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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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STERLING CHEMICALS HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C> <C>
DELAWARE 2869 76-0185186
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
1200 SMITH STREET, SUITE 1900 F. MAXWELL EVANS
HOUSTON, TEXAS 77002-4312 VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
(713) 650-3700 1200 SMITH STREET, SUITE 1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING HOUSTON, TEXAS 77002-4312
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) (713) 650-3700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
COPY TO:
WILLIAM N. FINNEGAN, IV
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002-3090
(713) 220-4200
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable following the effectiveness of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box:[ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]_________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF BEING OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
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Common Stock, $0.01 per share.... 575,253 shares $0.01 $5,752.53 $1.74
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(1) Determined pursuant to Rule 457(g).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 8, 1997
STERLING CHEMICALS HOLDINGS, INC.
575,253 SHARES OF
COMMON STOCK
ISSUABLE UPON EXERCISE OF WARRANTS
Sterling Chemicals Holdings, Inc. a Delaware corporation ("Holdings") is
offering up to 575,253 shares (the "Shares") of its Common Stock, par value
$0.01 per share ("Common Stock"), issuable upon the exercise of 191,751 of its
outstanding warrants to purchase Common Stock (the "Warrants").
The Warrants which were initially issued on August 21, 1996, become
exercisable on August 21, 1997, and expire on August 15, 2008. Each of the
Warrants entitles the holder thereof to purchase three shares of Common Stock at
an exercise price of $0.01 per share. Prior to the purchase of Common Stock
upon the exercise of a Warrant, the holder of a Warrant will have none of the
rights or privileges of a stockholder of Holdings.
The Common Stock is quoted on the OTC Electronic Bulletin Board under the
trading symbol "STXX," but is not listed on any securities exchange, and the
public market for the Common Stock is extremely limited. See "Risk Factors --
Limited Liquidity of the Common Stock." On July 7, 1997, the last reported sale
price of the Common Stock on the OTC Electronic Bulletin Board was $11.50 per
share.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE SHARES, SEE "RISK FACTORS" BEGINNING ON PAGE 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
Holdings is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, accordingly, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Such reports, proxy statements and other information
filed with the SEC are available for inspection and copying at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, and at the SEC's Regional Offices
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such documents may also be obtained from the Public Reference
Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, at prescribed rates. The SEC maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy statements and other information
regarding registrants that file electronically with the SEC.
Holdings has filed with the SEC a registration statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
on Form S-3 (Reg. No. 333- ) with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved. The Registration Statement and any amendments thereto, including
exhibits filed or incorporated by reference as a part thereof, are available for
inspection and copying at the SEC's offices as described above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed by Holdings with the SEC,
are incorporated by reference into this Prospectus:
1. The Annual Report on Form 10-K for the fiscal year ended September 30,
1996, as amended;
2. The Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1996;
3. The Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1997;
4. The Current Report on Form 8-K, dated December 23, 1996;
5. The Current Report on Form 8-K, dated March 24, 1997;
6. The Current Report on Form 8-K, dated April 8, 1997;
7. The Current Report on Form 8-K, dated May 22, 1997; and
8. The description of the Common Stock contained in Holdings'
Registration Statement on Form 8-A, as amended, dated as of September
20, 1988, including any amendments and reports hereafter filed for the
purpose of updating such description.
All reports and documents filed by Holdings pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the respective
date of filing of such documents. Any statement contained herein or in a
document all or a portion of which is incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such
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statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. HOLDINGS HEREBY UNDERTAKES TO PROVIDE WITHOUT
CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS
PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN
OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). SUCH REQUESTS FOR DOCUMENTS SHOULD BE DIRECTED TO
STERLING CHEMICALS HOLDINGS, INC., 1200 SMITH STREET, SUITE 1900, HOUSTON, TEXAS
77002-4312, ATTENTION: INVESTOR RELATIONS, TELEPHONE NUMBER (713) 650-3700.
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<PAGE>
THE COMPANY
The following is qualified in its entirety by the more detailed information
and financial statements, including notes thereto, included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1996 and in
subsequent reports filed by the Company pursuant to Section 13 or 15(d) of the
Exchange Act, which are incorporated by reference herein. Investors should
carefully consider the information set forth under "Risk Factors."
Prior to August 21, 1996, the operations of Sterling Chemicals, Inc.
("Chemicals") were conducted by Holdings, a Delaware corporation organized in
1986, with its principal executive offices in Houston, Texas. On August 21,
1996, STX Acquisition Corp., a Delaware corporation formed in April 1996 by an
investor group led by the Sterling Group, Inc. and The Unicorn Group L.L.C., was
merged with and into Holdings (the "Merger"). In connection with the Merger,
Holdings completed debt and equity transactions resulting in a recapitalization
of Holdings and all of the assets of Holdings were transferred to Chemicals, a
wholly owned subsidiary of Holdings (such transactions, including the Merger,
are referred to herein as the "1996 Recapitalization"). As a result of the 1996
Recapitalization, Holdings was reorganized into a holding company whose only
material asset is the capital stock of Chemicals. Holdings, Chemicals and its
subsidiaries are collectively referred to herein as the "Company."
