<PAGE> 1<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 1996
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Fruehauf Trailer Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-10772 38-2863240
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
111 Monument Circle, Suite 3200, Indianapolis, Indiana 46204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(317)630-3000
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Exhibit Index Appears on Page 4
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Item 5. Other Events.
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The Company is seeking consent from the
holders of its 14.75% Senior Secured Notes Due
2002 to certain waivers and amendments to the
Indenture dated as of May 1, 1995 between the
Company and IBJ Schroder Bank & Trust Company,
as Trustee. A copy of this Consent
Solicitation is attached as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
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(c) Exhibits.
99 Consent Solicitation of the Company to the
Holders of its 14.75% Senior Secured Notes
Due 2002, dated May 3, 1996.
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SIGNATURE
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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.
FRUEHAUF TRAILER CORPORATION
Date: May 10, 1996 By:/s/Gregory G. Fehr
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Gregory G. Fehr
Corporate Controller
(Principal Accounting Officer)
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EXHIBIT INDEX
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Pagination by
Sequential
Numbering
Exhibit Description of Exhibit System
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99 Consent Solicitation of the Company 5
to the Holders of its 14.75% Senior
Secured Notes Due 2002, dated May 3,
1996.
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FRUEHAUF TRAILER CORPORATION
111 Monument Circle, Suite 3200
P. O. Box 44913
Indianapolis, Indiana 46244-0913
May 3, 1996
To the Holders of
14.75% Senior Secured Notes Due 2002
of Fruehauf Trailer Corporation:
Re: Consent Solicitation
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As you know, Fruehauf Trailer Corporation (the
"Company") issued $74,117,000 aggregate principal amount
of its 14.75% Senior Secured Notes Due 2002 (the "Senior
Notes") on May 4, 1995, pursuant to the Indenture (the
"Indenture"), dated as of May 1, 1995, between the Company
and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee"). As a result of fully subscribed offers to
purchase Senior Notes dated September 15 and October 2,
1995 pursuant to the Indenture, the Company has
repurchased $11,543,000 in aggregate principal amount of
Senior Notes.
As you may be aware, the Company did not make the
interest payment on the Senior Notes due on May 1, 1996
(the "May 1 Payment") as scheduled. During the last half
of 1995, the Company experienced production difficulties
at its Fort Madison, Iowa and Scott County, Tennessee
trailer assembly plants. More recently, the Company has
been experiencing the effects of reduced retail demand in
the new trailer industry. As a result of these and other
factors, the ability of the Company to meet its ongoing
debt service requirements has been adversely affected. In
response to this situation, the Company is pursuing a
number of transactions (the "1996 Transactions") to
increase its liquidity and to enable it to make the May 1
Payment within the 30 day grace period provided for in the
Indenture. These transactions are also designed to return
significant economic value to the holders of the Senior
Notes (the "Holders") and to strengthen the Company's
liquidity to permit it to pursue its previously announced
goal of achieving a strategic transaction.
This letter requests certain consents by the Holders
to the waiver of certain covenants contained in the
Indenture, the amendment of the Indenture and the
amendment of the Intercreditor Agreement with reference to
the transactions described below. If the Company does not
receive the requested consents, the Company may not have
sufficient liquidity both to make the May 1 1996 Payment
and to operate its business. Should the requisite
consents not be obtained, the Company will consider its
available alternatives, including the possibility of
discontinuing its effort to complete the Foreign Sale (as
hereinafter defined).
This letter (this "Consent Solicitation Statement")
and the accompanying Consent form ("Consent") are referred
to collectively as the "Consent Solicitation." The terms
and conditions of the Consent Solicitation are contained
in this Consent Solicitation Statement and the Consent.
Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Indenture or in
the Intercreditor Agreement referred to therein.
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1996 TRANSACTIONS
On April 19, 1996, the Company entered into a letter
agreement (the "KHC Letter Agreement") with K-H
Corporation, a Delaware Corporation ("KHC"), pursuant to
which, among other things, KHC agreed to purchase an
initial $5.5 million interest, and agreed to purchase an
additional $1.0 million interest upon successful
completion of this Consent Solicitation, in the Working
Capital Facility (the "Funding"). The initial $5.5
million portion of the Funding was consummated on April
25, 1996. The Funding was designed to enhance the
Company's liquidity by expanding its availability under
Working Capital Facility. KHC was formerly known as
Fruehauf Corporation and was the entity from which the
Company purchased its trailer and maritime businesses and
assumed substantial liabilities associated with such
businesses. The KHC Letter Agreement contemplates that
KHC may, but is not required to, make additional loans to
the Company in the future. Such additional indebtedness,
if incurred, would be subordinated to the indebtedness
represented by the Indenture Obligations and would be used
to assist in the resolution of certain of the Company's
trailing liabilities. As part of the Funding, Congress
Financial Corporation (Central), the lender under the
Working Capital Facility, agreed to waive its right to a
portion of the proceeds of the Foreign Sale subject to
certain conditions, including receipt by the Company of
certain minimum gross and net proceeds from the Foreign
Sale and approval from the Holders for an amendment to the
Intercreditor Agreement described below.
On April 21, 1996 the Company entered into a
non-binding Letter of Intent with Private Equity
Investors, Inc. providing for the sale (the "Foreign
Sale") of certain of the Company's foreign assets for a
purchase price of potentially as much as $25 million, in
cash. Such letter of intent was amended on May 3, 1996
(such Letter of Intent, as amended, the "Letter of
Intent") a copy of which is attached hereto as Exhibit A
and incorporated herein by reference. While the precise
amount of cash that could be generated from the Foreign
Sale cannot be determined at this time, the Company
anticipates receiving approximately $20 million (before
deducting fees and expenses associated with the Foreign
Sale) during May and potentially as much as an additional
$5 million later this year. The Foreign Sale is designed
to return significant economic value to the Holders and to
strengthen the Company's liquidity to permit it to pursue
a strategic transaction.
