FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-3855
LACLEDE STEEL COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 43-0368310
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
One Metropolitan Square, St. Louis, Missouri 63102
(Address of principal executive offices)
(Zip code)
314-425-1400
(Registrant's telephone number, including area code)
(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
As of July 29, 1994 there were 4,056,140 shares of $13.33
par value common stock outstanding. LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(In Thousands Except Per Share Data)
Second Quarter EndeYear to Date
June 30, June 30,
1994 1993 1994 1993
Net sales 80,559 79,190 165,256 155,224
Costs and expenses:
Cost of products sold 72,457 72,077 150,468 140,589
Selling, general and administrative 3,168 3,040 6,550 6,258
Depreciation 1,926 1,853 3,853 3,702
Interest expense, net 1,572 1,097 3,134 2,128
Restructuring of operations -- -- (397) --
Total costs and expenses 79,123 78,067 163,608 152,677
Earnings before income taxes and
cumulative effect of change in accounting
principle 1,436 1,123 1,648 2,547
Provision for income taxes 574 427 659 968
Earnings before cumulative effect
of change in accounting principle 862 696 989 1,579
Cumulative effect of change in accounting
principle for postretirement medical benefits,
net of taxes -- -- -- (46,543)
Net earnings (loss) 862 696 989 (44,964)
Retained earnings at beginning of period 3,487 1,136 3,360 46,796
Cash dividends -- -- -- --
Retained earnings at end of period 4,349 1,832 4,349 1,832
Per share data:
Earnings before cumulative effect
of change in accounting principle 0.21 0.17 0.24 0.39
Cumulative effect of change in accounting
principle for post retirement medical benefits,
net of taxes -- -- -- (11.48)
Net earnings (loss) per share 0.21 0.17 0.24 (11.09)
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LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
Jun. 30 Dec. 31,
1994 1993
Current Assets:
Cash and cash equivalents 157 894
Bond funds in trust 8,000 9,700
Accounts receivable, less allowances 38,008 46,527
Prepaid expenses 296 351
Income taxes recoverable 596 596
Inventories:
Finished 50,930 50,165
Semi-finished 21,136 22,617
Raw materials 8,686 9,515
Supplies 15,583 15,129
Total inventories 96,335 97,426
Total Current Assets 143,392 155,494
Non-Current Assets:
Intangible assets 21,680 23,252
Bond funds in trust 5,628 5,474
Prepaid pension contributions 15,847 15,713
Deferred income taxes 26,504 27,083
Other 1,746 1,654
Total Non-Current Assets 71,405 73,176
Plant and Equipment, at cost 250,150 243,658
Less - accumulated depreciation 126,191 122,514
Net Plant and Equipment 123,959 121,144
Total Assets 338,756 349,814
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LIABILITIES AND STOCKHOLDERS' EQUITY
Jun. 30 Dec. 31,
1994 1993
Current Liabilities:
Accounts payable 26,512 25,421
Accrued compensation 6,119 8,788
Current portion of long-term debt 9,185 10,981
Notes payable to banks -- 7,500
Taxes, other than income taxes 570 733
Accrued costs of pension plans 9,470 9,963
Current portion of restructuring charges -- 622
Other current liabilities 3,033 2,653
Total Current Liabilities 54,889 66,661
Non-Current Liabilities:
Accrued costs of pension plans 51,904 54,287
Accrued postretirement medical benefits 78,601 77,801
Other non-current liabilities 7,203 7,549
Total Non-Current Liabilities 137,708 139,637
Long-Term Debt:
Bank agreement 75,000 75,000
Revenue bonds 27,580 25,926
Total Long-Term Debt 102,580 100,926
Stockholders' Equity:
Preferred stock, without par value, authorized
2,000,000 shares with none issued -- --
Common stock, $13.33 par value, authorized
5,000,000 shares with 4,056,140 shares issued 54,081 54,081
Capital in excess of par value 247 247
Retained earnings 4,349 3,360
Minimum pension liability adjustment (15,098) (15,098)
Total Stockholders' Equity 43,579 42,590
Total Liabilities and Stockholders' Equity 338,756 349,814
3
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended
June 30,
1994 1993
Cash flows from operating activities:
Net earnings (loss) 989 (44,964)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Cumulative effect of change in accounting for
postretirement medical benefits -- 46,543
Depreciation 3,853 3,702
Restructuring of operations (397) --
Change in deferred income taxes 579 782
Changes in assets and liabilities that
provided (used) cash:
Accounts receivable 8,519 1,619
Inventories 1,091 (9,809)
Accounts payable and accrued expenses (2,274) 3,863
Pension cost less than funding (1,510) (2,539)
Change in accrued postretirement medical benefits 800 1,366
Other assets and liabilities (12) 276
Net cash provided by operating activities 11,638 839
Cash flows used in investing activities:
Capital expenditures (6,279) (7,470)
Cash flows from financing activities:
Net borrowings (repayments) under bank agreement (7,500) 4,000
Long-term bond payments (142) (126)
Bond funds in trust 1,546 (12,662)
Refund under contract for HTMR facility -- 13,600
Net cash provided by (used in) financing activities (6,096) 4,812
Cash and cash equivalents:
Net decrease during the period (737) (1,819)
At beginning of year 894 1,958
At end of period 157 139
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements
include the accounts of Laclede Steel Company and its wholly-owned
subsidiaries. All inter-company accounts and transactions have
been eliminated. The consolidated financial statements reflect
all adjustments (such adjustments are of a normal recurring nature
unless otherwise disclosed in these interim financial statements)
which are in the opinion of the Management necessary to a fair
statement of the results for the interim periods.
NOTE 2 - ACCOUNTING CHANGE - POSTRETIREMENT MEDICAL BENEFITS
Effective January 1, 1993 the Company adopted Statement of
Financial Accounting Standards No. 106 (Employers' Accounting for
Postretirement Benefits Other Than Pensions) which requires
accounting for the cost of retiree medical benefits other than
pensions on an accrual basis. Implementation of this new standard
also requires the recognition of a transition obligation based on
the aggregate amount that would have been accrued in prior years
had the new standard been in effect for those years. In
accordance with this new standard the Company elected to recognize
the entire transition obligation as of January 1, 1993 and
accordingly recorded a non-cash charge of $46,543,000, after
recognition of $28,526,000 in deferred tax benefits.
NOTE 3 - STOCK APPRECIATION RIGHTS PLAN
In the first half of 1993 we incurred a net charge of $1,125,000
for our Stock Appreciation Rights Plans, which reflected the
increase in the price of our stock since the end of 1992. This
charge reduced net earnings for the first six months of 1993 by
$697,000, or $.17 per share, after recognition of related tax
benefits.
NOTE 4 - EARNINGS PER SHARE
Earnings per share amounts have been calculated based on weighted
average shares outstanding.
NOTE 5 - INCOME TAXES
The provision for income taxes represents an effective combined
federal and state tax rate of 40% and 38% for the six months ended
June 30, 1994 and 1993, respectively.
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ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Earnings of $1.0 million plus $3.9 million in depreciation charges
and deferred income taxes of $.6 million generated cash flow of $5.5
million in the first half of 1994. Operating activities provided
$11.6 million in cash during the period, reflecting a decrease in
accounts receivable and inventories. Working capital decreased by
$.3 million in the first half of 1994 and the ratio of current
assets to current liabilities was 2.6 to 1.0 at June 30, 1994.
Capital expenditures totaled $6.3 million in the first half of 1994.
The Company has an $80.0 million Revolving Credit Agreement with
four banks which expires September 1, 1995. In July 1993 the
Agreement was amended to provide for up to an additional $15 million
in availability through a short-term credit facility. This short-
term credit facility expired at June 30, 1994 and has been fully
paid. At June 30, 1994, $75.0 million in borrowings were
outstanding under the Revolving Credit Agreement and an additional
$3.6 million in letters of credit were also outstanding.
The Company has reached an agreement in principle for a new 5-
year, $95 million credit facility to replace the existing $80
million bank agreement. Management believes that internally
generated funds and its new banking arrangements will be adequate to
finance all planned capital expenditures, which will be
approximately $13.7 million in 1994, including $5.0 million in
expenditures to modify the HTMR System. These modifications will be
made using the Solid Waste Disposal Revenue Bond funds held in
trust.