This Prospectus contains certain forward-looking statements with respect to
the business of the Company and the industry in which it operates. These
forward-looking statements are subject to certain risks and uncertainties which
may cause actual results to differ significantly from such forward-looking
statements. See "Risk Factors" and "Disclosure Regarding Forward-Looking
Statements."
The Company, through its operating subsidiaries, is one of North America's
leading producers of selected commodity petrochemicals used in the production of
a wide array of consumer goods and industrial products, pulp chemicals used in
paper manufacturing and, as a result of a recent acquisition, acrylic fibers
used in the manufacture of textiles, carpeting, outdoor furniture and other
products. The Company ranks among the top three North American producers in
terms of rated production capacity for each of its primary products, styrene,
acrylonitrile, acetic acid, sodium chlorate and acrylic fibers. Other products
manufactured by the Company include methanol, plasticizers, tertiary butylamine,
sodium cyanide and sodium chlorite. The Company manufactures all of its
petrochemicals at a single facility in Texas City, Texas (the "Texas City
Plant"), and believes that the large scale of this facility and its location on
the U.S. Gulf Coast provides it with certain cost advantages. The Company's
pulp chemicals are currently produced at four plants in Canada and one plant in
Valdosta, Georgia (the "Valdosta Plant"), which began production in December of
1996. The Company believes that its pulp chemical plants benefit from their
proximity to key customers in the pulp industry and their access to
competitively priced electricity, which represents the most significant
production cost in sodium chlorate manufacturing . The Company manufacturers
all of its acrylic fibers at a single facility located near Pensacola, Florida
(the "Santa Rosa Plant").
In January 1997, the Company acquired substantially all of the assets of
Cytec Industries Inc. and its subsidiaries (collectively, "Cytec") related to
the development, manufacture, marketing, sale and distribution of acrylic
fibers, including, but not limited to, the Santa Rosa Plant (the "AFB" and such
acquisition, including the incurrence of Senior Debt related thereto, are
referred to herein as the "AFB Acquisition"). Consideration for the AFB
Acquisition totaled approximately $100 million plus the assumption of associated
liabilities. The AFB generated revenues of approximately $139 million in the
fiscal year ended December 31, 1996 (which was prior to the acquisition of the
AFB by the Company). The AFB is owned and operate by two wholly owned
subsidiaries of Chemicals (collectively, "Sterling Fibers"), and is one of only
two acrylic fibers manufacturers in the United States. Under a supply agreement
assumed by Sterling Fibers in connection with the AFB Acquisition, Cytec will
supply the Santa Rosa Plant's requirements for acrylonitrile, the primary raw
material for acrylic fibers, until February 28, 2002. The Company has used the
purchase method to account for the acquisition, and operating results of the AFB
have been included with those of the Company beginning February 1, 1997.
In recent years, the Company has pursued a strategy of growth and product
diversification, beginning in 1992 with the acquisition of its pulp chemicals
business. In 1995, the Company began a three-year, $200 million capacity
expansion and upgrade program, which has been substantially completed. Through
this program, the Company expanded its total petrochemical production capacity
by approximately 1.4 billion pounds, including capacity additions
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of 200 million pounds of styrene, 200 million pounds of acetic acid and 150
million gallons (approximately 995 million pounds) of methanol. In addition, the
Company expanded its sodium chlorate production capacity by 110,000 tons, or
30%, by constructing the Valdosta Plant, which came on stream in December 1996.
The AFB Acquisition further increases the diversity of the Company's product mix
and reduces the Company's sensitivity to economic cycles. The AFB Acquisition is
also consistent with the Company's stated strategy of acquiring chemical
businesses whose products provide further upstream or downstream integration
from the Company's base businesses. Sterling Fibers will ultimately provide
integrated downstream demand for the Company's acrylonitrile production,
although Sterling Fibers is contractually obligated to purchase its
acrylonitrile requirements for the Santa Rosa Plant from Cytec until February
28, 2002. Through its acquisition strategy, the Company seeks to capitalize on
the continuing secular growth in global demand for its key products, while
reducing its sensitivity to the cyclical nature of the markets for any
particular product.
Strategy. The Company's business strategy is to capitalize on its
competitive market position to take advantage of periods of tight supply and
high prices and margins for its primary products, which historically have
occurred on a cyclical basis, and to expand its production capacity to capture
future growth opportunities in the petrochemical and pulp chemical industries.
