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): April 1, 1998
LAWTER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7558 36-1370818
(State or other (Commission (I.R.S Employer
jurisdiction of File Number) Identification No.)
incorporation)
1-7558
One Terra Way, 8601 95th Street, Kenosha, Wisconsin 53412-7716
(Address of principal executive offices)
(414) 947-7300
(Registrant's telephone number)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On April 1, 1998, the Company issued a press release announcing that,
pursuant to that certain Purchase Agreement and Mutual Release dated as of March
19, 1998, on April 1, 1998 the Company purchased the 11,503,130 shares of the
Company's Com mon Stock held by the Estate of Daniel J. Terra, representing
approximately 25.4% of the issued and outstanding Common Stock of the Company,
for a purchase price of $11.375 per share. The $130,848,104 aggregate purchase
price was funded by the Compa ny through borrowings of $100,000,000 under the
Company's Private Shelf Agreement with The Prudential Insurance Company of
America, as amended, and cash on hand. On April 1, 1998, the Company entered
into an amendment (the "Amendment") to its Privat e Shelf Agreement dated as of
December 6, 1995 with The Prudential Insurance Company of America
("Prudential"). Among other things, the Amendment modified certain covenants
contained in the original Private Shelf Agreement. The Company issued and s old
$100,000,000 in aggregate principal amount of its 6.91% Series B Senior Notes
due 2010 to Prudential under and pursuant to the agreement, as amended. The
Amendment is attached as an exhibit to this report and is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 - Press Release dated April 1, 1998.
99.2 - First Modification of Private Shelf Agreement dated as of
December 6, 1995 (the"Agreement"), by and between Lawter International,
Inc. (the "Company") and The Prudential Insurance Company of America
("Prudential").
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SIGNATURES
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.
LAWTER INTERNATIONAL, INC.
(Registrant)
/s/ John P. O'Mahoney
John P. O'Mahoney
Chairman of the Board and
Chief Executive Officer
(On behalf of the registrant in his
capacity as Principal Executive Officer)
April 1, 1998
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<PAGE>
EXHIBIT INDEX
Number Description
99.1 Press Release dated April 1, 1998
99.2 First Modification of Private Shelf Agreement dated as of December
6, 1995 (the"Agreement"), by and between Lawter International, Inc.
(the "Company") and The Prudential Insurance Company of America
("Prudential").
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Exhibit 99.1
NEWS RELEASE For further information, please contact:
Mr. Mark W. Joslin
CFO and Treasurer
LAWTER INTERNATIONAL AND THE ESTATE OF DANIEL J. TERRA
COMPLETE STOCK BUYBACK
Kenosha, Wisconsin, April 1, 1998 -- Lawter International, Inc. (NYSE:
LAW) announced today that it has completed the repurchase of the entire holdings
of the Estate of Daniel J. Terra in Lawter Common Stock according to the terms
and conditi ons previously announced on March 19, 1998. The 11,503,130 shares,
representing approximately 25.4% of Lawter's outstanding Common Stock, were
purchased for $11.375 per share, for a total purchase price of $130,848,104,
funded by the Company through borrowings of $100,000,000 and cash on hand. The
borrowings were provided by The Prudential Insurance Company of America under an
existing shelf agreement with the Company, pursuant to which the Company issued
and sold $100,000,000 of its 6.91% Ser ies B Senior Notes due 2010.
Lawter is a specialty chemical company, with 20 facilities in 15 countries
throughout the world. It is a major manufacturer and distributor of printing
ink vehicles, wax compounds and powders, and synthetic and hydrocarbon resins
to the graphic arts industry. Lawter also serves the industrial coatings,
adhesives and rubber industries.
Exhibit 99.2
As of April 1, 1998
Lawter International, Inc.
8601 95th Street
Kenosha, Wisconsin 53141
Attention: Chief Financial Officer
Re: First Modification of Private Shelf Agreement dated as of December 6,
1995 (the "Agreement"), by and between Lawter International, Inc. (the
"Company") and The Prudential Insurance Company of America
("Prudential")
Ladies and Gentlemen:
Reference is made to the above-captioned Agreement, pursuant to which
the Company (i) issued and sold and Prudential purchased the Company's 6.33%
Series A Senior Notes in the original principal amount of $25,000,000, due
January 5, 2003 and (ii) will issue and sell and Prudential will purchase
simultaneously with the execution and delivery of this amendment to the
Agreement the Company's 6.91% Series B Senior Notes in the original principal
amount of $100,000,000, due April 1, 2010. Cap italized terms used and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement.
Pursuant to the request of the Company and in accordance with the
provisions of paragraph 11C of the Agreement, the parties hereto agree as
follows:
SECTION 1. Amendment. From and after the date this letter becomes
effective in accordance with its terms, the Agreement is amended as follows:
1.1 Paragraph 6A of the Agreement is amended hereby by deleting it
in its entirety and substituting the following in its stead:
"6A. [Intentionally left blank]."
1.2 The proviso to Paragraph 6B(2) of the Agreement is amended
hereby by deleting it in its entirety and substituting the following in its
stead:
"provided that (i) the Funded Debt Ratio shall not exceed 3.50 to 1.00 at any
time prior to September 30, 1999, and shall not exceed 3.25 to 1.00 at any time
on or after September 30, 1999, and (ii) Priority Debt shall at no time exceed
25% of Consol idated Capitalization.
