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
Date of Report (Date of earliest event
reported): January 13, 1998
L.A. GEAR, INC.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-10157
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(Commission File Number)
95-3375118
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(I.R.S. Employer Identification No.)
2850 Ocean Park Boulevard, Santa Monica, California 90405
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(310) 452-4327
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Item 5. Other Events.
On January 13, 1998, as part of its ongoing efforts to restructure its
business, Registrant announced it had reached agreement with an unofficial
committee of bondholders holding Registrant's 7 3/4 % Convertible Subordinated
Debentures due 2002 concerning the terms of a comprehensive financial
restructuring of Registrant's debt and equity interests. Registrant also
announced it filed a voluntary petition for relief under the reorganization
provisions of the United States Bankruptcy Code to implement the restructuring.
On January 21, Registrant announced it had filed a plan of reorganization and
disclosure statement with the U.S. Bankruptcy Court, Central District of
California. Under the reorganization plan, all of the currently issued and
outstanding shares of common stock of Registrant will be eliminated without
consideration.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit No. Description of Exhibit
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99 Press release dated January 13, 1998.
100 Press Release dated January 21, 1998.
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SIGNATURE
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.
L.A. GEAR, INC.
Date: February 10, 1998. By: /s/ David Gatto
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David Gatto
Chairman of the Board and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
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99 Press release dated January 13, 1998.
100 Press release dated January 21, 1998.
Exhibit 99
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January 13, 1998 Contact: Bill Schreiber
(916) 443-3354
IMMEDIATE RELEASE
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L.A. Gear Inc. Files For Reorganization With Agreement
of Unofficial Bondholders Committee;
Will Continue Operations and Supply Spring Product
Santa Monica, CA - L.A. Gear, Inc. (OTC-LAGR) announced today that it has
reached an agreement with an unofficial committee of bondholders holding L.A.
Gear 7.75% Convertible Subordinated Debentures due 2002 concerning the terms of
a comprehensive financial restructuring of the company's debt and equity
interests.
L.A. Gear also announced that it has filed a voluntary petition for relief
under the reorganization provisions of the United States Bankruptcy Code to
implement the restructuring agreed to with the unofficial bondholders committee.
L.A. Gear stated that it intends to file its plan of reorganization shortly,
perhaps as early as next week.
During its reorganization, L.A. Gear will continue to operate through its
subsidiaries. None of these subsidiaries, including its principal operating
subsidiary L.A. Gear, California, Inc., are obligors under the Debentures and
none have filed reorganization cases. L.A. Gear expects to continue its
day-to-day business activities without interruption.
"We view our agreement with the unofficial bondholders committee and the
reorganization case intended to implement the agreement as an opportunity to
begin focusing on L.A. Gear's long-term success," said David Gatto, L.A. Gear
Chairman and Chief Executive Officer. "During our restructuring process, we
fully expect to deliver all of our pending orders and to proceed with our fall
1998 line of footwear."
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The agreement between L.A. Gear and the unofficial bondholders committee
provides that holders of the Debentures will receive up to 2,375,000 shares of a
newly created Series A Voting Participating Convertible Preferred Stock.
Additional shares of new Series A Voting Participating Convertible Preferred
Stock will be divided among other unsecured creditors, and holders of L.A.
Gear's existing Series B Preferred Stock and Libra Investments, L.A. Gear's
investment advisor.
The new Series A Preferred Stock will have one vote per share with respect
to all matters submitted to a vote of the shareholders but not as a separate
class, and a liquidation preference equal to $10 per share. The holders of
Series A Preferred Stock will be entitled to elect two members of the Board of
Directors of reorganized L.A. Gear. Beginning in 2001, the company will pay
dividends on the new Series A Preferred Stock in an amount equal to 70 percent
of the prior year's earnings before interest and taxes. In addition, no
dividends will be paid on any other class of L.A. Gear stock until $10 in
dividends have been paid on each share of new Series A Preferred Stock. In the
event that L.A. Gear fails to pay any dividends, in accordance with certain
projections presented in the disclosure statement to be filed with the plan of
reorganization, each share of new Series A Preferred Stock will convert, at the
option of the holder, to up to 100 shares of the new Common Stock. Upon payment
of $10 in dividends on each share of new Series A Preferred Stock, each share of
the new Series A Preferred Stock will convert into one share of new Common Stock
of L.A. Gear.
The plan of reorganization also will provide that all of the new Common
Stock of reorganized L.A. Gear will be initially issued to the holders of L.A.
Gear's existing Series B Preferred Stock and to Libra Investments. Accordingly,
all of the currently issued and outstanding shares of Common Stock of L.A. Gear
will be eliminated without consideration.
"We believe that the new L.A. Gear that will emerge from the reorganization
case will be more efficient, more focused on customer satisfaction and better
able to provide to the customer high quality products with innovative designs,"
said Gatto. "The restructuring initiatives the company has undertaken over the
last year, and this reorganization process, have been difficult and painful for
us, but L.A. Gear now is in a better position to maximize the value of its brand
name than it has been for the past several years. We are excited about the
future prospects of this company."
