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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
SEC FILE NUMBER
NOTIFICATION OF LATE FILING 0-20854
CUSIP NUMBER
71819M 10 3
(Check One): [X] Form 10-K [ ] Form 20-F [ ] Form 11-K
[ ] Form 10-Q [ ] Form N-SAR
For Period Ended: December 31, 1998
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended: __________________________
Read Instruction (on back page) Before Preparing Form. Please Print or
Type. Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
PART I - REGISTRANT INFORMATION
Philip Services Corp.
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Full Name of Registrant
Philip Environmental Inc.
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Former Name if Applicable
100 King Street West
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Address of Principal Executive Office (Street and Number)
Hamilton, Ontario, Canada L8N 4J6
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City, State and Zip Code
PART II - RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
[X] (a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
[X] (b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof, will be
filed on or before the fifteenth calendar day following the prescribed
due date; or the subject quarterly report or transition report on Form
10-Q, or portion thereof will be filed on or before the fifth calendar
day following the prescribed due date; and
[ ] (c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
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PART III - NARRATIVE
State below in reasonable detail the reasons why Forms 10-K and Form 10-KSB,
20-F, 11-K, 10-Q and Form 10-QSB, N-SAR, or the transition report or portion
thereof, could not be filed within the prescribed time period. (Attach extra
sheets if needed).
Since June 1998 and as at December 31, 1998, the Registrant was not in
compliance with certain covenants of its then $1.2 billion revolving credit
facility (the "Credit Facility"), including the financial covenants, which
require the Registrant to maintain a specified interest coverage ratio, debt to
EBITDA ratio, fixed charge ratio and working capital ratio. In addition, the
Registrant stopped making payments of interest under the Credit Facility in
November 1998. As the Registrant is not in compliance with the terms of the
Credit Facility, the debt outstanding under the Credit Facility is classified as
a current liability on the Registrant's December 31, 1998 consolidated balance
sheet.
The Registrant has negotiated the form of lock-up agreement with
members of a steering committee of its lenders who hold in excess of 65% of the
Company's outstanding secured syndicated debt. The lock-up agreement outlines a
capital structure for a restructured Philip Services Corp. and sets forth the
principal conditions that would govern the repayment of the Registrant's $1.05
billion in outstanding secured syndicated debt. To become effective, the lock-up
agreement requires approval by lenders holding two-thirds of the outstanding
syndicated debt. The terms of the lock-up agreement will be implemented through
a filing of a prepackaged plan of reorganization in Canada and the United
States. The ability of the Registrant to continue as a going concern is
dependent on the conclusion of an agreement with its lenders and the subsequent
court approval of the Registrant's pre-packaged plan of reorganization. The
results of operations for the fiscal year ended December 31, 1998 cannot be
finalized as the ability of the Registrant to file its consolidated financial
statements on a going concern basis is dependent on the conclusion of an
agreement with its syndicated lenders. The Registrant expects the lock-up
agreement to be approved by April 15, 1999. If an agreement is not reached with
the Company's syndicated lenders a going concern basis of accounting may not be
appropriate and generally accepted accounting principles may require the use of
the liquidation basis of accounting. The liquidation basis of accounting would
require significant changes to the carrying value of assets, the order of
maturity of liabilities and the net loss in the financial statements. As
indicated in Part II, above, the Form 10-K will be filed on or before the 15th
calendar day following the prescribed due date.
PART IV - OTHER INFORMATION
(1) Name and telephone numbers of person to contact in regard to this
notification
Colin Soule (905) 521-1600
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(Name) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company act of
1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s). [X] Yes [ ] No
(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
[X] Yes [ ] No
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If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
The results of operations for the fiscal year ended December 31, 1998 cannot be
finalized as the ability of the Registrant to file its consolidated financial
statements on a going concern basis is dependent on the conclusion of an
agreement with its syndicated lenders. The Registrant expects the lock-up
agreement to be approved by April 15, 1999. If an agreement is not reached with
the Company's syndicated lenders a going concern basis of accounting may not be
appropriate and generally accepted accounting principles may require the use of
the liquidation basis of accounting. The liquidation basis of accounting would
require significant changes to the carrying value of assets, the order of
maturity of liabilities and the net loss in the financial statements.
In preparing the financial statements for the fiscal year ended December 31,
1998, management is reviewing the Company's long-lived assets and intangibles
such as goodwill, to assess whether the proposed lock-up agreement and
pre-packaged plan of reorganization indicate that the carrying amount of these
assets may not be recoverable. Where the proposed reorganization plan or
estimates of enterprise value raise doubts as to the recoverability of the
assets, estimates of future cash flows expected to result from the proposed use
of the assets and their eventual disposition are being determined. If the
estimates of future cash flow do not provide a reasonable level of assurance as
to recoverability of the carrying value of the assets, the carrying value will
be written down to the estimated recoverable amount.
Based on the above described tests and on the basis of going concern accounting
it is anticipated that virtually all of the goodwill and intangibles of the
Company as well as approximately $40 million in fixed assets were impaired at
December 31, 1998 and will require adjustment in the 1998 fourth quarter
results. However, final estimation of the impairment amounts is contingent, in
part, on the finalization of the lock-up agreement.
Philip Services Corp.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date April 1, 1999 By /s/ Colin Soule
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Name: Colin Soule
Title: Executive Vice President, General
Counsel and Corporate Secretary
INSTRUCTION: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
