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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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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) FEBRUARY 6, 1996
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THE ARLEN CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
NEW YORK
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(State or Other Jurisdiction of Incorporation)
1-6675 13-2668657
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(Commission File Number) (IRS Employer
Identification No.)
505 EIGHTH AVENUE, NEW YORK, NEW YORK 10018
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(Address of Principal Executive Offices) (Zip Code)
(212) 736-8100
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 6, 1996, Mataponi, L.L.C. ("Mataponi") was the successful
bidder for the outstanding shares of Common Stock of Rucon Services Corp.
("Rucon"), a wholly-owned subsidiary of the Registrant, at the
previously-announced involuntary public foreclosure sale conducted pursuant to
the provisions of the New York Uniform Commercial Code ("UCC"). Mataponi
assigned its right to acquire such shares to Automotive Accessories Holdings,
L.L.C. ("Automotive LLC"), which acquired such shares at a closing held on the
same date. Automotive LLC is owned by the Mataponi Trust (which is the owner
of Mataponi) and members or entities of the family of Arthur N. Levien, a
deceased former director and officer of the Registrant (the "Levien Group").
As a result of the involuntary sale of the shares of Rucon, the
Registrant ceased to have any interest in the five companies which prior
thereto had constituted its operating subsidiaries, Curtis Partition
Corporation, Grant Products, Inc., Grizzly Products, Inc., G.T. Styling, Inc.
and A & A Specialties Corp.
As previously reported in the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 1995 (as such report was amended
on Form 10-Q/A-1, the "November 10-Q"), the UCC sale resulted from an event of
default under the Registrant's 5-1/4% Subordinated Notes (the "5-1/4% Notes")
issued to Arthur G. Cohen, the Registrant's Chairman of the Board, and the
Levien Group. The outstanding indebtedness under the 5-1/4% Notes was
approximately $125 million as of November 30, 1995. The outstanding shares of
Common Stock of Rucon had been pledged as collateral for the 5-1/4% Notes.
As a result of the UCC sale, the outstanding indebtedness under the
5-1/4% Notes was reduced by $3,465,000. In addition, pursuant to a
previously-reported agreement (the "Forbearance Agreement") with Mataponi
entered into in anticipation of the sale, the Registrant received $750,000,
which was used to satisfy certain secured corporate obligations, and a $2
million promissory note (the "$2 Million Note") issued by Automotive LLC
(which note is payable in quarterly installments over a two-year period and is
expected to provide the Registrant with the cash needed to meet its short-term
operating expenses). The Registrant also became entitled to certain other
forbearances, benefits and opportunities which, under the Forbearance
Agreement, it would receive only if Mataponi were the successful bidder for the
Rucon shares at the UCC sale. Thus, as provided in the Forbearance Agreement,
(a) the previously-reported acceleration of the 5-1/4% Notes has been withdrawn
and the maturity date of the 5-1/4% Notes has been extended to December 28,
2033 (during which time interest will accrue at the rate of 8% per annum), (b)
no payments will be required under the 5-1/4% Notes except quarterly in an
amount equal to 50% of the Registrant's Net Income (as defined in the
Forbearance Agreement) and (c) the 5-1/4% Notes will hereafter be subject to
default only for non-payment of principal or interest when due or certain
bankruptcy-related events. As provided in the Forbearance Agreement, the
Registrant, at the request of the holders of the 5-1/4% Notes, may
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be required to collateralize the 5-1/4% Notes (which are currently unsecured)
by a pledge to such holders of any or all notes or bonds which the Registrant
may acquire prior to July 5, 1997; such notes or bonds may include the $2
Million Note.
Reference is made to the November 10-Q for further information
regarding the Forbearance Agreement and certain other transactions provided for
pursuant thereto which have benefited, or may in the future benefit,
the Registrant.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(B) PRO FORMA FINANCIAL INFORMATION:
It is impractical for the Registrant to provide at this time pro
forma financial information reflecting the effect of the transactions described
above in Item 2. To the extent that such pro forma financial information may be
required, the Registrant expects to file such information on or before April
22, 1996.
(C) EXHIBITS:
The following Exhibit is incorporated by reference into this
Report:
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
10.15 Forbearance Agreement dated as of January 5, 1996 among the Registrant,
Rucon, Mataponi and the holders of the 5-1/4% Notes by their agent, Arthur
G. Cohen, or their substitute agent, Mataponi, incorporated by reference to
Exhibit 10.15 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 30, 1995.
</TABLE>
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE ARLEN CORPORATION
(Registrant)
By: /s/ Allan J. Marrus
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Allan J. Marrus, President
Dated: February 20, 1996
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