<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM 10-Q/A
(Amendment No. 1)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- - ----- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
----------------------------------------
Commission file number 1-71
----------------------------------------
BORDEN, INC.
New Jersey 13-0511250
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 East Broad Street, Columbus, OH 43215
----------------------------------------------------
(Address of principal executive offices)
(614) 225-4000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares of common stock, $0.625 par value, outstanding as of the close
of business on October 22, 1994: 141,545,838
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<TABLE>
- - ---------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BORDEN, INC
<CAPTION>
Three Months Ended
September 30
-------------------------
(In millions except per share data) 1994 1993
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE Net sales $1,440.1 $1,386.4
- - ---------------------------------------------------------------------------------------
COSTS AND Cost of goods sold 1,077.4 1,022.9
EXPENSES Marketing, general and administrative
expenses 332.9 303.3
Restructuring (40.3)
Interest expense 34.3 30.6
Equity in income of affiliates (4.5) (3.4)
Minority interest 10.2 9.8
Other (income) and expense, net 86.2 10.6
Income taxes 15.7 4.1
-------- --------
1,511.9 1,377.9
-------- --------
- - ---------------------------------------------------------------------------------------
EARNINGS (Loss) income from continuing operations (71.8) 8.5
Discontinued operations:
Loss from operations (17.9)
Loss on disposal (58.7)
------- --------
Net loss $ (130.5) $ (9.4)
======== ========
- - ---------------------------------------------------------------------------------------
SHARE DATA (Loss) income from continuing operations $ (0.51) $ 0.06
Discontinued operations:
Loss from operations (0.13)
Loss on disposal (0.41)
-------- --------
Net loss per common share $ (0.92) $ (0.07)
======== ========
Cash dividends paid per common share $ 0.075 $ 0.150
Average number of common shares
outstanding during the period 141.5 141.2
- - ---------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
BORDEN, INC.
Nine Months Ended
September 30
------------------------------
(In millions except per share data) 1994 1993
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE Net sales $4,082.1 $4,036.5
- - ---------------------------------------------------------------------------------------
COSTS AND Cost of goods sold 3,075.4 2,966.8
EXPENSES Marketing, general and administrative
expenses 858.6 802.6
Restructuring (40.3)
Interest expense 91.9 92.9
Equity in income of affiliates (9.4) (9.7)
Minority interest 29.4 30.0
Other (income) and expense, net 104.4 28.8
Income taxes 27.0 42.4
-------- --------
4,137.0 3,953.8
-------- --------
- - --------------------------------------------------------------------------------------
EARNINGS (Loss) income from continuing operations (54.9) 82.7
Discontinued operations:
Loss from operations (46.4)
Loss on disposal (58.7)
-------- --------
(Loss) income before cumulative effect of
accounting changes (113.6) 36.3
Cumulative effect of change in
accounting for postemployment
benefits (18.0)
-------- --------
Net (loss) income $ (113.6) $ 18.3
======== ========
- - ---------------------------------------------------------------------------------------
SHARE DATA (Loss) income from continuing operations $ (0.39) $ 0.59
Discontinued operations:
Loss from operations (0.33)
Loss on disposal (0.41)
-------- --------
(Loss) income before cumulative effect of
accounting changes (0.80) 0.26
Cumulative effect of change in
accounting for postemployment
benefits (0.13)
-------- --------
Net (loss) income per common share $ (0.80) $ 0.13
======== ========
Cash dividends paid per common share $ 0.225 $ 0.750
Average number of common shares
outstanding during the period 141.5 140.9
- - ---------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
BORDEN, INC.
