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Filed under Rule 424(b)(1)
Registration No. 333-25773
PROSPECTUS
FIRST BRANDS CORPORATION
OFFER TO EXCHANGE ITS SERIES B 7.25% SENIOR NOTES DUE 2007
FOR ANY AND ALL OF ITS OUTSTANDING 7.25% SENIOR NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 11,
1997, UNLESS EXTENDED.
First Brands Corporation, a Delaware corporation (the 'Company'), hereby
offers (the 'Exchange Offer'), upon the terms and conditions set forth in this
Prospectus (as the same may be amended or supplemented from time to time, the
'Prospectus') and the accompanying Letter of Transmittal (the 'Letter of
Transmittal'), to exchange $1,000 principal amount of its Series B 7.25% Senior
Notes due 2007 (the 'Exchange Notes'), which will have been registered under the
Securities Act of 1933, as amended (the 'Securities Act') pursuant to a
Registration Statement of which this prospectus is a part, for each $1,000
principal amount of its outstanding 7.25% Senior Notes due 2007 (the 'Notes'),
of which $150,000,000 aggregate principal amount is outstanding. The form and
terms of the Exchange Notes are identical in all material respects to the form
and term of the Notes (which they replace) except that (i) the Exchange Notes
will bear a Series B designation and will have been registered under the
Securities Act and therefore will not be subject to certain restrictions on
transfer applicable to the Notes and will not be entitled to registration
rights, (ii) the Exchange Notes are issuable in minimum denominations of $1,000
compared to minimum denominations of $250,000 for the Notes, and (iii) the
Exchange Notes will not bear legends restricting their transfer and will not
contain certain provisions relating to an increase in the interest rate which
were included in the terms of the Notes in certain circumstances relating to the
timing of the Exchange Offer. The Exchange Notes will evidence the same debt as
the Notes (which they replace) and will be issued under and be entitled to the
benefits of the Indenture dated March 1, 1997 between the Company and The Bank
of New York (the 'Indenture') governing the Notes. See 'The Exchange Offer' and
'Description of Exchange Notes.'
The Company will accept for exchange any and all Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on June 11, 1997, unless
extended by the Company in its sole discretion (the 'Expiration Date').
Notwithstanding the foregoing, the Company will not extend the Expiration Date
beyond August 7, 1997. Tenders of Notes may be withdrawn at any time prior to
5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain
customary conditions. The Notes were sold by the Company on March 10, 1997 to
the Initial Purchasers (as defined) in a transaction not registered under the
Securities Act in reliance upon an exemption under the Securities Act. The
Initial Purchasers subsequently placed the Notes with qualified institutional
buyers that agreed to comply with certain transfer restrictions and other
conditions in reliance upon Rule 144A under the Securities Act. Accordingly, the
Notes may not be reoffered, resold or otherwise transferred in the United States
unless registered under the Securities Act or unless an applicable exemption
from the registration requirements of the Securities Act is available. The
Exchange Notes are being offered hereunder in order to satisfy the obligations
of the Company under the Registration Rights Agreement (as defined) entered into
by the Company in connection with the offering of the Notes. See 'The Exchange
Offer.'
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the 'Commission') to third parties, the Company believes
the Exchange Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is an 'affiliate' of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
such holder has no arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. See 'The Exchange Offer -- Purpose
and Effect of the Exchange Offer' and 'The Exchange Offer -- Resale of the
Exchange Notes.' Each broker-dealer (a 'Participating Broker-Dealer') that
receives Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a participating Broker-Dealer will not be deemed
to admit that it is an 'underwriter' within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus available to any participating
Broker-Dealer for use in connection with any such resale. See 'Plan of
Distribution.'
Holders of Notes not tendered and accepted in the Exchange Offer will
continue to hold such Notes and will be entitled to all the rights and benefits
and will be subject to the limitations applicable thereto under the Indenture
and with respect to transfer under the Securities Act. The Company will pay all
the expenses incurred by it incident to the Exchange Offer. See 'The Exchange
Offer.'
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 12, 1997
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Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Notes. The Exchange Notes will be a new issue of
securities for which there currently is no market. Although the Initial
Purchasers have informed the Company that they each currently intend to make a
market in the Exchange Notes, they are not obligated to do so, and any such
market making may be discontinued at any time without notice. Accordingly, there
can be no assurance as to the development or liquidity of any market for the
Exchange Notes. The Company currently does not intend to apply for listing of
the Exchange Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
Any Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the Indenture (except for those
rights which terminate upon consummation of the Exchange Offer). Following
consummation of the Exchange Offer, the holders of Notes will continue to be
subject to the existing restrictions upon transfer thereof and the Company will
have no further obligation to such holders (other than under certain limited
circumstances) to provide for registration under the Securities Act of the Notes
held by them. To the extent that Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Notes could be adversely affected.
See 'The Exchange Offer -- Consequences of Failure to Exchange.'
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF NOTES ARE URGED TO READ THIS PROSPECTUS AND THE RELATED
LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR NOTES
PURSUANT TO THE EXCHANGE OFFER.
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of a Global Certificate (as defined), which will be
deposited with, or on behalf of, The Depository Trust Company (the 'Depositary')
and registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Certificate representing the Exchange Notes will be
shown on, and transfers thereof to qualified institutional buyers will be
effected through, records maintained by the Depositary and its participants.
After the initial issuance of the Global Certificate, Exchange Notes in
certified form will be issued in exchange for the Global Certificate only on the
terms set forth in the Indenture. See 'Description of Exchange
Notes -- Book-Entry; Delivery and Form.'
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
OR ITS SUBSIDIARIES SINCE THE DATE HEREOF.
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the 'Exchange Offer Registration Statement,' which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Notes being offered hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Company and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. 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 Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith is required to file periodic reports, proxy statements and other
information with the Commission. The Exchange Offer Registration Statement,
including the exhibits thereto, together with reports, proxy statements and
other information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, at the Regional Offices of the commission
at 7 World Trade Center, New York, New York 10048 and at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 6066-2511. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such information may also be accessed electronically by means of the
Commission's home page on the Internet (http://www.sec.gov). Such reports, proxy
statements and other information can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005 on which the
Company's common stock is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996; and
(ii) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1996 and December 31,1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Exchange Offer shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from and after the
respective dates of filing of such documents. Any statement contained in a
document 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 which also is incorporated or deemed to be incorporated by reference
herein modified or supersedes such 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. As used herein, the terms 'Prospectus' and
'herein' mean this Prospectus, including the documents incorporated or deemed to
be incorporated herein by reference, as the same may be amended, supplemented or
otherwise modified from time to time.
The Company 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 such person, a copy of any or all
of the documents 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 in any such documents). Requests for such
copies should be directed to Joseph B. Furey, Vice President and Secretary,
First Brands Corporation, 83 Wooster Heights Road, Danbury, Connecticut
06813-1911, telephone (203) 731-2300.
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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, INCLUDING WITHOUT LIMITATION, CERTAIN STATEMENTS UNDER THE
'PROSPECTUS SUMMARY,' 'THE COMPANY,' 'MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS' AND 'BUSINESS' AND LOCATED
ELSEWHERE HEREIN REGARDING THE COMPANY'S FINANCIAL POSITION AND BUSINESS
STRATEGY, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE COMPANY'S EXPECTATIONS ('CAUTIONARY STATEMENTS') ARE
DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION IN CONJUNCTION WITH
THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS. ALL SUBSEQUENT
WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR
PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and audited consolidated financial statements of the Company,
including the notes thereto (the 'Consolidated Financial Statements'), and the
unaudited condensed financial statements of the Company, including the notes
thereto (the 'Consolidated Condensed Financial Statements'), appearing elsewhere
in this Prospectus or incorporated by reference herein. Unless the context
otherwise requires, references in this Prospectus to 'First Brands' and the
'Company' are to First Brands Corporation and its subsidiaries. Conversions in
this Prospectus from Australian dollars (A$) into United States dollars ($) are
approximate and are calculated at an assumed rate of A$1.00=$.775.
THE COMPANY
The Company develops, manufactures, markets and sells branded and private
label consumer products for the household and automotive markets. Consumers have
been purchasing products under the STP, GLAD, JONNY CAT, SCOOP AWAY, STARTERLOGG
and HEARTHSIDE brand names for over 42, 33, 31, 7, 7 and 4 years, respectively.
The Company's products can be found in large mass merchandise stores and chain
supermarkets as well as other retail outlets, including automotive supply
stores, grocery stores and warehouse clubs. The Company believes that the
significant market positions occupied by its products are attributable to
superior brand name recognition, comprehensive product offerings, continued
product innovation, strong emphasis on vendor support programs and aggressive
advertising and promotion. Through research and development and plant operating
and capital expenditure programs, management is committed to developing process
technologies and introducing new products which are fundamental to the Company's
objective of providing high quality, innovative consumer products at costs which
the Company believes are equal to or less than those of its competitors. The
Company has operations in the United States, Canada, South Africa, the United
Kingdom, Spain, Hong Kong, China, Mexico, Puerto Rico, the Philippines and
Australia and New Zealand as a result of the acquisition of the NationalPak
Business referenced below.
On March 14, 1997, the Company purchased the NationalPak business in
Australia and New Zealand (the 'NationalPak Business') from National Foods Ltd.
for A$206 million ($160 million) plus approximately $8 million of tax and other
transaction expenses. The NationalPak Business manufactures and markets consumer
products such as plastic wrap and bags, aluminum foil and wiping cloths under
the GLAD, CHUX, MONO, OSO and ROTA brand names. See 'Recent
Developments -- Recent Acquisition.'
