<PAGE>
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): OCTOBER 29, 1998
GORGES/QUIK-TO-FIX FOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-20155 58-2263508
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
9441 LBJ FREEWAY
SUITE 214
DALLAS, TEXAS 75243
(Address of Principal Executive Offices)
972-690-7675
(Registrant's telephone number, including area code)
Page 1 of 4
Index to Exhibits on Page 4
<PAGE>
ITEM 5. OTHER EVENTS.
On October 29, 1998, Gorges/Quik-to-Fix Foods, Inc. (the "Company") issued a
press release announcing its offer to purchase not less than $36,000,000 and up
to $46,000,000 aggregate principal amount of its 11 1/2% Senior Subordinated
Notes due 2006, Series B. The press release issued in connection therewith is
filed herewith as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) EXHIBITS
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EXHIBIT NO. DESCRIPTION
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10.1 The Fourth Amendment and Waiver dated October 29, 1998 by and
among Gorges Holding Company, a Delaware Corporation, the Company,
the lending institutions party to the Credit Agreement (as defined
therein) and NationsBank, N.A., successor by merger to NationsBank
of Texas, N.A.
10.2 The Equity Agreement dated October 29, 1998 by and among Gorges
Holding Company, Delaware Corporation, and CGW Southeast Partners
III, L.P., a Delaware limited partnership
99.1 Press Release of the Company dated October 29, 1998
99.2 The Company's Offer to Purchase dated October 29, 1998
2
<PAGE>
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.
GORGES/QUIK-TO-FIX FOODS, INC.
(Registrant)
Date: October 29, 1998 By /s/ A. Scott Letier
---------------------
A. Scott Letier
Chief Financial Officer
3
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
- -------
10.1 The Fourth Amendment and Waiver dated October 29, 1998 by and
among Gorges Holding Company, a Delaware Corporation, the Company,
the lending institutions party to the Credit Agreement (as defined
therein) and NationsBank, N.A., successor by merger to NationsBank
of Texas, N.A.
10.2 The Equity Agreement dated October 29, 1998 by and among Gorges
Holding Company, Delaware Corporation, and CGW Southeast Partners
III, L.P., a Delaware limited partnership
99.1 Press Release of the Company dated October 29, 1998
99.2 The Company's Offer to Purchase dated October 29, 1998
4
<PAGE>
EXHIBIT 10.1
The Fourth Amendment and Waiver
<PAGE>
EXHIBIT 10.1
FOURTH AMENDMENT AND WAIVER
---------------------------
This Agreement, dated as of October 29, 1998, is among Gorges Holding
Corporation, a Delaware corporation ("Holding"), Gorges/Quik-To-Fix Foods, Inc.,
a Delaware corporation (the "Borrower"), the lending institutions party to the
Credit Agreement referred to below (each a "Lender" and, collectively, the
"Lenders"), and NationsBank, N.A., successor by merger to NationsBank of Texas,
N.A., as Agent (in such capacity, the "Agent").
WHEREAS, Holding, the Borrower, the Lenders and Agent are parties to a
Credit Agreement dated as of November 25, 1996 (as amended, modified or
supplemented to, but not including, the date hereof, the "Credit Agreement");
and
WHEREAS, the parties hereto wish to further amend the Credit Agreement and
to waive compliance with certain provisions of the Credit Agreement as set forth
herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. This Agreement amends the Credit Agreement. The terms
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defined in the Credit Agreement as amended hereby (the "Amended Credit
Agreement") are used herein with the meanings so defined.
2. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement hereby is
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amended as follows:
2.1 AMENDMENTS TO SECTION 1.1. Section 1.1 is amended by (a)
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deleting the phrase, "fiscal quarter of the Borrower," in the definition of
"Interest Payment Date," and replacing such phrase with the phrase, "calendar
- ----------------------
month," and (b) adding or entirely amending the following terms:
"Borrowing Base" means, at any time, (a) the sum of (i) 85% of
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Eligible Accounts, plus (ii) 50% of Eligible Inventory. Agent may, in
its discretion from time to time, upon not less than five (5) days'
prior notice to Borrower, (i) reduce the formula in determining the
Borrowing Base with respect to Eligible Accounts to the extent that
Agent determines that (A) the dilution with respect to accounts for
any period (based on the ratio of (1) the aggregate amount of
reductions in accounts other than as a result of payments in cash to
(2) the aggregate amount of total sales) has increased in any material
respect or may be reasonably anticipated to increase in any material
respect above historical levels, or (B) the general creditworthiness
of account debtors has materially declined, and (ii) reduce the
formula in determining the Borrowing Base with respect to Eligible
Inventory to the extent that Agent determines that: (A) the number of
days of the turnover of inventory for any period has changed in any
material respect, (B) the value of the Eligible Inventory, or any
category thereof, has decreased in any material respect, or (C) the
nature and quality of inventory has deteriorated. When determining
whether to reduce the formula(s) in determining the
<PAGE>
Borrowing Base, Agent may consider events, conditions, contingencies
or risks which are also considered in determining Eligible Accounts
and Eligible Inventory.
"Borrowing Base Report" means a report substantially in the form of
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Exhibit 1.1.
"Eligible Accounts" means the enforceable and outstanding accounts of
-----------------
each Credit Party that are subject to perfected Liens in favor of
Agent and Lenders and that the Agent in its sole discretion shall have
determined to be Eligible Accounts and excluding in all events the
greater of (x) such Credit Party's reserves against accounts
receivable, or (y) the sum of the following, without duplication:
(a) the portion of any account not paid within 30 days of when due;
(b) the portion of any account against the payment of which the
account debtor (i) is entitled to any allowable discount, (ii)
owns a corresponding account payable or past due credit, or (iii)
has asserted any defense, setoff or counterclaim or (iv) is
entitled to delay payment;
(c) any account on which the account debtor is not domiciled in the
United States of America unless: (i) such account is supported
by one or more irrevocable letters of credit that are in form and
substance (and are issued by one or more Persons) acceptable to
Agent, and the issuer thereof has been notified of the assignment
of the proceeds of such letter of credit to Agent, or (ii) such
account is subject to credit insurance payable to Agent issued by
an insurer and on terms and in an amount acceptable to Agent, or
(iii) such account is otherwise acceptable in all respects to
Agent (subject to such lending formula with respect thereto as
Agent may determine);
(d) any account on which the account debtor or any officer or
employee of the account debtor is an Affiliate of any Credit
Party or an officer, employee or agent of or affiliated with any
Credit Party directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(e) any account not arising out of the actual and bona fide sale and
delivery by that Credit Party of inventory in the ordinary course
of its trade or business completed in accordance with the terms
and provisions contained in any documents related thereto;
(f) any account that consists of progress billings, bill and hold
invoice or retainage invoices;
(g) any account that arises from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under
which payment by the account debtor may be conditional or
contingent;
<PAGE>
(h) any account owed by an account debtor if 15% or more of the
aggregate balances then outstanding on accounts owed by such
account debtor and its Affiliates to the Credit Parties, or any
of them, are unpaid more than 30 days past the original due date
of the original invoice;
(i) any account that is not payable in Dollars;
(j) unless all actions and documents deemed appropriate by Agent
under applicable Requirement of Law have been respectively taken
and delivered, any account owed by the United States government
or by the government of any state, county, municipality, or other
political subdivision as to which a Lien on it or Agent's ability
to obtain direct payment of the proceeds of it is governed by the
Federal Assignment of Claims Act of 1940 or any other Requirement
----------------------------------------
of Law other than the applicable Uniform Commercial Code;
---------- -----------------------
(k) any account owed by an account debtor that is not Solvent, is
subject to proceedings under the Bankruptcy Code or other similar
debtor relief laws or is subject to proceedings or actions for
any reason that reasonably could result in any material adverse
change in such account debtor's financial condition;
(l) any account which either Agent or Required Lenders elect, in
their sole respective discretion and effective upon five (5) days
advance notice to Borrower to exclude because of the account
debtor's unsatisfactory financial condition or payment record;
(m) any account with respect to which there are any facts, events or
occurrences which would impair the validity, enforceability or
collectability of such accounts or reduce the amount payable
(other than discounts given according to prudent business
practice) or delay payment thereunder;
(n) any account related to inventory that is returned, reclaimed or
repossessed;
(o) any account evidenced by an instrument or chattel paper; and
(p) any account subject to a Lien that is not a Permitted Lien.
"Eligible Assets" means assets acquired in the ordinary course of
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business to replace assets sold or otherwise transferred in connection
with an Asset Disposition.
"Eligible Inventory" means the finished goods and raw materials
------------------
inventory of the Credit Parties that are subject to perfected Liens in
favor of Agent and Lenders and excluding in all events the greater of
(x) such Credit Party's reserves against inventory, or (y) the value
of all items that are:
(a) not usable or saleable by the applicable Credit Party in its
ordinary course of business;
<PAGE>
(b) subject to any Lien that is not a Permitted Lien;
(c) neither (i) in the possession of the applicable Credit Party and
stored at property owned by it, (ii) in the possession of the
applicable Credit Party and stored at property leased by it where
the total value of such stored inventory exceeds $100,000, unless
with respect to which (A) no default or other event or condition
has occurred or exists beyond the applicable grace or cure
period, the effect of which is to cause or to permit the landlord
or lessor to cause (whether or not it elects to cause) that lease
to be terminated before its stated expiration date, and (B)
Borrower has delivered to Agent a landlord estoppel and
subordination agreement from that landlord or lessor in respect
of that lease, the terms, form, and substance of which must be
satisfactory to Agent in its sole discretion, nor (iii) in the
possession of and stored at a third party warehouse where the
total value of such stored inventory exceeds $100,000, unless
with respect to which Borrower has delivered to Agent a third
party warehousemen's agreement, the terms, form, and substance of
which must be satisfactory to Agent in its sole discretion; and
(d) determined by Agent in its sole discretion not to be Eligible
Inventory, and in any event excluding from Eligible Inventory all
(i) packaging and shipping materials and raw ingredients other
than meat, (ii) work-in-process, (iii) bill and hold goods, (iv)
goods purchased on consignment; (v) returned, damaged or
defective goods, (vi) inventory that has been held for more than
180 days, and (vii) supplies and spare parts.
In addition to the above, Borrower's 8.00% mark-up in connection with
in-transit costs for inventory to be stored at third-party locations
shall also be deducted from the value of applicable inventory for
purposes of calculating Eligible Inventory.
"Maturity Date" means November 30, 2000.
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"Permitted Investments" means (a) any Investments in any Credit Party
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other than the Parent, (b) any Investment in Cash Equivalents, and (c)
Investments made as a result of the receipt of non-cash consideration
from any Asset Disposition that was made pursuant to and in compliance
with Section 8.5.
"Revolving Committed Amount" means $19,850,000.
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2.2 AMENDMENT TO SECTION 2.1. Section 2.1(a) is amended and
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restated in its entirety, as follows:
<PAGE>
(a) Revolving Loan Commitment. Subject to the terms and conditions
-------------------------
set forth herein, each Lender severally agrees to make revolving loans
(each a "Revolving Loan" and collectively the "Revolving Loans") to
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the Borrower, in Dollars, at any time and from time to time, during
the period from and including the Closing Date to but not including
the Maturity Date (or such earlier date if the Revolving Committed
Amount has been terminated as provided herein); provided, however,
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that (i) the sum of the aggregate amount of Revolving Loans
outstanding plus the aggregate amount of LOC Obligations outstanding
shall not exceed the lesser of (A) the Revolving Committed Amount
minus the Excess Payables or (B) the Borrowing Base minus the Excess
----- -----
Payables and (ii) with respect to each individual Lender, the Lender's
pro rata share of outstanding Revolving Loans plus such Lender's pro
rata share of LOC Obligations shall not exceed such Lender's Revolving
Loan Commitment Percentage of the lesser of (A) the Revolving
Committed Amount minus the Excess Payables, or (B) the Borrowing Base
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minus the Excess Payables. Subject to the terms of this Credit
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Agreement (including Section 3.3), the Borrower may borrow, repay and
reborrow Revolving Loans.
2.3 AMENDMENT TO SECTION 2.2. Section 2.2(a) is amended by amending
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and restating clauses (ii) and (iii) therein in their entirety, as follows:
(ii) the sum of the aggregate amount of LOC Obligations outstanding
plus Revolving Loans outstanding shall not exceed the lesser of (A)
the Revolving Committed Amount minus the Excess Payables or (B) the
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Borrowing Base minus the Excess Payables, and (iii) with respect to
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each individual LOC Participant, the LOC Participant's pro rata share
of outstanding Revolving Loans plus its pro rata share of outstanding
LOC Obligations shall not exceed such LOC Participant's Revolving Loan
Commitment Percentage of the lesser of (A) the Revolving Committed
Amount minus the Excess Payables, or (B) the Borrowing Base minus the
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Excess Payables.
2.4 AMENDMENT TO SECTION 2.3. Section 2.3(c) is amended and
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restated in its entirety, as follows:
(c) Amortization. The principal amount of the Term Loans shall be
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repaid in quarterly payments on the dates set forth below:
<TABLE>
<CAPTION>
Principal Amortization Term Loan Principal
Payment Dates Amortization Payment
---------------------- --------------------
<S> <C>
March 31, 1997 $ 1,250,000
June 30, 1997 $ 1,250,000
September 30, 1997 $ 1,250,000
December 31, 1997 $ 1,250,000
March 31, 1998 $ 1,750,000
June 30, 1998 $ 1,750,000
September 30, 1998 $ 1,750,000
December 31, 1998 $ 1,750,000
March 31, 1999 $ 2,250,000
June 30, 1999 $ 2,250,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
September 30, 1999 $ 2,250,000
December 31, 1999 $ 2,250,000
March 31, 2000 $ 2,250,000
June 30, 2000 $ 2,250,000
September 30, 2000 $ 2,250,000
Maturity Date $12,250,000
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Total $40,000,000
</TABLE>
2.5 AMENDMENT TO SECTION 3.3. Section 3.3(b) is amended by amending
------------------------
and restating clause (i) therein in its entirety, as follows:
(i) Revolving Committed Amount. If at any time the sum of the
--------------------------
aggregate amount of Revolving Loans outstanding plus LOC Obligations
outstanding exceeds the lesser of (A) the Revolving Committed Amount
minus the Excess Payables or (B) the Borrowing Base minus the Excess
----- -----
Payables, the Borrower shall immediately make a principal payment to
the Agent in the manner and in an amount necessary to be in compliance
with Section 2.1.
2.6 AMENDMENTS TO SECTION 3.4. Section 3.4 is amended, as follows:
-------------------------
(a) Section 3.4(a) is amended by amending and restating the last
sentence therein in its entirety, as follows:
The accrued Commitment Fees shall commence to accrue on the
Closing Date and shall be due and payable in arrears (i) from the
Closing Date through the fiscal quarter of the Borrower ending
on September 30, 1998, on the last Business Day of each fiscal
quarter of the Borrower for the immediately preceding fiscal
quarter (or portion thereof), beginning with the first of such
dates to occur after the Closing Date, (ii) for the period
beginning October 1, 1998, and ending on November 30, 1998, on
November 30, 1998, and (iii) at all times thereafter, on the last
Business Day of each calendar month for the calendar month then
ending (as well as on the Maturity Date and on any date that the
Revolving Committed Amount is reduced).
(b) Section 3.4(b) is amended by amending and restating the last
sentence in clause (i) therein in its entirety, as follows:
The Standby Letter of Credit Fee shall be payable (i) from the
Closing Date through the fiscal quarter of the Borrower ending
on September 30, 1998, on the last Business Day of each fiscal
quarter of the Borrower, (ii) for the period beginning October 1,
1998, and ending on November 30, 1998, on November 30, 1998, and
(iii) at all times thereafter, on the last Business Day of each
calendar month and on the Maturity Date.
2.7 AMENDMENT TO SECTION 7.1. Section 7.1(b) is amended and
-------------------------
restated in its entirety, as follows:
<PAGE>
(b) Monthly and Weekly Information. (i) As soon as available, and in
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any event within 20 days after the close of each of Borrower's twelve
(12) fiscal periods during each fiscal year, Borrower's management
book for such fiscal period, containing financial information in form
and detail substantially similar to that contained in Borrower's
management book that was delivered to the Lenders for Borrower's
fiscal period ending in August 1998, accompanied by a certificate of
an Executive Officer of the Borrower to the effect that such financial
information fairly presents in all material respects the financial
condition of the Credit Parties, and (ii) as soon as available, and in
any event no later than Tuesday of each week, a cash collections and
disbursement report for the week ending the immediately preceding
Saturday, and a forecast of cash collections and disbursements for the
thirteen-week period beginning the immediately preceding Sunday.