Nine Months Ended
September 30
--------------------------
(In millions) 1994 1993
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS Net (loss) income ($113.6) $18.3
FROM OPERATING Adjustments to reconcile net income to net cash
ACTIVITIES from operating activities:
Depreciation and amortization 125.5 166.4
Restructuring (102.6) (37.4)
Loss on disposal of discontinued operations 94.7
Non-pension postemployment benefit
obligation (4.7) 34.5
Decrease in receivables sold (140.0)
Net change in assets and liabilities:
Trade receiveables (108.9) (32.7)
Inventories (56.3) (12.4)
Trade payables 51.5 (4.1)
Current and deferred taxes (2.8) (20.8)
Other assets 4.2 (10.3)
Other, net 152.6 (131.2)
Discontinued Operations (88.9)
------- -------
(189.3) (4.9)
- - ------------------------------------------------------------------------------------------------------------------
CASH FLOWS Capital expenditures (102.0) (123.7)
FROM Divestiture of businesses 191.8 18.9
INVESTING ------- -------
ACTIVITIES 89.8 (104.8)
------- -------
- - ------------------------------------------------------------------------------------------------------------------
CASH FLOWS Increase (decrease) in short-term debt 44.4 (58.3)
FROM Reduction in long-term debt (115.1) (71.7)
FINANCING Long-term debt financing 220.9 268.9
ACTIVITIES Dividends paid (31.8) (105.6)
Other 1.1 6.8
------- -------
119.5 40.1
------- -------
- - ------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and equivalents 20.0 (69.6)
Cash and equivalents at beginning
of period 100.3 186.0
------- -------
Cash and equivalents at end
of period $ 120.3 $ 116.4
======= =======
- - ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Interest paid $ 109.2 $ 94.3
DISCLOSURES Income taxes paid (6.1) 27.3
OF CASH FLOW
INFORMATION
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
(In millions)
<CAPTION>
September 30 December 31
--------------- -------------
ASSETS 1994 1993
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Cash and equivalents $ 120.3 $ 100.3
ASSETS Accounts receivable (less allowance
for doubtful accounts of $12.5 and
$8.9 respectively) 477.0 334.7
Inventories:
Finished and in-process goods 359.0 319.4
Raw materials and supplies 180.5 171.0
Other current assets 163.5 142.6
Net assets of discontinued operations 70.0 222.2
-------- --------
1,370.3 1,290.2
-------- --------
- - --------------------------------------------------------------------------------------------------
INVESTMENTS Investments in and advances to
AND OTHER affiliated companies 89.3 91.3
ASSETS Deferred income taxes 346.7 225.4
Other assets 124.7 126.6
-------- --------
560.7 443.3
-------- --------
- - --------------------------------------------------------------------------------------------------
PROPERTY Land 101.4 105.5
AND Buildings 595.4 609.6
EQUIPMENT Machinery and equipment 1,962.9 1,949.3
-------- --------
2,659.7 2,664.4
Less accumulated depreciation (1,338.4) (1,327.7)
-------- ----------
1,321.3 1,336.7
-------- ----------
- - --------------------------------------------------------------------------------------------------
INTANGIBLES Intangibles resulting from
business acquisitions 761.8 801.5
-------- --------
- - --------------------------------------------------------------------------------------------------
$4,014.1 $3,871.7
-------- --------
</TABLE>
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<TABLE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
(In millions except share and per share data)
<CAPTION>
September 30 December 31
---------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Debt payable within one year $ 397.0 $ 410.6
LIABILITIES Accounts and drafts payable 507.2 433.3
Restructuring reserve 63.5 145.9
Income taxes 79.0 56.5
Other current liabilities 371.1 325.2
-------- --------
1,417.8 1,371.5
-------- --------
- - -------------------------------------------------------------------------------------------
OTHER Long-term debt 1,415.5 1,240.8
Deferred income taxes 52.1 47.1
Postretirement benefit obligations 349.1 353.8
Other long-term liabilities 133.3 103.8
Minority interest 506.6 508.8
-------- --------
2,456.6 2,254.3
-------- --------
- - -------------------------------------------------------------------------------------------
SHAREHOLDERS' Common stock - $0.625 par value
EQUITY Authorized 480,000,000 shares
Issued 194,983,374 shares 121.9 121.9
Paid in capital 88.4 88.1
Accumulated translation adjustment (132.9) (171.1)
Minimum pension liability (95.5) (95.5)
Retained earnings 689.6 835.1
-------- --------
671.5 778.5
Less common stock in treasury (at
cost) - 53,442,636 shares and
53,625,339 shares, respectively (531.8) (532.6)
-------- --------
139.7 245.9
-------- --------
- - --------------------------------------------------------------------------------------------
$4,014.1 $3,871.7
======== ========
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(dollars in millions except per share amounts)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements
contain all adjustments, consisting only of normal adjustments, which in
the opinion of management are necessary for a fair statement of the
results for the interim periods. Results for the interim periods are not
necessarily indicative of results for the full years.
