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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
February 24, 1999 0-14399
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Date of Report (Date of earliest event reported) Commission File Number
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1104930
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(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification Number)
888 Seventh Avenue, 40th Floor
New York, New York 10106
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(Address of Principal Executive Offices) (Zip Code)
(212) 547-6700
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(Registrant's telephone number, including area code)
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<PAGE>
Item 3. Bankruptcy or Receivership
On February 24, 1999, Golden Books Family Entertainment, Inc. ("GBFE")
announced that it had reached an agreement with its major creditors pursuant to
which it expects to significantly reduce its existing long-term debt, pay all
trade creditors in full and, under the direction of its current management team,
proceed with its publishing and entertainment operations. The agreement was
reached with the steering committee representing certain holders of the
Company's 7.65% Senior Notes due 2002 in the aggregate principal amount of $150
million (the "Senior Notes"), and the steering committee representing certain
holders of its 8.75% Convertible Trust Originated Preferred Securities due 2016
in the aggregate principal amount of $110 million the "TOPrS"). The
restructuring of the Company's indebtedness provides as follows: The Senior
Notes will be converted into (i) a new secured note in the principal amount of
$87,000,000, due 2004, with interest at the rate of 10%, if paid in cash, or, at
the Company's option for the first three years, 13.5% payable in kind, and (ii)
42.5% of the Company's new common stock to be issued post recapitalization,
prior to dilution. The note will be secured by the existing collateral already
granted to the senior noteholders as well as certain additional collateral. The
TOPrS indebtedness will be converted into 50% of the Company's new common stock
to be issued post recapitalization, prior to dilution. Also, pursuant to the
restructuring agreement, the Golden Press Holdings, L.L.C. bridge loan in the
amount of $10 million will be converted into 5% of the Company's new common
stock to be issued post recapitalization, prior to dilution. The restructuring
will provide that all of the Company's trade obligations be paid in full.
Existing preferred and common shareholders will surrender their stock
for out-of-the money warrants to purchase 5% of the new company stock to be
allocated two-thirds to the preferred and one-third to the common shareholders,
to be issued post recapitalization, prior to dilution. The restructuring also
provides for a management stock incentive program.
The foregoing recapitalization is expected to be effectuated pursuant
to a "prearranged" Chapter 11 Plan. Accordingly, on February 26, 1999 GBFE, as
well as Golden Books Publishing Company, Inc. ("Publishing") and Golden Books
Home Video, Inc. (collectively, the "Debtors") filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C.
ss.ss. 101 et seq. The petitions were filed in the United States Bankruptcy
Court for the Southern District of New York and were assigned Case Nos.
99-10030, 99-10031 and 99-10032, assigned to Judge Tina L. Brozman. The Debtors
are continuing to operate their business and their assets as
debtors-in-possession. No trustee has been appointed.
The Debtors expect shortly to petition the Court to approve a $55
million debtor-in-possession financing facility to be provided by The CIT
Group.
The Debtors are in the process of finalizing a Plan of Reorganization
which embodies the restructuring agreement summarized above. The Debtors
anticipate that they will shortly file with the Bankruptcy Court their
prearranged Chapter 11 Plan of Reorganization and a proposed disclosure
statement. The foregoing summary does not purport to be complete and is subject
to the terms of the Plan of Reorganization as filed with the Bankruptcy Court.
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<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits. The following exhibits are filed herewith and
incorporated herein by reference:
Exhibit No. Description
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99.1 Press release of GBFE, dated February 24, 1999
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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.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
Date: February 26, 1999 By: /s/ Philip Galanes
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Name: Philip Galanes
Title: Chief Administrative Officer,
Executive Vice President,
General Counsel & Secretary
<PAGE>
Exhibit Index
99.1 Press release of GBFE, dated February 24, 1999
FOR IMMEDIATE RELEASE
Investor/Press Contact:
Philip Galanes
Chief Administrative Officer
Golden Books Family Entertainment
212-547-4466
GOLDEN BOOKS FAMILY ENTERTAINMENT
ANNOUNCES RESTRUCTURING AGREEMENT
AND NEW FINANCING FACILITY
New York, New York February 24, 1999. Golden Books Family
Entertainment, Inc. (Nasdaq:GBFE) (the "Company") announced today that it had
reached an agreement with its major creditors pursuant to which it expects to
significantly reduce its existing long-term debt, pay all trade creditors in
full and, under the direction of its current management team, proceed with its
publishing and entertainment operations.
Richard E. Snyder, the Chairman and CEO of the Company said, "We are
extremely pleased to announce this restructuring and a new financing which will
allow the Company to continue the revitalization of our operations, more soundly
capitalized and in a manner which will allow all of our trade vendors to be
satisfied in full. We believe this consensual reorganization will allow Golden
Books to become a company that is healthy, vital and whose opportunities for
success in the future abound."
The agreement announced today was reached with the steering committee
representing certain holders of the Company's 7.65% Senior Notes due 2002 in the
aggregate principal amount of $150 million (the "Senior Notes"), and the
steering committee representing certain holders of its 8.75% Convertible Trust
Originated Preferred Securities due 2016 in the aggregate principal amount of
$110 million (the "TOPrS"). The restructuring of the Company's indebtedness
provides as follows:
The Senior Notes will be converted into (i) a new secured note in the
principal amount of $87,000,000, due 2004, with interest at the rate of 10%, if
paid in cash, or, at the Company's option for the first three years, 13.5%
payable in kind, and (ii) 42.5% of the Company's new common stock to be issued
post recapitalization, prior to dilution. The note will be secured by the
existing collateral already granted to the senior noteholders as well as certain
additional collateral. The TOPrS indebtedness will be converted into 50% of the
Company's new common stock to be issued post recapitalization, prior to
dilution.
Also, pursuant to the restructuring agreement, the Golden Press
Holdings, L.L.C. bridge loan in the amount of $10 million will be converted into
5% of the Company's new common stock to be issued post recapitalization, prior
to dilution.
<PAGE>
The restructuring will provide that all of the Company's trade
obligations be paid in full.
Existing preferred and common shareholders will surrender their stock
for out-of-the money warrants to purchase 5% of the new company stock to be
allocated two-thirds to the preferred and one-third to the common shareholders,
to be issued past recapitalization, prior to dilution. The restructuring also
provides for a management stock incentive program.
The foregoing recapitalization is to be effectuated pursuant to a
"pre-arranged" Chapter 11 plan which the Company expects to file shortly. In
connection therewith, the Company has arranged for a loan to be provided by the
CIT Group in the amount of $55 million. The recapitalization and the CIT loan
are subject to requisite court approval.
The Company is the leading publisher of children's books in North
America and owns one of the largest libraries of family entertainment
copyrights. The Company creates, publishes and markets entertainment products
for children and families through all media.
This press release includes statements which may constitute
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.
Although the Company believes the expectations contained in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. This information may involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Factors which could cause or contribute to such
differences include, but are not limited to, factors detailed in the Company's
Securities and Exchange Commission filings.
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