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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange
Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
WAXMAN INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
$94,502,869.50 in aggregate cash to be received by Registrant
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(Rule 240.0-11(c)(2))
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid: $18,900.57
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[ ] Fee previously paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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WAXMAN INDUSTRIES, INC.
24460 Aurora Road
Bedford Heights, Ohio 44146
July __, 2000
To all stockholders of Waxman Industries, Inc.:
The attached Information Statement is being delivered to you pursuant
to Regulation 14C of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
The attached Information Statement is being mailed on or about July __,
2000 to all stockholders of record on July __, 2000 of Waxman Industries, Inc.,
a Delaware corporation (the "Company") in connection with the proposed sale of
all of the outstanding common stock of Barnett Inc., a Delaware corporation,
held by Waxman USA Inc., a Delaware corporation and wholly-owned subsidiary of
the Company ("Waxman USA"), pursuant to the acquisition of Barnett by Wilmar
Industries, Inc. (such transaction herein referred to as the "Barnett Stock
Sale"). The Barnett Stock Sale has been approved by the Board of Directors of
the Company, the Board of Directors of Waxman USA and the holders of a majority
of the votes of the outstanding shares of common stock, par value $0.01 per
share, and Class B common stock, $.01 par value per share, of the Company
entitled to vote with respect to the Barnett Stock Sale. Accordingly,
resolutions will not be submitted to the stockholders for a vote.
The attached Information Statement is being provided to you pursuant to
Rule 14c-2 under the Securities Exchange Act of 1934, as amended. The
Information Statement contains a more detailed description of the Barnett Stock
Sale. The Information Statement also constitutes notice to the Company's
stockholders of the taking of corporate action by written consent of the
stockholders, as required by Section 228(d) of the Delaware General Corporation
Law. I encourage you to read the Information Statement, including the exhibits
thereto, thoroughly, but you need not take any other action at this time. No
vote will take place because all required stockholder approvals have been
obtained.
Sincerely,
Armond Waxman
President and Co-Chief Executive
Officer of the Company
Bedford Heights, Ohio
July __, 2000
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WAXMAN INDUSTRIES, INC.
24460 Aurora Road
Bedford Heights, Ohio 44146
-------------------------------
INFORMATION STATEMENT
-------------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished to holders of the
outstanding shares of common stock, par value $0.01 per share, and Class B
common stock, $.01 par value per share (collectively, the "Common Stock"), of
Waxman Industries, Inc., a Delaware corporation (the "Company") in connection
with the proposed sale of all of the outstanding common stock of Barnett Inc., a
Delaware corporation ("Barnett"), held by Waxman USA Inc., a Delaware
corporation and wholly-owned subsidiary of the Company ("Waxman USA") pursuant
to the acquisition of Barnett by Wilmar Industries, Inc. ("Wilmar") (such
transaction herein referred to as the "Barnett Stock Sale").
In conformance with the Delaware General Corporation Law ("DGCL") and
the Company's Certificate of Incorporation, the affirmative vote of the holders
of a majority of the votes of the outstanding shares of Common Stock entitled to
vote have approved the Barnett Stock Sale. Accordingly, the Company is not
asking you for a proxy and you are requested not to send us a proxy. For that
reason, no proxy card has been enclosed and no meeting of stockholders will be
held to consider approval of the Barnett Stock Sale. The Barnett Stock Sale will
not become effective until at least twenty days after the mailing of this
Information Statement.
THIS INFORMATION STATEMENT IS FURNISHED BY THE COMPANY FOR INFORMATION
PURPOSES ONLY. This Information Statement is first being mailed on or about July
__, 2000 to holders of record of Common Stock as of the close of business on
July __, 2000 (the "Record Date"). As of the Record Date, [______] shares of
common stock and [_______] shares of Class B common stock were outstanding.