Without the requested consents under the Working
Capital Facility and the Indenture, the Net Cash Proceeds
of the Foreign Sale would generally be applied (i) to
certain reserves under the Working Capital Facility, (ii)
to repurchase Senior Notes, and (iii) a limited portion to
the Company for its working capital purposes. As
discussed in further detail below, the Company proposes to
use these Net Cash Proceeds to make the May 1 Payment, and
divide the remaining portion in half, with the first half
used to make an offer to repurchase Senior Notes and the
second half retained by the Company for general corporate
purposes.
The Funding
The initial purchase by KHC of a $5.5 million
interest in the Working CapitalFacility was, and the
subsequent $1.0 million purchase is expected to be,
effected through the purchase by KHC of one or more
Working Capital Term Notes issued by the Company to
Congress under the Working Capital Facility (a "Working
Capital Note") pursuant to Note Purchase and Assignment
Agreements (a "Note Purchase Agreement"). In connection
with the initial Note Purchase Agreement, KHC and Congress
also entered into a Subordination Agreement pursuant to
which KHC's rights, including rights to payment of
principal and interest, under a Working Capital Note are
subordinated to Congress's rights under the Working
Capital Facility.
The KHC Letter Agreement contemplates, subject to
successful completion of this Consent Solicitation, the
possibility that the Company may incur additional
indebtedness subordinated to the Indenture Obligations
through future financing arrangements with KHC or one of
its affiliates and the grant by the Company of security
interests subordinate to those of the Trustee (on behalf
of the Secured Parties, including the Holders) and those
of Congress under the Working Capital Facility to secure
such arrangements. The purpose of any such arrangements
would be to assist in resolving certain of the Company's
trailing liabilities.
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Sale of Foreign Assets
As discussed above, the Company has entered into the
Letter of Intent and is pursuing the sale of (i) the
Company's ownership interest in Societe Europeene de
Semi-Remorques, S.A., a French corporation, (ii) the stock
or other ownership interests owned by Fruehauf
International Limited, a wholly owned subsidiary of the
Company ("FIL"), in Henred Fruehauf (PTY) Limited, Henred
Fruehauf Properties (PTY) Limited, Nippon Fruehauf Company
Ltd., and F.L.A. Licensing, L.L.C. (iii) the Company's and
FIL's interests in certain trademark and technology
license agreements currently operative outside North
America (including, without limitation, all of the
Company's and FIL's rights to any fees payable under any
such existing agreements and any renewals thereof that may
be made in the future), and (iv) all of the Company's
interest in the trademark "Fruehauf" outside North America
(these assets and the shares of Deutsche-Fruehauf (as
hereinafter defined), collectively comprising the
"Portfolio"). In addition, the Letter of Intent
contemplates a put-call arrangement between the Company
and the proposed purchaser in the Foreign Sale involving
the shares of Deutsche-Fruehauf Holding Corporation and/or
related entities ("Deutsche-Fruehauf"). The arrangement
for such shares should generate between $1.0 million and
$5.0 million of additional cash proceeds to the Company.
Under the Working Capital Facility, the Indenture and
the Intercreditor Agreement (in each case without giving
effect to the waivers and amendments contemplated
hereunder), the Net Cash Proceeds from the Foreign Sale
would be divided as follows: (i) a portion (approximately
$5.4 million) of the Net Cash Proceeds from the sale of
Non-Core Assets in the Portfolio would be applied to the
Permanent Reserve (as defined in the Intercreditor
Agreement), (ii) a portion of the Net Cash Proceeds
resulting from the sale of Core Assets in the Portfolio
would be paid to the Trustee to be held in the Core
Collateral Account and (a) if not used by the Company for
capital expenditures within 180 days of being credited to
the Core Collateral Account or (b) if an Event of Default
then exists, would be used to repurchase Senior Notes
through an Asset Sale Offer, (iii) 85% of the remaining
Net Cash Proceeds resulting from the sale of Class II
Non-Core Assets in the Portfolio would be deposited
directly with the Trustee to be held in trust for the
Holders and used to repurchase the Senior Notes through an
Asset Sale Offer, and (iv) 15% of the remaining proceeds
resulting from the sale of Class II Non-Core Assets in the
Portfolio would be paid to the Company for its general
corporate purposes.
The Company is proposing that the Net Cash Proceeds
from the Foreign Sale be applied as follows: (i) the May
1 Payment would be made to the Holders, (ii) one-half of
the remaining Net Cash Proceeds (including proceeds from
the sale of shares of Deutsche-Fruehauf) would be
deposited with the Trustee to be held in trust for the
Holders and used to make an Asset Sale Offer, and (iii)
the remaining Net Cash Proceeds (including proceeds from
the sale of shares of Deutsche-Fruehauf) would be paid to
Congress for application to the Working Capital Facility
but not applied to the Asset Sale Reserve or used to
increase the Permanent Reserve. These proceeds would thus
increase the Company's borrowing availability under the
Working Capital Facility and would strengthen the
Company's liquidity to permit it to pursue a strategic
transaction.
