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Filed Pursuant to Rule 424(b)(3)
Regisration No. 333-13661
OFFER TO EXCHANGE
ALL OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES
DUE OCTOBER 1, 2006
($125,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
10 3/4% SENIOR SUBORDINATED NOTES
DUE OCTOBER 1, 2006
OF
COMMONWEALTH ALUMINUM CORPORATION
---------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON NOVEMBER 21, 1996, UNLESS EXTENDED
---------------------
Commonwealth Aluminum Corporation, a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $1,000 principal amount of its 10 3/4% Senior Subordinated Notes Due
October 1, 2006 (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for each $1,000 principal amount of the outstanding 10 3/4% Senior
Subordinated Notes Due October 1, 2006 (the "Old Notes") of the Company, of
which $125,000,000 principal amount is outstanding. The New Notes and the Old
Notes are collectively referred to herein as the "Notes."
The Company will accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m., New York City time, on the date the Exchange
Offer expires, which will be November 21, 1996, unless the Exchange Offer is
extended (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the business day prior to the
Expiration Date, unless previously accepted for payment. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to certain conditions which
may be waived by the Company and to the terms and provisions of the Registration
Rights Agreement (as defined herein). See "The Exchange Offer." Old Notes may be
tendered only in denominations of $1,000 and integral multiples thereof.
The New Notes will be obligations of the Company entitled to the benefits of
the Indenture (as defined herein). The form and terms of the New Notes are the
same in all material respects as the form and terms of the Old Notes except that
the New Notes have been registered under the Securities Act and will not contain
terms restricting the transfer thereof. Following the completion of the Exchange
Offer, none of the Notes will be entitled to the benefits of the Registration
Rights Agreement relating to contingent increases in the interest rate provided
for pursuant thereto. See "The Exchange Offer."
INVESTMENT IN THE NOTES INVOLVES SIGNIFICANT RISKS DISCUSSED
UNDER "RISK FACTORS" ON PAGE 13 WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
The New Notes will bear interest from September 20, 1996. Holders of Old
Notes whose Old Notes are accepted for exchange will be deemed to have waived
the right to receive any payment in respect of interest on the Old Notes accrued
from September 20, 1996 to the date of the issuance of the New Notes. Interest
on the New Notes is payable semi-annually on April 1 and October 1 of each year,
commencing April 1, 1997, accruing from September 20, 1996 at a rate of 10 3/4%
per annum.
(CONTINUED ON NEXT PAGE)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is October 22, 1996.
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(CONTINUED FROM COVER)
The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after October 1, 2001, at the redemption prices set forth
herein plus accrued interest to the date of redemption. In addition, at any time
prior to October 1, 1999, the Company has the option to redeem up to $43.75
million aggregate principal amount of the Notes out of the proceeds of one or
more Public Equity Offerings (as defined herein) at a redemption price of
110.750% of the principal amount thereof, plus accrued interest to the date of
redemption; PROVIDED, that at least $65.0 million aggregate principal amount of
the Notes must remain outstanding after each such redemption.
Old Notes initially sold to Qualified Institutional Buyers (as defined in
Rule 144A under the Securities Act) were represented by a single, global Note in
definitive fully registered form without coupons, registered in the name of a
nominee of The Depository Trust Company ("DTC"), as depositary. The New Notes
exchanged for Old Notes represented by the global Note will be represented by a
single, global New Note in definitive fully registered form without coupons,
registered in the name of the nominee of DTC, as depositary, unless the
beneficial holders thereof request otherwise. The global New Note will be
exchangeable, upon ten days prior written notice, for New Notes in definitive
fully registered form without coupons, in denominations of $1,000 and integral
multiples thereof. See "Description of New Notes--Form, Denomination and
Book-Entry Procedures."
The Old Notes are, and the New Notes will be, subordinated in right of
payment to all existing and future Senior Indebtedness (as defined herein) of
the Company. The Old Notes are, and the New Notes will be, guaranteed by certain
of the Company's subsidiaries and the guarantees will be subordinated in right
of payment to the Senior Indebtedness of such subsidiaries. At June 30, 1996, on
a pro forma basis after giving effect to the CasTech Acquisition (as defined
herein), the Company would have had approximately $377.3 million of Indebtedness
(as defined herein) outstanding, of which $125.0 million would have been
represented by the Notes and approximately $252.3 million would have been Senior
Indebtedness of the Company's subsidiaries guaranteed by the Company.
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by holders thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangements with any person to participate in the distribution of such New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date, it will make this Prospectus and any amendment or supplement to
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
The Company will not receive any proceeds from this offering, and no
underwriter is being utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
The New Notes are a new issue of securities for which there is currently no
trading market. If the New Notes are traded after their initial issuance, they
may trade at a discount from their principal amount, depending upon prevailing
interest rates, the market for similar securities and other factors, including
general economic conditions and the financial condition and performance of, and
prospects for, the Company. Morgan Stanley & Co. Incorporated and NatWest
Capital Markets Limited have advised the Company that they currently intend to
make a market in the Old Notes and the New Notes. However, they are not
obligated to do so, and any market making activity with respect to the Old Notes
and the New Notes may be discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the Old Notes and the New Notes. The Company does not intend to apply for
listing of the New Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices: Seven World Trade Center,
13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and copies of such material can be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
such material can also be obtained from the Commission's Web site at
http://www.sec.gov.
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information contained in the
Registration Statement and the exhibits and schedules thereto and reference is
hereby made to the Registration Statement and the exhibits and schedules thereto
for further information with respect to the Company and the securities offered
hereby. Statements contained herein concerning the provisions of any documents
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is made
to the copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents or information filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended by the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1995 (collectively, the "Form 10-K");
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31 and June 30, 1996 and the Company's Quarterly Report on Form
10-Q/A for the fiscal quarter ended June 30, 1996 (the "June 30, 1996 Form
10-Q/A");
(c) the Company's Current Report on Form 8-K filed August 20, 1996 and
the Company's Current Report on Form 8-K filed September 26, 1996; and
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(d) all documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act on or after the date of this Prospectus and
prior to the termination of the offering made hereby.
Any statement contained herein or in any documents incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for the purpose of this Prospectus to the extent that a subsequent statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST FROM DONALD L. MARSH, JR., EXECUTIVE VICE PRESIDENT
FINANCE, CHIEF FINANCIAL OFFICER AND SECRETARY OF THE COMPANY AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES LOCATED AT MEIDINGER TOWER, 462 S. 4TH AVENUE, SUITE
1200, LOUISVILLE, KENTUCKY 40202, TELEPHONE NUMBER (502) 589-8100. IN ORDER TO
ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY NOVEMBER
14, 1996.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
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Available Information...................................................................................... 3
Incorporation of Certain Documents by Reference............................................................ 3
Summary.................................................................................................... 5
Risk Factors............................................................................................... 13
Use of Proceeds............................................................................................ 18
The Exchange Offer......................................................................................... 19
Description of New Notes................................................................................... 26
Certain Federal Income Tax Consequences.................................................................... 58
Plan of Distribution....................................................................................... 60
Validity of New Notes...................................................................................... 61
Experts.................................................................................................... 61
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SUMMARY
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN. INVESTMENT IN
THE SECURITIES OFFERED HEREBY INVOLVES SIGNIFICANT RISKS. SEE "RISK FACTORS".
THE COMPANY
The Company owns and operates at Lewisport, Kentucky, one of the largest
multi-purpose aluminum rolling mills in North America and is a leading
manufacturer of aluminum sheet for the transportation, construction and consumer
durables end-use markets. In 1995, the Company produced 599 million pounds of
aluminum sheet products from purchased aluminum scrap and primary aluminum
metal, up from 352 million pounds in 1991. A further increase in annual
production capacity to 720 million pounds in 1998 is planned. The Lewisport mill
uses the conventional, vertical direct chill, rolling ingot casting process.
In 1995, the Company's sales and income before income taxes, plus interest
expense, depreciation and amortization ("EBITDA") were $671.5 million and $65.1
million, respectively, and in the first six months of 1996, the Company's sales
and EBITDA were $327.2 million and $15.2 million, respectively. The Company
believes it is the largest supplier of common alloy aluminum sheet to aluminum
distributors in North America and one of the largest direct suppliers of
aluminum sheet products to American manufacturers of transportation equipment.
In 1995, the Company estimates its share of these two markets was approximately
21% and sales to these two markets amounted to approximately 48% and 22%,
respectively, of its 1995 aluminum sheet revenues.
On September 20, 1996, the Company consummated the acquisition (the "CasTech
Acquisition") of CasTech Aluminum Group Inc. ("CasTech") for cash consideration
(excluding fees and expenses) of approximately $275 million. CasTech is the
nation's leading manufacturer of continuous cast aluminum sheet, using low-cost,
scrap-based mini-mill production technology. CasTech also is a leading
manufacturer of electrical flexible conduit and prewired armored cable, made
principally from aluminum sheet manufactured by CasTech. Over the past several
years, CasTech has increased the aluminum sheet annual production capacity of
its mills at Uhrichsville, Ohio, and Carson, California, by over 40% to 360
million pounds. Total production capacity is expected to increase further to 400
million pounds by 1998. CasTech fabricates its flexible conduit and armored
cable products at its Long Beach, California fabrication facility. This facility
purchases its aluminum sheet from its Carson rolling mill making CasTech the
only backward integrated manufacturer of electrical flexible conduit and cable.
In fiscal 1996, CasTech's sales and EBITDA were $400.4 million and $41.7
million, respectively, and in the first six calendar months of 1996, CasTech's
sales and EBITDA were $201.5 million and $18.4 million, respectively. CasTech's
aluminum sheet products are used in numerous industries, including the building
products, transportation, electrical and consumer durable end-use markets. The
electrical flexible conduit and prewired armored cable products are sold
primarily for use in commercial and residential construction, renovation and
remodeling.
On a pro forma basis after giving effect to the CasTech Acquisition, the
Company's sales and EBITDA were $1.1 billion and $106.8 million, respectively,
in 1995 and $528.7 million and $33.6 million, respectively, in the first six
months of 1996.
