SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): October 31, 2000
RECOTON CORPORATION
(Exact name of registrant as specified in charter)
| |
New York
(State or other jurisdic-
tion of incorporation) |
0-5860
(Commission
File Number) |
11-1771737
(IRS Employer
Identification No.) |
|
2950 Lake Emma Road, Lake Mary, Florida 32746
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: 407-333-8900
N.A.
(Former name or former address, if changed since last report)
Item 5. Other Events
On October 31, 2000, the Company refinanced its existing senior
indebtedness through credit facilities aggregating $275 million as
follows:
| • |
The Company entered into a loan agreement (the “Senior Loan
Agreement”) with Heller Financial, Inc. as Administrative Agent, Senior
Agent and a lender and General Electric Capital Corporation as Collateral Agent,
Syndication Agent and a lender for a $235 million facility consisting of: |
| |
* |
a $185 million three year revolving loan and letter of credit facility bearing
interest at 2.50% points over LIBOR or 0.75% points over prime, with the amount
of borrowing availability depending on the Company's eligible receivables and
inventory; |
| |
* |
a three year term loan in the principal amount of $20
million with interest at 2.75% points over LIBOR or 1.00% point over prime,
amortized over three years with 11 quarterly installments of $500,000 each and
a balloon payment of $14.5 million due on the third anniversary; |
| |
* |
a two year term loan in the principal amount of $15
million with interest at 5.00% points over LIBOR or 3.25% points over prime,
amortized over two years with eight equal quarterly principal repayments of
$1.875 million each; and |
| |
* |
a term loan of $15 million with interest at 3.00% points
over prime, to be paid on the second anniversary to the extent that the advance
value of the collateral exceeds the revolving loan by more than $45 million,
with any balance due in 12 equal monthly installments (subject to later payment
under certain conditions) ending on the third anniversary. |
| • |
The Company entered into a loan agreement (the “Subordinated Loan
Agreement”) with its existing senior lenders, for a $15 million three-year
term loan subordinated to the senior loan, with interest at 5.75% points over
prime. |
| • |
The Company's German subsidiaries entered into a 50
million Deutsch Mark factoring facility (equal to approximately $25 million)
which in part supports a $13 million letter of credit issued in favor of Heller
as security for the loans under the Senior Loan Agreement. Borrowings under this
facility bear interest at 2.5% points over Euro LIBOR (which is currently
5%). |
The borrowings under the Senior Loan Agreement and the
Subordinated Loan Agreement were secured by substantially all the assets of the
Company, its United States subsidiaries, and the Canadian subsidiary, and 65% of
the stock of the first tier foreign subsidiaries pursuant to the guarantees,
security agreements, and pledge agreements.
Modifications were made to the existing 1999 Securities Purchase
Agreement to reflect the subordination of the rights of the holders of notes
issued pursuant to that agreement and the continuation of certain provisions of
the September 8, 1999 Master Restructuring Agreement entered into with the
Company’s then-existing creditors, including an increase in the
rate of interest paid to 16.5% and a cash payment of $875,000.
Warrants to purchase 20,000 Recoton Corporation common shares
were issued to the holders of the notes issued pursuant to the 1999 Securities
Purchase Agreement and warrants to purchase an aggregate of 5,000 Recoton
Corporation common shares were issued to certain lenders under one of the new
term loans under the Senior Loan Agreement. Such warrants expire on October 31,
2005 and have an exercise price of $13.28.
In connection with the refinancing, the Company accelerated
deferred financing costs associated with the September 1999 debt restructuring,
including “make-whole” obligations to the holders of the
Company’s senior subordinated debentures prepaid in connection with the
refinancing, totaling approximately $3.5 million on an after-tax basis, which
costs will be recognized in the Fourth Quarter of 2000. In addition, fees,
expenses and other costs associated with the current refinancing, estimated to
be approximately $7.5 million, will be amortized over the life of the loans.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
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a. |
Financial Statements of Business Acquired: not applicable |
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b. |
Pro Forma Financial Information: not applicable |
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1. |
Loan Agreement, dated as of October 31, 2000 between Recoton Corporation,
InterAct Accessories, Inc., Recoton Audio Corporation, AAMP of Florida, Inc and
Recoton Home Audio Corporation as borrowers (the "Borrowers"), and Christie
Design Corporation, Recoton International Holdings, Recoton European Holdings,
Recoton Japan, Inc. and Recoton Canada, Ltd. as guarantors (the "Guarantors"
and, together with the Borrowers, the "Loan Parties"), Heller Financial, Inc.
