<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 10, 1997
__________________
STERLING CHEMICALS HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-00059 76-0185186
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET, SUITE 1900
HOUSTON, TEXAS 77002-4312
(713) 650-3700
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(713) 650-3700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
__________________
STERLING CHEMICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 333-04343-01 76-0502785
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET, SUITE 1900
HOUSTON, TEXAS 77002-4312
(713) 650-3700
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
__________________
(713) 650-3700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 10, 1997, Sterling Pulp Chemicals (Sask) Ltd. ("Sterling Sask"), an
indirect wholly owned subsidiary of Sterling Chemicals Holdings, Inc. (the
"Company"), acquired substantially all of the assets of Saskatoon Chemicals Ltd.
("Saskatoon Chemicals"), a subsidiary of Weyerhaeuser Canada Ltd. The acquired
assets (the "SaskChem Business") include a manufacturing plant near Saskatoon,
Saskatchewan, and were used by Saskatoon Chemicals to manufacture sodium
chlorate, caustic soda, calcium hypochlorite, chlorine and hydrochloric acid.
The Company intends to continue such uses.
Total consideration for the acquisition consisted of approximately $69.2
million cash and the assumption of the current liabilities of the SaskChem
Business, which amount was determined through negotiations between
representatives of the Company and Saskatoon Chemicals. The acquisition will be
accounted for under the purchase method of accounting for financial reporting
purposes.
The sources of financing for the cash portion of the acquisition
consideration were (i) approximately $54.6 million under a new credit facility
established by Sterling Sask with a group of lenders led by The Chase Manhattan
Bank of Canada, (ii) approximately $7.3 million pursuant to a private placement
of common stock of the Company, and (iii) approximately $7.3 million pursuant to
a private placement of Units, each Unit consisting of shares of the Company's
newly authorized Cumulative Redeemable Preferred Stock, Series B and Warrants to
purchase shares of common stock of the Company.
The acquisition of the SaskChem Business requires the filing of
financial statements and pro forma financial information pursuant to Rule
11.01(a)(1) of Regulation S-X.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of the business acquired.
The financial statements of the SaskChem Business, omitted from the initial
filing of this Form 8-K as permitted by such Form, are included herein.
(b) Pro forma financial information.
The pro forma financial information reflecting the acquisition of the
SaskChem Business, omitted from this initial filing of this Form 8-K as
permitted by such Form, are included herein.
(c) Exhibits. None.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
STERLING CHEMICALS HOLDINGS, INC.
STERLING CHEMICALS, INC.
(Registrants)
Date: September 22, 1997
/s/ JIM P. WISE
By: __________________________________
Jim P. Wise
Vice President-Finance and
Chief Financial Officer
-3-
<PAGE>
ITEM 7 (a) AND (b)
PRO FORMA CONSOLIDATED STATEMENTS AND OTHER INFORMATION
Sterling Chemicals, Inc. (prior to the Merger, "Sterling") and STX
Acquisition Corp. ("STX Acquisition"), a Delaware corporation formed in April
1996 by an investor group led by The Sterling Group, Inc. ("TSG") and The
Unicorn Group L.L.C. ("Unicorn"), entered into an Amended and Restated Agreement
and Plan of Merger dated April 24, 1996 (the "Merger Agreement"). On August 20,
1996, the Merger Agreement was approved by a majority of the shares outstanding,
and on August 21, 1996, STX Acquisition merged with and into Sterling, changing
its name to Sterling Chemicals Holdings, Inc. ("Holdings"), and continuing as
the surviving corporation (the "Merger"). In connection with the Merger,
Holdings transferred all of its operating assets and liabilities excluding its
13 1/2% Senior Secured Discount Notes Due 2008 (the "13 1/2% Notes") to a wholly
owned subsidiary, STX Chemicals Corp., which at the time of the Merger changed
its name to Sterling Chemicals, Inc. (after the Merger, "Chemicals"). Holdings
has no direct subsidiaries other than Chemicals. As used herein, the term
"Company" refers to Sterling and its subsidiaries prior to the consummation of
the Merger and, following the Merger, to Holdings and its subsidiaries,
including Chemicals. The Company has accounted for the Merger and related
financing (collectively the "1996 Recapitalization") as a series of debt and
equity transactions representing a recapitalization. Accordingly, the historical
basis of the Company's assets and liabilities have not been impacted by the 1996
Recapitalization.
On January 31, 1997, the Company acquired (the "AFB Acquisition") the
acrylic fibers business (the "AFB") of Cytec Industries Inc. ("Cytec").