The purchase of the CasTech shares in the tender offer and subsequent
merger, the related transaction expenses and repayment of all outstanding
indebtedness of the Company and CasTech were funded with borrowings under a new
senior secured bank credit facility (the "New Bank Credit Facility") and the
proceeds of the sale of the Old Notes. See "Use of Proceeds." The New Bank
Credit Facility consists of $100 million of term loan and $225 million of
revolving credit facilities. See "Risk Factors--Ranking of Notes."
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The Company's principal executive offices are located at Meidinger Tower,
462 S. 4th Avenue, Suite 1200, Louisville, Kentucky 40202, and its telephone
number is (502) 589-8100.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $125,000,000 aggregate
principal amount of Old Notes for up to an equal aggregate principal amount of
New Notes. The New Notes will be obligations of the Company entitled to the
benefits of the Indenture. The form and terms of the New Notes are the same as
the form and terms of the Old Notes except that the New Notes have been
registered under the Securities Act and will not contain terms restricting the
transfer thereof (and hence are not entitled to the benefits of the Registration
Rights Agreement relating to the contingent increases in the interest rate
provided for pursuant thereto). The Old Notes and the New Notes are herein
collectively referred to as the "Notes." See "Description of New Notes."
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THE EXCHANGE OFFER........... $1,000 principal amount of New Notes will be issued in
exchange for each $1,000 principal amount of Old Notes
validly tendered pursuant to the Exchange Offer. As of the
date hereof, $125,000,000 in aggregate principal amount of
Old Notes are outstanding. The Company will issue the New
Notes to tendering holders of Old Notes promptly after the
Expiration Date.
RESALE....................... The Company believes that the New Notes issued pursuant to
the Exchange Offer generally will be freely transferable by
the holders thereof without registration or any prospectus
delivery requirement under the Securities Act, except that a
"dealer" or any "affiliate" of the Company, as such terms
are defined under the Securities Act, that exchanges Old
Notes held for its own account (a "Restricted Holder") may
be required to deliver copies of this Prospectus in
connection with any resale of the New Notes issued in
exchange for such Old Notes. See "The Exchange
Offer--General" and "Plan of Distribution."
EXPIRATION DATE.............. 5:00 p.m., New York City time, on November 21, 1996, unless
the Exchange Offer is extended, in which case the term
"Expiration Date" means the latest date and time to which
the Exchange Offer is extended. See "The Exchange
Offer--Expiration Date; Extensions; Amendments."
ACCRUED INTEREST ON THE NEW
NOTES AND THE OLD NOTES.... The New Notes will bear interest from September 20, 1996.
Holders of Old Notes whose Old Notes are accepted for
exchange will be deemed to have waived the right to receive
any payment in respect of interest on such Old Notes accrued
from September 20, 1996 to the date of the issuance of the
New Notes. Consequently, holders who exchange their Old
Notes for New Notes will receive the same interest payment
on April 1, 1997 (the first interest payment date with
respect to the Old Notes and the New Notes) that they would
have received had they not accepted the Exchange Offer. See
"The Exchange Offer--Interest on the New Notes."
TERMINATION OF THE EXCHANGE
OFFER...................... The Company may terminate the Exchange Offer if it
determines that
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its ability to proceed with the Exchange Offer could be
materially impaired due to any legal or governmental action,
any new law, statute, rule or regulation or any
interpretation of the staff of the Commission of any
existing law, statute, rule or regulation or if the Company
deems it advisable to terminate the Exchange Offer. Holders
of Old Notes will have certain rights against the Company
under the Registration Rights Agreement should the Company
fail to consummate the Exchange Offer. See "The Exchange
Offer-- Termination."
No federal or state regulatory requirements must be complied
with or approvals obtained in connection with the Exchange
Offer, other than applicable requirements under federal and
state securities laws.
PROCEDURES FOR TENDERING OLD
NOTES...................... Each holder of Old Notes wishing to accept the Exchange
Offer must complete, sign and date the accompanying Letter
of Transmittal, or a facsimile thereof, in accordance with
the instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with the Old Notes to be exchanged and
any other required documentation to Harris Trust and Savings
Bank, as Exchange Agent, at the address set forth herein and
therein or effect a tender of Old Notes pursuant to the
procedures for book-entry transfer as provided for herein.
See "The Exchange Offer-- Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL HOLDERS......... Any beneficial holder whose Old Notes are registered in the
name of his broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender in the Exchange
Offer should contact such registered holder promptly and
instruct such registered holder to tender on his behalf. If
such beneficial holder wishes to tender on his own behalf,
such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to register
ownership of the Old Notes in such holder's name or obtain a
properly completed bond power from the registered holder.
The transfer of record ownership may take considerable time.
See "The Exchange Offer--Procedures for Tendering."
GUARANTEED DELIVERY
PROCEDURES................. Holders of Old Notes who wish to tender their Old Notes and
whose Old Notes are not immediately available or who cannot
deliver their Old Notes (or who cannot complete the
procedure for book-entry transfer on a timely basis) and a
properly completed Letter of Transmittal or any other
documents required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date may tender their
Old Notes according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS............ Tenders of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the business day prior to
the Expiration Date,
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unless previously accepted for exchange. See "The Exchange
Offer-- Withdrawal of Tenders."
ACCEPTANCE OF OLD NOTES AND
DELIVERY OF NEW NOTES...... Subject to certain conditions (as summarized above in
"Termination of the Exchange Offer" and described more fully
in "The Exchange Offer--Termination"), the Company will
accept for exchange any and all Old Notes which are properly
tendered in the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New Notes issued
pursuant to the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange Offer--
General."
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... The exchange pursuant to the Exchange Offer will generally
not be a taxable event for federal income tax purposes. See
"Certain Federal Income Tax Consequences."
EXCHANGE AGENT............... Harris Trust and Savings Bank, the Trustee under the
Indenture, is serving as exchange agent (the "Exchange
Agent") in connection with the Exchange Offer. See "The
Exchange Offer--Exchange Agent."
USE OF PROCEEDS.............. There will be no cash proceeds payable to the Company from
the issuance of the New Notes pursuant to the Exchange
Offer. Net proceeds received by the Company from the sale of
the Old Notes were applied to effect the CasTech
Acquisition.
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SUMMARY DESCRIPTION OF NEW NOTES
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SECURITIES OFFERED........... $125,000,000 aggregate principal amount of 10 3/4% Senior
Subordinated Notes Due 2006 (the "New Notes").
MATURITY DATE................ October 1, 2006.
INTEREST..................... Payable semi-annually in cash on April 1 and October 1,
commencing on April 1, 1997.
OPTIONAL REDEMPTION BY
COMPANY.................... The Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after October 1, 2001,
initially at 105.375% of their principal amount, plus
accrued interest, declining ratably to 100% of their
principal amount, plus accrued interest, on or after October
1, 2003.
In addition, at any time prior to October 1, 1999, the
Company has the option to redeem up to $43.75 million
aggregate principal amount of the Notes out of the proceeds
of one or more Public Equity Offerings at a redemption price
of 110.750% of the principal amount thereof, plus accrued
interest to the date of redemption; PROVIDED, that at least
$65.0 million aggregate principal amount of Notes must
remain outstanding after each such redemption. See
"Description of New Notes--Optional Redemption."
CHANGE OF CONTROL............ Upon a Change of Control (as defined herein), the Company
will be required to make an offer to purchase the Notes at a
purchase price
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equal to 101% of their principal amount, plus accrued
interest. See "Description of New Notes--Repurchase of Notes
upon a Change of Control."
GUARANTEE.................... The Old Notes are, and the New Notes will be, jointly and
severally, fully and unconditionally guaranteed on a senior
subordinated basis by certain of the Company's subsidiaries
(each, a "Guarantor"). Each such Guarantee (a "Subsidiary
Guarantee") will be an unsecured, senior subordinated
obligation of the Guarantor and will rank junior in right of
payment to all existing and future Senior Indebtedness (as
defined herein) of such Guarantor, including such
Guarantor's obligations under the New Bank Credit Facility.
At June 30, 1996, on a pro forma basis after giving effect
to the CasTech Acquisition, the Company would have had
approximately $377.3 million of Indebtedness outstanding, of
which $125.0 million would have been represented by the
Notes and approximately $252.3 million would have been
Senior Indebtedness of the Guarantors guaranteed by the
Company. See "Risk Factors--Increased Financial Leverage"
and "Description of New Notes--Subsidiary Guarantees."
RANKING...................... The Old Notes are, and the New Notes will be, unsecured,
general obligations of the Company subordinated in right of
payment to all existing and future Senior Indebtedness of
the Company. The New Notes will rank PARI PASSU in right of
payment with any future Senior Subordinated Indebtedness (as
defined herein) of the Company and will be senior in right
of payment to all existing and future Subordinated
Indebtedness of the Company. At June 30, 1996, on a pro
forma basis after giving effect to the CasTech Acquisition,
the Company (excluding its subsidiaries) would have had no
Senior Indebtedness outstanding other than its guarantee of
approximately $252.3 million of the Senior Indebtedness of
its subsidiaries. See "Risk Factors--Ranking of the Notes"
and "Description of New Notes--Ranking."
CERTAIN COVENANTS............ The indenture pursuant to which the Old Notes were issued
and the New Notes will be issued (the "Indenture") contains
covenants for the benefit of the holders of the Notes (the
"Holders"), including covenants limiting the incurrence of
additional indebtedness, the payment of dividends, the
redemption of capital stock, the making of certain
investments, the issuance of capital stock of subsidiaries,
the creation of dividend and other restrictions affecting
subsidiaries, transactions with affiliates, asset sales and
certain mergers and consolidations. However, these
limitations will be subject to a number of important
qualifications and exceptions. See "Description of New
Notes--Certain Covenants." In addition, if the Notes are
assigned an Investment Grade Rating (as defined herein), the
covenants regarding incurrence of additional indebtedness,
the payment of dividends, the redemption of capital stock,
the making of certain investments, the issuance of capital
stock of subsidiaries, the creation of dividend and other
restrictions affecting subsidiaries, asset sales and certain
provisions regarding certain mergers and consolidations will
no longer apply and the Company will be subject to a
covenant regarding
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limitations on liens. See "Description of New Notes--Certain
Covenants--Certain Positive Credit Events."