Key elements of the Company's business strategy are to (i) maintain a
competitive cost position in petrochemicals by investing in new technology and
equipment, (ii) pursue low cost expansions in petrochemicals, such as its recent
30% expansion of acetic acid capacity and construction of a world-scale 150
million gallon methanol plant, (iii) pursue growth opportunities in pulp
chemicals, (iv) continue to build strong industry partnerships in petrochemicals
through securing long-term supply contracts with key customers, (v) focus on
niche specialty textile and technical fiber product lines, (vi) expand fiber
technology licensing opportunities and (vii) pursue a focused acquisition
strategy, targeting chemical businesses and assets (such as the AFB and the
SaskChem Acquisition, discussed below) which would strengthen the Company's
existing market positions, provide upstream or downstream integration or produce
complementary chemical products, reducing the overall sensitivity of the Company
to economic cycles and pricing fluctuations and stabilizing the cash flow of the
Company. The Company's ability to pursue its acquisition strategy may be
materially limited by the terms of its debt instruments and by its results of
operations. See "Risk Factors -- Ability to Complete Acquisitions."
Recent Developments. On April 7, 1997, Chemicals successfully completed a
$150 million offering (the "Notes Offering") of 11 1/4% Senior Subordinated
Notes Due 2007 (the "11 1/4% Notes"). The proceeds from the Notes Offering were
used to prepay outstanding indebtedness under the term loan facilities (the
"Term Loans") of Chemicals' credit agreements with its senior lenders (the
"Senior Credit Agreements"). In connection with such prepayment, Chemicals and
the requisite lenders under the Senior Credit Agreements agreed to certain
amendments to the Senior Credit Agreements (collectively "the Amendments"). The
Amendments, among other things, (i) permitted and provided for the issuance of
the 11 1/4% Notes, (ii) adjusted the method of the application of voluntary
prepayments to the outstanding indebtedness under the Term Loans significantly
reducing required principal payments, particularly over the next three years,
(iii) amended certain financial covenants to make them somewhat less
restrictive, including amendments to the Leverage Ratio, Interest Coverage Ratio
and Fixed Charge Coverage Ratio covenants (each as defined in the Senior Credit
Agreements), (iv) increased the commitment under the revolving portion of the
Senior Credit Agreements (the "Revolver") by $25 million to $125 million, and
(v) added a new financial covenant with respect to the maintenance of a
specified Senior Debt Leverage Ratio (as defined in the Amendments).
On May 21, 1997, the Company signed a definitive agreement with Saskatoon
Chemicals Ltd. ("Saskatoon Chemicals"), a subsidiary of Weyerhauser Canada Ltd.
("Weyerhauser Canada"), relating to the purchase by the Company of the assets of
Saskatoon Chemicals (the "SaskChem Acquisition"). The Company expects that the
Saskatoon Chemicals assets will be acquired by a subsidiary of the Company
designated as an Unrestricted Subsidiary under its Indentures (as hereinafter
defined) and Senior Credit Agreements and that the acquisition will be financed
through bank financing and the private placement of a combination of preferred
and common equity of Holdings. The SaskChem Acquisition and related financings
are collectively referred to herein as the "SaskChem Transaction." Saskatoon
Chemicals has annual sodium chlorate production capacity of 50,000 tons, and the
acquisition will increase the Company's annual production capacity of sodium
chlorate to over 500,000 tons. Saskatoon Chemicals also produces caustic soda,
chlorine, hydrochloric acid, and calcium hypochlorite. As part of the SaskChem
Acquisition, it is expected that the Company and Weyerhauser Canada will enter
into a long-term supply agreement pursuant to which Weyerhauser Canada will
continue to be a major customer of the Saskatoon Chemicals business. The
closing of the
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SaskChem Transaction, which is subject to the satisfaction of customary closing
conditions, is expected to occur by July 31, 1997.
RISK FACTORS
In evaluating the Company and its business, prospective investors should
consider carefully the following risk factors, together with the information and
financial data set forth in the reports and documents incorporated by reference
herein, prior to purchasing any shares of Common Stock offered hereby.
PETROCHEMICAL RAW MATERIAL PRICES AND AVAILABILITY
For each of the Company's products, the cost of raw materials and utilities
is far greater than all other costs of production combined. Therefore, an
adequate supply of raw materials at reasonable prices is critical to the success
of the Company's business. The only raw material for the Company's
petrochemical and pulp chemical products which is produced by the Company is
methanol, which is used in the production of acetic acid. The major raw
materials used by the Company in the production of its petrochemical products
are commodity chemicals and the price for such commodity Chemicals can fluctuate
widely for a variety of reasons, including changes in the availability of these
products because of major capacity additions or significant plant operating
problems. Although no assurances can be given, the Company believes that it
will continue to secure adequate supplies of all its raw materials at acceptable
prices. The primary raw material for acrylic fibers is acrylonitrile, which is
currently produced by the Company. However, as part of the AFB Acquisition, the
Company assumed an existing acrylonitrile supply agreement, which expires
February 28, 2002, pursuant to which Sterling Fibers will purchase all of the
Santa Rosa Plant's requirements for acrylonitrile from Cytec. Upon the
expiration of such supply contract, the Company expects to supply all of
Sterling Fibers' acrylonitrile requirements from the Company's Texas City Plant.