2.8 AMENDMENT TO SECTION 7.12. Section 7.12 is amended and restated
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in its entirety, as follows:
7.12 CONSOLIDATED EBITDA. Consolidated EBITDA for the period beginning
-------------------
on October 4, 1998, and ending on a date set forth below shall not be less
than the amount set forth opposite such date:
Amount
Period In $ Thousands
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10/31/98 260
12/5/98 980
1/2/99 1,620
1/30/99 2,526
3/6/99 4,168
4/3/99 5,589
5/1/99 7,074
6/5/99 8,748
7/3/99 10,083
7/31/99 11,289
9/4/99 13,323
10/2/99 14,913
and Consolidated EBITDA for the twelve-month period ending on a date set
forth below shall not be less than the amount set forth opposite such date:
Amount
Period In $ Thousands
------ --------------
10/30/99 15,977
12/4/99 16,728
1/1/00 17,150
1/29/00 17,222
3/4/00 17,310
4/1/00 17,383
4/29/00 17,447
6/3/00 17,544
7/1/00 17,710
7/29/00 17,784
9/2/00 17,830
9/3/00 17,840
10/28/00 19,320
<PAGE>
2.9 AMENDMENT TO SECTION 8.5. Section 8.5 is amended by deleting
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the text, "$1,000,000" contained therein and replacing it with the text,
"$100,000".
2.10 AMENDMENT TO SECTION 8.7. Section 8.7 is amended by adding the
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following text to clause (vi) thereof immediately following the text, "in an
aggregate amount not to exceed $1,000,000 in any fiscal year," as follows:
(no more than $360,000 of which may be used to pay Management
Company's management fees)
2.11 NEW SECTION 8.17. A new Section 8.17 is added immediately
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following Section 8.16, as follows:
8.17 CAPITAL EXPENDITURES.
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After October 4, 1998, no Credit Party shall make any Capital
Expenditures other than (a) from October 4, 1998, through June 30,
1999, Capital Expenditures that do not exceed an aggregate amount of
$2,000,000 and (b) at any time after June 30, 1999, Capital
Expenditures that do not exceed, in the aggregate for any fiscal
quarter of the Credit Parties, the sum of (i) $1,000,000 plus (ii)
amounts for the immediately preceding fiscal quarter permitted
hereunder that were not utilized for Capital Expenditures, provided
that the aggregate amount of all Capital Expenditures made by the
Credit Parties during any fiscal year shall never exceed $4,000,000.
2.12 AMENDMENT TO SECTION 11.5. Section 11.5 is amended by amending
-------------------------
and restating clause (a) therein in its entirety, as follows:
(a) pay all reasonable out-of-pocket costs and expenses of (i) the
Agent in connection with the negotiation, preparation, execution and
delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of
special counsel to the Agent and the fees and expenses of counsel for
the Agent in connection with collateral issues), and (ii) the Agent
and the Lenders in connection with (A) any amendment, waiver or
consent relating to this Credit Agreement or the other Credit
Documents including, but not limited to, any such amendments, waivers
or consents resulting from or related to any work-out, renegotiation
or restructure relating to the performance by the Credit Parties under
this Credit Agreement, (B) enforcement of the Credit Documents and the
documents and instruments referred to therein, including, without
limitation, in connection with any such enforcement, the reasonable
fees and disbursements of counsel for the Agent and each of the
Lenders (including the allocated costs of internal counsel), and (C)
any bankruptcy or insolvency proceeding of a Credit Party.
<PAGE>
2.13 NEW EXHIBIT 1.1. A new Exhibit 1.1 is added in the form of,
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and all references in the Amended Credit Agreement to Exhibit 1.1 are hereby
deemed to be references to, the attached Exhibit 1.1.
2.14 AMENDED EXHIBITS 2.1 AND 7.1(C). Exhibits 2.1 and 7.1(c) are
-------------------------------
amended and restated in the forms of, and all references in the Amended Credit
Agreement to Exhibits 2.1 and 7.1(c) are hereby deemed to be references to, the
attached Exhibits 2.1 and 7.1(c).
3. CERTAIN COVENANTS
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3.1 BORROWING BASE REPORT. Holding shall deliver a Borrowing Base
---------------------
Report to Agent not later than 12:00 Noon (Dallas time) on the first and third
Tuesday day of each calendar month, each of which shall be prepared as of the
end of business on the immediately preceding Saturday.
3.2 CONTINUATION FEE. The Borrower shall pay to the Agent, if
-----------------
applicable, the Continuation Fee (defined below) for the account of each Lender,
pro rata according to the sum of such Lender's Revolving Committed Amount and
the total outstanding principal amount of the Term Loans owed to such Lender
(the "Credit Exposure") as of the applicable Fee Determination Date. As used
herein, "Continuation Fee" shall mean a fee due and payable only if the Credit
Party Obligations have not been paid in full on or before March 31, 1999, which
fee shall equal (a) 0.25% of the Credit Exposure on the Fee Determination Date
that occurs on March 31, 1999, plus (b) 0.50% of the Credit Exposure on each
----
subsequent Fee Determination Date, which Continuation Fee shall be earned and
payable on each Fee Determination Date, but payment shall be deferred until the
date upon which the Credit Party Obligations are paid in full, or at final
maturity of the Credit Party Obligations, whichever first occurs. As used
herein, "Fee Determination Date" shall mean the last day of each fiscal quarter
of Holding, commencing March 31, 1999.
3.3 PRICING LEVEL; EURODOLLAR LOANS. Notwithstanding anything in
-------------------------------
the Credit Agreement or any other Credit Document, (a) Pricing Level I (as shown
in the table in the definition of "Applicable Percentage" in Section 1.1 of the
---------------------
Credit Agreement) shall remain in effect at all times, and (b) the Borrower may
not request, and Agent and Lenders will not make, Eurodollar Loans, and each
Eurodollar Loan outstanding on the date hereof shall be converted to a Base Rate
Loan at the end of the current Interest Period for such Eurodollar Loan.
3.4 PROCEEDS FROM ORANGE CITY SALE. Notwithstanding anything in the
------------------------------
Credit Agreement or any other Credit Document, Borrower shall make a mandatory
prepayment of the Net Proceeds (other than from the sale of current assets) from
the disposition, in whole or in part, of Borrower's Orange City, Iowa plant or
any equipment therein, and up to $4,000,000 of such prepayment may, at the
Borrower's option, be first applied to principal installments of the Term Loans
in order of maturity. Any remaining amounts of such prepayment shall be applied
in accordance with Section 3.3(b)(v)(ii) of the Credit Agreement. Furthermore,
Borrower shall make a mandatory prepayment of the Net Proceeds from the sale of
current assets at Borrower's Orange City, Iowa plant, which prepayment shall be
applied to the outstanding principal of the Revolving Loans and shall constitute
a permanent reduction to the Revolving Committed Amount.
<PAGE>
4. WAIVERS UNDER THE CREDIT AGREEMENT. The following waivers are hereby
----------------------------------
granted:
Section 4.1 WAIVER OF SECTION 3.3. Compliance by the Credit Parties
---------------------
with Section 3.3b(iv) of the Credit Agreement is waived to the extent
necessary to satisfy the condition precedent to the effectiveness of this
Agreement set forth in Section 9(b)(iii).
Section 4.2 WAIVER OF SECTION 7.12. Compliance by the Credit Parties
----------------------
with Section 7.12 of the Credit Agreement is waived as to the periods
ending on or before October 3, 1998.
Section 4.3 WAIVER OF SECTION 8.10. Compliance by the Credit Parties
----------------------
with Section 8.10 of the Credit Agreement is waived to the extent necessary
for the Parent to amend its Articles or Certificate of Incorporation, if
necessary, to provide for the issuance of additional common and/or
preferred stock in order to satisfy the condition precedent to the
effectiveness of this Agreement set forth in Section 9(b)(iii).
Section 4.4 WAIVER OF SECTION 8.11. Compliance by the Credit Parties
----------------------
with Section 8.11 of the Credit Agreement is waived to the extent necessary
for the Credit Parties to satisfy the condition precedent to the
effectiveness of this Agreement set forth in Section 9(b)(iii).
Section 4.5 WAIVER OF SECTION 8.12. Compliance by the Credit Parties
----------------------
with Section 8.12 of the Credit Agreement is waived to the extent necessary
for the Credit Parties to satisfy the condition precedent to the
effectiveness of this Agreement set forth in Section 9(b)(iii).
5. EFFECTIVE DATE. Sections 2 through 4 of this Agreement shall not
--------------
become effective unless and until (a) Holding, the Borrower, the Agent, and each
Lender shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent, and (b) all conditions precedent in Section
9 of this Agreement shall have been met.
6. AMENDMENT FEE. The Borrower shall pay to the Agent an amendment fee
-------------
for the account of each Lender equal to 0.50% of each such Lender's Credit
Exposure as of October 30, 1998, which shall be earned and payable on October
30, 1998. Borrower's failure or refusal to make such payment when such payment
is due shall be an Event of Default under the Credit Agreement.
7. NO DEFAULT; YEAR 2000 COMPLIANCE. In order to induce the Lenders to
--------------------------------
enter into this Agreement, the Borrower represents and warrants to the Lenders,
as follows:
(a) no Default exists under the Credit Agreement other than as waived
pursuant to Section 4 of this Agreement; and
(b) The Borrower has (i) initiated a review and assessment of all
areas within its business and operations (including those affected by
suppliers and vendors) that could be
<PAGE>
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower (or its suppliers and vendors)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999),
(ii) developed a plan and a timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance
with that timetable. The Borrower reasonably believes that all of its
computer applications that are material to its business and operations will
on a timely basis be able to perform properly date-sensitive functions for
all dates before and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that a failure to do so could not
reasonably be expected to have a material adverse effect on Borrower's
business or operations.
8. REPRESENTATIONS AND WARRANTIES. The representations and warranties of
------------------------------
Holding and the Borrower set forth in the Credit Agreement are true and correct
in all material respects as of the date hereof, both before and after giving
effect to this Agreement (unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date).
9. CONDITIONS PRECEDENT. This Agreement shall not be effective until all
--------------------
corporate actions of Holding and Borrower taken in connection herewith and the
transactions contemplated hereby shall be satisfactory in form and substance to
Agent and Lenders, and each of the following conditions precedent shall have
been satisfied on or before December 1, 1998:
(a) All out-of-pocket fees and expenses of Agent or any Lender in
connection with the Credit Documents, including this Agreement, including
legal and other professional fees and expenses incurred on or prior to the
date of this Agreement, including, without limitation, the fees and
expenses of Winstead Sechrest & Minick P.C, shall have been paid.
(b) Agent and each Lender shall have received each of the following,
in form and substance satisfactory to Agent, Lenders and Agent's counsel:
(i) a certificate of Holding and the Borrower certifying (i) as
to the accuracy in all material respects, after giving effect to this
Agreement, of the representations and warranties set forth in Section
6 of the Credit Agreement, the other Credit Documents and in this
Agreement, and (ii) that there exists no Default or Event of Default,
after giving effect to this Agreement, and the execution, delivery and
performance of this Agreement will not cause a Default or Event of
Default;
(ii) with respect to any third party warehouse in which any
Collateral is stored, a third party warehousemen's agreement, executed
by Borrower, Agent, and the applicable third party warehouseman;
(iii) evidence that (A) Borrower has received sufficient capital
contributions to allow Borrower to (1) purchase at least $48,000,000
(face amount) of Subordinated Debt, and (2) make the scheduled
interest payment due and payable under the Indenture on December 1,
1998, and (B) Borrower has used such capital
<PAGE>
contributions to (1) consummate the tender for subordinated debt
contemplated in clause (A)(1) above and cancel all tendered debt
instruments in accordance with the terms of the Indenture on or before
December 1, 1998, and (2) pay or make provision for the payment of the
interest payment described in clause (A)(2) above;
(iv) certified copies of resolutions of the boards of directors
of each of Holding and the Borrower authorizing the transactions
contemplated by this Agreement; and
(v) a Borrowing Base Report prepared as of November 21, 1998.
10. RELEASES. In consideration of Lenders' agreements herein and certain
--------
other good and valuable consideration, Holding and the Borrower each hereby
expressly acknowledge and agree that neither of them has any setoffs,
counterclaims, adjustments, recoupments, defenses, claims or actions of any
character, whether contingent, non-contingent, liquidated, unliquidated, fixed,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, known or unknown, against any Lender or the Agent or any grounds or
cause for reduction, modification or subordination of the obligations of Holding
or Borrower under the Credit Documents or any liens or security interests of any
Lender or the Agent in each case which arose on or prior to the date hereof. To
the extent Holding or Borrower may possess any such setoffs, counterclaims,
adjustments, recoupments, claims, actions, grounds or causes, each of Holding
and Borrower hereby waives, and hereby releases each Lender and Agent from, any
and all of such setoffs, counterclaims, adjustments, recoupments, claims,
actions, grounds and causes, such waiver and release being with full knowledge
and understanding of the circumstances and effects of such waiver and release
and after having consulted counsel with respect thereto.
11. GENERAL. Except as expressly set forth in this Amendment, the terms,
-------
provisions and conditions of the Credit Agreement and other Credit Documents are
unchanged, and said agreements, as amended, shall remain in full force and
effect and are hereby confirmed and ratified as being in full force and effect.
This Agreement, the Credit Agreement and the other Credit Documents referred to
herein or therein constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior and
current understandings and agreements, whether written or oral. The invalidity
or enforceability of any provision hereof shall not affect the validity or
enforceability of any other term or provision hereof. The headings in this
agreement are for convenience of reference only and shall not alter, limit or
otherwise affect the meaning hereof. Each of this Agreement and the Credit
Agreement is a Credit Document and may be executed in any number of
counterparts, which together shall constitute one instrument, and shall bind and
inure to the benefit of the parties and their respective successors and assigns,
including as such successors and assigns all holders of any Note. This
Agreement shall be governed by and construed in accordance with the laws (other
than the conflict of law rules) of the State of North Carolina.
For all purposes of the Credit Agreement, the signature pages to this
Amendment shall be deemed to be the signature pages of each Lender party to the
Credit Agreement.
<PAGE>
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
GORGES HOLDING CORPORATION
By: /s/ J. David Culwell
------------------------------------
Name: J. David Culwell
----------------------------------
Title: CEO
---------------------------------
GORGES/QUIK-TO-FIX FOODS, INC.
By: /s/ A. Scott Letier
------------------------------------
Name: A. Scott Letier
----------------------------------
Title: Chief Financial Officer
---------------------------------
NATIONSBANK, N.A.,
Individually and as Agent
By: /s/ Jay T. Wampler
------------------------------------
Name: Jay T. Wampler
----------------------------------
Title: Senior Vice President
---------------------------------
BANKBOSTON, N.A., formerly The First National
Bank of Boston
By: /s/ Stephen McGehee
------------------------------------
Name: Stephen McGehee
----------------------------------
Title: Managing Director
---------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Mary J. Reasoner
------------------------------------
Name: Mary J. Reasoner
----------------------------------
Title: Vice President
---------------------------------
<PAGE>
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Stephen W. Hipp
------------------------------------
Name: Stephen W. Hipp
----------------------------------
Title: Associate
---------------------------------
By: /s/ A. Scott Letier
------------------------------------
Name: A. Scott Letier
----------------------------------
Title: Chief Financial Officer
---------------------------------
HARRIS TRUST AND SAVINGS BANK
By: /s/ Kimberly A. McMahon
------------------------------------
Name: Kimberly A. McMahon
----------------------------------
Title: Vice President
---------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Phillip K. Liebscher
------------------------------------
Name: Phillip K. Liebscher
----------------------------------
Title: Vice President
---------------------------------
SUNTRUST BANK, ATLANTA
By: /s/ Rainer Zeck
------------------------------------
Name: Rainer Zeck
----------------------------------
Title: Vice President
---------------------------------
By: /s/ Kelly Fox
------------------------------------
Name: Kelly Fox
----------------------------------
Title: Banking Officer
---------------------------------
<PAGE>
EXHIBIT 1.1
-----------
BORROWING BASE REPORT
---------------------
AGENT: NationsBank, N.A. DATE:_______________
BORROWER: Gorges/Quik-To-Fix Foods, Inc.
