UNITED STATES
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): January 5, 2000
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SFC New Holdings, Inc.
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(Exact name of registrant as specified in its charter)
State of Delaware 33-383063 52-2173533
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or organization) Identification No.)
520 Lake Cook Road, Suite 550, Deerfield, IL 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 405-5300
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ITEM 5. OTHER EVENTS
This filing provides an update concerning certain legal matters
as noted below.
Cacique Litigation
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As reported by SFC New Holdings, Inc. (the "Company") on Form 8-K
dated September 16, 1999, a jury in the Los Angeles Superior
Court returned a verdict of $4.5 million of compensatory damages
against Stella Foods, Inc. ("Stella") and certain other
defendants in the matter of Cacique v. Stella Foods, et. al. (the
"Cacique Case"). In addition, the Court assessed approximately
$1.7 million of interest on the compensatory damages and
aggregate punitive damages of approximately $12.5 million against
Stella and C. Dean Metropoulos, the former CEO of Stella. The
Court has yet to rule on the amount of the plaintiff's attorney
fees to be paid by the defendants. As a part of the sale of
Stella to the Saputo Group ("Saputo") in December 1997, Specialty
Foods Corporation ("SFC"), a parent company of SFC New Holdings,
Inc., indemnified Saputo with respect to this proceeding.
Although the Company is not a defendant in the litigation, it
continues to control the defense. The facts that give rise to
this litigation are more fully described in SFC's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998.
As previously disclosed, the Company strongly disagrees with the
verdict in this case. Furthermore, the Company believes that
numerous reversible errors occurred at the trial and it will
vigorously pursue all available post-trial rights and remedies.
Post-trial motions are scheduled for February 2000.
Recently, three additional lawsuits have arisen stemming from the
Cacique matter. First, the Company and the other defendants in
the Cacique Case have filed suit against certain insurance
carriers of both the Company and Stella seeking declaratory
relief that such insurance companies are responsible for certain
of the damages in the Cacique Case. Second, following the
verdict in the Cacique Case, Saputo filed suit against the
Company seeking injunctive relief and alleging that the Company
is obligated to post a bond on Saputo's behalf in the Cacique
Case equal to 150% of the aggregate verdict while the Cacique
Case is under appeal. The Company disagrees with the allegations
in the Saputo lawsuit and intends to vigorously defend the
matter. Third, C. Dean Metropoulos filed suit against SFC,
Stella and certain other defendants alleging, among other things,
that the Company and its agents interfered with Mr. Metropoulos'
rights to indemnification from Stella for damages arising out of
the Cacique Case, notwithstanding the finding of the jury in that
case that the wrongful acts committed by Mr. Metropoulos were
"willful and malicious". The Company believes that Mr.
Metropoulos' lawsuit is entirely without merit. The Company
intends to vigorously defend against this action.
Bondholder Matter
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Recently, one of the holders ("Bondholder") of the Company's 11-
1/4% Senior Notes, filed a lawsuit (the "Bondholder Suit")
relating to the distribution of net proceeds following the
Company's pending sale (the "Metz Sale") of its wholly owned
subsidiary, Metz Holdings, Inc. The Bondholder has indicated to
the Company that it is primarily focused on the priority of
distribution of such proceeds as between the 11-1/4% Senior Notes
and the Company's 12-1/8% Senior Notes, which were exchanged for
notes that were originally issued as a refinancing of a portion
of the Company's term debt in 1995. Shortly thereafter, the
Bondholder Suit was withdrawn without prejudice, based on an
agreement between the Bondholder and the Company, pursuant to
which the Company agreed, among other things, that it would
negotiate in good faith in order to resolve the issues raised in
the Bondholder Suit and, in any event, that it would not
distribute the proceeds of the Metz Sale to holders of the
Company's Senior Notes without ten days' prior written notice to
the Bondholder.
Summary Comment
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The Company believes that it will successfully defend against the
actions described above. On that basis, it is unlikely that the
ultimate resolution of these matters will have a material adverse
effect on the Company's financial condition, results of
operations or near-term liquidity. However, the Company does
anticipate that it will incur significant additional legal
expenses as it pursues a vigorous defense against each of these
actions.
While the Company believes that it will successfully defend
against these actions, no assurances can be given as to: (i) the
outcome of these or any other legal proceedings and (ii) the
related impact of an unanticipated adverse outcome of these
proceedings on the Company's financial condition, results of
operations or near-term liquidity.
SIGNATURES
Pursuant to 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.
SFC NEW HOLDINGS, INC
(Registrant)
Date: January 13, 2000 By: /s/ Robert L. Fishbune
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Robert L. Fishbune
Vice President and Chief
Financial Officer