REGISTRATION RIGHTS.......... The Company is obligated to consummate the Exchange Offer or
to cause resales of the Old Notes to be registered under the
Securities Act and, if one of such events does not occur
prior to April 1, 1997, then the annual interest rate borne
by the Old Notes will be increased to 11 1/4%. If such
Exchange Offer is not consummated or a shelf registration
statement is not declared effective by October 1, 1997, then
the annual interest rate borne by the Old Notes shall be
increased by an additional 0.5%. Upon consummation of such
Exchange Offer or the effectiveness of such shelf
registration statement, the interest rate borne by the Old
Notes will revert to 10 3/4%. Holders who do not participate
in the Exchange Offer may thereafter hold a less liquid
security. See "Description of New Notes--Registration
Rights."
</TABLE>
RISK FACTORS
Prospective investors should consider carefully certain matters relating to
an investment in the New Notes. See "Risk Factors."
10
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated statement of
operations, operating and balance sheet data for the Company for the periods
indicated. The historical financial information for, and as of the end of, each
of the years ended December 31, 1991, 1992, 1993, 1994 and 1995 are derived from
the audited consolidated financial statements of the Company for such years. The
selected consolidated statement of operations data for the six months ended June
30, 1995 and 1996 and the selected consolidated balance sheet data as of June
30, 1996 are derived from the unaudited consolidated financial statements of the
Company, which include all adjustments (which were of a normal and recurring
nature), which management considers necessary for a fair presentation of the
data for such periods and at such dates. The results of the six months ended
June 30, 1996 are not necessarily indicative of results to be expected for the
full year. This information should be read in conjunction with, and is qualified
by reference to, the consolidated financial statements of the Company and the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in the Form 10-K and June 30, 1996 Form
10-Q/A.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT RATIOS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF OPERATIONS DATA:
Net sales.......................................... $ 326,860 $ 400,314 $ 413,036 $ 496,529 $ 671,501 $ 366,136 $ 327,216
Cost of goods sold................................. 344,237 379,654 407,561 455,123 606,751 327,822 308,535
--------- --------- --------- --------- --------- --------- ---------
Gross profit (loss)............................ (17,377) 20,660 5,475 41,406 64,750 38,314 18,681
Selling, general and administrative expenses....... 22,388 15,835 21,462 21,144 22,510 11,509 12,200
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss)............................ (39,765) 4,825 (15,987) 20,262 42,240 26,805 6,481
Halco income(1).................................... 3,785 2,337 4,504 2,635 1,636 1,263 --
Other income (expense), net........................ (233) 937 111 (44) 2,670 2,942 (247)
Interest expense, net.............................. (6,342) (122) (164) (62) (3,473) (1,849) (1,122)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes and cumulative
effect of accounting change...................... (42,555) 7,977 (11,536) 22,791 43,073 29,161 5,112
Provision for income taxes......................... 39 207 42 700 9,286 7,582 617
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before cumulative effect of
accounting change................................ (42,594) 7,770 (11,578) 22,091 33,787 21,579 4,495
Cumulative effect of change in accounting
principle(2)..................................... -- -- (66,415) -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss).................................. $ (42,594) $ 7,770 $ (77,993) $ 22,091 $ 33,787 $ 21,579 $ 4,495
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) per common share(3)................ N/A N/A N/A N/A $ 3.32 $ 2.12 $ 0.44
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Dividends per common share(3)...................... N/A N/A N/A N/A $ 0.15 $ 0.10 $ 0.10
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OPERATING DATA:
EBITDA(4).......................................... $ (20,574) $ 24,160 $ 5,166 $ 40,250 $ 65,146 $ 40,121 $ 15,197
Ratio of earnings to fixed charges(5).............. -- 18.34x -- 62.60x 11.53x 15.05x 4.05x
Depreciation and amortization...................... $ 15,639 $ 16,061 $ 16,538 $ 17,397 $ 18,600 $ 9,111 $ 8,963
Capital expenditures............................... $ 29,246 $ 16,647 $ 12,092 $ 19,662 $ 15,153 $ 11,330 $ 4,822
Net pounds shipped(6).............................. 351,036 458,505 511,887 568,970 587,932 317,388 314,581
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------- JUNE 30,
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $ (30,360) $ (20,300) $ (15,197) $ 134,026 $ 153,292 $ 159,027
Total assets.............................................. 329,095 357,103 357,557 439,454 420,684 402,294
Total debt(7)............................................. 116,830 125,000 125,000 -- 48,375 37,169
Total stockholders' equity(7)............................. 165,822 171,540 93,824 242,690 213,063 216,785
</TABLE>
- ------------------------
(1) Prior to March 1995, the Company had an interest in Halco (Mining) Inc. and
received dividends and income from bauxite sales. This investment was
distributed to Comalco Limited in a transaction associated with the
disposition of Comalco's interest in the Company.
(2) Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions" ("SFAS 106"). This standard requires companies
to accrue the cost of postretirement health care and life insurance benefits
within the employees' active service periods. The Company elected to
recognize the accumulated postretirement benefit obligation immediately upon
adoption of SFAS 106, resulting in a one time charge of $66.4 million at
January 1, 1993.
(3) Earnings per common share and dividends per common share have not been
presented for 1991 through 1994 when the Company was a wholly owned
subsidiary of Comalco Limited.
(4) EBITDA is calculated as income before income taxes, plus interest expense,
depreciation and amortization. EBITDA is not a measure of cash flow as
determined by generally accepted accounting principles ("GAAP"). EBITDA
should not be considered as an alternative to, or more meaningful than, net
income or cash flow as determined in accordance with GAAP as an indicator of
the Company's operating performance or liquidity.
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income (loss) before income taxes and cumulative effect of change
in accounting principle and fixed charges. Fixed charges consist of interest
expense, capitalized interest and implicit interest associated with
operating leases. For the years ended December 31, 1991 and 1993, the
Company had earnings deficiencies (income (loss) before income taxes and
cumulative effect of accounting change) of approximately $43.0 million and
$11.0 million, respectively.
(6) Net pounds shipped excludes certain shipments of raw materials.
(7) Reflects the contribution to equity in December 1994 of $125 million due to
Comalco Limited, then the parent of the Company, and the distribution of $50
million to Comalco Limited in 1995 in a transaction associated with the
disposition of Comalco's interest in the Company.
12
<PAGE>
RISK FACTORS
Investment in the New Notes involves various risks, including the following
principal factors, which, together with the other matters set forth herein or
incorporated by reference herein, should be carefully considered by prospective
investors.
SUCCESSFUL INTEGRATION OF CASTECH ACQUISITION
The integration and consolidation of the CasTech Acquisition will require
substantial management time and other resources and may pose risks with respect
to production, customer service and market share. While the Company believes
that it has sufficient management and other resources to accomplish the
rationalization and integration of the CasTech Acquisition, there can be no
assurance in this regard or that the Company will not experience difficulties
with customers, suppliers, personnel or others. In addition, although the
Company believes that the CasTech Acquisition will enhance the competitive
position and business prospects of the Company, there can be no assurance that
such benefits will be realized or that the combination of the Company and
CasTech will be more successful than the companies would have been if they had
remained independent.
INCREASED FINANCIAL LEVERAGE
At June 30, 1996, on a pro forma basis after giving effect to the CasTech
Acquisition, the Company would have had approximately $377.3 million of total
indebtedness, and the percentage of total debt to total capitalization
(including the current portion of long-term debt) on a consolidated basis would
have been approximately 64.2%. The degree to which the Company is leveraged
could have important consequences to Holders of the Notes, including the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions or other purposes
may be impaired, (ii) the Company's flexibility in planning for or reacting to
changes in market conditions may be limited and (iii) the Company may be more
vulnerable in the event of a downturn in its business. The Company expects that
its cash flow from operations will be sufficient to cover its expenses,
including fixed charges. However, the Company's ability to satisfy its
obligations will be dependent upon the future performance of the Company, which
will be subject to prevailing economic conditions and to financial, business and
other factors, including factors beyond the control of the Company.
At June 30, 1996, on a pro forma basis after giving effect to the CasTech
Acquisition, the Company would have had approximately $252.3 million in
aggregate borrowings outstanding under the New Bank Credit Facility and
availability under the New Bank Credit Facility of $72.7 million. Revolving
borrowings under the New Bank Credit Facility will mature on September 1, 2001
and all term borrowings under the New Bank Credit Facility will be repaid in
quarterly installments ending on September 1, 2001. There can be no assurance
that the Company will be able to either replace or refinance the New Bank Credit
Facility at maturity.
RANKING OF THE NOTES
The Old Notes are, and the New Notes will be, unsecured, general obligations
of the Company, subordinated in right of payment to all existing and future
Senior Indebtedness of the Company, including indebtedness under the New Bank
Credit Facility. Amounts outstanding under the New Bank Credit Facility are
secured by a first priority security interest in the Company's assets. At June
30, 1996, on a pro forma basis after giving effect to the CasTech Acquisition,
the Company would have had approximately $252.3 million of Senior Indebtedness
outstanding. In the event of bankruptcy, liquidation or reorganization of the
Company, the assets of the Company would be available to pay obligations on the
Notes only after all Senior Indebtedness has been repaid in full. Consequently,
sufficient assets may not exist to pay amounts due on the Notes. In addition,
the subordination provisions of the Indenture provide that no cash payments may
be made with respect to the Notes during the continuance of a payment default
under any
13
<PAGE>
Senior Indebtedness of the Company. Furthermore, if certain nonpayment defaults
exist with respect to certain Senior Indebtedness, the holders of such Senior
Indebtedness would be able to prevent payments on the Notes for certain periods
of time. The Subsidiary Guarantees will be subordinated to Senior Indebtedness
of the Guarantors to the same extent as the Notes are subordinated to Senior
Indebtedness of the Company. See "Description of New Notes--Ranking."