CYCLICAL MARKETS FOR PRODUCTS; CAPACITY INCREASES ON KEY PETROCHEMICAL PRODUCTS
The prices of the Company's petrochemical and pulp chemical products have
been cyclical and sensitive to overall supply relative to demand and the level
of general business activity. Large global capacity additions of styrene and
acrylonitrile are projected to be completed in fiscal years 1997 and 1998. For
styrene, approximately 7.2 billion pounds of new capacity is expected, and for
acrylonitrile, approximately 940 million pounds of new capacity is expected.
The Company believes that these announced global capacity additions in styrene
and acrylonitrile will result in overcapacity for these markets in fiscal years
1997 and 1998. The resulting impact on prices and margins began to affect the
Company's results of operations negatively in the last half of fiscal 1996.
ENVIRONMENTAL AND SAFETY MATTERS
The Company's operations involve the handling, production, transportation
and disposal of materials classified as hazardous or toxic and are subject to
extensive federal, state and local regulatory requirements relating to
environmental affairs, waste management, health and safety and chemical
products. Operating permits are or may be required for the operation of some of
the Company's operating units and chemical waste disposal operations, and these
permits are subject to revocation, modification and renewal. Governmental
authorities have the power to enforce compliance with these regulations and
permits, and violators are subject to fines, injunctions or both. Third parties
may also have the right to sue to enforce compliance. The Company believes that
its operations are in compliance in all material respects with applicable
environmental laws. However, the operations of a chemical manufacturing
facility entail some risk of environmental damage, and there can be no assurance
that material costs or liabilities will not be incurred. Moreover, it is
possible that other developments, such as increasingly strict requirements of
environmental laws and enforcement policies, could bring into question the
handling, manufacture, use, emission or on-site or off-site disposal of
substances or pollutants by the Company. There can be no assurance that past or
future operations will not result in exposure to injury or claims of injury by
employees or the public due to toxic or hazardous materials. In addition, a
catastrophic event at the Company's facilities could result in liabilities to
the Company substantially in excess of its insurance coverages.
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The Company's sodium chlorate market is sensitive to potential
environmental regulation. In general, environmental regulations support
substitution of chlorine dioxide, which is produced from sodium chlorate, for
elemental chlorine in the pulp bleaching process. Certain environmental groups
are encouraging passage of regulations which restrict the amount of Absorbable
Organic Halides ("AOX") or chlorine derivatives in bleach plant effluent.
Increased substitution of chlorine dioxide for elemental chlorine in the pulp
bleaching process significantly reduces the amount of AOX and chlorine
derivatives in bleach plant effluent. As long as there is not an outright ban
on chlorine-containing compounds, regulations restricting AOX or chlorine
derivatives in bleach plant effluent should favor the use of chlorine dioxide,
and thus sodium chlorate. Any significant ban on all chlorine-containing
compounds could have a material adverse effect on the Company's financial
condition and results of operations.
British Columbia has a regulation in place that would effectively eliminate
the use of chlorine dioxide in the bleaching process by the year 2002. The pulp
and paper industry is working to change this regulation and believes that the
ban of chlorine dioxide in the bleaching process will yield no measurable
environmental or public health benefit. The Company is not aware of any other
laws or regulations existing in North America which would restrict the use of
Chlorine dioxide product.
LIMITED LIQUIDITY OF THE COMMON STOCK
The liquidity of the Common Stock is extremely limited due to (i) a
relatively small number of outstanding shares of Common Stock (approximately
12.6 million shares upon consummation of the SaskChem Transaction, and
approximately 13.2 million shares assuming the issuance of all of the Shares
offered hereby) and the relatively few holders of a substantial percentage of
such shares, (ii) the lack of an exchange listing for the Common Stock, (iii)
statutory restrictions on transfer of a substantial portion of the outstanding
shares of Common Stock, including the shares purchased in connection with the
1996 Recapitalization and the AFB Acquisition, as well as the shares of Common
Stock to be sold in the SaskChem Transaction and (iv) restrictions on transfer
imposed by a Stockholders Agreement to which the holders of a majority of the
shares of Common Stock are parties.