The Company continually strives for product innovations and improvements to
improve market share and facilitate growth. During fiscal 1996, the Company
introduced the new GLAD-LOCK Snack Bag and increased the distribution and
selection of GLAD Trash Bags with Quick-Tie Flaps. The Company's selection of
litter products was expanded during fiscal 1996 through the introduction of a
new premium clay brand called EVER FRESH and the roll-out of innovative pet
accessory products such as a Self-Scooping Litter Box. In the automotive
business, the Company introduced six new products in fiscal 1996, including the
well-received STP Complete Fuel System Cleaner.
The Company's principal executive office is located at 83 Wooster Heights
Road, Danbury, Connecticut 06813-1911; its telephone number is (203) 731-2300.
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THE NOTES OFFERING
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Notes........................................ The Notes were sold by the Company on March 10, 1997 to Bear,
Stearns & Co. Inc., TD Securities (USA) Inc., Credit Lyonnais
Securities (USA) Inc. and First Union Capital Markets Corp.
(collectively, the 'Initial Purchasers') pursuant to a Purchase
Agreement dated March 5, 1997 (the 'Purchase Agreement'). The
Initial Purchasers subsequently resold the Notes to qualified
institutional buyers that agreed to comply with certain transfer
restrictions and other conditions pursuant to Rule 144A under
the Securities Act.
Registration Rights Agreement................ Pursuant to the Purchase Agreement, the Company and the Initial
Purchasers entered into a Registration Rights Agreement dated
March 5, 1997 (the 'Registration Rights Agreement'), which
grants the holder of the Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy such exchange
rights which terminate upon the consummation of the Exchange
Offer.
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THE EXCHANGE OFFER
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Securities Offered........................... $150,000,000 aggregate principal amount of Series B 7.25% Senior
Notes due 2007 (the 'Exchange Notes').
The Exchange Offer........................... $1,000 principal amount of the Exchange Notes in exchange for each
$1,000 principal amount of Notes. As of the date hereof,
$150,000,000 aggregate principal amount of Notes are
outstanding. The Company will issue the Exchange Notes to
holders on or promptly after the Expiration Date.
Based on an interpretation by the staff of the Commission set
forth in no-action letters issued to third parties, the Company
believes that Exchange Notes issued pursuant to the Exchange
Offer in exchange for Notes may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any
such holder which is an 'affiliate' of the Company within the
meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holder's business and that such
holder does not intend to participate and has no arrangement or
understanding with any person to participate in the distribution
of such Exchange Notes.
Each Participating Broker-Dealer that receives Exchange Notes for
its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale
of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an
'underwriter' within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection
with resales of Exchange Notes received in exchange for Notes
where such Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of
180 days after the Expiration Date, it will make this Prospectus
available to any Participating Broker-Dealer for use in
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connection with any such resale. See 'Plan of Distribution.'
Any holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a
distribution of the Exchange Notes could not rely on the
position of the staff of the Commission enunciated in no-action
letters and, in the absence of an exemption therefrom, must
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction. Failure to comply with such requirements in such
instance may result in such holder incurring liability under the
Securities Act for which the holder is not indemnified by the
Company.
Expiration Date.............................. 5:00 p.m., New York City time, on June 11, 1997 unless the
Exchange Offer is extended, in which case the term 'Expiration
Date' means the latest date and time to which the Exchange Offer
is extended.
Accrued Interest on the Exchange Notes and
the Notes.................................. Each Exchange Note will bear interest from its issuance date.
Holders of Notes that are accepted for exchange will receive, in
cash, accrued interest thereon to, but not including, the
issuance date of the Exchange Notes. Such interest will be paid
with the first interest payment on the Exchange Notes. Interest
on the Notes accepted for exchange will cease to accrue upon
issuance of the Exchange Notes.
Conditions to the Exchange Offer............. The Exchange Offer is subject to certain customary conditions,
which may be waived by the Company. See 'The Exchange
Offer -- Conditions.'
Procedures for Tendering Notes............... Each holder of Notes wishing to accept the Exchange Offer must
complete, sign and date the accompanying Letter of Transmittal,
or a facsimile thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together with the
Notes and any other required documentation to the Exchange Agent
(as defined) at the address set forth herein. By executing the
Letter of Transmittal, each holder will represent to the Company
that, among other things, the Exchange Notes acquired pursuant
to the Exchange Offer are being obtained in the ordinary course
of business of the person receiving such Exchange Notes, whether
or not such person is the holder, that neither the holder nor
any such other person has any arrangement or understanding with
any person to participate in the distribution of such Exchange
Notes and that neither the holder nor any such other person is
an 'affiliate,' as defined under Rule 405 of the Securities Act,
of the Company. See 'The Exchange Offer -- Purpose and Effect of
the Exchange Offer' and ' -- Procedures for Tendering.'
Untendered Notes............................. Following the consummation of the Exchange Offer, holders of Notes
eligible to participate but who do not tender their Notes will
not have any further exchange rights and such Notes will
continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Notes could be
adversely affected.
Consequences of Failure to Exchange.......... The Notes that are not exchanged pursuant to the Exchange Offer
will remain restricted securities. Accordingly, such Notes may
be resold only (i) to the Company, (ii) pursuant to Rule 144A or
Rule 144 under the Securities Act or pursuant to some other
exemption under the
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Securities Act, (iii) outside the United States to a foreign
person pursuant to the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration
statement under the Securities Act. See 'The Exchange
Offer -- Consequences of Failure to Exchange.'
Shelf Registration Statement................. If any holder of the Notes (other than any such holder which is an
'affiliate' of the Company within the meaning of Rule 405 under
the Securities Act) is not eligible under applicable securities
laws to participate in the Exchange Offer, and such holder has
provided information regarding such holder and the distribution
of such holder's Notes to the Company for use therein, the
Company has agreed to register the Notes on a shelf registration
statement (the 'Shelf Registration Statement') and use its best
efforts to cause it to be declared effective by the Commission
as promptly as practical on or after the consummation of the
Exchange Offer. The Company has agreed to maintain the
effectiveness of the Shelf Registration Statement for, under
certain circumstances, a maximum of two years, to cover resales
of the Notes held by any such holders.
Special Procedures for Beneficial Owners..... Any beneficial owner whose Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender should contact such registered holder
promptly and instruct such registered holder to tender on such
beneficial owner's behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner must, prior to
completing and executing the Letter of Transmittal and
delivering its Notes, either make appropriate arrangements to
register ownership of the Notes in such owner's name or obtain a
properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time. The
Company will keep the Exchange Offer open for not less than
twenty days in order to provide for the transfer of registered
ownership.
Guaranteed Delivery Procedures............... Holders of Notes who wish to tender their Notes and whose Notes
are not immediately available or who cannot deliver their Notes,
the Letter of Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent (or comply with the
procedures for book-entry transfer) prior to the Expiration Date
must tender their Notes according to the guaranteed delivery
procedures set forth in 'The Exchange Offer
Guaranteed -- Delivery Procedures.'
Withdrawal Rights............................ Tenders may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
Acceptance of Notes and Delivery of Exchange
Notes...................................... The Company will accept for exchange any and all Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New
York City time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be delivered promptly
following the Expiration Date. See 'The Exchange Offer -- Terms
of the Exchange Offer.'
Use of Proceeds.............................. There will be no cash proceeds to the Company from the exchange
pursuant to the Exchange Offer.
Exchange Agent............................... The Bank of New York.
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THE EXCHANGE NOTES
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General...................................... The form and terms of the Exchange Notes are the same as the form
and terms of the Notes (which they replace) except that (i) the
Exchange Notes bear a Series B designation, (ii) the Exchange
Notes have been registered under the Securities Act and,
therefore, will not bear legends restricting the transfer
thereof, (iii) the holders of Exchange Notes will not be
entitled to certain rights under the Registration Rights
Agreement, including the provisions providing for an increase in
the interest rate on the Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights will terminate
when the Exchange Offer is consummated and (iv) the Exchange
Notes will be issuable in minimum denominations of $1,000
compared to minimum denominations of $250,000 for the Notes. See
'The Exchange Offer -- Purpose and Effect of the Exchange
Offer.' The Exchange Notes will evidence the same debt as the
Notes and will be entitled to the benefits of the Indenture. See
'Description of Exchange Notes.' The Notes and the Exchange
Notes are referred to herein collectively as the 'Senior Notes.'
Securities Offered........................... $150,000,000 aggregate principal amount of Series B 7.25% Senior
Notes due 2007 of the Company.
Maturity Date................................ March 1, 2007.
Interest Payment Dates....................... March 1 and September 1, commencing September 1, 1997.
Record Dates................................. Each February 15 and August 15.
Denominations................................ The Notes will be issued in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof.
Sinking Fund................................. None.
Ranking...................................... The Exchange Notes will constitute unsecured unsubordinated
indebtedness of the Company and will rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company
for borrowed money. The Exchange Notes will be effectively
subordinated to all existing and future indebtedness, trade
payables, guarantees, lease obligations, letters of credit
obligations and other obligations of the Company's subsidiaries.
Absence of Market for the Exchange Notes..... The Exchange Notes will be a new issue of securities for which
there currently is no market. Although the Initial Purchasers
have informed the Company that they currently intend to make a
market in the Exchange Notes, the Initial Purchasers are not
obligated to do so, and any such market-making may be
discontinued at any time without notice. Accordingly, there can
be no assurance as to the development or liquidity of any market
for the Exchange Notes. The Company does not intend to apply for
listing of the Exchange Notes, on any securities exchange or for
quotation through the NASD Automated Quotation System. See 'Plan
of Distribution.'