FRAUDULENT CONVEYANCE
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court to subordinate or avoid the Notes or
any Subsidiary Guarantee in favor of other existing or future creditors of the
Company or a Guarantor.
The net proceeds from the sale of the Old Notes were used, together with the
borrowings under the New Bank Credit Facility, to effect the CasTech
Acquisition. If a court in a lawsuit on behalf of any unpaid creditor of the
Company or a representative of the Company's creditors were to find that, at the
time the Company consummated such transactions, the Company (x) intended to
hinder, delay or defraud any existing or future creditor or contemplated
insolvency with a design to prefer one or more creditors to the exclusion in
whole or in part of others or (y) did not receive fair consideration or
reasonably equivalent value for issuing the Notes and the Company (i) was
insolvent, (ii) was rendered insolvent by reasons of such transaction, (iii) was
engaged or about to engage in a business or transaction for which its remaining
assets constituted unreasonably small capital to carry on its business or (iv)
intended to incur, or believed that it would incur, debts beyond its ability to
pay such debts as they matured, such court could void the Notes and void such
transactions. Alternatively, in such event, claims of the Holders of the Notes
could be subordinated to claims of other creditors of the Company.
The Company's obligations under the Old Notes are, and the New Notes will
be, guaranteed by certain of the Guarantors. To the extent that a court were to
find that (x) a Subsidiary Guarantee was incurred by a Guarantor with intent to
hinder, delay or defraud any present or future creditor or the Guarantor
contemplated insolvency with a design to prefer one or more creditors to the
exclusion in whole or in part of others or (y) such Guarantor did not receive
fair consideration or reasonably equivalent value for issuing its Subsidiary
Guarantee, and such Guarantor (i) was insolvent, (ii) was rendered insolvent by
reason of the issuance of such Subsidiary Guarantee, (iii) was engaged or about
to engage in a business or transaction for which the remaining assets of such
Guarantor constituted unreasonably small capital to carry on its business or
(iv) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured, the court could void or subordinate
such Subsidiary Guarantee in favor of such Guarantor's creditors.
The Company's operations are conducted through subsidiaries, and the Company
therefore relies on distributions from its subsidiaries for the funds to service
its indebtedness, including payment of principal of and interest on the Notes.
To the extent that any Subsidiary Guarantees were voided as a fraudulent
conveyance or held unenforceable for any other reason, Holders of the Notes
would cease to have any claim in respect of such Guarantor and would be
creditors solely of the Company and any Guarantor whose Subsidiary Guarantee was
not voided or held unenforceable. In such event, the claims of the Holders of
the Notes against the issuer of an invalid Subsidiary Guarantee would be subject
to the prior payment of all liabilities and preferred stock interests, if any,
of such Guarantor. There can be no assurance that, after providing for all prior
claims and preferred stock interests, if any, there would be sufficient assets
to satisfy the claims of the Holders of the Notes relating to any voided
portions of any of the Subsidiary Guarantees.
The measures of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, the
Company or a Guarantor would be considered insolvent at a particular time if the
sum of its debts was then greater than all of its property at a fair valuation
or if the present fair saleable value of its assets was then less than the
amount that would be
14
<PAGE>
required to pay its probable liabilities on its existing debts as they became
absolute and matured. Based upon financial and other information currently
available to it, the Company's management believes that the Old Notes and the
Subsidiary Guarantees were incurred for proper purposes and in good faith and
that each of the Company and each Guarantor (i) was solvent at the time of such
issuance and continues to be solvent after issuing the Old Notes or its
Subsidiary Guarantee, as the case may be, (ii) will have sufficient capital for
carrying on its business, and (iii) will be able to pay its debts as they
mature. There can be no assurance, however, that a court passing on these same
issues would make the same determination.
CYCLICALITY OF END-USE MARKETS
Many of the end-use markets served by the Company, such as the building and
construction and transportation industries, are cyclical and are significantly
affected by changes in general and local economic conditions. These conditions
include the level of economic growth, employment levels, financing availability,
interest rates, consumer confidence and housing demand. The Company believes
that decreases in demand resulting from these conditions in its principal
markets in North America have adversely affected demand for, and prices of, many
of its products in the past and may do so again in the future. A prolonged
recession in the Company's principal markets could have a material adverse
effect on its financial condition or results of operations.
ALUMINUM METAL PRICE VOLATILITY
Aluminum scrap and primary aluminum metal prices are subject to significant
cyclical price fluctuations. For example, the average annual cash price per
pound of aluminum for transactions on the London Metals Exchange ("LME")
increased from $.54 in 1986 to $1.17 in 1988, declined to $.52 in 1993 and rose
to $.82 in 1995. On October 16, 1996, the LME cash price was $.59. Purchases of
metal for forward delivery and hedging with futures and options contracts are
used to reduce the Company's aggregate exposure at any time to the risk of
changes in metal prices. While changes in aluminum prices can cause the
Company's net sales to change significantly from period to period, net income is
more directly impacted by the fluctuation in material margins. During the second
quarter of 1996, the industry remained highly competitive as the Company's
material margins fell to their lowest levels in over two years, continuing a
trend that began during the third quarter of 1995, when, in anticipation of
falling metal prices, customers began shortening their lead times for new
orders. The Company intends to continue to base the selling prices of its
products upon the associated aluminum metal costs, as set by purchases for
forward delivery or hedging, but there can be no assurance that it will be able
to pass all increases in aluminum metal costs through to its customers or that
material margins will not continue to decrease. Significant increases in the
price of aluminum scrap or primary aluminum metal, if not offset by product
price increases, would have a material adverse effect on the Company's financial
condition or results of operations.
ENVIRONMENTAL CONSIDERATIONS
The Company's operations are subject to numerous and increasingly stringent
environmental laws and regulations governing protection of the environment,
including those relating to air emissions, wastewater discharges, the handling,
disposal and remediation of hazardous substances and wastes and employee health
and safety. Future environmental regulations, including those under the Clean
Air Act, are expected to impose stricter compliance requirements on the aluminum
industry in general. While the current cost of environmental compliance does not
have a material adverse effect upon the Company and the Company does not believe
that currently anticipated future requirements are likely to have a material
adverse effect on the Company, there can be no assurance that future capital
expenditures and costs for environmental compliance will not have a material
adverse effect on the Company's financial condition, results of operations or
liquidity.
In addition, historical and present manufacturing activities at current and
formerly-owned properties and adjacent areas have resulted in environmental
impacts requiring remediation. Financial responsibility
15
<PAGE>
for the remediation of contaminated property or for the amelioration of damage
to natural resources can be imposed on the Company where its current or prior
operations have had an environmental impact or where properties it currently or
historically owned or operated, or to which it sent hazardous waste, are
contaminated, whether by the Company or otherwise. The Company, its predecessor
companies and third parties historically have disposed of hazardous waste,
including salt cake fines and oxides, in landfills or other surface impoundments
or at inactive underground mining sites. This disposal activity has in some
cases resulted in contamination of the soil, groundwater or surface water and in
the emission of vapors generated as the hazardous waste reacts with water. As a
result, several sites owned or operated by the Company have been placed on the
National Priorities List or on other lists of environmentally-impacted sites or
are the subject of regulatory clean-up orders. The Company is performing
clean-up or remediation activities or taking other protective measures at those
sites, such as removing the hazardous waste from the property or preventing the
off-site migration of contamination. With respect to these activities the
Company has recorded accruals to cover future costs which, based on its analysis
of currently available information, the Company believes are probable of
occurring and reasonably estimable. However, there can be no assurance that
additional accruals will not be required in the future, which may be material to
the Company, due to the fact that (i) complete technical information regarding
the type and extent of contamination is not available with respect to some or
all of the issues at the affected properties, which means the scope and cost of
a viable remedial action plan may not have been defined or may be subject to
change as further information becomes available, (ii) clean-up or remediation
plans must be approved by regulatory authorities and most sites have not
received all required approvals, and (iii) new facts may be identified during
the course of further investigation performed by the Company or required by
regulatory authorities which could lead to additional clean-up or remedial
requirements. The Company believes, based upon information currently available
to management, that environmental matters will not have a material adverse
effect on the Company's financial condition, results of operations or liquidity,
although resolution of certain items in any particular year or quarter could be
material to the results of operations or liquidity for that period. However,
there can be no assurance that future environmental requirements with respect to
the operation of the Company's business, current and formerly owned or operated
properties or adjacent areas or at third party disposal sites will not have a
material adverse effect on the Company's financial condition, results of
operation or liquidity. See "Business--Environmental Matters" in the Form 10-K.
RESTRICTIONS IMPOSED BY THE NEW BANK CREDIT FACILITY AND THE INDENTURE
The New Bank Credit Facility and the Indenture contain certain restrictive
covenants, including, among others, covenants limiting the Company's and certain
of its subsidiaries' ability to incur additional indebtedness, pay dividends,
make certain investments, consummate certain asset sales, enter into
transactions with affiliates, incur liens, create restrictions on the ability of
certain subsidiaries to pay dividends or make certain payments to the Company,
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of the assets of the
Company. Although the covenants are subject to various exceptions which are
designed to allow the Company to operate without undue restraint, there can be
no assurance that such covenants will not adversely affect its ability to
finance future operations or capital needs or engage in other business
activities which may be in the interest of the Company. In addition, the Company
is required under the New Bank Credit Facility to maintain specified financial
ratios. The ability of the Company to comply with such provisions may be
affected by events beyond the Company's control. A breach of any of these
covenants or the inability of the Company to comply with the required financial
ratios could result in a default under the New Bank Credit Facility, which would
entitle the lenders to accelerate the maturity of the New Bank Credit Facility,
and could result in cross-defaults permitting the acceleration of other Senior
Indebtedness or other indebtedness under other agreements. Such an event would
adversely affect the Company's ability to make payments on the Notes.
