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):
November 14, 1997
Wyman-Gordon Company
(Exact name of Registrant as specified in its charter)
Massachusetts 0-3085 04-1992780
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
244 Worcester Street, Box 8001, No. Grafton, Massachusetts 01536-8001
(Address of principal executive offices and zip code)
508-839-4441
Registrant's telephone number, including area code:
ITEM 5. OTHER EVENTS
This Current Report on Form 8-K is filed by Wyman-Gordon Company (the
"Company" or "Wyman-Gordon") for the following purposes: (1) to report
that the Company has commenced a cash tender offer for certain of its
debt securities and is soliciting (the "Consent Solicitation") consents
("Consents") to amend the related indenture; (2) to report developments
relating to the previously reported industrial accident at the facility
of Wyman-Gordon Forgings, Inc. in Houston, Texas; and (3) to report the
commencement of an investigation by certain federal agencies involving
alleged irregularities at the Company's Tilton, New Hampshire facility.
Cash Tender Offer
The Company announced on November 14, 1997 that it is commencing a
cash tender offer (the "Tender Offer") for its outstanding $90,000,000
aggregate principal amount of 10 3/4% Notes due 2003 (the "Notes"). The
purchase price for Notes validity tendered and accepted for purchase will
be an amount based on a yield to the first call date equal to a 50 basis
point spread over the yield of the 5.125% U.S. Treasury Note due March
31, 1998 as of 2:00 p.m., New York City Time, on the second business day
immediately preceding the expiration date of the offer, less a consent
payment of $20 per $1,000 principal account. The Tender Offer is
scheduled to expire at 12:00 Midnight, New York City time, on December
12, 1997, unless extended.
In conjunction with the Tender Offer, the Company is also
soliciting consents from the registered holders of the Notes to effect
certain amendments to the indenture under which the Notes were issued.
Holders who provide consents to the proposed amendments will receive a
consent payment of $20 per $1,000 principal amount of Notes tendered and
accepted for purchase pursuant to the offer if they provide their
consents on or prior to 5:00 p.m., New York City time, on December 1,
1997.
The Company intends to finance the Tender Offer with a portion of
the proceeds of a proposed offering by the Company of $100,000,000
principal amount of senior notes. The Company's obligation to accept for
purchase and to pay for Notes in the Tender Offer is conditioned on,
among other things, the closing of the offering of the new notes.
Salomon Brothers Inc is the exclusive dealer manager and consent
solicitation agent, and Morrow & Co., Inc. is the information agent for
the Tender Offer and Consent Solicitation.
This announcement is not (1) an offer to purchase, a solicitation
of an offer to purchase or a solicitation of consents with respect to any
of the Company's 10 3/4% Notes due 2003 or (2) an offer to sell or the
solicitation of an offer to purchase any senior notes to finance the
Tender Offer, nor shall there be any sale of senior notes in any state in
which such offer, solicitation or sale would be unlawful. The Tender
Offer and Consent Solicitation is made solely by the Offer to Purchase
and Consent Solicitation Statement dated November 14, 1997. Any offering
of senior notes will made solely by a prospectus relating to such senior
notes.
Industrial Accident
On December 22, 1996, a serious industrial accident occurred at the
Houston, Texas facility of Wyman-Gordon Forgings, Inc. ("WGFI"), a
wholly-owned subsidiary of the Company, in which eight employees were
killed and two others were seriously injured. The Occupational Safety
and Health Administration ("OSHA") conducted an investigation of the
accident. On June 18, 1997, WGFI reached an agreement with OSHA,
settling citations resulting from the accident. Under the terms of the
settlements, WGFI agreed to pay a fine of $1.8 million and not to contest
the OSHA citations.
The injured workers and the decedents' families have all retained
attorneys who notified the Company that they intend to assert claims
against the Company on behalf of their clients. WGFI has also received
claims from several employees of a subcontractor claiming to have been
injured at the time of the accident as well as from one current employee.
The Company has cooperated with attorneys for the decedents' families by
providing them information and allowing them and their experts access to
Company facilities.
To date, the Company has agreed in principle to settle all claims
that could be brought by two of the decedent's families on terms
acceptable to the Company and its insurance carriers. The Company thus
far has been unable to achieve settlements with the other claimants, and,
on October 24, 1997, a lawsuit was filed in the District Court of Harris
County, Texas, on behalf of three of the decedents' families against the
Company, WGFI and Cooper-Cameron Corporation, as successor in interest to
the manufacturer of the valve.
