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) July 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 July 15, 1996, Keene Corporation ("Keene") filed its operating report for the
period May 26, 1996 to June 29, 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 July 15, 1996 for the period May 26, 1996 to
June 29,1996.
99(b) No Action Request to the Securities and Exchange Commission dated
March 8, 1994
<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: July 30, 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
MAY 26, 1996 TO JUNE 29, 1996
DEBTOR'S ADDRESS:
757 THIRD AVENUE SUITE 850
NEW YORK, NEW YORK 10017
PERIOD DISBURSEMENTS: $387,000
DEBTOR'S ATTORNEYS:
BERLACK, ISRAELS & LIBERMAN LLP
GENERAL COUNSEL
REPORT PREPARER:
TRACEY KARM
KEENE CORPORATION
PERIOD OPERATING PROFIT (LOSS): $(148,000)
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
7/15/96 /s/ Timothy E. Coyne, Pres.
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 MAY 26, 1996 - JUNE 29, 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.
ON JUNE 12, 1996, THE BANKRUPTCY COURT AND THE DISTRICT COURT
(COLLECTIVELY, THE "COURT") HELD A HEARING ON THE CONFIRMATION OF THE
DEBTOR'S FOURTH AMENDED PLAN OF REORGANIZATION, AS MODIFIED, (THE "PLAN"),
AT WHICH TIME THE COURT SIGNED AN ORDER CONFIRMING THE PLAN. THE EFFECTIVE
DATE OF THE PLAN IS EXPECTED TO OCCUR ON OR ABOUT JULY 31, 1996.
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Operating Report
For the Period May 26, 1996 - June 29, 1996
INDEX
PAGE #
Operating Results for the Period May 26, 1996-
June 29, 1996 1-3
Summary of Cash and Cash Equivalents and Investments
as of June 29, 1996 4
Receivables and Payables Summary as of June 29, 1996 5
Other Potential Recoveries as of June 29, 1996 6-8
Other Potential Payments as of June 29, 1996 9
Confirmation of Plan of Reorganization and
Related Matters as of June 29, 1996 10
Insurance Payment Report for the Period
May 26, 1996 - June 29, 1996 11
Taxes Paid Summary for the Period May 26, 1996-
June 29, 1996 12
Schedule of General Operating Expenses for the
Period May 26, 1996 - June 29, 1996 13
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Income Statement
For the Period May 26 1996 - June 29, 1996
(Unaudited)
($000's)
<CAPTION>
INCOME
<S> <C> <C>
Investment Income $143
GENERAL & ADMINISTRATIVE EXPENSES
Salary, Wages, Benefits and Payroll Taxes 87
Rent and Utilities 26
Insurance 52
General Operating Expenses (See Page 13) 78
_____
Loss Before Reorganization Items, Income Taxes
and Equity in Earnings of Subsidiary (100)
Reorganization Items:
Debtor's Counsel Legal Fees $100
Creditors Committee Counsel Legal Fees 100
Other 50 250
______
Loss Before Income Taxes and Equity in Earnings of Subsidiary (350)
Income Tax Benefit (57)
______
Loss Before Equity in Earnings of Subsidiary (293)
Equity in Earnings of Subsidiary 145
______
NET LOSS $(148)
======
<FN>
1
</FN>
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Balance Sheet
As of June 29, 1996
(Unaudited)
($000's)
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash and Cash Equivalents $12,473
Investments at Market 18,678
Accounts Receivable-Insurance Proceeds 15,000
Accounts Receivable-Surety Companies 3,309
Income Taxes Receivable 393
Investment Income Receivable 254
Due from Subsidiary (1) 662
Prepaid and Other Current Assets 125
_______
Total Current Assets 50,894
Net Fixed Assets 75
Investment in Subsidiary 7,294
Intangible Pension Asset 125
_______
TOTAL ASSETS $58,388
=======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Current Liabilities
Accounts Payable - Trade $122
Uncleared Outstanding Checks 10
Accrued Expenses 382
_______
Total Current Liabilities 514
Liabilities Subject to Chapter 11 Proceedings
Accounts Payable - Trade (Pre-Petition) 406
Accounts Payable - Retained Professionals' Hold 2,863
FASB 5 Asbestos Litigation Reserve (Pre-Petition) 5,311
Accrued Expenses 6,975
_______
Total Liabilities Subject to Chapter 11 Proceedings 15,555
Long Term Minimum Pension Liability 2,539
STOCKHOLDERS' INVESTMENT
Common Stock 1
Paid-in-Capital 120,411
Retained Loss (78,206)
Unrealized loss on Investment Securities (12)
Additional Pension Liability in Excess of Unrecognized
Prior Service Cost (2,414)
_______
Total Stockholders' Investment 39,780
_______
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $58,388
=======