In connection with the proposed Foreign Sale and the
execution of the KHC Letter Agreement, Congress and the
Company entered into a Limited Waiver (the "Congress
Limited Waiver"), attached hereto as Exhibit B and
incorporated herein by reference, pursuant to which, among
other items (including the extension of Congress's waiver
of the covenant prohibiting the payment of certain
liabilities), Congress has waived the provisions of the
Working Capital Facility to permit the Foreign Sale to
occur. In the Congress Limited Waiver, "Foreign Sale" is
defined to be a transaction in which, among other
requirements, (i) the Company receives not less than $23
million (before deducting fees and expenses) in Net Cash
Proceeds from the sale of the Portfolio, and (ii) the
Company receives, after all payments to or for the benefit
of the Holders, not less than $7.5 million that is used to
pay down the Working Capital Facility but remains
available to the Company for working capital purposes. In
the event these targets are not met with the proceeds from
the Foreign Sale, the Company will seek such additional
waivers as are necessary from Congress to complete the
Foreign Sale.
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One of the other conditions to the effectiveness of
the Congress Limited Waiver in relation to the Foreign
Sale (including the waiver of Congress' right to as much
as $5.4 million of the proceeds of the Foreign Sale as a
result of the Company's noncompliance with a covenant
prohibiting the payment of certain liabilities) is that
the Trustee enter into an amendment to the Intercreditor
Agreement: (i) permitting the portion of Net Cash Proceeds
of the Foreign Sale which are paid to Congress to be
applied as set forth in the second preceding paragraph
above, (ii) providing that the failure by Congress to
increase the Asset Sale Reserve or the Permanent Reserve
with respect to such portion of such Net Cash Proceeds
will not limit Congress's ability or right to apply future
Net Cash Proceeds from an Asset Sale to the Permanent
Reserve, and (iii) consenting to an amendment by Congress
and the Company to the Working Capital Facility permitting
such application and such ability.
The Congress Limited Waiver also contemplates an
additional amendment to the Intercreditor Agreement
pursuant to which the Asset Sale Reserve would be reduced
to zero and the Permanent Reserve, currently approximately
$0.3 million, would be immediately increased by the amount
of the Asset Sale Reserve, currently approximately $1.8
million, and the proceeds of any future Asset Sale (other
than the Foreign Sale), whether of Core Assets or Non-Core
Assets, consummated after such amendment becomes
effective, would be paid to Congress and applied to the
Permanent Reserve up to a maximum of $7.5 million. Such
an amendment also requires the consent of the Holders
since it would eliminate (until the Permanent Reserve has
reached $7.5 million) the Holders' current rights to a
share of the Net Cash Proceeds of Asset Sales of Non-Core
Assets.
In accordance with the terms of the Congress Limited
Waiver, the Company also anticipates that the Working
Capital Facility will be amended to add a new covenant
pursuant to which the Company would agree to generate Net
Cash Proceeds of Asset Sales in an amount sufficient to
cause the Permanent Reserve to be at least $6.0 million as
of December 31, 1996, and $7.5 million as of March 31,
1997. Simultaneously with such an amendment, Congress has
agreed to waive all defaults of the covenant in the
Working Capital Facility regarding payment of trailing
liabilities and to amend such covenantto reduce the
required month-end availability under the Working Capital
Facility for payment of trailing liabilities from $10.0
million to $2.5 million.
AMENDMENTS AND COVENANT WAIVERS REQUESTED
FOR 1996 TRANSACTIONS
KHC Letter Agreement
The terms of the Indenture provide a limitation on
the amount of working capital indebtedness which the
Company may incur. The initial Working Capital Facility
permitted borrowings by the Company in an amount less than
such maximum level set forth in the Indenture (1). With
the initial Funding, Congress amended the Working Capital
Facility to increase the Company's ability to borrow to
the Indenture limits, subject to various reserves and
other limitations. No consent by the Holders was required
for these amendments.
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[FN] 1 The definition of "Permitted Debt" in the
Indenture includes the following:
(a) Debt Incurred under a Working Capital
Facility, including without limitation, Debt in respect of
the Letter of Credit Obligations and letters of credit
cash collateralized with amounts borrowed under the
Working Capital Facility.
and the definition of "Working Capital
Facility" is as follows:
"Working Capital Facility" means the
Initial Working Capital Facility and any working capital
facility for borrowings by the issuer (including without
limitation extensions of credit in respect to Letters of
Credit) in an aggregate principal amount outstanding at
any time not to exceed the sum of (a) 85% of the aggregate
value of the eligible domestic accounts receivable of the
Issuer, (b) 65% of the aggregate value of the eligible
non-domestic accounts receivable of the Issuer, ( c ) 70%
of the value of the remaining eligible inventory of the
Issuer, in each case as recorded in the books and records
of the Issuer in accordance with GAAP...provided further
that any amendment and restatement of the Initial Working
Capital Facility pursuant to the Intercreditor Agreement
that satisfies the requirements set forth in this
definition shall constitute a Working Capital Facility.
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The KHC Letter Agreement also contemplates the
possibility of additional secured lending by KHC to the
Company in the future. Such a lending arrangement would
be designed to assist in the resolution of certain of the
Company's trailing liabilities. Neither the definition of
"Permitted Debt" or "Permitted Liens" in the Indenture
clearly provides for such secured lending. In order to
accommodate such additional secured lending, the Company
is soliciting consents to the amendment of the Indenture
to include (i) indebtedness to KHC fully subordinated to
the Indenture Obligations in the definition of Permitted
Debt, and (ii) liens fully subordinate to those of the
Secured Parties supporting such debt in the definition of
Permitted Liens. The Company is also currently seeking
other consents from its lenders to permit such additional
indebtedness.