THESE ACTIONS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH ACTIONS NOR UPON THE ACCURACY
OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
The date of this Information Statement is July __, 2000.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") and,
accordingly, files periodic reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
filed with the Commission are available for inspection and copying at the public
reference facilities of the Commission located in Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and should also be available
for inspection and copying at prescribed rates at the regional offices of the
Commission located at Northwest Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains an Internet web site at http://www.sec.gov that contains reports,
proxy statements and other information. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. The
Company's filings can also be read at the NASDAQ Stock Market, 800 Merritt
Boulevard, Trumbull, CT 06601.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT INCLUDED IN THEIR ENTIRETY. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS INFORMATION STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST TO MARK WESTER, VICE PRESIDENT - FINANCE, WAXMAN INDUSTRIES, INC., 24460
AURORA ROAD, BEDFORD HEIGHTS, OHIO 44146, TELEPHONE NUMBER (440) 439-1830, BY
FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS WITHIN ONE BUSINESS DAY OF
RECEIPT OF SUCH REQUEST.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by this
reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1999.
2. The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1999.
3. The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 1999.
4. The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2000.
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5. The Company's Current Report on Form 8-K filed with the
Commission on July 17, 2000.
All documents filed by the Company pursuant to Sections 13(a), 13(c)
and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date that the stockholders' authorization of the Barnett Stock Sale becomes
effective shall be deemed to be incorporated by reference herein and to be a
part hereof from the date any such document is filed.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof. This Information
Statement is qualified in its entirety by the information and financial
statements (including notes thereto) appearing in the documents incorporated
herein by reference, except to the extent set forth in the immediately preceding
statement.
No person is authorized to give any information or to make any
representations with respect to the matters described in this Information
Statement other than those contained herein or in the documents incorporated by
reference herein. Any information or representations with respect to such
matters not contained herein or therein must not be relied upon as having been
authorized by the Company. The delivery of this Information Statement shall not,
under any circumstances, create any implication that there has been no change in
the affairs of the Company since the date hereof or that the information in this
Information Statement or in the documents incorporated by reference herein is
correct as of any time subsequent to the date hereof or thereof.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Information Statement and the information incorporated herein by
reference may contain "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 that are based on the beliefs
of the Company and its management. When used in this document, the words
"anticipate," "believe," "continue," "estimate," "expect," "intend," "may,"
"should," and similar expressions are intended to identify forward-looking
statements. Such statements reflect the current view of the Company with respect
to future events and are subject to certain risks, uncertainties and
assumptions, including, but not limited to, the risk that the Company may not be
able to implement its debt reduction program (as described herein), risks
associated with currently unforeseen competitive pressures and risks affecting
the Company's industry, such as decreased consumer spending, customer
concentration issues and the effects of general economic conditions. In
addition, the Company's business, operations and financial condition are subject
to the risks, uncertainties and assumptions which are described in the Company's
reports and statements filed from time to time with the Securities and Exchange
Commission. Should one or more of those risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein.
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INTRODUCTION
This Information Statement is being furnished to holders of Common
Stock in accordance with the rules and regulations promulgated by the
Commission.
Approval of the Barnett Stock Sale
On July 9, 2000, the Board of Directors of the Company and Waxman USA
approved the Barnett Stock Sale. Messrs. Melvin Waxman, Armond Waxman and
Laurence Waxman, stockholders holding in the aggregate approximately 63.8% of
the aggregate voting power of the Common Stock, have acted by written consent in
lieu of a meeting of stockholders and voted to approve the Barnett Stock Sale.
No additional stockholder vote is necessary to approve the Barnett Stock Sale.
Neither your vote nor your proxy will be solicited.
Effectiveness of the Stockholder Approval of the Barnett Stock Sale
The Company currently anticipates that the Barnett Stock Sale will be
consummated during the third quarter of this year, but in no event will the
Barnett Stock Sale be consummated less than 20 calendar days after the mailing
of this Information Statement.
Stockholders of the Company will have no "dissenter's rights" upon
consummation of the Barnett Stock Sale. For additional information regarding the
Barnett Stock Sale, see "Financial Restructuring of the Company" below.