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<PAGE>
Results of Operations
Net sales increased by $1.4 million or 1.0% in the second quarter
of 1994 compared to the second quarter of 1993, reflecting a 6.9%
increase in average selling prices for steel products, offset by a
4.7% decrease in steel shipments. For the first half of 1994 net
sales increased by $10.0 million or 6.5% over the first half of
1993, reflecting an 8.8% increase in average selling prices and a
slight decrease in shipping volume.
Cost of products sold increased by $.4 million or .5% in the
second quarter of 1994 compared to the second quarter of 1993,
despite lower shipping volume. The increase is primarily a result
of higher costs for the Company's basic raw material, ferrous scrap.
First half 1994 costs of products sold increased by $9.9 million
over the prior year mainly due to higher ferrous scrap costs. In
late 1992 our average scrap cost was under $100 per gross ton. By
the end of 1993 it was over $140 per ton. It reached a peak of
about $150 in March of this year, before leveling off to about $135
per ton in the second quarter. Recently, however, we have again
incurred higher prices and, if this trend continues, will be forced
to evaluate sales price levels for all of our products.
As discussed in Note 3 to the Consolidated Financial Statements,
cost of products sold in the first half of 1993 included a charge of
$1.1 million for the Company's stock Appreciation Rights Plans. In
the first half of 1994 there were no comparable charges.
Production costs in the first half 1994 were adversely affected by
a number of operating problems in January and February at the
Company's new downstream facilities as well as the Alton Plant.
Severe weather, particularly in the East, also played a role. In
recent months the Company achieved considerable improvement in
overall production costs, which management expects to sustain.
The Company successfully completed the installation of new
equipment at the Fremont Plant and has ceased operations at the
Alton Wire Mill. Full realization of the anticipated lower oil
tempered wire production costs will now depend on the progress made
at the Fremont Plant in improving productivity.
The Company continues to experience high demand for oil tempered
wire. Therefore, a decision was made to supplement Fremont's oil
tempering capacity by relocating some of the Alton wire equipment to
the Memphis, Tennessee Wire Mill. Installation of the equipment was
- 7 -<PAGE>
completed in June 1994, and some sizes of oil tempered wire were
added to the Memphis Plant's existing cold drawn wire production.
As a result of this change to the 1992 wire operations restructuring
plan, a credit of $397,000 was recorded in the first quarter of
1994, representing the estimated net book value of the equipment to
be transferred.
The $46.5 million charge for postretirement medical benefits in
the first quarter of 1993 is net of $28.5 million in deferred tax
benefits. Non-current assets at June 30, 1994 includes $26.5
million in net deferred income taxes. In recording these deferred
tax benefits, no valuation allowance was deemed necessary as a
result of management's evaluation of the likelihood that all of the
deferred tax assets will be realized. In making this evaluation
management considered historical earnings trends and the impact
which changes in operations are expected to have on future earnings.
Additionally, consideration was given to the inherent long-term
nature of the Company's most significant deferred tax asset for the
related postretirement medical benefit obligations ($31.4 million at
June 30, 1994), for which recovery upon payment is expected to be
spread over many future years. Excluding special charges in 1992
pre-tax accounting income for the most recent five fiscal years
averaged $4.1 million. Taxable income for the same period averaged
$2.6 million.
This general level of historical earnings and taxable income,
along with expected improvements in future earnings as a result of
actions taken by management to implement its strategic plan for
various cost reductions, is expected to be sufficient to allow for
utilization of all recorded net deferred income tax assets,
including net operating loss and minimum tax carryovers, as they
reverse or within the related expiration periods.
- 8 -<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(4)(a) Registrant's Revolving Credit Agreement dated as of
September 16, 1992. (Incorporated by reference to
Exhibit (4) in Registrant's Quarterly Report on Form 10-
Q for the quarterly period ended September 30, 1992.)