Sale of Foreign Assets
Indenture Covenants. The asset sale covenant of the
Indenture (Section 3.16) prohibits the Company or any
Subsidiary from making any asset sale unless the general
requirements of Section 3.16(a) are met, including the
requirement in Section 3.16(a)(iii) that "100% of the Net
Cash Proceeds from such sale are, subject to the
provisions of the Intercreditor Agreement, applied by the
Issuer or such Subsidiary as provided in this Section 3.16
. . . ." Since the proceeds of Non-Core Assets in the
Portfolio would exceed $350,000, the Company's current
waiver from Congress would expire by its terms. The
Company would therefore be in default under the Working
Capital Facility. As a result of such default, under
Section 4(c) of the Intercreditor Agreement, prior to the
time at which the Permanent Reserve equalled $7.5 million,
the Net Cash Proceeds of the Non-Core Assets in the
Portfolio would be paid first to Congress and applied to
the Permanent Reserve.
Since the Portfolio contains Core Assets and Class II
Non-Core Assets, the application of proceeds of the
proposed Foreign Sale (after the Permanent Reserve equals
$7.5 million), would then be required to meet the
requirements of Sections 3.16(c) - (e) which are generally
as follows:
(c) Class II Non-Core Asset Proceeds. Subject
to the provisions of the Intercreditor Agreement
(including without limitation the provisions, if any,
requiring the application of Non-Core Proceeds), upon an
Asset Sale of any Class II Non-Core Assets, the Issuer
shall, or shall cause its applicable Subsidiary to,
directly deposit 85% of any such Class II Non-Core
Proceeds ("Excess Class II Non-Core Proceeds") with the
Trustee to be held in trust for the benefit of the Holders
and used to make an Asset Sale Offer as provided in
Section 3.16(e), and (ii) [sic] if no Event of Default has
occurred and is continuing, receive 15% of the Excess
Class II Non-Core Proceeds for its general corporate
purposes . . . .
(d) Core Asset Proceeds. Subject to the
provisions of the Intercreditor Agreement (including
without limitation the provisions, if any, requiring the
application of Core Asset Proceeds to the Working Capital
Facility or the deposit of Core Asset Proceeds in a
segregated collateral account held by a lender under the
Working Capital Facility), upon an Asset Sale of any Core
Asset, the Issuer shall, or shall cause its applicable
Subsidiary to, directly deposit all Core Asset Proceeds
from such Asset Sale to the Core Collateral Account to be
held and applied as set forth in this Section 3.16(d) . .
. . (2)
(e) Asset Sale Offer. If the Trustee holds Net
Cash Proceeds (including Non-Core Asset Proceeds and Core
Asset Proceeds) in an aggregate amount of not less than
$1,000,000, which Net Cash Proceeds are, in accordance
with the terms of this Indenture or any other Document to
be used to make an Asset Sale Offer, the Issuer shall,
within ten (10) days after the occurrence thereof, make an
offer to purchase an aggregate principal amount of the
Securities (other than any Securities owned by the Issuer
or any of its Affiliates) at least equal to the Net Cash
Proceeds so held (rounded to the nearest $1,000) on a
pro-rata basis at a purchase price equal to 100% of the
principal amount thereof outstanding plus accrued and
unpaid interest, if any, to the Advance Purchase Date.
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[FN] (2) Section 3.16(d) later provides a mechanism
whereby generally for a period of one hundred and eighty
days from the receipt by the Collateral Agent of Core
Asset Proceeds the Company may, so long as no Event of
Default then exists, apply for the use of these Core Asset
Proceeds for capital expenditures or the acquisition of
assets not classified as current assets, in each case
substantially related to the design, manufacture or sale
of truck trailers and components.
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Intercreditor Agreement Covenants. Section 4 of the
Intercreditor Agreement, which governs the application of
Proceeds of Collateral within the meaning of Section 3.16
of the Indenture (3), until the Permanent Reserve equals
$7.5 million, provides as follows:
(b) Asset Sales of Non-Core Assets after the LC
Time and prior to an Event of Default.
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* * *
(ii) . . . the Net Cash Proceeds of any Asset
Sale of any Non-Core Assets shall (x) be immediately paid
to the Trustee or Collateral Agent, as applicable, for
application in accordance with the Indenture until the
Noteholder Debt has been paid in full . . . .
* * *
(d) Core Assets. The Net Cash Proceeds of any
Asset Sale of any Core Asset shall be paid and applied as
follows:
(i) prior to both the Turnover Time and the
Enforcement Commencement Time, such Net Cash Proceeds
shall, to the extent that the sum of (x) the amount of
such proceeds plus (y) the amount of the Asset Sale
Reserve at such time plus (z) the Permanent Reserve at
such time, would not exceed the Maximum Deficiency Amount
at such time, be immediately paid to Congress for
application to the Congress Obligations in such order as
Congress in its sale discretion shall elect (and at such
time the amount of such payment shall be credited to the
Asset Sale Reserve and the Asset Sale Reserve shall be
increased by the amount of such payment);
* * *
If no amendments to the Indenture or the
Intercreditor Agreement were made, the Net Cash Proceeds
from the Foreign Sale would be divided as follows: (a)
under Section 4(c) of the Intercreditor Agreement, the
first $5.4 million would be paid to Congress to be applied
to the Permanent Reserve, (b) under Section 4(d) of the
Intercreditor Agreement and Section 3.16(d) of the
Indenture, a portion of the Net Cash Proceeds resulting
from the sale of Core Assets in the Portfolio would be
paid to the Trustee to be held in the Core Collateral
Account, and if not subsequently used by the Company for
capital expenditures within 180 days or if an Event of
Default then exists, would be used to repurchase Senior
Notes through an Asset Sale Offer; and (c) under Section
4(b)(ii) of the Intercreditor Agreement and Section
3.16(c) of the Indenture, 85% of the Net Cash Proceeds
resulting from the sale of Class II Non-Core Assets in the
Portfolio would be directly deposited with the Trustee to
be held in trust for the Holders and used to make an Asset
Sale Offer and, so long as no Event of Default then
exists, 15% of such Proceeds would be paid to the Company
for its general corporate purposes.