FINANCIAL RESTRUCTURING OF THE COMPANY
Background
As the Company has previously disclosed, since fiscal 1994, when the
Company last restructured its debt, the Company has continuously endeavored to
reduce its high level of debt through the monetization of its assets, as well as
through gaining efficiencies from its continuing businesses. As a result, the
Company has undertaken various initiatives to raise cash, improve its cash flow
and reduce its debt obligations or improve its financial flexibility during the
intervening period. Nonetheless, the Company continues to have a significant
amount of indebtedness.
As of March 31, 2000, the Company's consolidated debt (excluding trade
payables and accrued liabilities) was approximately $148.2 million. That
indebtedness is principally comprised of (i) approximately $92.797 million
accreted principal amount of 12 3/4% Senior Secured Deferred Coupon Notes due
June 2004 of the Company (the "Deferred Coupon Notes") issued pursuant to that
certain indenture (as amended, the "DC Notes Indenture"), dated as of May 20,
1994, by and between the Company and The Huntington National Bank, as trustee,
(ii) $35.855 million principal amount of 111/8% Senior Notes due September 2001
of Waxman USA (the "Senior Notes") issued pursuant to that certain indenture (as
amended, the "Senior Notes Indenture" and together with the
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DC Notes Indenture, the "Indentures"), dated as of April 1, 1996, by and between
Waxman USA and the United States Trust Company of New York, as trustee and (iii)
$20.566 million of current maturities of debt, including obligations under the
Company's working capital credit facility (the "Congress Credit Facility") with
Congress Financial Corporation ("Congress"). Cash interest of approximately $6.0
million is payable semi-annually with respect to the Deferred Coupon Notes, and
the Senior Notes require semi-annual cash interest payments of approximately
$2.0 million. Excluding these interest payments, the Company believes that
operating cash flow, together with borrowings under its working capital credit
facilities, will be sufficient in the short-term to fund its working capital
requirements, capital expenditures and cash interest requirements under the
Congress Credit Facility until the expected completion of the Barnett Stock
Sale. Ultimately, however, the Company will not be able to make the interest and
principal payments under its debt instruments without a restructuring of such
debt instruments and/or a significant appreciation in, and monetization of, the
value of the 7,186,530 shares of common stock of Barnett owned by Waxman USA
(the "Barnett Shares"). The Barnett Shares constitute approximately 44.3% of the
outstanding common stock, $.01 par value per share, of Barnett (the "Barnett
Common Stock"), a formerly wholly-owned subsidiary of the Company. Shares of
Barnett Common Stock are listed on the Nasdaq National Market under the symbol
"BNTT." As of July 10, 2000, the closing price at which the Barnett Common Stock
was sold on Nasdaq was $12.3125 per share, and the aggregate market value of the
Barnett Shares based on such closing price was $88.5 million.
The Company held discussions with several of the holders of the
Deferred Coupon Notes and the Senior Notes throughout 1999. Certain of these
bondholders (the "Consenting Noteholders") formed an ad hoc committee of holders
of Deferred Coupon Notes and Senior Notes, with which Committee the Company
continued to have discussions. As a result of these discussions, as previously
announced by the Company, on December 8, 1999, the Company entered into an
agreement (as amended (see below), the "Recapitalization Agreement") with the
Consenting Noteholders with respect to certain elements of the financial
restructuring of the Company (the "Financial Restructuring"). Key elements of
the Financial Restructuring include (x) the sale of the Barnett Shares and the
application of the net proceeds of such sale to pay taxes on such sale, to pay
certain amounts outstanding under the Congress Credit Facility, to pay certain
transaction expenses incurred by the Company, to repay in full the Senior Notes
and, after payment of the foregoing obligations, to apply the remaining amounts
to repay, on a discounted basis, the Deferred Coupon Notes and (y) after the
closing of the Barnett Stock Sale but before the repayment of the Deferred
Coupon Notes, the filing of a consensual, prepackaged Joint Plan of
Reorganization under Chapter 11 of Bankruptcy Code. The application of proceeds
upon consummation of the Barnett Stock Sale is more fully described below in the
subsection entitled "Financial Restructuring-Application of Proceeds." As
discussed in greater detail below, the Company expects to receive gross proceeds
of approximately $94.5 million upon consummation of the Barnett Stock Sale.
