SAFELITE GLASS CORP
8-K, 1998-12-21
AUTOMOTIVE REPAIR, SERVICES & PARKING
Previous: OCWEN ASSET INVESTMENT CORP, 10-K/A, 1998-12-21
Next: TELEHUB COMMUNICATIONS CORP, 424B3, 1998-12-21


<PAGE>   1
                       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): DECEMBER 14, 1998

                              SAFELITE GLASS CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                    DELAWARE
                 (STATE OR OTHER JURISDICTION OF INCORPORATION)

       333-21949                                       13-3386709
(COMMISSION FILE NUMBER)                 (I.R.S. EMPLOYER IDENTIFICATION NUMBER)

                    1105 SCHROCK ROAD, COLUMBUS, OHIO 43229
             (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)    (ZIP CODE)

                                 (614) 842-3000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                      NONE

         (FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>   2
ITEM 5. OTHER EVENTS

EXTENSION OF EXCHANGE OFFER. 

     As of the date hereof, the Company has $100 million in principal amount of
9 7/8% Senior Subordinated Notes Due 2006 outstanding which were issued in
December 1996 (the "Initial Notes"). On October 29, 1998, the Company commenced
an offer to exchange $1,000 in principal amount of 9 7/8% Series B Senior
Subordinated Notes Due 2006 (the "Exchange Notes") for each $1,000 in principal
amount of Initial Notes outstanding (the "Exchange Offer"). The initial
expiration date for the Exchange Offer (the "Expiration Date"), as set forth in
the Prospectus, dated October 29, 1998, was 5:00 P.M., New York City time, on
November 30, 1998. On November 30, 1998, the Company extended the Expiration
Date until 5:00 P.M., New York City time, on December 14, 1998, and on December
14, 1998, the Company extended the Expiration Date until 5:00 p.m., New York
City time, on December 22, 1998. The press release issued by the Company on
December 14, 1998 to announce the extension of the Expiration Date is attached
as an exhibit to this Form 8-K. 

OFFERING OF $55,000,000 AGGREGATE PRINCIPAL AMOUNT OF 9 7/8% SERIES C SENIOR
SUBORDINATED NOTES DUE 2006:

     On December 18, 1998 (the "Closing Date"), the Company, consummated an 
offering (the "Offering") of $55,000,000 aggregate principal amount of 9 7/8%
Series C Senior Subordinated Notes due 2006 (the "Series C Notes"). The Offering
was made in reliance upon exemptions from registration under the Securities Act
of 1933, as amended, for an offer and sale of securities which does not involve
a public offering. The Notes were issued at an offering price of 91.649% plus
accrued interest, if any, from the date of original issuance. The terms of the
Notes provide that, unless the Company has received net cash proceeds of $50
million in exchange for the issuance of Qualified Capital Stock (as defined in
the Indenture pursuant to which the Notes were issued) (the "Equity Investment")
by January 29, 1999, the Company shall be required to redeem the Notes (the
"Special Redemption") on February 3, 1999 at a redemption price of 92.649% of
the original principal amount of the Notes, plus accrued interest until the date
of redemption (the "Special Redemption Price"). During the period from the
closing of the Offering until the earlier of (x) completion of the Equity
Investment and (y) the date of the Special Redemption, the net proceeds from the
Offering will be held by a Collateral Agent pursuant to a Pledge Agreement. In
addition, any shortfall between the amount required to fund the Special
Redemption and the net proceeds of the Offering deposited under the Pledge
Agreement will be provided by drawings by the Collateral Agent on an irrevocable
letter of credit issued under the Senior Credit Facilities (as defined below) on
the Closing Date in favor of the Collateral Agent for the benefit of the holders
of the Notes.

BANK AMENDMENT. 

     As reported in the Company's Report on Form 10-Q for the quarter ended
October 3, 1998, the Company had initiated discussions with the lenders ("the
Lenders") providing senior credit facilities under a Credit Agreement, dated
December 20, 1996, as amended (the "Bank Credit Agreement"), seeking
modifications of certain covenants in the Bank Credit Agreement which would
enhance the Company's likelihood of continued compliance thereunder. On the
Closing Date, the Company and the Lenders entered into an amendment to the Bank
Credit Agreement described below. The amendment, however, will cease to be
effective after February 3, 1999, unless the Equity Investment shall have been
completed and the pledged funds shall have been released to the Company by such
date. The proceeds of the Equity Investment, if it occurs, would be used to 
repay $15 million of term loans and to pay down $35 million of revolving credit 
loan under the Bank Credit Agreement.