This Borrowing Base Report, prepared as of ___________, is executed and
delivered by Borrower pursuant to that certain Credit Agreement dated as of
November 26, 1996 among the Borrower, each of the banks or other lending
institutions which is or may from time to time become a signatory thereto and
any successors or permitted assigns thereof ("LENDERS") and Agent (as amended,
supplemented or modified from time to time, the "CREDIT AGREEMENT"). All terms
used herein shall have the meanings assigned to them in the Credit Agreement.
Borrower represents and warrants to Agent that all information contained
herein is true, correct, and complete, and that the total Eligible Accounts and
total Eligible Inventory referred to below represent the Eligible Accounts and
Eligible Inventory that qualify for purposes of determining the Borrowing Base
under the Credit Agreement.
ELIGIBLE ACCOUNTS OF THE CREDIT PARTIES:
1. Accounts (ending balance for period ended __________, 19__)........ $_______
2. Less: Ineligible Accounts (determined pursuant to the
definition of Eligible Accounts in the Credit Agreement),
including, without duplication:
(a) Accounts not paid within 30 days of when due................... $_______
(b) Accounts for which the account debtor is entitled to
any allowable discount or owns a corresponding account
payable or past due credit..................................... $_______
(c) Accounts subject to any defense, setoff, dispute or
counterclaim or for which the account debtor is
entitled to delay payment...................................... $_______
(d) Accounts on which the account debtor is not domiciled
in the United States unless,
(i) such account is supported by one or more irrevocable
letters of credit acceptable to Agent or
(ii) such account is subject to credit insurance payable
to Agent or
(iii) such account is otherwise acceptable to Agent............ $_______
(e) Accounts owed by other Affiliates or any officer or employee
of any Credit Party affiliated with any Credit Party directly
or indirectly by virtue of ownership, control, management
or otherwise................................................... $_______
(f) Accounts not arising out of the actual and bona fide sale
and delivery of inventory in the ordinary course of business
in accordance with related documents........................... $_______
(g) Accounts including progress billings, bill and hold
invoices or retainage invoices................................. $_______
(h) Accounts from sales on consignment, guaranteed sale,
sale-and-return, sale on approval or other conditional
payment terms.................................................. $_______
(i) Accounts owed by each account debtor with over 15% of the
balances owed by such account debtor and its Affiliates
outstanding and payable to the Credit Parties for more
than 30 days past the original due date........................ $_______
(j) Accounts not payable in Dollars................................ $_______
(k) Accounts owed by the United States or any other government
for which the Federal Assignment of Claims Act of 1940,
as amended, or other applicable law (other than the Uniform
Commercial Code) has not been complied with.................... $_______
(l) Accounts owed by account debtor that is not Solvent,
or is subject to proceedings under debtor relief laws
or other proceedings that reasonably could result in
material adverse change in such account debtor's
financial condition............................................ $_______
(m) Accounts which either the Agent or Required Lenders
exclude due to debtor's unsatisfactory financial condition
or payment record.............................................. $_______
(n) Accounts subject to events or occurrences which impair
the validity, enforceability or collectibility
of such accounts............................................... $_______
(o) Accounts related to inventory that is returned, reclaimed,
or repossessed................................................. $_______
(p) Accounts evidenced by instruments or chattel paper............. $_______
(q) Accounts subject to a lien other than Permitted Liens.......... $_______
<PAGE>
3. Total Ineligible Accounts (sum of Lines 2(a)-(q)).................. $_______
4. Reserves against accounts receivables $____________
5. Total Eligible Accounts (Line 1 minus the greater of
Line 3 or Line 4).................................................. $_______
ELIGIBLE INVENTORY OF CREDIT PARTIES.:
6. Total Inventory (valued at lesser of actual cost for purchase
or fair market value).............................................. $_______
7. Less: Ineligible Inventory (determined pursuant to the
definition of Eligible Inventory in the Credit Agreement,
without duplication)
(a) Inventory not usable or saleable by applicable Credit Party
in its ordinary course of business............................. $_______
(b) Work-in-process inventory...................................... $_______
(c) Inventory shipped or delivered on consignment,
sale or return, or similar terms............................... $_______
(d) Inventory considered bill and hold goods....................... $_______
(e) Returned, damaged or defective goods........................... $_______
(f) Inventory which has been held for over 180 days................ $_______
(g) Inventory considered packaging, shipping materials,
and raw ingredients other than meat............................ $_______
(h) Inventory that is not
(I) in the possession of the applicable Credit Party and
stored at property owned by it, or
(II) in the possession of the applicable Credit Party and
stored at leased locations or third party warehouses
where there is more than $100,000 in inventory............ $_______
(i) Inventory subject to a lien other than Permitted Liens......... $_______
8. Total Ineligible Inventory (sum of Lines 7(a)-(j))................. $_______
9. Mark-ups in connection with in-transit costs for inventory
to be stored at third-party locations.............................. $_______
10. Reserves against inventory......................................... $_______
11. Total Eligible Inventory (Line 6 minus the greater of
[Line 8 minus Line 9] or Line 10).................................. $_______
BORROWING BASE:
12. Total Eligible Accounts (Line 5)................................... $_______
13. Total Eligible Inventory (Line 11)................................. $_______
14. 85% of Line 12..................................................... $_______
15. 50% of Line 13..................................................... $_______
16. Borrowing Base: Sum of Line 14 plus Line 15........................ $_______
17. Outstanding Revolving Loans........................................ $_______
18. Available Credit Amount or amount to be paid if negative
[(the lesser of $19,850,000 or Line 16) minus Line 17]............. $_______
Borrower further represents and warrants to Agent and Lenders that the
representations and warranties contained in Section 6 of the Credit Agreement
are true and correct on and as of the date of this Borrowing Base Report as if
made on and as of the date hereof, and that no Material Adverse Effect, Default,
or Event of Default exists.
Date: _______________ GORGES/QUIK-TO-FIX FOODS, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
<PAGE>
EXHIBIT 2.1
-----------
FORM OF NOTICE OF BORROWING
NationsBank, N.A.,
as Agent for the Lenders
901 Main Street
Dallas, Texas 75202
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, GORGES/QUIK-TO-FIX FOODS, INC. (the "Borrower"), refers to
--------
the Credit Agreement date as of November 25, 1996 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among the
----------------
Borrower, the other Credit Parties party thereto, the Lenders party thereto and
NationsBank, N.A., as Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section 2.1(b) of the
Credit Agreement that it requests a Revolving Loan advance under the Credit
Agreement, and in connection therewith sets forth below the terms on which such
Loan advance is requested to be made:
(A) Date of Borrowing
(which is a Business Day) __________________
(B) Principal Amount of
Borrowing __________________
In accordance with the requirements of Section 5.2, the Borrower hereby
reaffirms the representations and warrants set forth in the Credit Agreement as
provided in subsection (b) of such Section, and confirms that the matters
referenced in subsections (c), (d), (e) and (f) of such Section, are true and
correct.
Very truly yours,
GORGES/QUIK-TO-FIX FOODS, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE>
Exhibit 7.1(c)
--------------
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
For the fiscal period ended ________________, _______.
I, ____________________, [Title] of GORGES/QUIK-TO-FIX FOODS, INC. (the
"Borrower") hereby certify that, to the best of my knowledge and belief, with
________
respect to that certain Credit Agreement dated as of November 25, 1996 (as
amended, modified, extended or restated from time to time, the "Credit
______
Agreement"); all of the defined terms in the Credit Agreement are incorporated
_________
herein by reference) among the Borrower, the other Credit Parties party thereto,
the Lenders party thereto and NationsBank, N.A., as Agent:
a. The company-prepared financial statements which accompany this
certificate are true and correct in all material respects and have been prepared
in accordance with GAAP applied on a consistent basis, subject to changes
resulting from normal year-end audit adjustments.
b. Since _________________ (the date of the last similar certification, or,
if none, the Closing Date) no Default or Event of Default has occurred and is
continuing under the Credit Agreement; and
Delivered herewith are detailed calculations demonstrating compliance by the
Credit Parties with the financial covenant contained in Section 7.12 of the
Credit Agreement as of the end of the fiscal period referred to above.
This _______ day of _______________, ________.
GORGES/QUIK-TO-FIX FOODS, INC.
By: ___________________________
Name: _________________________
Title: ________________________
<PAGE>
Attachment to Officer's Certificate
-----------------------------------
Computation of Financial Covenants
<PAGE>
EXHIBIT 10.2
The Equity Agreement
<PAGE>
EXHIBIT 10.2
================================================================================
EQUITY AGREEMENT
DATED
OCTOBER 29, 1998
BY AND AMONG
CGW SOUTHEAST PARTNERS III, L.P.
AND
GORGES HOLDING CORPORATION
================================================================================
<PAGE>
EXECUTION COPY
EQUITY AGREEMENT
----------------
THIS EQUITY AGREEMENT (this "Agreement") is entered into on this 29th day
of October, 1998, by and among CGW SOUTHEAST PARTNERS III, L.P., a Delaware
limited partnership ("CGW") and GORGES HOLDING CORPORATION, a Delaware
corporation ("GHC").
WHEREAS, CGW and GHC are parties to that certain Securities Purchase and
Stockholders Agreement dated November 25, 1996 (the "Stockholders Agreement") by
and among GHC, CGW, Mellon Bank, N.A., as Trustee for First Plaza Group Trust
("First Plaza"), NationsBanc Investment Corporation, a Delaware corporation
("NationsBank"), J. David Culwell, Richard E. Mitchell, Randall H. Collins,
Robert M. Powers, Hernando Aviles and Stuart Alan Ensor (First Plaza,
NationsBank and Messrs. Culwell, Mitchell, Collins, Powers, Aviles and Ensor are
each an "Other Stockholder" and, collectively, the "Other Stockholders");
WHEREAS, the capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Stockholders Agreement;
WHEREAS, the Board of Directors of GHC has approved a plan for the
reorganization and refinancing of GHC intended to reduce indebtedness and
improve GHC's ability to meet its debt service obligations (the "Reorganization
Plan");
WHEREAS, as part of the Reorganization Plan, and subject to the Minimum
Tender Condition, Senior Financing Condition, Bridge Financing Condition and
Amendment Condition (as those terms are defined herein), GHC proposes to issue
and sell up to 3,675,000 shares of Stock (the "Shares") for Four Dollars
($4.00) per share (the "Price Per Share");
WHEREAS, Section 8 of the Stockholders Agreement requires GHC to offer the
Shares to CGW and each of the Other Stockholders in proportion to their
respective pro rata share of the current number of outstanding and issued shares
of Common Stock ("Pro Rata Share") for the Price Per Share;
WHEREAS, Gorges/Quik-To-Fix Foods, Inc., a Delaware corporation and wholly
owned subsidiary of GHC ("Gorges"), proposes to make an offer (the "Tender
Offer") to purchase not less than Thirty Six Million Dollars ($36,000,000) and
up to Forty Six Million Dollars ($46,000,000) aggregate principal amount of its
11 1/2% Senior Subordinated Notes Due 2006, Series B (the "Notes") guaranteed by
GHC using a written offer in substantially the form attached hereto as Exhibit A
---------
(the "Offer to Purchase");
WHEREAS, upon consummation of the Offer to Purchase, Gorges will be
obligated to make an interest payment on the outstanding Notes in an amount
up to
<PAGE>
$3,000,000, depending on the aggregate principal amount of Notes that remain
outstanding after the consummation of the Offer to Purchase (the "Interest
Payment");
WHEREAS, GHC desires to provide Gorges with the funds necessary to make the
Interest Payment using funds made available to GHC by CGW under the Bridge
Financing Condition (as defined herein);
WHEREAS, because of timing considerations related to Gorges making the
Offer to Purchase, it is not practical for GHC to comply with the provisions of
Section 8 of the Stockholders Agreement prior to the consummation of the Offer
to Purchase;
WHEREAS, in order to provide assurances to GHC that the Shares it proposes
to issue and sell will be fully subscribed for prior to such time as Gorges
makes the Offer to Purchase, CGW has agreed, subject to the satisfaction of the
Minimum Tender Condition, the Senior Debt Condition, the Bridge Financing
Condition and the Amendment Condition, to subscribe for and purchase all of the
Shares; and
WHEREAS, as soon as practical, GHC will notify the Other Stockholders of
such proposed issuance, and CGW shall afford to the Other Stockholders the right
to purchase from it each Other Stockholders' Pro Rata Share of the Shares at the
Price Per Share.
NOW, THEREFORE, for and in consideration of the above mutual
representations, warranties, covenants and agreements and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto mutually covenant and agree as follows:
SECTION 1
PURCHASE AND SALE OF SECURITIES
-------------------------------
1.1 Purchase and Sale of Class A Stock by CGW. Subject to the
-----------------------------------------
satisfaction of the conditions precedent in Section 1.2, GHC agrees to issue and
sell the shares to CGW and CGW agrees to purchase the Shares from GHC for the
Price Per Share. The amount equal to the product of the Shares and the Price Per
Share is hereinafter referred to as the "Aggregate Purchase Price".
1.2 Conditions Precedent to Closing. Notwithstanding any other provisions
-------------------------------
set forth herein, the obligation of CGW to purchase the Shares at the Closing
(as defined below) is subject to the fulfillment or waiver of all of the
following conditions prior to, or contemporaneously with, the Closing.
1.2.1 The Minimum Tender Condition. There shall have been validly
----------------------------
tendered (and not withdrawn) prior to the Expiration Date (as defined in the
Offer to Purchase) not less than Thirty Six Million Dollars ($36,000,000) in the
aggregate principal amount of the Notes ("the Minimum Tender Condition").
<PAGE>
1.2.2 The Senior Financing Condition. There shall have been
----- ------------------------------
completed an amendment to the Credit Agreement, which amendment is in a form and
substance satisfactory to CGW in its sole and absolute discretion (the "Senior
Financing Condition").
1.2.3 The Bridge Financing Condition. GHC shall have made available
------------------------------
to Gorges, through the purchase of additional equity or debt securities of
Gorges, up to Three Million Dollars ($3,000,000) to finance the Interest Payment
(the "Bridge Financing Condition").
1.2.4 The Amendment Condition. The following actions shall have been
-----------------------
taken and completed by GHC (the "Amendment Condition"):
(a) The Board of Directors of GHC shall have adopted, by
unanimous written action of such directors, without a meeting formally convened,
resolutions substantially in the form of Exhibit B hereto (i) adopting an
---------
Amendment of the Certificate of Incorporation, pursuant to which the
capitalization of GHC shall be increased such that the number of authorized
shares of Class A Stock is Ten Million (10,000,000), the number of authorized
shares of Class B Stock is Two Million (2,000,000) and the number of shares of
Preferred Stock without designation is One Million (1,000,000) (the
"Amendment"), (ii) calling a special meeting of the stockholders of GHC by no
later than November 10, 1998, and (iii) recommending that the Amendment be
approved by the stockholders of GHC.
(b) By no later than November 10, 1998, the stockholders of GHC
shall have acted by unanimous written action, without a meeting formally
convened, to adopt resolutions substantially in the form attached as Exhibit C
---------
hereto.
(c) As soon as practicable following an approval of the
Amendment by the stockholders of GHC, GHC shall file the Amendment with the
Secretary of State of the State of Delaware, and shall cause the same to become
effective in accordance with Section 103 of the Delaware General Corporation
Law.
(d) GHC shall receive a certificate from the Secretary of State
of the State of Delaware certifying the filing of the Amendment.
1.3 Closing. Subject to the satisfaction or waiver of all conditions
-------
precedent which are set forth in Section 1.2, the purchase of the Shares by CGW
and consummation of the Bridge Financing described in Section 2 below shall take
place contemporaneously at a closing (the "Closing") to be held at the offices
of Alston & Bird, 1201 W. Peachtree Street, Atlanta, Georgia 30309, on December
1, 1998, or such later date agreed upon by GHC and CGW (the "Closing Date)".
1.4 Deliveries at the Closing. CGW shall pay for the Shares subscribed
-------------------------
for hereunder by (a) transferring to GHC at the Closing Twelve Million Dollars
($12,000,000)
<PAGE>
in aggregate face amount of Notes now owned by CGW which shall be valued at Four
Million Dollars ($4,000,000) for purposes of payment for the Shares, and (b)
paying by wire transfer to the account of GHC, subject to the adjustments in
Section 3.2, the balance of the Aggregate Purchase Price for the Shares. In
consideration of the delivery of the Aggregate Purchase Price, GHC shall deliver
to CGW a certificate registered in the name of CGW representing the Shares
purchased by CGW hereunder.
