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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)
August 21, 1996
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STERLING CHEMICALS HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10059 76-0185186
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
1200 Smith Street, Suite 1900
Houston, Texas 77002-4312
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 650-3700
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
MERGER WITH STX ACQUISITION CORP.
Pursuant to an Amended and Restated Agreement and Plan of Merger dated
as of April 24, 1996 (the "Merger Agreement"), on August 21, 1996 (the "Closing
Date"), STX Acquisition Corp. ("STX Acquisition") merged with and into Sterling
Chemicals, Inc. (the "Company"), with the Company (renamed Sterling Chemicals
Holdings, Inc.) as the surviving corporation (the "Merger").
An aggregate of approximately 5.0 million shares of the Company's
common stock, par value $0.01 per share ("Common Stock") were retained by
existing stockholders (the "Rollover Shares"), and the remaining shares of
Common Stock were converted into the right to receive $12.00 in cash. Upon
consummation of the Merger, the Rollover Shares represented approximately 46% of
the outstanding Common Stock. In addition, (i) each option, warrant or other
right to acquire equity interests in the Company and each security convertible
into or exchangeable for such equity interests or obligating the Company to
enter into any such option, warrant or other right was automatically canceled,
with no consideration exchanged therefor, (ii) each SAR was converted into the
right to receive a cash payment in an amount equal to the excess, if any, of
$12.00 over the base price provided for in such SAR (unless the holder of any
SAR, the Company and STX Acquisition agreed otherwise in writing), (iii) each
share of outstanding phantom stock relating to the Company was automatically
converted into the right to receive a cash payment in the amount of $12.00 and
(iv) all outstanding shares of restricted stock became immediately and fully
vested. Following consummation of the Merger, the Company conveyed
substantially all of the assets and properties of the Company to Sterling
Chemicals, Inc., its wholly owned operating subsidiary (formerly a wholly owned
subsidiary of STX Acquisition known as STX Chemicals Corp., and referred to
herein as "Chemicals").
In connection with the Merger, a group of investors formed by The
Sterling Group, Inc. and The Unicorn Group, L.L.C. purchased a total of 589,103
shares of STX Acquisition Common Stock (the "Equity Private Placement"). In the
Merger, each share of STX Acquisition Common Stock was converted into ten shares
of Common Stock. As a result, upon consummation of the Merger total shares of
Common Stock purchased in the Equity Private Placement represented approximately
54% of the outstanding Common Stock.
FINANCING ARRANGEMENTS
In addition to the funds raised in the Equity Private Placement, the
financing for the Merger also included the following:
Pursuant to the Merger Agreement, Chemicals entered into a bank credit
facility with Texas Commerce Bank National Association, as administrative agent,
and Credit Suisse and Chase Securities Inc. as co-arrangers. The Credit
Facility consists of (i) a six and one-half year $100.0 million revolving credit
facility, (ii) a six and one-half year $200.0 million term loan, (iii) an eight
year $150.0 million term loan and (iv) a four year $6.5 million term loan.
On the Closing Date, the Company issued in a registered public
offering (the "Public Offering") $191,751,000 representing 191,751 Units, each
Unit consisting of one 13 1/2% Senior Secured Discount Note Due 2008 and one
warrant to purchase three shares of Common Stock. Also in the Public Offering,
Chemicals issued $275,000,000 11 3/4% Senior Subordinated Notes Due 2006.
Proceeds of the Equity Private Placement, the Credit Facility and the
Public Offering were used primarily to purchase the Common Stock (other than the
Rollover Shares) and other equity interests in the Merger, to refinance the
Company's existing debt and to pay fees and expenses in connection with the
Merger.
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AGREEMENTS AMONG STOCKHOLDERS
In connection with the Equity Private Placement, the purchasers
therein have entered into a Stockholders Agreement and a Tag-Along Agreement.
