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UNITED STATES
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): AUGUST 15, 2000
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PACKAGING RESOURCES INCORPORATED
(Exact name of Registrant as specified in its charter)
DELAWARE 333-05885 36-3321568
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
ONE CONWAY PARK
100 FIELD DRIVE, SUITE 300
LAKE FOREST, ILLINOIS 60045
(Address of principal executive offices) (Zip Code)
(847) 295-6100
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
A letter of intent ("Letter") has been entered into with Sweetheart Cup
Company Inc. ("Sweetheart") and Mr. Dennis Mehiel, the Chairman and principal
stockholder of Sweetheart, relating to a proposed sale of capital stock of
Packaging Resources Group ("Group"), the parent company of Packaging
Resources Incorporated ("PRI"). The Letter contemplates that Group will
effect a recapitalization whereby its stock will be exchanged for voting
stock and non-voting stock, and that Mr. Mehiel or an affiliate ("Purchaser")
will acquire all the non-voting stock and 35% of the voting stock of Group
from HPH Industries, Ltd. ("HPH") for $5 million, subject to adjustment for
changes in working capital. In addition, Sweetheart will enter into
multi-year consulting and non-competition agreements with HPH under which HPH
will receive payments aggregating $6 million. Sweetheart will also enter into
a joint sales and marketing agreement with PRI. Completion of the transaction
will be subject to execution of definitive documentation and certain other
conditions. Closing of the transaction is not conditioned on approval or
consent of the holders of Group's and PRI's outstanding indebtedness. There
can be no assurance as to whether or when the proposed transaction will be
completed.
In connection with the transaction, the Purchaser will propose to
restructure certain debt of PRI and Group. The proposal will include:
- aggregate payments of $17.4 million by Sweetheart to PRI pursuant to
certain proposed agreements, including an option, exercisable in 2006, to
purchase certain assets of PRI at appraised value. PRI will use these funds
to pay interest on its Senior Secured Notes, including the May 2000
payment, which is currently past due.
- a waiver under the PRI Senior Secured Note Indenture to permit up to
$27.6 million of proceeds of Asset Sales (as defined) by PRI to be used for
interest payments on its Senior Secured Notes and for general working capital.
- a waiver under the PRI Senior Secured Note Indenture to permit cash
distributions from PRI to Group under certain circumstances, to pay the
interest on Group's senior notes.
- a proposal to exchange Group's existing Senior Notes for new Group
senior notes with substantially similar terms except for a reduction in
aggregate principal amount from $27.8 million to $21 million and a reduction
in the interest rate from 13% to 8% per annum.
Completion of the proposed restructuring would be subject to Purchaser's
acquisition of Group's capital stock described above and such other terms and
conditions as the Purchaser may impose.
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SIGNATURES:
Pursuant to the requirements of the securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACKAGING RESOURCES INCORPORATED, a Delaware corporation
Date: August 17, 2000
By: Jerry J. Corirossi
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Title: Executive Vice President, Finance and Administration
Chief Financial Officer and duly authorized officer