SECTION 2
BRIDGE FINANCING
2.1 Bridge Financing. Subject to the satisfaction of the Minimum Tender
----------------
Condition, the Senior Financing Condition and the Amendment Condition set forth
in Sections 1.2.1, 1.2.2 and 1.2.4, respectively, CGW shall make available to
GHC, through the purchase of debt or equity securities of GHC, up to Three
Million Dollars ($3,000,000) to GHC (the "Bridge Financing"). Promptly upon
consummation of the Bridge Financing, the proceeds of the Bridge Financing shall
be made available by GHC to Gorges to satisfy the Bridge Financing Condition
described in Section 1.2.3.
2.2 Subordination of the Bridge Loan Financing. If the Bridge Financing
------------------------------------------
is made through the purchase by CGW of debt securities of GHC, CGW agrees to
execute and deliver such other evidence of the subordination of the Bridge
Financing to the prior payment of the indebtedness from time to time outstanding
under the Credit Agreement, as the same may be from time to time amended,
supplemented or replaced, and the indebtedness evidenced by the Notes that
remain outstanding following completion of the Offer to Purchase.
SECTION 3
OFFER TO THE OTHER STOCKHOLDERS
3.1 Notice to the Other Stockholders. As soon as practicable, but in all
--------------------------------
events within three business days following the Closing, GHC and CGW shall give
the notice required by Section 8 of the Stockholders Agreement to the Other
Stockholders.
3.2 Shares Offered to Other Stockholders. If GHC receives timely notice
------------------------------------
from any Other Stockholder stating that such Other Stockholder desires to
purchase his, her or its Pro Rata Share of the Shares, CGW will promptly
transfer to such Other Stockholder such Pro Rata Share of the Shares against
payment to CGW by such Other Stockholder of an amount equal to the product of
the Price Per Share times the number of shares transferred to such Other
Stockholder.
SECTION 4
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations and Warranties of CGW. CGW represents and warrants to
-------------------------------------
GHC as follows:
<PAGE>
4.1.1 Organization and Qualification. CGW is a partnership that is
------------------------------
duly organized, validly existing and in good standing under the laws of
Delaware.
4.1.2 Authority. CGW is an "accredited investor" as such term is
---------
defined in Rule 501 of the Rules and Regulations promulgated under the
Securities Act of 1933, as amended, and has full power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by CGW of this Agreement have been duly and
validly authorized and approved by all necessary action on the part of CGW.
4.1.3 Investment. The Class A Stock to be purchased by CGW hereunder
----------
is being acquired for investment purposes only and for CGW's own account and not
with a view to the resale or distribution of any part thereof, except for
resales to Other Stockholders as provided in Section 3 to satisfy the rights of
such Other Stockholders under Section 8 of the Stockholders Agreement.
4.1.4 Sophistication. CGW has such knowledge and experience in
--------------
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Class A Stock; CGW has the ability to bear the
economic risks of such investment; CGW has the capacity to protect his or its
own interests in connection with the transactions contemplated by this
Agreement; and CGW has had an opportunity to obtain such financial and other
information from GHC as it deems necessary or appropriate in connection with
evaluating the merits of the investment in the Class A Stock.
4.2 Representations and Warranties of GHC. GHC represents and warrants to
-------------------------------------
CGW as follows:
4.2.1 Legal Status; Qualification.
---------------------------
(a) GHC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. GHC is duly qualified or
licensed to do business and in good standing as a foreign corporation in all
jurisdictions where the failure to be so qualified or licensed would have a
Material Adverse Effect (as defined in the Stockholders Agreement). GHC is not
in violation of any of the provisions of its Certificate of Incorporation or
Bylaws.
(b) As of the Closing, the only subsidiary of GHC is Gorges. Gorges
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Gorges is duly qualified or licensed to do
business and in good standing as a foreign corporation in all jurisdictions
where the failure to be so qualified or licensed would have a Material Adverse
Effect. Gorges is not in violation of any of the provisions of its Certificate
of Incorporation or Bylaws.
<PAGE>
4.2.2 Corporate Power and Authority; Governmental or Other Consents.
-------------------------------------------------------------
Gorges and GHC each have all requisite corporate power and authority to carry on
their business as presently conducted and as currently proposed to be conducted,
and to own, lease, sell or operate their properties. GHC has the requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, and any other instruments or documents executed and
delivered by it hereunder. No governmental or other consents, approvals,
authorizations, registrations, declarations or filings are required for the
execution, delivery and performance of this Agreement by GHC. Neither GHC nor
any of its subsidiaries are subject to any law, rule or regulation restricting
in any way its ability to issue shares of its capital stock or rights to acquire
such shares.
4.2.3 Due Authorization; Validity; Enforceability. This Agreement
-------------------------------------------
and all other instruments or documents executed by GHC in connection herewith
have been duly authorized, executed and delivered, and constitute legal, valid
and binding obligations of GHC, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general principles of equity (whether
considered in an action at law or in equity).
4.2.4 Truth and Accuracy of Information. None of the documents,
---------------------------------
instruments and other information furnished to CGW by GHC contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make any statements made therein not misleading. No representation,
warranty or statement made by GHC in this Agreement, or in any document or
certificate delivered in connection herewith, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make any statements made therein not misleading. There is no
fact which could reasonably be expected to have a Material Adverse Effect and
which has not been disclosed in the documents provided to CGW.
4.2.5 Litigation. There is no (a) legal, administrative, arbitration
----------
or other proceeding, suit, claim or action of any nature, investigation or
controversy, pending or, to the knowledge of GHC, threatened against Gorges or
GHC, whether at law or in equity, or before or by any arbitrator or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality that, if decided adversely to Gorges or GHC would have
a Material Adverse Effect or would restrain or prohibit GHC from consummating
the transactions provided for herein; or (b) judgment, decree, injunction or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator against Gorges or GHC that would have a Material Adverse Effect or
that would restrain or prohibit GHC from consummating the transactions provided
for herein.
4.2.6 Valid Issuance. All of the outstanding capital stock of GHC
--------------
has been duly authorized and validly issued and is fully paid and non-assessable
and has been issued in compliance with applicable securities and other similar
laws. When issued in accordance with, and for the consideration specified in,
this Agreement, the Class A Stock
<PAGE>
to be purchased by CGW hereunder will have been duly authorized and validly
issued and will be fully paid and non-assessable with no personal liability
attaching to the ownership thereof. CGW will receive title to the Class A Stock
purchased by it hereunder free and clear of any lien, charge or encumbrance,
other than as may be created by the action or inaction of CGW.
SECTION 5
COVENANTS, RIGHTS, OBLIGATIONS AND RESTRICTIONS
-----------------------------------------------
CGW and GHC hereby agree that CGW shall have, and continue to have the
benefit of the covenants, rights, obligations and restrictions set forth in
Sections 5 through 11 in the Stockholders Agreement with respect to the Shares
purchased by CGW under this Agreement; provided that, such covenants, rights,
obligations and restrictions are subject to termination under Section 11.1.4 of
the Stockholders Agreement.
SECTION 6
MISCELLANEOUS
-------------
6.1 Termination. This Agreement and the transactions contemplated herein
-----------
may be terminated at any time prior to the Closing by (a) CGW if the
transactions contemplated hereby have not been closed or if any of the
conditions set forth in Section 1.2 have not been satisfied or waived by CGW by
December 5, 1998; or (b) the agreement of GHC and CGW.
6.2 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
6.3 Entire Agreement, Amendment. This Agreement by GHC and CGW in
---------------------------
connection with, or as required by, this Agreement constitutes the entire
agreement between GHC and CGW with respect to the transactions contemplated by
this Agreement; supersedes all prior or contemporaneous negotiations,
communications, discussions and correspondence concerning the subject matter
hereof; and may be amended or modified only with the written consent of GHC and
CGW.
6.4 Severability of Provisions. If any provision of this Agreement shall
--------------------------
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement, and the parties shall use their respective best efforts to negotiate
and enter into an amendment to this Agreement whereby such provision will be
modified in a manner that is consistent with the intended economic consequences
of the invalid provision and that, as modified, is legal and enforceable.
<PAGE>
6.5 Governing Law. This agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Delaware without giving effect
to any choice of law or conflict, provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of Delaware to be applied.
6.6 Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which, when so executed, shall be deemed to be an original
and all of which, when taken together, shall constitute but one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first written above.
GORGES HOLDING CORPORATION
By: /s/ William A. Davies
-------------------------------
Vice President and Secretary
CGW SOUTHEAST PARTNERS III, L.P.
By: CGW Southeast III, L.L.C., its
General Partner
By: CGW, Inc., its Manager
By: /s/ William A. Davies
-------------------------------
William A. Davies
Managing Director
<PAGE>
EXHIBIT 99.1
Press Release
<PAGE>
EXHIBIT 99.1
COMPANY PRESS RELEASE
GORGES/QUIK-TO-FIX FOODS, INC. ANNOUNCES CASH
TENDER OFFER ON SENIOR SUBORDINATED NOTES
DALLAS, Texas - October 29, 1998 - Gorges/Quik-to-Fix Foods, Inc. ("Gorges" or
the "Company") today announced that is has commenced a cash tender offer
relating to the $100,000,000 outstanding principal amount of 11 1/2% Senior
Subordinated Notes Due 2006, Series B (the "Notes").
The consideration for tendered Notes is $320 per $1,000 principal amount of
the Notes, and includes all accrued and unpaid interest on the Notes to and
through the Expiration Date (the "Tender Offer Consideration"). The tender
offer is for not less than $36,000,000 aggregate principal amount (the "Minimum
Tender Condition") and up to $46,000,000 aggregate principal amount of Notes
(the "Maximum Amount"). To the extent that Notes are properly tendered in excess
of the Maximum Amount, the Company will pay the Tender Offer Consideration to
tendering Holders of Notes pro rata based on the ratio of a Holder's Notes
validly tendered and not withdrawn and the aggregate principal amount of all
Notes validly tendered and not withdrawn, and return to tendering Holders, Notes
not accepted for payment of the Tender Offer Consideration
The tender offer is subject to the satisfaction of a number of conditions,
including: (a) the effectiveness of an amendment to the Company's credit
facility, (b) the receipt by the Company through the Company's parent, Gorges
Holding Corporation ("GHC"), of an equity contribution from CGW Southeast
Partners III, L.P. ("CGW"), the majority shareholder of GHC, of not less than
$11.5 million or such greater amount as is necessary to finance the payment of
the Tender Offer Consideration, (c) CGW providing to GHC up to $3.0 million,
which will be provided to the Company and used to finance the December 1, 1998
interest payment on Notes outstanding after consummation of the Offer, (d) there
having been validly tendered (and not withdrawn) prior to the Expiration Date,
Notes representing not less than the Minimum Tender Condition, and (e) certain
other conditions. All the conditions are mutually dependent, and all must be
satisfied.
The tender offer expires at 12:00 midnight, New York City time, on November
30, 1998, unless extended (the "Expiration Date"). Donaldson, Lufkin & Jenrette
Securities Corporation is acting as the Dealer Manager for the tender offer.
The Depository for the tender offer is IBJ Schroder Bank & Trust Company. The
tender offer is being made pursuant to an Offer to Purchase Statement and
related Letter of Transmittal, which more fully set forth the terms of the
tender offer. Additional information concerning the terms of the tender offer,
tendering notes, conditions to the tender offer and copies of the Offer to
Purchase Statement and Letter of Transmittal may be obtained from Donaldson,
Lufkin & Jenrette, 1201 W. Peachtree Street, Suite 3650, Atlanta, Georgia 30309,
telephone number (404) 897-2894, Attention: Investment
<PAGE>
Banking or from IBJ Schroder Bank & Trust Company, One State Street, New York,
New York 10004, Attention: Securities Processing Window, SC-1.
J. David Culwell, Chief Executive Officer of the Company, stated "the
decision to tender for a portion of the Notes is part of the Company's
restructuring plan, and is intended to improve its debt-to-equity ratio and
ability to service its debt obligations."
The Company is a leading producer, marketer and distributor of quality
value added processed fresh and frozen beef, pork and poultry products supplied
primarily to the foodservice industry under its Gorges and Quik-to-Fix brands.
In addition, the Company co-packs a variety of products for the retail trade as
well as other foodservice outlets, and is also a converter of protein products
under the USDA Commodity Reprocessing Program.
Whenever the words "believes," "expects," "anticipates," "intends,"
"estimates," "plans," "predicts," or similar expressions are used herein or in
the Company's (i) Annual Report on Form 10-K for the fiscal year ended September
28, 1997, (ii) Quarterly Reports on Form 10-Q for the fiscal Quarters ended
December 27, 1997, March 28, 1998 and June 27, 1998, (iii) Current Reports filed
on Form 8-K dated October 21, 1998 and October 30, 1998, (iv) Current Reports on
Form 8-K filed hereafter or (v) in the Offer to Purchase, we are making forward-
looking statements. All such forward-looking statements are qualified in their
entirety by the information set forth in the aforementioned documents and
filings.
Contact:
Gorges/Quik-to-Fix Foods, Inc.
A. Scott Letier
Chief Financial Officer
(972) 690-7675
<PAGE>
EXHIBIT 99.2
Offer to Purchase
<PAGE>
EXHIBIT 99.2
Offer to Purchase For Cash
GORGES/QUIK-TO-FIX FOODS, INC.
OFFER TO PURCHASE FOR CASH
NOT LESS THAN $36,000,000 AND UP TO $46,000,000
AGGREGATE PRINCIPAL AMOUNT
OF ITS OUTSTANDING
11 1/2% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
($100 MILLION PRINCIPAL AMOUNT OUTSTANDING)
- --------------------------------------------------------------------------------
THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON NOVEMBER 30,
1998, UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY BE EXTENDED, THE "EXPIRATION
DATE"). HOLDERS OF NOTES (AS DEFINED BELOW) MUST VALIDLY TENDER THEIR NOTES ON
OR PRIOR TO THE EXPIRATION DATE IN ORDER TO RECEIVE THE TENDER OFFER
CONSIDERATION (AS DEFINED BELOW).
- --------------------------------------------------------------------------------
Gorges/Quik-to-Fix Foods, Inc., a Delaware corporation ("Gorges" or the
"Company"), hereby offers to purchase for cash, upon the terms and subject to
the conditions set forth in this Offer to Purchase (as it may be supplemented
from time to time, the "Offer to Purchase"), and in the accompanying Letter of
Transmittal (the "Letter of Transmittal" and, together with this Offer to
Purchase, the "Offer"), not less than $36,000,000 (the "Minimum Tender
Condition") and up to $46,000,000 aggregate principal amount (the "Maximum
Amount") of its 11 1/2% Senior Subordinated Notes Due 2006, Series B (the
"Notes"). THE OFFER IS SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS,
INCLUDING THE SENIOR FINANCING CONDITION, THE EQUITY CONTRIBUTION CONDITION, THE
BRIDGE FINANCING CONDITION AND THE MINIMUM TENDER CONDITION (EACH AS DEFINED).
The Offer is part of a financial restructuring of the Company intended to
reduce indebtedness and improve the Company's ability to meet its debt service
obligations. The Company is currently in default under the Senior Facility (as
defined) and as a result, it does not have access to funds under the Revolving
Credit Facility (as defined). Although the Company believes that it has
sufficient liquidity to fund operations in the near-term, the Company's free
cash flow will be insufficient to service its December 1, 1998 interest payment
on the Notes. Even if the operational restructuring described herein is
successful, the Company expects it will remain unable to meet its debt service
requirements under its current capital structure. As a result, the Company
believes that a significant financial restructuring, which includes the Offer,
the amendment of its existing Senior Facility, the receipt of the Equity
Contribution (as defined) and the Bridge Financing (as defined), is needed to
improve the Company's ability to meet its debt service obligations.
The table below sets forth certain information relating to the
consideration payable pursuant to the Offer, as more fully described herein:
Notes/Cusip No. Tender Offer Consideration
--------------- --------------------------
11 1/2% Senior Subordinated $320 per $1,000 principal amount
Notes Due 2006, Series B, 382883AB2 of the Notes, and includes all
accrued and unpaid interest to
and through the Expiration Date.
