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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24, 1997
STERLING CHEMICALS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-00059 76-0185186
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
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)
<TABLE>
<S> <C> <C>
Delaware 333-04343-01 76-0502785
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
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)
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Item 5. Other Events
(a) The press release issued on March 25, 1997, by Sterling Chemicals
Holdings, Inc. ("Holdings" and, together with its wholly owned subsidiary
Sterling Chemicals, Inc. ("Sterling"), the "Company") is filed as Exhibit 99.1
to this Current Report on Form 8-K, and the contents of such Exhibit are
incorporated herein by reference.
(b) The Company has previously disclosed that a significant element of
its business strategy is to pursue strategic acquisitions. Based on the
Company's results of operations for the four quarters ended December 31, 1996,
the restrictions contained in the Company's existing indentures currently
operate to prevent the Company from incurring any additional debt other than
debt incurred under the revolving portion of Sterling's credit agreements or
pursuant to certain limited "baskets" and other exceptions. In addition,
Sterling's credit agreements further limit the Company's ability to incur
additional debt to finance acquisitions. Accordingly, the Company's ability to
pursue its acquisition strategy in the near term may be limited. Under certain
circumstances the Company may, however, consummate additional acquisitions (i)
if the pro forma effect of such an acquisition has a sufficient positive impact
on certain financial ratios under the Company's existing indentures, or (ii)
through the incurrence of debt in Unrestricted Subsidiaries (as defined in the
existing indentures).
Item 7. Exhibits
Exhibit 99.1 -- Press Release dated March 25, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STERLING CHEMICALS HOLDINGS, INC.
STERLING CHEMICALS, INC.
(Registrants)
Date: March 25, 1997
By:/s/ F. Maxwell Evans
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F. Maxwell Evans
Vice President, General Counsel
and Secretary
Exhibit 99.1
FOR IMMEDIATE RELEASE For Additional Information:
Joe Baj (713) 654-9506
STERLING CHEMICALS ANNOUNCES PRIVATE OFFERING
Houston, Texas (March 25, 1997) . . . . Sterling Chemicals Holdings,
Inc. (OTC:STXX) announced today that its wholly owned subsidiary, Sterling
Chemicals, Inc. ("Sterling"), has commenced a private offering of $150 million
of Senior Subordinated Notes Due 2007 (the "Notes").
The Notes will be unsecured senior subordinated obligations of
Sterling, ranking subordinate in right of payment to all existing and future
senior debt of Sterling (including borrowings under Sterling's credit
agreements), pari passu with all existing and future senior subordinated
indebtedness of Sterling (including its 11 3/4% Senior Subordinated Notes Due
2006) and senior in right of payment to all existing and future subordinated
indebtedness of Sterling.
The private offering of the Notes has not been registered under the
Securities Act of 1933 (the "Securities Act") and will be made in reliance on
exemptions from the registration requirements of the Securities Act. The Notes
may not be offered or sold by the purchasers thereof without registration under
the Securities Act or an applicable exemption from registration.
The net proceeds from the offering of the Notes will be used to prepay
amounts outstanding under Sterling's term loan facilities with certain senior
lenders. In connection with such prepayment, Sterling is negotiating certain
amendments to its credit agreements. Sterling expects to execute definitive
agreements related to the proposed amendments shortly. Effectiveness of the
proposed amendments and consummation of the offering of the Notes are
conditioned upon each other.
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The proposed amendments would, among other things, amend certain of
the financial covenants (including the "Leverage Ratio" covenant discussed
below) to make them somewhat less restrictive, and include a new "Senior Debt
Leverage Ratio" covenant. In addition, the commitment under the revolving
portion of the credit agreements would be increased by up to $25 million to a
maximum of $125 million, and the procedure for voluntary prepayments would be
amended to allow the proceeds of the offering of the Notes to be applied toward
the term loans in a manner that would significantly reduce required principal
payments, particularly over the next three years. The amendments would be
effective as of March 31, 1997.
One of the credit agreement financial covenants being amended is the
Leverage Ratio requirement. Sterling believes that it may not be in compliance
with the current Leverage Ratio covenant as of March 31, 1997. Accordingly,
Sterling has requested a waiver of any such noncompliance until the Leverage
Ratio covenant has been amended. The requisite lenders have indicated that such
waiver will be approved.
Based in Houston, Texas, Sterling Chemicals Holdings, Inc. is a
holding company that, through its operating subsidiaries, manufactures
petrochemicals, pulp chemicals and acrylic fibers and provides large-scale
chlorine dioxide generators to the pulp and paper industry. The Company's
petrochemical plant is located in Texas City, Texas. The Company's pulp
chemicals plants are located in four Canadian locations and one U.S. location.
The Company's acrylic fibers plant is located near Pensacola, Florida.
Certain statements in this news release, including statements
regarding the terms of the Notes and the amendment of and waiver under
Sterling's credit agreements, may be regarded as "forward-looking statements"
within the meaning of the Securities Litigation Reform Act. Such statements
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are subject to various uncertainties and risks, including the Company's high
financial leverage, the cyclical nature of the markets for the Company's
products, and the volatility of prices for the Company's products and raw
materials, as well as other risks discussed in detail in the Company's SEC
filings, including the Annual Report on Form 10-K for the year ended September
30, 1996. Actual outcomes may vary materially.
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