Third quarter 1994 results include a net pretax charge of $181.2. The
charges include an addition of $104.5 ($64.8 after tax) to the reserve for
loss on disposal of discontinued operations (primarily related to
less-than-estimated divestiture proceeds); $3.7 for loss on two other
business disposals; $52.2 for transaction fees and expenses with respect
to Borden's pending merger with an affiliate of Kohlberg Kravis Roberts &
Co. (KKR); $54.4 for the writedown of two partnerships and of goodwill
related to the Fisher cheese brand; and $16.5 for additions to
environmental, litigation and idle property reserves. In arriving at the
net charge of $181.2, these charges were partially offset by a credit of
$50.1 for the reversal of prior restructuring charges, of which $40.3
applied to continuing operations and $9.8 applied to discontinued
operations.
The net pretax charge of $181.2 is recorded in the income statement as
follows: $28.9 is in marketing, general and administrative expenses; a
credit of $40.3 is in restructuring; $97.9 is included in other income and
expense; and $94.7 is included in discontinued operations.
2. ACQUISITION AND MERGER
On September 23, 1994 the Company entered into a merger agreement ("Merger
Agreement") providing for the acquisition of all of the outstanding common
stock of the Company by an affiliate of Kohlberg Kravis Roberts & Co.
(together with its affiliates, unless the context otherwise requires,
"KKR") in exchange for RJR Nabisco Holdings Corp. (RJR) common stock owned
by KKR and its affiliates.
The Merger Agreement provides for an exchange offer by KKR in which
holders of the Company's common stock would have the right to exchange
their shares for RJR common stock valued at $14.25 per Borden share. The
exact number of RJR shares to be exchanged for each Borden share will be
based on the average price of RJR common stock during a 10-day trading
period. However, in no event will the Company's stockholders receive
greater than 2.375 RJR shares, or fewer than 1.78125 RJR shares for each
Borden share.
On September 23, 1994 the Company and KKR also entered into a Conditional
Purchase/Stock Option Agreement under which KKR was granted a right to
purchase from the Company at $11.00 per share, newly issued or treasury
shares of the Company equal to 19.9% of the Company's currently
outstanding shares payable in RJR stock. If the option is exercised prior
to the close of the exchange offer, KKR must purchase at least 41% of the
Company's outstanding common stock in the exchange offer if it acquires
any shares in the exchange offer. If KKR acquires at least 41%, but less
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than or equal to 50%, of the Company's common stock in the exchange offer,
the option must be exercised by KKR, to the extent necessary for KKR to
own more than 50% of the Company's outstanding common stock. If KKR
purchases at least 41% of the outstanding shares in the exchange offer, it
must pursue subject to any required shareholder approval, a merger in
which all remaining shares of the Company's common stock will be converted
into the same number of RJR shares as were paid in the exchange offer.
On September 29, 1994, the Company filed with the Federal Trade
Commission ("FTC") and the U.S. Department of Justice Antitrust Division
(the "Antitrust Division") a Premerger Notification and Report Form in
connection with the proposed KKR transaction. On October 19, 1994, the
Company and KKR each received a request from the FTC for additional
information and documentary material, this matter having been cleared to
the FTC by the Antitrust Division, and KKR responded to such request on
November 4, 1994. Accordingly, the exchange of Borden common stock
pursuant to the exchange offer may not be consummated until the expiration
of a 20-calendar day waiting period following the date of substantial
compliance by KKR with such request, unless the waiting period is sooner
terminated by the FTC. Thereafter, the waiting period could be extended
only by court order. Borden is currently engaged in complying with this
request. While the Company has a duty substantially to comply with the
request within a reasonable period of time, its compliance does not affect
the waiting period.
In the Merger Agreement, the Company has agreed to make any and all
divestitures or undertakings required by the FTC, or any other applicable
governmental entity in connection with the proposed KKR transaction, which
divestitures in each case shall be reasonably acceptable to KKR.
3. DISCONTINUED OPERATIONS
In December 1993 the Company recorded a pretax charge of $637.4, $490.0
after tax, to accrue the estimated cost of a business divestiture program.
