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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 19, 2000
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UST Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-17506 06-1193986
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
100 West Putnam Avenue, Greenwich, Connecticut 06830
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 661-1100
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On June 20, 2000, UST signed, as part of its contingency planning to
assure its continuing ability to contest the recent damage award entered in the
pending antitrust litigation involving its smokeless tobacco subsidiary, a
commitment letter (the "Commitment Letter") with The Bank of Nova Scotia
("Scotiabank") and Goldman Sachs Credit Partners L.P. ("Goldman Sachs"),
pursuant to which Scotiabank and Goldman Sachs have agreed to underwrite up to
$1.25 billion in senior secured financing (the "New Credit Facility") composed
of a (i) $250,000,000 revolving credit facility (the "Revolving Facility"), (ii)
$700,000,000 letter of credit facility (the "Letter of Credit Facility"), (iii)
upon a drawing under the letter of credit facility, a term loan facility (the
"Tranche A Facility") in the principal amount of such drawing (not to exceed
$700,000,000) and (iv) a $300,000,000 term loan facility (the "Tranche B
Facility"). Proceeds of revolving loans made under the Revolving Facility will
be used to refinance all amounts outstanding under the existing credit facility
and otherwise for working capital purposes. Letters of credit ("Letter of
Credit") will be issued under the Letter of Credit Facility, to the extent
necessary, in favor of one or more bonding companies (the "Sureties") or, if
applicable, the U.S. District Court in Paducah, Kentucky (the "District Court"),
as required to stay the judgment pending appeal in the pending antitrust
litigation. Proceeds of loans made under the Tranche A Facility will be used, if
necessary, to reimburse the issuer of the letters of credit for amounts, if any,
drawn down, while proceeds of loans made under the Tranche B Facility will be
deposited with the District Court in an escrow account, if necessary, to satisfy
all or a portion of the Company's bonding obligations. The interest rates and
letter of credit fees to be paid by the Company will vary based on a pricing
grid tied to the Company's credit ratings.
The New Credit Facility will be secured by certain of the Company's
assets and contemplates, among other things, that additional cash deposits be
made from time to time with the District Court which deposits may be used (in a
manner permitted by the District Court) to reduce the Letter of Credit amount.
In addition, the Company has received certain commitments from the
Sureties, subject to the terms thereof, to issue bonds, as required to stay the
judgment pending appeal in the antitrust litigation. It is contemplated that
approximately 70% of the bonds to be issued by the Sureties will be supported by
the Letter of Credit, with the remaining 30% to be secured by cash deposits to
be made by the Company to a mutually satisfactory escrow account over a two year
period following the posting of the bonds. The bonds issued by the Sureties,
together with the proceeds from the Tranche B Facility, are expected to be
available initially to satisfy any bonding requirement ultimately established by
the District Court.
The commitment of the lenders to provide the New Credit Facility is
subject to a number of conditions, including the absence of a material adverse
change with respect to the Company and/or the capital markets generally and the
opportunity of the lenders to complete a reasonable
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syndication process. The commitment of the Sureties is also subject to certain
conditions. The total cost of the foregoing arrangements will be dependent upon
a number of factors, including the Company's debt rating, the results of
syndication efforts and interest rates. The annual cost of these facilities is
expected to average between 2-3% of the initial bonding amount, before any
offset for interest income earned on amounts deposited in escrow after the
establishment of the initial bonding amount. The Company anticipates that if it
ultimately prevails on appeal, some or all of the costs of these bonding
requirements could be recoverable from the plaintiff.
A copy of the Commitment Letter, a summary of the commitments
from the Sureties and the press release announcing the execution of the
Commitment Letter are attached hereto as Exhibit 99.1, 99.2 and 99.3,
respectively.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
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<CAPTION>
EXHIBIT NO. EXHIBIT
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99.1 Commitment letter, dated as of June 19, 2000, between the Company
and Scotiabank and Goldman Sachs.
99.2 Summary commitments of the Sureties.
99.3 UST Inc.'s press release dated June 20, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 22, 2000
UST INC.
By: /s/ Debra A. Baker
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Name: Debra A. Baker
Title: Senior Vice President and Secretary
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INDEX TO EXHIBITS
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<CAPTION>
Exhibit No. Exhibit
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99.1 Commitment letter, dated as of June 19, 2000, between
the Company and Scotiabank and Goldman Sachs.
99.2 Summary of commitments of the Sureties
99.3 UST Inc.'s press release dated June 20, 2000.
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