16
<PAGE>
RELIANCE ON IMCO
IMCO Recycling, Inc. ("IMCO") processes aluminum scrap to supply
substantially all of the requirements for CasTech's Ohio rolling mill. While the
Company believes CasTech's alliance with IMCO has provided a long-term source of
high quality recycled aluminum for its largest rolling mill, production
disruptions or other factors affecting IMCO could interrupt or temporarily
reduce the supply of reprocessed aluminum to CasTech's Ohio rolling mill and
adversely impact the Company. CasTech is responsible for the treatment and
disposal of substantially all of the waste generated as a result of IMCO's
processing services on behalf of CasTech. CasTech has agreed to indemnify IMCO
against damages and liabilities arising from CasTech's treatment and disposal of
such waste. Nonpayment, uncured defaults and certain events of bankruptcy
relating to CasTech would enable IMCO to terminate the agreement underlying the
alliance.
COMPETITIVE INDUSTRY
The market for aluminum sheet products is diverse and highly competitive.
The Company competes in the production and sale of common alloy aluminum sheet
products with some 27 other aluminum rolling mills in the United States and
Canada (including large, single purpose can sheet mills, other continuous
casters and other multi-purpose mills, some of which are larger and have greater
financial and technical resources than the Company) and with imported products.
In its major markets, the Company competes with other rolled products suppliers,
principally the multipurpose mills, on the basis of quality, price, timeliness
of delivery and customer service. Aluminum also competes with other materials
such as steel, plastic and glass for various applications. Higher or lower
aluminum prices tend to make aluminum products less or more competitive with
these alternative materials. To respond to such competitive forces will require
continued investment by the Company in technology and product development. There
can be no assurance that the Company will continue to have sufficient resources
to continue to make such investments. See "Business--Competition" in the Form
10-K.
POTENTIAL LACK OF FUNDING FOR CHANGE OF CONTROL OFFER
In the event of a Change of Control, the Company will be required, subject
to certain conditions, to offer to purchase all outstanding Notes at a purchase
price equal to 101% of the principal amount thereof, plus accrued interest to
the date of repurchase. The New Bank Credit Facility restricts such a purchase
and the offer would require the approval of the lenders thereunder. Accordingly,
the right of the Holders of the Notes to require the Company to repurchase the
Notes may be of limited value if the Company cannot obtain approval under the
New Bank Credit Facility. There can be no assurance that the Company will have
the financial resources necessary to purchase the Notes upon a Change of
Control. Failure to offer to repurchase the Notes under such circumstances,
however, would constitute an Event of Default under the Indenture. See
"Description of New Notes--Repurchase of Notes upon a Change of Control."
LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are a new issue of securities for which there is currently no
trading market. If the New Notes are traded after their initial issuance, they
may trade at a discount from their principal amount, depending upon prevailing
interest rates, the market for similar securities and other factors, including
general economic conditions and the financial condition and performance of, and
prospects for, the Company. Morgan Stanley & Co. Incorporated and NatWest
Capital Markets Limited have advised the Company that they currently intend to
make a market in the Old Notes and the New Notes. However, they are not
obligated to do so, and any market making activity with respect to the Old Notes
and the New Notes may be discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the Old Notes and the New Notes. The Company does not intend to apply for
listing of the New Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
17
<PAGE>
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes as contemplated
in this Prospectus, the Company will receive in exchange Old Notes in like
principal amount, the terms of which are the same in all material respects as
the form and terms of the New Notes except that the New Notes have been
registered under the Securities Act and will not contain terms restricting the
transfer thereof. The Old Notes surrendered in exchange for the New Notes will
be retired and cancelled and cannot be reissued. Accordingly, issuance of the
New Notes will not result in any increase in the indebtedness of the Company.
The net proceeds received by the Company from the offering of the Old Notes
was estimated to be $120.6 million. The Company applied the net proceeds from
the offering of the Old Notes to effect the CasTech Acquisition.
18
<PAGE>
THE EXCHANGE OFFER
GENERAL
In connection with the sale of the Old Notes, the purchasers thereof became
entitled to the benefits of certain registration rights (the "Registration
Rights"). Pursuant to the agreement governing the Registration Rights (the
"Registration Rights Agreement"), the Company agreed to use its reasonable best
efforts, at its cost, to file and cause to become effective a registration
statement with respect to the Exchange Offer to exchange the Old Notes for the
New Notes. Upon such registration statement being declared effective, the
Company has agreed to offer the New Notes in return for surrender of the Old
Notes. For each Old Note surrendered to the Company under the Exchange Offer,
the Holder will receive a New Note of equal principal amount. Interest on each
New Note will accrue from September 20, 1996. In the event that applicable
interpretations of the staff of the Commission do not permit the Company to
effect the Exchange Offer or under certain other circumstances, the Company has
agreed, at its cost, to use its reasonable best efforts to cause to become
effective a shelf registration statement (the "Shelf Registration Statement")
with respect to resales of the Old Notes and to keep such registration statement
effective until September 20, 1999. The Company shall, in the event of such a
shelf registration, provide to each holder copies of the prospectus, notify each
holder when the Shelf Registration Statement for the Old Notes has become
effective and take certain other actions as are required to permit resales of
the Old Notes.
In the event an Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective on or prior to April 1, 1997, then the
annual interest rate borne by the Old Notes shall be increased to 11 1/4%. If
such Exchange Offer is not consummated or such Shelf Registration Statement is
not declared effective by October 1, 1997, then the annual interest rate borne
by the Old Notes shall be increased by an additional 0.5%. Upon consummation of
such Exchange Offer or the effectiveness of such Shelf Registration Statement,
the interest rate borne by the Old Notes will revert to 10 3/4%.
In the event an exchange offer is consummated, the Company will not be
required under the Registration Rights Agreement to file the Shelf Registration
Statement to register any outstanding Old Notes, and the interest rate on such
Old Notes will remain at its initial level of 10 3/4%. The Exchange Offer shall
be deemed to have been consummated upon the earlier to occur of (i) the Company
having exchanged New Notes for all outstanding Old Notes (other than Old Notes
held by a Restricted Holder) pursuant to the Exchange Offer and (ii) the Company
having exchanged, pursuant to the Exchange Offer, New Notes for all Old Notes
that have been tendered and not withdrawn on the date that is 30 days following
the commencement of such Exchange Offer. In such event, holders of Old Notes
seeking liquidity in their investment would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act. See "Description of New Notes--Registration Rights Agreement" and "Risk
Factors."
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all Old
Notes properly tendered prior to 5:00 p.m., New York City time, on the
Expiration Date. The Company will issue $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of outstanding Old Notes accepted in
the Exchange Offer. Holders may tender some or all of their Old Notes pursuant
to the Exchange Offer in denominations of $1,000 and integral multiples thereof.
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such New
Notes. Any holder of Old Notes who tenders in the Exchange Offer for the purpose
of participating in a distribution of the New
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<PAGE>
Notes could not rely on such interpretation by the staff of the Commission and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution."
As of the date of this Prospectus, $125,000,000 aggregate principal amount
of the Old Notes is outstanding. In connection with the issuance of the Old
Notes, the Company arranged for the Old Notes to be eligible for trading in the
Private Offering, Resale and Trading through Automated Linkages (PORTAL) Market,
the National Association of Securities Dealers' screen based, automated market
trading of securities eligible for resale under Rule 144A under the Securities
Act.
This Prospectus, together with the accompanying letter of transmittal (the
"Letter of Transmittal"), is being sent to all registered holders as of October
18, 1996 (the "Record Date").
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to Harris
Trust and Savings Bank (the "Exchange Agent"). See "Exchange Agent." The
Exchange Agent will act as agent for the tendering holders of Old Notes for the
purpose of receiving New Notes from the Company and delivering New Notes to such
holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean November 21, 1996, unless the Company,
in its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the record
holders of Old Notes an announcement thereof, prior to 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Such announcement may state that the Company is extending the Exchange Offer for
a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and to refuse to
accept Old Notes not previously accepted, if any of the conditions set forth
herein under "Termination" shall have occurred and shall not have been waived by
the Company (if permitted to be waived by the Company), by giving oral or
written notice of such delay, extension or termination to the Exchange Agent,
and (ii) to amend the terms of the Exchange Offer in any manner deemed by it to
be advantageous to the holders of the Old Notes. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment in a manner reasonably calculated to inform the
holders of the Old Notes of such amendment.
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<PAGE>
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the Exchange Offer, the Company shall have no obligation to publish, advertise,
or otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from September 20, 1996, payable
semiannually on April 1 and October 1, of each year commencing on April 1, 1997,
at the rate of 10 3/4% per annum. Holders of Old Notes whose Old Notes are
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of interest on the Old Notes accrued from September 20, 1996
until the date of the issuance of the New Notes. Consequently, holders who
exchange their Old Notes for New Notes will receive the same interest payment on
April 1, 1997 (the first interest payment date with respect to the Old Notes and
the New Notes) that they would have received had they not accepted the Exchange
Offer.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless such tender is being effected pursuant to the procedure for
book-entry transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the Old Notes by causing DTC to
transfer such Old Notes into the Exchange Agent's account in accordance with
DTC's procedure for such transfer. Although delivery of Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received or confirmed by the Exchange Agent at its addresses set forth
herein under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth herein. Holders may also request that their respective brokers,
dealers, commercial banks, trust companies or nominees effect such tender for
such holders.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. No Letter of Transmittal or Old Notes should
be sent to the Company.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
The term "holder" with respect to the Exchange Offer means any person in whose
name Old Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose Old Notes are held of record by DTC who desires to deliver such
Old Notes by book-entry transfer at DTC.