On April 7, 1997, Chemicals completed a private offering (the "11 1/4%
Notes Offering") of $150,000,000 of 11 1/4% Senior Subordinated Notes Due 2007
(the "11 1/4% Notes"). The 11 1/4% Notes are unsecured senior subordinated
obligations of Chemicals, ranking subordinate in right of payment to all
existing and future senior debt of Chemicals, but pari passu with the 11 3/4%
Notes and all future senior subordinated indebtedness. On July 7, 1997,
Chemicals completed a registered exchange offer, pursuant to which all of the 11
1/4% Notes were exchanged for publicly registered 11 1/4% Notes with
substantially similar terms.
On July 10, 1997, Sterling Pulp Chemicals (Sask) Ltd. ("Sterling Sask"), an
indirect wholly owned subsidiary of Holdings and Chemicals, acquired
substantially all of the assets of Saskatoon Chemicals Ltd. ("Saskatoon
Chemicals"), a subsidiary of Weyerhaeuser Canada Ltd. (the "Saskatoon
Acquisition").
The unaudited pro forma statements of operation presented below for the
year ended September 30, 1996, and for the sixth month period ended March 31,
1997, have been derived from the financial statements of the Company in the
Annual Report on Form 10-K for the fiscal year ended September 30, 1996 and the
Company's Form 10-Q for the six months ended March 31, 1997, and from the
unaudited financial information of the AFB and Saskatoon Chemicals and give
effect to the 1996 Recapitalization, the AFB Acquisition, the 11 1/4% Notes
Offering and the Saskatoon Acquisition as if they had occurred on October 1,
1995. The unaudited pro forma consolidated balance sheet as of March 31, 1997,
has been derived from the unaudited consolidated balance sheet of the Company
included in its Form 10-Q for the period ended March 31, 1997 and from the
unaudited financial information of the AFB and Saskatoon Chemicals and gives
effect to the Saskatoon Acquisition and the 11 1/4% Notes Offering as if they
had occurred on March 31, 1997. The unaudited pro forma consolidated financial
data do not necessarily represent what the Company's financial position or
results of operations would have been if the 1996 Recapitalization, the AFB
Acquisition, the 11 1/4% Notes Offering and the Saskatoon Acquisition had
actually been completed as of the dates indicated and are not intended to
project the Company's financial position or results of operations for any future
period or as of any date. In addition, the unaudited historical information for
AFB and Saskatoon Chemicals has been furnished by Cytec and Weyerhaeuser,
respectively. The unaudited historical information of the Company presented
below should be read in conjunction with the historical Consolidated Financial
Statements of the Company and its subsidiaries and the related notes thereto and
"Management`s Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 and in the Quarterly Reports on Form 10-Q.
Holdings is a holding company whose only material asset is Chemicals.
Holdings' only material liability is its obligation to repay the 13 1/2% senior
subordinated discount notes due 2008 (Discounts Notes) issued in connection with
the Merger. Chemicals and its subsidiaries own substantially all of the
consolidated operating assets and are obligated for substantially all
liabilities of the Company other than the Discount Notes. Other than the
additional interest expense associated with the Discount Notes, the results of
operations for Holdings is the same as Chemicals. Accordingly, separate
unaudited pro forma statements of operations and balance sheet for Chemicals
would not, in the opinion of the Company, provide additional meaningful
information and therefore are not included herein.
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1996
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Acrylic Fibers Saskatoon
The Company Business Chemicals Pro Forma The Company
Historical Historical Historical Adjustments Pro Forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 790.4 $ 136.5 $ 49.6 $ (1.0)(l) $ 975.5
Cost of goods sold 679.0 113.5 33.2 2.1 (a) 827.8
-------- --------- --------- --------- ---------
Gross profit 111.4 23.0 16.4 (3.1) 147.7
Expenses
Selling, general &
administrative expense 40.3 15.4 5.0 (3.8)(b) 56.9
Merger related expenses 3.6 -- -- -- 3.6
Write off of assets 3.7 -- -- -- 3.7
Interest and debt related
expenses, net of interest income 13.4 -- -- 62.2 (c) 91.6
16.0 (d)
