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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) AUGUST 14, 2000
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HORIZON MEDICAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 000-24025 58-1882343
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
ONE HORIZON WAY
P.O. BOX 627
MANCHESTER, GEORGIA 31816
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 706-846-3126
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
Horizon Medical Products, Inc. (the "Company") has reported the following events
previously in its Form 10-Q for the period ending June 30, 2000. The purpose of
this Current Report on Form 8-K is to file the three documents referenced herein
as Exhibits.
On August 14, 2000, the Company entered into the Fifth Amendment to Amended and
Restated Credit Agreement and Waiver (the "Fifth Amendment and Waiver") with
Bank of America, N.A. ("Bank of America"), successor to Banc of America
Commercial Finance Corporation. As of June 30, 2000, the Company has violated
certain financial covenants of the Company's $50 million amended and restated
credit facility (the "New Credit Facility"), as amended, but pursuant to the
Fifth Amendment and Waiver, the Company has obtained a waiver of these covenant
violations from Bank of America through July 31, 2000. The Fifth Amendment and
Waiver amends certain of the financial covenants and provides that (i) the
Company's financial covenant compliance shall be measured monthly rather than
quarterly; (ii) the Company shall cooperate and pay all expenses associated with
the Bank of America Recovery Group's conduct of collateral and operational
audits; and (iii) the Company shall either (a) enter into a letter of intent on
or before August 22, 2000 setting forth the terms for an equity investment which
is satisfactory to Bank of America or (b) engage an investment banker acceptable
to Bank of America to explore strategic alternatives with respect to the sale of
a portion or all of the Company's assets or stock. Pursuant to Emerging Issues
Task Force 86-30, Classification of Obligations When a Violation is Waived by
the Creditor, the Company has reclassified the debt under its New Credit
Facility from long term liabilities to current liabilities on its balance sheet
dated June 30, 2000. The preceding summary of the transaction is qualified in
its entirety by the more detailed information contained in the copy of the Fifth
Amendment and Waiver included as Exhibit 10.1 to this Current Report.
The Company and Banc of America Commercial Finance Corporation also amended the
New Credit Facility on June 6, 2000 (the "Fourth Amendment") to provide a
short-term bridge loan (the "Bridge Loan") to the Company in the principal
amount of $900,000. The proceeds of the Bridge Loan were used to fund a
short-term bridge loan to Marshall B. Hunt, the Company's Chairman, CEO and
largest shareholder. (See Notes 4 and 5 to the Company's interim condensed
consolidated financial statements included in the Company's Form 10-Q for the
period ending June 30, 2000). The Bridge Loan and related interest are due on
August 30, 2000. In the event that the Company is unable to pay the amount due
under the Bridge Loan, it will be in default under the New Credit Facility. In
such event, the business, results of operation and consolidated financial
condition of the Company will be materially adversely affected. The preceding
summary of the transaction is qualified in its entirety by the more detailed
information contained in the copy of the Fourth Amendment included as Exhibit
10.2 to this Current Report.
As permitted under the New Credit Facility documents and under the Bridge Loan
documents, Bank of America has instituted a sweep arrangement whereby funds
collected in the Company's depositary accounts are swept periodically into the
Company's lockbox account with Bank of America and applied against the
outstanding loan under the New Credit Facility. The financial institutions which
hold such accounts have been notified by Bank of America that such lockbox
arrangements have been instituted, and the Company's and its subsidiaries' right
to withdraw, transfer or pay funds from the accounts has been terminated. The
Company may apply to receive additional loans under the New Credit Facility to
the extent such loan has been paid down under the lockbox arrangement. There can
be no assurance that Bank of America will agree to loan the Company additional
funds under the New Credit Facility. The failure of the Company to secure
additional loans from Bank of America will have a material adverse effect on the
Company's business, results of operations, consolidated financial condition,
liquidity and ability to pay its
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debts as they become due. The preceding summary of the transaction is qualified
by the more detailed information contained in the copy of the Letter Agreement,
dated as of June 6, 2000, between the Company and Bank of America regarding the
new cash management system included as Exhibit 10.3 to this Current Report.
The Company is continuing negotiations with various lenders and potential
investors to refinance its existing senior indebtedness and to provide new
subordinate debt or equity investment. Quarterly payments of principal under the
New Credit Facility commence on October 1, 2000 and continue thereafter on each
January 1, April 1, July 1 and October 1 for sixteen quarters. (See Note 4 to
the Company's interim condensed consolidated financial statements included in
the Company's Form 10-Q for the period ending June 30, 2000.) Should the Company
not be successful in refinancing its existing senior indebtedness or securing
new subordinate debt or equity investment, the Company may again violate certain
financial covenants of the New Credit Facility as of August 31, 2000 or may be
unable to pay the August 30, 2000 Bridge Loan payment or October 1, 2000
principal installment payment and subsequent principal installment payments.
Should this covenant violation occur and not be waived by Bank of America or
should the Company be unable to make the August 30, 2000 Bridge Loan payment or
the October 1, 2000 or subsequent principal payments, there could be a material
adverse effect on the Company's business, consolidated financial condition,
results of operations, liquidity and ability to pay its debts as they become
due.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
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Exhibit Number Description
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*** 10.1 Fifth Amendment to Amended and Restated Credit
Agreement and Waiver, dated as of August 14, 2000, by
and among the Company, Horizon Acquisition Corp.,
Strato/Infusaid, Inc., Stepic Corporation, the
Lenders referred to therein and Bank of America,
N.A., successor to Banc of America Commercial Finance
Corporation, as Agent.
*** 10.2 Fourth Amendment to Amended and Restated Credit
Agreement, dated as of June 6, 2000, by and among the
Company, the Lenders referred to therein and Banc of
America Commercial Finance Corporation, as Agent.
*** 10.3 Letter Agreement, dated as of June 6, 2000, between
the Company and Banc of America Commercial Finance
Corporation.
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*** PORTIONS OF THESE EXHIBITS HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION.
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HORIZON MEDICAL PRODUCTS, INC.
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.
HORIZON MEDICAL PRODUCTS, INC.
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(Registrant)
August 18, 2000 By: /s/ Robert M. Dodge
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Senior Vice-President and
Chief Financial Officer
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