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[FN] 3 Section 4(b)(ii) also provides a mechanism
through which Congress can, depending on the value of
certain of its remaining collateral, determine that the
New Cash Proceeds of a sale of Non-Core Assets should be
applied to Congress Obligations, as defined in the
Intercreditor Agreement, and used to increase the
Permanent Reserve.
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In order to (i) make the May 1 Payment from the
proceeds of the Foreign Sale, (ii) apply a portion of such
proceeds to increase the Company's borrowing availability
under the Working Capital Facility, and (iii) provide that
the failure by Congress to increase the Asset Sale Reserve
or the Permanent Reserve will not limit Congress's ability
or right to apply future Net Cash Proceeds from an Asset
Sale to the Permanent Reserve, the Company is soliciting
the consents of the Holders to the waiver and amendment of
the requirements of Section 3.16 of the Indenture and
Section 4 of the Intercreditor Agreement.
In addition to these waivers and amendments, the
Company is soliciting the consents of the Holders to
additional amendments to the Intercreditor Agreement and
the Working Capital Facility pursuant to which:
(a) The Asset Sale Reserve would be reduced to
zero and the Permanent Reserve would be immediately
increased by the amount of the Asset Sale Reserve,
currently $1.8 million.
(b) All Net Cash Proceeds of any Asset Sale
(other than the Foreign Sale), whether of Core Assets or
Non-Core Assets, consummated after the amendment to the
Intercreditor Agreement has become effective, would be
applied as follows:
(1) To the extent that the sum of (A) the
amount of such proceeds plus (B) the Permanent Reserve
would not exceed $7,500,000, the Net Cash Proceeds shall
be paid to Congress for application to the Congress
Obligations, as defined in the Intercreditor Agreement, in
such order as Congress in its sale discretion shall elect
(and at such time the amount of such payment shall be
credited to the Permanent Reserve and the Permanent
Reserve shall be increased by such amount).
(2) The remainder, if any, after making the
payments described in (1) above shall be paid to the
Trustee for application in accordance with the Indenture
until all Noteholder Debt, as defined in the
Intercreditor Agreement, has been paid in full.
(3) The remainder, if any, after making the
payments described in (1) and (2) above shall be paid to
Congress for application to the Congress Obligations in
such order as Congress in its sole discretion shall elect.
Section 9 of the Intercreditor Agreement requires the
written consent of the Trustee to these amendments.
Although by its terms, the Intercreditor Agreement does
not require the written consent of the Trustee to amend
Section 13 of the Rider to the Working Capital Agreement
("Section 13") Application of Proceeds of Non-Core Assets
and Core Assets, for the avoidance of doubt, the Company
is soliciting the consents of the Holders to amend Section
13 so that it is substantially similar to the amended
Section 4 of the Intercreditor Agreement.
Jacksonville Note Clarification
As part of the Security Documents securing the
Indenture, the Jacksonville Security Agreement contains a
section providing for special treatment of a promissory
note (the "JSI Promissory Note") executed by Jacksonville
Riverfront Development, Ltd. in favor of Jacksonville
Shipyards, Inc. ("Jacksonville"). Section 26 provides as
follows:
Subsidiary May Deal With Riverfront Pledged Note.
Notwithstanding anything to the contrary contained herein,
in the Indenture or in any other Document, so long as no
Event of Default shall then exist, the Subsidiary
[Jacksonville] may accept and retain all payments due
under the Pledged Note made by Jacksonville Riverfront
Development, Ltd. dated February 10, 1995, and may amend,
modify or transfer such Pledged Note in an arm's length
transaction (including but not limited to the transfer of
such Pledged Note in exchange for the assumption by the
transferee of liabilities of equivalent value of the
Subsidiary to third parties), and the Agent shall release
such Pledged Note and/or its Lien thereon for such
purposes, provided that in connection with any amendment
or modification of such Pledged Note the Subsidiary shall,
concurrently with the release by the Agent of such Pledged
Note, pledge and deliver hereunder to the Agent a
replacement Pledge Note, as so amended or modified.
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Jacksonville no longer operates a business and does not
generate any revenue. The JSI Promissory Note matured on
February 16, 1996, and the maker defaulted on payments of
the principal of and interest then due thereunder. In an
effort to realize value from the JSI Promissory Note,
Jacksonville is seeking a buyer for the JSI Promissory
Note and related mortgage interest. In the event that no
suitable buyer is found, Jacksonville intends to foreclose
on the real property securing the JSI Promissory Note.
At the time the quoted language was included in the
Security Documents, the Company intended that payments on
the JSI Promissory Note would be used by Jacksonville.
The Company also anticipated that, under the language of
this section, Jacksonville retained the freedom to deal
with the JSI Promissory Note for this purpose, including
the ability to transfer the JSI Promissory Note and use
the proceeds to satisfy these creditors, all outside of
the otherwise applicable Asset Sale provisions of the
Indenture, the Intercreditor Agreement and the other
Documents. The Trustee has taken the position that such
an ability is not specifically enumerated in the Section.
The Company believes that using the proceeds of the sale
of the JSI Promissory Note to satisfy Jacksonville's
creditors, while not specifically enumerated, is within
the clear general intent of Section 26.
Therefore, for the avoidance of doubt, the Company
requests that the Holders consent to the amendment of
Section 26 of the Jacksonville Security Agreement (as set
forth in the Consent) to confirm that Section 26 allows
Jacksonville to retain the cash proceeds of a sale of the
JSI Promissory Note and the related mortgage interest or
the proceeds of the foreclosure sale of the real property
securing the JSI Promissory Note.