(continued on following page)
------------------------
DONALDSON, LUFKIN & JENRETTE
Dealer Manager
October 29, 1998
<PAGE>
The consideration for tendered Notes is $320 per $1,000 principal amount of
the Notes, and includes all accrued and unpaid interest on the Notes to and
through the Expiration Date (the "Tender Offer Consideration"). Tendering
holders will receive no interest on or in addition to the Tender Offer
Consideration.
If a Holder's Notes are not validly tendered pursuant to the Offer on or
prior to 12:00 Midnight, New York City time, on the Expiration Date or such
tender is withdrawn on or prior to 12:00 Midnight, New York City time, on the
Expiration Date, such Holder will not receive the Tender Offer Consideration.
The Company will not pay the Tender Offer Consideration on tendered Notes in
excess of the Maximum Amount. The "Maximum Amount" shall mean validly tendered
Notes in the aggregate principal amount of $46,000,000. To the extent that
Notes are validly tendered in excess of the Maximum Amount, the Company will pay
the Tender Offer Consideration to tendering Holders of Notes pro rata based on
the ratio of a Holder's Notes validly tendered and not withdrawn to the
aggregate principal amount of all Notes validly tendered and not withdrawn, and
return to tendering Holders, Notes not accepted for payment of the Tender Offer
Consideration.
NOTWITHSTANDING ANY OTHER PROVISION OF THE OFFER, THE COMPANY'S OBLIGATION
TO ACCEPT FOR PAYMENT, AND TO PAY FOR, NOTES VALIDLY TENDERED PURSUANT TO THE
OFFER IS CONDITIONED UPON (A) THE EFFECTIVENESS OF AN AMENDMENT TO THE COMPANY'S
CREDIT FACILITY (THE "SENIOR FACILITY") WITH NATIONSBANK OF TEXAS, N.A.,
(TOGETHER WITH ITS SUCCESSORS BY MERGER, NATIONSBANK ("NATIONSBANK"), AS
AGENT FOR A SYNDICATE OF BANKS (THE "SENIOR FINANCING CONDITION"), (B) THE
RECEIPT BY THE COMPANY THROUGH ITS PARENT, GORGES HOLDING CORPORATION ("GHC"),
OF AN EQUITY CONTRIBUTION FROM CGW SOUTHEAST PARTNERS III, L.P. ("CGW"), THE
MAJORITY SHAREHOLDER OF GHC, OF NOT LESS THAN $11.5 MILLION TO FINANCE THE
PAYMENT OF THE TENDER OFFER CONSIDERATION (THE "EQUITY CONTRIBUTION CONDITION"),
(C) CGW MAKING AN INVESTMENT IN GHC OF UP TO $3.0 MILLION, THE PROCEEDS OF WHICH
WILL BE INVESTED IN THE COMPANY AND USED TO FINANCE THE DECEMBER 1, 1998
INTEREST PAYMENT ON NOTES OUTSTANDING AFTER CONSUMMATION OF THE OFFER (THE
"BRIDGE FINANCING CONDITION"), (D) THERE HAVING BEEN VALIDLY TENDERED (AND NOT
WITHDRAWN) PRIOR TO THE EXPIRATION DATE, NOTES REPRESENTING NOT LESS THAN THE
MINIMUM TENDER CONDITION, AND (E) SATISFACTION OF THE GENERAL CONDITIONS (AS
DEFINED HEREIN). ALL THE CONDITIONS ARE MUTUALLY DEPENDENT, AND ALL MUST BE
SATISFIED. SEE "CONDITIONS TO THE OFFER."
IN THE EVENT THAT THE OFFER IS WITHDRAWN OR OTHERWISE NOT COMPLETED, THE
TENDER OFFER CONSIDERATION WILL NOT BE PAID OR BECOME PAYABLE TO HOLDERS OF THE
NOTES WHO HAVE VALIDLY TENDERED THEIR NOTES IN CONNECTION WITH THE OFFER.
Any questions or requests for assistance may be directed to the Dealer
Manager at its address and telephone number set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed
to the Dealer Manager or to the Depositary. Beneficial owners may also contact
their broker, dealer, commercial bank or trust company for assistance concerning
the Offer.
<PAGE>
CERTAIN OFFER MATTERS
The Company's obligation to accept for purchase and to pay for validly
tendered Notes is conditioned on the satisfaction of the Senior Financing
Condition, the Equity Contribution Condition, the Bridge Financing Condition,
the Minimum Tender Condition and the General Conditions. See "Conditions to the
Offer."
The "Expiration Date" will be 12:00 Midnight, New York City time, on
November 30, 1998, unless extended.
Tenders of Notes may be validly withdrawn at any time on or prior to 12:00
Midnight, New York City time, on the Expiration Date, but not thereafter. In
addition, tenders of Notes may be validly withdrawn if the Offer is terminated
without any Notes being purchased thereunder. In the event of a termination of
the Offer, the Notes tendered pursuant to the Offer will be promptly returned to
the tendering Holder. In no event may Notes be withdrawn after the Expiration
Date unless the Offer is terminated by the Company without any Notes being
purchased hereunder or as otherwise provided herein.
The Tender Offer Consideration which a tendering Holder of Notes is
entitled to receive pursuant to the Offer will be paid promptly on the business
day following the date that the Company accepts Notes for purchase pursuant to
the Offer (the "Acceptance Date") or promptly thereafter (the "Payment Date").
The Acceptance Date and the Payment Date will follow the Expiration Date.
See "Certain Significant Considerations" and "Certain U.S. Federal Income
Tax Considerations" for discussions of certain factors that should be considered
in evaluating the Offer.
Under no circumstances will any interest be payable because of any delay by
the Depositary in the transmission of funds to Holders. Subject to securities
laws and the terms set forth in this Offer, the Company reserves the right (a)
to waive any and all conditions to the Offer, (b) to extend or to terminate the
Offer or (c) otherwise to amend the Offer in any respect.
The Company expressly reserves the absolute right, in its sole discretion,
from time to time to purchase any Notes after the Expiration Date, through open
market or privately negotiated transactions, one or more additional tender or
exchange offers or otherwise on terms that may differ materially from the terms
of the Offer.
NONE OF THE COMPANY, THE GUARANTOR, THE DEALER MANAGER NOR THE DEPOSITARY
MAKE ANY RECOMMENDATION AS TO WHETHER OR NOT HOLDERS SHOULD TENDER NOTES IN
RESPONSE TO THE OFFER.
-----------
<PAGE>
IMPORTANT NOTICE
Any Holder desiring to tender Notes should either (a) in the case of a
Holder who holds physical certificates evidencing such Notes, complete and sign
the Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions therein, have his or her signature thereon guaranteed (if required
by Instruction 1 of the Letter of Transmittal) and send or deliver such manually
signed Letter of Transmittal (or a manually signed facsimile thereof), together
with certificates evidencing such Notes and any other required documents to IBJ
Schroder Bank & Trust Company, as Depositary (the "Depositary"), or (b) in the
case of a Holder who holds Notes in book-entry form, request such Holder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such Holder. A beneficial owner who has Notes registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
such beneficial owner desires to tender Notes so registered. See "Procedures
for Tendering Notes."
Any Holder who desires to tender Notes but who cannot comply with the
procedures set forth herein for tender on a timely basis or whose certificates
for Notes are not immediately available may tender the Notes by following the
procedures for guaranteed delivery set forth under "Procedures for Tendering
Notes Guaranteed Delivery."
The Depository Trust Company ("DTC") has authorized DTC participants that
hold Notes on behalf of beneficial owners of Notes through DTC to tender their
Notes as if they were Holders. To effect a tender, DTC participants may, in
lieu of physically completing and signing the Letter of Transmittal, transmit
their acceptance to DTC through the DTC Automated Tender Offer Program ("ATOP")
for which the transaction will be eligible and follow the procedure for book-
entry transfer set forth in "Procedures for Tendering Notes." A beneficial
owner of Notes that are held of record by a custodian bank, depositary, broker,
trust company or other nominee must instruct such Holder to tender the Notes on
the beneficial owner's behalf. A Letter of Instructions is included in the
solicitation materials provided along with this Offer to Purchase which may be
used by a beneficial owner in this process to effect the tender and consent.
See "Procedures for Tendering Notes."
Tendering Holders will not be obligated to pay brokerage fees, commissions
or fees of the Dealer Manager, the Company or the Depositary.
Questions and requests for assistance may be directed to the Dealer Manager
or the Depositary at their addresses and telephone numbers set forth on the
cover and the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Dealer Manager. Beneficial
owners may also contact their brokers, dealers, commercial banks or trust
companies through which they hold the Notes with questions and requests for
assistance.
THE OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO PURCHASE IN ANY
JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION UNDER SECURITIES OR BLUE SKY LAWS. THE
DELIVERY OF THIS OFFER TO PURCHASE SHALL NOT UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN ANY ATTACHMENTS HERETO OR IN THE AFFAIRS OF
THE COMPANY OR ANY OF ITS AFFILIATES SINCE THE DATE HEREOF.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS OFFER TO PURCHASE AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE GUARANTOR, THE DEALER MANAGER OR THE DEPOSITARY.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO A
TENDER OF NOTES.
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED OR REFERRED TO HEREIN MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS FOR PURPOSES OF THE SECURITIES ACT AND THE EXCHANGE
ACT. ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED OR
REFERRED TO IN THIS OFFER TO PURCHASE THAT ADDRESS ACTIVITIES, EVENTS OR
DEVELOPMENTS THAT THE COMPANY OR ITS AFFILIATES EXPECT OR ANTICIPATE WILL OR MAY
OCCUR IN THE FUTURE, INCLUDING SUCH THINGS AS FUTURE CAPITAL EXPENDITURES
(INCLUDING THE AMOUNT AND NATURE THEREOF), BUSINESS STRATEGY AND MEASURES TO
IMPLEMENT STRATEGY, COMPETITIVE STRENGTHS, GOALS, EXPANSION AND GROWTH OF THE
COMPANY'S AND ITS AFFILIATES' BUSINESS AND OPERATIONS, PLANS, REFERENCES TO
FUTURE SUCCESS AND OTHER SUCH MATTERS ARE FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS MAY INVOLVE UNCERTAINTIES AND OTHER FACTORS THAT MAY
CAUSE THE ACTUAL RESULTS AND PERFORMANCE OF THE COMPANY AND ITS AFFILIATES TO BE
MATERIALLY DIFFERENT FROM FUTURE RESULTS OR PERFORMANCE EXPRESSED OR IMPLIED BY
SUCH STATEMENTS. CAUTIONARY STATEMENTS REGARDING THE RISKS ASSOCIATED WITH SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, THOSE STATEMENTS
INCLUDED UNDER "RISK FACTORS," "SUMMARY" AND ELSEWHERE HEREIN OR IN THE
COMPANY'S (I) ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 28,
1997, (II) QUARTERLY REPORTS ON FORM 10-Q FOR THE FISCAL QUARTERS ENDED DECEMBER
27, 1997, MARCH 28, 1998 AND JUNE 27, 1998, (III) CURRENT REPORTS FILED ON FORM
8-K DATED OCTOBER 21, 1998 AND OCTOBER 30, 1998, AND (IV) CURRENT REPORTS ON
FORM 8-K FILED HEREAFTER OR TO BE FILED BY THE COMPANY WITH THE SECURITIES AND
EXCHANGE COMMISSION. AMONG OTHERS, FACTORS THAT COULD ADVERSELY AFFECT ACTUAL
RESULTS AND PERFORMANCE INCLUDE LOCAL AND REGIONAL ECONOMIC CONDITIONS IN THE
AREAS SERVED BY THE COMPANY AND ITS AFFILIATES, THE COMPANY'S ABILITY TO
IMPLEMENT ITS RESTRUCTURING PLAN, THE COMPANY'S SIGNIFICANT LEVERAGE AND DEBT
SERVICE OBLIGATIONS, THE COMPANY'S RECENT HISTORY OF DECREASES IN NET SALES,
RESTRICTIONS IMPOSED BY THE TERMS OF THE COMPANY'S INDEBTEDNESS, FLUCTUATIONS IN
RAW MATERIALS PRICES, THE COMPANY'S DEPENDENCE ON KEY PERSONNEL, COMPETITION
FROM OTHER PRODUCERS OF BEEF PRODUCTS, RISKS ASSOCIATES WITH GOVERNMENTAL
REGULATION AND ENVIRONMENTAL REGULATION, THE SEASONALITY OF THE COMPANY'S
BUSINESS AND THE COMPANY'S DEPENDENCE ON KEY CUSTOMERS. WHENEVER THE WORDS
"BELIEVES," "EXPECTS," "ANTICIPATES," "INTENDS," "ESTIMATES," "PLANS,"
"PREDICTS," OR SIMILAR EXPRESSIONS ARE USED, WE ARE MAKING FORWARD-LOOKING
STATEMENTS.
ALL WRITTEN FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY AND ITS
AFFILIATES ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY
STATEMENT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Section 1 Summary..................................................... 1
Section 2 Available Information....................................... 3
Section 3 Terms of the Offer.......................................... 3
Section 4 Certain Significant Considerations.......................... 4
Section 5 Certain Information Concerning the Company and the Guarantor 6
Section 6 Operational Restructuring Plan.............................. 6
Section 7 Purpose of the Offer........................................ 7
Section 8 Conditions to the Offer..................................... 8
Section 9 Capitalization.............................................. 9
Section 10 Acceptance for Payment and Payment for Notes................ 10
Section 11 Procedures for Tendering Notes.............................. 10
Section 12 Withdrawal of Tenders....................................... 13
Section 13 Conditions to the Offer..................................... 14
Section 14 Certain U.S. Federal Income Tax Consequences................ 15
Section 15 The Dealer Manager and the Depositary....................... 16
Section 16 Fees and Expenses........................................... 17
Section 17 Source and Amount of Funds.................................. 17
Section 18 Miscellaneous............................................... 17
</TABLE>
<PAGE>
TO HOLDERS OF THE 11 1/2% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
OF GORGES/QUIK-TO-FIX FOODS, INC.
This Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
SECTION 1. SUMMARY.
The following summary is provided solely for the convenience of the
Holders of the Notes. This summary is not intended to be complete and is
qualified in its entirety by reference to the full text and more specific
details contained or incorporated in this Offer to Purchase and any amendments
or supplements hereto. Holders of the Notes are urged to read this Offer to
Purchase in its entirety. Each of the capitalized terms used in this Summary
and not defined herein has the meaning set forth elsewhere in this Offer to
Purchase.
The Company ................... Gorges/Quik-to-Fix Foods, Inc. (the "Company").
The Guarantor ................. Gorges Holding Corporation ("GHC").
The Notes ..................... 11 1/2% Senior Subordinated Notes Due 2006,
Series B of the Company.
The Offer ..................... Offer to purchase not less than $36,000,000 and
up to $46,000,000 aggregate principal amount of
the outstanding Notes.
Expiration Date ............... The Expiration Date of the Offer shall be 12:00
Midnight, New York City time, on November 30,
1998, unless extended.
Tender Offer Consideration .... $320 per $1,000 principal amount of Notes,
including all accrued and unpaid interest on the
Notes to and including the Expiration Date.
Minimum Tenders ............... Tenders of not less than $36,000,000 aggregate
principal amount of Notes.
Acceptance Date ............... The date the Company accepts Notes for purchase
pursuant to the Offer, and which shall follow
the Expiration Date.
Payment Date .................. The Payment Date shall be the business day
following the Acceptance Date or promptly
thereafter.
How to Tender Notes ........... See Section 12 "Procedures for Tendering Notes."
For further information, call the Dealer Manager
or the Depositary or consult your broker,
dealer, commercial bank or trust company for
assistance.
Withdrawal Rights ............. Tenders of Notes may be withdrawn at any time on
or prior to 12:00 Midnight, New York City time,
on the Expiration Date. See Section 13 ?
"Withdrawal of Tenders."
Purpose of the Offer .......... The purpose of the Offer is to acquire not less
than $36,000,000 and up to $46,000,000 aggregate
principal amount of outstanding Notes to enable
the Company to complete a financial
restructuring intended to reduce the Company's
indebtedness and improve its debt service
capabilities.
<PAGE>
Brokerage Commissions and Fees No brokerage fees, commissions or fees are
payable by tendering Holders of the Notes to the
Dealer Manager, the Company or the Depositary.
