AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 4, 1996
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COLLINS & AIKMAN PRODUCTS CO.
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C>
DELAWARE 13-0588910
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
AND ITS GUARANTOR PARENT
COLLINS & AIKMAN CORPORATION
(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C>
DELAWARE 13-3489233
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
701 MCCULLOUGH DRIVE
CHARLOTTE, NORTH CAROLINA 28262
(704) 547-8500
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ELIZABETH R. PHILIPP, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
COLLINS & AIKMAN CORPORATION
210 MADISON AVENUE, 6TH FL.
NEW YORK, NEW YORK 10016
(212) 578-1336
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
ROBERT ROSENMAN, ESQ. ROBERT A. PROFUSEK, ESQ.
CRAVATH, SWAINE & MOORE JONES, DAY, REAVIS & POGUE
825 EIGHTH AVENUE 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(212) 474-1300 (212) 326-3800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / / _____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE><CAPTION>
PROPOSED MAXIMUM
AGGREGATE AMOUNT AGGREGATE PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Debt Securities............. (1) N/A (1) $100
Guarantee of the Debt
Securities.................. (2) N/A N/A N/A (3)
</TABLE>
(1) An indeterminate amount of Debt Securities are being registered hereby for
the purpose of secondary market making transactions by the Registrants or
affiliates thereof.
(2) The Debt Securities being registered will be irrevocably, fully and
unconditionally guaranteed on an unsecured senior basis or an unsecured
subordinated basis, as applicable, by Collins & Aikman Corporation. Collins
& Aikman Products Co. is a wholly owned subsidiary of Collins & Aikman
Corporation.
(3) No additional registration fee is payable in respect of the registration of
the Guarantees.
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PURSUANT TO RULE 429 UNDER THE SECURITIES ACT, THE PROSPECTUS INCLUDED IN
THIS REGISTRATION STATEMENT ALSO RELATES TO $400,000,000 AGGREGATE PRINCIPAL
AMOUNT OF DEBT SECURITIES (AND RELATED GUARANTEE) PREVIOUSLY REGISTERED UNDER
THE REGISTRANTS' REGISTRATION STATEMENT ON FORM S-3 (NO. 33-62665). THIS
REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO THE
REGISTRANTS' REGISTRATION STATEMENT ON FORM S-3 (NO. 33-62665).
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 4, 1996
PROSPECTUS
COLLINS & AIKMAN PRODUCTS CO.
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED BY COLLINS & AIKMAN CORPORATION
Collins & Aikman Products Co. (the "Company") may offer from time to time,
together or separately, unsecured notes, debentures or other evidences of
indebtedness ("Debt Securities"), which may be either senior (the "Senior
Securities") or subordinated (the "Subordinated Securities") in priority of
payment, having an aggregate initial public offering price not to exceed
$400,000,000 (including the U.S. dollar equivalent of securities for which the
initial public offering price is denominated in one or more foreign currencies
or composite currencies). The Debt Securities may be offered in one or more
series, in amounts, at prices and on terms determined at the time of sale and
set forth in a supplement to this Prospectus (a "Prospectus Supplement").
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
unsecured and subordinated as described under "Subordinated Securities" and the
Senior Securities and the Subordinated Securities will be effectively
subordinated to all obligations of the subsidiaries of the Company.
The Debt Securities will be irrevocably, fully and unconditionally guaranteed
(the "Guarantee") on an unsecured senior basis, in the event Senior Securities
are issued, or on an unsecured subordinated basis, in the event Subordinated
Securities are issued, by Collins & Aikman Corporation ("C&A Co."). The Company
is a wholly owned subsidiary of C&A Co. None of the subsidiaries of the Company
will guarantee the Debt Securities. C&A Co. is a holding company that derives
all its operating income and cash flow from its subsidiary, the Company, the
common stock of which presently constitutes C&A Co.'s only material asset.
The specific terms of the Debt Securities in respect of which this Prospectus
is being delivered will be set forth in an accompanying Prospectus Supplement,
including, where applicable, whether they are Senior Securities or Subordinated
Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity (which may be fixed or extendible), priority, interest
rate (or manner of calculation thereof), if any, time of payment of interest, if
any, terms for any redemption, terms for any repayment at the option of the
holder, terms for any sinking fund payments, the initial public offering price,
special provisions relating to Debt Securities in bearer form, provisions
regarding original issue discount securities, additional covenants including
event risk provisions, and any other specific terms of such Debt Securities.
The Prospectus Supplement will also contain information, where applicable and
material, about certain United States Federal income tax considerations relating
to, and any listing on a securities exchange of, the Debt Securities covered by
the Prospectus Supplement.
FOR A DISCUSSION OF RISKS ASSOCIATED WITH THE DEBT SECURITIES, SEE "RISK
FACTORS" AT PAGE 3.
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The Debt Securities may be offered directly, through underwriters, dealers or
agents as designated from time to time, or through a combination of such
methods. See "Plan of Distribution". If any agents of the Company or any dealers
or underwriters are involved in the offering of the Debt Securities in respect
of which this Prospectus is being delivered, the names of such agents, dealers
or underwriters and any applicable commissions or discounts will be set forth in
the Prospectus Supplement. The net proceeds to the Company from such sale will
also be set forth in the Prospectus Supplement. The Company may also issue
contracts under which the counterparty may be required to purchase Debt
Securities. Such contracts would be issued with the Debt Securities in amounts,
at prices and on terms to be set forth in the applicable Prospectus Supplement.
The Company or one or more of its affiliates may from time to time purchase
or acquire a position in the Debt Securities and may, at its option, hold or
resell such Debt Securities. Wasserstein Perella Securities, Inc. ("WP
Securities"), an affiliate of the Company, expects to offer and sell previously
issued Debt Securities in the course of its business as a broker-dealer. WP
Securities may act as principal or agent in such transactions. This Prospectus
and the related Prospectus Supplement may be used by the Company or any of its
affiliates, including WP Securities, in connection with such transactions. Such
sales, if any, will be made at varying prices related to prevailing market
prices at the time of sale. See "Plan of Distribution".
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This Prospectus may not be used to consummate sales of Debt Securities unless
accompanied by a Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
AVAILABLE INFORMATION
C&A Co. is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by C&A Co. with the Commission pursuant to the informational requirements
of the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of
such material may be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information may also be inspected at the offices of the New
York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York, on
which C&A Co.'s Common Stock, par value $.01 per share (the "Common Stock"), is
listed. The Company is not currently subject to the periodic reporting and other
informational requirements of the Exchange Act because management of the Company
believes that the reports and other information, including the summary financial
statements of the Company to be included in the financial statements of C&A Co.
filed therewith, filed by C&A Co. will provide investors with all material
information with regard to the Company. If the Company is not required to
deliver annual reports of C&A Co. to holders of Debt Securities pursuant to the
Securities Exchange Act of 1934, the Company will deliver quarterly and annual
reports of C&A Co. to the holders of Debt Securities at the same time that C&A
Co. delivers such reports to its security holders.
This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company and C&A Co. with the
Commission under the Securities Act of 1933 (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related exhibits for
further information with respect to the Company and the Debt Securities.
Statements contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INFORMATION INCORPORATED BY REFERENCE
The Company incorporates herein by reference C&A Co.'s Annual Report on Form
10-K for the fiscal year ended January 27, 1996 filed by C&A Co. with the
Commission (File No. 1-10218) pursuant to the Exchange Act and C&A Co.'s Reports
on Form 8-K filed by C&A Co. with the Commission (File No. 1-10218) on April 10,
1996 and May 17, 1996 pursuant to the Exchange Act.
All documents and reports subsequently filed by C&A Co. pursuant to Sections
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 offering of the Debt Securities hereunder
shall be deemed to be incorporated herein by reference and to be a part hereof
from the date of filing of such documents.
Any statement contained herein or 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 or any Prospectus Supplement to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies 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 or any Prospectus Supplement.
2
<PAGE>
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus and the accompanying Prospectus
Supplement are delivered, upon the written or oral request of such person, a
copy of any or all the documents incorporated herein by reference other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference in such documents, and any other documents specifically identified
herein as incorporated by reference into the Registration Statement to which
this Prospectus relates or into such other documents. Requests should be
directed to: Collins & Aikman Products Co., 701 McCullough Drive, P.O. Box
32665, Charlotte, NC 28232-2665 (telephone: (704) 548-2370), Attention:
Director-Investor Relations.
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered in evaluating an
investment in the Debt Securities.
CYCLICALITY OF INDUSTRIES
The Company's business segments are highly cyclical. Downturns in North
American automotive production, consumer spending, commercial and residential
construction and renovation and by consumer confidence could have a material
adverse effect on the Company.
DEPENDENCE ON SIGNIFICANT AUTOMOTIVE CUSTOMERS AND CAR MODELS
The Company's sales are dependent on certain significant customers. Sales to
General Motors Corporation, Ford Motor Company and Chrysler Corporation
accounted for approximately 23.3%, 11.6% and 12.7%, respectively, of the
Company's 1995 net sales. In addition, certain of the Company's customers are
unionized and have in the past experienced labor disruptions. The loss of one or
more significant customers or a prolonged disruption in their production could
have a material adverse effect on the Company.
The Company principally competes for new business in its Automotive Products
segment at the design stage of new models and upon the redesign of existing
models. There can be no assurance that the Company will continue to be able to
obtain such new business or to improve or maintain its gross margins on such new
business. In addition, the Company may not be able to pass on raw material price
increases to its customers due to pricing pressure from its customers. A
decrease in demand for the models that generate the most sales for the Company,
the failure of the Company to obtain purchase orders for new or redesigned
models and pricing pressure from the major automotive companies could have a
material adverse effect on the Company.
VULNERABILITY TO CHANGES IN CONSUMER TASTES
Consumer tastes in automotive seat fabrics and interior furnishings change
over time. A shift in consumer preferences away from the products that the
Company produces or has the capability to produce could have a material adverse
effect on the Company.
COMPETITION
The industries in which the Company operates are highly competitive. There
can be no assurance that the Company's products will compete successfully with
those of its competitors. Several competitors are larger and may have greater
financial and other resources available to them. There can be no assurance that
the Company will be able to maintain its operating margins if the competitive
environment changes.
3
<PAGE>
SUBSTANTIAL LEVERAGE
The substantial indebtedness of the Company and its subsidiaries could have
important consequences to holders of Debt Securities, including the following:
(i) the ability of the Company and its subsidiaries to obtain additional
financing in the future to refinance maturing debt or for working capital,
capital expenditures, acquisitions and other general corporate purposes could be
impaired; (ii) a substantial portion of the cash flow from operations of the
Company and its subsidiaries must be dedicated to the payment of the principal
of and interest on existing indebtedness, which will have the effect of
decreasing the amount available for working capital, capital expenditures,
acquisitions or other general corporate purposes; (iii) the Company and its
subsidiaries could be more highly leveraged than certain of their competitors,
which may place the Company and its subsidiaries at a competitive disadvantage;
(iv) a significant portion of the borrowings of the Company and its subsidiaries
are at variable rates of interest, and consequently the Company and its
subsidiaries will be vulnerable to increases in interest rates; and (v) the high
degree of leverage of the Company and its subsidiaries may make the Company more
vulnerable to economic downturns. At January 27, 1996 the Company had an
aggregate of approximately $768.1 million of indebtedness outstanding (excluding
approximately $128.0 million in off-balance sheet financing under a receivables
facility, approximately $.7 million of indebtedness of the discontinued
Wallcoverings segment and approximately $28.1 million of outstanding letters of
credit) and unused borrowing availability of approximately $46.9 million under a
revolving credit facility and $5.5 million under a working capital facility for
a Canadian subsidiary. Incurrence of additional indebtedness would increase this
degree of leverage and, therefore, could exacerbate the consequences described
above. The Company intends to pursue a growth-oriented strategy and to consider
the incurrence of additional indebtedness and other capital market transactions
to finance its planned expansion.
SECURITY INTERESTS
The capital stock of the Company's principal subsidiaries and certain real
estate of the Company and its subsidiaries are subject to various security
interests and liens securing certain indebtedness of the Company and its
subsidiaries. In addition, substantially all the receivables of the Company and
its subsidiaries have been transferred to a trust in connection with a
receivables financing. See "Existing Credit Facilities".
LIMITATIONS IMPOSED BY EXISTING CREDIT FACILITIES
The Company's existing credit facilities contain a number of restrictive
covenants which, among other things, limit the ability of the Company and its
subsidiaries to make capital expenditures, to incur other indebtedness, to
create liens and to make certain restricted payments, and which require the
Company to maintain certain specified financial ratios, some of which become
more restrictive over time. A failure by the Company to satisfy such financial
ratios or to comply with the restrictions contained in its credit facilities
could result in a default thereunder, which in turn could result in such
indebtedness being declared immediately due and payable. If the Company were
unable to repay such indebtedness, the lenders under the Company's credit
facilities could proceed against their collateral, which includes 100% of the
common stock of the Company and of its principal subsidiaries. See "Existing
Credit Facilities".
HISTORICAL LOSSES
C&A Co. has experienced net losses in four of the last five fiscal years,
and as of January 27, 1996 had an accumulated deficit of $770.1 million. Even
though C&A Co. is operating with lower interest charges and has been profitable
since its initial public offering and Recapitalization in July 1994 (the
"Recapitalization"), there can be no assurance as to whether C&A Co.'s
operations will remain profitable.
4
<PAGE>
COLLECTIVE BARGAINING AGREEMENTS
The Company is a party to collective bargaining agreements with respect to
hourly employees of its continuing operations at six of its 42 U.S. facilities,
its seven Canadian facilities and its four Mexican facilities. The Company's
continuing operations employ 11,700 persons, approximately 2,900 of which, all
of whom are employed in the Company's Automotive Products segment, are covered
by such agreements. The Company has not experienced any significant labor
disruptions during the past five years. Although management believes that its
relationship with the employees covered by collective bargaining agreements is
good, there can be no assurance that the Company will be able to negotiate new
agreements on favorable terms.
ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES
The Company is subject to stringent Federal, state, local and foreign laws
and regulations concerning the environment. Changes in environmental laws and
regulations may require the Company to make substantial capital expenditures and
to incur substantial expenses with respect to its ongoing and divested
operations and properties. In addition, the Company has received notices that it
is a potentially responsible party ("PRP") in a number of proceedings for
cleanup of hazardous substances at various sites. The Company may be named as a
PRP at other sites in the future. It is difficult to estimate the total cost of
investigation and remediation due to various factors including incomplete
information regarding particular sites and other PRPs, uncertainty regarding the
extent of environmental problems and the Company's share, if any, of liability
for such problems, the selection of alternative compliance approaches, the
complexity of the environmental laws and regulations and changes in cleanup
standards and techniques. When it has been possible to provide reasonable
estimates of the Company's liability with respect to environmental sites,
provisions have been made in accordance with generally accepted accounting
principles. However, there can be no assurance that the Company has identified
or properly assessed all potential environmental liabilities arising from the
activities or properties of the Company, its present and former subsidiaries and
their corporate predecessors.
The Company has significant financial and legal obligations with respect to
certain divested and acquired businesses. In connection with the sale and
acquisition of certain businesses, the Company has agreed to indemnify the
purchasers and sellers for certain environmental liabilities, lease obligations
and other matters. In addition, the Company is contingently liable with respect
to certain lease and other obligations assumed by certain purchasers and may be
required to honor such obligations if such purchasers are unable or unwilling to
do so.
ABSENCE OF PUBLIC MARKET FOR THE DEBT SECURITIES
The Debt Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the Company
for public offering and sale may make a market in such Debt Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the secondary market for any Debt Securities.
POTENTIAL APPLICABILITY OF FRAUDULENT TRANSFER LAWS
Management believes that each of the Company and C&A Co., after the issuance
of the Debt Securities, will be solvent, will have sufficient capital for
carrying on its respective businesses and will be able to pay its debts as they
become due. Notwithstanding management's belief, if a court of competent
jurisdiction in a suit by an unpaid creditor or a representative of creditors
(such as a trustee in bankruptcy or a debtor in possession) were to find that
either the Company or C&A Co. did not receive fair consideration or reasonably
equivalent value for issuing the Debt Securities or the Guarantee, respectively,
and, at the time of the incurrence of indebtedness represented by the Debt
Securities or the Guarantee, the Company or C&A Co. was insolvent, was rendered
insolvent by reason of such incurrence, was engaged in a business or transaction
for which its remaining assets constituted unreasonably small capital, intended
to incur, or believed that it would incur, debts beyond its ability to
5
<PAGE>
pay as such debts matured, or intended to hinder, delay or defraud its
creditors, such court could avoid such indebtedness or, quite apart from the
express subordination of such indebtedness of the Company or C&A Co., as
applicable, such court could subordinate such indebtedness to other existing and
future indebtedness of the Company or C&A Co., as applicable. The measure of
insolvency for purposes of the foregoing will vary depending upon the law of the
relevant jurisdiction. Generally, however, a company would be considered
insolvent for purposes of the foregoing if the sum of the company's debts is
greater than all the company's property at a fair valuation, or if the present
fair saleable value of the company's assets is less than the amount that will be
required to pay its probable liability on its existing debts as they become
absolute and matured.
THE COMPANY
The Company is a major supplier of interior textile and plastic trim
products to the North American automotive industry, with leading positions in
five major product lines. The Company is also a leading manufacturer of
residential upholstery, as well as a major provider of contract carpet products
in the United States. On April 9, 1996, the Company announced its intention to
spin off its Imperial Wallcoverings subsidiary ("Wallcoverings") to the
stockholders of C&A Co. The spin-off is subject to, among other things, the
consent of the Company's lenders and final approval of the Company's Board of
Directors. The financial results and net assets of Wallcoverings have been
accounted for as a discontinued operation. Accordingly, previously reported
financial results for all periods have been restated to reflect Wallcoverings as
a discontinued operation.
C&A Co. is a holding company whose only material asset is the common stock
of the Company. The Company's and C&A Co.'s principal executive offices are
located at 701 McCullough Drive, Charlotte, North Carolina 28262 and the
telephone number at that location is (704) 547-8500.
As used in this Prospectus, the term the "Company" refers to Collins &
Aikman Products Co. and its subsidiaries, unless the context otherwise
indicates.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for C&A Co. is set forth below for
the periods indicated. For periods in which earnings before fixed charges were
insufficient to cover charges, the amount of coverage deficiency (in millions),
instead of the ratio is disclosed.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JANUARY
-------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------- ---- ----
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (or amounts by
which earnings were inadequate to cover fixed
charges).............................................. ($92.4) ($85.2) ($173.1) 1.8x 2.3x
</TABLE>
For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as income (loss) from continuing operations before income taxes,
plus fixed charges relating to continuing operations. Fixed charges consist of
interest expense on all indebtedness (including amortization of deferred debt
issuance costs), loss on sale of receivables, preferred stock dividends of
subsidiaries and the portion of operating lease rental expense that is
representative of the interest factor. Earnings were inadequate to cover fixed
charges for the fiscal years ended January 1992, 1993 and 1994.
On July 13, 1994, the Company effected the Recapitalization in connection
with its initial public offering. Prior to the Recapitalization, fixed charges
were higher due to larger average outstanding amounts, and higher average
interest rates, under C&A Co.'s various debt facilities. Additionally, earnings
from continuing operations for the fiscal years prior to the Recapitalization
were negatively impacted by various charges related to restructuring,
compensation and goodwill. Accordingly, the ratio for the fiscal year ended
January 1995 reflects the benefits of the Recapitalization for a part of the
year and for the fiscal year ended January 1996 reflects the benefits for the
full year.
6
<PAGE>
USE OF PROCEEDS
Except as may otherwise be set forth in the Prospectus Supplement, the net
proceeds from the sale of the Debt Securities will be used for general corporate
purposes, including working capital, capital expenditures and acquisitions.
EXISTING CREDIT FACILITIES
THE CREDIT AGREEMENT FACILITIES
C&A Co. and the Company are parties to a credit agreement dated as of June
22, 1994, as amended (the "Credit Agreement"), with Chemical Bank ("Chemical")
and the lenders named therein providing for (i) an eight-year senior secured
term loan facility in an aggregate principal amount of $475 million (the "Term
Loan Facility"), which was drawn in full on July 13, 1994 to prepay other
indebtedness in connection with the Recapitalization, and (ii) a seven-year
senior secured revolving credit facility (the "Revolving Facility", and together
with the Term Loan Facility, the "Credit Agreement Facilities") in an aggregate
principal amount of up to $150 million. At January 27, 1996, the Company had
unused borrowing availability of approximately $46.9 million under the Revolving
Facility.
On December 22, 1995, C&A Co. and the Company entered into an additional
credit facility (as amended, the "Term Loan B Facility") to finance the January
1996 purchase of Manchester Plastics. The Term Loan B Facility provides for a
term loan in the principal amount $197 million, all of which was outstanding at
January 27, 1996. In conjunction with the Term Loan B Facility, the restrictive
covenants of the Credit Agreement Facilities were amended to permit the purchase
of Manchester Plastics. The restrictive covenants contained in the Term Loan B
Facility are identical to those in the Credit Agreement Facilities.
The Company is the borrower under the Credit Agreement Facilities and the
Term Loan B Facility, although a portion of the Term Loan Facility has been
borrowed by a Canadian subsidiary of the Company. Loans outstanding under the
Credit Agreement Facilities bear interest, due quarterly, at a per annum rate
equal to the Company's choice of (i) Chemical's Alternate Base Rate (which is
the highest of Chemical's announced prime rate, the Federal Funds Rate plus .5%
and Chemical's base certificate of deposit rate plus 1%) plus a margin ranging
from 0% to .75% or (ii) the offered rates for Eurodollar deposits ("LIBOR") of
one, two, three, six, nine or 12 months (as selected by the Company) plus a
margin ranging from 1% to 1.75%. Pursuant to the terms of the Credit Agreement,
at January 27, 1996 the Alternate Base Rate margin was .75% and the LIBOR margin
was 1.75%. Such margins under the Credit Agreement Facilities will increase by
1/4% over the margins then in effect on July 13, 1999. Indebtedness under the
Term Loan B Facility bears interest at a per annum rate equal to the Company's
choice of (i) Chemical Bank's Alternate Base Rate as described above plus a
margin of 1.25% or (ii) LIBOR of one, two, three or six months, as selected by
the Company, plus a margin of 2.25%.
Loans under the Term Loan Facility and the Term Loan B Facility amortize in
annual amounts equal to (i) $41.9 million in 1996, (ii) $68.1 million in 1997,
(iii) $88.9 million in 1998, (iv) $101.8 million in 1999, (v) $109.4 million in
each of 2000 and 2001 and (vi) the remainder in 2002. The Revolving Facility
will mature on July 13, 2001. In addition, the Credit Agreement and the Term
Loan B Facility provide for mandatory prepayments with certain excess cash flow
of the Company, net cash proceeds of certain asset sales or other dispositions
by the Company and its subsidiaries, net cash proceeds of certain sale/leaseback
transactions and net cash proceeds of certain issuances of debt obligations
(which are not expected to include Debt Securities). Mandatory prepayments will
be applied pro rata across remaining scheduled maturities. Loans under the
Credit Agreement Facilities and Term
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Loan B Facility are voluntarily prepayable by the Company at any time without
penalty. Voluntary prepayments will be applied against the most current
scheduled maturities.
The Credit Agreement Facilities and the Term Loan B Facility are guaranteed
by C&A Co. and each existing and subsequently acquired or organized United
States subsidiary of C&A Co., subject to certain exceptions (the "Credit
Agreement Guarantees"). The Credit Agreement Facilities, the Term Loan B
Facility and the Credit Agreement Guarantees are secured by a first priority
pledge of all the capital stock of the Company and each subsidiary (other than
certain unrestricted subsidiaries) of the Company (or, in the case of any
foreign subsidiary, 65% of the capital stock of such subsidiary), subject to
certain exceptions, and certain intercompany indebtedness.
The Credit Agreement and the Term Loan B Facility contain various
restrictive covenants, including limitations on indebtedness of C&A Co. and its
subsidiaries (including the Company); limitations on dividends and on
redemptions and repurchases of capital stock; limitations on prepayments,
redemptions and repurchases of debt; limitations on liens and sale/leaseback
transactions; limitations on loans and investments; limitations on capital
expenditures; a prohibition on C&A Co.'s direct ownership of any subsidiary
other than the Company or certain unrestricted subsidiaries; limitations on
mergers, acquisitions and asset sales; limitations on transactions with
affiliates and stockholders; limitations on fundamental changes in business
conducted; and limitations on the amendment of debt and other material
agreements and licenses. In addition to the foregoing, the Credit Agreement and
Term Loan B Facility contain financial covenants applicable to C&A Co. and its
subsidiaries (including the Company) on a consolidated basis. Under these
covenants C&A Co. and its subsidiaries are required: to maintain, for each
period of four consecutive fiscal quarters, a ratio of EBITDA to cash interest
expense of 3.25 to 1.00 through April 30, 1996 and 3.50 to 1.00 from May 1, 1996
through January 31, 1997 (which ratio increases periodically thereafter, to 4.75
to 1.00 on and after February 1, 1998); to maintain a ratio of funded debt to
EBITDA for the preceding 12 consecutive months of not more than 3.95 to 1.00
until April 30, 1996 and 3.50 to 1.00 from May 1, 1996 through July 31, 1996
(which ratio decreases periodically thereafter, to 2.25 to 1.00 on and after
February 1, 1999); to have a minimum EBITDA of $175 million in each fiscal year;
and to maintain a ratio of current assets to current liabilities at the end of
each fiscal quarter of at least 1.25 to 1.00.
The Credit Agreement and the Term Loan B Facility also contain various
events of default (with customary qualifications and exceptions), including
nonpayment of principal or interest; violation of covenants; material breaches
of representations and warranties; cross default and cross acceleration;
bankruptcy; material undischarged judgments; certain ERISA events; invalidity of
security documents; invalidity of subordination provisions; and Change in
Control. "Change in Control" is defined in the Credit Agreement and Term Loan B
Facility as (a) a majority of the board of directors of C&A Co. ceases to be
comprised of Continuing Directors (defined as any director of C&A Co. who either
(x) was a member of the board of directors on July 13, 1994 or (y) after such
date became a member of the board of directors and whose election was approved
by vote of a majority of the Continuing Directors then on the board of directors
of C&A Co.), (b) a person or group (other than the Company's current principal
stockholders, Wasserstein Perella Partners, L.P. ("WP Partners"), Blackstone
Capital Partners L.P. ("Blackstone Partners"), and additional designated
persons) beneficially owns, directly or indirectly, shares representing more
than 25% of the aggregate ordinary voting power represented by the outstanding
capital stock of C&A Co. at any time that WP Partners, Blackstone Partners and
additional designated persons do not beneficially own shares representing at
least 50% of the aggregate ordinary voting power represented by the outstanding
capital stock of C&A Co. or (c) C&A Co. ceases to maintain direct ownership of
the Company, free of liens and claims (other than liens in connection with a
pledge under the Credit Agreement and Term Loan B Facility).
In addition to the foregoing, the Credit Agreement and the Term Loan B
Facility contain other miscellaneous provisions, including provisions concerning
indemnification by the Company of each
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lender against losses, claims or other expenses and payment by the Company of
certain fees and expenses of the lenders and their respective advisors and
consultants.
The description of the Credit Agreement Facilities and the Term Loan B
Facility set forth above does not purport to be complete and is qualified in its
entirety by reference to the documents which are filed as exhibits and
incorporated by reference into the Registration Statement of which this
Prospectus forms a part.
RECEIVABLES FACILITY
The Company, through a trust (the "Trust") formed by its wholly-owned,
bankruptcy-remote subsidiary, Carcorp, Inc. ("Carcorp"), is a party to a
receivables facility (the "Receivables Facility") comprised of (i) term
certificates, which were issued on March 31, 1995 in an aggregate face amount of
$110 million and (ii) variable funding certificates, which represent revolving
commitments, of up to an aggregate of $75 million. The term certificates and the
variable funding certificates have a term of five years. Carcorp purchases on a
revolving basis and transfers to the Trust virtually all trade receivables
generated by the Company and certain of its subsidiaries (the "Sellers"). The
certificates represent the right to receive payments generated by the
receivables held by the Trust.
Availability under the variable funding certificates at any time depends
primarily on the amount of receivables generated by the Sellers from sales to
the auto industry, the rate of collection on those receivables and other
characteristics of those receivables which affect their eligibility (such as
bankruptcy or downgrading below investment grade of the obligor, delinquency and
excessive concentration). Based on these criteria, at January 27, 1996
approximately $19.8 million was available under the variable funding
certificates, of which approximately $18.0 million was utilized.
The proceeds received by Carcorp from collections on receivables, after the
payment of expenses and amounts due on the certificates, are used to purchase
new receivables from the Sellers. Collections on receivables are required to
remain in the Trust if at any time the Trust does not contain sufficient
eligible receivables to support the outstanding certificates. At January 27,
1996, cash collateral of $8.7 million was required to be retained in the Trust.
Additionally, the Trust held $15.7 million of cash collections to be distributed
upon determination of eligibility. The Receivables Facility contains certain
other restrictions on Carcorp and on the Sellers customary for facilities of
this type and will terminate prior to its term upon the occurrence of certain
events of default. Under the Receivables Facility, the term certificates bear
interest at an average rate equal to the rate on one-month LIBOR deposits plus
34 one-hundredths of one percent per annum and the variable funding certificates
bear interest, at Carcorp's option, at a LIBOR deposit rate plus 40
one-hundredths of one percent per annum or a prime rate.
The description of the Receivables Facility set forth above does not purport
to be complete and is qualified in its entirety by reference to the Receivables
Facility and any amendments thereto which are filed as exhibits and incorporated
by reference into the Registration Statement of which this Prospectus forms a
part.
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
The Debt Securities will constitute either Senior Securities or Subordinated
Securities. The Senior Securities will be issued under an Indenture (the "Senior
Indenture"), between the Company and the trustee named in the applicable
Prospectus Supplement as trustee (the "Senior Trustee"). The Subordinated
Securities will be issued under an Indenture dated as of June , 1996 (the
"Subordinated Indenture"), between the Company and the trustee named in the
applicable Prospectus Supplement as trustee ("the Subordinated Trustee"). The
Senior Indenture and the Subordinated Indenture are
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collectively referred to herein as the "Indentures". References to the "Trustee"
shall mean the Senior Trustee or the Subordinated Trustee, as applicable. The
statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not purport to be complete and are qualified in
their entirety by reference to the applicable Indenture, copies of which are
exhibits to and incorporated in the Registration Statement. Cross references to
Sections of the Indentures relate to both the Senior Indenture and the
Subordinated Indenture, unless otherwise indicated.
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions do not apply to such
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities.
Neither of the Indentures limits the amount of Debt Securities which may be
issued thereunder, and each Indenture provides that Debt Securities of any
series may be issued thereunder up to the aggregate principal amount which may
be authorized from time to time by the Company's board of directors or any duly
authorized committee of that board ("Board of Directors") and may be denominated
in any currency or composite currency designated by the Company. (Section 3.01)
Neither the Indentures nor the Debt Securities will limit or otherwise restrict
the amount of other indebtedness which may be incurred or the other securities
which may be issued by the Company or any of its subsidiaries.
Debt Securities of a series may be issuable in registered form with or
without coupons ("Registered Securities"), in bearer form with or without
coupons attached ("Bearer Securities") or in the form of one or more global
securities in registered or bearer form (each a "Global Security"). (Section
3.01) Bearer Securities, if any, will be offered only to non-United States
persons and to offices located outside the United States of certain United
States financial institutions. (Section 3.03) Reference is made to the
Prospectus Supplement for a description of the following terms, where
applicable, of each series of Debt Securities in respect of which this
Prospectus is being delivered: (1) the title of such Debt Securities; (2) the
limit, if any, on the aggregate principal amount or aggregate initial public
offering price of such Debt Securities; (3) the priority of payment of such Debt
Securities; (4) the price or prices (which may be expressed as a percentage of
the aggregate principal amount thereof) at which the Debt Securities will be
issued; (5) the date or dates on which the principal of the Debt Securities will
be payable; (6) the rate or rates (which may be fixed or variable) per annum at
which such Debt Securities will bear interest, if any, or the method of
determining the same; (7) the date or dates from which such interest, if any, on
the Debt Securities will accrue, the date or dates on which such interest, if
any, will be payable, the date or dates on which payment of such interest, if
any, will commence and the date, if any, specified in the Debt Security as the
"Regular Record Date" for such interest payment dates; (8) the extent to which
any of the Debt Securities will be issuable in temporary or permanent global
form, or the manner in which any interest payable on a temporary or permanent
global Debt Security will be paid; (9) each office or agency where, subject to
the terms of the applicable Indenture, the Debt Securities may be presented for
registration of transfer or exchange; (10) the place or places where the
principal of (and premium, if any) and interest, if any, on the Debt Securities
will be payable; (11) the date or dates, if any, after which such Debt
Securities may be redeemed or purchased in whole or in part, at the option of
the Company or mandatorily pursuant to any sinking, purchase or analogous fund
or may be required to be purchased or redeemed at the option of the holder, and
the redemption or repayment price or prices thereof; (12) the denomination or
denominations in which such Debt Securities are authorized to be issued; (13)
the currency, currencies or composite currency (including the European Currency
Unit as defined and revised from time to time by the Council of the European
Communities ("ECU")) based on or related to currencies for which the Debt
Securities may be purchased and the currency, currencies or composite currency
(including ECU) in which the principal of, premium, if any, and any interest on
such Debt Securities may be payable; (14) any index used to determine the amount
of payments of principal of, premium, if any, and interest on the Debt
Securities; (15) whether any of the Debt Securities are to be issuable as Bearer
Securities and/or Registered Securities, and if issuable as Bearer
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Securities, any limitations on issuance of such Bearer Securities and any
provisions regarding the transfer or exchange of such Bearer Securities
(including exchange for registered Debt Securities of the same series); (16) the
payment of any additional amounts with respect to the Debt Securities; (17)
whether any of the Debt Securities will be issued as Original Issue Discount
Securities (as defined below); (18) information with respect to book-entry
procedures, if any; (19) any additional covenants or Events of Default not
currently set forth in the applicable Indenture; and (20) any other terms of
such Debt Securities not inconsistent with the provisions of the applicable
Indenture.
If any of the Debt Securities are sold for one or more foreign currencies or
foreign currency units or if the principal of, premium, if any, or interest on
any series of Debt Securities is payable in one or more foreign currencies or
foreign currency units, the restrictions, elections, tax consequences, specific
terms and other information with respect to such issue of Debt Securities and
such currencies or currency units will be set forth in the Prospectus Supplement
relating thereto. A judgment for money damages by courts in the United States,
including a money judgment based on an obligation expressed in a foreign
currency, will ordinarily be rendered only in U.S. dollars. New York statutory
law provides that a court shall render a judgment or decree in the foreign
currency of the underlying obligation and that the judgment or decree shall be
converted into U.S. dollars at the exchange rate prevailing on the date of entry
of the judgment or decree.
Debt Securities may be issued as original issue discount Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) ("Original Issue Discount Securities"), to be sold at a
substantial discount below the stated principal amount thereof due at the stated
maturity of such Debt Securities. (Section 3.01) There may not be any periodic
payments of interest on Original Issue Discount Securities as defined herein. In
the event of an acceleration of the maturity of any Original Issue Discount
Security, the amount payable to the holder of such Original Issue Discount
Security upon such acceleration will be determined in accordance with the
Prospectus Supplement, the terms of such security and the Indenture, but will be
an amount less than the amount payable at the maturity of the principal of such
Original Issue Discount Security. (Section 7.02) Federal income tax
considerations with respect to Original Issue Discount Securities will be set
forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, WAIVERS, ETC.
An Event of Default with respect to Debt Securities of any series is defined
in the Indentures as (i) default in the payment of the principal of or premium,
if any, on any Debt Security of such series when due, (ii) default in the
payment of interest upon any Debt Security of such series when due and the
continuance of such default for a period of 30 days, (iii) default in the
observance or performance of any other covenant or agreement of the Company or
C&A Co. in the Debt Securities of such series or the Indenture with respect to
such Debt Securities of such series and continuance of such default for 90 days
after written notice, (iv) certain events of bankruptcy, insolvency or
reorganization of the Company or C&A Co. or (v) any other Event of Default
provided with respect to Debt Securities of any series. (Section 7.01)
If any Event of Default with respect to any series of Debt Securities for
which there are Debt Securities outstanding under the Indentures occurs and is
continuing, either the applicable Trustee or the holders of not less than 25% in
aggregate principal amount of the Debt Securities of such series may declare the
principal amount (or if such Debt Securities are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all Debt Securities of that series to be immediately
due and payable. The holders of a majority in aggregate principal amount of the
Debt Securities of any series outstanding under the Indentures may waive the
consequences of an Event of Default resulting in acceleration of such Debt
Securities, but only if all Events of Default have been remedied and all
payments due (other than those due as a result of acceleration) have been made.
(Section 7.02) If an Event of Default occurs and is continuing, the Trustee may
in its discretion, or at
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the written request of holders of not less than a majority in aggregate
principal amount of the Debt Securities of any series outstanding under the
Indentures and upon reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and subject to
certain other conditions set forth in the Indentures, proceed to protect the
rights of the holders of all the Debt Securities of such series. (Sections 7.03
and 7.07) If the Trustee fails within 60 days after its receipt of such a
written request and offer of indemnity to institute any such proceeding, any
holder of a Debt Security who has previously given notice to the Trustee of a
continuing Event of Default may institute such a proceeding. (Section 7.07) The
holders of a majority in aggregate principal amount of Debt Securities of any
series outstanding under the Indentures may waive any past default under the
Indentures except a default in the payment of principal of, premium, if any, or
interest on the Debt Securities of such series and except for the waiver of a
covenant or provision that, pursuant to the Indentures, cannot be modified or
amended without the consent of holders of all such Debt Securities then
outstanding. (Section 7.13)
The Indentures provide that in the event of an Event of Default specified in
clauses (i) or (ii) of the first paragraph under "Events of Default, Waivers,
Etc.", the Company will, upon demand of the applicable Trustee, pay to it, for
the benefit of the holder of any such Debt Security, the whole amount then due
and payable on such Debt Security for principal, premium, if any, and interest.
The Indentures further provide that if the Company fails to pay such amount
forthwith upon such demand, the applicable Trustee may, among other things,
institute a judicial proceeding for the collection thereof. (Section 7.03)
The Indentures also provide that notwithstanding any other provision of the
Indentures, the holder of any Debt Security of any series will have the right to
institute suit for the enforcement of any payment of principal of, premium, if
any, and interest on such Debt Security when due and that such right may not be
impaired without the consent of such holder. (Section 7.08)
The Company is required to file annually with the Trustee a written
statement of officers as to the existence or non-existence of defaults under the
Indentures or the Debt Securities. (Section 5.05)
GUARANTEE
C&A Co., as primary obligor and not merely as surety, will irrevocably,
fully and unconditionally guarantee on either an unsecured senior basis, an
unsecured senior subordinated basis or an unsecured junior subordinated basis,
as applicable, the performance and punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Company under
the Senior Indenture, Subordinated Indenture and the Debt Securities, whether
for principal of or interest on the Debt Securities, expenses, indemnification
or otherwise (all such obligations guaranteed by C&A Co. being herein called the
"Guaranteed Obligations"). C&A Co. will agree to pay, in addition to the amount
stated above, any and all expenses (including reasonable counsel fees and
expenses) incurred by the Trustee or the holders in enforcing any rights under
the Guarantee with respect to C&A Co. (Section 14.01 of Senior Indenture and
Section 15.01 of Subordinated Indenture) Such Guarantee, however, will be
limited in amount to an amount not to exceed the maximum amount that can be
guaranteed by C&A Co. without rendering the Guarantee, as it relates to C&A Co.,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer. (Section 14.02 of Senior Indenture and Section 15.02 of Subordinated
Indenture) C&A Co. has no material assets other than the common stock of the
Company.
The Guarantee is a continuing guarantee and will (i) remain in full force
and affect until payment in full of all the Guaranteed Obligations, (ii) be
binding upon C&A Co. and (iii) enure to the benefit of and be enforceable by the
Trustee, the holders and their successors, transferees and assigns. (Section
14.03 of Senior Indenture and Section 15.03 of Subordinated Indenture) Upon the
failure of the Company to pay the principal of or interest on any Guaranteed
Obligation when and as due, whether at
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maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Guaranteed Obligations, C&A Co. shall, upon receipt of written
demand by the Trustee, pay or cause to be paid, in cash, to the holders or the
Trustee an amount equal to the sum of (a) unpaid principal amount of such
Guaranteed Obligations, (b) accrued and unpaid interest on such Guaranteed
Obligations (but only to the extent not prohibited by law) and (c) all other
monetary Guaranteed Obligations of the Company to the holders and the Trustee.
See "Events of Default, Waivers, Etc." for a description of rights in an Event
of Default.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued only as Registered Securities. (Section 2.01) If
Bearer Securities are issued, the United States Federal income tax consequences
and other special considerations, procedures and limitations applicable to such
Bearer Securities will be described in the Prospectus Supplement relating
thereto.
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities issued as Registered Securities will be without coupons. Debt
Securities issued as Bearer Securities will have interest coupons attached,
unless issued as zero coupon securities. (Section 2.01)
Registered Securities (other than a Global Security) may be presented for
transfer (with the form of transfer endorsed thereon duly executed) or exchanged
for other Debt Securities of the same series at the office of the security
registrar appointed by the Company (the "Security Registrar") specified
according to the terms of the applicable Indenture. The Company has agreed in
each of the Indentures that, with respect to Registered Securities having the
City of New York as a place of payment, the Company will appoint a Security
Registrar or a co-security registrar, as may be appropriate (the "Co-Security
Registrar") located in the City of New York for such transfer or exchange.
Unless otherwise provided in the applicable Prospectus Supplement, such transfer
or exchange shall be made without service charge, but the Company may require
payment of any taxes or other governmental charges as described in the
applicable Indenture. Provisions relating to the exchange of Bearer Securities
for other Debt Securities of the same series (including, if applicable,
Registered Securities) will be described in the applicable Prospectus
Supplement. In no event, however, will Registered Securities be exchangeable for
Bearer Securities. (Section 3.05)
GLOBAL SECURITIES
Debt Securities of a series may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such series. (Section 3.01) Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. (Section
2.04) Unless and until it is exchanged in whole or in part for the individual
Debt Securities represented thereby, a Global Security may not be transferred
except as a whole by the Depositary for such Global Security to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor. (Section 3.05)
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The specific terms of the depositary arrangement with respect to a series of
Debt Securities and certain limitations and restrictions relating to a series of
Bearer Securities in the form of one or more Global Securities will be described
in the Prospectus Supplement relating to such series. The Company anticipates
that the following provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the
underwriters or agents with respect to such Debt Securities. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities. (Sections 1.12 and 3.08)
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. None of the Company, the Trustee for such
Debt Securities, any person authorized by the Company to pay the principal of,
premium, if any, or interest on any Debt Securities or any coupons appertaining
thereto on behalf of the Company ("Paying Agent"), and the Security Registrar
for such Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Security for such Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. (Section 3.08)
Subject to certain restrictions relating to Bearer Securities, the Company
expects that the Depositary for a series of Debt Securities or its nominee, upon
receipt of any payment of principal, premium or interest in respect of a
permanent Global Security representing any of such Debt Securities, will credit
participants' accounts immediately with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security for such Debt Securities as shown on the records of such Depositary or
its nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security 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 in bearer form or registered
in "street name". Such payments will be the responsibility of such participants.
With respect to owners of beneficial interests in a temporary Global Security
representing Bearer Securities, receipt by such beneficial owners of payments of
principal, premium or interest in respect thereof will be subject to additional
restrictions.
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If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in definitive form in exchange for the Global Security
representing such series of Debt Securities. (Section 3.05) In addition, the
Company may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Debt Securities,
determine not to have any Debt Securities of a series represented by one or more
Global Securities and, in such event, will issue individual Debt Securities of
such series in definitive form in exchange for the Global Security or Securities
representing such series of Debt Securities. (Section 3.05) Further, if the
Company so specifies with respect to the Debt Securities of a series, an owner
of a beneficial interest in a Global Security representing Debt Securities of
such series may, on terms acceptable to the Company, the Trustee and the
Depositary for such Global Security, receive Debt Securities of such series in
definitive form in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Debt
Securities. (Section 3.05) In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery in
definitive form of Debt Securities of the series represented by such Global
Security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in its name (if the Debt Securities of such series
are issuable as Registered Securities). (Section 3.05) Debt Securities of such
series so issued in definitive form will be issued (i) as Registered Securities
in denominations, unless otherwise specified by the Company, of $1,000 and
integral multiples thereof if the Debt Securities of such series are issuable as
Registered Securities, (ii) as Bearer Securities in the denomination, unless
otherwise specified by the Company, of $5,000 if the Debt Securities of such
series are issuable as Bearer Securities or (iii) as either Registered or Bearer
Securities, if the Debt Securities of such series are issuable in either form.
(Sections 3.02 and 3.05) Certain restrictions may apply, however, on the
issuance of a Bearer Security in definitive form in exchange for an interest in
a Global Security.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium, if any, on Registered Securities will be made at
the office of such Paying Agent or Paying Agents as the Company may designate
from time to time. At the option of the Company, payment of any interest may be
made (i) by check mailed to the address of the person entitled thereto as such
address shall appear in the applicable security register kept by the Company
("Security Register") or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the applicable Security Register. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
installment of interest on Registered Securities will be made to the person in
whose name such Debt Security is registered at the close of business on the
Regular Record Date for such payment. (Sections 3.07 and 5.02)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and any interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time or, at the option of the holder, by check mailed to any address outside
the United States or by transfer to an account maintained by the payee with a
bank located outside the United States. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on Bearer Securities will
be made only against surrender of the coupon relating to such interest payment
date. No payment with respect to any Bearer Security will be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States. (Sections 3.07, 5.01 and 5.02)
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CONSOLIDATION, MERGER OR SALE OF ASSETS
Each Indenture provides that the Company may not, without the consent of the
holders of the Debt Securities outstanding under the applicable Indenture,
consolidate with, merge into or transfer its assets substantially as an entirety
to any single person, unless (i) any such successor assumes the Company's
obligations on the applicable Debt Securities and under the applicable
Indenture, (ii) after giving effect thereto, no Event of Default shall have
happened and be continuing and (iii) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel each stating that such
consolidation, merger, conveyance or transfer and the supplemental indenture
pursuant to which the successor assumes the Company's obligations on the
applicable Debt Securities comply with Article 10 of the applicable Indenture
and that all conditions precedent therein provided for relating to such
transaction have been complied with. (Section 10.01) Accordingly, unless
otherwise specified in an applicable Prospectus Supplement, any such
consolidation, merger or transfer of assets substantially as an entirety that
meets the conditions described above, would not create any Event of Default
which would entitle holders of the Debt Securities, or the Trustee on their
behalf, to take any of the actions described above under "Events of Default,
Waivers, Etc." Additionally, upon any such consolidation or merger, or any such
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, the successor person formed by such consolidation or into which
the Company is merged or to which such conveyance or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under each Indenture with the same effect as if such successor
person had been named as the Company. In the event of any such conveyance or
transfer, the Company as the predecessor corporation and C&A Co. shall be
relieved of all obligations and covenants under each Indenture and may be
dissolved, wound up and liquidated at any time thereafter. (Section 10.02)
LEVERAGED AND OTHER TRANSACTIONS
Neither Indenture contains provisions which would afford holders of the Debt
Securities protection in the event of a highly leveraged or other transaction
involving the Company which could adversely affect the holders of Debt
Securities. Provisions, if any, applicable to any such transaction will be
described in an applicable Prospectus Supplement.
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of each affected series, modifications and alterations of such Indenture may be
made which affect the rights of the holders of such Debt Securities, except that
no such modification or alteration may be made without the consent of the holder
of each Debt Security so affected which would, among other things, (i) change
the maturity of the principal of, or of any installment of interest (or premium,
if any) on, any Debt Security issued pursuant to such Indenture, or reduce the
principal amount thereof or any premium thereon, or change the method of
calculation of interest or the currency of payment of principal or interest (or
premium, if any) on, or reduce the minimum rate of interest thereon, or impair
the right to institute suit for the enforcement of any such payment on or with
respect to any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity thereof or (ii) reduce the above-stated percentage
in principal amount of outstanding Debt Securities required to modify or alter
such Indenture. (Section 9.02)
Each Indenture also provides that, without the consent of any holder of Debt
Securities, the Company, when authorized by a resolution of its Board of
Directors, and the Trustee, at any time and from time to time, may enter into
one or more supplemental indentures to such Indenture to (i) evidence the
succession of another corporation or person to the Company or C&A Co., as the
case may be, in the Indenture and in the Debt Securities, (ii) evidence and
provide for a successor Trustee, (iii) add to the covenants of the Company or
C&A Co. for the benefit of the holders of Debt Securities of all or any
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series or to surrender any right or power conferred upon the Company or C&A Co.
in the Indenture, (iv) cure any ambiguity, correct or supplement any provision
which may be inconsistent or make any other provisions with respect to matters
or questions arising under the Indenture, provided the interests of the holders
of Debt Securities of any series are not adversely affected in any material
respect, (v) add any additional Events of Default, (vi) make certain changes
with respect to Bearer Securities which do not adversely affect the interests of
the holders of Debt Securities of any series in any material respect, (vii) add
to, change or eliminate any provision of the Indenture; provided that such
addition, change or elimination (a) becomes effective only when there is no Debt
Security outstanding of a series created prior to the execution of such
supplemental indenture which is adversely affected or (b) does not apply to any
outstanding Debt Securities, (viii) establish the form or terms of Debt
Securities of any series as permitted under the Indenture, (ix) add to or change
provisions to permit or facilitate the issuance of Debt Securities convertible
into other securities, (x) evidence any changes to corporate Trustee eligibility
authorized by the Trust Indenture Act of 1939, as in force as of the date an
Indenture is executed and, to the extent required by law, as thereafter amended
(the "Trust Indenture Act"), or (xi) add to or change or eliminate any provision
of the Indenture as necessary to comply with the Trust Indenture Act provided
such action does not adversely affect the interests of the holders of Debt
Securities of any series in any material respect. (Section 9.01).
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee, if
and when the Trustee becomes a creditor of the Company (or any other obligor
upon the Debt Securities), regarding the collection of such claims against the
Company (or any such other obligor). (Section 8.13) Except as provided in the
following sentence, the Indentures do not prohibit the Trustee from serving as
trustee under any other indenture to which the Company may be a party from time
to time or from engaging in other transactions with the Company. If the Trustee
acquires any conflicting interest and there is a default with respect to any
series of Debt Securities, it must eliminate such conflict or resign. (Section
8.08)
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the Company
and will rank pari passu with all outstanding unsecured senior indebtedness of
the Company.
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Company and will be subject to the subordination provisions described below.
SUBORDINATION
The payment of the principal of, premium (if any) and interest on the
Subordinated Securities and other payment obligations of the Company in respect
of the Subordinated Securities is subordinated in right of payment, as set forth
in the Subordinated Indenture, to the payment in cash when due of all Senior
Indebtedness and, if applicable, Senior Subordinated Indebtedness of the
Company. (Section
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14.01 of Subordinated Indenture) However, payment from the money or the proceeds
of U.S. government obligations held in any defeasance trust is not subordinate
to any Senior Indebtedness or, if applicable, Senior Subordinated Indebtedness
or subject to the restrictions described herein if such money was permitted to
be deposited in such trust at the time of deposit. (Section 14.12 of
Subordinated Indenture) At January 27, 1996, outstanding Senior Indebtedness of
the Company was $761.8 million (excluding unused commitments, approximately
$128.0 million in off-balance sheet financing under the Receivables Facility and
approximately $28.1 million of outstanding letters of credit), and the Company
did not have any Senior Subordinated Indebtedness. At that date the Company's
continuing subsidiaries had approximately $56.4 million of indebtedness for
borrowed money (excluding intercompany balances), trade and other liabilities
substantially in excess of that amount and approximately $688.8 million of
guarantees of Senior Indebtedness of the Company. Claims of creditors of such
subsidiaries, including trade creditors, secured creditors and creditors holding
guarantees issued by such subsidiaries, and claims of preferred stockholders (if
any) of such subsidiaries generally will have priority with respect to the
assets and earnings of such subsidiaries over the claims of creditors of the
Company, including holders of the Subordinated Securities, even though such
obligations may not constitute Senior Indebtedness or Senior Subordinated
Indebtedness. The Subordinated Securities therefore will be effectively
subordinated to creditors (including trade creditors) and preferred stockholders
(if any) of subsidiaries of the Company. The domestic subsidiaries of the
Company have guaranteed the Company's obligations pursuant to the Credit
Agreement.
Senior Indebtedness is defined in the Subordinated Indenture as (i) all
obligations of the Company, whether direct or by guarantee, to pay principal,
interest (including all interest accruing after the filing of a petition by or
against the Company under any Bankruptcy Law, in accordance with and at the
rate, including any default rate, specified in the Credit Agreement, whether or
not a claim for such interest is allowed as a claim after such filing in any
proceeding under such Bankruptcy Law), fees, expenses, reimbursement
obligations, indemnities and other amounts payable under or in connection with
the Credit Agreement, whether outstanding on the date of the Subordinated
Indenture or thereafter created, assumed or incurred, (ii) the principal of,
premium, if any, and interest (including all interest accruing after the filing
of a petition by or against the Company under any Bankruptcy Law in accordance
with and at the rate, including any default rate, specified with respect to such
indebtedness, whether or not a claim for such interest is allowed as a claim
after such filing in any proceeding under such Bankruptcy Law) on, (a) all the
Company's other indebtedness for money borrowed whether outstanding on the date
of execution of the Subordinated Indenture or thereafter created, assumed or
incurred, except such indebtedness (including any securities issued under the
Subordinated Indenture) as is by its terms expressly stated to be not superior
in right of payment to the subordinated securities issued under the Subordinated
Indenture and (b) any deferrals, renewals or extensions of any such Senior
Indebtedness and (iii) all Interest Swap Obligations of the Company in respect
of Senior Indebtedness, except that Senior Indebtedness will not include (1) any
obligation of the Company to any subsidiary, (2) any liability for Federal,
state, local or other taxes owed or owing by the Company, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any indebtedness, guarantee or obligation of the Company which
is expressly subordinate or junior in right of payment in any respect to any
other indebtedness, guarantee or obligation of the Company, including any senior
subordinated indebtedness and any subordinated obligations, or (5) any
obligations with respect to any capital stock. The term "indebtedness for money
borrowed" as used in the foregoing sentence means any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets. (Section 1.01 of Subordinated Indenture) There is no
limitation on the issuance of additional Senior Indebtedness of the Company. The
Senior Securities constitute Senior Indebtedness under the Subordinated
Indenture.
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The Subordinated Securities may rank pari passu with other subordinated
indebtedness of the Company or may, if indicated in the applicable Prospectus
Supplement, be subordinate to Senior Subordinated Indebtedness, including other
series of Subordinated Securities. (Section 3.01 Subordinated Indenture) "Senior
Subordinated Indebtedness" means any indebtedness of the Company that is not
subordinated by its terms in right of payment to any indebtedness or obligation
of the Company which is not Senior Indebtedness and which is senior in right of
payment to the Debt Securities. (Section 1.01 of Subordinated Indenture)
Neither the Company nor C&A Co. may directly or indirectly (nor shall any
direct or indirect payment or distribution be made by or on behalf of the
Company or C&A Co. in respect of the following) pay principal of, premium (if
any) or interest on the Subordinated Securities and other payment obligations of
the Company in respect of the Subordinated Securities, make any deposits
pursuant to the defeasance provisions in the Subordinated Indenture or otherwise
purchase, redeem or retire any Subordinated Securities (collectively, "pay the
Subordinated Securities") if (i) any Senior Indebtedness and, if applicable,
Senior Subordinated Indebtedness is not paid when due or (ii) any other default
on Senior Indebtedness, and, if applicable, Senior Subordinated Indebtedness
occurs and the maturity of such Senior Indebtedness, and, if applicable, Senior
Subordinated Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration has
been rescinded or such Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness has been paid in full in cash. However, the Company
and C&A Co. may pay the Subordinated Securities without regard to the foregoing
if the Company, C&A Co. and the Trustee receive written notice approving such
payment from the Representatives (as defined below) of the holders of Senior
Indebtedness, and, if applicable, Senior Subordinated Indebtedness with respect
to which either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. Representative of the holders
of Senior Indebtedness or Senior Subordinated Indebtedness means a trustee,
agent or other representative (if any) for an issue of such Senior Indebtedness
or Senior Subordinated Indebtedness, as applicable. During the continuance of
any default (other than a default described in clause (i) or (ii) of the second
preceding sentence) with respect to any Senior Indebtedness, and, if applicable,
Senior Subordinated Indebtedness, pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, neither the Company nor C&A Co. may pay the Subordinated Securities for
a period (a "Payment Blockage Period") commencing upon the receipt by the
Trustee (with a copy to the Company and C&A Co.) of written notice (a "Blockage
Notice") of such default from the Representatives of the holders of such Senior
Indebtedness, and, if applicable, Senior Subordinated Indebtedness, specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (a) by written notice
to the Trustee, the Company and C&A Co. from the Person or Persons who gave such
Blockage Notice, (b) because the default giving rise to such Blockage Notice is
no longer continuing or (c) because such Senior Indebtedness, and, if
applicable, Senior Subordinated Indebtedness, has been repaid in full in cash).
Notwithstanding the provisions described in the immediately preceding sentence,
unless one of the events described in clause (i) or (ii) of this paragraph is
then continuing, the Company and C&A Co. may resume payments on the Subordinated
Securities after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Senior Indebtedness, and, if applicable,
Senior Subordinated Indebtedness during such period. (Section 14.03 of
Subordinated Indenture)
Upon any payment or distribution of the assets or securities of the Company
or C&A Co. to creditors upon a total or partial liquidation or dissolution or
reorganization of or similar proceeding relating to the Company or C&A Co. or
their property, or in connection with a bankruptcy, insolvency, receivership or
similar proceeding relating to the Company or C&A Co. or their respective
property, or in connection with an assignment for the benefit of creditors or
any marshalling of assets and liabilities
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of the Company or C&A Co., the holders of Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness will be entitled to receive payment
in full in cash of the Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness before the holders of Subordinated Securities are
entitled to receive any payment or distribution, and until the Senior
Indebtedness and, if applicable, Senior Subordinated Indebtedness is paid in
full, any payment or distribution to which holders of Subordinated Securities
would be entitled but for the subordination provisions of the Subordinated
Indenture will be made to holders of the Senior Indebtedness and, if applicable,
Senior Subordinated Indebtedness as their interests may appear. (Section 14.02
of Subordinated Indenture) If a distribution is made to holders of Subordinated
Securities that, due to the subordination provisions, should not have been made
to them, such holders of Subordinated Securities are required to hold it in
trust for the holders of Senior Indebtedness or Senior Subordinated
Indebtedness, as the case may be, and pay it over to them as their interests may
appear. (Section 14.05 of Subordinated Indenture)
If payment of the Subordinated Securities is accelerated because of an Event
of Default, the Company, C&A Co. or the Trustee will promptly notify the holders
of Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness or
the Representatives of such holders of the acceleration. The Company may not pay
the Subordinated Securities until five business days after such holders or the
Representatives of the Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness receive notice of such acceleration and, thereafter,
may pay the Subordinated Securities only if the subordination provisions of the
Subordinated Indenture otherwise permit payment at that time. (Section 14.04 of
Subordinated Indenture)
By reason of such subordination provisions contained in the Subordinated
Indenture, in the event of insolvency, creditors of the Company or C&A Co. who
are holders of Senior Indebtedness or Senior Subordinated Indebtedness may
recover more, ratably, than the holders of Subordinated Securities, and
creditors of the Company who are not holders of Senior Indebtedness or Senior
Subordinated Indebtedness may recover less, ratably, than holders of Senior
Indebtedness or Senior Subordinated Indebtedness, as the case may be, and may
recover more, ratably, than the holders of Subordinated Indebtedness.
Definitions
"Designated Senior Indebtedness" means (i) the Credit Agreement and (ii) to
the extent expressly so designated in the agreement or instrument evidencing
such Senior Indebtedness each series of Senior Indebtedness having an aggregate
principal amount (or available commitments) of at least $25 million.
"Credit Agreement" means the collective reference to (i) the Credit
Agreement, dated as of June 22, 1994, by and among Collins & Aikman Corporation,
Collins & Aikman Products Co., Collins & Aikman Canada Inc., the Lenders
referred to therein, Continental Bank, N.A. and NationsBank, N.A., as Managing
Agents, and Chemical Bank, as Administrative Agent, and (ii) the Credit
Agreement dated as of December 22, 1995, by and among Collins & Aikman
Corporation, Collins & Aikman Products Co., the Lenders named therein and
Chemical Bank, as Administrative Agent, and all promissory notes, guarantees,
security agreements, pledge agreements, deeds of trust, mortgages, letters of
credit and other instruments, agreements and documents executed pursuant thereto
or in connection therewith, as each may be amended, extended, renewed, restated,
replaced, refinanced, supplemented or otherwise modified (in whole or in part,
and without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement governing Indebtedness incurred
to refund or refinance a portion of the borrowings and commitments then
outstanding or permitted to be outstanding under the Credit Agreement or such
agreement; provided that such refunding or refinancing by its terms states that
it is intended to be senior in right of payment to the Subordinated Securities.
The Company shall promptly notify the Trustee of any such refunding or
refinancing of the Credit Agreement; provided that failure to give such notice
shall not impair the subordination provisions hereof.
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"Interest Swap Obligation" means any obligation of any person pursuant to
any arrangement with any other person whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount. The term
"Interest Swap Obligation" shall also include interest rate exchange, collar,
cap, swap option or similar agreements providing interest rate protection.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to one or more underwriters (acting
alone or through underwriting syndicates led by one or more managing
underwriters) or dealers for public offering and sale by them or may sell the
Debt Securities to investors directly or through agents designated from time to
time. The Prospectus Supplement with respect to the Debt Securities offered
thereby describes the terms of the offering of such Debt Securities and the
method of distribution of the Debt Securities offered thereby and identifies any
firms acting as underwriters, dealers or agents in connection therewith.
The Debt Securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed from time to
time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at prices determined as specified in the
Prospectus Supplement. In connection with the sale of the Debt Securities,
underwriters, dealers or agents may be deemed to have received compensation from
the Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Debt Securities for whom they may act
as agent. Underwriters may sell the Debt Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the purchasers for whom they may act as agent. Certain of the
underwriters, dealers or agents who participate in the distribution of the Debt
Securities may engage in other transactions with, and perform other services
for, the Company in the ordinary course of business.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to dealers, are set forth in
the Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Debt Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
the resale of the Debt Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters and their controlling
persons, dealers and agents may be entitled, under agreements entered into with
the Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or agents to solicit offers by certain institutions to
purchase Debt Securities from the Company pursuant to delayed delivery contracts
providing for payment and delivery at a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. Unless otherwise set forth in the applicable Prospectus Supplement,
the obligations of any purchaser under any such contract will not be subject to
any conditions except that (i) the purchase of the Debt Securities shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject, and (ii) if the Debt Securities are also being sold
to underwriters acting as principals for their own account, the underwriters
shall have purchased such Debt Securities not sold for delayed delivery. The
underwriters and such other persons will not have any responsibility in respect
of the validity or performance of such contracts.
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This Prospectus and the related Prospectus Supplement may be used by the
Company or any of its affiliates, including WP Securities, in connection with
offers and sales related to secondary market transactions in the Debt
Securities. Such sales, if any, will be made at varying prices related to
prevailing market prices at the time of sale.
CERTAIN LEGAL MATTERS
Certain legal matters in connection with the Debt Securities will be passed
upon for the Company by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Ave., New York, NY 10019. Certain legal matters will be passed upon for the
underwriters or agents, if any, named in a Prospectus Supplement, by Jones, Day,
Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022. From time to
time, Jones, Day, Reavis & Pogue provides legal services to C&A Co. and the
Company and other entities in which the principal stockholders of C&A Co. have
equity interests.
EXPERTS
The consolidated financial statements and schedules of C&A Co. incorporated
by reference in this prospectus and elsewhere in the registration statement to
the extent and for the periods indicated in their reports have been audited by
Arthur Andersen LLP, independent public accountants, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.
-------------------
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or any
accompanying Prospectus Supplement in connection with the offer made by this
Prospectus or any Prospectus Supplement, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Company or by any underwriter, dealer or agent. This Prospectus and any
Prospectus Supplement do not constitute an offer to sell or a solicitation of an
offer to buy any securities other than those to which they relate. Neither the
delivery of this Prospectus and any accompanying Prospectus Supplement nor any
sale of or offer to sell the Debt Securities offered hereby shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company or that the information herein is correct as of any time
after the date hereof. This Prospectus and any accompanying Prospectus
Supplement do not constitute an offer to sell or a solicitation of an offer to
buy any of the Debt Securities offered hereby in any state to any person to whom
it is unlawful to make such offer or solicitation in such state.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts, to be borne by the registrant in connection with
the distribution of the Debt Securities.
Securities and Exchange Commission registration fee............. $138,031*
Trustee's fees and expenses..................................... 20,000
Printing and engraving expenses................................. 25,000
Rating agency fees.............................................. 160,000
Accounting fees and expenses.................................... 20,000
Legal fees and expenses......................................... 75,000
Blue Sky fees and expenses (including fees and expenses of
counsel)........................................................ 20,000
Miscellaneous expenses.......................................... 10,000
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Total Expenses.................................................. 468,031
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* Includes $137,931 previously paid in connection with Registration Statement
No. 33-62665.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each Registrant is a Delaware corporation.Section 145 of the Delaware
General Corporation Law (the "DGCL") provides that a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation-a "derivative action"), by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise (an "indemnitee")
against expenses (including attorneys' fees), judgements, fines and amounts paid
in settlement actually and reasonably incurred if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal actions
or proceedings, had no reasonable cause to believe his or her conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation with respect to any claim, issue or matter in the derivative
action. The statute further provides for the mandatory indemnification of an
indemnitee who is successful on the merits or otherwise in defending any action,
suit or proceeding described in the statute or in defence of any claim, issue or
matter therein, and authorizes a corporation to pay in advance any expenses
incurred by an indemnitee in any covered proceeding, provided that a director or
officer must furnish to the corporation an undertaking to repay the amounts
advanced if it is ultimately determined that the director or officer is not
entitled to indemnification. The statute provides that it is not exclusive of
other indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise.
Each Registrant's By-Laws provide that any person made a party to or
threatened to be made a party to or otherwise involved in any action, suit or
proceeding by reason of the fact he or she is or was a director or officer of
the Registrant, or is or was a director, officer, employee or agent of any other
enterprise for which he or she served as such at the request of the Registrant,
shall be indemnified by the
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Registrant to the fullest extent authorized by the DGCL against all expenses
(including attorneys' fees) reasonably incurred by such indemnitee (except, with
limited exceptions, for suits brought by the indemnitee unless authorized by the
Board of Directors of the Registrant). Such right of indemnification includes
the right to be paid, in advance, all expenses incurred in connection with the
defense of a proceeding (upon receipt of any required undertaking) and is a
contract right and shall not be deemed exclusive of any other rights to which
such director or officer may be entitled outside the indemnification provisions
of said By-Laws.
Section 102(b)(7) of the DGCL permits a corporation organized thereunder to
include in its certificate of incorporation a provision eliminating or limiting,
with certain exceptions, the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director. The Certificate of Incorporation of each of the Registrants eliminates
the liability of directors to the full extent permitted by the DGCL (as it
exists or may be amended).
The foregoing statements are subject to the detailed provisions of Sections
145 and 102(b)(7) of the DGCL, Article VIII of Collins & Aikman Corporation's
By-Laws and Article Eighth of its Restated Certificate of Incorporation and
Article VIII of Collins & Aikman Products Co.'s By-Laws and Article Eight of its
Certificate of Incorporation, as applicable.
C&A Co. has insurance coverage under policies issued to it (which policies
also cover the Company) for losses by any person who is or hereafter may be a
director or officer of C&A Co. arising from claims against that person for any
wrongful act (subject to certain exceptions) in his or her capacity as a
director or officer of C&A Co. or any of its subsidiaries, including the
Company. The policies also provide for reimbursement to C&A Co. or its
subsidiaries for indemnification given by them pursuant to common or statutory
law or the Certificate of Incorporation or the By-Laws or any contract to any
such person arising from any such claims. The policies' present coverage is
limited to a maximum of $50 million for claims made in a single year and there
is a deductible of $1 million.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
(1) --Proposed form of Debt Securities Underwriting Agreement.**
(4.1) --Form of Senior Indenture.**
(4.2) --Form of Subordinated Indenture.**
(5) --Opinion of Cravath, Swaine & Moore.**
(12) --Statement regarding the computation of the ratio of earnings to fixed charges.**
(23.1) --Consent of Arthur Andersen LLP, Independent Public Accountants.*
(23.2) --Consent of Counsel (included in Exhibit (5)).**
(24) --Powers of Attorney (included on signature pages hereof).
(25) --Statement of Eligibility and Qualification on Form T-1 of Trustee (bound
separately).***
</TABLE>
- ------------
* Filed herewith.
** Incorporated by reference to the Registrant's Registration Statement on Form
S-3 (No. 33-62665).
*** To be filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
A. UNDERTAKING PURSUANT TO RULE 415
The undersigned Registrants hereby undertake:
(a) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by one of the Registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), that are incorporated by reference in the
Registration Statement;
(b) that, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(c) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS
BY REFERENCE
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of Collins &
Aikman Corporation's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described in Item 15 above, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act
II-3
<PAGE>
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by either of the Registrants of
expenses incurred or paid by a director, officer or controlling person of such
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such officer, director or controlling person in connection with the
securities being registered, the Registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
D. UNDERTAKING IN RESPECT OF RULE 430A
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
E. UNDERTAKING IN RESPECT OF QUALIFICATION OF TRUST INDENTURES UNDER THE TRUST
INDENTURE ACT OF 1939 FOR DELAYED OFFERINGS
The undersigned Registrants hereby undertake to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on June 3, 1996.
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. MICHAEL STEPP
..................................
Name: J. Michael Stepp
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Thomas E. Hannah, David A. Stockman and Randall
J. Weisenburger, and each of them, with full power to act without the other, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments (including
post-effective amendments and amendments thereto) to this Registration Statement
on Form S-3 of Collins & Aikman Products Co., and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he might or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the dates indicated by the
following persons in the capacities indicated.
<TABLE><CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -------------
<S> <C> <C>
/s/ THOMAS E. HANNAH Director, President and Chief June 3, 1996
..................................... Executive Officer (Principal
(Thomas E. Hannah) Executive Officer)
/s/ J. MICHAEL STEPP Executive Vice President and Chief June 3, 1996
..................................... Financial Officer (Principal
(J. Michael Stepp) Financial and Accounting Officer)
/s/ DAVID A. STOCKMAN Director June 3, 1996
.....................................
(David A. Stockman)
/s/ RANDALL J. WEISENBURGER Director June 3, 1996
.....................................
(Randall J. Weisenburger)
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on June 3, 1996.
COLLINS & AIKMAN CORPORATION
By: /s/ J. MICHAEL STEPP
..................................
Name: J. Michael Stepp
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Thomas E. Hannah, David A. Stockman and Randall
J. Weisenburger, and each of them, with full power to act without the other, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments (including
post-effective amendments and amendments thereto), to this Registration
Statement on Form S-3 of Collins & Aikman Corporation, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he might or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the dates indicated by the
following persons in the capacities indicated.
<TABLE><CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -------------
<S> <C> <C>
/s/ THOMAS E. HANNAH Director and Chief Executive Officer June 3, 1996
..................................... (Principal Executive Officer)
(Thomas E. Hannah)
/s/ J. MICHAEL STEPP Executive Vice President and Chief June 3, 1996
..................................... Financial Officer (Principal
(J. Michael Stepp) Financial and Accounting Officer)
/s/ DAVID A. STOCKMAN Co-Chairman of the Board of Directors June 3, 1996
.....................................
(David A. Stockman)
/s/ RANDALL J. WEISENBURGER Co-Chairman of the Board of Directors June 3, 1996
.....................................
(Randall J. Weisenburger)
..................................... Director
(Robert C. Clark)
/s/ GEORGE L. MAJOROS, JR. Director June 3, 1996
.....................................
(George L. Majoros, Jr.)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -------------
<S> <C> <C>
/s/ JAMES J. MOSSMAN Director June 3, 1996
.....................................
(James J. Mossman)
/s/ WARREN B. RUDMAN Director
.....................................
(Warren B. Rudman)
/s/ STEPHEN A. SCHWARTZMAN Director June 3, 1996
.....................................
(Stephen A. Schwartzman)
/s/ W. TOWNSEND ZIEBOLD, JR. Director June 3, 1996
.....................................
(W. Townsend Ziebold, Jr.)
</TABLE>
II-7
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
April 10, 1996 included in Collins & Aikman Corporation's Form 10-K for the
fiscal year ended January 27, 1996 and to all references to our firm included in
this registration statement.
Arthur Andersen L.L.P.
Charlotte, North Carolina
June 3, 1996