<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
</FN>
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Statement of Cash Flows
For the period May 26, 1996 - June 29, 1996
(Unaudited)
($000's)
<CAPTION>
RECEIPTS
<S> <C>
Investment Income $304
Other 68
______
Total Receipts 372
DISBURSEMENTS
Salary, Wages, Benefits and Payroll Taxes 55
1995 Final Pension Contribution 222
Other General and Administrative Expenses
General Operating 66
Bankruptcy-related 44
______
Total Disbursements 387
Increase in Uncleared Outstanding Checks (27)
______
Net Cash used in Operating Activities (42)
______
Maturity of Marketable Security 9,981
Investment in Marketable Security (4,864)
______
Net Cash provided by Investing Activities 5,117
______
Net Increase in Cash and Cash Equivalents 5,075
Cash and Cash Equivalents at Beginning of Period 7,398
______
Cash and Cash Equivalents at End of Period $12,473
======
<FN>
3
</FN>
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Summary of Cash and Cash Equivalents and Investments
As of June 29, 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 45 45 -
Citibank On Demand Cash in Investment Accts 25 25 25
Bank of America - IL (1) On Demand Cash in Investment Accts 1 1 -
Bank of America - IL On Demand Horizon Treasury
Fund 5.0500% 12,292 12,292 -
_______ _______ ______
Total Bank of America - IL 12,293 12,293 -
_______ _______ ______
Fleet National Bank On Demand Fidelity Institutional
of Connecticut (2) Money Market 5.2900% 110 110 -
_______ _______ ______
Total Fleet National Bank
of Connecticut 110 110 -
_______ _______ ______
TOTAL CASH AND CASH EQUIVALENTS $12,473 $12,473 $25
======= ======= ======
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% 236 238 238
Citibank 06-Oct-92 30-Sep-96 T-Note 7.0000% 93 85 85
_______ _______ ______
Total Citibank 420 408 408
_______ _______ ______
Bank of America - IL 15-Feb-96 08-Aug-96 T-Bill 4.6900% 519 528 519
Bank of America - IL 13-Mar-96 08-Aug-96 T-Bill 4.8200% 2,160 2,193 2,160
Bank of America - IL 15-Mar-96 19-Sep-96 T-Bill 4.9650% 6,818 6,918 -
Bank of America - IL 11-Jun-96 12-Dec-96 T-Bill 5.3200% 4,864 4,880 -
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% 379 382 -
Bank of America - IL 30-Sep-91 30-Sep-96 T-Note 7.0000% 230 232 -
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 15,398 15,556 2,679
_______ _______ ______
Fleet National Bank
of Connecticut 15-Mar-96 19-Sep-96 T-Bill 5.0000% 2,872 2,916 556
_______ _______ ______
Total Fleet National Bank 2,872 2,916 556
of Connecticut
_______ _______ ______
LESS: T-BILL INTEREST IN MARKET VALUE (3) - 202 -
_______ _______ ______
TOTAL INVESTMENTS $18,690 $18,678 $3,643
======= ======= ======
GRAND TOTAL - CASH AND CASH
EQUIVALENTS AND INVESTMENTS $31,163 $31,151 $3,668
======= ======= ======
<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
</FN>
</TABLE>
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Receivables and Payables Summary
As of June 29, 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 $3,309
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) $122
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 June 29, 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 June 29, 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. On June 12, 1996,
the Bankruptcy Court approved the Settlement and on July 8, 1996 Keene received
the Settlement monies.
7
<PAGE>
Keene Corporation
(Debtor-in-Possession)
Other Potential Recoveries
(Unaudited)
As of June 29, 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)
As of June 29, 1996
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 Keene's former and present officers and 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>
Keene Corporation
(Debtor-in-Possession)
Confirmation of Consensual Plan of Reorganization and Related Matters
(Unaudited)
As of June 29, 1996
On June 12, 1996, the Bankruptcy Court and the District Court (collectively,
the "Court") held a hearing on the confirmation of the Debtor's Fourth Amended
Plan of Reorganization, as modified, (the "Plan"), at which time the Court
signed an order confirming the Plan. The Plan is expected to go effective
on or about July 31, 1996. Also, on June 12, 1996, the Bankruptcy Court signed
a case management order dismissing, among other things, the Unjust Enrichment
Lawsuit, subject to the occurrence of the effective date of the Plan.