HIGH FINANCIAL LEVERAGE
As a result of the 1996 Recapitalization and the AFB Acquisition, the
Company had consolidated indebtedness of $830.6 million and deficiency in assets
of $280.8 million at March 31, 1997. On a pro forma basis as of March 31, 1997,
giving effect to the SaskChem Transaction and the Notes Offering, the Company
would have had consolidated indebtedness of $885.4 million and deficiency in
assets of $275.0 million. The Company's high degree of leverage could have
important consequences, including the following: (i) the ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate purposes and other purposes, if needed, may be
restricted; (ii) a substantial portion of cash flow from operations will be
dedicated to cover cash interest requirements, thereby limiting the funds
available for operations and any future business opportunities; and (iii) the
degree of leverage may make the Company more vulnerable to a downturn in its
businesses or the economy generally.
SUBSTANTIAL RESTRICTIONS AND COVENANTS
The Company's debt instruments contain numerous financial and operating
covenants, including, but not limited to, restrictions on the Company's ability
to incur indebtedness, pay dividends, create liens, sell assets, engage in
certain mergers and acquisitions and refinance existing indebtedness. These
covenants may limit the Company's ability to pursue its acquisition strategy.
In the event of a change of control, Holdings will be required to offer to
purchase all of its outstanding 13 1/2% Senior Subordinated Discount Notes due
2008 ("13 1/2% Notes"), and Chemicals will be required to offer to purchase all
of its outstanding 11 1/4% Notes and 11 3/4% Senior Subordinated Notes due 2006
("11 3/4% Notes"), in each case subject to certain conditions, at a price equal
to 101% of the Accreted Value (as defined) with respect to the 13 1/2% Notes,
and 101% of the principal amount thereof, with respect to the 11 1/4% Notes and
11 3/4% Notes, plus accrued and unpaid interest, if any. The ability of the
Company to comply with such covenants and other terms of its debt instruments
and to satisfy its other debt obligations will depend on the future performance
of the Company.
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HIGHLY COMPETITIVE INDUSTRY
The industry in which the Company operates is highly competitive. Many of
the Company's competitors, particularly in the petrochemical industry, are
larger and have substantially greater financial resources than the Company.
Among the Company's competitors are some of the world's largest chemical
companies that have their own raw material resources. In addition, a
significant portion of the Company's business is based upon widely available
technology. The entrance of new competitors into the industry and the addition
by existing competitors of new capacity may reduce the Company's ability to
maintain profit margins or its ability to preserve its market share, or both.
Such developments could have a negative impact on the Company's ability to
obtain higher profit margins, even during periods of increased demand for the
Company's products. The competitiveness of Sterling Fibers with respect to its
specialty textiles and technical fibers products (which are its higher margin
products) is maintained, to a significant extent, through the exclusive
ownership or use of certain product and manufacturing technology. If
competitors of Sterling Fibers gain access to the use of similar technology, or
render such technology obsolete through the introduction of superior technology,
the financial condition of Sterling Fibers would be materially affected in an
adverse manner.
DEPENDENCE ON TEXAS CITY PLANT
All of the Company's petrochemical products, including all of its styrene
and acrylonitrile, are produced at the Company's Texas City Plant. Significant
unscheduled downtime at the Texas City Plant due to equipment breakdowns,
interruptions in the supply of raw materials, power failures, natural forces or
any other cause, including the normal hazards associated with the production of
petrochemicals, could materially adversely affect the Company. Although the
Company maintains insurance, including business interruption insurance, that it
considers to be adequate under the circumstances, there can be no assurance that
a significant interruption in the operation of the Texas City Plant would not
have a material adverse effect on the Company's financial condition and results
of operations.
ABILITY TO COMPLETE ACQUISITIONS
A significant element of the Company's business strategy is to pursue
strategic acquisitions that either expand or complement the Company's products.
The financing for such acquisitions will likely affect the Company's
capitalization. There can be no assurance that the Company will be able to
identify and make acquisitions on terms favorable to it or that the Company will
be able to obtain financing for such acquisitions on terms the Company finds
acceptable. Based on the Company's pro forma results of operations for the four
quarters ended March 31, 1997, the restrictions contained in the indentures for
the 13 1/2% Notes, 11 3/4% Notes and 11 1/4% Notes (collectively, the
"Indentures") currently operate to prevent the Company from incurring any
additional debt other than debt incurred under the Revolver or pursuant to
certain limited "baskets" and other exceptions. The Company may, however,
consummate additional acquisitions if the pro forma effect of such an
acquisition has a sufficient positive impact on certain financial ratios under
the Indentures. Under limited circumstances, the Company may also make
additional acquisitions through the incurrence of debt in Unrestricted
Subsidiaries (as defined in the Indentures). The financing for the SaskChem
Acquisition has been structured in this manner. In addition, the Senior Credit
Agreements further limit the Company's ability to incur additional debt to
finance such acquisitions.