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L.A. Gear is represented by Hennigan, Mercer & Bennett and the unofficial
bondholders committee is represented by Sidley & Austin. The reorganization case
was filed in the United States Bankruptcy Court for the Central District of
California.
Certain statements made in this press release are forward-looking, reflect
L.A. Gear's current expectations, and involve certain risks and uncertainties.
There can be no assurance that the Company's actual future performance will meet
L.A. Gear's or its shareholders expectations. L.A. Gear's future operating
results are difficult to predict and subject to significant fluctuations.
Factors that may cause future results to differ materially from L.A. Gear's
current expectations include, among others: general economic and business
conditions; competition; success of operating initiatives; development and
operating costs; advertising and promotional efforts; brand awareness; the
existence or adherence to development schedules; the existence or absence of
adverse publicity; availability, location and terms of product distribution
channels; changes in business strategy or development plans; the quality of
management; availability, terms and deployment of capital and borrowings;
business abilities and judgment of personnel; availability of qualified
personnel; labor and employee benefit costs; changes in, or the failure to
comply with, government regulations; the ability to reverse recent trends that
have caused reductions in market share and substantial losses; the continued use
of intellectual property; continued access to adequate sources of product
supply; risks associated with unaffiliated manufacturers and international
operations; and other factors referenced in L.A. Gear's filings with the
Securities Exchange Commission.
L.A. Gear designs, develops and markets a broad range of quality athletic
and lifestyle footwear under various labels for adults and children worldwide.
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Exhibit 100
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January 21, 1998 Contact: Bill Schreiber
(916) 443-3354
IMMEDIATE RELEASE
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L.A. Gear Inc. Files Plan of Reorganization
And Disclosure Statement
Santa Monica, CA - L.A. Gear, Inc., as previously announced, filed its
Plan of Reorganization and related Disclosure Statement with the United States
Bankruptcy Court, Central District of California.
The plan and disclosure statement specifically define the financial
restructuring that the company negotiated with an unofficial committee
representing holders of L.A. Gear's 7.75% Convertible Subordinate Debentures.
The classes of claims and interests established by the plan and the
distributions contemplated to be made to those classes are as follows:
Class A-1. Allowed secured claim of Congress Financial (Western). Unimpaired
treatment.
Class A-2. All other allowed secured claims. Unimpaired treatment.
Class B-1. Priority unsecured claims. Unimpaired treatment.
Class B-2. Allowed unsecured claims for senior debt. Unimpaired treatment.
Class B-3. All other allowed unsecured claims, including claims based on 7.75%
Convertible Subordinated Debenture. Treatment options as follows:
(Option A) 20 cents multiplied by allowed amount of claim.
(Option B) 45.3015 shares of New Series A Preferred Stock for each $1,000
allowed claim.
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Class C-1. Existing preferred stock. Treatment as follows: less than 5 percent
of the issued and outstanding shares of New Series A Preferred Stock and
100 percent of the shares of New Common Stock.
Class C-2. Existing common stock. No distribution.
Class D-1. Securities litigation claims. No distribution.
In the event that a holder of an Allowed Class B-3 claim does not elect
treatment under either Option B-3-A or Option B-3-B, such holder's Allowed Class
B-3 Claim shall receive the treatment specified in Option B-3-A. If the
aggregate amount of Debentures evidencing allowed Class B-3 Claims as to which
the holders thereof elect treatment under this Option B-3-A exceed $8,750,000,
or under certain circumstances a lesser amount, then Small Holders will receive
cash in an amount equal to 20 cents multiplied by the allowed amount of such
Small Holder's Allowed Class B-3 Claim, and all other Allowed Class B-3 Claims
electing treatment under this Option B-3-A shall receive (a) cash in an amount
equal to such holder's pro rata share (calculated with respect to the holders of
Allowed Class B-3 Claims electing treatment under this Option B-3-A) of
Available Cash; and (b) a number of shares of New Series A Preferred Stock equal
to the product of (x), the difference between (i) the Allowed Amount of the
particular holder's Allowed Class B-3 Claim minus (ii) 5.000 multiplied by the
amount of cash distributed to such holder in accordance with the preceding
clause (a); multiplied by (y) 0.0453015.
The New Series A Preferred Stock to be issued pursuant to the Plan
shall have a dividend and liquidation preference of $10 per share. After $10 in
dividends have been paid on each share of New Series A Preferred Stock, the
shares of New Series A Preferred Stock will be automatically converted into a
like number of shares of New Common Stock. It is estimated that up to 2,840,000
shares of New Series A Preferred Stock could be issued pursuant to the plan.
Copies of the Plan and Disclosure Statement can be purchased for the
cost of copying from Litigation Graphic Technology, 911 Wilshire Blvd., Suite
2095, Los Angeles, CA 90017. Telephone is (213) 624-7595 and fax number is (213)
624-8647.
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