-------- --------- --------- --------- ---------
Income (loss) before income taxes 50.4 7.6 11.4 (77.5) (8.1)
Provision (benefit) for income taxes 16.9 -- 3.4 (23.8)(e) (3.5)
-------- --------- --------- --------- ---------
Income (loss) from continuing
operations $ 33.5 $ 7.6 $ 8.0 $ (53.7) $ (4.6)
======== ========= ========= ========= ========
Per share data:
Income (loss) from continuing
operations attributable to
common stockholders $ 0.66(f) $ (0.51)(f)
Weighted average shares outstanding 50.7 12.8 (f)
</TABLE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1997
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Acrylic Fibers Saskatoon
The Company Business Chemicals Pro Forma The Company
Historical Historical(k) Historical Adjustments Pro Forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 426.7 $ 44.5 $ 23.4 $ (0.5)(l) $ 494.1
Cost of goods sold 394.8 42.0 15.6 2.3 (a) 454.7
-------- --------- --------- --------- ---------
Gross profit 31.9 2.5 7.8 (2.8) 39.4
Expenses
Selling, general &
administrative expense 13.3 3.5 1.9 (1.3)(b) 17.4
Interest and debt related
expenses, net of interest income 39.5 -- -- 6.9 (d) 46.4
-------- --------- --------- --------- ---------
Income (loss) before income taxes (20.9) ( 1.0) 5.9 (8.4) (24.4)
Provision (benefit) for income taxes (5.9) -- 5.2 (6.4)(e) (7.1)
-------- --------- --------- --------- ---------
Income (loss) from continuing
operations $ (15.0) $ (1.0) $ 0.7 $ (2.0) $ (17.3)
======== ========= ========= ========= =========
Per share data:
Income (loss) from continuing
operations attributable to
common stockholders $ (1.40)(f) $ (1.43)(f)
Weighted average shares outstanding 10.9 12.8 (f)
</TABLE>
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
Saskatoon
The Company Chemicals Pro Forma The Company
Historical Historical Adjustments Pro Forma
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 6.3 $ -- $ 1.6(g) $ 6.1
(1.8)(i)
Accounts receivable 159.7 6.4 166.1
Inventories 75.8 4.5 80.3
Prepaid expenses 16.7 -- 16.7
Deferred income taxes 6.6 -- 6.6
---------- ---------- --------- ----------
Total current assets 265.1 10.9 (0.2) 275.8
Property, plant & equipment, net 439.6 35.2 22.8(g) 497.6
Other assets 127.2 (3.1) 3.1(g) 125.7
0.1(g)
2.6(h)
1.8(i)
(6.0)(i)
---------- ---------- --------- ----------
Total assets $ 831.9 $ 43.0 $ 24.2 $ 899.1
========== ========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY IN ASSETS)
Current liabilities
Accounts Payable $ 70.4 $ 1.7 $ $ 72.1
Accrued liabilities 63.6 2.2 65.8
Current maturities of long-term debt 22.0 2.8(h) 5.8
(19.0)(i)
---------- ---------- --------- ----------
Total current liabilities 156.0 3.9 (16.2) 143.7
Long-term debt 808.6 -- 150.0(i) 879.5
(131.0)(i)
51.9 (h)
Deferred income taxes 47.2 11.7 (11.7)(g) 45.1
(2.1)(i)
Deferred credits and other liabilities 89.6 -- 89.6
Common stock held by ESOP 7.7 -- 7.7
Less: unearned compensation (6.6) -- (6.6)
Redeemable preferred stock 10.2 -- 7.3 (m) 17.5
Stockholders' equity (deficiency in assets):
Common stock; $0.01 par value -- 2.2 (2.2)(g) 0.1
0.1 (j)
Additional paid-in capital (551.3) 0.1 (0.1)(g) (544.1)
7.2 (j)
Retained earnings 291.5 25.1 (25.1)(g) 287.6
(3.9)(i)
Accumulated translation adjustment (21.0) -- (21.0)
Treasury stock, at cost, 7,000 shares
at March 31, 1997 -- -- --
---------- ---------- --------- ----------
Total stockholders' equity
(deficiency in assets) (280.8) 27.4 (24.0) (277.4)
---------- ---------- --------- ----------
Total liabilities and
stockholders' equity
(deficiency in assets) $ 831.9 $ 43.0 $ 24.2 $ 899.1
========== ========== ========= ==========
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(a) Reflects the adjustment to depreciation resulting from the purchase price
allocation for the AFB Acquisition and the Saskatoon Acquisition. The AFB
Acquisition and the Saskatoon Acquisition were accounted for using the
purchase method of accounting.
(b) Reflects the elimination of corporate overhead allocations from Cytec and
Weyerhaeuser net of the additional costs of the Company to replace the
services provided by Cytec and Weyerhaeuser.
(c) Represents adjustments to reflect interest expense related to the Credit
Agreement dated as of June 21, 1996 among Chemicals, Texas Commerce Bank
National Association ("TCB") and certain other financial institutions (the
"Original Credit Agreement"), the 11 3/4% Notes and the 13 1/2% Notes.