The Merger Transaction
On July 10, 2000, Barnett, Wilmar and BW Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of Wilmar ("Merger Sub" and together
with Wilmar, the "Purchaser")
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entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant
to which the Purchaser agreed to acquire all of the outstanding shares of
Barnett Common Stock, for $13.15 per share in cash (the "Merger Consideration"),
pursuant to a merger of Merger Sub with and into Barnett (the "Merger"). The
consummation of the Merger is subject to several conditions, including
regulatory and shareholder approval and the receipt by the Purchaser of debt
financing necessary to fund the Merger. The operative agreements with respect to
the Merger, certain of which are summarized below, have been filed as exhibits
to a Current Report on Form 8-K filed by the Company with the Commission on July
17, 2000.
The aggregate Merger Consideration that Waxman USA will receive for the
Barnett Shares is $94,502,870. The fairness of the Merger Consideration has been
addressed in a fairness opinion issued by Deutsche Banc Alex. Brown, which was
retained by a special committee of outside directors of the Board of Directors
of Barnett.
The Company and Waxman USA entered into several agreements with the
Purchaser with respect to the Merger and the transactions contemplated by the
Merger Agreement. The Company and Waxman USA entered into a stockholder
agreement, dated as of July 10, 2000 (the "Stockholder Agreement"), by and among
the Company, Waxman USA, Wilmar and Merger Sub, providing for, among other
things, a Proxy in favor of the Purchaser and certain covenants by Waxman USA to
vote the Barnett Shares in favor of, and to take such other actions as will
facilitate the consummation of, the Merger. Waxman USA also entered into a
Voting Trust Agreement, dated as of July 10, 2000 (the "Voting Trust
Agreement"), by and among Waxman USA, Wilmar, Merger Sub, Barnett and American
Stock Transfer & Trust Company, as voting trustee (the "Voting Trustee"). The
Voting Trust Agreement provides for the delivery of certain of the Barnett
Shares to the Voting Trustee to vote such shares in favor of the Merger.
Waxman USA also entered into an agreement, dated as of July 7, 2000
(the "Barnett Agreement" and together with the Merger Agreement, the Stockholder
Agreement and the Voting Trust Agreement, the "Transaction Agreements"), by and
between Waxman USA and Barnett, pursuant to which Barnett agrees to purchase
from Waxman USA shares of Barnett Common Stock equal in value to $2,000,000, if
the Merger has not occurred by September 1, 2000.
Application of Proceeds
The proceeds received by Waxman USA from the Barnett Stock Sale will be
applied as follows, in accordance with the provisions set forth in the
Recapitalization Agreement:
- Taxes. Upon the consummation of the Barnett Stock Sale, the
Company shall pay all required taxes with respect to the
Barnett Stock Sale for the taxable year in which the Barnett
Shares are sold ("Taxes"). The Company estimates that the
Taxes will be approximately $1.35 million.
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- Payment to Secured Lender. Upon the consummation of the
Barnett Stock Sale, approximately $9.9 million (representing
the sum of (x) approximately $5,916,000 of interest actually
paid in cash on the Deferred Coupon Notes on December 1, 1999,
(y) approximately $1,994,000 of interest actually paid in cash
on the Senior Notes on March 1, 2000 and (z) $2,000,000 of
restructuring expenses already paid by the Company) shall be
immediately paid by the Company to Congress to be applied to
the obligations under the Congress Credit Facility.
- Satisfaction of Obligations Under the Senior Notes. Upon the
consummation of the Barnett Stock Sale, each holder of Senior
Notes would receive its pro rata share of $35,855,000 of
principal (plus accrued and unpaid interest from March 1, 2000
to the date of payment), in full and complete satisfaction of
the Senior Notes. Assuming the Merger is completed on August
31, 2000, the amount payable to the holders of the Senior
Notes will be approximately $37,849,434, which includes
$1,994,434 in accrued interest.
- Satisfaction of Obligations Under the Deferred Coupon Notes.