GENERAL PROVISIONS OF CONSENT SOLICITATION
General Terms of Solicitation
In order to effect the proposed waivers and
amendments requested hereby, Holders of at least a
majority of the outstanding aggregate principal amount of
the Senior Notes must consent to the waivers and
amendments by properly completing, executing and
delivering Consents in the form requested hereby to the
Trustee at its address specified in the return envelope
enclosed herewith. Enclosed is a form of Consent to be
executed and delivered by each of the Holders. There are
presently issued and outstanding $62,574,000 aggregate
principal amount of the Senior Notes. Accordingly, the
requested waivers and amendments must be approved by the
Holders of more than $31,287,000 aggregate principal
amount of the Senior Notes. Holders of the Senior Notes
who wish to consent with respect to the requested waivers
and amendments must consent to all of the proposed waivers
and amendments.
This Consent Solicitation Statement is being sent to
all Holders as reflected in the records of the Trustee as
of April 22, 1996 (the "Record Date"). The Trustee may
treat this Consent Solicitation Statement as notice from
the Company of the Record Date. The expiration date for
this Consent Solicitation is 5:00 p.m., New York City
time, on May 17, 1996, unless extended by the Company upon
notice to the Trustee (the "Expiration Date").
The form of Consent contemplates that the Trustee
will be authorized to enter into a supplemental indenture
(the "Supplemental Indenture"), substantially in the form
attached hereto as Exhibit C, or in any other form which
may be used to effectuate the matters referred to herein,
amending certain provisions of the Indenture, and that the
Trustee and/or the Collateral Agent will be authorized to
enter into an amendment to the Intercreditor Agreement
(the "Amended Intercreditor Agreement"), and that the
Trustee and/or the Collateral Agent will also be
authorized to enter into such other or additional
supplemental indentures, amendments to any of the
Documents, releases of Liens and security interests in
favor of either of them and such other agreements,
documents and instruments as may be necessary or
desirable, in their sole discretion, to consummate the
transactions contemplated by this Consent Solicitation.
<PAGE>
<PAGE>
Prior to the execution by the Trustee of the
Supplemental Indenture, the Company will obtain such
consents and instructions from Congress as may be required
under the Working Capital Facility and the Intercreditor
Agreement in order to effect the transactions contemplated
by this Consent Solicitation.
Nothing in the Consent Solicitation, nor the fact
that the Company has requested waivers and amendments of
certain covenants contained in the Indenture with respect
to the 1996 Transactions, shall be deemed an admission on
the part of the Company that completion of the 1996
Transactions as proposed by the Company, or any portion
thereof, would conflict with any covenant contained in the
Indenture in the absence of obtaining the waivers and
amendments requested hereby.
If the requisite Consents are received on or prior to
the Expiration Date, then the Consents will become valid
and effective, and the Company will so notify the Trustee
and the Holders. Nothing in this Consent Solicitation
shall be deemed to obligat the Company to consummate any
of the 1996 Transactions, in whole or in part.
Procedure for Consenting
A Consent can only be effected by execution of the
enclosed form of Consent, properly completed, executed and
delivered by each of the Holders to the Trustee (which
will deliver a copy of the Consent to the Company) at the
address for the Trustee set forth on the form of Consent.
Upon proper completion and execution of a Consent by a
Holder, the Holder will be considered to have consented to
the requested waivers and amendments as delineated in this
Consent Solicitation Statement and the form of Consent.
A return envelope, addressed to the Trustee, is
enclosed for your convenience in transmitting your
completed Consent to the Trustee.
Only registered Holders of the Senior Notes as of the
Record Date (or holders of a valid proxy from the Holder
or DTC Participants described in the Consent) may deliver
a Consent. Any beneficial owner of Senior Notes who is not
the registered Holder of such Senior Notes must arrange
with the registered Holder (or holders of a valid proxy
from the Holder) to execute and deliver the Consent on
his, her or its behalf.
All questions as to the validity, form, eligibility,
receipt and acceptance of any Consent will be resolved by
the Company, whose determination shall be final and
binding, subject only to review and approval of the
Trustee with respect to proof of execution and ownership.
The Company reserves the right, subject only to review and
approval of the Trustee with respect to proof of execution
and ownership, to waive any defects or irregularities or
conditions of delivery as to particular Consents. Unless
waived, all such defects or irregularities must be cured
prior to the Expiration Date. Neither the Company, the
Trustee nor any other person shall be under any duty to
give notification of any such defects or irregularities,
nor shall any of them incur any liability for failure to
give such notification. Consents will not be deemed to
have been properly given until all defects and
irregularities have been cured or waived. The Company's
interpretation of the terms and conditions of the Consent
Solicitation shall be conclusive and binding.
Non-Revocability of Consents
Each Consent includes an acknowledgment that the
Consent shall become irrevocable after Consents
substantially to the effect provided herein, executed by
the Holders of a majority in principal amount of the
Senior Notes outstanding as of the Record Date, have been
delivered to the Trustee (the "Effective Date").
<PAGE>
<PAGE>
Questions
Any questions concerning this Consent Solicitation
may be directed to Timothy J. Wiggins, Executive Vice
President--Finance and Administration and Chief Financial
Officer of the Company (Telephone: (317) 630-3035);
Kenneth A. Minor, Treasurer of the Company (Telephone:
(317) 630-3016); or Gregory G. Fehr, Corporate Controller
of the Company (Telephone: (317) 630-3010).
* * * * *
Thank you very much for your continued cooperation
and support of the Company. Please make every effort to
deliver your signed Consents to the Trustee as
expeditiously as possible.