<TABLE>
<CAPTION>
Year Ended
September 30, 1996
------------------
<S> <C>
Interest expense on the Original Credit Agreement (assumes 8.3%
interest rate) $ 29.8
Interest expense on the 11 3/4% Notes 32.3
--------
Pro forma cash interest expense (including capitalized interest) 62.1
Interest expense on the 13 1/2% Notes 13.5
Amortization of deferred financing costs and debt discount 4.1
--------
Pro forma interest expense 79.7
Less: Interest expense recorded (13.4)
Capitalized interest (4.1)
--------
Pro forma adjustment $ 62.2
========
</TABLE>
(d) Represents net adjustments to interest expense to reflect the AFB
Acquisition, the Notes Offering and the Saskatoon Acquisition as follows:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
September 30, 1996 March 31, 1997
------------------ ----------------
<S> <C> <C>
Interest expense on Credit Agreement dated as of January 31, 1997
Among Chemicals, TCB and certain other financial institutions
(the "New Credit Agreement") (assumes 8.3% interest rate) $ 6.7 $ 2.3
Interest expense on the 11 1/4% Notes 16.9 8.4
Interest expense reduction upon the partial prepayment under
the Original Credit Agreement (assumes 8.0% interest rate) (12.0) (6.0)
Net decrease in amortization of deferred financing costs (0.5) (0.3)
------- -------
Pro forma impact of the New Credit Agreement and the 11 1/4%
Notes Offering 11.1 4.4
Interest expense on the Sterling Sask Credit Facility (assumes
8.8% interest Rate) 4.9 2.5
------- -------
Total pro forma interest expense $ 16.0 $ 6.9
======= =======
</TABLE>
(e) Represents the adjustments necessary to tax effect the pro forma
adjustments and other operating results at a 35% statutory rate.
<PAGE>
(f) The following is the calculation of earnings per share:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
September 30, 1996 March 31, 1997
----------------------- ----------------------
Historical Pro forma Historical Pro forma
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $ 0.66 $ (0.36) $ (1.38) $ (1.35)
Effect of Preferred Stock dividends -- (0.15) (0.02) (0.08)
---------- --------- ---------- ---------
Income (loss) from continuing operations attributed
to common stockholders $ 0.66 $ (0.51) $ (1.40) $ (1.43)
========== ========= ========== =========
</TABLE>
Weighted average shares outstanding after giving effect to the AFB
Acquisition and the Saskatoon Acquisition represents the 11.141 million
shares of Holdings Common Stock outstanding at September 30, 1996, the
0.833 million shares issued in connection with the AFB Acquisition plus the
0.608 million shares issued in connection with the Saskatoon Acquisition
less the estimated 0.557 million unallocated shares held by the ESOP formed
in connection with the 1996 Recapitalization, which are not considered
outstanding for earnings per share calculations until they are allocated to
ESOP plan participants.
(g) Represents management's estimate of the adjustments necessary to record the
purchase of Saskatoon Chemicals:
<TABLE>
<CAPTION>
<S> <C>
Sources of Funds:
Sterling Sask Credit Facility (h) $ 54.7
Preferred Stock and New Warrants (m) 7.3
New common stock (j) 7.3
--------
Total sources $ 69.3
========
Uses of Funds:
Cash paid to Weyerhaeuser $ 64.8
Saskatoon acquisition costs including debt issue costs 2.9
Retained cash 1.6
--------
Total uses $ 69.3
========
The Company consideration paid:
Cash to Weyerhaeuser $ 64.8
Saskatoon acquisition costs 0.3
--------
Total consideration 65.1
Less: Saskatoon Chemicals equity (27.4)
--------
Net adjustment $ 37.7
========
Allocation of adjustment:
Property, plant and equipment, net $ 22.8
Deferred income tax liability 11.7
Goodwill 0.1
Other assets 3.1
--------
Net adjustment $ 37.7
========
</TABLE>
(h) Represents the incurrence of debt and related issue costs to complete
the Saskatoon acquisition.
(i) Represents the incurrence of $150.0 in debt pursuant to the 11 1/4% Notes
Offering, the prepayment of $150.0 of debt under the Original Credit
Agreement and the related deferred financing costs of $1.8. Debt issuance
costs of $6.0 ($3.9 net of tax) related to the early extinguishment of debt
have been written off.
(j) Represents the issuance of .608 million shares of Common Stock par value
$.01 related to the Saskatoon Acquisition for consideration of $12 per
share.
<PAGE>
(k) Represents AFB results from October 1, 1996 to January 31, 1997, the four
months of the six month period ended March 31, 1997, which are not included
in the Company's consolidated results as they preceded the closing of the
AFB Acquisition.
(l) Represents an adjustment to the historical pricing of sodium chlorate sold
to Weyerhaeuser to reflect the pricing formula in the Chlorate Agreements.
(m) Represents the issuance of .073 million shares of New Preferred Stock par
value $.01 and liquidation preference of $100 per share and New Warrants to
purchase .200 million shares Holdings Common Stock (exercisable for nominal
consideration) to investors for consideration of approximately $7.3.