Modification of the Indenture................ The Company and the Trustee, without the consent of the holders of
the Senior Notes, may amend the Indenture, if in the opinion of
the Trustee, such change does not adversely affect the rights of
the holders in any material respect. Other modifications to the
Indenture may be
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made with the consent of holders of a majority of the principal
amount of the Senior Notes then outstanding except that consent
is required from all holders of Senior Notes in instances such
as reductions in the amount or timing of interest payments,
reductions in the principal and changes in the maturity,
redemption or repurchase dates of the Senior Notes. See
'Description of Exchange Notes -- Modification of the
Indenture.'
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For additional information regarding the Exchange Notes, see 'Description
of Exchange Notes.'
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RECENT DEVELOPMENTS
RECENT ACQUISITION
On March 14, 1997, the Company purchased the NationalPak Business in
Australia and New Zealand from National Foods Ltd. for A$206 million ($160
million) plus approximately $8 million of tax and other transaction expenses.
Management of the NationalPak Business intends to purchase a minor equity
interest in the NationalPak Business by June 30, 1997. The NationalPak Business
manufactures and markets consumer products such as plastic wrap and bags,
aluminum foil and wiping cloths under the GLAD, CHUX, MONO, OSO and ROTA brand
names. Sales for these businesses during their fiscal year ended June 30, 1996
were approximately A$159 million ($123 million). In addition to acquiring the
GLAD brand in the only major commercial market where it was not owned by the
Company, the Company believes it can share technology and marketing information
with NationalPak in Australia and New Zealand, as well as introduce and market
in Australia and New Zealand other household products of the Company through
NationalPak's strong distribution network. Although the Company regularly
engages in discussions with companies regarding potential acquisitions, the
Company is currently not a party to any agreement with respect to any other
pending acquisition that management believes is probable and material.
NEW BANK FACILITIES
The Company has amended and restated its domestic credit agreement
effective February 28, 1997 (the 'Credit Agreement' and, as amended, the
'Amended Credit Agreement'). The amendments to the Credit Agreement, among other
things, (i) generally provide the Company with more favorable borrowing rates,
(ii) extend the maturity date of the facility (the 'Revolving Credit Facility')
from December 31, 1999 to February 28, 2002, (iii) permit a greater amount of
restricted payments, such as dividends and stock repurchases, (iv) grant more
flexibility to foreign subsidiaries to borrow money and (v) in certain
circumstances, exclude certain foreign subsidiaries from financial covenant
calculations. In addition, the requirement in the Revolving Credit Facility that
the Company maintain a ratio of consolidated total senior liabilities to
consolidated net worth plus subordinated debt of not more than 0.75 to 1.0 was
amended to require the Company to maintain a ratio of consolidated total
indebtedness to consolidated total capitalization of not more than 0.6 to 1.0.
The Amended Credit Agreement is guaranteed by the material domestic subsidiaries
of the Company, and provides for maximum borrowings of $300 million. As of
December 31, 1996, the Company had drawn down approximately $140 million under
the Revolving Credit Facility and had approximately $160 million in availability
thereunder.
The Company has received an A$100 million ($77.5 million) seven-year
acquisition and working capital credit facility in Australia and New Zealand
related to the acquisition of the NationalPak Business. The credit facility,
which is fully secured by the assets of the NationalPak Business, was entered
into at the closing of such acquisition. Approximately A$80 million ($62
million) of the acquisition cost was financed through such facility.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the Exchange Notes in the
Exchange Offer. The net proceeds of approximately $148.1 million from the
issuance of the Notes were used to redeem all of the Company's outstanding
9 1/8% Senior Subordinated Notes due April 1, 1999 (the 'Senior Subordinated
Notes') and to reduce borrowings under the Amended Credit Agreement.
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1996 and as adjusted to reflect the sale of the Notes, the
redemption of the Senior Subordinated Notes and the expected borrowings under
the Revolving Credit Facility and long-term credit facilities in Australia, New
Zealand and Canada in connection with the consummation of the acquisition of the
NationalPak Business. The table should be read in conjunction with the Company's
Consolidated Financial Statements and Consolidated Condensed Financial
Statements incorporated by reference herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
SENIOR DEBT:
Revolving Credit Facility(a)....................................................... $140,000 $ 183,000
Other debt, net of current maturities(b)........................................... 4,726 80,726
7.25% Senior Notes due 2007........................................................ -- 150,000
-------- -----------
Total senior debt............................................................. 144,726 413,726
SUBORDINATED DEBT:
9 1/8% Senior Subordinated Notes due 1999(c)....................................... 100,000 --
-------- -----------
Total long-term debt(d)....................................................... 244,726 413,726
Total stockholders' equity.................................................... 404,661 404,661
-------- -----------
Total capitalization.......................................................... $649,387 $ 818,387
-------- -----------
-------- -----------
</TABLE>
- ------------
(a) The Company has amended and restated its Revolving Credit Facility. The
Revolving Credit Facility, as amended, (i) has a maximum availability of
$300 million, (ii) has a five-year term expiring February 28, 2002, (iii)
based upon the current rating of the Senior Subordinated Notes and the
Notes, has interest at the prime rate, LIBOR plus 0.275% or the CD rate
plus 0.40% and (iv) has a facility fee of 0.15%. See 'Recent
Developments -- New Bank Facilities.'
(b) Approximately $76 million of the 'as adjusted' amount was drawn against
long-term credit facilities in Australia, New Zealand and Canada on or
about the closing of the NationalPak Business acquisition.
(c) The Company redeemed all of its 9 1/8% Senior Subordinated Notes on April
9, 1997.
(d) Total long-term debt excludes other long-term obligations of $16.8 million
(which is comprised primarily of pension and retiree medical plan
obligations) and long-term operating lease commitments. See Notes 6 and 7
to the Company's Consolidated Financial Statements in the Company's Annual
Report on Form 10-K for the year ended June 30, 1996 and Notes 2 and 4 to
the Company's Consolidated Condensed Financial Statements in the Company's
Report on Form 10-Q for the period ended December 31, 1996. See 'Available
Information.'
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SELECTED CONSOLIDATED FINANCIAL DATA
The selected data presented below as of and for the fiscal years ended June
30, 1996, 1995, 1994, 1993 and 1992 are derived from the Company's Consolidated
Financial Statements which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The Consolidated Financial Statements
as of June 30, 1996 and 1995 and for each of the years in the three-year period
ended June 30, 1996 and the independent auditors' report thereon are
incorporated by reference herein. The selected data presented below for the six
months ended December 31, 1996 and 1995 and as of December 31, 1996 are derived
from the Company's unaudited Consolidated Condensed Financial Statements to
which KPMG Peat Marwick LLP has applied limited procedures in accordance with
professional standards for a review of such information. The unaudited
Consolidated Condensed Financial Statements as of December 31, 1996 and for the
six month period ended December 31, 1996 and 1995, and the independent auditors'
review report thereon, are incorporated by reference herein and such statements,
in the opinion of management, include all adjustments (all of which were of a
normal recurring nature) necessary to fairly present the financial information
for such periods.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED JUNE 30,(a)
------------------ -----------------------------------------------
1996 1995 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................ $535.5 $513.9 $1,073.0 $1,036.5 $1,086.3 $1,041.9 $ 988.5
Cost of goods sold(b)................................ 345.6 339.2 687.1 645.9 666.0 646.3 599.7
Selling, general and administrative expenses......... 118.1 105.7 241.7 255.3 269.2 257.8 259.5
Amortization and other depreciation.................. 6.3 7.8 15.6 16.5 20.8 19.1 22.4
-------- -------- -------- -------- -------- -------- -------
Earnings before interest expense, other income
(expense), net, provision for income taxes and
extraordinary items................................ 65.5 61.2 128.6 118.8 130.3 118.7 106.9
Interest expense and discount on sales of accounts
receivable(c)...................................... 11.0 11.0 21.5 22.8 26.7 29.7 40.4
Other income (expense), net(d)....................... 0.9 1.7 1.8 (21.2) (0.1) 0.1 --
-------- -------- -------- -------- -------- -------- -------
Income before provision for income taxes and
extraordinary items................................ 55.4 51.9 108.9 74.8 103.7 89.1 66.5
Extraordinary items(e)............................... -- -- -- (4.5) -- -- (15.7)
Net income........................................... 33.4 30.2 65.1 38.7 60.2 52.7 23.5
Net income per common share and common equivalent
share(f)........................................... $ 0.80 $ 0.71 $ 1.53 $ 0.91 $ 1.36 $ 1.21 $ 0.54
Cash dividends declared per share(f)................. $ 0.14 $ 0.11 $ 0.24 $ 0.19 $ 0.15 $ 0.09 $ 0.02
OTHER FINANCIAL DATA:
Earnings before interest, taxes, depreciation and
amortization (EBITDA).............................. $ 86.7 $ 81.5 $ 168.7 $ 134.1 $ 172.1 $ 156.4 $ 146.4
Total depreciation and amortization.................. 20.3 18.6 38.3 36.5 41.7 37.6 39.5
Capital expenditures................................. 14.0 16.8 42.3 47.0 39.8 39.1 47.8
Ratio of EBITDA to interest expense.................. 7.9x 7.4x 7.8x 5.9x 6.4x 5.3x 3.6x
Ratio of earnings to fixed charges(g)................ 4.5x 4.3x 4.5x 3.3x 3.8x 3.2x 2.2x
BALANCE SHEET DATA (AS OF THE END OF THE PERIOD):
Working capital...................................... $158.5 $ 125.0 $ 72.5 $ 52.8 $ 59.0 $ 25.4
Total assets......................................... 853.1 860.9 839.9 814.0 830.2 828.2
Long-term debt (including current maturities)(h)..... 244.7 199.4 166.3 153.4 226.3 282.3
Stockholders' equity................................. 404.7 398.8 352.2 360.7 305.4 256.7
Total long-term debt, including current maturities,
as a percentage of total capitalization(i)......... 37.7% 33.3% 32.1% 29.8% 42.6% 52.4%
</TABLE>
(footnotes on next page)
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(footnotes from previous page)
(a) Financial data for fiscal years 1992 through 1995 include the operations of
the Prestone antifreeze and car care products business (the 'Prestone
Business') which was sold in August, 1994. Net sales for the Prestone
Business were $32.0 million for the eight-week period ended August 26,
1994, $190.6 million for fiscal 1994, $191.4 million for fiscal 1993 and
$187.1 million for fiscal 1992. The data also include the operations of the
following subsidiaries: A&M Products, Inc. acquired May, 1992; Excel
Mineral Inc. acquired July, 1994; Multifoil (Pty) Ltd. (South Africa)
acquired April, 1995; and Forest Technology Corporation acquired March,
1996.