Any beneficial holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder
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<PAGE>
promptly and instruct such registered holder to tender on his behalf. If such
beneficial holder wishes to tender on his own behalf, such beneficial holder
must, prior to completing and executing the Letter of Transmittal and delivering
his Old Notes, either make appropriate arrangements to register ownership of the
Old Notes in such holder's name or obtain a properly completed bond power from
the registered holder. The transfer of record ownership may take considerable
time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution") unless the Old Notes tendered
pursuant thereto are tendered (i) by a registered holder who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by appropriate bond powers which authorize such person to tender the
Old Notes on behalf of the registered holder, in either case signed as the name
of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the absolute right to waive any irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Old Notes nor shall any
of them incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such irregularities have
been cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned without cost by the Exchange Agent to the
tendering holder of such Old Notes unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to (a)
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date, or, as set forth under "Termination," to terminate the
Exchange Offer and (b) to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers may differ from the terms of the Exchange
Offer.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the
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<PAGE>
Exchange Agent prior to the Expiration Date, or if such Holder cannot complete
the procedure for book-entry transfer on a timely basis, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the holder of the Old Notes, the certificate number or
numbers of such Old Notes and the principal amount of Old Notes tendered,
stating that the tender is being made thereby, and guaranteeing that, within
five business days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing the Old Notes
to be tendered in prior form for transfer and any other documents required by
the Letter of Transmittal, will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing all tendered Old Notes
in proper form for transfer (or confirmation of a book-entry transfer into the
Exchange Agent's account at DTC of Old Notes delivered electronically) and all
other documents required by the Letter of Transmittal are received by the
Exchange Agent within five business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the business day prior to
the Expiration Date, unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the business day prior to the Expiration Date and prior to acceptance for
exchange thereof by the Company. Any such notice of withdrawal must (i) specify
the name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Old Notes), (iii) be
signed by the Depositor in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to permit the Trustee with respect to the Old Notes to register the
transfer of such Old Notes into the name of the Depositor withdrawing the tender
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such withdrawal notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Notes will be issued with
respect thereto unless the Old Notes so withdrawn are validly retendered. Any
Old Notes which have been tendered but which are not accepted for exchange will
be returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "Procedures for Tendering" at any time prior to
the Expiration Date.
TERMINATION
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange New Notes for, any Old Notes not
theretofore accepted for exchange, and may terminate or amend the Exchange Offer
as provided herein before the acceptance of such Old Notes if: (i) any action or
proceeding is instituted or threatened in any court or by or before any
governmental agency with respect to the Exchange Offer, which, in the Company's
judgment, might materially impair the Company's ability to proceed with the
Exchange Offer, (ii) any law, statute, rule or regulation is proposed,
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<PAGE>
adopted or enacted, or any existing law, statute rule or regulation is
interpreted by the staff of the Commission in a manner, which, in the Company's
judgment, might materially impair the Company's ability to proceed with the
Exchange Offer, or (iii) the Company reasonably deems it advisable to terminate
the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer, as set
forth above, the Company may (i) refuse to accept any Old Notes and return any
Old Notes that have been tendered to the holders thereof, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the Expiration of the
Exchange Offer, subject to the rights of such holders of tendered Old Notes to
withdraw their tendered Old Notes, or (iii) waive such termination event with
respect to the Exchange Offer and accept all properly tendered Old Notes that
have not been withdrawn. If such waiver constitutes a material change in the
Exchange Offer, the Company will disclose such change by means of a supplement
to this Prospectus that will be distributed to each registered holder of Old
Notes, and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered holders if the Old Notes, if the Exchange Offer
would otherwise expire during such period. See "Description of New
Notes--Registration Rights Agreement."
EXCHANGE AGENT
Harris Trust and Savings Bank, the Trustee under the Indenture, has been
appointed as Exchange Agent for the Exchange Offer. Questions and requests for
assistance and requests for additional copies of this Prospectus or of the
Letter of Transmittal should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C>
By Mail: Harris Trust and Savings Bank
c/o Harris Trust Company
of New York
P.O. Box 1010
Wall Street Station
New York, NY 10268
By Hand or
Overnight Courier: Harris Trust and Savings Bank
c/o Harris Trust Company
of New York
77 Water Street
4th Floor
New York, NY 10004
</TABLE>
Facsimile Transmission: (212) 701-7636
Confirm by Telephone: (212) 701-7624
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and employees of the Company and its affiliates in person, by telegraph
or telephone.
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<PAGE>
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this Prospectus, Letters of Transmittal and related
documents to the beneficial owners of the Old Notes and in handling or
forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer, including
fees and expenses of the Exchange Agent and Trustee and accounting and legal
fees, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the Company
upon the consummation of the Exchange Offer. The expenses of the Exchange Offer
will be amortized by the Company over the term of the New Notes under generally
accepted accounting principles.
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<PAGE>
DESCRIPTION OF NEW NOTES
The Old Notes were, and the New Notes will be, issued under an Indenture,
dated as of September 20, 1996 (the "Indenture"), among the Company, as Issuer,
each Restricted Subsidiary of the Company (other than any Immaterial
Subsidiary), as Guarantors, and Harris Trust and Savings Bank, as Trustee (the
"Trustee"). The Indenture is governed by the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
The following summary of certain provisions of the Indenture and the Notes
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Indenture and the Notes
including the definitions of certain terms therein and those terms made a part
thereof by the Trust Indenture Act. Whenever particular Sections or defined
terms of the Indenture not otherwise defined herein are referred to, such
Sections or defined terms are incorporated herein by reference. References in
this section to the "Notes" shall be references to the Old Notes and the New
Notes.
The Indenture authorizes a maximum principal amount of $125,000,000 of Notes
at any one time outstanding. The New Notes will be issued solely in exchange for
an equal principal amount of Old Notes pursuant to the Exchange Offer. See
"--Registration Rights Agreement." The terms of the New Notes will be the same
in all material respects as the form and terms of the Old Notes except that (i)
interest thereon will accrue from the last date on which interest was paid on
the Old Notes, or if no such interest has been paid, from September 20, 1996,
(ii) the New Notes will not contain restrictions on transfer and (iii) the New
Notes will not contain provisions relating to an increase in their interest rate
under certain circumstances.
GENERAL
The Old Notes are, and the New Notes will be, unsecured senior subordinated
obligations of the Company and will mature on October 1, 2006. The Old Notes
will bear interest at the 10 3/4% from September 20, 1996 or from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semiannually (to Holders of record at the close of business on March 15
or September 15, immediately preceding the Interest Payment Date) on April 1 and
October 1 of each year, commencing April 1, 1997. The interest rate on the Old
Notes is subject to increase in certain circumstances as described under
"--Registration Rights Agreement".
Principal of, premium, if any, and interest on the Notes will be payable at
the corporate trust office of the Trustee in Chicago, Illinois, and the Notes
may be presented for registration of transfer or exchange, at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York (which initially will be the office of Harris Trust Company
of New York, 177 Water Street, New York, New York); PROVIDED that, at the option
of the Company, payment of interest may be made by check mailed to the address
of the Holders as such address appears in the Security Register. Notwithstanding
the foregoing, upon written instructions from a registered Holder of $5.0
million or more aggregate principal amount of Notes in definitive form not less
than 15 days prior to an Interest Payment Date for the Notes, payment of
interest will be made by transfer by the Trustee of immediately available funds
to such account at such bank in the United States as such registered Holder
shall have designated. Interest payable on the Notes held through DTC will be
available to DTC participants (as defined herein) on the business day following
payment thereof by the Company.
The New Notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 of principal amount and any integral multiple
thereof. No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any transfer tax or other similar governmental charge payable in
connection therewith.
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<PAGE>
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes will not be
redeemable prior to October 1, 2001. At any time on or after that date, the
Notes will be redeemable, at the Company's option, in whole or in part, upon not
less than 30 nor more than 60 days' prior notice mailed by first class mail to
each Holder's address appearing in the Security Register, at the following
Redemption Prices (expressed in percentages of principal amount), plus accrued
interest to the Redemption Date (subject to the right of Holders of record on
the relevant Regular Record Date to receive interest due on an Interest Payment
Date that is on or prior to the Redemption Date), if redeemed during the
12-month period commencing October 1 of the years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------------------------------- ----------------
<S> <C>
2001............................................................................ 105.375%
2002............................................................................ 102.688
2003 and thereafter............................................................. 100.000
</TABLE>
In addition, at any time prior to October 1, 1999, the Company may redeem in
the aggregate up to $43.75 million aggregate principal amount of the Notes out
of the proceeds of one or more Public Equity Offerings, at a Redemption Price
(expressed as a percentage of principal amount) of 110.75% plus accrued interest
to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the Redemption Date); PROVIDED that (i) at least $65.0
million aggregate principal amount of the Notes must remain outstanding after
each such redemption; and (ii) such redemption shall occur within 60 days of the
date of the closing of such Public Equity Offering.
If less than all of the Notes are to be redeemed, the Trustee shall select
by such method as the Trustee shall deem to be fair and appropriate the
particular Notes to be redeemed or any portion thereof that is an integral
multiple of $1,000.
The Notes will not have the benefit of a sinking fund.
SUBSIDIARY GUARANTEES
Pursuant to the Indenture, each of the Company's Restricted Subsidiaries
(other than any Immaterial Subsidiary) has, jointly and severally, Guaranteed
the Company's obligations under the Notes on an unsecured senior subordinated
basis (each such Guarantee, a "Subsidiary Guarantee," and each such Subsidiary
and each Person who enters into such a Guarantee subsequent to the date of the
Indenture, a "Guarantor"). In addition, the Indenture contains a covenant
requiring the Company to cause any future Restricted Subsidiary (other than a
Securitization Subsidiary and any Immaterial Subsidiary (for so long as such
Immaterial Subsidiary remains an Immaterial Subsidiary)) to enter into and
deliver a Subsidiary Guarantee.
The Indebtedness evidenced by each Subsidiary Guarantee (including the
payment of principal of, premium, if any, and interest on the Notes) will be
subordinated to Senior Indebtedness of the Guarantor on the same basis as the
Notes are subordinated to Senior Indebtedness of the Company. See "--Ranking."
As of June 30, 1996, on a pro forma basis after giving effect to the CasTech
Acquisition, the Guarantors had an aggregate of approximately $252.3 million of
Senior Indebtedness outstanding.