Upon the consummation of the Barnett Stock Sale, the remaining
proceeds will be deposited into a segregated account to be
applied to the satisfaction of the Deferred Coupon Notes. On
the effective date (the "Effective Date") of the confirmation
of the Joint Plan of Reorganization by the Bankruptcy Court,
each holder of Deferred Coupon Notes would receive (i) its pro
rata share of the remaining proceeds, allocated between (x)
accrued and unpaid interest and (y) principal and (ii) all
accrued interest or other investment proceeds earned on the
proceeds from the date of the closing of the Barnett Stock
Sale through the date such funds are distributed to the
holders of the Deferred Coupon Notes, in full and complete
satisfaction of any and all claims relating to the Company,
including with respect to the Deferred Coupon Notes.
- Additional Consideration to Holders of Deferred Coupon Notes.
If, within one year from the date the Joint Plan of
Reorganization is confirmed by the Bankruptcy Court, the
Company sells itself or any of its subsidiaries or operating
divisions, or any assets thereof, other than sales of
inventory and other assets in the ordinary course of business
or sells additional equity securities, and such transactions
generate in the aggregate net proceeds in excess of $15.0
million during such one year period ("Excess"), then the
Company shall pay to the holders of the Deferred Coupon Notes
who received the distribution from the Joint Plan of
Reorganization 50% of such Excess.
Consents
The Company and Waxman USA obtained the requisite consents from their
bondholders and secured lender to enter into the transactions contemplated by
the Transaction Agreements. The Company, Waxman USA and the Consenting
Noteholders entered into an Amendment, Consent and
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Waiver, dated as of July 9, 2000 (the "Amendment, Consent & Waiver"), pursuant
to which (i) certain provisions of the Recapitalization Agreement were amended,
(ii) the Consenting Noteholders consented to the taking of certain actions by
the Company and Waxman USA as set forth in the Transaction Agreements, (iii) the
Consenting Noteholders waived any defaults under the Indentures occasioned by
the completion of the transactions contemplated by the Transaction Agreements
and (iv) the Consenting Noteholders agreed not to accelerate, or otherwise take
any action against the Company, due to a default in payment of interest on the
Deferred Coupon Notes. In a letter to the Trustee, dated July 12, 2000, the
Consenting Noteholders instructed the Trustee not to seek acceleration of the
Deferred Coupon Notes, or otherwise take any action against the Company, due to
a default in payment of interest on the Deferred Coupon Notes.
Congress Financial Corporation ("Congress"), secured lender for the
Company, Waxman USA and certain subsidiaries of Waxman USA, consented to the
entering into of the transactions contemplated by the Transaction Agreement by
delivery of a letter agreement, dated as of July 10, 2000 (the "Congress Consent
Letter"), with respect to that certain Loan and Security Agreement, dated as of
June 17, 1999 (as same may be amended from time to time, the "Loan and Security
Agreement"), by and among Western American Manufacturing, Inc. ("WAMI"), WAMI
Sales, Inc. ("WAMI Sales"), Medal of Pennsylvania, Inc. ("Medal") and Waxman
Consumer Products Group Inc. ("WCPG," and together with WAMI, WAMI Sales and
Medal, the "Borrowers"), as Borrowers, and the Company, Waxman USA and TWI,
International, Inc. ("TWI" and together with the Company and Waxman USA, the
"Guarantors") and Congress Financial Corporation (the "Congress"). The Congress
Consent Letter provides for the consent by Congress to the sale by Waxman USA of
all of the Barnett Shares (including those Barnett Shares pledged to Congress
pursuant to the Pledge and Security Agreement, dated as of June 17, 1999 and
amended as of December 8, 1999 and July 10, 2000, by and between Waxman USA and
Congress) in one sale or a series of related sales pursuant to the Merger
Agreement and the other Transaction Agreements and the waiver of certain
defaults under the Loan and Security Agreement occasioned by the completion of
the transactions contemplated by the Transaction Agreements, the
Recapitalization Agreement and the Amendment, Consent and Waiver.