LONG-TERM CONTRACTS AND SIGNIFICANT CUSTOMERS
The Company sells substantial portions of its styrene and acrylonitrile
production under long-term contracts, and sells all of its acetic acid and
plasticizers production under long-term contracts with single customers. These
contracts are intended to provide some stability if demand for or prices of
these products decline significantly, but also limit the Company's ability to
take full advantage of attractive market conditions during periods of higher
prices for these products. During fiscal 1996, a significant portion of the
Company's production from the Texas City Plant was dedicated to multi-year
contracts with Monsanto Company, Bayer Corporation, BP Chemicals, Inc. ("BP"),
and BASF Corporation. Under certain market conditions, the loss of one or more
of these customers or a material reduction in the amount of product purchased by
one or more of them could have a material adverse effect on the Company. The
Company and BP have recently renewed their styrene sales and purchase agreement
on substantially the same terms but at approximately half the original volumes.
During fiscal 1996, the Company delivered approximately 10% of its styrene
production to BP pursuant to this agreement.
-8-
<PAGE>
FOREIGN OPERATIONS, COUNTRY RISKS AND EXCHANGE RATE FLUCTUATIONS
Approximately 20% of the Company's fiscal 1996 revenues were derived from
its Canadian-based pulp chemical business and approximately 34% were derived
from export sales. Approximately 25% of the AFB's revenues were derived from
export sales in the year ended December 31, 1996. International operations and
exports to foreign markets are subject to a number of special risks, including
currency exchange rate fluctuations, trade barriers, exchange controls, national
and regional labor strikes, political risks and risks of increases in duties,
taxes and governmental royalties, as well as changes in laws and policies
governing operations of foreign-based companies. In addition, earnings of
foreign subsidiaries and intercompany payments are subject to foreign income tax
rules that may reduce cash flow available to meet required debt service and
other obligations of the Company.
Since the Company derives most of its pulp chemical revenues from
production and sales by subsidiaries within Canada, the Company has organized
its subsidiary structure and its operations in part based on certain assumptions
about various Canadian tax laws, currency exchange and capital repatriation laws
and other relevant laws. While the Company believes that such assumptions are
correct, there can be no assurance that Canadian taxing or other authorities
will reach the same conclusion. If such assumptions are incorrect, or if Canada
were to change or modify such laws or the current interpretation thereof, the
Company may suffer adverse tax and financial consequences.
A portion of the Company's expenses and sales are denominated in Canadian
dollars, and accordingly, the Company's revenues, cash flows and earnings may be
affected by fluctuations in the exchange rate between the United States dollar
and the Canadian dollar, which may also have adverse tax consequences. In
addition, because a portion of the Company's sales, cost of goods sold and other
expenses are denominated in Canadian dollars, the Company has a translation
exposure to fluctuations in the Canadian dollar against the U.S. dollar. These
currency fluctuations could have a material impact on the Company as increases
in the value of the Canadian dollar have the effect of increasing the U.S.
dollar equivalent of cost of goods sold and other expenses with respect to the
Company's Canadian production facilities. The Company enters into forward
foreign exchange contracts to hedge such exposure for periods consistent with
its committed exposure, but does not engage in currency speculation.
The Company's exposure to the aforementioned risks, especially with regard
to Canadian operations, will be increased to some degree upon consummation of
the SaskChem Acquisition.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this Prospectus
or incorporated herein by reference, including without limitation statements
regarding the cyclical nature of the Company's industry, current and future
industry conditions and the potential effects of such maters on the Company's
business strategy, results of operations and financial position, are forward-
looking statements. Although the Company believes that the expectations
reflected in the forward-looking statements contained or incorporated herein are
reasonable, no assurance can be given that such expectations will prove to have
been correct. Certain important factors that could cause actual results to
differ materially from expectations ("Cautionary Statements") are stated herein
in conjunction with the forward-looking statements or are included under "Risk
Factors" or elsewhere in this Prospectus or incorporated herein by reference.
All forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by the Cautionary
Statements.
-9-
<PAGE>
USE OF PROCEEDS
The proceeds from the exercise of the Warrants will be approximately $5,800
(assuming the exercise of all Warrants prior to their expiration), and will be
used by Holdings for general corporate purposes. Holdings will not receive any
proceeds from any sale of the Shares by the Warrant holders to whom such Shares
are issued.
PLAN OF DISTRIBUTION
The Shares offered hereby are issuable upon the exercise of the Warrants
and the payment of the exercise price. In accordance with the provisions of the
Warrants and the Warrant Agreement governing the Warrants, upon the surrender of
the Warrant Certificate and the delivery of the Subscription Form set forth in
the Warrant Certificate duly executed, along with payment in full of the
exercise price to the Warrant Agent or its successor at its corporate trust
office set forth in the Warrant Agreement, Holdings will issue to the registered
holder of such Warrant or Warrants the applicable number of Shares, registered
in such name or names as may be directed by such holder.
LEGAL MATTERS
Certain legal matters with respect to the Shares offered hereby will be
passed upon for Holdings by Andrews & Kurth L.L.P., Houston, Texas.