The Subsidiary Guarantee of each Guarantor shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer
(which sale, exchange or transfer is not prohibited by the Indenture) to a
Person other than the Company or a Restricted Subsidiary of (i) all of the
Capital Stock owned by the Company or any Subsidiary of the Company of such
Guarantor or (ii) all or substantially all the assets of such Guarantor;
PROVIDED that in connection with any such sale, exchange or transfer to an
Affiliate of the Company, the Company must first obtain a favorable written
opinion from a nationally
27
<PAGE>
recognized investment banking firm as to the fairness from a financial point of
view of such transaction to the Company or such Guarantor, as the case may be.
RANKING
The indebtedness evidenced by the Old Notes is, and the New Notes will be,
unsecured, general obligations of the Company, subordinated in right of payment,
as set forth in the Indenture, to the prior payment of all present and future
Senior Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter incurred, including the Company's Obligations under the New Bank
Credit Facility (as of June 30, 1996, on a pro forma basis after giving effect
to the CasTech Acquisition, the Company (excluding its Subsidiaries and
Guarantees of Indebtedness of its Subsidiaries) would have had no Senior
Indebtedness outstanding). In addition, the Old Notes are, and the New Notes
will be, effectively subordinated in right of payment to Senior Indebtedness of
the Guarantors. See "--Subsidiary Guarantees."
All Indebtedness of the Company that is Senior Indebtedness will rank senior
to the Notes in accordance with the provisions of the Indenture. The Notes will
in all respects rank PARI PASSU in right of payment with all other Senior
Subordinated Indebtedness of the Company. The Company has agreed in the
Indenture that it will not, and will not permit any Guarantor to, Incur,
directly or indirectly, any Indebtedness that is subordinate or junior in
ranking in right of payment to its Senior Indebtedness unless such Indebtedness
is Senior Subordinated Indebtedness or is expressly subordinated in right of
payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not
deemed to be subordinated or junior to Secured Indebtedness merely because it is
unsecured.
The Company may not pay principal of, premium, if any, or interest on the
Notes, or redeem (or make a deposit in redemption of), defease or repurchase any
of the Notes if (i) Designated Senior Indebtedness of the Company or Senior
Indebtedness of the Company with an aggregate principal amount in excess of $5.0
million then outstanding is not paid when due or (ii) any other default on
Designated Senior Indebtedness of the Company or Senior Indebtedness of the
Company with an aggregate principal amount in excess of $5.0 million then
outstanding occurs and the maturity of such Designated Senior Indebtedness or
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration has
been rescinded or such Designated Senior Indebtedness or such Senior
Indebtedness has been paid in full. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the holders or Representative of the holders
of such Designated Senior Indebtedness or Senior Indebtedness with respect to
which either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (i) or (ii) of the second
preceding sentence) with respect to any Designated Senior Indebtedness of the
Company pursuant to which the maturity thereof may be accelerated, the Company
may not pay the Notes for a period (a "Payment Blockage Period") commencing upon
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the holders or Representative of such
holders of such Designated Senior Indebtedness specifying an election to effect
a Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders have accelerated the maturity of such Designated Senior
Indebtedness, the Company must resume payments on the Notes after the end of
such Payment Blockage Period. The Notes shall not be subject to more than one
Payment Blockage Period in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period.
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Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of or other similar
proceeding relating to the Company or its property, the holders of all Senior
Indebtedness of the Company will be entitled to receive payment in full (or have
such payment duly provided for) of all amounts due or to become due on or in
respect thereof before Holders of the Notes are entitled to receive any payment
on account of the principal of, premium, if any, and interest on the Notes or in
respect of the redemption price or Change of Control Purchase Price, and until
such Senior Indebtedness is paid in full, any payment or distribution to which
Holders of the Notes would be entitled but for the subordination provisions of
the Indenture will be made to holders of such Senior Indebtedness as their
interests may appear. If a distribution is made to Holders of the Notes that,
due to the subordination provisions, should not have been made to them, such
Holders of the Notes are required to hold it in trust for the holders of Senior
Indebtedness of the Company and pay it over to them as their interests may
appear.
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, and interest on the Notes. The subordination
provisions of the Indenture and the Notes do not prevent the occurrence of any
Event of Default under the Indenture or limit the rights of the Trustee or any
Holder to pursue any other rights or remedies with respect to the Notes.
The obligations of each Guarantor under its Subsidiary Guarantee will be
senior subordinated obligations. As such, the rights of Holders of the Notes to
receive payment by a Guarantor pursuant to its Subsidiary Guarantee will be
subordinated in right of payment to the rights of holders of Senior Indebtedness
of the Guarantors. The terms of the subordination provisions described above
with respect to the Company's obligations under the Notes apply equally to a
Guarantor and the obligations of such Guarantor under its Subsidiary Guarantee.
By reason of the subordination provisions contained in the Indenture, in the
event of bankruptcy, liquidation, insolvency or other similar proceedings,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the Holders of the Notes, and creditors of the Company who
are not holders of Senior Indebtedness may recover less, ratably, than holders
of Senior Indebtedness and may recover more, ratably, than the Holders of the
Notes.
Notwithstanding the foregoing, payment from the money or the proceeds of
U.S. Government Obligations held in any defeasance trust described under
"--Defeasance" below will not be contractually subordinated in right of payment
to any Senior Indebtedness or subject to the restrictions described herein.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other capitalized
term used herein for which no definition is provided.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person existing at the time
such Person merged with or into or became a Restricted Subsidiary and not
Incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary.
"ADJUSTED CONSOLIDATED NET INCOME" means, for any period, the aggregate net
income (or loss) of the Company and its consolidated Restricted Subsidiaries for
such period determined in conformity with GAAP; PROVIDED that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income of any Person that is not a Restricted
Subsidiary, except to the extent of the amount of dividends or other
distributions that are actually paid in cash to the Company or any of its
Restricted Subsidiaries by such Person during such period; (ii) solely for the
purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of the "Limitation on Restricted
Payments" covenant described below (and in such case,
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except to the extent includable pursuant to clause (i) above), the net income
(or loss) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with the Company or any of its
Restricted Subsidiaries or all or substantially all of the property and assets
of such Person are acquired by the Company or any of its Restricted
Subsidiaries; (iii) the net income of any Restricted Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not permitted at such time by its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary; (iv) any net
after-tax gains or losses attributable to Asset Dispositions; (v) any net
after-tax extraordinary gains or extraordinary losses; and (vi) the cumulative
effect of a change in accounting principles.
"AFFILIATE" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"ALUMINUM BUSINESS" means the business of developing, manufacturing,
producing, marketing, transporting and selling aluminum, aluminum products and
electrical wiring products, including, without limitation, flexible conduit and
pre-wired armored cable, and any other business incidental thereto.
"ASSET ACQUISITION" means (i) an Investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries or (ii) an acquisition by the
Company or any of its Restricted Subsidiaries of the property and assets of any
Person other than the Company or any of its Restricted Subsidiaries that
constitute substantially all of a Line of Business of such Person.
"ASSET DISPOSITION" means any sale, lease, transfer or other disposition by
the Company or any Restricted Subsidiary (or series of related sales, leases,
transfers or dispositions), including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition") of all or any of its property or assets
(including, without limitation, the Capital Stock of any Restricted Subsidiary);
provided that the following shall not be included in the definition of "Asset
Disposition": (i) any disposition by the Company or any Restricted Subsidiary of
any or all of its property or assets (upon voluntary liquidation or otherwise)
to the Company or a Wholly Owned Restricted Subsidiary; (ii) any disposition by
the Company or any Restricted Subsidiary in the ordinary course of business of
property or assets acquired and held for resale in the ordinary course of
business; (iii) any disposition of property or assets of the Company or any
Restricted Subsidiary pursuant to and in accordance with the provisions
described under "--Consolidation, Merger and Sale of Assets;" (iv) any
disposition by the Company or any Restricted Subsidiary of damaged, worn out or
other obsolete property or assets in the ordinary course of business; (v) any
transfer by the Company or any Restricted Subsidiary of any Capital Stock of any
Restricted Subsidiary to the Company or any Wholly Owned Restricted Subsidiary;
(vi) any disposition or series of related dispositions involving assets having a
fair market value of $1.0 million or less; provided, that such disposition or
series of related dispositions is effected at fair market value; and (vii) any
Permitted Receivables Financing.
"ATTRIBUTABLE INDEBTEDNESS" means, in respect of a Sale/Leaseback
Transaction, as of the time of determination, the present value (discounted at
the interest rate implicit in the Sale/Leaseback Transaction) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
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"AVERAGE LIFE" means, at any date of determination with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such Indebtedness and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"BORROWING BASE" means, as of any date of determination, the sum of (i) 85%
of the aggregate unpaid portions of accounts receivable of the Company or any
Restricted Subsidiary (other than Receivables and Related Assets being sold
pursuant to a Permitted Receivables Financing) arising in the ordinary course of
business from the sale of products or the provision of services (after allowance
for doubtful accounts and net of any credits, rebates, offsets or other
adjustments) and (ii) 50% of the value (determined at the lower of cost or
market on a basis consistent with the consolidated financial statements of the
Company, after appropriate write-downs for obsolescence, quality problems and
the like) of inventories (including work in progress inventory) of the Company
or any Restricted Subsidiary held in the ordinary course of business.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital stock or other ownership
interests, whether now outstanding or issued after the Issue Date, including,
without limitation, all common stock and Preferred Stock.
"CAPITALIZED LEASE" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person; and "Capitalized
Lease Obligation" means the rental obligations, as aforesaid, under such
Capitalized Lease.