     The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the Bank Credit Agreement. The Chase Manhattan
Bank ("Chase") and other lenders have provided the Company with senior secured
credit facilities (referred to herein as the Senior Credit Facilities) in an
aggregate principal amount, prior to the application of the proceeds of this
Offering, of $450 million. After the application of the gross proceeds of the
Offering and the Equity Investment and after giving effect to the amendment to
the Senior Credit Facilities, the terms of the Bank Credit Agreement would be as
follows:

     Structure. The Senior Credit Facilities would consist of (a) a term loan 
facility in an aggregate principal amount of $288.6 million (the "Term Loan 
Facility"), consisting of three tranches in principal amounts of $123.6 million 
(the "Tranche A Term Loan"), $82.5 million (the "Tranche B Term Loan"), and 
$82.5 million (the Tranche C Term Loan"), respectively, and (b) a revolving 
credit facility providing for revolving loans to the Company and the issuance 
of letters of credit for the account of the Company in an aggregate principal 
amount (including the aggregate stated amount of letters of credit and the 
aggregate reimbursement and other obligations in respect thereof) at any time 
not to exceed $100 million (the "Revolving Credit Facility").

     Repayment. The Tranche A Term Loan and the Revolving Credit Facility will
mature on the sixth anniversary of the initial borrowing under the Bank Credit
Agreement (such initial borrowing date referred to hereinafter as the
"Closing"). The Tranche B Term Loan would mature on the seventh anniversary of
the Closing. The Tranche C Term Loan would mature on the eighth anniversary of
the Closing. The Term Loan Facility would be subject to the following
amortization schedule:

<TABLE>
<CAPTION>
                                                                   REPAYMENT AMOUNTS
                                                        ---------------------------------------
                                                         TRANCHE A     TRANCHE B     TRANCHE C
                         DATE                            TERM LOAN     TERM LOAN     TERM LOAN
                         ----                           -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Last business day in September and December 1999......  $         0   $   206,138   $   206,138
Last business day in March, June, and September 2000..            0       206,138       206,138
Last business day in December 2000....................    3,682,736       206,138       206,138
Last business day in March 2001.......................    7,500,000       206,138       206,138
Last business day in June, September and December
  2001................................................    7,500,000       206,138       206,138
Last business day in March, June, September and
  December 2002.......................................   10,000,000       206,138       206,138
Last business day in March, June, and September 2003..   12,500,000     9,946,153       206,138
December 17, 2003.....................................   12,500,000            --            --
Last business day in December 2003....................           --     9,946,153       206,138
Last business day in March, June and September 2004...           --     9,946,153     9,843,084
December 17, 2004.....................................           --     9,946,153            --
Last business day in December 2004....................           --            --     9,843,084
Last business day in March, June and September 2005...                         --     9,843,084
December 17, 2005.....................................           --            --     9,843,084
</TABLE>
 
 
     Interest. At the Company's election, the interest rates per annum
applicable to the loans under the Bank Credit Agreement are fluctuating rates of
interest measured by reference to either (a) an adjusted London inter-bank
offered rate ("LIBOR") plus a borrowing margin or (b) an alternate base rate
("ABR") (equal to the higher of Chase's published prime rate and the Federal
Funds effective rate plus 1/2 of 1% per annum) plus a borrowing margin. Under
the amendment, the borrowing margins applicable to the Tranche A Term Loan and
loans under the Revolving Credit Facility are 1.75% per annum for ABR loans and
2.75% per annum for LIBOR loans; the borrowing margins applicable to the Tranche
B Term Loan are 2.00% per annum for ABR loans and 3.00% per annum for LIBOR
loans; and the borrowing margins applicable to the Tranche C Term Loan are 2.25%
per annum for ABR loans and 3.25% per annum for LIBOR loans. All of the forgoing
margins are subject to reduction based upon the achievement by the Company of
certain financial performance thresholds. Amounts under the Bank Credit
Agreement not paid when due will bear interest at a default rate equal to 2.00%
per annum above the rate otherwise applicable.

     Covenants. The Bank Credit Agreement contains a number of covenants that,
among other things, restrict the ability of the Company to dispose of assets,
incur additional indebtedness, incur guarantee obligations, prepay other
indebtedness or amend other debt instruments, pay dividends, create liens on
assets, make investments, loans or advances, make acquisitions, create
subsidiaries, engage in mergers or consolidations, change the business conducted
by the Company, make capital expenditures, or engage in certain transactions
with affiliates and otherwise restrict certain corporate activities. In
addition, under the Bank Credit Agreement, the Company is required to comply
with specified financial ratios and minimum tests, including minimum interest
coverage ratios and maximum leverage ratios. The Bank Credit Agreement, as
amended, requires the Company to maintain a leverage ratio (total debt to
EBITDA, each as adjusted) of 9.75 to 1.00 commencing on March 31, 1999 and
declining thereafter in predetermined increments, and an interest coverage ratio
(EBITDA to interest expense, each as adjusted) of 1.15 to 1.00 commencing on
March 31, 1999 and increasing thereafter in predetermined increments.