The estimated cost of the program included operating losses from December
31, 1993 to date of disposal of $78.1. An additional charge of $104.5 was
recorded in third quarter 1994.
Businesses divested as of September 30, 1994 include seafood, foodservice,
jams and jellies, sauces, mashed potatoes, model kits, hobby paints, and
various snack businesses. Year to date proceeds for discontinued
operations and other divestitures total $191.8, including $146.4 million
from discontinued operations and $45.4 million from other divestitures.
Pretax losses on disposal of $328.1 and pretax operating losses of $61.8,
severance and other costs of $9.2 have been charged to the reserve as of
September 30, 1994, which are in line with estimates as adjusted in the
third quarter. The remaining reserve at September 30, 1994 includes $16.2
for future operating losses until disposal of discontinued operations.
Management believes that the sale or closure of the discontinued
operations will be substantially complete by late 1994 or early 1995.
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PART I FINANCIAL INFORMATION
----------------------------
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ACQUISITION AND MERGER
On September 23, 1994 the Company entered into a merger agreement providing for
the acquisition of all of the outstanding common stock of the Company by a
Kohlberg Kravis Roberts & Co. affiliate in exchange for RJR Nabisco Holdings
Corp. common stock owned by KKR and its affiliates. See Note 2 to the
Consolidated Financial Statements.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1994 VERSUS QUARTER ENDED SEPTEMBER 30, 1993
Net sales from continuing operations for the quarter ended September 30, 1994
increased 3.9% to 1.44 billion from $1.39 billion in 1993. The Company
reported a net loss for third quarter 1994 of $130.5 million, or $0.92 per
share, compared with a restated net loss of $9.4 million, or $0.07 per share,
in 1993 primarily as a result of net pretax charges of $181.2 million. These
charges include an addition of $104.5 million ($64.8 million after tax) to the
reserve for loss on disposal of discontinued operations (primarily related to
less-than-estimated divestiture proceeds); $3.7 million for loss on two other
business disposals; $52.2 million for transaction fees and expenses with
respect to Borden's pending merger with an affiliate of KKR; $54.4 million for
the writedown of two partnerships and of goodwill related to the Fisher cheese
brand; and $16.5 million for additions to environmental, litigation and idle
property reserves. These charges were partly offset by a credit of $50.1
million for the reversal of prior restructuring charges. Management reviewed
the prior restructuring programs in light of recent events and determined that
portions of the reserves for these programs would not be utilized.
The loss from continuing operations for third quarter 1994 was $71.8 million
compared to income from continuing operations of $8.5 million in 1993.
Division operating income in third quarter 1994 increased 21.3% to $75.3
million from $62.0 million in 1993. The 1994 amount includes a $23.9 million
credit for the reversal of prior restructuring charges and a $28.9 million
charge for the write-off of cheese goodwill.
The reversal of prior restructuring charges is allocated by division as
follows:
North American Foods $ 8.6
International Foods 1.7
Packaging 13.6
Corporate 16.4
----
Continuing Operations 40.3
Discontinued Operations 9.8
----
TOTAL $ 50.1
====
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North American Foods sales decreased 1.3% to $680.2 million from $689.1 million
in 1993 primarily as a result of 1993 divestitures and decreased sales for most
niche grocery products, partially offset by slightly higher sales for pasta and
dairy products. Including the write-off of cheese goodwill and a credit of
$8.6 million for the reversal of prior restructuring charges, the 1994
operating loss was $7.4 million compared to an operating loss of $2.9 million
in 1993. The increased operating loss was primarily due to substantial losses
in dairy, and income declines in pasta products as a result of continued high
durum wheat costs. Income was down slightly in niche grocery products as a
result of higher marketing costs associated with the introduction of an Eagle
Brand sweetened milk line extension, partially offset by improvements in
Cremora non-dairy creamer, Cracker Jack products, ReaLemon juice and Wyler's
and Steero bouillon.
International Foods sales increased 0.4% to $232.4 million from $231.4 million
in 1993. The increase is due to higher sales in the European bakery, grocery
and pasta businesses, partially offset by decreases in international milk
powder sales. Including a credit of $1.7 million for the reversal of prior
restructuring charges, operating income declined 14.7% to $19.0 million from
$22.2 million in 1993 as a result of declines in the European bakery and Latin
American food businesses, partially offset by improvements in the KLIM milk
powder export business.
