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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): January 16, 2001
MEDIQ Incorporated
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(Exact name of registrant as specified in its charter)
Delaware 1-8147 51-0219413
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(Sate of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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One MEDIQ Plaza
Pennsauken, New Jersey 08110
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (856) 662-3200
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Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index on page 2
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Item 5. Other Events.
MEDIQ Incorporated will not file its annual report for the year ending
September 30, 2000, on its January 12th deadline for making such filing. The
facts and circumstances giving rise to such event are described in our
statement, dated January 16, 2001, which is filed as Exhibit 5.1 hereto and
incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
5.1 Statement of MEDIQ Incorporated, dated as of January 16, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MEDIQ Incorporated
By: /S/ Kenneth R. Koester
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Name: Kenneth R. Koester
Title: Senior Vice President and Chief Financial Officer
Dated: January 16, 2001
EXHIBIT INDEX
Exhibit No. Document Page
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5.1 Statement of MEDIQ Incorporated, dated as of 3
January 16, 2001
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Statement of MEDIQ Incorporated, dated January 12, 2001
Delay in Completing Audit
On December 28, 2000, MEDIQ Incorporated ("MEDIQ") requested a 15-day extension
for the filing of its annual report with the SEC as a result of unforeseen
delays in the collection and review of information and documents necessary to
complete its year-end audit. As a result of the delay in completing the audit,
MEDIQ will not file its annual report within the 15-day extended time period,
which ended January 12, 2001; however, it expects to file within a reasonable
period after completion of such audit.
Defaults on Indebtedness, Effect on Liquidity and Operations, and Going Concern
At the filing date of this report, MEDIQ/PRN Life Support Services, Inc.,
("MEDIQ/PRN" or the "Company") a wholly owned subsidiary of MEDIQ Incorporated
was in default of a number of covenants under its senior secured credit
facility. Potential additional events of default concerning financial covenants
may exist as a result of the restatement of fiscal 1999 quarterly financial
information. The lenders to the MEDIQ/PRN credit facility have the right to
accelerate payment of all amounts outstanding under the facility as a result of
these defaults. Although the lenders have not yet exercised that right, there
can be no assurance that they will not do so in the future.
As a result of the defaults, MEDIQ/PRN is unable to access the credit facility
and must fund its working capital needs through other sources of cash. Although
the Company had adequate funds from working capital and operating activities to
fund operations and capital expenditures for fiscal 2000, the Company had
insufficient funds to satisfy its debt servicing needs. The Company's current
cash forecast indicates additional sources of cash will be required for the
Company to meet future working capital, capital expenditure, and debt servicing
needs.
On June 12, 2000 and June 30, 2000, MEDIQ/PRN made $8.5 million in interest
payments under the credit facility. Such payments represented normal interest
costs, calculated at LIBOR/prime plus the applicable margin, but did not include
default interest of $1.8 million as required under the credit agreement.
Non-payment of the default interest constitutes a default under the credit
facility. In addition, MEDIQ/PRN notified the lenders for the credit facility
that it intended to defer the principal payment of $3.3 million due June 30,
2000 to $1.1 million July 21, 2000; $1.1 million August 18, 2000; and $1.1
million September 15, 2000. On September 30, 2000, an $8.1 million interest
payment on the MEDIQ/PRN credit facility was made. The principal payments due
September 30, 2000 and December 31, 2000 were not made. Additionally, the
scheduled December 31, 2000 interest payments of $8.2 million were not made.
Such deferments and non-payments constitute defaults under the credit facility.
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Currently, MEDIQ/PRN is in violation of covenants under the indenture that
governs its 11% Senior Subordinated Notes due 2008 with respect to timely filing
of financial information for fiscal 1999 and fiscal 2000 and failure to make
such semi-annual interest payments of $10.5 million due on each of June 1, 2000
and December 31, 2000. Upon the written notice from the trustees or holders of
at least 25% of the outstanding debt under the indenture, the trustee or such
holders may declare the principal and interest due under the 11% notes to be
accelerated based on interest payment default. At the filing date of this
report, MEDIQ/PRN has not received a notice of acceleration with respect to the
indenture for the 11% notes.
MEDIQ is in violation of a covenant under the indenture governing its 13% Senior
Discount Debenture due 2009 with respect to its failure to timely file its
annual report on Form 10-K for the fiscal year ended September 30, 2000. Upon
the written notice from the trustees or holders of at least 25% of the
outstanding debt under such indenture that MEDIQ is in default of this covenant,
MEDIQ will have 30 days to cure the default. Failure to cure the default would
give rise to an event of default under the indenture. At the filing date of this
report, MEDIQ has not received a notice of default with respect to such
indenture.
At the filing date of this report, all outstanding principal under the credit
facility and all indentures were considered to be current obligations because of
the defaults under MEDIQ/PRN's credit facility and indenture for the 11% notes
and the potential for cross default under the indenture for MEDIQ's 13%
debentures. The Company does not have sufficient current assets nor does it
presently have any other available sources of capital to satisfy this current
liability. In addition, the credit facility permits the lenders thereunder the
right to liquidate collateral under the security agreement thereto to satisfy
amounts outstanding under the facility. The credit facility is secured by a
first priority lien and security interests in substantially all tangible and
intangible assets of MEDIQ/PRN and its subsidiaries.
The Company is in negotiations with the lenders of MEDIQ/PRN's credit facility
and certain holders of the 11% notes to obtain some form of formal debt
restructuring agreement. Although the Company is optimistic that a satisfactory
form of restructuring agreement will be reached in the foreseeable future, there
can be no assurance that such a result will be achieved.
While the Company is working with certain of its lenders to arrange a formal
reorganization agreement, the Company has implemented an aggressive cash
management program. The program consists of an intensive daily review of all
cash expenditures and receipts, and increased cash collection efforts.
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This filing contains forward-looking statements, which are made pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of 1995, each of
which involves risks and uncertainties that may affect our business and
prospects. Such forward-looking statements include, without limitation, our
ability to file our annual report within the timeframe discussed above, our
ability to reach a satisfactory agreement with certain of our lenders and our
beliefs as to our liquidity. Investors should consult the Corporation's ongoing
interim and quarterly filings and annual reports for additional information on
risks and uncertainties relating to forward-looking statements. Investors are
cautioned not to rely on these forward-looking statements. We do not undertake
to update these forward-looking statements.
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