FRUEHAUF TRAILER CORPORATION
Enclosures
Form of Consent;
<PAGE>
<PAGE>
CONSENT
______________________________________
Fruehauf Trailer Corporation
14.75% Senior Secured Notes Due 2002
______________________________________
Reference is made to the letter dated May 3, 1996
(the "Consent Solicitation Statement"), from Fruehauf
Trailer Corporation (the "Company") to the holders of the
Company's 14.75% Senior Secured Notes Due 2002.
Capitalized terms used herein and not defined herein shall
have the respective meanings ascribed thereto in the
Consent Solicitation Statement.
This Consent is executed and delivered with reference
to the Indenture (the "Indenture"), dated as of May 1,
1995, between the Company and IBJ Schroder Bank & Trust
Company, as Trustee (the "Trustee"). The undersigned is
the Holder of the aggregate original principal amount of
the Senior Notes indicated herein and is authorized to
execute and deliver this Consent.
The undersigned hereby consents to the waivers and
amendments contemplated by the Consent Solicitation
Statement including, without limitation, the following:
(a) The inclusion in the definition of
"Permitted Debt" under the Indenture, debt incurred by the
Company or any of its Subsidiaries to KHC or any of its
affiliates that is fully subordinated to the Indenture
Obligations.
(b) The inclusion in the definition of
"Permitted Liens" under the Indenture, (i) Liens securing
such financing arrangements with KHC or any of its
affiliates provided that such Liens shall be fully
subordinate to the Liens in favor of any of the Secured
Parties and (ii) arrangements related to the sale of the
shares of Deutsche-Fruehauf as set forth in the Letter of
Intent.
(c) The waiver of the requirements of Section
3.16 of the Indenture governing application of the Net
Cash Proceeds of the Foreign Sale and the amendment of
Section 3.16 of the Indenture permitting (i) the use of a
portion of the Net Cash Proceeds of the Foreign Sale to
make the May 1 Payment; (ii) the direct deposit of 50% of
the balance of such proceeds (after application to the
May 1 Payment) with the Trustee to be held in trust for
the benefit of the Holders and used to make an Asset Sale
Offer under Section 3.16(e); and (iii) the application of
the remaining portion of such proceeds to the Working
Capital Facility, as amended below.
(d) The amendment of the definition of "Asset
Sale" under the Indenture to exclude Jacksonville's sale
of the JSI Promissory Note or the foreclosure of the
mortgage securing the JSI Promissory Note.
(e) The execution and delivery by the
Collateral Agent of an amendment to Section 26 of the
Jacksonville Security Agreement, pursuant to which Section
26 thereof would be deleted and replaced in its entirety
by the following:
<PAGE>
<PAGE>
Section 26. Subsidiary May Deal With
Riverfront Pledged Note.
------------------------
Notwithstanding anything to the contrary
contained herein, in the Indenture or in any other
Document, so long as no Event of Default shall then exist,
the Subsidiary may accept and retain, free of lien or
claim or lien hereunder, all payments due under or derived
from the sale of the Pledged Note made by Jacksonville
Riverfront Development, Ltd., dated February 10, 1993 or
derived from the proceeds of the foreclosure of any
mortgage or security interest securing the Pledged Note
(including the sale of the property foreclosed, if such
property is acquired by the Subsidiary at a foreclosure
sale or otherwise), and may amend, modify or transfer
such Pledged Note in an arm's length transaction
(including but not limited to the transfer of such Pledged
Note in exchange for the assumption by the transferee of
liabilities of equivalent value of the Subsidiary to third
parties), foreclose the mortgage that secures such Pledged
Note, and/or purchase the property subject to such
mortgage at foreclosure sale or otherwise free of lien or
claim of lien hereunder, and the Agent shall release such
Pledged Note and/or its Lien thereon for such purposes,
provided that in connection with any amendment or
modification of such Pledged Note the Subsidiary shall,
concurrently with the release by the Agent of such Pledged
Note, pledge and deliver hereunder to the Agent a
replacement Pledged Note, as so amended or modified.
(f) The amendment of the Intercreditor
Agreement and the Working Capital Facility pursuant to
which:
(i) The Asset Sale Reserve would be reduced to
zero and the Permanent Reserve (as defined in the
Intercreditor Agreement) would be immediately increased by
the amount of the Asset Sale Reserve (as defined in the
Intercreditor Agreement), currently approximately $1.8
million.
(ii) All Net Cash Proceeds of any Asset Sale
(other than the Foreign Sale), whether of Core Assets or
Non-Core Assets, consummated after the amendment to the
Intercreditor Agreement has become effective, would be
applied as follows:
(1) To the extent that the sum of (A) the
amount of such proceeds plus (B) the Permanent Reserve,
would not exceed the $7,500,000, the Net Cash Proceeds
shall be paid to Congress for application to the Congress
Obligations, as defined in the Intercreditor Agreement, in
such order as Congress in its sole discretion shall elect
(and at such time the amount of such payment shall be
credited to the Permanent Reserve and the Permanent
Reserve shall be increased by such amount).
(2) The remainder, if any, after making the
payments described in (1) above shall be paid to the
Trustee for application in accordance with the Indenture
until all Noteholder Debt (as defined in the Intercreditor
Agreement) has been paid in full.
(3) The remainder, if any, after making the
payments described in (1) and (2) above shall be paid to
Congress for application to the Congress Obligations in
such order as Congress in its sole discretion shall elect.
(iii) The portion of the Net Cash Proceeds of
the Foreign Sale described in paragraph (c)(iii) above
shall be paid directly to Congress to be applied to the
Congress Obligations in such order as Congress shall
elect, and will not increase the Asset Sale Reserve or the
Permanent Reserve provided, that the failure by Congress
to so increase the Asset Sale Reserve or the Permanent
Reserve will not limit Congress's ability or right to
apply future Net Cash Proceeds from an Asset Sale to the
Permanent Reserve.
