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): JANUARY 6, 1998
PARAGON TRADE BRANDS, INC.
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-11368
(Commission File Number)
91-1554663
(IRS Employer Identification No.)
180 TECHNOLOGY PARKWAY, NORCROSS, GA 3009
(Address of principal executive offices) (Zip Code)
(770) 300-4000
(Registrant's telephone number, including area code)
NONE
(Former name or former address, if changed since last report)
Page 1 of 7
Exhibit Index is at Page 4
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
(a) Proceeding: Chapter 11 Voluntary Petition
Court: United States Bankruptcy Court for the Northern District
of Georgia, Case No. 98-60390
Date Jurisdiction
was Assumed:January 6, 1998
Trustee: Not applicable; Registrant is a debtor in possession.
For additional information, see the press release attached hereto as Exhibit
99.1 dated January 7, 1998.
ITEM 5. OTHER EVENTS
See attached Exhibit 99.2
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SIGNATURE
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.
PARAGON TRADE BRANDS, INC.
By: /s/ Alan J. Cyron
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Name: Alan J. Cyron
Title: Chief Financial Officer
Dated: January 20, 1998
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EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
99.1 Press Release issued by Paragon Trade Brands, Inc. on
January 7, 1998.
99.2 Press Release issued by Paragon Trade Brands, Inc. on
January 9, 1998.
4
Exhibit 99.1
(For Immediate Release)
PARAGON TRADE BRANDS ANNOUNCES CHAPTER 11 FILING
FILING WILL ENABLE PARAGON TO PURSUE AN APPEAL OF RECENT JUDGMENT
WHILE CONTINUING OPERATIONS AND MAINTAINING DELIVERY OF ITS PRODUCTS
Norcross, GA, January 7, 1998 - Paragon Trade Brands, Inc. (NYSE: PTB) today
announced that it has filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code. The petition was filed with the
federal court in the Northern District of Georgia.
The goal of the Chapter 11 petition is to enable the Company to conduct its
business in the ordinary course and propose a plan of reorganization to
restructure its financial obligations. The filing will also enable Paragon to
pursue an appeal of a recent adverse judgment in a patent infringement lawsuit
with The Procter & Gamble Company as well as an antitrust counterclaim which was
previously dismissed by the Court. At the time the judgment was rendered,
Paragon also announced that it had previously entered into an agreement with P&G
which is designed to ensure that this patent dispute will not inhibit Paragon's
ability to provide its customers a continuous supply of products for six months
while pursuing the appeal.
In late December, Paragon announced that the federal district court in Delaware
had rendered an unfavorable judgment against the Company in its lawsuit with P&G
regarding whether either company had infringed a valid patent of the other. The
judgment entitled P&G to damages based on sales of Paragon diapers containing an
"inner leg gather" feature. While a final number has not been entered by the
Court, Paragon has estimated the liability to be approximately $160 to $200
million. At the time the decision was rendered, Paragon announced its intent to
appeal this decision as well as the dismissal of its antitrust counterclaim
against P&G.
"The decision to file under Chapter 11 was a difficult and painful one," stated
Bobby Abraham, Chief Executive Officer of Paragon. "After attempts to engage in
discussions to resolve the patent issues with P&G proved fruitless, it became
apparent that it was necessary to file in order to allow for an orderly appeal
of the Court's recent decision, to enable us to restructure our financial
obligations, including the judgment, and to continue to meet our obligations to
our customers. We continue to believe that the patents asserted by P&G are
invalid and not infringed by our products."
"Paragon has been in the store brand disposable baby diaper business for 25
years and is committed to providing our customers superior products and
service," Mr. Abraham noted. "Protecting their interests and providing the
consumer a value alternative to branded products has been and remains our top
priority."
Paragon Trade Brands is the leading manufacturer of store brand infant
disposable diapers in the United States and Canada. Paragon manufactures
a line of premium and economy diapers, training pants, feminine care
and adult incontinence products and household cleaners
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and air freshener products, which are distributed throughout the United States
and Canada, primarily through grocery and food stores, mass merchandisers,
warehouse clubs, toy stores and drug stores that market the products under their
own store brand names. Paragon has also established international joint ventures
in Mexico, Argentina and Brazil for the sale of infant disposable diapers and
other absorbent personal care products.
Alan J. Cyron
Executive Vice President and Chief Financial Officer
Paragon Trade Brands, Inc.
180 Technology Parkway
Norcross, GA 30092
770/300-4200
6
Exhibit 99.2
(For Immediate Release)
PARAGON TRADE BRANDS SECURES $75 MILLION
LIQUIDITY FINANCING COMMITMENT
FINANCING TO ENABLE PARAGON TO MAINTAIN OPERATIONS AND DELIVERY
OF ITS PRODUCTS WHILE
PURSUING AN APPEAL OF RECENT JUDGMENT
Norcross, GA, January 9, 1998 - Paragon Trade Brands, Inc. (NYSE: PTB) today
announced that it has received a commitment for a $75 million liquidity facility
from the Chase Manhattan Bank, subject to the completion of due diligence,
execution by the parties of definitive documentation and approval by the
Bankruptcy Court. The funds will be used by the Company to meet its current
obligations and operate its business in the ordinary course.
The liquidity financing will ensure that the Company is able to conduct its
business in the ordinary course while it develops a proposed plan of
reorganization to restructure its financial obligations. Paragon is also
planning to pursue an appeal of a recent adverse judgment in a patent
infringement lawsuit with The Procter & Gamble Company as well as an antitrust
counterclaim which was previously dismissed by the Court.
Paragon previously announced that it had filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. The
petition was filed with the United States Bankruptcy Court for the Northern
District of Georgia.
Paragon's legal advisers are Willkie Farr & Gallagher and Alston & Bird. The
Company's financial adviser is The Blackstone Group.
Paragon Trade Brands is the leading manufacturer of store brand infant
disposable diapers in the United States and Canada. Paragon manufactures a line
of premium and economy diapers, training pants, feminine care and adult
incontinence products and household cleaners and air freshener products, which
are distributed throughout the United States and Canada, primarily through
grocery and food stores, mass merchandisers, warehouse clubs, toy stores and
drug stores that market the products under their own store brand names. Paragon
has also established international joint ventures in Mexico, Argentina and
Brazil for the sale of infant disposable diapers and other absorbent personal
care products.
Alan J. Cyron
Executive Vice President and Chief Financial Officer
Paragon Trade Brands, Inc.
180 Technology Parkway
Norcross, GA 30092
770/300-4200
7
