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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): October 28, 1999
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Purina Mills, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 33-66606 43-1359249
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation File Number) Identification No.)
1401 S. Hanley Road, St. Louis, Missouri 63144
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 768-4100
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(Former name, former address and former fiscal year, if changed since last
report)
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ITEM 3. BANKRUPTCY OF RECEIVERSHIP
On October 28, 1999 Purina Mills, Inc. ("PMI") and certain of its
subsidiaries filed voluntary petitions under chapter 11 of the United States
Bankruptcy code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of Delaware (Case No. 99-3938 (SLR)). No trustee, examiner with
extended powers, receiver, fiscal agent or similar officer has been appointed
with respect to PMI and such subsidiaries, which continue to operate their
businesses and manage their assets as debtors in possession pursuant to Sections
1107 and 1108 of the Bankruptcy Code.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
NOT APPLICABLE
(b) PRO FORMA FINANCIAL INFORMATION.
NOT APPLICABLE
(c) EXHIBITS.
Exhibit No. Exhibit Description
99.1 Press Release issued October 28, 1999
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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.
Purina Mills, Inc.
Date: October 28, 1999 By: /s/ Del G. Meinz
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Name: Del G. Meinz
Title: Vice President, Treasurer
and Controller
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EXHIBIT INDEX
Exhibit No. Exhibit Description
99.1 Press Release issued October 28, 1999
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Exhibit 99.1
Purina Mills, Inc.
P.O. Box 66812
St. Louis, MO 63166-6812
[PURINA MILLS LOGO] NEWS
For more information contact:
Max Fisher
314/768-4405
FOR IMMEDIATE RELEASE:
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PURINA MILLS ANNOUNCES FINANCIAL REORGANIZATION UNDER CHAPTER 11 TO REDUCE
DEBT; FILING OF REORGANIZATION PLAN PUT ON FAST TRACK; PURINA FOCUSES ON NEW
BUSINESS MODELS TO SERVE FUTURE MARKETS, AS IT PREPARES FOR INDEPENDENCE
FROM KOCH INDUSTRIES
ST. LOUIS, OCTOBER 28, 1999-- Purina Mills, Inc. announced today that,
as part of an overall financial restructuring, the Company and 10 of its
affiliates commenced reorganization cases under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware. The Company said it will promptly file a proposed plan of
reorganization, underscoring its goal of completing its reorganization and
emerging from Chapter 11 as quickly as possible. During the restructuring, the
Company's operations and ingredient supply will not be affected.
According to the Company, the business will continue to supply and
service its customer base without interruption. The financial restructuring is
necessary due to the current downturn in commodity prices and depressed
agricultural markets, particularly in the swine sector, that have restricted the
Company's ability to service debt associated with the purchase of Purina Mills
by Koch Industries, Inc. in 1998. The Company said all operations otherwise were
cash flow positive. In papers filed with the Bankruptcy Court, the Company
listed unsecured debt of over $350 million arising largely from the 1998
purchase transaction.
Purina Mills also announced that it has received a commitment for up
to $50 million in Debtor-In-Possession (DIP) financing from a group of lenders
led by Chase Bank of Texas, N.A. This new financing will provide the Company
with working capital during its
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reorganization. According to the Company, Chase Bank of Texas, N.A. agreed to
provide the DIP financing after a review of the Company's business plan.
Purina Mills said it anticipates focusing on its core businesses,
implementing its strategic business plan and taking the steps necessary to
become a strong, stand-alone enterprise, independent of Koch Industries. Under
the Company's anticipated plan of reorganization, all unsecured debt will be
converted to equity in a reorganized Purina Mills. Koch Industries' equity
interests in Purina Mills through its parent corporation, PM Holdings, would be
canceled.
The Company said that the original concept of the Koch-Purina
relationship was to develop a number of operational synergies and strategic
initiatives to create a world-class agriculture business. This included taking
advantage of Koch's expertise in commodity trading, risk management and use of
alternative ingredients in feed products through a proprietary Koch technology.
According to the Company, however, these synergies failed to materialize.
"Unquestionably, under these circumstances, the current downturn of the
agriculture markets, especially swine, had a dramatic impact on our ability to
service our acquisition-related debt," said Brad Kerbs, Purina Mills' President
and Chief Operating Officer. "But apart from that debt, our financial condition
is sound. We anticipate we will operate on a positive cash flow basis
going-forward."
Plans call for Koch to return all operational functions, which had been
transferred to Koch's base in Wichita, back to Purina Mills' headquarters in St.
Louis.
According to Mr. Kerbs, the Chapter 11 filing will allow Purina Mills
to restructure its debt and emerge from the reorganization as a properly
capitalized company. The reorganized Purina Mills, said Mr. Kerbs, will have a
clear commitment to customers and employees, control of its own destiny and a
financial structure that will give the 105-year-old animal nutrition company a
healthy balance sheet as it begins the new millennium.
In September, Purina Mills announced management and operational changes
designed to better serve local markets by segmenting its business into two
profit centers, its Dealer and Livestock Production Systems businesses. Both
profit centers will take independent actions to evolve to best serve their
respective dealers and customers, the Company said.
Mr. Kerbs emphasized that the decision to engage in a financial
restructuring will allow Purina Mills to continue to focus on its long-standing
relationships with independent dealers and livestock production systems. "But,
given current markets where there is an
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oversupply of both feed and animal products, we have adjusted our business
models to better manage our resources," said Mr. Kerbs. "Supporting the
substantial acquisition-related debt in this environment was just not possible."
Darrell Swank, Purina Mills' Chief Financial Officer, said that,
without the Company's $350 million subordinated debt and with the financial
security of the $50 million in DIP financing, the Company is well positioned to
adjust to current market conditions. "We intend to re-capture efficiencies and
quickly reintegrate activities such as ingredient procurement, payroll and
employee benefits, which had been transferred to Koch Industries," said Mr.
Swank. "We also intend to remain on course with plans to better serve and supply
our customer base, assist our dealers in expanding their market presence and
improve productivity throughout the enterprise. The interim financial structure
will allow the Company to effectively manage its businesses without interruption
during the reorganization."
"We have made the difficult financial decisions and have taken the
steps necessary to de-leverage the Company," Mr. Kerbs said. "We've refined our
business model that pivots on the ability of local management teams to service
customers and put in place the management and operational resources to support
that model. We're going to the local marketplace with the full force of the
Purina brand names and reputation for quality and service to advance our
position as America's Leader in Animal Nutrition."
Purina Mills is America's largest producer and marketer of animal
nutrition products. Based in St. Louis, Missouri, the Company has 49 plants and
2500 employees nationwide. Purina Mills is not affiliated with Ralston Purina
Company, which is the registered owner of the trademarks "Purina," the
checkerboard logo and Purina Dog Chow brand and Purina Cat Chow brand pet foods.
# # #
Certain statements contained in this press release, including but not limited to
information regarding the future economic performance and financial condition of
the Company, the plans and objectives of the Company's management and the
Company's assumptions regarding such performance and plans, are forward-looking
in nature. Additional information concerning important factors that could cause
actual results to differ from the forward-looking information contained in this
release is included in the Company's publicly filed quarterly and annual
reports.
