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) December 30, 1998
Falcon Building Products, Inc.
(Exact name of registrant as specified in charter)
Delaware 1-13418 36-3931893
(State or other jurisdiction (Commission file no.) (IRS employer
of incorporation) identification no.)
233 South Wacker Drive, Suite 3500, Chicago, Illinois 60606
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (312) 906-9700
Not applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On December 30, 1998, Falcon Building Products, Inc. (the "Company")
entered into an Option Agreement (the "Agreement") for the benefit of the
Company's stockholders of record on the date of the Agreement (the "Holders")
whereby the Company sold to the Holders, for the aggregate purchase price of
$1,000,000 (the "Purchase Price"), an option (the "Option") to purchase all of
the issued and outstanding capital stock of Mansfield Plumbing Products, Inc., a
wholly owned subsidiary of the Company ("Mansfield"), exercisable by the Holders
at any time on or prior to June 30, 1999. The exercise price of the Option will
be determined by reference to Mansfield's enterprise value which the Board of
Directors determined to be $80,000,000 after consulting with, and receiving an
independent third-party valuation from, a qualified valuation and appraisal
firm. The exercise price will equal Mansfield's enterprise value less the amount
of indebtedness assumed or incurred by Mansfield, which has not yet been
determined. It is currently anticipated that if the Option is exercised, the
net cash proceeds received by the Company from the sale will be used to reduce
indebtedness outstanding under its credit facility.
The Board of Directors of the Company decided to implement the Option as a
mechanism to permit the potential separation of the Mansfield business due to
its belief that Mansfield's growth prospects and future strategic alternatives
differ significantly from those of the Company's other principal operating
subsidiaries.
If the Holders elect to exercise the Option, the consummation of the sale
of Mansfield would be subject to customary closing conditions, including the
receipt of all necessary consents. No assurances can be given that the Holders
will exercise the Option or that such consents will be received. Factors which
could affect the Holders' decision to exercise the Option include, but are not
limited to, Mansfield's operating performance and prospects, the level of
indebtedness incurred or assumed by Mansfield and its ability to service such
debt, and its capitalization.
Forward-looking statements in this letter are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Act of 1995. Investors
are cautioned that actual results may differ substantially from such forward-
looking statements. Forward-looking statements involve risks and uncertainties,
including but not limited to, those discussed above with respect to factors that
may affect the decision whether to exercise the Option.
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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.
Date: January 12, 1999
FALCON BUILDING PRODUCTS, INC.
By: /s/ Sam A. Cottone
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Sam A. Cottone
Executive Vice President and
Chief Financial Officer
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