EXPERTS
The consolidated balance sheets of Holdings as of September 30, 1996 and
the related consolidated statements of operations, changes in stockholders'
equity (deficiency in assets) and cash flows of Holdings for the year ended
September 30,1996, incorporated herein by reference, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
incorporated by reference herein, and are incorporated by reference in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
The consolidated balance sheet of the Company as of September 30, 1995 and
the consolidated statements of operations, changes in stockholders' equity and
cash flows for each of the two years in the period ended September 30, 1995,
incorporated herein by reference, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as stated in their report incorporated by reference
herein, and are incorporated by reference in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
-10-
<PAGE>
===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
_______________________
TABLE OF CONTENTS
PAGE
----
Available Information.................. 2
Documents Incorporated by Reference.... 2
The Company............................ 4
Risk Factors........................... 6
Disclosure Regarding Forward-Looking
Statements.......................... 9
Use of Proceeds........................ 10
Plan of Distribution................... 10
Legal Matters.......................... 10
Experts................................ 10
===============================================================================
===============================================================================
STERLING CHEMICALS
HOLDINGS, INC.
575,253 SHARES OF
COMMON STOCK
ISSUABLE UPON EXERCISE OF WARRANTS
---------------------
PROSPECTUS
---------------------
DATED , 1997
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the expenses expected to be incurred in connection with
the issuance and distribution of the securities registered hereby. With the
exception of the Securities and Exchange Commission registration fee, the
amounts set forth below are estimates and consist exclusively of expenses
incurred in connection with this Registration Statement on Form S-3:
Securities and Exchange Commission registration fee.................... $ 2
Printing and engraving expenses........................................ 1,000
Legal fees and expenses................................................ 10,000
Accounting fees and expenses........................................... 8,000
Blue Sky fees and expenses............................................. --
Miscellaneous expenses................................................. 998
-------
Total............................................................. $20,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper. Section 145 further provides that to the extent
a director or officer of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; that
indemnification provided by Section 145 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of such person's
heirs, executors and administrators; and empowers the corporation to purchase
and maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his
II-1
<PAGE>
status as such, whether or not the corporation would have the power to indemnify
him against such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a certificate of incorporation may contain a
provision eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.
Section 3.07 of Holding's Certificate of Incorporation states that:
(a) No person who is or was a director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit.
(b) If the DGCL is hereafter amended to authorize corporate action
further limiting or eliminating the personal liability of directors, then
the personal liability of the directors to the Corporation or its
stockholders shall be limited or eliminated to the full extent permitted by
the DGCL, as so amended from time to time.
Article VI of Holdings' Certificate of Incorporation and Article VIII of
Holdings' Bylaws further provide that Holdings shall indemnify its officers and
directors to the fullest extent permitted by the DGCL. Pursuant to such
provision, Holdings has entered into agreements with its officers and directors
which provide for indemnification of such persons.
Article VI of the Certificate of Incorporation as well as Article VIII of
the Bylaws of Holdings also permit the indemnification to the same extent of
officers, employees or agents of Holdings if, and to the extent, authorized by
the Board of Directors. In addition, the Bylaws of Holdings provide for
indemnification against expenses incurred by a director to be paid by Holdings
at reasonable intervals in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall be ultimately determined that he is not
entitled to be indemnified by Holdings. The Bylaws further provide for a
contractual cause of action on the part of directors of Holdings for
indemnification claims that have not been paid by Holdings.
Holdings also has provided liability insurance for each director and
officer for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of Holdings.
II-2
<PAGE>
ITEM 16. EXHIBITS
The following is a complete list of Exhibits filed as part of, or
incorporated by reference into, this Registration Statement:
EXHIBIT NO. DESCRIPTION
---------- -----------
4.1 Form of Common Stock Certificate, incorporated by reference from
Exhibit 4.1 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp. (Registration No.
333-04343).
4.2 Form of Warrant Certificate, incorporated by reference from
Exhibit 4.2 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp. (Registration No.
333-04343).
4.3 Form of Warrant Agreement, incorporated by reference from
Exhibit 4.3 to the Registration Statement on Form S-1 of STX
Acquisition Corp. and STX Chemicals Corp. (Registration No.
333-04343).
*5.1 Opinion of Andrews & Kurth L.L.P.
*15.1 Letter of Awareness of Deloitte & Touche LLP.
*23.1 Consent of Deloitte & Touche LLP.
*23.2 Consent of Coopers & Lybrand L.L.P.
*23.3 Consent of Andrews & Kurth L.L.P. (included in exhibit 5.1).
*24.1 Power of Attorney (included on the signature pages hereof).
__________________
* Filed herewith.
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) ((S)
230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in the
Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE>
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by its
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS,
ON THE 8TH DAY OF JULY, 1997.
STERLING CHEMICALS HOLDINGS, INC.
BY: /s/ Robert W. Roten
-------------------------------------
ROBERT W. ROTEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW APPOINTS ROBERT W. ROTEN, JIM P.