(b) Cost of goods sold includes a portion of the Company's depreciation
expense.
(c) The Company entered into an agreement to sell without recourse up to $100
million in fractional ownership interests in a defined pool of eligible
trade accounts receivable. As of December 31, 1996, the Company had sold
$80 million in such fractional ownership interests. The costs associated
with this program are reported as 'discount on sales of accounts
receivable.'
(d) Other income (expense), net for fiscal 1995, primarily reflects settled
litigation costs relating to the Company's formerly operated mobile
antifreeze recycling business as well as a gain on the sale of the Prestone
Business and a loss on the disposal of the Company's automotive service
centers.
(e) Extraordinary items include, in fiscal 1995, the premium paid and the
write-off of unamortized issuance costs, net of taxes, related to the
purchase of the remaining $45 million of the Company's 13 1/4% Subordinated
Notes, and in fiscal 1992, the costs incurred including premiums paid and
write-off of unamortized issuance costs, net of taxes, relating to the
purchase of the Company's 12 1/2% Senior Subordinated Debentures and a
portion of the 13 1/4% Subordinated Notes.
(f) Net income per common share and common equivalent share and cash dividends
declared per share have been computed using the weighted average number of
common shares and common share equivalents outstanding for each period. The
computations have been adjusted for the February, 1996 2-for-1 stock split.
(g) The ratio of earnings to fixed charges is calculated as follows: income
before provision for income taxes plus fixed charges (excluding capitalized
interest), divided by fixed charges. Fixed charges are defined as interest
incurred (expended or capitalized) plus amortization of debt financing
costs plus one third of rent expense incurred on operating leases.
(h) Long-term debt excludes other long-term obligations and long-term operating
lease commitments. See Notes 6 and 7 to the Company's Consolidated
Financial Statements incorporated by reference herein.
(i) Total long-term debt as a percentage of total capitalization is calculated
as follows: long-term debt (including current maturities but excluding
other long-term obligations and long-term operating lease commitments)
divided by total capitalization. Total capitalization is defined as
follows: long-term debt (including current maturities but excluding other
long-term obligations and long-term operating lease commitments) plus
stockholders' equity.
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BUSINESS
First Brands is primarily engaged in the development, manufacture,
marketing and sale of branded and private label consumer products for the
household and automotive markets. The Company's products can be found in large
merchandise and chain supermarkets and other retail outlets. The Company
believes that the significant market positions occupied by its products are
attributable to superior brand name recognition, comprehensive product
offerings, continued product innovation, strong emphasis on vendor support
programs and aggressive advertising and promotion.
Household products include the most complete line of branded plastic wrap,
bags and drinking straws in the United States and Canada, which are sold under
the GLAD and GLAD-LOCK brands. Plastic bags are also sold in Canada under the
SURTEC brand. Cat litter products are sold under the SCOOP AWAY, EVER CLEAN,
JONNY CAT and EVER FRESH brands. Automotive performance and appearance products
are sold under the STP brand. Consumers have been purchasing products under the
STP, GLAD, JONNY CAT, SCOOP AWAY, STARTERLOGG and HEARTHSIDE brand names for
over 42, 33, 31, 7, 7 and 4 years, respectively.
Through research and development and plant operating and capital
expenditure programs, management is committed to developing process technologies
and introducing new products which are fundamental to the Company's objective of
providing high quality, innovative consumer products at costs which the Company
believes are equal to or less than those of its competitors. The Company spent
$4.8 million, $4.9 million and $6.3 million on research and development during
fiscal 1996, 1995 and 1994, respectively. Included in these figures were
expenditures relating to the divested Prestone Business of $0.5 million and $2.1
million for fiscal 1995 and 1994, respectively. In addition to operating
state-of-the-art equipment and facilities, each of the household, litter and
automotive businesses has its own Research and Development Director and research
staff to focus on its business opportunities.
The Company continually strives for product innovations and improvements to
improve market share and facilitate growth. In the household products business,
the Company emphasizes improved product value, convenience and performance.
During fiscal 1996, the Company introduced the new GLAD-LOCK Snack Bag and
increased the distribution and selection of GLAD Trash Bags with Quick-Tie
Flaps. The Company's selection of litter products was expanded during fiscal
1996 through the introduction of a new premium clay brand called EVER FRESH and
the roll-out of innovative pet accessory products such as a Self-Scooping Litter
Box. In the automotive business, the Company introduced six new products in
fiscal 1996, including the well-received STP Complete Fuel System Cleaner.
Through its subsidiary, Himolene Incorporated ('Himolene'), the Company is
the leading producer in the United States of high molecular weight, high density
polyethylene plastic trash can liners for use in the institutional and
industrial markets.
A&M Products, Inc. ('A&M'), a wholly owned subsidiary of the Company,
manufactures and markets SCOOP AWAY and EVER CLEAN cat litter, the leading
brands of clumping cat litter in the United States. During fiscal 1995, A&M
acquired the cat litter and absorbent mineral assets of Excel Mineral Inc. and
Excel International Inc. ('Excel'). The assets acquired from Excel included the
JONNY CAT brand of pet care products.
On March 19, 1996, the Company purchased substantially all of the assets
and assumed the liabilities of Forest Technology Corporation ('Forest
Technology'). Forest Technology manufactures and markets STARTERLOGG, the
leading brand of wood starter fire products, and HEARTHSIDE firelogs. In April,
1995, the Company also acquired a 79% equity interest in Multifoil (Pty) Ltd., a
South African manufacturer of consumer and commercial plastic products.
First Brands operates in foreign countries through subsidiaries in Canada,
South Africa, the United Kingdom, Spain, Hong Kong, China, Mexico, Puerto Rico,
the Philippines and Australia and New Zealand as a result of the acquisition the
NationalPak Business. See 'Recent Developments -- Recent Acquisition.' Through
its Hong Kong subsidiary, First Brands holds a 51% interest in a joint venture
in China which is engaged in the manufacture and sale of plastic wrap and bags
and automotive products. During fiscal 1996 and 1997, the Company acquired an
additional 14% of its South African subsidiary,
15
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<PAGE>
bringing the Company's total investment to 93% of that company's outstanding
capital stock. In addition to its foreign operations, First Brands exports
products to over 100 countries.
The Company's products are sold directly to retailers and wholesalers and
can be found in large mass merchandise stores and chain supermarkets as well as
other retail outlets, including automotive supply stores, grocery stores and
price clubs. While the Company's sales are not dependent upon a single customer,
in fiscal 1996 its top 25 customers accounted for approximately 46% of total net
sales, and net sales to its largest customer, the Wal-Mart and Sams Wholesale
Club stores, accounted for approximately 12% of total net sales.
Sales to food outlets, which in fiscal 1996 accounted for approximately 69%
of domestic sales of plastic wrap and bags as well as cat litter, are handled
through a network of brokers. Sales to mass merchandisers, which accounted for
the approximate 31% balance of such sales, are handled by First Brands' direct
sales force. Sales of automotive products are primarily handled through First
Brands' direct sales force and sold to mass merchandisers. Sales by Himolene to
the institutional and industrial markets are handled by that subsidiary's direct
sales force as well as through distributors. Sales of the Company's products in
Canada are generally handled in the same manner as domestic sales. Other
international sales are handled primarily through distributors.
The Company believes its manufacturing facilities employ state-of-the-art
technology. The plastic wrap and bag manufacturing process employs advanced
extrusion and conversion technologies. The Company's strategy is to continue to
update and expand its manufacturing facilities with internally developed
technologies (some of which are patented) and state-of-the-art technology
acquired from third-party sources. Through improvements in existing process
technologies and the acquisition of additional equipment, the Company
continually strives to increase its production capacity and efficiency.
Through the use of its high molecular weight, high density polyethylene
technology, First Brands and Himolene produce stronger plastic bags with less
raw material, resulting in a conservation of resources and a reduction of
materials that eventually are sent to landfills.
The Company currently purchases a substantial portion of the raw materials
for its plastic wrap and bags under a long-term contract with Union Carbide. The
contract with Union Carbide satisfies a substantial portion of the Company's
expected polyethylene resin requirements through December 31, 1999. Union
Carbide is the Company's largest single supplier and the Company believes that
it is also Union Carbide's largest customer for polyethylene resin. The Company
also has contracts for the purchase of certain raw materials, including
polyethylene resin, from other suppliers, and makes purchases on the open market
as well. The pricing provisions in the Company's present supply contracts are
designed to be responsive to market conditions and the cost of relevant raw
materials.