10
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Insurance Payment Report
For the period May 26, 1996 - June 29, 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>
11
</FN>
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Taxes Collected, Received, Due or Withheld
For the period May 26, 1996 - June 29, 1996
(Unaudited)
($000's)
<CAPTION>
Taxes Withheld/Due Taxes Paid Date Paid
<CAPTION>
Gross Salaries
and Wages $46
<S> <C> <C> <C>
Total Federal Payroll
Taxes Withheld $13 $13 6/18/96
Total Employer Payroll Taxes 2 2 6/18/96
Total State Payroll Taxes Withheld 3 3 6/19/96
Total Local Payroll Taxes Withheld - - 6/19/96
___ ___
Totals $18 $18
=== ===
<FN>
12
</FN>
</TABLE>
<PAGE>
<TABLE>
Keene Corporation
(Debtor-in-Possession)
Schedule of General Operating Expenses
For the Period May 26, 1996 - June 29, 1996
(Unaudited)
($000)
<S> <C>
NORMAL COURSE CONSULTING $2
NON-EMPLOYEE STOCK OPTION COMPENSATION 42
CORPORATE LEGAL FEES 1
STOCK TRANSFER FEES 4
DEPRECIATION 4
BUSINESS TRAVEL AND EXPENSES 3
DIRECTORS FEES 8
COMMUNICATIONS & POSTAGE 4
SUPPLIES & DUPLICATION 3
BANK FEES 1
OTHER EXPENSES 6
___
TOTAL $78
<FN>
13
</FN>
</TABLE>
<PAGE>
Exhibit 99(b)
HAYTHE & CURLEY
237 Park Avenue
New York, NY 10017-3142
212/880-6000
Facsimile 212/682-0200
Securities Exchange Act of 1934
Rules 12b-21 and 12b-25
March 8, 1994
FEDERAL EXPRESS
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, NW
Judiciary Plaza
Washington, DC 20549
Re: Keene Corporation
Ladies and Gentlemen:
On behalf of our client Keene Corporation, a Delaware corporation ("Keene"),
we respectfully request that the Staff of the Securities and Exchange Commission
(the "Commission") not recommend enforcement action to the Commission if,
during the pendency of its current bankruptcy proceedings, Keene undertakes to
file with the Commission under cover of Current Reports on Form 8-K certain
bankruptcy reports described below, in lieu of filing Annual and Quarterly
Reports on Forms 10-KSB and 10-QSB as required by the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The following information has been
provided to us by Keene for inclusion herein.
Background
Keene is a reporting company under the Exchange Act. Keene has been
engaged in managing its asbestos-related litigation and, through a wholly owned
subsidiary, manufacturing
<PAGE>
Office of Chief Counsel -2- March 8, 1994
advanced composite components and sheet molding compounds for a variety of
aerospace, defense and commercial applications.
On December 3, 1993 (the "Petition Date"), Keene filed a voluntary petition
for relief under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court Case No. 93-B-46090 (SMB). Keene has remained in
possession of its property and has continued to operate its business as a debtor
- -in-possession since the Petition Date. Keene issued a press release disclosing
the bankruptcy filing on December 3, 1993, and, on December 17, filed a Current
Report on Form 8-K making an Item 3 disclosure of such filing. As of the
Petition Date, Keene was current in its filings under the Exchange Act. Except
for the aforementioned Form 8-K, no filings for Keene under the Exchange Act
have become due since the Petition Date.
As a debtor-in-possession, Keene is subject to the provisions of the
Bankruptcy Code and the rules promulgated thereunder, as well as the supervision
of the Office of the U.S. Trustee for the United States Bankruptcy Court (the
"U.S. Trustee").
In addition, in accordance with the Bankruptcy Code, Bankruptcy Rules and
the Guidelines of the U.S.Trustee, monthly financial reports are filed with
the U.S. Trustee and furnished to certain other interested persons. The monthly
reports ("Monthly Reports") are filed within 15 days of each month end, and
contain (I) a profit and loss statement detailing revenues, expenses, net
profits and other essential operating data and (ii) a cash position statement
detailing balances, receipts and expenditures for all cash and securities
accounts. These financial reports are publicly available and serve as a means
for Keene's creditors and the Bankruptcy Court to monitor Keene's finances and
activities on an ongoing basis.