<PAGE>
<PAGE>
(g) The execution and delivery by the Trustee
of a supplemental indenture, substantially in the form
attached to the Consent Solicitation Statement as Exhibit
C, and the execution and delivery by the Trustee and/or
the Collateral Agent of such other or additional
supplemental indentures, amendments to any of the
Documents, including without limitation the Amended
Intercreditor Agreement, releases of Liens and security
interests in favor of either of them and such other
agreements, documents and instruments as may be necessary
or desirable, in their sole discretion, to consummate the
1996 Transactions or otherwise to accomplish the intended
purposes of the Consent Solicitation.
This Consent shall become irrevocable after Consents
substantially to the effect provided herein, executed by
a majority in principal amount of the Senior Notes
Outstanding, have been delivered to the Trustee. Nothing
in this Consent Solicitation shall be deemed to obligate
the Company to consummate any of the 1996 Transactions, in
whole or in part.
The term holder ("Holder") as used herein shall mean
a registered holder of Senior Notes as reflected in the
records of the Trustee as of April 22, 1996 (the "Record
Date"). The Company anticipates that the Depository Trust
Company ("DTC"), as nominee holder of certain Senior
Notes, will execute an omnibus proxy which will authorize
its participants ("DTC Participants") to consent with
respect to the Senior Notes owned by it and held in the
Cede & Co. name as specified on a DTC position listing as
of the Record Date. In such case, all references to
Holder shall, unless otherwise specified, include DTC
Participants.
By execution hereof, the undersigned acknowledges
receipt of the Consent Solicitation Statement and hereby
represents and warrants that the undersigned has full
power and authority to give the Consent contained herein.
The undersigned will, upon request, execute and deliver
any additional documents deemed by the Company to be
necessary or desirable to perfect the undersigned's
Consent.
The method of delivery of this Consent and all other
required documents to the Trustee is at the election and
risk of the Holder, but, except as otherwise provided
below, the delivery will be deemed made only when actually
received by the Trustee. In all cases, sufficient time
should be allowed to assure timely delivery. No Consent
should be sent to any person other than the Trustee. In
no event should you deliver or tender any Senior Notes.
Consents may be revoked only prior to the Effective
Date by the registered Holder or DTC Participant who
submits a Consent. Such person may revoke such Consent by
delivering written notice of such revocation to the
Trustee at any time prior to the Effective Date. To be
valid any such notice of revocation must indicate the
certificate number or numbers of the Senior Notes to which
it relates and the aggregate principal amount represented
by such Senior Notes and must be signed by the Holder(s)
or DTC Participant(s) in the same manner as the original
Consent or be accompanied by evidence satisfactory to the
Company and the Trustee that the Holder or DTC Participant
revoking such Consent has the power to revoke such
Consent.
This Consent relates to the total principal amount of
the Senior Notes held of record by (or held by DTC for the
account of) the undersigned as of the Record Date, unless
Senior Notes held of record by (or held by DTC for the
account of) the undersigned are to be excluded from this
Consent, which exclusion is clearly indicated in the table
below. The undersigned has listed in the table below the
Note numbers and principal amount of the Senior Notes held
of record by (or held by DTC for the account of) the
undersigned, separately grouping and appropriately
indicating which of such Senior Notes, if any, are
excluded from this Consent. If the space provided below is
inadequate, list all such information on a separate
schedule and affix the schedule to this Consent.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PLEASE COMPLETE THE FOLLOWING TABLE
<S> <C> <C>
Name(s) and Note Number(s)or Aggregate
Address(es)of Cede & Co. Principal
Registered Account Number(s) Amount of
Holder(s) or Senior
DTC Participant(s) Notes
- ----------------- ----------------- ---------
- ----------------- ----------------- ---------
- ----------------- ----------------- ---------
- ----------------- ----------------- ---------
- ----------------- ----------------- ---------
</TABLE>
This Consent, when completed and signed, is to be
delivered to the Trustee at:
Via Regular Mail
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attention: Reorganization Operations Department
By Hand or Overnight Delivery
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Securities Processing Window Subcellar One (SC-1)
Telephone Number: (212) 858-2103
Facsimile Transmission: Confirm By Telephone
(212) 858-2611 (212) 858-2103
Attention: Reorganization
Operations Department
(Original executed consents
must follow)
Consents should not be delivered to any person other
than the Trustee. In no event should a Holder deliver any
certificates representing the Senior Notes.<PAGE>
<PAGE>
IMPORTANT--SIGN HERE
Registered holders or the DTC Participant(s) must execute
this Consent exactly as their name(s) appear(s) on the
Senior Notes or the position listing of Cede & Co. If
Senior Notes to which this Consent relates are held of
record by two or more joint registered Holders, all such
Holders must sign this Consent. If signature is by a
trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person
acting in a fiduciary or representative capacity, such
person should so indicate when signing and must submit
evidence satisfactory to the Company of such person's
authority to so act. Signatures on this consent must be
guaranteed by a firm that is a member of the National
Association of Securities Dealers, Inc., or a member of a
registered national securities exchange or by a commercial
bank or trust company having an office in the United
States.
SIGN HERE
__________________________________
__________________________________
Signature of Owner(s)
Dated: ________________, 1996
Name(s):
__________________________________
__________________________________
Capacity:
__________________________________
Address:
__________________________________
__________________________________
__________________________________
Area Code and Telephone No.:
___________________________________
Tax Identification or Social Security No.:
___________________________________
GUARANTEE OF SIGNATURES
Authorized Signature:__________________________
Name and Title: _______________________________
(Please Print)
Dated: ________________________________________
Name of Firm: _________________________________
