text of the Amendment attached hereto as
Exhibit 10.29 and incorporated by reference herein.
The Amendment (a) provides for an additional $30.5 million commitment by
ING Capital to make supplemental loans, which will become due and payable on
December 31, 2002 (subject to extension upon the extension of the maturity date
specified in the Loan Agreement), and to issue supplemental letters of credit,
(b) requires the obligors under the amended Loan Agreement to grant a security
interest in all of their personal property, including all trademarks and other
intangibles, to the extent not already included in the collateral, and one item
of real property to secure the loans under the amended Loan Agreement, (c)
amends the EBITDA covenant to (i) increase the minimum required EBITDA to (A)
$22,500,000 for the twelve months ending March 31, 1999, (B) $24,000,000 for the
twelve months ending June 30, 1999, (C) $27,000,000 for the twelve months ending
September 30, 1999 and (D) $30,000,000 for the twelve months ending December 31,
1999 and (ii) exclude results of GeoLogistics Americas, Inc. from the
calculation of EBITDA during the period from and after December 31, 1998 to and
including December 31, 1999 for purposes of complying with the EBITDA covenant,
(d) amends the Interest Charge Coverage Ratio covenant to (i) decrease the
minimum Interest Charge Coverage Ratio to (A) 1.00 to 1.00 for the fiscal
quarter ending December 31, 1998, (B) 1.10 to 1.00 for the fiscal quarter ending
March 31, 1999, (C) 1.20 to 1.00 for the fiscal quarter ending June 30, 1999,
(D) 1.30 to 1.00 for the fiscal quarter ending September 30, 1999 and (E) 1.40
to 1.00 for the fiscal quarter ending December 31, 1999 and (ii) exclude results
of GeoLogistics Americas, Inc. from the calculation of EBITDA during the period
from and after December 31, 1998 to and including December 31, 1999 for purposes
of complying with the Interest Charge Coverage Ratio covenant, (e) increases the
restrictions regarding the making of investments and acquisitions and prohibits
the payment of management fees by the Company and certain of its
subsidiaries prior to the date following March 31, 1999 on which the Company is
in compliance with the EBITDA and the Interest Charge Coverage Ratio covenants
or, in the case of the management fees, the earlier satisfaction of certain
other tests, (f) added an EBITDA covenant for GeoLogistics Americas, Inc.
requiring a maximum deficit EBITDA for GeoLogistics Americas, Inc. of (i)
($19,500,000) for the three months ending on December 31, 1998, (ii)
($9,000,000) for the three months ending on March 31, 1999, (iii) ($13,500,000)
for the six months ending on June 30, 1999, (iv) ($19,900,000) for the nine
months ending on September 30, 1999 and (v) ($22,000,000) for the fiscal period
ending December 31, 1999, (g) increases the margins applicable to eurodollar and
base rate loans based on specified funded debt ratios, (h) joins Bekins Van
Lines, LLC and GeoLogistics Network Solutions, Inc. as borrowers under the Loan
Agreement and (i) provides that for purposes of calculating EBITDA for any
fiscal period, GeoLogistics Air Services, Inc. (including its predecessor
Caribbean Air Services, Inc.) shall be deemed to be a subsidiary of the Company
for the entirety of that fiscal period. Because of the undetermined impact of
the restructuring on GeoLogistics Americas EBITDA, and because of the
uncertainties surrounding the performance of GeoLogistics Americas, the Company
may have to seek again to amend those covenants.
The Company has applied approximately $15 million of amounts borrowed under
the supplemental commitment of the amended Loan Agreement to repay in full the
obligations of the Company to ING Capital under the Credit Agreement (the
"Credit Agreement") dated July 10, 1998 between the Company and ING Capital.
The Company anticipates that additional borrowings under the amended Loan
Agreement will be applied for working capital purposes.
The matters discussed herein and in the press release attached as an
exhibit hereto may be deemed to contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding the Company's
plans for restructuring GeoLogistics Americas, the Company's plans to
investigate strategic and operating alternatives and the Company's pro forma
operating results after giving effect to the acquisition of Caribbean Air
Services. Such forward-looking statements are inherently uncertain and may be
affected by a variety of factors, including without limitation availability of
financing, competition, general economic conditions and other factors described
in the Company's Registration Statement on Form S-4 dated April 28, 1998 and the
Company's quarterly reports on Form 10-Q for the periods ended March 31, 1998,
June 30, 1998 and September 30, 1998. Investors should recognize that the
Company's plans described herein, including its plans to restructure
GeoLogistics Americas, may change. There can be no assurance that the Company's
restructuring efforts will succeed or that there will be sufficient financing
available for the Company's operations should the Company's GeoLogistics
Americas business continue to incur significant operating losses.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.29 Amendment No. 3 to the Amended and Restated Loan Agreement.
99.1 Press Release
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.
GEOLOGISTICS CORPORATION
Date: March 4, 1999 By: /s/ Miles Stover
-------------------------
Miles Stover
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.29 Amendment No. 3 to the Amended and Restated Loan Agreement.
99.1 Press Release