Joint Plan of Reorganization
An integral component of the Financial Restructuring is the filing by
the Company of a prepackaged, consensual Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code. This Joint Plan of Reorganization would be
jointly sponsored by the Company and the Consenting Noteholders, and the only
class of securityholder to be affected under the Joint Plan of Reorganization
would be the holders of the Deferred Coupon Notes. The holders of Common Stock
of the Company would not be impaired under the Joint Plan of Reorganization. In
addition, none of the Company's subsidiaries or operating divisions would be a
part of the Joint Plan of Reorganization, and they would continue to pay all of
their trade creditors, employees and other liabilities under normal trade
conditions. As of the date of this Information Statement, the Joint Plan of
Reorganization has the support of bondholders owning approximately $81,269,000
principal
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amount of Deferred Coupon Notes, or approximately 87.6% of the total principal
amount of such Deferred Coupon Notes.
Although the Consenting Noteholders have agreed to the terms of a
consensual debt restructuring program and have entered into the Recapitalization
Agreement, there can be no assurance that the Financial Restructuring, as
described herein, will be effected as contemplated. Bankruptcy entails many
risks, some of which may change the outcome of the Financial Restructuring and
cause such outcome to materially deviate from the terms as described herein.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Melvin Waxman and Armond Waxman are the Chairman of the Board of
Directors and Vice Chairman of the Board of Directors of Barnett, respectively.
In addition, Melvin Waxman individually owns 24,000 shares of Barnett Common
Stock (constituting less than 0.2% of the outstanding shares of Barnett Common
Stock) and an option, granted under the 1997 Directors Stock Option Plan of
Barnett, exercisable to acquire 100,000 shares of the Barnett Common Stock
(constituting less than 0.7% of the outstanding shares of Barnett Common Stock)
at $21.00 per share. Armond Waxman owns 24,700 shares of Barnett Common Stock
(constituting less than 0.2% of the outstanding shares of Barnett Common Stock)
and an option, granted under the 1997 Directors Stock Option Plan of Barnett,
exercisable to acquire 100,000 shares of Barnett Common Stock (constituting less
than 0.7% of the outstanding shares of Barnett Common Stock) at $21.00 per
share. The aforementioned options will be terminated, without value, upon
consummation of the transactions contemplated hereby.
Barnett has established a committee of its independent directors to
review and approve the Barnett Stock Sale, and has retained independent advisors
to render advice to it with respect thereto. Melvin Waxman, Armond Waxman and
William R. Pray, the President and Chief Executive Officer of Barnett, are not
members of such committee. In addition, it is agreed that each of Melvin Waxman
and Armond Waxman will resign from the Board of Directors of Barnett upon the
consummation of the Barnett Stock Sale.
The Company's wholly-owned subsidiaries engage in business transactions
with Barnett. Products sold to Barnett for resale totaled $19.9 million in
fiscal 1999, $16.2 million in fiscal 1998 and $13.7 million in fiscal 1997.
There were no purchases from Barnett in fiscal 1999 and $0.1 million in fiscal
1997.
The Company and Barnett provide to and receive from each other certain
selling, general and administrative services and reimburse each other for
out-of-pocket disbursements related to those services. In connection with
initial public offering of Barnett, the Company and Barnett, among others,
entered into an intercorporate agreement (the "Intercorporate Agreement").
Pursuant to the Intercorporate Agreement, the Company provides certain
managerial, administrative and financial services to Barnett and is paid by
Barnett for the allocable cost of the salaries and expenses of the
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Company's employees while they are rendering such services. Barnett also
reimburses the Company for actual out-of-pocket disbursements to third parties
by the Company required for the provision of such services by the Company. In
addition to the services provided by the Company to Barnett pursuant to the
Intercorporate Agreement, Barnett also provided certain services to U.S. Lock,
LeRan Gas Products and Madison Equipment, which were divisions or subsidiaries
of the Company until they were sold by the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Capital Stock
The following table sets forth, as of June 30, 2000, the number of
shares of common stock and Class B common stock beneficially owned by each
director and executive officer, by the directors and executive officers of the
Company as a group and by each holder of at least five percent of common stock
and Class B common stock known to the Company, and the respective percentage
ownership of the outstanding common stock and Class B common stock and voting
power held by each such holder and group. The mailing address for Messrs. Melvin
and Armond Waxman is the executive office of the Company.
