<PAGE>
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): May 27, 1994 (May 23, 1994)
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Eljer Industries, Inc.
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(Exact name of registrant as specified in charter)
Delaware 1-10181 75-2270874
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
17120 Dallas Parkway, Dallas, Texas 75248
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (214) 407-2600
Not applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 5 Other Events
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On May 23, 1994, United States Brass Corporation ("U.S. Brass"), an
indirect, wholly-owned subsidiary of Eljer Industries, Inc. (the "Company"),
filed a voluntary petition for reorganization under Chapter 11 of the Federal
Bankruptcy Code in the United States Bankruptcy Court for the Eastern District
of Texas, Plano Division (Case No. 94-40823S).
U.S. Brass manufactures faucets, plumbing supplies, connectors and plumbing
systems for use in residential and commercial construction. U.S. Brass is
currently operating its business and managing its assets as "debtor-in-
possession" and is expected to continue to act in that capacity during the
pendency of the reorganization proceeding. U.S. Brass' principal lender,
Congress Financial Corporation, has agreed, subject to court approval, to
continue its existing secured working capital credit facility and to provide up
to $20 million of debtor-in-possession financing to meet U.S. Brass' continuing
operating expenses during the reorganization proceeding.
The U.S. Brass Chapter 11 filing was necessitated by the substantial
contingent liabilities associated with claims and lawsuits filed against U.S.
Brass alleging defects in its Qest polybutylene plumbing system (the "Qest
system"). U.S. Brass manufactured and sold the Qest system for residential
site-built installations from 1979 through 1986 and for other installations
from 1975 through 1990. Homeowners, developers and others have instituted a
substantial number of claims and filed numerous lawsuits (including purported
class actions) against U.S. Brass, the Company and its subsidiary, Eljer
Manufacturing, Inc. ("Eljer Manufacturing"), suppliers of U.S. Brass and others
alleging defects in the Qest system. The claims and lawsuits seek damages on
a variety of theories, including strict liability, breach of warranty,
negligence, misrepresentation and fraud and various state deceptive trade
practice statutes. In addition, Shell Oil Company and Hoechst Celanese
Corporation, suppliers to U.S. Brass, have filed lawsuits against U.S. Brass,
the Company, Eljer Manufacturing and Household International, Inc., seeking
damages against the various defendants on a variety of theories, including
breach of contract, fraud and alter ego. The capital stock of the Company
was owned by Household International, Inc. prior to the distribution thereof
to its stockholders in April 1989. For further information regarding the
Qest system litigation, reference is made to Note (13) to Consolidated
Financial Statements of the Company included in Item 8 of its Annual Report
on Form 10-K for the Fiscal Year Ended January 2, 1994.
Although U.S. Brass believes it has sufficient insurance to cover the
indemnity costs for Qest system claims and litigation, its insurance carriers
are contesting the nature and extent of coverage and, as a result, U.S. Brass
has determined that it may be unable to absorb the ongoing costs, either
indemnity or expense, of the litigation. In addition, claimants in the
litigation typically seek awards for punitive damages for which there may be no
insurance coverage.
U.S. Brass believes that a reorganization proceeding provides the best
means of maximizing the return to its creditors and resolving the Qest system
claims and litigation against U.S. Brass.
Neither the Company nor Eljer Manufacturing is a party to the U.S. Brass
reorganization proceeding. The U.S. Brass Chapter 11 filing does not constitute
an event of default under the Company's existing bank credit agreement.
<PAGE>
Item 7 Exhibits
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Press release dated May 24, 1994 describing the filing of United States
Brass Corporation for protection under Chapter 11 of the United States
Bankruptcy Code.
<PAGE>
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.
ELJER INDUSTRIES, INC.
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Date: May 27, 1994 By: /S/Henry W. Lehnerer
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Henry W. Lehnerer
Vice President - Finance &
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit No. Page No.
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<C> <S> <C>
99 Press release dated May 24, 1994 describing
the filing of United States Brass Corporation
for protection under Chapter 11 of the United
States Bankruptcy Code.
</TABLE>
<PAGE>
News Release
FOR: ELJER INDUSTRIES,
INC. AND UNITED STATED BRASS
CORPORATION
APPROVED BY: Edward W. Fordyce, Jr.
Vice President
(214) 407-2670
For Immediate Release
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CONTACT: Morgen-Walke Associates
Lynn Morgen/June Filingeri
Terence Rooney/Helen Spanakos, Media
Contact
(212) 850-5600
Ken Pieper (214) 701-8851
UNITED STATES BRASS CORPORATION ANNOUNCES CHAPTER 11 FILING
DALLAS, Texas, May 24, 1994 --United States Brass Corporation, a
manufacturer of faucets, plumbing supplies, and plumbing systems for residential
and commercial construction, remodeling and do-it-yourself applications, and an
indirect, wholly-owned subsidiary of Eljer Industries, Inc. (NYSE:ELJ) announced
today that it had filed a voluntary petition for reorganization under Chapter 11
of the Federal Bankruptcy Code in the United States Bankruptcy Court for the
Eastern District of Texas, Plano Division.
Under Chapter 11, a company continues to operate its business in the
ordinary course under court protection from creditors while seeking to work out
a plan of reorganization to provide for the payment of its creditors. U.S.
Brass indicated that its principal lender, Congress Financial Corporation, has
agreed to provide up to $20,000,000 of debtor-in-possession financing for U.S.
Brass' continuing operations. The financing would be a continuation of the
existing secured working capital credit facility.
The possitility of a Chapter 11 reorganization for U.S. Brass had been
previously announced. U.S. Brass stated that the Chapter 11 filing was
necessitated by substantial contingent liabilities associated with litigation
arising from its manufacture and sale of Qest polybutylene plumbing systems
and the substantial costs associated with and anticipated for such
litigation. Other defendants in the Qest system lawsuits are Shell Chemical
Company, a subsidiary of Shell Oil Company, the manufacturer of polybutylene
resin from which U.S. Brass extrudes the pipe used in the system, Celanese
Specialty Resins, a unit of Hoechst Celanese Corporation and the manufacturer
of a resin from which U.S. Brass injection molded the Celcon acetal fittings
formerly used in the system, other pipe and fittings manufacturers, builders,
developers and plumbing contractors.
- MORE -
(LETTERHEAD OF MORGEN-WALKE)
<PAGE>
U. S. BRASS CORPORATION ANNOUNCES CHAPTER 11 FILING - Page 2 -
While U.S. Brass believes it has sufficient insurance to cover the
indemnity costs for such claims, its insurance carriers are contesting the
nature and extent of coverage and, as a result, it may be unable to absorb
the ongoing costs, either indemnity or expense, of the litigation. In
addition, claimants in the litigation typically seek awards for punitive
damages, for which there may be no insurance coverage.
Scott G. Arbuckle, Chairman of U.S. Brass and President and Chief Executive
Officer of Eljer Industries, commented: "The decision to reorganize U.S. Brass
under federal bankruptcy laws is based on our belief that it is the best means
of maximizing the return to its creditors while enabling us to systematically
resolve the issues raised in the polybutylene-related litigation that have
placed a severe burden on our entire Company since our spin-off from Household
International in 1989."
Mr. Arbuckle continued: "This action comes at a time when our relationship
with our vendors and creditors is strong, our market position is established,
economic trends remain favorable and our operating performance continues to
demonstrate the substantial improvement we have made over the past three years."
The predecessor to U.S. Brass Corporation was incorporated in the 1940's,
and since that time the Company has grown into a nationally recognized plumbing
company. It was acquired by Household International, Inc. in 1981. U.S. Brass
Corporation is a subsidiary of Eljer Manufacturing, Inc., which is based in
Dallas, Texas. Neither Eljer Industries nor Eljer Manufacturing is a party
to the reorganization proceeding.
Eljer Industries, Inc. is a leading manufacturer and marketer of high
quality building products, including plumbing, heating and ventilating
products, for the residential and commercial construction, remodeling and
repair, and do-it-yourself markets.
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