For additional discussion of the Company's business, see 'Item
1 -- Business' of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996.
16
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DESCRIPTION OF EXCHANGE NOTES
The Series B 7.25% Senior Notes due 2007 (the 'Exchange Notes') will be
issued under an indenture (the 'Indenture'), dated as of March 1, 1997 by and
between the Company and The Bank of New York, as Trustee (the 'Trustee'). The
following summary of certain provisions of the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Indenture Act of 1939, as amended (the 'TIA'), and to all of the
provisions of the Indenture, including the definitions of certain terms therein
and those terms made a part of the Indenture by reference to the TIA as in
effect on the date of the Indenture. A copy of the Indenture may be obtained
from the Company or the Initial Purchasers. The definitions of certain
capitalized terms used in the following summary are set forth below under
'Certain Definitions.' For purposes of this section, references to the 'Company'
include only the Company and not its subsidiaries and references to the 'Senior
Notes' include the Notes and the Exchange Notes.
The Exchange Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. The Senior
Notes may be presented for registration or transfer and exchange at the offices
of the Registrar, which initially will be the Trustee's corporate trust office.
The Company may change any Paying Agent and Registrar without notice to holders
of the Senior Notes (the 'Holders'). The Company will pay principal (and
premium, if any) on the Senior Notes at the Trustee's corporate office in New
York, New York. At the Company's option, interest may be paid at the Trustee's
corporate trust office or by check mailed to the registered address of Holders.
The form and terms of the Exchange Notes are the same as the form and terms of
the Notes (which they replace) except that (i) the Exchange notes bear a Series
B designation, (ii) the Exchange Notes have been registered under the Securities
Act and, therefore, will not bear legends restricting the transfer thereof,
(iii) the holders of Exchange Notes will not be entitled to certain rights under
the Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Notes in certain circumstances relating to
the timing of the Exchange Offer, which rights will terminate when the Exchange
Offer is consummated and (iv) the Exchange Notes will be issued in minimum
denominations of $1,000 compared to minimum denominations of $250,000 for the
Notes. No service charge will be made for any registration of transfer, exchange
or redemption of Exchange Notes, except in certain circumstances for any tax or
other governmental charge that may be imposed in connection therewith. The Notes
and the Exchange Notes shall be treated as one class for all purposes under the
Indenture, including amendments, waivers and redemptions.
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes will mature on March 1, 2007, will be limited to $150
million aggregate principal amount at any one time outstanding (including any
Exchange Notes that may be issued from time to time in exchange for the Notes)
and will be unsecured unsubordinated obligations of the Company. Each Senior
Note will bear interest at the rate set forth on the cover page hereof from
March 1, 1997 or from the most recent interest payment date to which interest
has been paid, payable semiannually on March 1 and September 1 in each year,
commencing September 1, 1997, to the person in whose name the Senior Note (or
any predecessor Senior Note) is registered at the close of business on the
February 15 or the August 15 next preceding such interest payment date.
The Senior Notes will not be subject to redemption by the Company prior to
maturity and will not be entitled to the benefit of any sinking fund or other
mandatory redemption obligation prior to maturity.
RANKING; SUBSIDIARIES
The Senior Notes will be unsecured unsubordinated obligations of the
Company and will rank on a parity in right of payment with all other unsecured
and unsubordinated indebtedness of the Company for borrowed money. The Senior
Notes are obligations exclusively of the Company. Some of the Company's
consolidated assets are held by its subsidiaries. Accordingly, the cash flow of
the Company and the consequent ability to service its debt, including the Senior
Notes, are in part dependent upon the earnings of such subsidiaries. The Senior
Notes will be effectively subordinated to all existing and
17
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future indebtedness, trade payables, guarantees, lease obligations, letter of
credit obligations and other obligations of the Company's subsidiaries. The
Company's material domestic subsidiaries have guaranteed the Company's
obligations under the Amended Credit Agreement.
RESTRICTIVE COVENANTS
Limitations on Secured Debt. The Indenture provides that the Company will
not itself, and will not permit any Restricted Subsidiary (defined below) to,
incur, issue, assume or guarantee any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed (herein called 'debt'), secured by
a pledge of, or mortgage or other lien on, any Principal Property (defined
below), now owned or hereafter owned by the Company or any Restricted
Subsidiary, or any shares of stock or debt of any Restricted Subsidiary (herein
called 'liens'), without effectively providing that the Notes (together with, if
the Company shall so determine, any other debt of the Company or such Restricted
Subsidiary then existing or thereafter created which is not subordinate to the
Notes) shall be secured equally and ratably with such secured debt. The
foregoing restrictions do not apply, however, to (a) liens on any Principal
Property acquired (whether by merger, consolidation, purchase, lease or
otherwise), constructed or improved by the Company or any Restricted Subsidiary
after the date of the Indenture which are created or assumed prior to,
contemporaneously with, or within 270 days after, such acquisition, construction
or improvement, to secure or provide for the payment of all or any part of the
cost of such acquisition, construction or improvement; (b) liens on property,
shares of capital stock or debt existing at the time of acquisition thereof,
whether by merger, consolidation, purchase, lease or otherwise (including liens
on property, shares of capital stock or debt of a corporation existing at the
time such corporation becomes a Restricted Subsidiary); (c) liens in favor of,
or which secure debt owing to, the Company or any Restricted Subsidiary; (d)
liens in favor of the United States of America or any State thereof, or any
department, agency, or instrumentality or political subdivision thereof, or
political entity affiliated therewith, or in favor of any other country, or any
political subdivision thereof, to secure partial, progress, advance or other
payments or to secure any debt incurred for the purpose of financing all or any
part of the purchase price or the cost of constructing or improving the property
subject to such liens, including liens to secure pollution control, internal
revenue or other types of bonds; (e) certain liens imposed by law, such as
mechanics', workmen's, repairmen's, materialmen's, carriers', warehousemen's,
vendors' or other similar liens arising in the ordinary course of business; (f)
certain pledges or deposits under workmen's compensation or similar legislation
or in certain other circumstances; (g) certain liens in connection with legal
proceedings, including certain liens arising out of judgments or awards; (h)
liens for certain taxes or assessments; (i) certain liens consisting of
restrictions on the use of real property which do not interfere materially with
the property's use; (j) liens existing on the first date on which the Senior
Notes are authenticated; or (k) any extension, renewal or replacement (or
successive extensions, removals or replacements) as a whole or in part, of any
lien referred to in the foregoing clauses (a) to (j), inclusive.
Notwithstanding the restrictions described above, the Company or any
Restricted Subsidiary may incur, issue, assume or guarantee debt secured by
liens without equally and ratably securing the Senior Notes, provided that at
the time of such incurrence, issuance, assumption or guarantee, after giving
effect thereto and to the retirement of any debt which is concurrently being
retired, the aggregate amount of all outstanding debt secured by liens so
incurred (other than liens permitted as described in clauses (a) through (k)
above), together with the aggregate amount of Attributable Debt incurred
pursuant to the second paragraph under the caption ' -- Limitations on Sale and
Leaseback Transactions' below, does not at such time exceed the greater of (i)
$100 million or (ii) 25% of Consolidated Net Tangible Assets (defined below) of
the Company.
Limitations on Sale and Leaseback Transactions. Sale and leaseback
transactions by the Company or any Restricted Subsidiary involving a Principal
Property are prohibited unless either (a) the Company or such Restricted
Subsidiary would be entitled, without equally and ratably securing the Senior
Notes, to incur debt secured by a lien on such property, pursuant to the
provisions described in clauses (a) through (k) above under ' -- Limitations on
Secured Debt'; or (b) the Company, within 270 days after such transaction,
applies an amount not less than the greater of (i) the net proceeds of the sale
of the Principal Property leased pursuant to such arrangement or (ii) the fair
market value of the
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Principal Property so leased to (x) the retirement of its Funded Debt (defined
below) (subject to credits for certain voluntary retirements of Funded Debt) or
(y) the purchase, construction or development of other property, facilities or
equipment used or useful in the Company's or its Restricted Subsidiaries'
business. This restriction will not apply to a sale and leaseback transaction
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries or involving the taking back of a lease for a period of less than
three years.
Notwithstanding the restrictions described above, the Company or any
Restricted Subsidiary may enter into a sale and leaseback transaction, provided
that at the time of such transaction, after giving effect thereto and to the
retirement of any Funded Debt which is concurrently being retired, the aggregate
amount of all Attributable Debt (defined below) in respect of sale and leaseback
transactions existing at such time (other than sale and leaseback transactions
permitted as described in the preceding paragraph), together with the aggregate
amount of all outstanding debt incurred pursuant to the second paragraph under
the caption ' -- Limitations on Secured Debt' above, does not at such time
exceed the greater of (i) $100 million or (ii) 25% of Consolidated Net Tangible
Assets of the Company.
Certain Definitions. The term 'Attributable Debt' means, at any time, the
total net amount of rent (discounted at the rate of interest implicit in the
terms of the lease) required to be paid during the then remaining term of any
lease.
The term 'Consolidated Net Tangible Assets' means, at any time, the
aggregate amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom (a) all current liabilities
(excluding any indebtedness for money borrowed having a maturity of less than 12
months from the date of the then most recent consolidated balance sheet of the
Company publicly available but which by its terms is renewable or extendable
beyond 12 months from such date at the option of the borrower) and (b) all
goodwill, trade names, patents, unamortized debt discount and expense and any
other like intangibles, all as set forth on the then most recent consolidated
balance sheet of the Company publicly available and computed in accordance with
generally accepted accounting principles.