Further Information .......... Additional copies of this Offer to Purchase and
the Letter of Transmittal may be obtained by
contacting the Dealer Manager, Donaldson, Lufkin
& Jenrette Securities Corporation, 1201 W.
Peachtree Street, Suite 3650, Atlanta, Georgia
30309, telephone number (404) 897-2894,
Attention: Investment Banking or from the
Depositary, IBJ Schroder Bank & Trust Company,
One State Street, New York, New York 10014,
telephone number (212) 858-2176, Attention:
Securities Processing Window SC-1.
<PAGE>
SECTION 2. AVAILABLE INFORMATION.
The Company is subject to the information requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information relating to the Company, with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington D.C. 20549 and at the Commission's regional
offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at prescribed rates. You may obtain additional
information regarding the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
Copies of the Company's (i) Annual Report on Form 10-K for the fiscal year ended
September 28, 1997, (ii) Quarterly Reports on Form 10-Q for the fiscal Quarters
ended December 27, 1997, March 28, 1998 and June 27, 1998, (iii) Current Reports
filed on Form 8-K dated October 21, 1998 and October 30, 1998, and (iv) Current
Reports on Form 8-K filed hereafter or to be filed by the Company with the
Commission can be obtained from the Company without charge by contacting the
Company at 9441 LBJ Freeway, Suite 214, Dallas, Texas 75243 attn: Chief
Financial Officer or from the Commission as set forth above.
All documents and reports filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Offer to Purchase and on or prior to the termination of the Offer should
be considered also. Any statement contained in a document or report referred to
herein shall be deemed to be modified or superseded for purposes of this Offer
to Purchase to the extent that a statement contained herein or in any
subsequently filed document or report referred to herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this Offer
to Purchase.
SECTION 3. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Company is offering to purchase for cash not less
than $36,000,000 and up to $46,000,000 aggregate principal amount of its
outstanding Notes (as defined in the Indenture and as described below) at a
price, for each $1,000 principal amount of Notes validly tendered pursuant to
the Offer, equal to the Tender Offer Consideration. The Tender Offer
Consideration is equal to $320 per $1,000 principal amount of Notes, and
includes all accrued and unpaid interest on the tendered Notes to and including
the Expiration Date.
If the tendered Notes are accepted for payment pursuant to the Offer,
Holders who validly tender their Notes pursuant to the Offer on or prior to
12:00 Midnight, New York City time, on the Expiration Date will receive the
Tender Offer Consideration for each $1,000 principal amount of tendered Notes.
The Company will not pay the Tender Offer Consideration on tendered Notes in
excess of the Maximum Amount. To the extent that Notes are tendered in excess of
the Maximum Amount, the Company will pay the Tender Offer Consideration to
tendering Holders of Notes pro rata based on the ratio of a Holder's Notes
validly tendered and not withdrawn to the aggregate principal amount of all
Notes validly tendered and not withdrawn, and return to tendering Holders, Notes
not accepted for payment of the Tender Offer Consideration.
Subject to the Maximum Amount, all Notes validly tendered in
accordance with the procedures set forth in Section 12 and not withdrawn in
accordance with the procedures set forth in Section 13 on or prior to the
Expiration Date will, upon the terms and subject to the conditions hereof,
including satisfaction of the Senior Financing Condition, the Equity
Contribution Condition, the Bridge Financing Condition, the Minimum Tender
Condition and the General Conditions, be accepted for payment by the Company,
and payments will be made therefor, promptly
<PAGE>
after the Expiration Date. All conditions to the Offer must either be satisfied
or, in the Company's sole discretion, waived, if tendered Notes are to be
accepted for payment promptly after the Expiration Date, be either satisfied or
waived by the Company prior to the expiration of the Offer on the Expiration
Date.
The "Expiration Date" is scheduled to be 12:00 Midnight, New York City
time, on November 30, 1998, unless extended. The "Acceptance Date" is the date
promptly after the Expiration Date, that the Company accepts tendered Notes for
purchase pursuant to the Offer.
Tenders of Notes may be validly withdrawn at any time on or prior to 12:00
Midnight, New York City time, on the Expiration Date, but not thereafter. In
addition, tenders of Notes may be validly withdrawn if the Offer is terminated
without any Notes being purchased thereunder. In the event of a termination of
the Offer, the Notes tendered pursuant to the Offer will be promptly returned to
the tendering Holder.
The Company's obligation to accept, and pay for, Notes validly tendered
pursuant to the Offer is conditioned upon satisfaction of (a) the Senior
Financing Condition, (b) the Equity Contribution Condition, (c) the Bridge
Financing Condition, (d) the Minimum Tender Condition and (e) the General
Conditions. Subject to securities laws and the terms set forth in this Offer to
Purchase, the Company reserves the right, exercisable in the Company's sole
discretion prior to the expiration of the Offer on the Expiration Date, (i) to
waive any and all conditions to the Offer, (ii) to extend or to terminate the
Offer or (iii) otherwise to amend the Offer in any respect. See "Conditions to
the Offer." The rights reserved by the Company in this paragraph are in addition
to the Company's rights to terminate the Offer described in Section 14. Any
extension, amendment or termination of the Offer will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension of the Offer to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which any public announcement may be made, the Company
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, the Company will disseminate additional Offer
materials and extend such Offer to the extent required by law. See "Withdrawal
of Tenders and Revocation of Consents."
SECTION 4. CERTAIN SIGNIFICANT CONSIDERATIONS.
The following considerations, in addition to the other information
described elsewhere herein or incorporated herein by reference, should be
carefully considered by each Holder before deciding whether to participate in
the Offer.
Risk of Default Under Notes. The Company is not in compliance with certain
limit and ratio covenants under its Senior Facility. As a result, amounts
outstanding under the Senior Facility have been classified as current
liabilities to reflect the ability of NationsBank to declare all amounts
outstanding under the Senior Facility due and payable at any time. Additionally,
as a result of this noncompliance, NationsBank has restricted the Company from
making additional borrowings under the revolving credit facility portion of the
Senior Facility (the "Revolving Credit Facility"). So long as the Company is in
noncompliance with the covenants under the Senior Facility and, as a result, is
unable to make additional borrowings under the Revolving Credit Facility, the
Company will be unable to make interest payments on the Notes as such interest
payments become due.
The Company intends to eliminate the covenant defaults under the Senior
Facility through the satisfaction of the Senior Financing Condition, which, like
the Offer, is contingent upon satisfaction of the Minimum Tender Condition, the
Equity Contribution Condition and the Bridge Financing Condition. In the event
the Company is unable to consummate the Offer with respect to the Minimum Tender
Condition, the Company will be unable to make interest payments on outstanding
Notes commencing with the December 1, 1998 interest payment. Assuming the Offer
is consummated with respect to the Minimum Tender Condition, the Company expects
<PAGE>
to satisfy the Senior Financing Condition, the Equity Contribution Condition,
the Bridge Financing Condition and the General Conditions and, as a result, be
able to make the December 1, 1998 interest payment on the remaining outstanding
Notes then outstanding. There can be no assurance, however, that the Minimum
Tender Condition will be satisfied, that all other conditions to the Offer will
be satisfied or that the Company will have sufficient funds to make future
interest payments on outstanding Notes.
Significant Leverage and Debt Service. Assuming the Offer is consummated
with respect to the Minimum Tender Condition, the Company will remain highly
leveraged. At June 27, 1998, the Company had total outstanding debt of $148.4
million. After giving pro forma effect to the consummation of the Offer with
respect to the Minimum Tender Condition, but before accounting for the effects
of restructuring and related charges, including the costs of this Offer and the
related transactions, at June 27, 1998, the Company would have had total
outstanding debt of $100.4 million and for the nine months ended June 27, 1998,
the Company's ratio of EBITDA to interest expense would have been 1.43x. As
used herein, "EBITDA" represents the sum of income before interest expense and
provision for income taxes, plus depreciation, amortization and other expenses,
which consist of losses on dispositions of property, plant and equipment. EBITDA
should not be construed as a substitute for operating income, net income or cash
flow from operating activities for purposes of analyzing the Company's operating
performance, financial position and cash flows. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare companies
on the basis of operating performance and to determine a company's ability to
service debt.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including, but not limited to: (i) a substantial
portion of the Company's cash flow from operations must be dedicated to debt
service and will not be available for other purposes; (ii) the Company's ability
to obtain additional debt financing in the future for working capital, capital
expenditures, research and development, acquisitions or other corporate purposes
may be limited; (iii) the borrowings under the Senior Facility accrue interest
at variable rates, which could cause the Company to be vulnerable to increased
interest expense in the event of higher interest rates; and (iv) the Company's
level of indebtedness could limit its flexibility in reacting to changes in its
industry or economic conditions generally.
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond its control, as well as the availability of
borrowings under the Senior Facility or successor facilities. Assuming
consummation of the Offer with respect to the Minimum Tender Condition, the
Company anticipates that its operating cash flow and borrowings under the Senior
Facility or successor facilities should be sufficient to meet its foreseeable
operating expenses and to service its debt requirements as they become due.
However, if the Company is unable to service its indebtedness, it will be forced
to take actions such as reducing or delaying capital expenditures, additional
assets, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these remedies can be
effected on satisfactory terms, if at all. In addition, the Company's ability
to repay the principal amount of the Notes at maturity may depend on its ability
to refinance the Notes. There can be no assurance that the Company will be able
to refinance the Notes at maturity, if necessary, on satisfactory terms, if at
all.
Limited Trading Market. The Notes are not listed on any national or other
securities exchange. To the extent that Notes are tendered and accepted in the
Offer, any existing trading market for the remaining Notes will become more
limited. A debt security with a smaller outstanding principal amount available
for trading (a smaller "float") may command a lower price than would a
comparable debt security with a greater float. Consequently, the liquidity,
market value and price volatility of Notes which remain outstanding may be
adversely affected. Holders of unpurchased Notes may attempt to obtain
quotations for the Notes from their brokers; however, there can be no assurance
that any trading market will exist for the Notes following consummation of the
Offer, or as to the depth or continuation of such market, if any. The extent of
the public market for the Notes following consummation of
<PAGE>
the Offer would depend upon the number of Holders remaining at such time, the
interest in maintaining a market in such Notes on the part of securities firms
and other factors.
Although the Company believes that the Notes trade on a negotiated basis
between certain market makers and holders of the Notes, no generally reliable
public pricing information for the Notes is available. Holders of Notes are
urged to contact their brokers to obtain information as to potential current
market prices.
SECTION 5. CERTAIN INFORMATION CONCERNING THE COMPANY AND THE GUARANTOR.
The Company, a wholly owned subsidiary of GHC, is a leading producer,
marketer and distributor of value added processed fresh and frozen beef, and to
a lesser extent pork and poultry. The Company purchases fresh and frozen beef,
pork and poultry, which it processes into a variety of fully cooked and ready to
cook, value added products. The Company's value added products include but are
not limited to: (i) breaded beef items such as country fried steak and beef
fingers; (ii) charbroiled beef items such as fully cooked hamburger patties,
fajita strips, meatballs and meatloaf; and (iii) other specialty products such
as fully cooked and ready to cook pork sausage, breaded pork and turkey, cubed
steaks and Philly steak slices. The Company's products are primarily sold to
the foodservice industry, which encompasses all aspects of away-from-home food
preparation, including restaurants, schools, healthcare providers, corporation
and other commercial feeding operations. The Company sells its products
primarily through broadline and specialty foodservice distributors throughout
the United States.
SECTION 6. OPERATIONAL RESTRUCTURING PLAN.
Restructuring Plan. Historically, the Company has produced two principal
product lines, value added products and ground beef products. Since January
1998, the Company's results have been adversely affected by a number of factors
including: (i) a significant decrease in sales volume resulting from the loss of
certain national account customers; and (ii) the adverse effects on
profitability of lower margin products, especially ground beef. The Company
recently completed, with the assistance of outside consultants, a detailed
review of its operations and has begun to implement an operational restructuring
plan. The Company intends to implement the following restructuring measures
designed to improve operating efficiencies and better position it to focus its
efforts on its core value added products business (the "Restructuring"):
. Termination of the Low Margin Ground Beef Business. On October 7,
1998, the Company announced its intent to exit the ground beef business to
concentrate on its core value added products. The Company's decision to
exit the ground beef business was based on the ground beef business being a
low margin, commodity business. Additionally, as a middle tier producer of
ground beef products, the Company's operating costs have been higher than
many of its larger competitors and have been adversely affected by
increased regulation of ground beef production and continued consolidation
of the ground beef industry. During the nine months ended June 27, 1998,
ground beef represented approximately 26.8% of the Company's total net
sales.
. Disposition of Ground Beef Manufacturing Facility. The Company
is offering to sell its Orange City, Iowa manufacturing facility (the
"Ground Beef Facility"), and is currently holding discussions with
potential buyers of this facility. Historically, the Ground Beef Facility
has produced almost exclusively ground beef product offerings, representing
100% of the Company's total ground beef production based on weight. If the
Company is unable to sell the Ground Beef Facility by the end of 1998, it
intends to close the Ground Beef Facility to facilitate its exit from the
ground beef business and to reduce costs. Should the Company close the
Ground Beef Facility, it will continue to explore opportunities to sell
this facility. Any proceeds from the sale of the Ground Beef Facility are
required to be used to reduce the Company's borrowings under its Senior
Credit Facility. The Company expects to incur significant charges relating
to the writedown in value or loss on sale of the Ground Beef Facility in
the fiscal years ended October 3, 1998 and in the first quarter of fiscal
year 1999. The proceeds from any sale of the Ground Beef Facility are
expected to be materially less than the Company's needs in order to meet
its objectives under the financial restructuring plan. See "Purpose of the
Offer."
<PAGE>
. Elimination of Lower Margin Value Added Product Offerings. The
Company has identified a number of value added product offerings whose
contribution margins are not sufficient to justify their continued
production. The Company intends to eliminate these product offerings in
order to focus on its higher margin value added product offerings. The
Company believes that elimination of less profitable product lines will
allow it to produce more efficiently its remaining value added product
offerings.
. Reduction of Working Capital Requirements and Corporate Overhead.
The Company intends to reduce inventory levels in connection with its exit
from the ground beef business and the elimination of lower margin value
added product offerings. The Company also has identified various other
areas in which it believes it can reduce its overhead expenses.
Additionally, the Restructuring contemplates a reduction in selling,
general and administrative costs, as well as other corporate overhead
costs.
. Strengthening of Management Team. In connection with the
Restructuring, the Company has strengthened its management team by
eliminating the position of President, hiring a new Vice President of
Operations and creating the new position of Senior Vice President of Sales
and Marketing. The Company believes this will allow it to more efficiently
implement the Restructuring and operate its business following the
Restructuring.
SECTION 7. PURPOSE OF THE OFFER.
The Offer is part of a financial restructuring of the Company intended
to reduce indebtedness and improve the Company's capacity to meet its debt
service obligations. The Company is currently in default under the Senior
Facility and as a result, does not have access to funds under the Revolving
Credit Facility. Although the Company believes that it has sufficient liquidity
to fund operations in the near-term, the Company's free cash flow will be
insufficient to service its December 1, 1998 interest payment on the Notes. The
Company believes that even after the operational restructuring described in
Section 6 above has been implemented, it will continue to be unable to meet its
debt service requirements under its current capital structure. As a result, the
Company believes that a financial restructuring which includes the Offer, the
amendment of its existing Senior Facility and the receipt of the Equity
Contribution is needed to improve the Company's results and ability to meet its
debt service obligations.
SECTION 8. CONDITIONS TO THE OFFER.
This section sets forth a brief description of the Senior Financing
Condition, the Equity Contribution Condition and the Bridge Financing Condition.
The summaries of the Senior Financing Condition, the Equity Contribution
Condition and the Bridge Financing Condition are qualified in their entirety by
reference to the full and complete terms of each as disclosed in the Company's
Report on Form 8-K, dated October 29, 1998.