Packaging and Industrial Products sales increased 13.2% to $527.5 million from
$466.0 million in 1993. The increase is primarily the result of higher sales
in worldwide resins, Latin American operations and plastic film and packaging
products. Including a credit of $13.6 million for the reversal of prior
restructuring charges, operating income increased 49.4% to $63.7 million from
$42.7 million in 1993 as a result of increased income contributions from Borden
Chemicals and Plastics Limited Partnership and improvements in Latin American
operations and worldwide resins, partially offset by slight declines in
non-food consumer products and plastic film and packaging products.
Net sales of discontinued operations decreased 34.3% to $196.9 million from
$299.8 million in 1993 primarily as a result of the divestitures of the
foodservice, clam products, and jam and jellies businesses. The net loss from
discontinued operations was $7.4 million compared to $17.9 million in 1993.
The net loss has been charged against the reserve for loss on discontinued
operations. The 1994 loss is in line with the estimates made to establish the
reserve.
In November 1994, the Company announced a reorganization which will result in a
reduction of staff by approximately 200 positions. As a result, a charge to
income will be recorded in the fourth quarter for an as yet undetermined
amount.
NINE MONTHS ENDED SEPTEMBER 30, 1994 VERSUS NINE MONTHS ENDED SEPTEMBER 30,
1993
Net sales from continuing operations for the nine months ended September 30,
1994 increased 1.1% to $4.08 billion from $4.04 billion in 1993. As a result
of the previously mentioned charges, the Company recorded a net loss for the
first nine months of 1994 of $113.6 million, or $0.80 per share, compared to
restated net income of $18.3 million, or $0.13 per share, in 1993. Results for
1994 include a $58.7 million loss on disposal of discontinued operations while
the 1993 results include a $46.4 million loss from discontinued operations and
an $18.0 million charge for the cumulative effect of an accounting change. The
loss from continuing operations for the first nine months of 1994 was $54.9
million compared to income from continuing operations of $82.7 million in 1993.
Including
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the reversal of prior restructuring charges, division operating income
decreased 28.3% to $195.2 million from $272.0 million in 1993.
Generally the explanations previously discussed for the quarter ended September
30, 1994 also apply to the nine month period ended September 30, 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities during the first nine months of 1994 was
$189.3 million compared to $4.9 million for the first nine months of 1993. The
decrease in operating cash flows primarily reflects the decline in operating
results and higher working capital requirements due to a decrease in
receivables sold.
Capital expenditures for new facilities and improvements to existing facilities
were $102.0 million in 1994 compared to $123.7 million in 1993. The reduced
capital spending in 1994 reflects efforts at cash conservation and the effect
of discontinued operations.
Cash provided by the divestiture of businesses was $191.8 million in 1994 and
$18.9 million in 1993. The 1994 proceeds include the sale of the seafood,
foodservice, jams and jellies, sauces, mashed potatoes, model kits, hobby
paints and various snack businesses. Divestitures in 1993 consisted of two
snack and one candy businesses.
Short term debt increased $44.4 million in 1994 compared to a decrease of $58.3
million in 1993. A portion of the 1994 increase is due to lower sales of
accounts receivable. Sales of accounts receivable are made without recourse
and there is no provision in the sales agreement for repurchasing sold
receivables. The decrease in 1993 reflects repayment of commercial paper with
proceeds from long-term debt financing.
In August 1994 the Company entered into a $1.4 billion, 2-1/2 year
credit facility arranged by Citibank and Credit Suisse. The facility provides
for direct borrowings, sale of up to $300 million of accounts receivable, and
back up for commercial paper borrowings. This facility replaces a revolving
facility that expired in September and other backup credit facilities,
consolidates other financings in place and provides for the normal financing
requirements of the businesses. Also included in the $1.4 billion facility was
a separate agreement for the refinancing of the credit agreement of T.M.
Investors Limited Partnership.
The 1994 long-term debt financing includes borrowings under the $1.4 billion
credit facility. The 1993 long-term debt financing includes proceeds from a
$250.0 million issuance of 30-year, 7 7/8% debentures.