The term 'Funded Debt' means debt which by its terms matures at or is
extendible or renewable at the option of the obligor to a date more than 12
months after the date of the creation of such debt.
The term 'Principal Property' means any plant, office facility, warehouse,
distribution center or equipment located within the United States of America
(other than its territories or possessions) and owned by the Company or any
subsidiary, the gross book value (without deduction of any depreciation
reserves) of which on the date as of which the determination is being made
exceeds 1% of Consolidated Net Tangible Assets except any such property which
the Company's Board of Directors, in its good faith opinion, determines not to
be of material importance to the business conducted by the Company and its
subsidiaries, taken as a whole, as evidenced by a board resolution.
The term 'Restricted Subsidiary' means any subsidiary of the Company which
owns or leases a Principal Property.
EVENTS OF DEFAULT
The following events are defined in the Indenture as 'Events of Default'
with respect to the Senior Notes: (1) failure to pay any interest on any Senior
Note when due and payable, continued for 30 days; (2) failure to pay principal
of or any premium on any Senior Note at its maturity; (3) failure to perform any
other covenant of the Company in the Indenture, continued for 60 days after
written notice as provided in the Indenture; (4) default under any indenture or
instrument (other than the Indenture or any Senior Note) under which the Company
or any Restricted Subsidiary shall have outstanding or shall have guaranteed the
payment of at least $10 million aggregate principal amount of indebtedness for
money borrowed which default (a) is caused by failure to pay the principal of or
premium, if any, or interest on such indebtedness prior to the expiration of the
grace period provided in such indebtedness on the date of such default or (b)
results in acceleration of such indebtedness prior to its express maturity and
such acceleration has not been annulled within 10 days after written notice as
provided in the Indenture; and (5) certain events in bankruptcy, insolvency or
reorganization involving the Company.
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If an Event of Default occurs and is continuing, then either the Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes by notice as provided in the Indenture may declare the principal amount of
all of the Senior Notes to be due and payable immediately. At any time after a
declaration of acceleration with respect to Senior Notes has been made, but
before a judgment or decree for payment of money has been obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Trustee, the Holders of a majority in aggregate principal
amount of the Outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, with respect to the
Senior Notes.
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Notes; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
Senior Note affected thereby, change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any Senior Note, reduce the
principal amount of, or premium or interest on, any Senior Note, change the
place of payment where or coin or currency in which the principal of, or any
premium or interest on, any Senior Note is payable, impair the right to
institute suit for the enforcement of any payment on or with respect to any
Senior Note, reduce the percentage in principal amount of outstanding Senior
Notes, the consent of the Holders of which is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults or modify any of the above
provisions.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Notes may, on behalf of the Holders of all Senior Notes, waive
compliance by the Company with certain restrictive provisions of the Indenture.
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes may, on behalf of the Holders of all Senior Notes, waive any
past default under the Indenture, except a default (1) in the payment of
principal of, or any premium or interest on, any Senior Note, or (2) in respect
of a covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each Senior Note.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Notes, may consolidate or merge with or into, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person which is a
corporation, partnership or trust organized and validly existing under the laws
of any domestic jurisdiction, provided that (1) any successor Person assumes by
supplemental indenture the Company's obligations on the Senior Notes and under
the Indenture, (2) after giving effect to the transaction no Event of Default,
and no event which, after notice or lapse of time, would become an Event of
Default, shall have occurred and be continuing under the Indenture, (3) as a
result of such transaction the properties or assets of the Company are not
subject to any encumbrance which would not be permitted under the Indenture, and
(4) the Company shall have delivered an Officers' Certificate and an Opinion of
Counsel, each stating that such transaction or supplemental indenture, complies
with the Indenture.
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DEFEASANCE PROVISIONS
Defeasance and Discharge. The Indenture provides that the Company will be
discharged from any and all obligations in respect of the Senior Notes (except
for certain obligations to register the transfer or exchange of Senior Notes, to
replace stolen, lost or mutilated Senior Notes, to maintain paying agencies and
to hold moneys for payment in trust) upon the deposit with the Trustee, in
trust, of money, U.S. Government Obligations (as defined) or a combination
thereof, which through the payment of interest and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
any installment of principal of (and premium, if any) and interest on the Stated
Maturity of such payments in accordance with the terms of the Indenture and the
Senior Notes. Such discharge may only occur if there has been a change in
applicable Federal law or the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling to the effect
that such a discharge will not be deemed, or result in, a taxable event with
respect to holders of the Senior Notes. The term 'U.S. Government Obligations'
is defined to mean direct obligations of the United States of America, backed by
its full faith and credit.
Defeasance of Certain Covenants and Events of Default. The Company may omit
to comply with the restrictive covenants described in ' -- Restrictive
Covenants -- Limitations on Secured Debt' and ' -- Restrictive
Covenants -- Limitations on Sale and Leaseback Transactions' and the omission
with respect thereof shall not be an Event of Default. To exercise such option,
the Company must deposit with the Trustee money, U.S. Government Obligations or
a combination thereof, which through the payment of interest and principal
thereof in accordance with their terms will provide money in an amount
sufficient to pay any installment of principal of (and premium, if any) and
interest on the Stated Maturity of such payments in accordance with the terms of
the Indenture and the Senior Notes. The Company will also be required to deliver
to the Trustee an opinion of counsel to the effect that the deposit and related
covenant defeasance will not cause the holders of the Senior Notes to recognize
income, gain or loss for Federal income tax purposes.
Defeasance and Events of Default. In the event the Company exercises its
option to omit compliance with certain covenants of the Indenture and the Senior
Notes are declared due and payable because of the occurrence of an Event of
Default, the amount of money and U.S. Government Obligations on deposit with the
Trustee will be sufficient to pay amounts due on the Senior Notes at the time of
their Stated Maturity, but may not be sufficient to pay amounts due on the
Senior Notes at the time of the acceleration resulting from such Event of
Default. However, the Company shall remain liable for such payments.
GOVERNING LAW
The Indenture and the Senior Notes will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form, without coupons. Except as described below, the Exchange Notes
will be deposited with, or on behalf of, The Depository Trust Company ('DTC'),
New York, New York, as depository (the 'Depository'), and registered in the name
of Cede & Co., as DTC's nominee, in the form of one or more global Exchange Note
certificates (the 'Global Certificate').
Global Certificates. Ownership of beneficial interests in a Global
Certificate will be limited to persons who have accounts with DTC
('participants') or persons who hold interests through participants. Ownership
of beneficial interests in the Global Certificates will be shown on, and the
transfer of these ownership interests will be effected only through, records
maintained by DTC or its nominee (with respect to interests of participants) and
the records of participants (with respect to interests of persons other than
participants).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Exchange Notes represented by such Global
Certificate for all purposes under the Indenture and the Notes. In addition,
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no beneficial owner of an interest in a Global Certificate will be able to
transfer that interest except in accordance with DTC's applicable procedures (in
addition to those under the Indenture referred to herein).
Payments on Global Certificates will be made to DTC, or its nominee, as the
registered owner thereof. Neither the Company, the Trustee nor any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Certificates or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Company expects that DTC, or its nominee, upon receipt of any payment
in respect of a Global Certificate representing any Exchange Notes held by it or
its nominee, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Certificate for such Exchange Notes as shown on the
records of DTC or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Certificate held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. The laws of some states require that certain
persons take physical delivery of securities in definitive form. Consequently,
the ability to transfer beneficial interests in a Global Certificate to such
persons may be limited. Because DTC can only act on behalf of participants, who
in turn act on behalf of indirect participants (defined below) and certain
banks, the ability of a person having a beneficial interest in a Global
Certificate to pledge such interest to persons or entities that do not
participate in the DTC system or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate of such
interest.
The Company believes that it is the policy of DTC that it will take any
action permitted to be taken by a holder of Exchange Notes only at the direction
of one or more participants to whose account interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
principal amount of the Exchange Notes as to which such participant or
participants has or have given such direction.
The Indenture provides that if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository, or if the Depository ceases
to be eligible under the Indenture and a successor depository is not appointed
by the Company within 90 days, (ii) the Company determines that the Exchange
Notes shall no longer be represented by Global Certificates and executes and
delivers to the Trustee a Company Order to such effect or (iii) an Event of
Default or event which, with notice or lapse of time or both, would constitute
an Event of Default with respect to the Exchange Notes shall have occurred and
be continuing, the Global Certificates will be exchanged for Exchange Notes in
definitive form of like tenor and of an equal aggregate principal amount, in
authorized denominations. Such definitive Exchange Notes shall be registered in
such name or names as the Depository shall instruct the Trustee. It is expected
that such instructions may be based upon directions received by the Depository
from participants with respect to ownership of beneficial interests in Global
Certificates.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a 'banking organization'
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a 'clearing corporation' within the meaning of the New York Uniform
Commercial Code and a 'clearing agency' registered pursuant to the provisions of
section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC and facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Access to the DTC system
is also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
direct
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participant, either directly or indirectly ('indirect participants'). The rules
applicable to DTC and its participants are on file with the Commission.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among participants of DTC, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
In case any Exchange Note shall become mutilated, defaced, destroyed, lost
or stolen, the Company will execute and, upon the Company's request, the Trustee
will authenticate and deliver a new Exchange Note, of like tenor and equal
principal amount in exchange and substitution for such Exchange Note (upon
surrender and cancellation thereof) or in lieu of and substitution for such
Exchange Note. In case such Exchange Note is destroyed, lost or stolen, the
applicant for a substituted Exchange Note shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to hold each of
them harmless, and, in every case of destruction, loss or theft of such Exchange
Note, the applicant shall also furnish to the Company or the Trustee
satisfactory evidence of the destruction, loss or theft of such Exchange Note
and of the ownership thereof. Upon the issuance of any substituted Exchange
Note, the Company may require the payment by the registered holder thereof of a
sum sufficient to cover fees and expenses connected therewith.