In general under Texas statutory law, an employee's exclusive
remedy against an employer for an on-the-job injury is the benefits of
the Texas Workers Compensation Act. WGFI, the employer of the deceased
employees, has workers compensation insurance coverage and the injured
employees and beneficiaries of the deceased employees are receiving
workers compensation payments. Under applicable law, however, statutory
beneficiaries of employees killed in the course and scope of their
employment may recover punitive (but not compensatory) damages in excess
of workers compensation benefits. However, to do so they must prove that
the employer was grossly negligent. The protection of the workers
compensation exclusive remedy provision may not extend to the Company as
parent corporation of WGFI. Therefore, with regard to the October 24,
1997 lawsuit and any future lawsuits brought on behalf of those killed or
injured in the Houston accident or their families against the Company, if
(i) the court finds that the Company had a legal duty to WGFI and its
employees, (ii) the evidence supports a finding that the Company acted
negligently in its duty to WGFI and its employees and (iii) such
negligence had a causal connection with the accident, the plaintiffs
might be able to recover compensatory damages against the Company. If it
is shown that the Company's conduct amounted to gross neglect, and that
conduct is found to be a cause of the accident, the plaintiffs may be
able to recover punitive damages against the Company.
It is not possible at this time to determine the extent, if any, to
which WGFI or the Company could be held liable in connection with the
accident. The Company maintains general liability and employer's
liability insurance for itself and its subsidiaries under various
policies with aggregate coverage limits of approximately $29 million.
While WGFI has tendered the defense of the various claims to the
Company's insurance carriers, there can be no assurance that the full
insurance coverage will be available. Counsel for the Company has been
engaged for several months in settlement discussions with attorneys
representing the decedents' families. At this time, however, only two of
the decedents' families (and none of the other claimants or potential
claimants) have agreed to settle any claims against the Company and/or
WGFI relating to the accident. If the Company is not successful in
settling the remaining claims on terms acceptable to the Company, the
Company anticipates that more lawsuits relating to the accident will be
filed against it and WGFI. Based on the Company's experience in the
settlement negotiations to date, the Company believes that there is a
substantial risk that the pending and threatened claims will not be
settled for an aggregate amount within its insurance coverage limits.
The Company anticipates that, like the currently pending lawsuit, any
additional lawsuits will include claims for alleged compensatory as well
as punitive damages that in the aggregate could substantially exceed the
Company's available insurance coverage. The Company intends vigorously
to defend all lawsuits that have been or may be filed relating to the
accident. However, if one or more such lawsuits were to be prosecuted
successfully by the plaintiffs and a judgment were to be obtained by one
or more plaintiffs in such lawsuits and sustained on appeal, litigation
costs, including the cost of pursuing any appeals, and the cost of paying
such a judgment, to the extent not covered by insurance, could have a
material adverse effect on the Company's financial condition and the
results of operations, particularly if any such judgment includes awards
for punitive damages.
Investigation at the Company's Tilton Facility
On September 25, 1997 the Company received a subpoena from the
United States Department of Justice informing it that the United States
Department of Defense and other federal agencies had commenced an
investigation with respect to the manufacture and sale of investment
castings at the Company's Tilton, New Hampshire facility. The focus of
the investigation is whether the Company failed to comply with required
inspection procedures for cast aerospace parts and whether the Company
shipped cast components that did not meet applicable specifications,
which could be a violation of federal requirements. The investigating
agencies have directed the Company to furnish various documents and
information relating to the subject of the investigation. The Company is
cooperating fully with the investigation and in addition has commenced
its own investigation, which is being supervised by the Company's outside
attorneys and conducted by quality and process auditors from another
casting facility of the Company and by the Company's internal attorneys.
Such investigation has identified certain departures from Company
policies and procedures which are currently the subject of further
review. The federal investigation may result in criminal or civil
charges being brought against the Company, which could result in civil
damages and penalties and criminal liability, if the Company were found
to have violated federal laws. Based on the Company's own investigation
to date (which is ongoing), the Company does not believe that the federal
investigation is likely to result in a material adverse impact on the
Company's financial condition or results of operations, although no
assurance as to the outcome or impact of that investigation can be given.
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.
Date: November 18, 1997 WYMAN-GORDON COMPANY
/s/ Andrew C. Genor
By: Andrew C. Genor
Vice President
Chief Financial Officer
and Treasurer
DOCSC\561674.2