(4)(b) First Amendment dated July 20, 1993 to Registrant's
Revolving Credit Agreement. (Incorporated by reference
to Exhibit (4)(b) in Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1993.)
(4)(c) Second Amendment dated January 20, 1994 to Registrant's
Revolving Credit Agreement. (Incorporated by reference
to Exhibit (4)(c) in Registrant's Annual Report on Form
10-K for the year ended December 31, 1993.)
(4)(d) Third Amendment dated June 30, 1994 to Registrant's
Revolving Credit Agreement.
Instruments with respect to long-term debt issues have
been omitted where the amount of securities authorized
under such instruments does not exceed 10% of the total
consolidated assets of the Registrant. Registrant
hereby agrees to furnish a copy of any such instrument
to the Commission upon its request.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the
quarter.
- 9 -<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities and Exchange Act of 1934, the
Registrant has duly caused this report
to be signed on its behalf by the
undersigned thereunto duly authorized.
LACLEDE STEEL COMPANY
(Registrant)
/s/ Michael H. Lane
Michael H. Lane
Vice President - Finance
Treasurer and Secretary
Duly Authorized Officer and
Principal Financial Officer
Date: August 12, 1994
9
EXHIBIT 4d
THIRD AMENDMENT TO
AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT
This Third Amendment to Amended and Restated Revolving Credit
Loan Agreement (this "Amendment") is made and entered into as of
the 30th day of June, 1994, by and between LACLEDE STEEL COMPANY,
a Delaware corporation("Borrower"), THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS, NATIONAL CITY BANK, MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, COMMERCE BANK OF ST. LOUIS, N.A.
(collectively, the "Banks"), and THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, AS AGENT for the Banks ("Agent").
Recitals:
A. Borrower, Agent and the Banks have entered into a certain
Amended and Restated Revolving Credit Loan Agreement dated
September 16, 1992, as amended by that certain First Amendment to
Amended and Restated Revolving Credit Loan Agreement dated July
20, 1993, and as further amended by that certain Second Amendment
to Amended and Restated Revolving Credit Loan Agreement dated as
of January 20, 1994 (as amended, modified, restated, or replaced
from time to time, the "Credit Agreement") pursuant to which the
Banks have (i) extended an $80,000,000 revolving credit facility
to Borrower, which facility includes the issuance of letters of
credit (the "Revolving Loan Facility"), and (ii) extended an
additional short-term revolving credit facility (the "Bridge
Facility") to Borrower in an aggregate amount not to exceed
$15,000,000 and subject to the reductions specified in the Credit
Agreement to provide working capital to Borrower in the event
that there is no availability under the Revolving Loan Facility.
B. The parties desire to amend the Credit Agreement to set
forth their mutual understanding and agreement with respect to
the Revolving Loan Facility and the Bridge Facility.
Agreement:
In consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Borrower, Agent and the Banks hereby agree as follows:
1. Definitions. All capitalized terms used and not otherwise
defined herein shall have the meanings given them in the Credit
Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is
hereby amended as follows, effective as of the date of this
Amendment:
2.1. The second sentence of Section 1.1. of the Credit
Agreement is hereby deleted and replaced with the following:
"Without limiting the terms of the preceding sentence,
at no time shall a Bank be obligated to make a Non-
Reimbursement Loan if the principal amount of the
requested Non-Reimbursement Loan plus the aggregate
unpaid principal amount of such Bank's other Non-
Reimbursement Loans at the time of the request exceeds
that Bank's Non-Reimbursement Loan Commitment."
2.2. Section 1.5. of the Credit Agreement is hereby deleted
and replaced with the following:
"Section 1.5. Interest on Eurodollar Revolving Loans.
(a) Subject to the terms of Section 1.5.(b), each
Eurodollar Revolving Loan, so long as it shall be
Eurodollar Revolving Loan, shall bear interest on the
unpaid principal amount thereof during each Eurodollar
Interest Period applicable to such Eurodollar Revolving
Loan at a rate per annum equal to the sum of (i) the
Eurodollar Rate, plus (ii) 250 basis points. For the
purposes of the Section 1.5.(a), the term "basis point"
shall mean one-hundredth (1/100th) of one percent (1%).