REGARDING THE TRUSTEE
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions with the Company and its subsidiaries from time to time,
provided that if the Trustee acquires any conflicting interest it must eliminate
such conflict upon the occurrence of an Event of Default, or else resign. The
Trustee is a lender under the Amended Credit Agreement.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were originally sold by the Company on March 10, 1997 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Notes to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to a limited number of institutional
accredited investors that agreed to comply with certain transfer restrictions
and other conditions. As a condition to the Purchase Agreement, the Company
entered into the Registration Rights Agreement with the Initial Purchasers (the
'Registration Rights Agreement') pursuant to which the Company has agreed, for
the benefit of the holders of the Notes, at the Company's cost, to use its best
efforts to (i) file the Exchange Offer Registration Statement within 45 calendar
days after the date of the original issue of the Notes with the Commission with
respect to the Exchange Offer for the Exchange Notes, and (ii) cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 120 calendar days after the date of original issuance of
the Notes. Upon the Exchange Offer Registration Statement being declared
effective, the Company will offer the Exchange Notes in exchange for surrender
of the Notes. The Company will keep the Exchange Offer open for not less than 30
calendar days (or longer if required by applicable law) after the date on which
notice of the Exchange Offer is mailed to the holders of the Notes. For each
Note surrendered to the Company pursuant to the Exchange Offer, the holder of
such Note will receive an Exchange Note having a principal amount equal to that
of the surrendered Note. Interest on each Exchange Note will accrue from the
date of its original issue.
Based on existing interpretations of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by the holders thereof (other than holders who are
broker-dealers) without further compliance with the registration and prospectus
delivery provisions of the Securities Act. However, any purchaser of Notes who
is an affiliate of the Company or who intends to participate in the Exchange
Offer for the purpose of distributing the Exchange Notes, or any broker-dealer
who purchased the Notes from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (i) will not be able to rely
on the interpretation of the Staff set forth in the above-mentioned no-action
letters, (ii) will not be entitled to tender its Notes in the Exchange Offer and
(iii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the Notes unless
such sale or transfer is made pursuant to an exemption from such requirements.
The Company does not intend to seek its own no-action letter and there can be no
assurance that the Staff would make a similar determination with respect to the
Exchange Notes as it has in such no-action letters to third parties.
Each holder of the Notes (other than certain specified holders) who wishes
to exchange the Notes for Exchange Notes in the Exchange Offer will be required
to represent that (i) it is not an affiliate of the Company, (ii) the Exchange
Notes to be received by it were acquired in the ordinary course of its business
and (iii) at the time of the Exchange Offer, it has no arrangement with any
person to participate in the distribution (within the meaning of the Securities
Act) of the Exchange Notes. In addition, in connection with any resales of
Exchange Notes, any broker-dealer (a 'Participating Broker-Dealer') who acquired
the Notes for its own account as a result of market-making or other trading
activities must deliver a prospectus meeting the requirements of the Securities
Act. The staff of the Commission has taken the position in the above-mentioned
no-action letters that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the Exchange Notes (other than a resale of
an unsold allotment from the original sale of the Notes) with the prospectus
contained in the Exchange Offer Registration Statement. Under the Registration
Rights Agreement, the Company is required to allow Participating Broker-Dealers
and other persons, if any, subject to similar prospectus delivery requirements
to use the prospectus contained in the Exchange Offer Registration Statement in
connection with the resale of such Exchange Notes.
If, (i) because of any change in law or in currently prevailing
interpretations of the Staff, the Company is not permitted to effect the
Exchange Offer, (ii) the Exchange Offer is not consummated within 150 calendar
days of the Issue Date, (iii) in certain circumstances, certain holders of
unregistered
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Exchange Notes so request, or (iv) in the case of any Holder that participates
in the Exchange Offer, such holder does not receive Exchange Notes on the date
of the exchange that may be sold without restriction under federal securities
laws (other than due solely to the status of such holder as an affiliate of the
Company within the meaning of the Securities Act), then in each case, the
Company will (x) promptly deliver to the holders and the Trustee written notice
thereof and (y) at its sole expense, (a) as promptly as practicable, file a
shelf registration covering resales of the Notes or such Exchange Notes (the
'Shelf Registration Statement'), (b) use its best efforts to cause the Shelf
Registration Statement to be declared effective under Securities Act and (c) use
its best efforts to keep effective the Shelf Registration Statement until the
earlier of two years after its effective date or such time as all of the
applicable Notes or Exchange Notes have been sold thereunder. The Company will,
in the event that a Shelf Registration Statement is filed, provide to each
holder copies of the prospectus that is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for the
Notes has become effective and take certain other actions as are required to
permit unrestricted resales of the Notes or Exchange Notes. A holder that sells
Notes or Exchange Notes pursuant to the Shelf Registration Statement will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement that are
applicable to such a holder (including certain indemnification rights and
obligations).
Each Note contains a legend to the effect that the holder of such Notes by
its acceptance thereof, will be deemed to have agreed to be bound by the
provisions of the Registration Rights Agreement. In that regard, each holder
will be deemed to have agreed that, upon its receipt of notice from the Company
of the occurrence of any event which makes any statement in the prospectus which
is part of the Shelf Registration Statement (or, in the case of Participating
Broker-Dealers, the prospectus which is a part of the Exchange Offer
Registration Statement) untrue in any material respect or which requires the
making of any changes in such prospectus in order to make the statements therein
not misleading or of certain other events specified in the Registration Rights
Agreement, such holder (or Participating Broker-Dealer, as the case may be) will
suspend the sale of Notes or Exchange Notes, if applicable, pursuant to such
prospectus until the Company has amended or supplemented such prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented prospectus to such holder (or Participating Broker-Dealer, as the
case may be) or the Company has given notice that the sale of the Notes or
Exchange Notes, if applicable, may be resumed, as the case may be. If the
Company shall give such notice to suspend the sale of the Notes or Exchange
Notes, if applicable, it shall extend the relevant period referred to above
during which it is required to keep effective the Shelf Registration Statement
(or the period during which Participating Broker-Dealers are entitled to use the
prospectus included in the Exchange Offer Registration Statement in connection
with the resale of Exchange Notes, as the case may be) by the number of days
during the period from and including the date of the giving of such notice to
and including the date when holders shall have received copies of the
supplemented or amended prospectus necessary to permit resales of the Notes or
Exchange Notes, if applicable, or to and including the date on which the Company
has given notice that the sale of Notes or Exchange Notes, if applicable, may be
resumed, as the case may be.
If the Company fails to comply with the above provisions or if the Exchange
Offer Registration Statement or the Shelf Registration Statement fails to become
effective, then, as liquidated damages, additional interest (the 'Additional
Interest') shall become payable in respect of the Notes as follows:
(i) if (A) neither the Exchange Offer Registration Statement nor Shelf
Registration Statement is filed with the Commission on or prior to the 45th
calendar day after the Issue Date or (B) notwithstanding that the Company
has consummated or will consummate an Exchange Offer, the Company is
required to file a Shelf Registration Statement and such Shelf Registration
Statement is not filed on or prior to the date required by the Registration
Rights Agreement, then commencing on the day after either such required
filing date, Additional Interest shall accrue on the principal amount of
the Notes at a rate of 0.50% per annum; or
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(ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the Commission on or
prior to the 75th calendar day after the applicable required filing date or
(B) notwithstanding that the Company has consummated or will consummate an
Exchange Offer, the Company is required to file a Shelf Registration
Statement and such Shelf Registration Statement is not declared effective
by the Commission on or prior to the 75th calendar day after the date such
Shelf Registration Statement was required to be filed, then, commencing on
the 76th calendar day after the applicable required filing date, Additional
Interest shall accrue on the principal amount of the Notes at a rate of
0.50% per annum; or
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 150th calendar day after the Issue Date or (B) if
applicable, the Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be effective at any time
prior to the second anniversary of its effective date (other than after
such time as all Notes have been disposed of thereunder), then Additional
Interest shall accrue on the principal amount of the Notes at a rate of
0.50% per annum commencing on (x) the 151st calendar day after such Issue
Date, in the case of (A) above, or (y) the day such Shelf Registration
Statement ceases to be effective in the case of (B) above;
provided, however, that the Additional Interest rate on the Notes may not exceed
in the aggregate 0.50% per annum; provided further, however, that (1) upon the
filing of the Exchange Offer Registration Statement or a Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in the
case of clause (ii) above), or (3) upon the exchange of Exchange Notes for all
Notes tendered (in the case of clause (iii)(A) above), or upon the effectiveness
of the Shelf Registration Statement which had ceased to remain effective (in the
case of clause (iii)(B) above), Additional Interest on the Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part. In addition, the information set forth above
concerning certain interpretations of and positions taken by the Commission is
not intended to constitute legal advice, and perspective investors should
consult their own legal advisors with respect to such matters.
Following the consummation of the Exchange Offer, holders of the Notes who
were eligible to participate in the Exchange Offer but who did not tender their
Notes will not have any further registration rights and such Notes will continue
to be subject to certain restrictions on transfer. Accordingly, the liquidity of
the market for such Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Notes accepted
in the Exchange Offer. Holders may tender some or all of their Notes pursuant to
the Exchange Offer. However, Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that (i) the Exchange Notes bear a Series B designation and
a different CUSIP Number from the Notes, (ii) the Exchange Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof, (iii) the holders of the Exchange Notes will not be
entitled to certain rights under the Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Notes in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated and (iv) the
Exchange Notes will be issued in minimum denominations of $1,000 compared to
minimum denominations of $250,000 for the Notes. The Exchange Notes will
evidence the same debt as the Notes and will be entitled to the benefits of the
Indenture.
