SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): NOVEMBER 19, 1999
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 30092
(Address of principal executive offices) (Zip Code)
(678) 969-5000
(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 3
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ITEM 5. OTHER EVENTS
See attached Exhibit 99.1
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: December 2, 1999
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Press Release issued by Paragon Trade Brands, Inc. on
November 19, 1999.
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Exhibit 99.1
NEWS
FOR IMMEDIATE RELEASE
CONTACT: Kurt P. Ross
Guy B. Lawrence
K.P. ROSS, INC.
tel: (212) 308-3333
E-mail: [email protected]
PARAGON'S DISCLOSURE STATEMENT APPROVED
JANUARY 2000 CONFIRMATION HEARING DATE SET
SHAREHOLDER MEETING ADJOURNED
Norcross, GA, November 19, 1999 - Paragon Trade Brands, Inc. (OTC Bulletin
Board:PGNFQ) today announced that the United States Bankruptcy Court for the
Northern District of Georgia has approved the Company's Disclosure Statement
(the "Disclosure Statement") in connection with the Second Amended Plan (the
"Amended Plan") of Reorganization filed by the Company and its Official
Committee of Unsecured Creditors (the "Creditors' Committee") as co-proponents.
In connection therewith, the Court also approved certain voting procedures and
established Friday, January 7, 2000 as the voting deadline for the Amended Plan
and Thursday, January 13, 2000 as the date for a hearing to consider
confirmation of the Amended Plan.
Commenting on the Amended Plan and approval of the Disclosure Statement, Bobby
Abraham, Chief Executive Officer of Paragon, stated, "We are delighted to have
received Bankruptcy Court approval of our Disclosure Statement and are pleased
to be on schedule for a confirmation hearing on our plan of reorganization for
mid-January. We are also very pleased to have the support of the Creditors' and
Equity Committees with respect to the plan. One of our major goals has been to
achieve a consensual plan of reorganization and with the support of the Equity
Committee we have now achieved that goal."
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Mr. Abraham further noted, "The approval of the Disclosure Statement together
with the execution of the Wellspring Stock Purchase Agreement are major
milestones in our progress toward emergence from Chapter 11. We now look forward
to moving ahead with completing the transaction with Wellspring and exiting
Chapter 11 as expeditiously as possible."
The Amended Plan incorporates certain modifications with respect to the
acquisition of Paragon by Wellspring Capital Management LLC ("Wellspring") as
part of the plan of reorganization (the "Wellspring Transaction"). The Amended
Plan also reflects the terms of a global settlement reached between the Company,
the Creditors' Committee, the Official Committee of Equity Security Holders (the
"Equity Committee"), The Procter & Gamble Company ("P&G") and Kimberly-Clark
Corporation ("K-C") with respect to certain distributions to be made to the
Company's current stockholders under the Amended Plan. The Equity Committee
supported approval of the Disclosure Statement and urges the Company's
stockholders to vote to accept the Amended Plan.
Paragon also announced that it has executed a stock purchase agreement with
Wellspring (the "Wellspring Stock Purchase Agreement") incorporating the
modifications included in the Amended Plan. Under the Amended Plan, Paragon will
be reorganized either (a) through the consummation of the Wellspring Transaction
and the distribution of the proceeds as outlined under the Amended Plan, or (b)
alternatively, if the Wellspring Transaction is not consummated, pursuant to a
stand-alone plan of reorganization.
Under the Wellspring Transaction, Wellspring will purchase 98.5% (subject to
reduction with respect to any New Common Stock purchased in accordance with the
Wellspring Rights Offering) of the New Common Stock to be issued and outstanding
on the effective date of the Amended Plan for a purchase price equal to $10.00
per share of New Common Stock, or approximately $117 million in cash. Holders of
allowed unsecured claims will receive distributions in amounts equal to their
pro rata share of the $117 million of cash and approximately $160 million
(subject to adjustment) of 11.25% five-year senior subordinated notes (the "New
Notes") and the right to participate in a rights offering (the "Wellspring
Rights Offering") to purchase up to 35% of the new common stock (the "New Common
Stock") of the reorganized entity ("Reorganized Paragon"). The Company's current
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stockholders will receive their pro rata share of 1.5% of the New Common Stock,
certain warrants to purchase 5% of the New Common Stock (the "Warrants") and the
right to participate in the Wellspring Rights Offering (to the extent all such
rights are not exercised by holders of allowed unsecured claims).
If Paragon is reorganized on a stand-alone basis as permitted under the Amended
Plan, holders of allowed unsecured claims will receive distributions in amounts
equal to their pro rata share of 99.13% of the New Common Stock and the
Company's current stockholders will receive their pro rata share of .87% of the
New Common Stock Amount and the Warrants.
Under either the Wellspring Transaction or a stand-alone plan, holders of
allowed unsecured claims and the Company's current stockholders also will
receive a portion of the proceeds, if any, of certain claims which will remain
with the estate to be pursued by a Litigation Claims Representative to be
approved in accordance with the terms of the Amended Plan.
In response to a joint written request of the Creditors' and Equity Committees,
Paragon's Board of Directors has voted to adjourn the 1999 Annual Stockholders
Meeting scheduled for November 29, 1999 until such time as the Bankruptcy Court
has had an opportunity to consider confirmation of the Amended Plan, or any
amendment thereto, and, assuming confirmation, consummation of the transactions
contemplated therein.
Paragon Trade Brands is the leading manufacturer of store brand infant
disposable diapers in the United States and, through its wholly owned
subsidiary, Paragon Trade Brands (Canada) Inc., is the leading marketer of store
brand infant disposable diapers in Canada. Paragon manufactures a line of
premium and economy diapers, training pants, feminine care and adult
incontinence 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, Brazil and China for the sale of infant disposable diapers
and other absorbent personal care products.
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Statements made in this press release, other than those concerning historical
information, should be considered forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those expressed in the Company's forward-looking
statements. Factors which could affect the Company's financial results,
including, but not limited to: the Company's Chapter 11 filing; increased raw
material prices and product costs; new product and packaging introductions by
competitors; increased price and promotion pressure from competitors; new
competitors in the market; Year 2000 compliance issues; and patent litigation,
are described in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Readers are cautioned not to place undue
reliance on the forward-looking statements contained herein, which speak only as
of the date hereof, and which are made by management pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
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Alan J. Cyron
Executive Vice President and Chief Financial Officer
Paragon Trade Brands, Inc.
180 Technology Parkway
Norcross, GA 30092
678/969-5200