The Agent shall, after the applicable Eurodollar Rate
is determined, notify the Borrower and the Banks of
such interest rate. Interest on each Eurodollar
Revolving Loan shall be payable on each Eurodollar
Interest Payment Date with respect to that Revolving
Loan and when that Revolving Loan shall be due (whether
by reason of acceleration or otherwise) and upon the
date of any prepayment of that Revolving Loan.
(b) Notwithstanding the terms of Section 1.5.(a) to the
contrary, the principal balance of the Revolving Loans
from time to time outstanding up to an not to exceed
$5,000,000 shall bear interest at a rate per annum
equal to the Base Rate in effect from time to time plus
one percent f(1%). At Agent's discretion outstanding
Eurodollar Revolving Loans shall make up all, some, or
none of the Revolving Loans to which such interest rate
is applicable, with the remainder, if any, made up of
outstanding Domestic Base Rate Revolving Loans. After
Agent determines that a Eurodollar Revolving Loan is to
bear interest at the rate specified in this Section
1.5.(b), interest on such Revolving Loan shall be
payable on successive Domestic Base Rate Interest
Dates, beginning on the first such date after Agent
makes its determination
2
and on the date such first such Revolving Loan shall be
due (whether by reason of acceleration or otherwise)
and on the date of any prepayment of such Revolving
Loan.
(c) The interest rates provided in this Section 1.5.
shall be computed on the basis of a year of 360 days
and the actual number of days elapsed and, in the case
of the interest rate provided in Section 1.5.(b), shall
be adjusted automatically as of the opening of business
on the effective date of each change in the Base Rate."
2.3. Section 1.6. of the Credit Agreement is hereby deleted
and replaced with the following:
"Section 1.6. Interest on Domestic Base Rate Revolving
Loans.
(a) Subject to the terms of Section 1.6.(b), each
Domestic Base Rate Revolving Loan shall bear interest
on the unpaid principal amount thereof at a rate per
annum equal to the Base Rate in effect from time to
time. The Agent shall notify the Borrower and the
Banks of such interest rate. Interest on each Domestic
Base Rate Revolving Loan shall be payable on successive
Domestic Base Rate Interest Payment Dates, beginning on
the first such date after the date such Revolving Loan
is made or converted to a Domestic Base Rate Revolving
Loan and on the date when such Revolving Loan shall be
due (whether by reason of acceleration or otherwise)
and on the date of any prepayment os such Revolving
Loan.
(b) Notwithstanding the terms of Section 1.6.(a) to
the contrary, the principal balance of the Revolving
Loans from time to time outstanding up to an not to
exceed $5,000,000 shall bear interest at the Base Rate
plus one percent (1%). At Agent's discretion
outstanding Domestic Base Rate Revolving Loans shall
make up all, some, or none of the Revolving Loans to
which such interest rate is applicable, with the
remainder, if any, made up of outstanding Eurodollar
Revolving Loans. Interest on any Domestic Base Rate
Revolving Loan which bears interest at the rate
specified in this Section 1.6.(b) shall be payable on
the dates specified in Section 1.6.(a).
(c) The interest rates provided in this section 1.6.
shall be computed on the basis of a year of 360 days
and the actual number of days elapsed and shall be
adjusted automatically as of the opening of business on
the effective date of each change in the Base Rate"
3
2.4 Section 1.7. of the Credit Agreement is hereby deleted
and replaced with the following:
"Section 1.7. Default Rate of Interest. If
borrower shall fail to pay when due (at maturity, whether by
reason of acceleration or otherwise) all or any portion of the
principal amount of any Revolving Loan, such unpaid amount shall
no longer bear interest in accordance with the terms of Section
1.5. or Section 1.6., as the case may be, but shall instead bear
interest at the Default Rate for each day from the day it became
so due until paid in full, payable on demand."