WISE AND F. MAXWELL EVANS, AND EACH OF THEM ACTING ALONE, AS HIS TRUE AND LAWFUL
ATTORNEY-IN-FACT AND AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION,
FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY
AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION
STATEMENT AND ANY REGISTRATION STATEMENT FOR THE SAME OFFERING FILED PURSUANT TO
RULE 462 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO, AND ALL OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH
THE SECURITIES AND EXCHANGE COMMISSION, AND GRANTS UNTO SAID ATTORNEY-IN-FACT
AND AGENT FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND
THING REQUISITE AND NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS AND PURPOSES
AS HE MIGHT OR WOULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEY-IN-FACT AND AGENT, OR HIS OR HER SUBSTITUTE AND SUBSTITUTES, MAY
LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 8TH DAY OF JULY, 1997, BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
SIGNATURE TITLE
--------- ------
/s/ Frank P. Diassi
- ------------------------ Chairman of the Board of Directors
Frank P. Diassi
/s/ Robert W. Roten President, Chief Executive Officer and
- ------------------------ Director (principal executive officer)
Robert W. Roten
/s/ Jim P. Wise Vice President--Finance and Chief
- ------------------------ Financial Officer (principal financial officer)
Jim P. Wise
/s/ Paul G. Vanderhoven
- ------------------------ Controller (principal accounting officer)
Paul G. Vanderhoven
/s/ J. Virgil Waggoner
- ------------------------ Vice Chairman of the Board of Directors
J. Virgil Waggoner
/s/ Robert B. Calhoun
- ------------------------ Director
Robert B. Calhoun
/s/ Allan R. Dragone
- ------------------------ Director
Allan R. Dragone
/s/ John L. Garcia
- ------------------------ Director
John L. Garcia
II-5
<PAGE>
/s/ George B. Gregory
- ------------------------ Director
George B. Gregory
/s/ Frank J. Hevrdejs
- ------------------------ Director
Frank J. Hevrdejs
/s/ T. Hunter Nelson
- ------------------------ Director
T. Hunter Nelson
II-6
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF ANDREWS & KURTH L.L.P.]
July 8, 1997
Board of Directors
Sterling Chemicals Holdings, Inc.
1200 Smith Street, Suite 1900
Houston, Texas 77002-4312
Gentlemen:
We have acted as counsel for Sterling Chemicals Holdings, Inc., a
Delaware corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-3 (the "Registration Statement") relating to
the registration under the Securities Act of 1933, as amended, of the offering
and sale of an aggregate of up to 575,253 shares (the "Shares") of common stock
of the Company, par value $0.01 per share (the "Common Stock"). The Shares are
to be issued upon the exercise from time to time of 191,751 warrants (the
"Warrants"), each of which entitles the holder to purchase three shares of
Common Stock pursuant to the Warrant Agreement dated as of August 15, 1996 (the
"Warrant Agreement") between the Company and Harris Trust and Savings Bank
(formerly known as Key Corp Shareholder Services), as Warrant Agent.
As the basis for the opinion hereinafter expressed, we have examined
such statutes, regulations, corporate records and documents, certificates of
corporate and public officials, and other instruments as we have deemed
necessary or advisable for the purposes of this opinion. In such examination we
have assumed the authenticity of all documents submitted to us as originals and
the conformity with the original documents of all documents submitted to us as
copies.
Based upon the foregoing and on such legal considerations as we deem
relevant, we are of the opinion that the Shares issuable upon exercise of the
Warrants have been duly authorized and reserved for issuance upon such exercise
and, when issued upon such exercise in accordance with the terms of the Warrant
Agreement, will be validly issued, fully-paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" therein.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
1173/1198/2608
<PAGE>
Exhibit 15.1
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
July 8, 1997
Sterling Chemicals Holdings, Inc.
1200 Smith Street, Suite 1900
Houston, Texas 77002-4312
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Sterling Chemicals Holdings, Inc. and subsidiaries and of
Sterling Chemicals, Inc. for the quarterly periods ended December 31, 1996 and
March 31, 1997, as indicated in our reports dated February 4, 1997 and May 13,
1997, respectively; because we did not perform an audit, we expressed no opinion
on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1996 and
March 31, 1997, are being used in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Sterling Chemicals Holdings, Inc. ("Holdings") on Form S-3 of our report dated
December 6, 1996, appearing in the Annual Report on Form 10-K of Sterling
Chemicals Holdings, Inc. for the year ended September 30, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
July 8, 1997
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our report dated October 25, 1995, on our audits of the consolidated
financial statements of Sterling Chemicals Holdings, Inc., as of September 30,
1994 and 1995 and for each of the three years in the period ended September 30,
1995. We also consent to the reference to our Firm under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Houston, Texas
July 7, 1997