The Stockholders Agreement restricts transfer of shares of Common Stock held by
such stockholders (with certain exceptions) unless such shares are first offered
to Chemicals' Employee Stock Ownership Plan, the Company and finally to other
stockholders party to the agreement. In addition, the agreement restricts the
ability of any stockholder who is a party to the agreement to initiate a
disposition of a control position in the Company without first complying with
the right of first refusal provisions. The Tag-Along Agreement provides that if
any of the parties thereto propose to transfer, sell or otherwise dispose of an
aggregate of 51% or more of the Common Stock issued and outstanding at the time
of such transfer, all other holders of Common Stock will have the right to
participate in such transfer on a pro rata basis and on the same terms and
conditions. All shares of Common Stock purchased in the Equity Private
Placement are subject to the Stockholders Agreement and the Tag-Along Agreement.
On the Closing Date, a Voting Agreement was entered into among Frank
J. Hevrdejs, Frank P. Diassi, William C. Oehmig, Hunter Nelson, Susan O. Rheney,
Koch Equities Inc. ("Koch"), affiliates of Clipper Capital Partners, L.P.
(collectively, "The Clipper Group") and Fayez Sarofim & Co. The Voting
Agreement provides for each of such parties to vote their shares of Common Stock
in favor of a nominee to the Board of Directors of the Company to be selected by
each of Koch and The Clipper Group. The rights of Koch and The Clipper Group to
select a nominee under such Voting Agreement are terminated in the event their
ownership of Common Stock represents less than 5% of the total outstanding
shares of Common Stock. Upon consummation of the Merger, the parties to the
Voting Agreement beneficially owned approximately 48% of the Common Stock.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On August 21, 1996, the firm of Arthur Andersen LLP, which was engaged
effective December 18, 1995 as independent auditors for the Company, resigned
effective immediately in connection with the Merger described in Item 1. The
Company has engaged Deloitte & Touche LLP as its independent auditors. Deloitte
& Touche LLP served as independent auditors for STX Acquisition prior to the
Merger.
Arthur Andersen LLP did not perform an audit of the Company's
financial statements for any period. During the period of the engagement of
Arthur Andersen LLP, there were no disagreements with Arthur Andersen LLP on any
matter of accounting principles or practices or financial statement disclosure.
The Company has not been advised by Arthur Andersen LLP of any of the reportable
events listed in Item 304(a)(1)(v)(A) through (D) of Regulation S-K.
The Company has requested that Arthur Andersen LLP furnish a letter,
addressed to the Securities and Exchange Commission, stating whether it agrees
with the statements made by the Company in response to this Item 4 and, if not,
stating the respects in which it does not agree. A copy of the letter of Arthur
Andersen LLP is attached as Exhibit 16.1 to this Report on Form 8-K.
ITEM 5. OTHER EVENTS.
On August 22, 1996, the Common Stock was suspended from trading on the
New York Stock Exchange pending the completion of the de-listing process.
Application has been made to have the Common Stock included in the Pink Sheets
maintained by the National Association of Securities Dealers.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
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2.1 Amended and Restated Agreement and Plan of Merger between STX
Acquisition Corp. and Sterling Chemicals, Inc. dated as of April
24, 1996, incorporated by reference from the Company's Current
Report on Form 8-K dated April 24, 1996 as amended by Form 8-K/A.
4.1 Form of Warrant Agreement, incorporated by reference from Exhibit
4.4 to the Registration Statement on Form S-1 of STX Acquisition
Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.2 Form of Indenture governing the 13 1/2% Senior Secured Discount
Notes Due 2008 of the Company, incorporated by reference from
Exhibit 4.5 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.3 Form of Indenture governing the 11 3/4% Senior Subordinated Notes
Due 2006 of Sterling Chemicals, Inc. (formerly known as STX
Chemicals Corp.), incorporated by reference from Exhibit 4.7 to
the Registration Statement on Form S-1 of STX Acquisition Corp.
and STX Chemicals Corp., Reg. No. 333-04343.