At September 30, 1994 the Company's current maturities of long-term debt
totaled $40.5 million, while short term obligations relating to agreements
which must be settled within one year were $156.6 million. The Company expects
to satisfy its debt repayment obligations over the next twelve months using
cash flows from operations, net proceeds in excess of $200 million from several
pending dispositions where the Company has either signed contracts or oral
agreements, and amounts borrowed under its credit agreements. At October 22,
1994 the Company had available $50.7 million under the $1.4 billion credit
facility, and $259.8 million under various advised foreign bank lines of
credit.
The Company's new credit facility contains certain restrictive covenants that,
among other things, limit the ability of the Company to incur indebtedness, pay
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dividends, create liens, engage in mergers and consolidations and sell
or transfer assets. The Company anticipates that either a new financing
facility will be put in place before the consummation of the transaction with
KKR or, in connection with a commitment for a facility to be put in place after
the consummation of the transaction with KKR, the Company will obtain a waiver
of these covenants.
Upon the occurrence of both a change of control and a downgrade of the
Company's long term debt rating, the Company may be required to purchase all or
part of its approximately $48.7 million of outstanding 9 1/4% sinking fund
debentures. Also upon a change of control, the Company is obligated to offer
to purchase $150 million of outstanding senior notes of Borden Chemicals and
Plastics Limited Partnership. The Company anticipates entering into an
arrangement with the holders of the securities under which a premium would be
paid but the Company would not be required to purchase the notes.
Under the Merger Agreement, KKR's obligation to consummate the exchange offer
is conditioned upon, among other matters, (i) the obtaining of all consents and
waivers on terms satisfactory to KKR necessary in order that the consummation
of the transactions contemplated by the Merger Agreement and the Conditional
Purchase/Stock Option Agreement not constitute (A) an event of default or an
event which with or without notice or the passage of time would constitute an
event of default under any indebtedness, partnership agreement or
equityholders' agreement of the Company or any subsidiary (or Borden Chemicals
and Plastics Limited Partnership, Borden Chemicals and Plastics Operating
Limited Partnership and T.M. Investors Limited Partnership) ("Indebtedness"),
including, without limitation, the Company's $1.4 billion credit facility, or
(B) an event which would individually or in combination with other events give
rise to an obligation on the part of the Company to repay or repurchase any
Indebtedness, partnership interest or equity interest, which event of default
or other event described in clause (A) or (B) above would give rise to, with or
without notice or the passage of time and taking into account any
cross-acceleration or cross-default provisions, the obligation to repay prior
to maturity or the acceleration of an aggregate of at least $25 million of
Indebtedness or other obligations; and (ii) the Company having refinanced, or
received commitments for refinancing or indications satisfactory to KKR from
lenders that it will be able to refinance, in each case on market terms
reasonably acceptable to KKR, the principal bank credit facilities of the
Company and T.M. Investors Limited Partnership, provided that such refinancing
shall not be required to increase the available lines of credit under such
facilities except to meet the working capital and other reasonable needs of the
Company and its subsidiaries and shall principally be related to extending
maturities and renegotiating repayment schedules under such facilities as
appropriate to meet the business plan as determined by KKR and the Company.
The Merger Agreement also contains covenants restricting the conduct of the
business of the Company. Under the Merger Agreement, the Company has agreed,
among other things, to (i) redeem all outstanding Preferred Share Purchase
Rights at a redemption price of one and two-thirds cents per Right effective
immediately prior to the acceptance of exchange of any shares pursuant to the
exchange offer so long as certain conditions to the offer are met; (ii) redeem
all outstanding shares of Series B Preferred Stock at a redemption price of $39
per share plus accrued interest prior to any record date in connection with the
merger provided that certain conditions to the offer are met; and (iii) not
declare or pay quarterly dividends on common stock in excess of $0.01 per share.
On October 26, 1994 the Company announced that its Board of Directors had
declared a quarterly dividend on the common stock of $0.01 per share, reduced
from $0.075 per share for the prior quarter of 1994.
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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 thereunto duly authorized.
BORDEN, INC.
Date: November 17, 1994 By /s/ James C. Van Meter
----------------------------
James C. Van Meter
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
duly authorized signing officer)
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