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): AUGUST 24, 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 6
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: August 27, 1999
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Press Release issued by Paragon Trade Brands, Inc. on August 25,
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 FILES PLAN OF REORGANIZATION
Norcross, GA, August 25, 1999 - Paragon Trade Brands, Inc. (OTC Bulletin Board:
PGNFQ) announced that yesterday it filed a stand alone plan of reorganization
(the "Plan") with the United States Bankruptcy Court for the Northern District
of Georgia. The Plan is supported by the Official Committee of Unsecured
Creditors (the "Creditors' Committee") of Paragon. The Plan provides an
alternative to the proposal by Wellspring Capital Management LLC ("Wellspring"),
a private investment company, to acquire Paragon as part of a plan of
reorganization (the "Wellspring Proposal"). The Wellspring Proposal contemplated
that Paragon could simultaneously prepare and file a stand alone plan of
reorganization.
The Plan provides that Paragon's unsecured creditors will receive a pro rata
distribution of notes and new common stock to be issued by reorganized Paragon
and that current equity will be canceled. If current shareholders approve the
Plan, they will receive a combination of warrants and a portion of the proceeds,
if any, of claims assigned to a litigation trust. The Plan contains provisions
typical of a chapter 11 plan of this nature and provides for new bank financing
for working capital for reorganized Paragon.
Paragon also announced that it is revising its business plan to reflect second
quarter 1999 results and lowered volume growth expectations for the future. As a
result of Paragon's reforecasting of its business plan, the Plan, as filed, does
not yet specify the amount of value to be distributed.
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On August 19, 1999, Wellspring delivered a commitment to proceed with the
Wellspring Proposal, but Paragon informed Wellspring that the commitment was not
acceptable. The parties are continuing their negotiations with respect to this
matter. Paragon stated that it remains committed to pursuing a transaction with
Wellspring while continuing to welcome other bids in accordance with the
Bankruptcy Court-approved procedures.
Commenting on the filing of the Plan, Chief Executive Officer, Bobby Abraham,
said "The filing of our stand alone plan is an important step in the process of
exiting from chapter 11. We will continue to pursue the auction process approved
by the Bankruptcy Court while simultaneously moving forward with our Plan. Our
filing of the Plan provides us flexibility to emerge from chapter 11 whether we
do so independently, with Wellspring or with another entity. The stand alone
plan furthers our objective to expeditiously emerge from chapter 11 while
maintaining the ability to maximize the value of Paragon's estate."
Paragon also reported that the Bankruptcy Court last week granted a limited stay
through August 25, 1999 of Paragon's recently approved settlement agreement with
Kimberly-Clark Corporation ("K-C") pending a ruling by the District Court on an
emergency motion by the Equity Committee which seeks an 80-day stay of the K-C
settlement pending an appeal. The parties agreed yesterday to the District
Court's direction that a limited stay remain in place until September 3, 1999,
to allow the District Court to more fully consider the Equity Committee's
motion. Paragon believes that the granting of the limited stay by the District
Court is a procedural step in the appeal process that does not alter the
substance of the Bankruptcy Court's August 6, 1999 approval of the K-C
settlement. The Equity Committee has also filed a notice of appeal of the
Bankruptcy Court's August 6, 1999 approval of the Company's settlement with The
Procter & Gamble Company ("P&G"). Paragon believes that both the K-C and the P&G
settlements will be upheld on appeal.
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
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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.
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.
ALAN J. CYRON
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
PARAGON TRADE BRANDS, INC.
180 TECHNOLOGY PARKWAY
NORCROSS, GA 30092
678/969-5200