The Senior Financing Condition. Since its acquisition from Tyson
Foods, Inc. in November 1996, the Company has had a senior credit facility from
NationsBank and a syndicate of banks. The Senior Facility consists of a $40
million term loan facility and a $30 million revolving credit facility maturing
in November 2001. Under the Senior Facility, the Company is subject to
customary financial and other covenants including certain technical or financial
limit and ratio covenants. The Company is currently not in compliance with
certain of these limit and ratio covenants and, as a result of this
noncompliance, amounts outstanding under the Senior Facility have been
classified as current liabilities. On October 29, 1998, the Company entered
into an amendment to the Senior Facility (the "Amendment") that replaces the
existing covenants with a new set of covenants under which the Company can
borrow funds based on the levels of its accounts receivable and inventory. The
implementation of new covenants under the Senior Facility may have the effect of
reducing the amount available under the Revolving Credit Facility depending on
the levels of accounts receivable and inventory at any given time. The
Amendment also shortens the maturity of the Senior Facility from November 2001
to November 2000. The change in maturity of the Senior Facility does not affect
the repayment schedule under the Senior Facility, except that all payments that
previously were due between November 2000 and November 2001 (an aggregate of
<PAGE>
$12.5 million) will be due on November 30, 2000. Additionally, the Amendment
provides that on March 31, 1999, the Company must pay a fee under the Senior
Facility equal to 0.25% of the amounts outstanding under the Senior Facility
and, thereafter, every three months, the Company must pay a fee under the Senior
Facility in cash equal to 0.50% of the amounts outstanding under the Senior
Facility until such time as the Company has secured a replacement facility (the
"Replacement Senior Facility") from another lender. The effectiveness of the
Amendment is contingent upon the consummation of the Offer and the satisfaction
of the Minimum Tender Condition, as well as the satisfaction of the Equity
Contribution Condition and the Bridge Loan Condition.
The Equity Contribution Condition. In order to fund the payment of
the Tender Offer Consideration, GHC expects to receive an equity contribution
from CGW of at least $11.5 million to fund the Minimum Tender Condition, or
such higher amount as may be necessary to purchase validly tendered Notes up to
the Maximum Amount (the "Equity Contribution"). GHC will contribute such amount
to the Company as equity. GHC has entered into an agreement (the "Equity
Agreement") to fund the Equity Contribution through the issuance of shares of
its common stock to CGW in exchange for a cash payment equal to the Equity
Contribution. The Equity Agreement also contemplates as part of the Equity
Contribution the issuance of shares of common stock to CGW in exchange for CGW
contributing $12.0 million aggregate principal amount of Notes previously
purchased by CGW in a negotiated transaction for approximately $3.3 million.
Such exchange of Notes by CGW for GHC common stock is separate and distinct from
the Offer and CGW's tender of such Notes does not affect the satisfaction of the
Minimum Tender Condition or reduce the Maximum Amount.
Pursuant to the terms and conditions of the Equity Agreement and GHC's
shareholders' agreement, GHC's two other major shareholders, NationsBank
Investment Corp. ("NBIC") and Mellon Bank, N.A., as trustee of First Plaza Group
Trust, a General Motors pension plan ("FPGT") will be offered the opportunity to
participate in the Equity Contribution based on their pro rata ownership of GHC.
If NBIC and FPGT do not participate in the Equity Contribution, CGW's ownership
of GHC will increase to 93.8% and NBIC's and FPGT's ownership will decrease to
2.7% and 3.3%, respectively, with the remainder of GHC shares held by the
Company's management. If NBIC and FPGT elect to participate in the Equity
Contribution, CGW, NBIC and FPGT's respective ownership of GHC will increase to
55.5%, 20.0% and 24.4%, respectively, with the remainder of GHC shares held by
management. The effectiveness of the Equity Agreement is contingent upon the
consummation of the Offer and the satisfaction, as well as the satisfaction of
the Senior Financing Condition.
The Bridge Financing Condition. In order to finance the December 1,
1998 interest payment on Notes outstanding after consummation of the Offer, CGW
has committed to make an investment in GHC of not less than $3.0 million (the
"Bridge Commitment"). CGW's investment in GHC will be through a purchase of
equity or through a bridge loan facility that will be subordinated to the Senior
Facility. GHC has commmitted to contribute to the Company the full amount of
the Bridge Commitment on terms parallel to the terms on which CGW invests in
GHC, provided that any loan to the Company by GHC will be subordinated to the
Notes. The effectiveness of the Bridge Commitment is contingent upon the
consummation of the Offer and the satisfaction of the Minimum Tender Condition,
$36,000,000 aggregate principal amount of outstanding Notes, as well as the
satisfaction of the Senior Financing Condition.
The Replacement Senior Facility. As a result of the increased fees
payable under the Senior Facility pursuant to the Amendment, the Company is
seeking a commitment from several alternative lenders with respect to the
Replacement Senior Facility. There can be no assurance that the Company will
successfully implement the Replacement Facility, or that if obtained, such
facility will have terms and conditions satisfactory to the Company or that are
more favorable than the Senior Facility.
<PAGE>
SECTION 9. CAPITALIZATION.
The following table reflects the Company's unaudited historical
capitalization and the Company's pro forma capitalization, adjusted for the
consummation of the Offer with respect to the Minimum Tender Condition upon the
satisfaction of the Senior Financing Condition, the Equity Contribution
Condition and the Bridge Financing Condition. The historical financial
information as of June 27, 1998 has been derived from the Company's unaudited
financial statements. The pro forma financial information does not purport to
represent what the Company's financial condition would have been if the events
had occurred at the date indicated, nor does such information purport to project
the results of the Company for any future period. The Company's pro forma
capitalization does not reflect the Company's results of operations for its
fiscal year ended October 3, 1998, which are expected to include significant
charges relating to the Restructuring, including cash and non-cash charges
relating to, among other things, the write down of inventory, the sale or
closure of the Ground Beef Facility, potential management severance costs and
equipment moving and relocation costs.
<TABLE>
<CAPTION>
As of
June 27, 1998 Pro Forma
Actual Adjustments Capitalization
------------------- -------------------- --------------------
(unaudited) (unaudited)
Current Debt
<S> <C> <C> <C>
Revolving Credit Facility $ 18,000,000 $(18,000,000) (A) -
Term Credit Facility 30,350,000 (20,600,000) (A) $ 9,750,000
Long Term Debt - -
- -
Revolving Credit Facility - 18,000,000 (A) 18,000,000
Term Loan Facility - 20,600,000 (A) 20,600,000
Notes 100,000,000 (48,000,000) (B) 52,000,000
Total Debt 148,350,000 (45,010,000) 100,350,000
Shareholder's Equity (C) 32,259,193 44,513,700 (D) 76,772,893
------------ ------------ ------------
Total Capitalization 180,609,193 (3,486,300) 177,122,893
============ ============ ============
</TABLE>
(A) To reflect changes in debt maturity based on the satisfaction of the Senior
Financing Condition.
(B) To reflect the retirement of tendered Notes equal to the Minimum Tender
Condition and the contribution by CGW of $12.0 million aggregate principal
amount of Notes as part of the Equity Contribution.
(C) Assumes the Bridge Financing Condition is satisfied through an investment
in GHC by CGW and a similar investment in the Company by GHC.
(D) To reflect the Equity Contribution, a $30.4 million dollar gain net of tax
on the retirement of tendered Notes equal to the Minimum Tender Condition,
the contribution by CGW of $12.0 million aggregate principal amount of
Notes as part of the Equity Contribution, transaction expenses and the
write-off of origination fees relating to the Notes and the Senior Facility
estimated at $3.7 million. The Company does not anticipate the need to fund
the related tax liability being generated as a result of the Offer due to
the existence of significant available net operating losses and the
anticipated additional losses from the Restructuring and sale or closure of
the Ground Beef Facility.
<PAGE>
SECTION 10. ACCEPTANCE FOR PAYMENT AND PAYMENT OF NOTES.
Upon the terms and subject to the conditions of the Offer (including
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment) and applicable law, subject to the Maximum Amount, the
Company will purchase, by accepting for payment, and after the Expiration Date
will promptly pay for, all Notes validly tendered pursuant to the Offer, and not
withdrawn, or if withdrawn, validly retendered, such payment to be made by the
deposit of the aggregate Tender Offer Consideration in immediately available
funds by the Company promptly after the Expiration Date with the Depositary,
which will act as agent for tendering Holders for the purpose of receiving
payment from the Company and transmitting such payment to tendering Holders. The
Company will not pay the Tender Offer Consideration on Notes tendered in excess
of the Maximum Amount. To the extent that Notes are tendered in excess of the
Maximum Amount, the Company will accept for payment tendered Notes pro rata
based on the ratio of a Holder's Notes validly tendered and not withdrawn to the
aggregate principal amount of all Notes validly tendered and not withdrawn, and
return to tendering Holders, Notes not accepted for payment of the Tender Offer
Consideration. Under no circumstances will interest be paid on the Tender Offer
Consideration whether as a result of any delay by the Depositary in making
payment.
The Company expressly reserves the right, in its sole discretion and
subject to Rule 14e-1(c) under the Exchange Act, to delay acceptance for payment
of or payment for Notes in order to comply, in whole or in part, with any
applicable law. See "Conditions to the Offer." In all cases, payment by the
Depositary to Holders or beneficial owners of the Tender Offer Consideration for
Notes purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) certificates representing such Notes or timely
confirmation of a book-entry transfer of such Notes into the Depositary's
account at DTC pursuant to the procedures set forth in Section 12, (ii) a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) or a properly transmitted Agent's Message (as defined below)
and (iii) any other documents required by the Letter of Transmittal.
For purposes of the Offer, tendered Notes will be deemed to have been
accepted for payment, if, as and when the Company gives oral or written notice
thereof to the Depositary which is expected to occur on or promptly after the
Expiration Date.
If any tendered Notes are not purchased pursuant to the Offer for any
reason, such Notes not purchased will be returned, without expense, to the
tendering Holder promptly (or, in the case of Notes tendered by book-entry
transfer, such Notes will be credited to the account maintained at DTC from
which such Notes were delivered) after the expiration or termination of the
Offer.
Tendering Holders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the Company, or, except as
set forth in Instruction 7 of the Letter of Transmittal or transfer taxes on the
purchase of Notes pursuant to the Offer.
The Company reserves the right to transfer or assign, in whole at any
time or in part from time to time, to one or more of its affiliates, the right
to purchase Notes tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Company of its obligations under the Offer or
prejudice the rights of tendering Holders to receive payment for Notes validly
tendered and accepted for payment pursuant to the Offer.
IT IS A CONDITION PRECEDENT TO THE COMPANY'S OBLIGATION TO PURCHASE
NOTES TENDERED PURSUANT TO THE OFFER, AMONG OTHER CONDITIONS, THAT THE SENIOR
FINANCING AND THE BRIDGE FINANCING HAVE BEEN CONSUMMATED AND THAT THE EQUITY
CONTRIBUTION HAS BEEN RECEIVED.
SECTION 11. PROCEDURES FOR TENDERING NOTES.
Tender of Notes. The tender by a Holder of Notes (and subsequent
acceptance of such tender by the Company) pursuant to one of the procedures set
forth below will constitute a binding agreement between such Holder and the
<PAGE>
Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Only Holders are authorized to tender their Notes. The procedures by
which Notes may be tendered by beneficial owners that are not Holders will
depend upon the manner in which the Notes are held.
Tender of Notes Held in Physical Form. To effectively tender Notes
held in physical form pursuant to the Offer, a properly completed Letter of
Transmittal (or a facsimile thereof duly executed by the Holder thereof), and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at its address set forth on the back cover of this Offer to
Purchase (or delivery of Notes may be effected through the deposit of Notes with
DTC and making book-entry delivery as set forth below) on or prior to the
Expiration Date; provided, however, the tendering Holder may instead comply with
the guaranteed delivery procedure set forth below. Letters of Transmittal and
tendered Notes should be sent only to the Depositary and should not be sent to
the Company, the Dealer Manager or the Trustee.
Tender of Notes Held Through a Custodian. To effectively tender Notes
that are held of record by a custodian bank, depositary, broker, trust company
or other nominee, the beneficial owner thereof must instruct such Holder to
tender the Notes on the beneficial owner's behalf. A Letter of Instructions is
included in the materials provided with this Offer to Purchase which may be used
by a beneficial owner in this process to effect the tender. Any beneficial
owner of Notes held of record by DTC or its nominee, through authority granted
by DTC, may direct the DTC participant through which such beneficial owner's
Notes are held in DTC to execute, on such beneficial owner's behalf, a Consent
with respect to Notes beneficially owned by such beneficial owner on the day of
execution without tendering the Notes.
Tender of Notes Held Through DTC. To effectively tender Notes that
are held through DTC, DTC participants may, in lieu of physically completing and
signing the Letter of Transmittal and delivering it to the Depositary,
electronically transmit their acceptance through ATOP, and DTC will then edit
and verify the acceptance and send an Agent's Message to the Depositary for its
acceptance. Delivery of tendered Notes must be made to the Depositary pursuant
to the book-entry delivery procedures set forth below or the tendering DTC
participant must comply with the guaranteed delivery procedures set forth below.
THE METHOD OF DELIVERY OF TENDERED NOTES AND LETTERS OF TRANSMITTAL,
ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE TRANSMITTED
THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING NOTES AND
DELIVERING LETTERS OF TRANSMITTAL AND, EXCEPT AS OTHERWISE PROVIDED IN THE
LETTER OF TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE DEPOSITARY PRIOR TO SUCH DATE.
Except as provided below, unless the Notes being tendered are
deposited with the Depositary on or prior to the Expiration Date (accompanied by
a properly completed and duly executed Letter of Transmittal or a properly
transmitted Agent's Message), the Company may, at its option, treat such tender
as defective for purposes of the right to receive the Tender Offer
Consideration. Payment for the Notes will be made only against deposit of the
tendered Notes and delivery of all other required documents.
Book-Entry Delivery Procedures. The Depositary will establish
accounts with respect to the Notes at DTC for purposes of the Offer within two
business days after the date of this Offer to Purchase, and any financial
institution that is a participant in DTC may make book-entry delivery of
tendered Notes by causing DTC to transfer such Notes into the Depositary's
account in accordance with DTC's procedures for such transfer. Although delivery
of tendered Notes may be effected through book-entry transfer into the
Depositary's account at DTC, the Letter of Transmittal (or facsimile thereof),
with any required signature guarantees or an Agent's Message in connection with
a book-entry transfer, and any other required documents, must, in any case, be
<PAGE>
transmitted to and received by the Depositary at one or more of its addresses
set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date, or the guaranteed delivery procedure described below must be
complied with. Delivery of documents to DTC does not constitute delivery to the
Depositary. The confirmation of a book-entry transfer into the Depositary's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from each
participant in DTC tendering the Notes and that such participants have received
the Letter of Transmittal and agree to be bound by the terms of the Letter of
Transmittal and the Company may enforce such agreement against such
participants.
Signature Guarantees. Signatures on all Letters of Transmittal must
be guaranteed by a recognized participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (a "Medallion Signature Guarantor"), unless
the Notes tendered thereby are tendered (i) by a registered Holder of the Notes
(or by a participant in DTC whose name appears on a security position listing as
the owner of such Notes) who has not completed any of the boxes entitled
"Special Issuance/Delivery Instructions" on the Letter of Transmittal, or (ii)
for the account of a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. ("NASD") or a
commercial bank, trust company, or savings bank or savings and loan association
having an office or correspondent in the United States (each of the foregoing,
being referred to as an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal. If the Notes are registered in the name of a person
other than the signer of the Letter of Transmittal or if Notes not accepted for
payment or not tendered are to be returned to a person other than the registered
Holder, then the signatures on the Letters of Transmittal accompanying the
tendered Notes must be guaranteed by a Medallion Signature Guarantor as
described above. See Instructions 1 and 6 of the Letter of Transmittal.
Guaranteed Delivery. If a Holder desires to tender Notes pursuant to
the Offer and time will not permit the Letter of Transmittal, certificates
representing such Notes and all other required documents to reach the
Depositary, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, such Notes may nevertheless be tendered, with the
effect that such delivery and/or tender will be deemed to have been received
prior to the Expiration Date, if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to guaranteed delivery that is accepted by the
Company, is received by the Depositary on or prior to 12:00 Midnight, New
York City time, on the Expiration Date as provided below; and
(iii) the certificates for the tendered Notes, in proper form
for transfer (or a Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described above), together with a
Letter of Transmittal (or facsimile thereof) properly completed and duly
executed, with any required signature guarantees and any other documents
required by the Letter of Transmittal or a properly transmitted Agent's
Message, are received by the Depositary within two business days after the
date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery,
telegram, facsimile transmission or registered or certified mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in the Notice of Guaranteed Delivery.