2.5. Section 2.1. of the Credit Agreement is hereby deleted
and replaced with the following:
"Section 2.1. Letters of Credit. Subject to
Section 4.2 and the other terms of this Agreement, pursuant to
written application and reimbursement therefor, substantially
in the form of Exhibit C attached hereto (or such other form as
may be agreed to by the Agent and the Borrower), executed by
Borrower or Laclede Chain, as the case may be, and delivered to
Agent (a "Letter of Credit Agreement"), along with payments to
the Agent of the Letter of Credit Fee for said Letter of Credit,
the Agent (on behalf of the Bank, as hereinafter provider) shall
issue Letters of Credit to such beneficiaries as are designated
in a Letter of Credit Agreement by Borrower or Laclede Chain, for
the account of Borrower or Laclede Chain, whichever has executed
and delivered that Letter of Credit Agreement, in the form of the
Agent's standard commercial letter of credit; provided, however,
in no event shall a Letter of Credit be issued by Agent if, (a)
the face amount of said Letter of Credit exceeds the Borrowing
Base on such date, or (b) after giving effect to the issuance of
said Letter of Credit the sum of (i) the aggregate of the then
unpaid principal balance of all Revolving Loans (including
Reimbursement Loans), and (ii) the Letter of Credit Obligations,
would exceed the then aggregate of the Banks' Revolving Loan
Commitments."
2.6. The definition of "Available Amount" in Article 10 of
the Credit Agreement is hereby deleted and replaced with the
following:
" Available Amount for a Bank shall mean, on any
particular date, the Dollar amount which is equal to
the lesser of (i) the Revolving Loan Commitment of such
Bank, and (ii) such Bank's Pro Rata Share of the
Borrowing Base on such date."
4
2.7. The definition of "Borrowing Base" in Article 10 of the
Credit Agreement is hereby deleted and replaced with the
following:
" Borrowing Base shall mean, on any particular date,
the Dollar amount which is equal to:
(i) 80% of Eligible Accounts Receivable as of such
date; plus
(ii) the lesser of: (a) 50% of Eligible Inventory
consisting of raw materials, work in process, and the
undrawn amount of letters of credit issued and
outstanding as of such date for the account of Borrower
or any of its subsidiaries for their purchase of
Eligible Inventory, and 60% of Eligible Inventory
consisting of finished goods as of such date; provided,
however, that commencing on October 1, 1994 only 50% of
Eligible Inventory consisting of finished goods shall
be included in the Borrower Base, and (b) $5,000,000;
less
(iii) the principal amount of all outstanding Revolving
Loans and Bridge Loans and the Letter of Credit
Obligations.
Notwithstanding any terms or provisions in the Credit
Agreement to the contrary, the Borrowing Base shall not
be considered and shall have no effect on the amount of
availability under the Bridge Facility at any time."
2.8. The definition of "Letter of Credit Obligations" in
Article 10 of the Credit Agreement is hereby deleted and
replaced with the following:
" Letter of Credit Obligations shall mean the
aggregate Dollar amount of all outstanding
indebtedness, liabilities and obligations (direct,
contingent or otherwise, and including interest and any
applicable charges and the aggregate undrawn amount of
the Letters of Credit) of Borrower or Laclede Chain, or
both of them, to the agent on issued and outstanding
Letters of Credit and under the Letter of Credit
Agreements executed and delivered by Borrower or
Laclede Chain with respect to such Letters of Credit."
2.9. Exhibit H attached hereto shall be attached to the
Credit Agreement in place of Exhibit H currently attached
thereto and shall be deemed to be incorporated in the Credit
Agreement for all purposes as though originally made a part
thereof.
5
3. No Extension. Nothing contained in this Amendment shall be
construed as extending or evidencing the agreement of any of the
Banks to an extension of the Revolving Loan Termination Date or
the Bridge Loan Termination Date.
4. Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Bank that (i) no consents are
necessary from any third parties for Borrower's execution,
delivery or performance of this Amendment or any of the other
documents, agreements, or certificates executed by Borrower in
connection with the transactions contemplated by this Amendment,
(ii) this Amendment and all other documents, agreements, and
certificates executed by Borrower in connection with the
transactions contemplated by this Amendment constitute legal,
valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their terms, except to the extent
that the enforceability thereof against Borrower may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforceability of
creditors' rights generally or by equitable principles of general
application (whether considered in an action at law or equity),
(iii) all of the representations and warranties contained in
Article 5 of the Credit Agreement, as amended by this Amendment,
are true and correct in all material respects with the same force
and effect as if made on and as of the date of this Amendment,
and (iv) as of the date hereof there exists no Event of Default
or event which with the passage of time, giving of notice or
otherwise would constitute an Event of Default.
