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): October 30, 1996
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BEST PRODUCTS CO., INC.
(Exact name of registrant as specified in its charter)
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Virginia 0-24178 54-0853592
(State or other jurisdiction (Commission File Number) (I. R. S. Employer Identification No.)
of incorporation)
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1400 Best Plaza, Richmond, Virginia 23227-1125
(Address of principal executive offices) (Zip Code)
(804) 261-2000
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On October 21, 1996, the bankruptcy court approved the closing of 81
stores and agreed to allow Schottenstein Bernstein Capital Group, LLC and Alco
Capital Group Inc. (the "SBA Group") to conduct the going-out-of-business sales
at those locations. The court has also scheduled a hearing for November 19, 1996
to consider the proposal from the SBA group to purchase substantially all the
store-related assets of Best Products. A copy of the letter sent to the
Company's merchandise vendors on October 23, 1996 is attached as an exhibit
hereto.
Item 5. Other Events
The attached letter sent to the Company's merchandise vendors
(Exhibit 99.) contains updated information regarding the Company's
debtor-in-possession financing availability and a net asset analysis. The
Company believes it has sufficient liquidity to meet its post-petition
obligations. All merchandise received by the Company through the closing date of
the asset acquisition mentioned above will be paid for by the Company under the
terms of the respective purchase orders. A copy of the letter sent to the
Company's merchandise vendors on October 23, 1996 is attached as an exhibit
hereto.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
99. Form Letter dated October 23, 1996 sent to the
Company's Merchandise Vendors.
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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.
BEST PRODUCTS CO., INC.
Date: October 30, 1996 /s/ Daniel H. Levy
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Daniel H. Levy
Chairman and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description Page
99. Form Letter dated October 23, 1996 sent to the Company's
Merchandise Vendors.
EXHIBIT 99.
Dear Best Vendor,
We are pleased to inform you that the bankruptcy court has approved the closing
of 81 Best stores and agreed to allow Schottenstein Bernstein Capital Group, LLC
and Alco Capital Group Inc. to conduct the going-out-of-business sales at those
locations. An auction was held to maximize Best's proceeds from the store
closing sales, and we are pleased with the results. Schottenstein Bernstein and
Alco have agreed to pay Best 91.3% of inventory costs less expenses, which means
the company will receive approximately $11.4 million more than originally
anticipated.
The court has also scheduled a hearing for November 19 to consider the proposal
from Schottenstein Bernstein and Alco to purchase substantially all the
store-related assets of Best Products. If a final agreement is approved,
Schottenstein Bernstein and Alco would acquire substantially all of Best
Products' assets, including the remaining 88 stores and 11 Best Jewelry stores.
A court-approved agreement could be consummated prior to Thanksgiving. The
acquisition may expedite the Chapter 11 case, with proceeds from both the
closing store sales and sale of assets being applied to pre-petition debts.
DIP Financing and Net Asset Analysis
Enclosed with this letter is updated information on our DIP availability. As
you can see from this report and the enclosed net asset analysis, Best has
sufficient liquidity to meet its post-petition obligations.
Merchandise Purchases
As we've mentioned previously, all merchandise Best receives (title transfers)
through the closing date of the asset acquisition mentioned above will be paid
for by Best under terms of the purchase orders.
We are now working to maximize sales through the fall selling season, and your
continued support of Best is greatly appreciated. As always, we encourage you to
call our hotline at (804) 261-2500 with your bankruptcy-related questions.
Sincerely,
Daniel H. Levy
Chairman and Chief Executive Officer
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BEST PRODUCTS CO., INC.
SUMMARY OF CERTAIN POST-PETITION ASSETS AND LIABILITIES
ESTIMATED AT 10/19/96
($ in millions)
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Cash $7.0
Inventory at average cost 442.3
Inventory on order under trade letters of credit 24.6
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$473.9
Post-petition trade payables (estimated) 8.5
Amounts outstanding under DIP Credit Agreement-
direct borrowings $60.3
trade letters of credit 24.6
bankers acceptances 18.4
standby letters of credit 19.9 123.2 (1)
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Other post-petition administrative obligations (estimated) 20.0
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Net assets at historical cost available to support post-petition obligations $322.2
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BEST PRODUCTS CO., INC.
DIP CREDIT AGREEMENT AVAILABILITY
AS OF 10/19/96
($ in millions)
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(a) DIP Credit Agreement line $250.0
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(b) Borrowing Base Formula $252.7 (2)
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Lesser of (a) or (b) $250.0
Amounts outstanding under DIP Credit Agreement 123.2 (1)
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Availability under DIP Credit Agreement as of 10/19/96 $126.8
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(2) Based upon advance rates under DIP Credit Agreement.