     The terms of the Bank Credit Agreement are otherwise on terms consistent 
with the Bank Credit Agreement as amended prior to the Closing Date. 

EQUITY INVESTMENT

     The stockholders of the Company are holding discussions regarding the
structure of the Equity Investment and the completion of the Equity Investment
by January 29, 1999. The Company expects that certain current stockholders which
are affiliates of Thomas H. Lee Company ("THL") will purchase a percentage of
the equity to be issued which is at least equal to THL's proportionate economic
interest in the Company on the Closing Date. Upon completion of such Equity
Investment, THL will at least maintain its percentage ownership of the Company's
Class A Voting Common Stock. There can be no assurance, however, that the Equity
Investment will be completed. If the Equity Investment is not completed on or
prior to January 29, 1999, then the Notes will be redeemed pursuant to the
Special Redemption and the amendment to the Credit Agreement described above
will cease to be effective.

FORWARD LOOKING STATEMENTS. 

       This report contains forward-looking statements concerning the Company's
operations, economic performance and financial condition, including, in 
particular, the likelihood of the Company's success in developing and expanding
its business and successfully realizing expected net synergies from the Vistar
Merger. These statements are based upon a number of assumptions and estimates 
which are inherently subject to significant uncertainties and contingencies, 
many of which are beyond the control of the Company, and reflect future 
business decisions which are subject to change. Some of these assumptions 
inevitably will not materialize, and unanticipated events will occur which 
will affect the Company's results.

Statements contained in this report that are prefaced with the words "may,"
"will," "expect," "anticipate," "continue," "estimate," "project," "intend,"
"designed" and similar expressions, are intended to identify forward-looking
statements regarding events, conditions and financial trends that may affect the
Company's future plans of operations, business strategy, results of operations
and financial position. These statements are based on the Company's current
expectations and estimates as to prospective events and circumstances about
which the Company can give no firm assurance. Further, any forward-looking
statement speaks only as of the date on which such statement is made, and the
Company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such statement is made.
As it is not possible to predict every new factor that may emerge,
forward-looking statements should not be relied upon as a prediction of actual
future financial condition or results. These forward-looking statements, like
any forward-looking statements, involve risks and uncertainties that could cause
actual results to differ materially from those projected or anticipated. Such
risks and uncertainties include product demand, regulatory uncertainties, the
effect of economic conditions, the impact of competitive products and pricing,
changes in customers' ordering patterns and costs and expenses associated with
any Year 2000 issues associated with the Company, including updating software
and hardware and potential system interruptions. The foregoing list should not
be construed as exhaustive.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

     (a) Press release of the Company dated December 14, 1998
<PAGE>   3
                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                       

                                        SAFELITE GLASS CORP.


Dated: December 21, 1998                By: /s/ Douglas A. Herron
                                            ------------------------------
                                            Name: Douglas A. Herron
                                            Title: Chief Financial Officer

  

<PAGE>   1

FOR IMMEDIATE RELEASE                        CONTACT:  Dee Uttermohlen
                                                       Marketing Manager
                                                       (614) 842-3017
                         
                                                       Poe Timmons
                                                       VP, Corporate Controller
                                                       (614) 842-3325



SAFELITE GLASS CORP. EXTENDS EXPIRATION DATE FOR
EXCHANGE OFFER UNTIL DECEMBER 22, 1998

     Columbus, OH -- December 14, 1998 -- SAFELITE GLASS CORP. announced today 
that it has extended the Expiration Date until 5:00 p.m., New York City time, 
on December 22, 1998, for its Offer to Exchange $1,000 in Principal Amount of 
9 7/8% Series B Senior Subordinated Notes Due 2006 for each $1,000 in Principal 
Amount of Outstanding 9 7/8% Senior Subordinated Notes Due 2006 (the "Exchange 
Offer"), in accordance with the terms of the Prospectus, dated October 29, 
1998, related to the Exchange Offer. The previously announced Expiration Date 
was December 14, 1998. All other terms of the Exchange Offer as set forth in 
the Prospectus remain unchanged. As of 12:00 P.M., New York City time, on
December 14,  1998, $97,450,000 aggregate principal amount of the $100 million
outstanding Senior Subordinated Notes Due 2006 had been tendered for exchange.

     Additional information concerning the terms of the Exchange Offer and a
copy of the Prospectus and related documents may be obtained at State Street
Bank and Trust Company, the Exchange Agent, at Two International Place, 4th
Floor, Corporate Trust Division, Boston, MA 02110, Attention: Susan Lavey,
Facsimile: 617-664-5290.

     Founded in 1947, Safelite is the largest provider of automotive glass 
replacement and repair services and claims management solutions in the United 
States. The Company operates two manufacturing facilities, four national call 
centers, 75 automotive glass warehouses, and 699 SAFELITE(R) AUTOGLASS service 
centers in all 50 states.




                                     -###-



© 2019 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission