SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported) May 15, 1996
KEENE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-18434 13-2596288
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
757 THIRD AVENUE, NEW YORK, N.Y. 10017
(Address of principal executive officers) Zip Code)
Registrant's telephone number, including area code (212) 486-3200
N/A
(Former name or former address, if change since last report.)
<PAGE>
Item 5. Other Events
On May 15, 1996, Keene Corporation ("Keene") filed its operating report for the
period March 31, 1996 to April 27, 1996 with the United States Bankruptcy Court
for the Southern District of New York and the United States Trustee. These
financial statements were prepared in accordance with the United States Trustee
guidelines.
Item 7. Financial statements, pro forma financial statements and exhibits
(c) Exhibits
99(a) Operating Report dated May 15, 1996 for the period March 31, 1996 to
April 27,1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KEENE CORPORATION
(Registrant)
/s/ Timothy E. Coyne
Timothy E. Coyne
President
Date: May 29, 1996
<PAGE>
EXHIBIT 99(a)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
CHAPTER 11
KEENE CORPORATION,
Debtor. CASE NO. 93 B 46090 (SMB)
OPERATING REPORT FOR THE PERIOD
MARCH 31, 1996 TO APRIL 27, 1996
DEBTOR'S ADDRESS:
757 THIRD AVENUE SUITE 850
NEW YORK, NEW YORK 10017
PERIOD DISBURSEMENTS: $410,000
DEBTOR'S ATTORNEYS:
BERLACK, ISRAELS & LIBERMAN LLP
GENERAL COUNSEL
REPORT PREPARER:
TRACEY KARM
KEENE CORPORATION
PERIOD OPERATING PROFIT (LOSS): $(547,000)
The undersigned, having reviewed the attached report and being familiar
with the Debtor's financial affairs, verifies under penalty of perjury, that
the information contained therein is complete, accurate and truthful to the
best of my knowledge.
DATE SIGNATURE AND TITLE
5/15/96 /s/ Timothy E. Coyne
Indicate if this an amended statement by checking here.
_____ AMENDED STATEMENT
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
CHAPTER 11
KEENE CORPORATION,
Debtor. CASE NO. 93 B 46090 (SMB)
OPERATING REPORT FOR KEENE CORPORATION
FOR THE PERIOD MARCH 31, 1996 - APRIL 27, 1996
THE DEBTOR HAS OBTAINED THE CONSENT OF THE U.S. TRUSTEE TO USE FISCAL
MONTHS IN ACCORDANCE WITH ITS NORMAL ACCOUNTING PRACTICE TO PREPARE ITS
FINANCIAL REPORTS.
THE DEBTOR MAILED ITS SECOND AMENDED DISCLOSURE STATEMENT REGARDING
DEBTOR'S FOURTH AMENDED PLAN OF REORGANIZATION DATED MARCH 11, 1996 (THE
"DISCLOSURE STATEMENT"), DEBTOR'S FOURTH AMENDED PLAN OF REORGANIZATION
DATED MARCH 11, 1996 (THE "PLAN") AND RELATED VOTING MATERIALS ON MARCH 29,
1996. THE VOTING DEADLINE FOR THE PLAN IS MAY 14,1996. THE BANKRUPTCY COURT HAS
SCHEDULED A CONFIRMATION HEARING ON THE PLAN FOR JUNE 12, 1996.
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Operating Report
For the Period March 31, 1996 - April 27, 1996
INDEX
PAGE #
Operating Results for the Period March 31, 1996-
April 27, 1996 1-3
Summary of Cash and Cash Equivalents and Investments
as of April 27, 1996 4
Receivables and Payables Summary as of 5
Other Potential Recoveries as of April 27, 1996 6-8
Other Potential Payments as of April 27, 1996 9
Insurance Payment Report for the Period
March 31, 1996 - April 27, 1996 10
Taxes Paid Summary for the Period March 31, 1996-
April 27, 1996 11
Schedule of General Operating Expenses for the
Period March 31, 1996 - April 27, 1996 12
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Income Statement
For the Period March 31, 1996 - April 27, 1996
(Unaudited)
($000's)
<CAPTION>
INCOME
<S> <C> <C>
Investment Income $135
GENERAL & ADMINISTRATIVE EXPENSES
Salary, Wages, Benefits and Payroll Taxes 93
Rent and Utilities 27
Insurance 31
General Operating Expenses (See Page 12) 47
_____
Loss Before Reorganization Items, Income Taxes
and Equity in Loss of Subsidiary (63)
Reorganization Items:
Debtor's Counsel Legal Fees $50
Creditors Committee Counsel Legal Fees 100
Other 100 250
______
Loss Before Income Taxes and Equity in Loss of Subsidiary (313)
Income Tax Expense 80
______
Loss Before Equity in Loss of Subsidiary (393)
Equity in Loss of Subsidiary (154)
______
NET LOSS $(547)
======
<FN>
1
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Balance Sheet
As of April 27, 1996
(Unaudited)
($000's)
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash and Cash Equivalents $7,558
Investments at Market 23,821
Accounts Receivable-Insurance Proceeds 15,000
Accounts Receivable-Surety Companies 3,282
Income Taxes Receivable 393
Investment Income Receivable 327
Due from Subsidiary (1) 555
Prepaid and Other Current Assets 193
_______
Total Current Assets 51,129
Net Fixed Assets 82
Investment in Subsidiary 7,142
Intangible Pension Asset 125
_______
TOTAL ASSETS $58,478
=======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Current Liabilities
Accounts Payable - Trade $124
Uncleared Outstanding Checks 26
Accrued Expenses 469
_______
Total Current Liabilities 619
Liabilities Subject to Chapter 11 Proceedings
Accounts Payable - Trade (Pre-Petition) 406
Accounts Payable - Retained Professionals' Hold 2,862
FASB 5 Asbestos Litigation Reserve (Pre-Petition) 5,311
Accrued Expenses 6,619
_______
Total Liabilities Subject to Chapter 11 Proceedings 15,198
Long Term Minimum Pension Liability 2,539
STOCKHOLDERS' INVESTMENT
Common Stock 1
Paid-in-Capital 120,286
Retained Loss (77,742)
Unrealized loss on Investment Securities (9)
Additional Pension Liability in Excess of Unrecognized
Prior Service Cost (2,414)
_______
Total Stockholders' Investment 40,122
_______
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $58,478
=======
<FN>
(1) Subsidiary is included in the consolidated federal income tax return of
Keene. Substantially all of this amount represents subsidiary's federal income
tax liability computed as if a separate tax return was filed.
2
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Statement of Cash Flows
For the period March 31, 1996 - April 27, 1996
(Unaudited)
($000's)
<CAPTION>
RECEIPTS
<S> <C>
Investment Income $107
Other 11
______
Total Receipts 118
DISBURSEMENTS
Salary, Wages, Benefits and Payroll Taxes 75
First Quarter Pension Funding 174
Other General and Administrative Expenses
General Operating 71
Bankruptcy-related 90
______
Total Disbursements 410
Decrease in Uncleared Outstanding Checks (74)
______
Net Cash used in Operating Activities (366)
______
Net Decrease in Cash and Cash Equivalents (366)
Cash and Cash Equivalents at Beginning of Period 7,924
______
Cash and Cash Equivalents at End of Period $7,558
======
<FN>
3
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Summary of Cash and Cash Equivalents and Investments
As of April 27, 1996
(Unaudited)
(000's)
<CAPTION>
Purchase Maturity Interest Market Amount
Bank Date Date Issue Rate Cost Value Pledged
<S> <C> <C> <C> <C> <C> <C> <C>
Chemical Bank On Demand Cash in Bank 42 42 -
Citibank On Demand Cash in Investment Accts 26 26 26
Bank of America - IL (1) On Demand Cash in Investment Accts 1 1 -
Bank of America - IL On Demand Horizon Treasury
Fund 5.0800% 7,380 7,380 -
_______ _______ ______
Total Bank of America - IL 7,381 7,381 -
_______ _______ ______
Fleet National Bank On Demand Fidelity Institutional
of Connecticut (2) Money Market 5.1800% 109 109 -
_______ _______ ______
Total Fleet National Bank
of Connecticut 109 109 -
_______ _______ ______
TOTAL CASH AND CASH EQUIVALENTS $7,558 $7,558 $26
======= ======= ======
Citibank 07-Apr-93 30-Sep-96 T-Note 7.0000% 91 85 85
Citibank 30-Sep-91 30-Sep-96 T-Note 7.0000% 236 239 239
Citibank 06-Oct-92 30-Sep-96 T-Note 7.0000% 93 85 85
_______ _______ ______
Total Citibank 420 409 409
_______ _______ ______
Bank of America - IL 07-Dec-95 06-Jun-96 T-Bill 5.1800% 9,981 10,193 -
Bank of America - IL 15-Feb-96 08-Aug-96 T-Bill 4.6900% 519 523 519
Bank of America - IL 13-Mar-96 08-Aug-96 T-Bill 4.8200% 2,160 2,173 2,160
Bank of America - IL 15-Feb-96 08-Aug-96 T-Bill 4.9650% 6,818 6,857 -
Bank of America - IL 29-Jul-93 5-May-96 T-Note 4.2500% 23 23 -
Bank of America - IL 30-Sep-93 30-Sep-96 T-Note 7.0000% 22 20 -
Bank of America - IL 30-Sep-91 30-Sep-96 T-Note 7.0000% 379 383 -
Bank of America - IL 30-Sep-91 30-Sep-96 T-Note 7.0000% 230 233 -
Bank of America - IL 07-Apr-93 30-Sep-96 T-Note 7.0000% 64 60 -
Bank of America - IL 29-Oct-91 31-Oct-96 T-Note 6.8750% 103 104 -
Bank of America - IL 02-Dec-91 30-Nov-96 T-Note 6.5000% 138 139 -
Bank of America - IL 31-Dec-91 31-Dec-96 T-Note 6.1250% 26 26 -
Bank of America - IL 20-May-93 28-Feb-98 T-Note 5.1250% 69 68 -
Bank of America - IL 15-Apr-93 31-Mar-98 T-Note 5.1250% 6 6 -
_______ _______ ______
Total Bank of America - IL 20,538 20,808 2,679
_______ _______ ______
Fleet National Bank
of Connecticut 15-Mar-96 19-Sep-96 T-Bill 5.0000% 2,872 2,890 556
_______ _______ ______
Total Fleet National Bank 2,872 2,890 556
of Connecticut
_______ _______ ______
LESS: T-BILL INTEREST IN MARKET VALUE (3) - 286 -
_______ _______ ______
TOTAL INVESTMENTS $23,830 $23,821 $3,644
======= ======= ======
GRAND TOTAL - CASH AND CASH
EQUIVALENTS AND INVESTMENTS $31,388 $31,379 $3,670
======= ======= ======
<FN>
(1) Formerly Continental Bank, N.A.
(2) Formerly Shawmut Bank Connecticut, N.A.
(3) T-Bills are purchased at a discount and as interest is earned over time the
market value of the T-Bills increases. For accounting purposes, interest
earned on T-Bills is classified as investment income receivable. It is
deducted from the market value on this schedule so that it is not accounted
for twice (once in the market value of the investments and once in
investment income receivable).
4
</TABLE>
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Receivables and Payables Summary
As of April 27, 1996
(Unaudited)
($000's)
Accounts Receivable-Trade $0
Accounts Receivable-Insurance Proceeds $15,000
FACE VALUE OF POLICIES EXPECTED TO BE AVAILABLE FROM THE EXPECTED SUCCESSFUL
OUTCOME OF THE KEENE IV INSURANCE COVERAGE LITIGATION. HOWEVER, SUCCESSFUL
OUTCOME OF THE LITIGATION AND REALIZATION AND TIMING OF THE RECEIPT OF THIS
RECEIVABLE CAN NOT BE ASSURED.
Accounts Receivable-Surety Companies $3,282
AMOUNT OF CASH PROCEEDS RECEIVED BY SURETY COMPANIES FROM LETTER OF CREDIT
PRESENTMENTS IN EXCESS OF THE SURETY COMPANIES' APPEAL BOND OBLIGATIONS,
COSTS AND ATTORNEYS' FEES ASSOCIATED WITH THE ISSUANCE AND HONORING OF
APPEAL BONDS ON KEENE'S BEHALF. BY STIPULATION AND AGREED ORDERS, EACH
SURETY COMPANY HOLDING EXCESS CASH PROCEEDS MUST INVEST SUCH EXCESS PROCEEDS
ON KEENE'S BEHALF AND PERIODICALLY REMIT ANY INTEREST EARNED ON THE EXCESS
PROCEEDS TO KEENE.
Accounts Payable (Post-petition) $124
THE COMPANY DOES NOT AGE ITS ACCOUNTS PAYABLE. PAYMENTS ARE MADE IN THE
NORMAL TERMS.
5
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Other Potential Recoveries
(Unaudited)
As of April 27, 1996
The Debtor potentially might recover additional amounts as described below.
However, the recovery of these amounts is uncertain and no assurance can be
given at this time as to whether any recovery will ultimately be obtained and in
what amounts.
Insurance Issued by Insolvent Insurance Companies
Approximately $30 million of Keene's total aggregate available insurance
coverage applicable to asbestos-related claims is due from insolvent insurance
companies. Keene settled claims against certain state guaranty funds arising
from the lack of availability of the insurance coverage issued by the insolvent
insurance companies for a total aggregate payment of $9.5 million, which was
received in 1993 and 1994. In addition, Keene received a distribution of $1.4
million in 1995 from the liquidator of one insolvent insurance company. Keene
is continuing to pursue claims against the liquidators of the insolvent
insurance companies.
In 1993, prior to the filing of the Chapter 11 petition, Keene filed a
lawsuit against the Pennsylvania Insurance Guaranty Association ("PIGA") seeking
indemnification from PIGA for up to approximately $20 million of
asbestos-related payments made by Keene to Pennsylvania citizens as a result of
the lack of availability of the insurance coverage issued by the insolvent
insurance companies. This lawsuit is in the pre-trial phase.
Ten Year Net Operating Loss Carryback
Keene has carried back, and anticipates carrying back in the future,
federal tax net operating losses arising from asbestos-related litigation to
prior tax periods, which could generate federal tax refunds of as much as
approximately $32 million in the aggregate. However, approximately $30 million
of such refunds will be paid to Bairnco Corporation ("Bairnco"), Keene's former
parent company, because the refunds relate to tax periods in which Bairnco filed
consolidated federal tax returns for an affiliated group of companies of which
Keene was a member. Bairnco claims a legal right to such funds, which Bairnco
refuses to release to Keene. On September 9, 1994, Keene filed a lawsuit (the
"Bairnco NOL Lawsuit") in Bankruptcy Court against Bairnco seeking, among other
things, injunctive relief and a declaratory judgment that the approximately $30
million in refunds which are presently due, or are anticipated to become due, on
account of federal income taxes previously paid by Keene in the years 1983
through 1989 when Keene was a member of the Bairnco consolidated federal tax
return, are property of Keene's estate. On January 4, 1995, Keene obtained
Bankruptcy Court approval of an escrow arrangement with Bairnco, providing for
the segregation and investment of the refunds at issue in the Bairnco NOL
Lawsuit until the lawsuit is resolved. To date, federal tax refunds of
approximately $30 million have been received. Of the approximately $30 million
received, approximately $28.5 million has been received by Bairnco and placed in
escrow and approximately $1.5 million was received by Keene.
By stipulation and agreed order, Keene and the Official Committee of
Unsecured Creditors (the "Committee") agreed that the Bairnco NOL Lawsuit
originally filed by Keene would be prosecuted by the Committee for the benefit
of Keene's estate. On February 13, 1995, the Committee filed an amended
complaint substituting the Committee as the party plaintiff and alleging
additional counts. Pursuant to Stipulation and Order dated June 27, 1995, the
Committee filed a second amended complaint on July 5, 1995 alleging additional
counts.
On or about March 7, 1996, the Internal Revenue Service informed Keene that
it planned to amend its previously filed administrative expense claim from
approximately $3,500 to approximately $31.8 million as a protective filing
pending final approval by the Joint Committee on Taxation of the United States
Congress of the tax refunds at issue in the Bairnco NOL Lawsuit.
6
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Other Potential Recoveries
(Unaudited)
As of April 27, 1996
(Continued)
Co-Defendant Contributions
Keene has claims against co-defendants in asbestos litigation for
contribution or indemnification based on payments made by Keene under theories
of joint and several liability and other theories. Likewise, co-defendants in
asbestos litigation may have claims against Keene for contribution and
indemnification under joint and several liability and other theories. However,
the amounts of such potential contribution or indemnification claims cannot be
estimated at this time.
On June 20, 1995, as a direct result of Keene's active participation in the
proposed settlement of a class action brought by beneficiaries of the Manville
Personal Injury Settlement (the "Manville Trust") in Findley v. Falise, Keene
was initially allocated in excess of $3.8 million of the $35 million
Contribution Claim Fund established for claimants holding indemnification or
contribution claims against the Manville Trust as part of the settlement. This
allocation, however, is subject to the resolution of objections filed by certain
other co-defendants to the co-defendant allocation scheme. To date, Keene is
informed that it has been allocated at least $3.5 million, subject to an upward
adjustment to approximately $3.8 million if certain pending objections are
resolved in the Manville Trust's administrator's favor. Pursuant to the
governing distribution principles, Keene may use its portion of the $35 million
co-defendant settlement fund either for direct payments to individual asbestos
health claimants or for transfer to an asbestos creditors' trust.
Challenge to Bank of America Illinois (the "Bank") Claims
Upon the presentation of certain letters of credit issued by the Bank to
secure appeal bonds posted on Keene's behalf by certain sureties, the Bank filed
a motion for relief from the automatic stay to foreclose its asserted security
interests in Keene's book-entry United States Treasury securities (the
"Collateral") pledged against the Bank's issuance of letters of credit to
secure appeal bonds posted on Keene's behalf. In response to the Bank's motion,
the Committee challenged such security interests as not being properly
perfected, contending that the Bank's claims to these Keene assets should be
equitably subordinated or otherwise avoided.
In a Memorandum Decision and Order dated October 17, 1995, the Bankruptcy
Court denied the Bank relief from the automatic stay and directed, among other
things, that an evidentiary hearing be conducted to determine the intention of
the Bank and Keene concerning the creation of the security interests in the
Collateral and the ambiguous description of the Collateral in the related
security agreements. Pursuant to this decision and order and a November 30, 1995
Bankruptcy Court ruling, the Committee filed an adversary proceeding against the
Bank on December 1, 1995 seeking to avoid and recover certain allegedly
preferential transfers made by Keene for the Bank's benefit in connection with
Keene's granting the Bank security interests in the Collateral and challenging
the Bank's allegedly perfected security interests. Approximately $32 million was
at issue in this action.
On March 11, 1996, the Bank, the Debtor and the Committee announced that
they had settled all the disputes concerning the validity of the Bank's
security interests. The settlement provides for, among other things, the
Bank's payment of $0.2 million to the Keene estate and the Committee's
dismissal with prejudice of its adversary proceeding against the Bank and its
appeal of the October 17, 1995 Memorandum Decision and Order.
7
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Other Potential Recoveries
(Unaudited)
As of April 27, 1996
(Continued)
Transactions Lawsuits
Prior to September 1993, a number of lawsuits were filed, including two
lawsuits filed in federal court in New York (collectively, the "Prepetition
Transactions Lawsuits"), alleging that the sale of certain Keene assets during
the 1980s to certain subsidiaries of Bairnco, Keene's former parent company,
were not for fair value or were otherwise improper. Keene is not a named party
in some of the cases, although certain of its former and current officers and
directors are named defendants in some of the cases. The Prepetition
Transactions Lawsuits generally seek several forms of relief, including the
setting aside of the asset sales and the appointment of a receiver for those
assets, a declaration that Bairnco and certain of its present and former
subsidiaries are responsible for asbestos-related claims against Keene, the
imposition of a constructive trust on certain assets of Bairnco and certain of
Bairnco's present and former subsidiaries, compensatory damages in an
unspecified amount and attorneys' fees and costs.
By Orders dated April 15, 1994 and May 11, 1994, the Bankruptcy Court
appointed an examiner to investigate whether or not the claims or causes of
action asserted in the Prepetition Transactions Lawsuits were valid. The
examiner's preliminary report was released on September 23, 1994. The examiner
concluded, among other things, that there may arguably be valid claims or causes
of action related to the sale of some of the Keene assets to Bairnco. The
potential for any recovery arising from these claims or causes of action cannot
be accurately estimated at this time. By Stipulation of Settlement Regarding a
Consensual Plan of Reorganization for the Debtor, approved by the Bankruptcy
Court on March 28, 1995 (the "Stipulation"), Keene, the Committee and the Legal
Representative for Future Claimants agreed, among other things, that the
Committee would prosecute the claims or causes of actions investigated by the
examiner, subject to such terms and conditions deemed appropriate by the
Bankruptcy Court. By Order dated May 3, 1995 (the "May 3 Order") , the
prosecution of the claims or causes of action asserted in the Prepetition
Transactions Lawsuits was transferred to the Committee. On June 8, 1995, the
Committee filed a lawsuit in Bankruptcy Court on behalf of the Debtor, as
contemplated by the May 3 Order (the "Transactions Lawsuit"). The Transactions
Lawsuit names 21 corporate and individual defendants and alleges, among other
things, violations of the fraudulent conveyance laws, the New York Business
Corporation Law and the Racketeer Influenced and Corrupt Organizations Act, tort
liability based on theories of successor liability and veil piercing and breach
of fiduciary duties. The damages (including treble damages) and attorneys fees
and costs asserted in the various counts pleaded in the Transactions Lawsuit,
if aggregated, seek a total recovery in excess of $7 billion. At a hearing on
January 31, 1995, the Bankruptcy Court ruled, among other things, that the
Transactions Lawsuit would be stayed until March 11, 1996, with the exception
of certain discovery, and that Committee Counsel would be compensated for
prosecuting the lawsuit at its regular hourly rates subject to Bankruptcy Court
approval. On March 11, 1996, the Bankruptcy Court approved an agreement
relating to the Transactions Lawsuit which provided for, among other things, the
withdrawal of the action from the Bankruptcy Court to the District Court seventy
one days after the Bankruptcy Court confirms the Debtor's consensual plan of
reorganization.
Unjust Enrichment Lawsuit
On June 3, 1994, Keene filed a lawsuit in Bankruptcy Court against 27 law
firms alleging violations of federal anti-trust laws, the Racketeer Influenced
and Corrupt Organizations Act, professional ethics rules and fiduciary
obligations. The lawsuit seeks damages of $130 million along with treble
damages, punitive damages and attorneys' fees and costs, which, if awarded,
could bring the total recovery to up to $390 million. The Stipulation provides
for, among other things, the dismissal with prejudice of this lawsuit on the
effective date of a consensual plan of reorganization
8
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Other Potential Payments
(Unaudited)
The Debtor may be required to pay certain amounts as described below.
However, the payment of these amounts is uncertain and no assurance can be given
at this time as to the ultimate payments.
Secured Judgments
On the date of its Chapter 11 filing, approximately 60 non-final judgments
totaling approximately $22 million and a number of final judgments totaling
approximately $29 million were outstanding against Keene and secured by appeal
bonds or escrow arrangements. The appeal bonds were backed by letters of credit
issued by Bank of America Illinois (formerly Continental Bank, N.A.) or Fleet
National Bank of Connecticut (formerly Shawmut Bank Connecticut, N.A.). The
letters of credit were, in turn, secured by the pledge of certain Keene assets.