5. Effect on Loan Documents. Except as specifically amended
hereby, the Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed in all respects. The
execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of Bank under
the Loan Documents, nor constitute a waiver of any provision of
the Loan Documents except as specifically set forth herein. Upon
the effectiveness of this Amendment, each reference in the Credit
Agreement to "the Agreement", "hereunder", "hereof", "herein", or
words of like import, shall mean and be a reference to the Credit
Agreement, as amended hereby. Upon the effectiveness of this
Amendment, each reference in the Loan Documents, other than the
Credit Agreement, to the Credit Agreement shall mean and be a
reference to the Credit Agreement, as amended hereby.
6. Reaffirmation. Borrower hereby ratifies, affirms,
acknowledges, and agrees that the Credit Agreement (as amended by
this Amendment) and the Notes represent the valid, enforceable
and collectible obligations of Borrower, and Borrower further
acknowledges that there are no existing claims, defenses,
personal or otherwise or rights of setoff
6
whatsoever known to Borrower with respect to any of the Loan
Documents. Borrower hereby agrees that this Amendment in no way
acts as a release or relinquishment of the Liens securing payment
of the Obligations and that such liens continue to apply and
remain fully perfected and enforceable. Borrower hereby ratifies
and confirms its Unlimited Guaranty dated September 16, 1992,
covering the indebtedness of Laclede Chain Company for the
benefit of the Banks, and agrees that the same is and shall
continue in full force and effect to cover all present and future
indebtedness of Laclede Chain Company to the Agent or the Banks,
including indebtedness arising under Letters of Credit issued for
the account of Laclede Chain Company.
7. Governing Law. This Amendment has been delivered in St.
Louis, Missouri and shall be governed by and construed in
accordance with the laws and decisions of the State of Missouri
without giving effect to the choice or conflicts of law
principles thereunder.
8. Section Titles. The section titles contained in this
Amendment are and shall be without substance, meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties hereto.
9. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
[remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of
the day and year first above written.
ATTEST: LACLEDE STEEL COMPANY
Michael H. Lane
Vice President-Finance
Laclede Chain Manufacturing Company, A Delaware corporation,
Laclede Mid America, Inc., an Indiana corporation, and Laclede
Consulting Services Limited, a Delaware corporation
(collectively, the "Subsidiaries"), have executed this Amendment
in the space provided below to acknowledge the terms of this
Agreement, and to ratify and confirm their respective obligations
under the Security Agreement dated September 16, 1992, executed
by Borrower and the Subsidiaries for the benefit of the Agent,
for the ratable benefit of the Banks. The Subsidiaries further
acknowledge that said Security Agreement is and shall continue in
full force and effect to secure the "Obligations", as such term
is defined in said Security Agreement, including but not limited
to the indebtedness of Borrower now or hereafter arising under
the Credit Agreement (as amended by this Amendment) and the
Notes.
ATTEST: LACLEDE CHAIN MANUFACTURING
COMPANY
By:
Michael H. Lane
Vice President
ATTEST: LACLEDE MID AMERICA, INC.
By:
Michael H. Lane
Vice President
ATTEST: LACLEDE CONSULTING SERVICES
LIMITED
By:
Michael H. Lane
Vice President
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[SIGNATURE PAGE TO THIRD AMENDMENT TO AMENDED
AND RESTATED REVOLVING CREDIT LOAN AGREEMENT]
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By:
Name: Barbara F. Drago
Title: Vice President
COMMERCE BANK OF ST. LOUIS, N.A.
By:
Name: Fred H. Entrikin, III
Title: Senior Vice President
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION
By:
Name: Edward A. Cheney
Title: Vice President
NATIONAL CITY BANK
By:
Name: Joseph A. Runk, Jr.
Title: Account Representative
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