("Heller") as Administrative Agent, Senior Agent and a Lender, General Electric
Capital Corporation as Collateral Agent, Syndication Agent and a Lender and
other lenders party thereto (the "Senior Loan Agreement") for a $235 million
loan and letter of credit facility. |
| |
2. |
Credit Agreement, dated as of October 31, 2000, among the Loan Parties, the
several lenders from time to time parties thereto, and The Chase Manhattan Bank,
as Agent (the "Subordinated Loan Agreement") for a $15 million term loan. |
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3. |
Security Agreement, dated as of October 31, 2000, made by Recoton Corporation
and certain of its Subsidiaries in favor of Heller, as Collateral Agent. |
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4. |
First Amendment to Securities Purchase Agreement, Guaranty and Registration
Rights Agreement, dated as of October 31, 2000, between Recoton Corporation, The
Prudential Insurance Company of America and ING (U.S.) Capital LLC |
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5. |
Form of Common Stock Purchase Warrants dated October 31, 2000 issued to the
holders of Recoton Corporation's Subordinated Notes issued February 4, 1999 to
purchase an aggregate of 20,000 shares of common stock. |
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6. |
Form of Common Stock Purchase Warrants dated October 31, 2000
issued to the lenders under the Subordinated Loan Agreement to purchase an
aggregate of 5,000 shares of common stock. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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RECOTON CORPORATION
By: /s/ Arnold Kezsbom
Name: Arnold Kezsbom
Title: Senior Vice President-Finance |
Dated: November 13, 2000
EXHIBIT LIST
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10.1 |
Loan Agreement, dated as of October 31, 2000 between Recoton Corporation,
InterAct Accessories, Inc., Recoton Audio Corporation, AAMP of Florida, Inc and
Recoton Home Audio Corporation as borrowers (the "Borrowers"), and Christie
Design Corporation, Recoton International Holdings, Recoton European Holdings,
Recoton Japan, Inc. and Recoton Canada, Ltd. as guarantors (the "Guarantors"
and, together with the Borrowers, the "Loan Parties"), Heller Financial, Inc.
("Heller") as Administrative Agent, Senior Agent and a Lender, General Electric
Capital Corporation as Collateral Agent, Syndication Agent and a Lender and
other lenders party thereto (the "Senior Loan Agreement") for a $235 million
loan and letter of credit facility. |
| |
10.2 |
Credit Agreement, dated as of October 31, 2000, among the Loan Parties, the
several lenders from time to time parties thereto, and The Chase Manhattan Bank,
as Agent (the "Subordinated Loan Agreement") for a $15 million term loan. |
| |
10.3 |
Security Agreement, dated as of October 31, 2000, made by Recoton Corporation
and certain of its Subsidiaries in favor of Heller, as Collateral Agent. |
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10.4 |
First Amendment to Securities Purchase Agreement, Guaranty and Registration
Rights Agreement, dated as of October 31, 2000, between Recoton Corporation, The
Prudential Insurance Company of America and ING (U.S.) Capital LLC |
| |
10.5 |
Form of Common Stock Purchase Warrants dated October 31, 2000 issued to the
holders of Recoton Corporation's Subordinated Notes issued February 4, 1999 to
purchase an aggregate of 20,000 shares of common stock. |
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10.6 |
Form of Common Stock Purchase Warrants dated October 31, 2000
issued to the lenders under the Subordinated Loan Agreement to purchase an
aggregate of 5,000 shares of common stock. |