4.4 Credit Agreement among Sterling Chemicals, Inc. (formerly known
as STX Chemicals Corp.), Texas Commerce Bank as Agent, Credit
Suisse and Chase Securities Inc. as co-arrangers and the lenders
named therein, incorporated by reference from Exhibit (a) to the
Company's Schedule 13E-3, Commission File No. 5-40034.
4.5 Stockholders Agreement, incorporated by reference from Exhibit
4.10 to the Registration Statement on Form S-1 of STX Acquisition
Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.6 Voting Agreement, incorporated by reference from Exhibit 4.12 to
the Registration Statement on Form S-1 of STX Acquisition Corp.
and STX Chemicals Corp., Reg. No. 333-04343.
4.7 Tag-Along Agreement, incorporated by reference from Exhibit 4.13
to the Registration Statement on Form S-1 of STX Acquisition
Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.8 Intercreditor Agreement, incorporated by reference from Exhibit
4.14 to the Registration Statement on Form S-1 of STX Acquisition
Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.9 Security Agreement (Pledge) between STX Acquisition Corp. and
Texas Commerce Bank, incorporated by reference from Exhibit 4.15
to the Registration Statement on Form S-1 of STX Acquisition
Corp. and STX Chemicals Corp., Reg. No. 333-04343.
*16.1 Letter from Arthur Andersen LLP, dated August 21, 1996,
regarding change in independent auditors.
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* Filed herewith.
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SIGNATURES
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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 thereunto duly authorized.
Date: August 28, 1996 STERLING CHEMICALS, INC.
By: /s/ Jim P. Wise
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Jim P. Wise
Vice President - Finance and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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2.1 Amended and Restated Agreement and Plan of Merger between STX
Acquisition Corp. and Sterling Chemicals, Inc. dated as of
April 24, 1996, incorporated by reference from the Company's
Current Report on Form 8-K dated April 24, 1996 as amended by
Form 8-K/ A.
4.1 Form of Warrant Agreement, incorporated by reference from
Exhibit 4.4 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.2 Form of Indenture governing the 13 1/2% Senior Secured Discount
Notes Due 2008 of the Company, incorporated by reference from
Exhibit 4.5 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.3 Form of Indenture governing the 11 3/4% Senior Subordinated
Notes Due 2006 of Sterling Chemicals, Inc. (formerly known as
STX Chemicals Corp.), incorporated by reference from Exhibit
4.7 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.4 Credit Agreement among Sterling Chemicals, Inc. (formerly known
as STX Chemicals Corp.), Texas Commerce Bank as Agent, Credit
Suisse and Chase Securities Inc. as co-arrangers and the
lenders named therein, incorporated by reference from Exhibit
(a) to the Company's Schedule 13E-3, Commission File
No. 5-40034.
4.5 Stockholders Agreement, incorporated by reference from Exhibit
4.10 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.6 Voting Agreement, incorporated by reference from Exhibit 4.12
to the Registration Statement on Form S-1 of STX Acquisition
Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.7 Tag-Along Agreement, incorporated by reference from
Exhibit 4.13 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.8 Intercreditor Agreement, incorporated by reference from Exhibit
4.14 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
4.9 Security Agreement (Pledge) between STX Acquisition Corp. and
Texas Commerce Bank, incorporated by reference from Exhibit
4.15 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp., Reg. No. 333-04343.
*16.1 Letter from Arthur Andersen LLP, dated August 21, 1996,
regarding change in independent auditors.
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* Filed herewith.
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EXHIBIT 16.1
August 28, 1996
Office of the Chief Accountant
SECPS Letter File
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sir:
We have read Item 4 included in the attached Form 8-K dated August 21, 1996 of
Sterling Chemicals Holdings, Inc. to be filed with the Securities and Exchange
Commission and are in agreement with the statements contained therein.
Very truly yours,
ARTHUR ANDERSEN LLP