<PAGE>
Failure to complete the guaranteed delivery procedure outlined above
will not, of itself, affect the validity of, or effect a revocation of, any
Consent properly executed by a Holder of Notes who attempted to use the
guaranteed delivery procedures.
Notwithstanding any other provision hereof, payment of the Tender
Offer Consideration for Notes tendered and accepted for payment pursuant to the
Offer will, in all cases, be made only after timely receipt by the Depositary of
the tendered Notes (or Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described above), and a Letter of
Transmittal (or facsimile thereof) with respect to such Notes, properly
completed and duly executed, with any required signature guarantees and any
other documents required by the Letter of Transmittal, or a properly transmitted
Agent's Message.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE COMPANY BY REASON
OF ANY DELAY IN MAKING PAYMENT TO ANY PERSON USING THE GUARANTEED DELIVERY
PROCEDURES. THE TENDER OFFER CONSIDERATION FOR NOTES TENDERED PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES WILL BE THE SAME AS THAT FOR NOTES DELIVERED TO
THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE, EVEN IF THE NOTES TO BE
DELIVERED PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES ARE NOT SO DELIVERED TO
THE DEPOSITARY, AND THEREFORE PAYMENT BY THE DEPOSITARY ON ACCOUNT OF SUCH NOTES
IS NOT MADE, UNTIL AFTER THE PAYMENT DATE.
Backup U.S. Federal Income Tax Withholding. To prevent backup U.S.
federal income tax withholding, each tendering Holder of Notes must provide the
Depositary with such Holder's correct taxpayer identification number and certify
that such Holder is not subject to backup U.S. federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tendered Notes
pursuant to any of the procedures described above will be determined by the
Company in the Company's sole discretion (whose determination shall be final and
binding). The Company reserves the absolute right to reject any or all tenders
of any Notes determined by it not to be in proper form or, in the case of Notes,
if the acceptance for payment of, or payment for, such Notes may, in the opinion
of the Company's counsel, be unlawful. The Company also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer or
any defect or irregularity in any tender with respect to Notes of any particular
Holder, whether or not similar defects or irregularities are waived in the case
of other Holders. The Company's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the Instructions thereto)
will be final and binding. None of the Company, the Guarantor, the Depositary,
the Dealer Manager, the Trustee or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification. If the Company waives its
right to reject a defective tender of Notes, the Holder will be entitled to the
Tender Offer Consideration.
SECTION 12. WITHDRAWAL OF TENDERS
Tenders of Notes may be withdrawn at any time on or prior to 12:00
Midnight, New York City time, on the Expiration Date (but not thereafter if the
Company accepts any tendered Notes for payment). Tenders of Notes may not be
withdrawn after 12:00 Midnight, New York City time, on the Expiration Date. In
addition, tenders of Notes may be validly withdrawn if the Offer is terminated
by the Company without any Notes being purchased thereunder. In the event of a
termination of the Offer, the Notes tendered pursuant to the Offer will be
promptly returned to the tendering Holder (or, in the case of Notes tendered by
book-entry transfer, such Notes will be credited to the account maintained at
DTC from which such Notes were delivered).
For a withdrawal of a tender of Notes to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be received by
the Depositary on or prior to 12:00 Midnight, New York City time, on the
Expiration Date at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must (i) specify the name of the person
who tendered the Notes to be withdrawn, (ii) contain the description of the
Notes to be withdrawn and identify the certificate number or numbers shown on
<PAGE>
the particular certificates evidencing such Notes (unless such Notes were
tendered by book-entry transfer) and the aggregate principal amount represented
by such Notes and (iii) be signed by the Holder of such Notes in the same manner
as the original signature on the Letter of Transmittal by which such Notes were
tendered (including any required signature guarantees), if any, or be
accompanied by (x) documents of transfer sufficient to have the Trustee register
the transfer of the Notes into the name of the person withdrawing such Notes and
(y) a proper completed irrevocable proxy that authorized such person to effect
such revocation on behalf of such Holder. If the Notes to be withdrawn have been
delivered or otherwise identified to the Depositary, a signed notice of
withdrawal is effective immediately upon written or facsimile notice of
withdrawal even if physical release is not yet effected. Any Notes properly
withdrawn will be deemed to be not validly tendered for purposes of the Offer.
Withdrawal of Notes can be accomplished only in accordance with the
foregoing procedures.
ALL QUESTIONS AS TO THE VALIDITY (INCLUDING TIME OF RECEIPT) OF
NOTICES OF WITHDRAWAL WILL BE DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE
DISCRETION (WHOSE DETERMINATION SHALL BE FINAL AND BINDING). NONE OF THE
COMPANY, THE GUARANTOR, THE DEPOSITARY, THE DEALER MANAGER, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO
GIVE ANY SUCH NOTIFICATION.
SECTION 13. CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer and in addition to
(and not in limitation of) the Company's rights to extend and/or amend the
Offer, the Company shall not be required to accept for payment, purchase or pay
for, and may delay the acceptance for payment of, any tendered Notes, in each
event subject to Rule 14e-1(c) under the Exchange Act, and may terminate the
Offer, if any of the Senior Financing Condition, the Equity Contribution
Condition, the Bridge Financing Condition or the Minimum Tender Condition shall
not have been satisfied, or if any of the following (the "General Conditions")
have occurred:
(i) there shall have been instituted, threatened or be pending
any action or proceeding (or there shall have been any material adverse
development to any action or proceeding currently instituted, threatened or
pending) before or by any court, governmental, regulatory or administrative
agency or instrumentality, or by any other person, in connection with the
Offer that is, or is reasonably likely to be, in the sole judgment of the
Company, materially adverse to the business, operations, properties,
condition (financial or otherwise), assets, liabilities or prospects of the
Company or the Guarantor and its subsidiaries, taken as a whole, or which
would or might, in the sole judgment of the Company, prohibit, prevent,
restrict or delay consummation of the Offer;
(ii) an order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been proposed, enacted, entered,
issued, promulgated, enforced or deemed applicable by any court or
governmental, regulatory or administrative agency or instrumentality that,
in the sole judgment of the Company, would or might prohibit, prevent,
restrict or delay consummation of the Offer or that is, or is reasonably
likely to be, materially adverse to the business, operations, properties,
condition (financial or otherwise), assets, liabilities or prospects of the
Company or the Guarantor and its subsidiaries, taken as a whole;
(iii) any event shall have occurred or is believed likely to
occur that affects the business or financial affairs of the Company that,
in the sole judgment of the Company, would or might prohibit, prevent,
restrict or delay consummation of the Offer;
(iv) the Trustee under the Indenture shall have objected in any
respect to or taken action that could, in the sole judgment of the Company,
adversely affect the consummation of the Offer or shall have taken any
action that challenges the validity or effectiveness of the procedures used
by the Company in the making of the Offer or the acceptance of, or payment
for, the Notes;
<PAGE>
(v) there shall have occurred (1) any general suspension of, or
limitation on prices for, trading in securities in the United States
securities or financial markets, (2) any significant adverse change in the
price of the Notes or any publicly traded securities of the Company or any
of its affiliates in the United States, or other major European securities
or financial markets, (3) a material impairment in the trading market for
debt securities, (4) a declaration of a banking moratorium or any
suspension of payments in respect to banks in the United States or other
major financial markets, (5) any limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, or other event that, in the reasonable
judgment of the Company, might affect the extension of credit by banks or
other lending institutions, (6) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (7) in the case of any of the
foregoing existing on the date hereof, a material acceleration or worsening
thereof; or
(vi) there shall have occurred or be likely to occur any event or
series of events that, in the sole judgment of the Company, would or might
prohibit, prevent, restrict or delay consummation of the Offer or that
will, or is reasonably likely to, impair the contemplated benefits to the
Company of the Offer, or otherwise result in the consummation of the Offer
not being or not being reasonably likely to be in the best interests of the
Company.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition (including any action or inaction by the Company) and may be
waived by the Company, in whole or in part, at any time and from time to time,
in the sole discretion of the Company. All conditions to the Offer must, if
Notes are to be accepted for payment promptly after the Expiration Date, be
either satisfied or waived by the Company prior to the expiration of the Offer
on the Expiration Date. The failure by the Company at any time to exercise any
of the foregoing rights will not be deemed a waiver of any other right and each
right will be deemed an ongoing right which may be asserted at any time and from
time to time.
SECTION 14. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain anticipated U.S.
federal income tax consequences of the Offer to Holders of Notes. This
discussion is general in nature, and does not discuss all aspects of U.S.
federal income taxation that may be relevant to a particular Holder in light of
the Holder's particular circumstances, or to certain types of Holders subject to
special treatment under U.S. federal income tax laws (such as insurance
companies, tax-exempt organizations, financial institutions, brokers, dealers in
securities, and taxpayers that are neither citizens nor residents of the United
States, or that are foreign corporations, foreign partnerships or foreign
estates or trusts as to the United States). In addition, the discussion does
not consider the effect of any foreign, state, local or other tax laws, or any
U.S. tax considerations (e.g., estate or gift tax) other than U.S. federal
income tax considerations, that may be applicable to particular Holders.
Further, this summary assumes that Holders hold their Notes as "capital assets"
(generally, property held for investment) within the meaning of section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code").
This summary is based on the Code and Treasury Regulations, rulings,
administrative pronouncements and decisions in effect as of the date hereof, all
of which are subject to change or differing interpretations at any time with
possible retroactive effect.
EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR TO DETERMINE THE
FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES TO IT OF THE OFFER
<PAGE>
Tax Considerations for Tendering Holders. A sale of Notes by a Holder
pursuant to the Offer will be a taxable transaction to such Holder for U.S.
federal income tax purposes. A Holder will generally recognize capital gain
(subject to the market discount rules discussed below) or loss on the sale of a
Note in an amount equal to the difference between (i) the amount of cash
received for such Note, other than the portion of such amount that is properly
allocable to accrued interest, and that will be taxed as ordinary income, and
(ii) the Holder's "adjusted tax basis" for such Note at the time of sale. Such
capital gain or loss will be long-term if the Holder held the Note for more than
one year at the time of such sale. Generally, a Holder's adjusted tax basis for
a Note will be equal to the cost of the Note to such Holder, increased by the
amount of any original issue discount previously included in such Holder's gross
income up to the date of disposition, less payments (other than interest
payments) received on the Notes. If applicable, a Holder's tax basis in a Note
also would be increased by any market discount previously included in income by
such Holder pursuant to an election to include market discount in gross income
currently as it accrues, and would be reduced by the principal deduction of any
of amortizable bond premium that the Holder has previously elected to deduct
from gross income on an annual basis.
An exception to the capital gain treatment described above may apply
to a Holder who purchased a Note from another Holder at a "market discount."
Subject to a statutory de minimis exception, market discount is the excess of
the "face amount" of such Note over the Holder's tax basis in such Note
immediately after its acquisition by such Holder. In general, unless the Holder
has elected to include market discount in income currently as it accrues, any
gain realized by a Holder on the sale of a Note having market discount in excess
of a de minimis amount will be treated as ordinary income to the extent of the
market discount that has accrued (on a straight line basis or, at the election
of the Holder, on a constant interest basis) while such Note was held by the
Holder.
Tax Considerations for Non-Tendering Holders. A Holder who does not
participate in the Offer should not recognize any income, gain, or loss for U.S.
federal income tax purposes as a result of the Proposed Amendments, due to the
fact that there will be no modifications on the Notes remaining outstanding.
Backup Withholding. The receipt of the Tender Offer Consideration by
a Holder who tenders its Notes may be subject to backup withholding at the rate
of 31% with respect to such payments unless such Holder (i) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or (ii) provides a correct taxpayer identification number, certifies
as to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. Any amount withheld
under these rules will be credited against the Holder's U.S. federal income tax
liability. A Holder who does not provide its correct taxpayer identification
number may be subject to penalties imposed by the IRS.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATIONS. HOLDERS SHOULD CONSULT
THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE OFFER,
INCLUDING THE EFFECT OF ANY FEDERAL, STATE, LOCAL, FOREIGN OR OTHER LAWS.
SECTION 15. THE DEALER MANAGER AND THE DEPOSITARY
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has been
engaged to act as the Dealer Manager in connection with the Offer, and DLJ is
also serving as a financial advisor to the Company in connection with the
Company's financial restructuring. The Dealer Manager may contact Holders of
Notes regarding the Offer and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward this Offer to Purchase and related
materials to beneficial owners of Notes. At any given time, the Dealer Manager
may trade the Notes for its own account or for the accounts of customers, and
accordingly, may hold a long or short position in the Notes.
<PAGE>
The Company has agreed to indemnify the Dealer Manager against certain
liabilities, including certain liabilities under the federal securities laws.
The Dealer Manager has provided in the past and may provide in the future, other
investment banking and financial advisory services to the Company and its
affiliates.
Any Holder that has questions concerning the terms of the Offer may
contact the Dealer Manager at its address and telephone number set forth on the
back cover page of this Offer to Purchase.
IBJ Schroder Bank & Trust Company has been appointed as Depositary for
the Offer. Letters of Transmittal and all correspondence in connection with the
Offer should be sent or delivered by each Holder or a beneficial owner's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at the
addresses and telephone number set forth on the back cover page of this Offer to
Purchase. Any Holder or beneficial owner that has questions concerning tender
procedures or whose Notes have been mutilated, lost, stolen or destroyed should
contact the Depositary at the addresses and telephone number set forth on the
back cover of this Offer to Purchase. The Company has agreed to indemnify the
Depositary against losses incurred by the Depositary as a result of the
performance of its obligations with respect to the Offer, other than losses
resulting from the Depositary's gross negligence, willful misconduct or bad
faith.
SECTION 16. FEES AND EXPENSES
The Company will pay the Dealer Manager and the Depositary reasonable
and customary fees for their services and will reimburse them for their
reasonable out-of-pocket expenses in connection therewith. The Company will pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Offer to
Purchase and related documents to the beneficial owners of Notes.
SECTION 17. SOURCE AND AMOUNT OF FUNDS
The maximum amount of funds required by the Company to pay the Tender
Offer Consideration in connection with the Offer is estimated to be
approximately $14.4 million, assuming the Maximum Amount is reached. The Company
intends to obtain such funds through the Equity Contribution, subject to the
satisfaction of the conditions to such Equity Contribution.
SECTION 18. MISCELLANEOUS
The Company is not aware of any jurisdiction in which the making of
the Offer is not in compliance with applicable law. If the Company becomes
aware of any jurisdiction in which the making of the Offer would not be in
compliance with applicable law, the Company will make a good faith effort to
comply with any such law. If, after such good faith effort, the Company cannot
comply with any such law, the Offer will not be made to (nor will tenders of
Notes be accepted from or on behalf of) the owners of Notes residing in such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Company not contained in this Offer to Purchase
or in the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
Manually signed facsimile copies of the Letter of Transmittal,
properly completed and duly executed, will be accepted. The Letter of
Transmittal, Notes and any other required documents should be sent or delivered
by each Holder or its broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase.
From time to time in the future, the Company and/or its affiliates
may, in their sole discretion, seek to acquire any Notes which remain
outstanding following consummation or expiration of the Offer, through open
market purchases, privately negotiated transactions, tender offers, exchange
<PAGE>
offers or otherwise, upon such terms and at such prices as they may determine,
which may be more or less than the price to be paid pursuant to the Offer and
may be for cash or other consideration. Alternatively, the Company or its
affiliates may consider taking other steps in order to render inoperative the
restrictions contained in the relevant covenants of the Indenture. There can be
no assurance as to which, if any, of these alternatives (or combinations
thereof) the Company may pursue, whether they would be successful or the timing
thereof.
<PAGE>
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
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By Hand or Overnight Courier: By Mail:
<S> <C>
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
One State Street P.O. Box 84
New York, New York 10004 Bowling Green Station
Attention: Securities Processing Window SC-1 New York, New York 10274-0084
Attention: Reorganization Department
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Facsimile Transmissions:
(212) 858-2611
Confirmation by Telephone:
(212) 858-2103
Any questions or requests for assistance or additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Depositary, or to the Dealer Manager at its
phone number set forth below or such Holder's broker, dealer, commercial bank or
trust company or nominee.
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
1201 W. Peachtree Street
Suite 3650
Atlanta, Georgia 30309
Telephone: (404) 897-2894
Facsimile: (404) 897-3302
Attention: Investment Banking
