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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SFAC New Holdings, Inc.
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(Exact name of registrant as specified in its charter)
State of Delaware 33-383149 52-2173534
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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"), a subsidiary
company of SFAC New Holdings, Inc., 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 SFAC 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.
SFAC 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