Keene presently has only a small headquarters staff, who are managing
Keene's affairs, and complying with the obligations of Keene as a debtor-in-
possession. The small headquarters staff is already overburdened complying with
the substantial reporting requirements of Chapter 11 described above. In
addition, because Keene's available liquid assets are extremely limited, the
expenses incident to filing the reports and information required by the Exchange
Act will directly reduce Keene's operating capital and over time could prejudice
its ability to reorganize.
Trading in Keene's Common Stock was delisted by the NASDAQ National market
System ("NASDAQ/NMS") on December 29, 1993. Keene has been informed that its
securities are quoted on
<PAGE>
Office of Chief Counsel -3- March 8, 1994
the NASDAQ OTC Bulletin Board and trade only sporadically, at pennies per share,
in the over-the-counter market. Keene's stock transfer agent's records confirm
that the number of transfers of Keene stock certificates has severely declined
since the delisting.
Analysis
In Exchange Act Release No. 9660, dated June 30, 1972 (the "Release"), the
Commission indicated that it is willing to accept reports from an issuer which
differ in form and/or content from the quarterly and annual reports otherwise
required pursuant to the Exchange Act in instances where the issuer is subject
to bankruptcy proceedings or has ceased or severely curtailed its operations so
long as the reports and modified reporting procedure are consistent with the
protection of investors. In addition, the Commission indicated that, in
determining whether the substitute reports and modified procedure are
appropriate, the Commission would consider the nature and extent of the trading
in securities of the issuer and the burden that compliance with the requirements
of the Exchange Act would impose on the issuer.
The policies set forth in the Release have been implemented by the Staff
in a series of letters taking no-action positions on various forms of modified
reporting for Exchange Act companies in bankruptcy. See, e.g. First Executive
Corporation (available November 14, 1991), Zale Corporation (available September
11, 1992), Yuba WestGold, Inc. (available November 16, 1992), American Body
Armor & Equipment, Inc. (available April 21, 1993), Washington Bancorporation
(available October 30, 1990), Carnagie International Corporation (available
July 1, 1983), Midway Airlines, Inc. (available April 17, 1991), SPC,Inc.
(available September 25, 1990), TTS, Inc. (available June 4, 1990), Bio-
Response, Inc. (available April 2, 1990), MMR Holding Corpo.(available December
6, 1990), Mosely Holding Crop. (available June 8, 1989), Fitzgerald, DeArman &
Roberts, Inc. (available December 9, 1988), Argo Petroleum Corporation
(available June 15, 1987) and Baldwin-United Cooperation (available August 7,
1985).
Keene's situation is similar to the facts in the American Body Armor &
Equipment, Inc. ("ABA") no-action letter. Like ABA, Keene has limited available
resources which would be quickly depleted if they were used to compensate
accountants and attorneys to prepare Exchange Act filings. Since Keene's Common
Stock has been delisted from the NASDAQ/NMS, there has been little trading
activity (as was the case with ABA's stock). Management of Keene believes that
the interests of Keene's stockholders and creditors would not be served by
requiring Keene
<PAGE>
Office of Chief Counsel -4- March 8, 1994
to comply with the reporting requirements of the Exchange Act during the
pendency of its bankruptcy proceedings and that the previous no-action letters
of the Staff indicate that relief from such obligations should be granted to
Keene.
Consequently, on behalf of Keene, we respectfully request that the Staff
not recommend enforcement proceedings if, in lieu of filing Annual and Quarterly
Reports on Forms 10-KSB and 10-QSB, during the pendency of Keene's bankruptcy
precedents, Keene files, under cover of a Current Report on Form 8-K, all
Monthly Reports. Keene would undertake to file Monthly Reports within 15 days
after such reports are filed with the Bankruptcy Court or the U.S. Trustee. If
and when Keene emerges from bankruptcy, it will thereafter fully comply with the
requirements of the Exchange Act. During the pendency of its bankruptcy, Keene
would, of course, timely file all other Current Reports on Form 8-K required to
be filed by it except to the extent that such reports may require the inclusion
of audited financial data or other information that Keene cannot obtain without
unreasonable effort or expense.
Conclusion
We appreciate your consideration at your earliest convenience of Keene's
application for a no-action letter ruling and would be happy to discuss Keene's
application with you. For the Staff's convenience, seven additional copies of
this letter are enclosed herewith. Should you have any questions regarding this
matter, please contact the undersigned at 212/880-6010.
Please acknowledge receipt of this letter by stamping the additional
enclosed copy of this letter and returning it to the undersigned in the enclosed
self-addressed, stamped envelope.
Very truly your,
/s/ Andrew Beck
Andrew Beck