<TABLE>
<CAPTION>
Number of Shares Percentage
Beneficially Owned Ownership
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Class B Class B Percentage of
Common Common Common Common Aggregate
Name and Beneficial Owner Stock Stock Stock Stock Voting Power
------------------------- --------- ----------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Melvin Waxman(1)................... 1,129,300 1,011,932 11.0% 47.2% 35.5%
Armond Waxman(2)................... 1,030,882 770,282 10.0 35.9 27.0
Laurence S. Waxman(3).............. 231,900 55,252 2.6 2.6 2.6
Irving Friedman(4)................. 25,000 -- * -- *
Judy Robins(5)..................... 109,750 75,250 1.1 3.5 2.7
Directors and officers as a 2,620,007 1,912,716 24.2 89.3 67.4
group (7 individuals)..............
Credit Suisse First Boston, 1.8
Inc. (6)........................... 550,000 -- 5.5 --
11 Madison Avenue
New York, NY 10010
Herzog, Heine Geduld. Inc..........
525 Washington Blvd. 544,144 -- 5.5 -- 1.7
Jersey City, NJ 07310
</TABLE>
-----------------
* less than 1%
(1) Includes 300,000 shares of common stock subject to options
granted to Mr. Melvin Waxman pursuant to the Company's 1992
Non-Qualified and Incentive Stock Option Plan (the "1992 Stock
Option Plan") and 100 shares of common stock owned by a member of
Mr. Waxman's immediate family, as to which shares Mr. Waxman
disclaims beneficial ownership. Does not include 200,000 shares
of common stock subject to stock appreciation rights granted to
Mr. Waxman by the Company which are vested but have a $3.375
trigger price.
(2) Includes 300,000 shares of common stock subject to options
granted to Mr. Armond Waxman
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pursuant to the 1992 Stock Option Plan and 100 shares of common
stock owned by a member of Mr. Waxman's immediate family, as to
which shares Mr. Waxman disclaims beneficial ownership. Does not
include 200,000 shares of common stock subject to stock
appreciation rights granted to Mr. Waxman by the Company which
have vested but have a 3.375 trigger price.
(3) Includes 166,250 shares of common stock subject to options
granted to Mr. Laurence Waxman pursuant to the 1992 Stock Option
Plan and 27,100 shares of common stock for which Mr. Waxman is
custodian to his minor children. Does not include 100,000 shares
of common stock subject to stock appreciation rights granted to
Mr. Waxman by the Company which have vested, but have a $3.375
trigger price.
(4) Includes 20,000 shares of common stock subject to options granted
to Mr. Friedman pursuant to the 1994 Non-Employee Directors Stock
Option Plan (the "1994 Directors Plan") and 5,000 shares of
common stock granted to Mr. Friedman pursuant to the 1996
Non-Employee Directors' Restricted Share Plan (the "1996
Directors Plan").
(5) Includes 20,000 and 10,000 shares of common stock subject to
options granted to Mrs. Robins as director and her spouse,
pursuant to the 1994 Directors Plan, as Corporate Secretary of
the Company, respectively, and 15,000 shares of common stock
granted to Mrs. Robins pursuant to the 1996 Directors Plan.
(6) The information set forth in the table with respect to Credit
Suisse First Boston, Inc. was obtained from a statement on
Schedule 13G , dated February 13, 1998, filed with the Securities
and Exchange Commission. Such statement reflects Credit Suisse
First Boston, Inc.'s beneficial ownership as of December 31,
1997.
(7) The information set forth in the table with respect to Herzog,
Heine Geduld, Inc. was derived from a statement on Schedule 13G,
dated as of December 31, 1999, filed with the Securities and
Exchange Commission.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company is required to identify any officer, director or
beneficial owner of more than 10% of the Company's equity securities who failed
to timely file with the Commission a required report relating to ownership and
changes in ownership of the Company's equity securities. Based on material
provided to the Company by such officers, directors and beneficial owners of
more than 10% of the Company's equity securities, the Company believes that
during the year ended March 31, 2000, there was compliance with all such filing
requirements.
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