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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or l5(d)
of the Securities Exchange Act of 1934
Date of Report: June 24, 2000
(Date of earliest event reported)
THE SIRENA APPAREL GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-24636 36-2998726
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation
2825 South Santa Fe Avenue, Vernon, California 90058
(Address of principal executive offices) (Zip Code)
(323) 581-9700
(Registrant's telephone number, including area code)
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Bankruptcy or Receivership
On June 25, 1999, The Sirena Apparel Group ("Sirena") filed a voluntary
petition as a debtor in possession under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Central District
of California (Case No. LA 99-34245-ER). Sirena and the Committee of Creditors
Holding Unsecured Claims (the "Committee") filed a First Amended Plan of
Reorganization dated June 14, 2000 (the "Plan"). The Bankruptcy Court entered
its order confirming the Plan on June 24, 2000. The Plan became effective on
August 3, 2000 ("Effective Date").
The Plan is attached hereto as Exhibit 2(a). The Plan and its effect on
the holders of claims and equity interests in Sirena is fully described in the
Disclosure Statement to Accompany Debtor's and the Committee's First Amended
Plan of Reorganization Dated June 14, 2000 ("Disclosure Statement") attached
hereto as Exhibit 2(b). The capitalized terms used herein have the meaning
ascribed to them in the Plan.
Summary of Plan. As soon as practicable following the Effective Date,
Sirena will issue or reserve two and one-half million (2,500,000) shares of
its common stock, $.01 par value ("Common Stock").
American Industries, Inc. ("AII"), the sole holder of a secured claim, has
an allowed portion of its secured claim in the amount of $365,000 which will be
secured by a second priority lien in the assets of Sirena. The balance of the
AII claim will be treated as a general unsecured claim (Class 4).
Priority unsecured claims (Class 2) will be paid in full in cash without
interest.
Administrative Convenience Class of Unsecured Claims (Class 3) will be
paid in full in cash without interest.
Holders of allowed general Unsecured Claims will receive a pro rata
distribution of shares of common stock in Sirena, representing an aggregate of
55% of the issued and outstanding shares and a release of all voidable
preference claims.
Class 5 consists of all unsecured claims against Sirena's shareholders,
including any claims for damages arising from the purchase and sale of any
security of Sirena. Holders of Class 5 claims will not receive any distribution
from Sirena nor retain any interest in the Plan.
Holders of equity interests in Sirena (Class 6) will have their interest
canceled as of the Effective Date. All of the issued and outstanding shares of
Sirena as of the Effective Date will be canceled. Holders of equity interests
will not receive any distribution nor retain any interest under the Plan.
Foothill Capital Corporation ("Foothill") will provide Sirena with
$27,000,000 of exit financing ("Exit Financing") secured by a senior lien on all
of Sirena's assets.
As additional consideration for providing the financing, Foothill will
receive 30% of the issued and outstanding shares of common stock and a warrant
to purchase 333,334 shares at a nominal exercise price.
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Funding for the Plan. The Plan will be funded by the following: cash
from operations and the Foothill Exit Financing. Under the Exit Financing,
Sirena will have access to the funds necessary to refinance the indebtedness
owed to Foothill under the Debtor-in-Possession financing provided by
Foothill to pay administrative claims, priority claims and other claims and
costs payable on the Effective Date of the Plan and for working capital for
Sirena.
Post-Confirmation Management. Mr. Brian Zientek will serve as the Chief
Executive Officer of Sirena at an annual salary of $300,000, on the terms and
conditions set forth in the Employment Agreement between Mr. Zientek and Sirena
dated January 5, 2000 and approved by the Bankruptcy Court on February 2, 2000.
Sirena will be governed by a five (5) member Board of Directors, which
members shall initially consist of: four (4) creditor nominees designated by the
Creditors Committee (two of whom shall be independent) and the Chief Executive
Officer of Sirena. The initial members of the Board of Directors are as follows:
Name Title
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Brian Zientek Chief Executive Officer of The Sirena Apparel Group,
Inc.
David Ryan Chair of the Creditors Committee and Senior Executive
Officer of Applied Consulting Solutions, Inc.
Allan I. Whitman, CPA Financial Advisor to the Creditors Committee and Member
of Bernstein. Fox. Whitman & Co., LLP
Richard Matthews Independent Management Consultant and Current
Reorganization Consultant of The Sirena Apparel Group,
Inc.
Anne Leatherbury Independent Consultant to retail industry.
Following the Effective Date, the Board of Directors will establish a
management incentive program which will make available 15% of the issued and
outstanding shares of common stock to participants in the incentive plan.
Cancellation of Stock and Issuance of New Stock. On the Effective Date,
all authorized, issued and outstanding shares of Common or Preferred Stock in
Sirena shall be cancelled. As soon as practicable following the Effective
Date, Sirena shall issue or reserve two and one-half million (2,500,000)
shares of Common Stock (the "New Common Stock"). The New Common Stock will be
issued in the following percentages: unsecured creditors 55%;
management/employees 15% and Foothill 30%.
Creditors holding allowed claims in Class 4 will be issued their pro-rata
share of 1,100,000 shares of the New Common Stock. Foothill will be issued
600,000 shares of the New Common Stock. There shall be reserved for management /
employees of Sirena 300,000 shares in the aggregate, to be allocated in a manner
to be determined by the Board of Directors. Each share of the
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New Common Stock in Sirena will entitle its holder to one vote and holders of
such stock shall have the right to participate proportionately in any dividends.
Sirena, or such other qualified agent, as the Board of Directors shall
select in the future, shall act as its own registrar and transfer agent for the
New Common Stock shares to be issued under the Plan.
Following the Effective Date, Sirena intends to take all necessary steps
to deregister as a "reporting company" under Section 12(g) of the Securities
Exchange Act of 1934, as amended.
Amendment of Certificate of Incorporation of Sirena. Sirena's certificate
of incorporation will be amended and restated as necessary so that the
certificate of incorporation of Sirena authorizes the issuance of up to
2,500,000 shares of the New Common Stock and prohibits the issuance of
non-voting equity securities. The adoption of the amended certificate of
incorporation will be deemed to have occurred and be effective as of the
Effective Date without any further action by the directors or stockholders of
Sirena.
Financial Information. Certain financial information about the assets and
liabilities of Sirena is set forth in the Disclosure Statement.
Financial Statements; Pro Forma Financial Information and Exhibits.
2(a) Disclosure Statement to Accompany Debtor's and Committee's First
Amended Plan of Reorganization dated June 14, 2000.
2(b) First Amended Plan of Reorganization dated June 14, 2000.
2(c) Bankruptcy Court Order.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be executed on its behalf
by the undersigned thereunto duly authorized.
Dated: August 16, 2000 THE SIRENA APPAREL GROUP, INC.
A Delaware corporation
By: /s/ Brian Zientek
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BRIAN ZIENTEK
Chief Executive Officer
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