Notwithstanding clause (i) of the proviso to this paragraph 6B(2), the Company
shall not be considered to have failed to comply with the provisions of this
paragraph 6B(2) by reason of having exceeded the maximum permitted Funded Debt
Ratio set forth in clause (i) of such proviso (a "Leverage Payment Event") so
long as (x) such Leverage Payment Event does not continue for more than 24
consecutive months, (y) the Funded Debt Ratio does not at any time exceed 4.00
to 1.00, and (z) the Company shal l have paid the fee (the "Leverage Fee")
described below. The Company agrees that, for the period during which there is
a Leverage Payment Event (or, if any period of consecutive days during which
there is a Leverage Payment Event is less than 90 da ys, then, in lieu of the
actual length of such period, for a period of 90 consecutive days beginning
with the first day of such Leverage Payment Event) the Company shall pay to
each holder of a Note a fee at the rate per annum set forth in the follow ing
table (computed on the basis of a 360-day year 30-day month) on the outstanding
principal balance of such holder's Notes (such rate to be based on the stage of
the Funded Debt Ratio and whether or not the Leverage Payment Event is before
Septembe r 30, 1999 or on or after September 30 1999), such fee to be paid
quarterly in arrears on each date upon which interest payments are due on the
Notes:
Stages Funded Debt Before On or after
Ratio Range September 30, 1999 September 30,1999
Stage 1 3.25x<Funded Debt Ratio<3.50x N/A 0.25%
Stage 2 3.50x<=Funded Debt Ratio<3.75x 0.35% 0.50%
Stage 3 3.75x<= Funded Debt Ratio<= 4.00x 0.70% 0.70%
The rate at which the Leverage Fee shall be computed shall not decrease during a
given Leverage Payment Event whether or not the Funded Debt Ratio declines to a
lower stage during such Leverage Payment Event. In the event that the Funded
Debt Ratio shall move from a lower stage to a higher stage or shall continue
beyond September 29, 1999, then the higher rate applicable to such higher stage
or later date shall commence immediately and remain in effect throughout the
remaining period that the L everage Fee shall be due in accordance with this
paragraph."
1.3 Paragraph 6D is added hereby to the Agreement:
"6D. Minimum Consolidated Net Worth. The Company will not permit at any time
Consolidated Net Worth to fall below the sum of (i) $22,000,000 (after giving
effect to the repurchase of the Company's outstanding common stock from the
estate of Daniel J. Terra in the amount of approximately $130,000,000), plus
(ii) 20% of Consolidated Net Income, to the extent positive, applied at the end
of each fiscal quarter commencing with the fiscal quarter ending on March 31,
1998."
1.4 The following term in Paragraph 10B is amended hereby by
deleting it in its entirety and substituting the following in its stead:
"Funded Debt Ratio" shall mean, as of any time of determination thereof, the
ratio of (i) Consolidated Funded Debt less Consolidated Cash to (ii)
Consolidated EBITDA.
1.5 The following terms are added hereby to Paragraph 10B in
appropriate alphabetical order:
"Consolidated EBITDA" shall mean, with respect to any period of four consecutive
calendar quarters, Consolidated Net Income for such period before crediting or
deducting (as the case may be) amounts attributable to extraordinary, non-
recurring and ex ceptional non-cash gains or losses (whether or not such items
actually are classified as extraordinary items) plus, to the extent deducted in
determining Consolidated Net Income for such period, interest expense,
depreciation, amortization and taxes for such period, provided that in the event
of any acquisition by the Company or any Subsidiary of greater than 50% of the
total combined voting power of all classes of Voting Stock of a Person or all or
substantially all of the assets of a Person, i n either case through a
transaction or a series of related transactions, the historical financial
results of such Person (without any adjustment for cost savings or other
synergies) shall be included in the calculation of Consolidated EBITDA for such
period as though such acquisition had been consummated immediately prior to the
beginning of such period.
"Leverage Fee" shall have the meaning specified in paragraph 6B(2).
"Leverage Payment Event" shall have the meaning specified in paragraph 6B(2).
1.6 Paragraph 10C of the Agreement is amended hereby by adding the
following at the end of the paragraph:
"Any reference herein to any specific law, statute, rule or regulation shall
refer to such law, statute, rule or regulation as the same may be modified,
amended or replaced from time to time."
SECTION 2. Acknowledgment regarding Use of Proceeds. Prudential
acknowledges and agrees that the Company's use of the proceeds from the 6.91%
Series B Senior Notes to repurchase the outstanding shares of the Company's
common stock owned by the estate of Daniel J. Terra does not constitute a
transaction prohibited by Paragraph 6B(6) of the Agreement.
SECTION 3. Conditions Precedent. This letter shall become effective as
of the date hereof upon the return by the Company to Prudential of a counterpart
hereof duly executed by the Company and Prudential.
SECTION 4. Reference to and Effect on Agreement. Upon the
effectiveness of this letter, each reference to the Agreement in any other
document, instrument or agreement shall mean and be a reference to the
Agreement as modified by this let ter. Except as specifically set forth in
Section 1 hereof, the Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects.
SECTION 5. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF SUCH
STATE.
SECTION 6. Counterparts; Section Titles. This letter may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. The section titles contained in
this letter 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.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: ___________________________________
Vice President
Agreed and accepted:
LAWTER INTERNATIONAL, INC.
By: ____________________________
Title: ___________________________