By two separate Orders dated January 13, 1994 and January 26, 1994, the
Bankruptcy Court authorized the payment of all final judgments. Accordingly,
the related appeal bonds were drawn, the related letters of credit, in turn,
were drawn and those assets pledged by Keene were liquidated or the escrow
accounts were released.
The non-final judgments are on appeal to higher courts, which appeals are
subject to the automatic bankruptcy stay. Motions for relief from the automatic
stay may be filed with the Bankruptcy Court for each individual non-final
judgment and, if granted, the appeal may be completed. If the result of any
appeal is adverse to Keene, the amount of the judgment may have to be paid,
resulting in the appeal bonds securing these judgments being drawn in payment
of these judgments, the letters of credit securing these appeal bonds, in turn,
being drawn and certain Keene assets being liquidated by the banks which issued
the letters of credit. To date, approximately 45 non-final judgments totaling
approximately $20 million were settled for the payment of approximately $13
million in the aggregate.
Avoidance Actions and Tolling Agreements
On or about November 28, 1995 and with the Bankruptcy Court's approval, the
Committee entered into tolling agreements with seven former and present
directors and officers of Keene. These agreements extend until December 3,
1996 the time for commencing actions against each for alleged liability to Keene
concerning, among other things, certain allegedly avoidable or recoverable
transfers. Mr. Bailey, Keene's former Chairman and President, did not sign a
tolling agreement and, as a consequence, the Committee was authorized by the
Bankruptcy Court to file an adversary proceeding against him. On December 1,
1995, the Committee filed its complaint against Mr. Bailey alleging a number of
grounds for liability. With limited exceptions, the claims that have been
tolled against two of Keene's former and present officers and all of Keene's
directors except Mr. Bailey, as well as the claims asserted against Mr. Bailey,
would be released on the effective date of the amended consensual plan of
reorganization filed on January 29, 1996 pursuant to the Stipulation.
9
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Insurance Payment Report
For the period March 31, 1996 - April 27, 1996
(Unaudited)
($000's)
<CAPTION>
Insurance Carrier Due Date Amounts Paid
<S> <C> <C> <C>
General Liability Transamerica Pre-paid 6/95-6/96 $-
Inland Marine
Property
Umbrella General Star National Pre-paid 6/95-6/96 -
Workers'
Compensation Paramount Pre-paid 6/95-6/96 -
Commercial
Crime The Hartford 3 Year Policy -
6/94 - 6/97
Directors
& Officers United Capitol Pre-paid 8/95-8/96 -
Executive Re
Specialty Pre-paid 8/95-8/96 -
Executive Re Additional discovery for
Specialty 8/90-8/94 period
Prepaid 8/95-8/98 -
___
TOTAL PAYMENTS $-
===
<FN>
10
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Taxes Collected, Received, Due or Withheld
For the period March 31, 1996 - April 27, 1996
(Unaudited)
($000's)
<CAPTION>
Taxes Withheld/Due Taxes Paid Date Paid
<CAPTION>
Gross Salaries
and Wages $61
<S> <C> <C> <C>
Total Federal Payroll
Taxes Withheld $19 $19 4/17/96
Total Employer Payroll Taxes 5 5 4/17/96
Total State Payroll Taxes Withheld 3 3 4/18/96
Total Local Payroll Taxes Withheld 1 1 4/18/96
___ ___
Totals $28 $28
=== ===
<FN>
11
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Schedule of General Operating Expenses
For the Period March 31, 1996 - April 27, 1996
(Unaudited)
($000)
<S> <C>
NORMAL COURSE CONSULTING $1
CORPORATE LEGAL FEES 5
APPEAL BOND COSTS 14
STOCK TRANSFER FEES 2
DEPRECIATION 1
BUSINESS TRAVEL AND EXPENSES 5
DIRECTORS FEES 8
COMMUNICATIONS & POSTAGE 2
SUPPLIES & DUPLICATION 1
BANK FEES 1
OTHER EXPENSES 7
___
TOTAL $47
<FN>
12
</TABLE>