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As of the date of this Prospectus, $150,000,000 aggregate principal amount
of Notes were outstanding. The Company has fixed the close of business on
, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Notes do not have any appraisal or dissenters' rights under the
General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Notes when,
as and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the Exchange Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See ' -- Fees and Expenses.'
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR NOTES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE
OFFER AND, IF SO, THE AGGREGATE AMOUNT OF NOTES TO TENDER AFTER READING THIS
PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF
ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term 'Expiration Date' shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term 'Expiration Date' shall mean the latest
date and time to which the Exchange Offer is extended. Notwithstanding the
foregoing, the Company will not extend the Expiration Date beyond August 7,
1997.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under ' -- Conditions' shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate of 7.25% per annum from the
most recent date to which interest has been paid or duly provided for on the
Note surrendered in exchange for such
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Exchange Note or, if no interest has been paid or duly provided for on such
Note, from March 1, 1997. Interest on the Exchange Notes is payable
semi-annually on each March 1, and September 1, commencing on the first such
date following the original issuance date of the Exchange Notes.
Holders of Notes whose Notes are accepted for exchange will not receive
accrued interest on such Notes for any period from and after the last Interest
Payment Date to which interest has been paid or duly provided for on such Notes
prior to the original issue date of the Exchange Notes or, if no such interest
has been paid or duly provided for, will not receive any accrued interest on
such Notes, and will be deemed to have waived the right to receive any interest
on such Notes accrued from and after such Interest Payment Date or, if no such
interest has been paid or duly provided for, from and after March 1, 1997.
PROCEDURES FOR TENDERING
Only a holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Notes and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. To be tendered effectively, the Notes, Letter of
Transmittal and other required documents must be completed and received by the
Exchange Agent at the address set forth below under 'Exchange Agent' prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the Notes may
be made by book-entry transfer in accordance with the procedures described
below. Confirmation of such book-entry transfer must be received by the Exchange
Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the
Company the representations set forth above in the third paragraph under the
heading ' -- Purpose and Effect of the Exchange Offer.'
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE
HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See 'Instruction to
Registered Holder and/or Book-Entry Transfer Facility Participant from Owner'
included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled 'Special Registration
Instructions' or 'Special Delivery Instructions' on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an 'Eligible Institution').
If the Letter of Transmittal is signed by a person other than the
registered holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power,
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signed by such registered holder as such registered holder's name appears on
such Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Notes at the book-entry transfer facility, The Depository Trust Company (the
'Book-Entry Transfer Facility'), for the purpose of facilitating the Exchange
Offer, and subject to the establishment thereof, any financial institution that
is a participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of Notes by causing such Book-Entry Transfer Facility to
transfer such Notes into the Exchange Agent's account with respect to the Notes
in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. Although delivery of the Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.
The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for the DTC Automated Tender Offer Program ('ATOP'). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange Offer
by causing DTC to transfer Notes in accordance with DTC's ATOP procedures for
transfer. DTC will then send an Agent's Message to Exchange Agent.
The term 'Agent's Message' means a message transmitted by DTC, received by
Exchange Agent and forming part of the confirmation of a book-entry transfer,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering Notes which are the subject of such book-entry
confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Company may enforce such
agreement against such participant. In the case of an Agent's Message relating
to guaranteed delivery, the term means a message transmitted by DTC and received
by Exchange Agent, which states that DTC has received an express acknowledgment
from the participant in DTC tendering Notes that such participant has received
and agrees to be bound by the Notice of Guaranteed Delivery.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right in its sole discretion to waive any defects, irregularities
or conditions of tender as to particular Notes. The Company's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Notes must
be cured within such time as the Company shall determine. Although the Company
intends, to notify holders of defects or irregularities with respect to tenders
of Notes, neither the Company, the Exchange Agent nor any other person shall
incur any liability for failure to give such notification. Tenders of Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
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GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Notes and the principal amount of Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s)
representing the Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and all other documents required by the Letter of Transmittal
are received by the Exchange Agent upon five New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Notes to be withdrawn (the 'Depositor'),
(ii) identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of Notes transferred by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Notes register the transfer of such Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Notes are to
be registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the Notes so withdrawn are validly retendered. Any
Notes which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Notes may be retendered by following one of the
procedures described above under ' -- Procedures for Tendering' at any time
prior to the Expiration Date.
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CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Notes and return all
tendered Notes to the tendering holders, (ii) extend the Exchange Offer and
retain all Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Notes (see
' -- Withdrawal of Tenders') or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
The Bank of New York
101 Barclay Street -- 7E
New York, New York 10286
Attention: Reorganization Section
Telephone: (212) 815-6333
Facsimile: (212) 571-3080
Delivery to an address other than as set forth above will not constitute a
valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
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ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Notes, which is face value, as reflected in the Company's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Company. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii) so
long as the Notes are eligible for resale pursuant to Rule 144A, to a person
inside the United States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, in accordance with Rule 144
under the Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Company), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. To the extent that Notes are tendered
and accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Notes could be adversely affected.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
'affiliate' of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Notes in the ordinary course of
business and who is not participating, does not intend to participate, and has
no arrangement or understanding with person to participate, in the distribution
of the Exchange Notes, will be allowed to resell the Exchange Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Notes, where such Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the Exchange Notes are to be
acquired by the holder or the person receiving such Exchange Notes, whether or
not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging and does not intend to engage, in the
distribution of the Exchange Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the holder nor any such other
person is an 'affiliate' of the Company within the meaning of Rule 405 under the
Securities Act, and (v) the holder or any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose
of distributing the Exchange Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes and cannot rely on those no-action letters. As
indicated above, each Participating Broker-Dealer that receives an Exchange Note
for its own account in exchange for Notes must acknowledge that it will deliver
a
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prospectus in connection with any resale of such Exchange Notes. For a
description of the procedures for such resales by Participating Broker-Dealers,
see 'Plan of Distribution.'
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the 'Service') will not take a contrary view,
and no ruling from the Service has been or will be sought. Legislative, judicial
or administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. The Company recommends that
each holder consult such holder's own tax advisor as to the particular tax
consequences of exchanging such holder's Notes for Exchange Notes, including the
applicability and effect of any state, local or foreign tax laws.
The exchange of the Notes for the Exchange Notes pursuant to the Exchange
Offer should not be a taxable event to the holder and thus the holder should not
recognize any taxable gain or loss as a result of the exchange. A holder's
adjusted tax basis in the Exchange Notes will be the same as his adjusted tax
basis in the Notes exchanged therefor, and his holding period for the Notes will
be included in his holding period for the Exchange Notes. Although the exchange
of the Notes for the Exchange Notes will not create additional 'market discount'
or 'amortizable bond premium,' to the extent that a holder acquired the Notes at
a market discount or with amortizable bond premium, such discount or premium
would generally carry over to the Exchange Notes received in exchange for the
Notes. Such holders should consult their tax advisors regarding the United
States Federal income tax treatment of such market discount and amortizable bond
premium.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Notes where such Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
August 20, 1997, all dealers effecting transactions in the Exchange Notes may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchaser or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an 'underwriter' within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an 'underwriter' within the meaning of the Securities Act.
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For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
LEGAL MATTERS
Certain legal matters in connection with the issuance of Exchange Notes
offered hereby will be passed upon for the Company by Kirkland & Ellis, New
York, New York.
EXPERTS
The consolidated financial statements and schedule of the Company as of
June 30, 1996 and 1995, and for each of the years in the three-year period ended
June 30, 1996, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended September 30, 1996 and 1995, and December 31, 1996 and 1995, incorporated
by reference herein, the independent certified public accountants have reported
that they applied limited procedures in accordance with professional standards
for a review of such information. However, their separate reports included in
the Company's quarterly reports on Form 10-Q for the quarters ended September
30, 1996 and 1995, and December 31, 1996 and 1995, and incorporated by reference
herein, state that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. The accountants are not subject to the
liability provisions of section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is not
a 'report' or a 'part of the registration statement prepared or certified by the
accountants' within the meaning of sections 7 and 11 of the Act.
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_____________________________ _____________________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED HEREIN OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, NOR DOES IT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY
PERSON 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. 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 OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information....................................................................................................... 3
Incorporation of Certain Documents by Reference............................................................................. 3
Prospectus Summary.......................................................................................................... 5
Recent Developments......................................................................................................... 11
Use of Proceeds............................................................................................................. 11
Capitalization.............................................................................................................. 12
Selected Consolidated Financial Data........................................................................................ 13
Business.................................................................................................................... 15
Description of Exchange Notes............................................................................................... 17
The Exchange Offer.......................................................................................................... 24
Certain Federal Income Tax Consequences..................................................................................... 33
Plan of Distribution........................................................................................................ 33
Legal Matters............................................................................................................... 34
Experts..................................................................................................................... 34
</TABLE>
------------------------
UNTIL AUGUST 20, 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
FIRST BRANDS CORPORATION
OFFER TO EXCHANGE ITS
SERIES B 7.25% SENIOR NOTES
DUE 2007 FOR ANY
AND ALL OF ITS OUTSTANDING
7.25% SENIOR NOTES DUE 2007
-------------------------
PROSPECTUS
-------------------------
MAY 12, 1997
_____________________________ _____________________________
