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UNITED STATES
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) June 27, 2000 (June 15, 2000)
SWEETHEART HOLDINGS INC.*
(Exact name of registrant as specified in its charter)
Commission file number 33-64814
Delaware 06-1281287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10100 Reisterstown Road, Owings Mills, Maryland 21117
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 410/363-1111
* The Registrant is the guarantor of the 9 5/8% Senior Secured Notes due
September, 2000 and the 10 1/2% Senior Subordinated Notes due 2003 of Sweetheart
Cup Company Inc., a wholly owned subsidiary of the Registrant.
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
In connection with a sale-leaseback transaction, on June 15, 2000,
Sweetheart Cup Company Inc. ("Sweetheart") and Sweetheart Holdings Inc.
(collectively, the "Company") sold certain production equipment located in
Owings Mills, Maryland, Chicago, Illinois and Dallas, Texas for a fair market
value of $212.3 million to several owner participants. Pursuant to a lease dated
June 1, 2000 between Sweetheart and State Street Bank and Trust Company of
Connecticut, National Association ("State Street"), (the "Lease"), Sweetheart
shall lease such production equipment from State Street, the Owner Trustee for
several owner participants, through November 9, 2010. Sweetheart may also renew
the Lease at its option for up to four consecutive renewal terms of two years
each. The Company's obligations in connection with the Lease are collateralized
by substantially all of the Company's property, plant and equipment owned as of
June 15, 2000.
The Company expects to account for this transaction as an operating
lease, expensing the $32.0 million annualized rental payments and removing the
property, plant and equipment sold from its balance sheet. A gain is expected to
be realized from this sale and shall be amortized over the term of the lease.
This expected taxable gain would allow the Company to utilize a substantial
portion of its net operating loss carryforward.
ITEM 5. OTHER EVENTS
On June 15, 2000, the Company issued a redemption notice to the holders
of its Senior Secured Notes due September 1, 2000 ("Notes"). The Company has
deposited the necessary funds with U.S. Trust Company of New York to redeem
these Notes on July 15, 2000. See the attached redemption notice, Exhibit 99.0.
On June 15, 2000, the Company amended and restated its current
agreement under the U.S. Credit Facility to extend the maturity of the $135
million revolving credit facility through June 15, 2005 and to add a term loan
of $25 million that requires equal monthly installments through June 2005. Both
the term loan and revolving credit facility have an accelerated maturity date of
July 1, 2003 if the Company's Senior Subordinated Notes due September 1, 2003
are not refinanced before June 1, 2003. Borrowings under the revolving credit
facility will now bear interest, at the Company's election, at a rate equal to
(i) LIBOR plus 2.00% or (ii) a bank's base rate plus 0.25%, plus certain other
fees. Borrowings under the term loan will bear interest, at the Company's
election, at a rate equal to (i) LIBOR plus 2.50% or (ii) a bank's base rate
plus 0.50%, plus certain other fees. The credit facility is collateralized by
the Company's inventories and receivables with the term loan portion of the
credit facility further collateralized by certain production equipment.
ITEM 7. EXHIBITS
99.0 Redemption Notice dated June 15, 2000 for the Senior Secured Notes.
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SIGNATURES
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.
SWEETHEART HOLDINGS INC.
(registrant)
Date: June 27, 2000 By: /s/ Hans H. Heinsen
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Hans H. Heinsen
Senior Vice President - Finance and
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