"CHANGE OF CONTROL" means: (i) any "PERSON" or "GROUP" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable, except that for purposes of this clause (i) such person or group
shall be deemed to have "BENEFICIAL OWNERSHIP" of all shares that such person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), is or becomes the "BENEFICIAL OWNER" (as such
term is used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly
or indirectly, of more than 35% of the aggregate voting power of the Voting
Stock of the Company; or (ii) individuals who on the Issue Date constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a majority of the directors then still in office who
were either directors on the Issue Date or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED CURRENT LIABILITIES" means, as of any date of determination,
the aggregate amount of liabilities of the Company and its consolidated
Restricted Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a consolidated basis, after
eliminating (i) all intercompany items between the Company and any Restricted
Subsidiary and (ii) all current maturities of long-term Indebtedness, all as
determined in conformity with GAAP.
"CONSOLIDATED EBITDA" means, for any period, the sum of (i) Adjusted
Consolidated Net Income, plus (ii) Consolidated Interest Expense plus (iii) the
following to the extent deducted in calculating Adjusted Consolidated Net
Income: (A) income taxes (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets), (B) depreciation expense, (C) amortization expense and (D) other
non-cash items reducing Adjusted Consolidated Net Income, net of non-cash items
increasing Adjusted Consolidated Net Income, less (iv) the amount of all cash
payments (other than any cash payment that individually or together with any
other related cash payments aggregate less than $1.0 million) made during such
period to the extent that such payments relate to non-cash charges that were
added back in determining Consolidated EBITDA for
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such period or for any prior period, all as determined on a consolidated basis
for the Company and its Restricted Subsidiaries in conformity with GAAP;
provided that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in conformity with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income attributable to such Subsidiary multiplied by
(B) the quotient of (1) the number of shares of outstanding common stock of such
Subsidiary not owned on the last day of such period by the Company or any
Restricted Subsidiary divided by (2) the total number of shares of outstanding
common stock of such Subsidiary on the last day of such period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, on any Transaction Date,
the ratio of (i) the aggregate amount of Consolidated EBITDA for the then most
recent four fiscal quarters prior to such Transaction Date for which financial
information in respect thereof is available immediately prior to such
Transaction Date (the "Reference Period") to (ii) the aggregate Consolidated
Fixed Charges during such Reference Period. In making the foregoing calculation,
(A) pro forma effect shall be given to (1) any Indebtedness Incurred subsequent
to the end of the Reference Period and prior to the Transaction Date, (2) any
Indebtedness Incurred during such Reference Period to the extent such
Indebtedness is outstanding at the Transaction Date and (3) any Indebtedness to
be Incurred on the Transaction Date, in each case as if such Indebtedness had
been Incurred on the first day of such Reference Period and in each case after
giving pro forma effect to the application of the proceeds thereof as if such
application had occurred on such first day; (B) Consolidated Interest Expense
attributable to interest on any Indebtedness (whether existing or being
Incurred) computed on a pro forma basis and bearing a floating interest rate
shall be computed as if the rate in effect on the Transaction Date (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months) had been
the applicable rate for the entire Reference Period; (C) there shall be excluded
from Consolidated Fixed Charges any Consolidated Fixed Charges related to any
amount of Indebtedness, Redeemable Stock or obligations under leases that was
outstanding during such Reference Period or thereafter but that is not
outstanding or is to be repaid on the Transaction Date, except for Consolidated
Interest Expense accrued (as adjusted pursuant to clause (B) above) during such
Reference Period under a revolving credit or similar arrangement in effect on
the Transaction Date; (D) pro forma effect shall be given to Asset Dispositions
(other than an Asset Disposition involving assets having a fair market value of
less than $2.0 million) and Asset Acquisitions (including giving pro forma
effect to the application of proceeds of any Asset Disposition) that occur
during such Reference Period or thereafter and on or prior to the Transaction
Date as if they had occurred and such proceeds had been applied on the first day
of such Reference Period; and (E) pro forma effect shall be given to Asset
Dispositions (other than an Asset Disposition involving assets having a fair
market value of less than $2.0 million) and Asset Acquisitions (including giving
pro forma effect to the application of proceeds of any Asset Disposition) that
have been made by any Person that has become a Restricted Subsidiary or has been
merged with or into the Company or any Restricted Subsidiary during such
Reference Period or subsequent to such period and prior to the Transaction Date
and that would have constituted Asset Dispositions or Asset Acquisitions had
such transactions occurred when such Person was a Restricted Subsidiary as if
such Asset Dispositions or Asset Acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; PROVIDED
that to the extent that clause (D) or (E) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or Line of Business of the Person,
that is acquired or disposed for which financial information is available.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum (without
duplication) of (i) Consolidated Interest Expense for such period and (ii) the
product of (x) cash and non-cash dividends (except dividends payable solely in
shares of Capital Stock that are not Redeemable Stock) paid, declared, accrued
or accumulated on any Redeemable Stock or other Preferred Stock and (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the sum of the currently effective combined Federal, state, local and
foreign tax rate of the Company and its Restricted Subsidiaries.
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"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total amount of
interest expense of the Company and its consolidated Restricted Subsidiaries,
plus, to the extent not included in total interest expense, and to the extent
incurred by the Company and its Restricted Subsidiaries, without duplication,
(i) interest expense attributable to Capitalized Lease Obligations paid, accrued
or scheduled to be paid or to be accrued during such period, (ii) amortization
of original issue discount on any Indebtedness, (iii) the interest portion of
any deferred payment obligation, calculated in accordance with the effective
interest method of accounting, (iv) all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance
financing, (v) the interest-equivalent costs associated with Hedging
Obligations, (vi) interest paid on Indebtedness that is Guaranteed by the
Company or any of its Restricted Subsidiaries and (vii) interest-equivalent
costs associated with any Permitted Receivables Financing, whether accounted for
as interest expense or loss on the sale of Receivables and Related Assets;
EXCLUDING, HOWEVER, any amount of such interest of any Restricted Subsidiary if
the net income of such Restricted Subsidiary is excluded in the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) of the definition
thereof (but only in the same proportion as the net income of such Restricted
Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income
pursuant to clause (iii) of the definition thereof).
"CONSOLIDATED NET TANGIBLE ASSETS" means, at any date of determination, the
total amount of assets (less accumulated depreciation and amortization,
allowances for doubtful receivables, other applicable reserves and other
properly deductible items) which would appear on a consolidated balance sheet of
the Company and its consolidated Restricted Subsidiaries, determined on a
consolidated basis in conformity with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, the amounts of: (i) minority interests in
consolidated Subsidiaries held by Persons other than the Company or a Restricted
Subsidiary; (ii) excess of cost over fair value of assets of businesses
acquired, as determined in good faith by the Board of Directors; (iii) any
revaluation or other write-up in book value of assets subsequent to the Issue
Date as a result of a change in the method of valuation in conformity with GAAP;
(iv) unamortized debt discount and expenses and other unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
licenses, organization or developmental expenses and other intangible items; (v)
treasury stock; (vi) cash set apart and held in a sinking or other analogous
fund established for the purpose of redemption or other retirement of Capital
Stock to the extent such obligation is not reflected in Consolidated Current
Liabilities; and (vii) Investments in and assets of Unrestricted Subsidiaries.
"CURRENCY AGREEMENT" means, with respect to any Person, any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"DEFAULT" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means, with respect to any Person, (i) any
Indebtedness under the New Bank Credit Facility (including all Obligations under
the New Bank Credit Facility) and (ii) any other Senior Indebtedness which, at
the date of determination, has an aggregate principal amount of, or under which,
at the date of determination, the holders thereof are committed to lend up to at
least $25.0 million and is specifically designated as "Designated Senior
Indebtedness" for purposes of the Indenture.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPIRATION DATE" has the meaning specified in the definition of Offer to
Purchase.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the date of determination, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession.
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"GUARANTEE" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); PROVIDED that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person pursuant to any Materials Hedging Contract, Interest Rate Agreement
or Currency Agreement.
"IMMATERIAL SUBSIDIARY" means, at the date of determination, any Restricted
Subsidiary that is not a Significant Subsidiary.
"INCUR" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness;
PROVIDED that (i) the Indebtedness of a Person existing at the time such Person
became a Subsidiary or a Restricted Subsidiary, as the case may be, shall be
deemed to have been Incurred by such Subsidiary or Restricted Subsidiary, as the
case may be, and (ii) that neither the accrual of interest nor the accretion of
original issue discount shall be considered an Incurrence of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication), whether or not Incurred at the date of the
Indenture (i) all indebtedness of such Person for borrowed money, (ii) all
indebtedness of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person in respect of bankers'
acceptances, letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) all obligations of such Person as lessee under
Capitalized Leases, (vi) all indebtedness of other Persons secured by a Lien on
any asset of the first-mentioned Person, whether or not such Indebtedness is
assumed by the first-mentioned Person; PROVIDED that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii) to
the extent not otherwise included in this definition, Hedging Obligations and
(ix) the maximum fixed redemption or repurchase price of any Redeemable Stock
issued by such Person; PROVIDED that up to $7.0 million payable to Lockheed
Martin pursuant to agreements relating to the reimbursement for certain
environmental costs (as in effect on the Issue Date) shall not be included in
the definition of "Indebtedness." The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations
described above, the maximum liability upon the occurrence of the contingency
giving rise to the obligation; PROVIDED that the amount outstanding at any time
of any Indebtedness issued with original issue discount is the face amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in
interest rates.
"INVESTMENT" means any direct or indirect advance, loan or other extension
of credit (other than advances to customers in the ordinary course of business
that are, in conformity with GAAP, recorded as
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accounts receivable on the balance sheet of the lender) or capital contribution
to (by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, bonds, notes, debentures or other similar
instruments issued by any other Person. For purposes of the definition of
"Unrestricted Subsidiary" and the "Limitation on Restricted Payments" covenant
described below, "Investment" shall include (i) the fair market value of the
assets (net of liabilities) of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude
the fair market value of the assets (net of liabilities) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary and (ii) any property transferred to or from any Person
shall be valued at its fair market value at the time of such transfer, in each
case as determined by the Board of Directors in good faith.
"INVESTMENT GRADE RATING" means that both S&P and Moody's have assigned and
published a rating in one of such agency's four highest generic rating
categories that signifies investment grade (i.e, BBB- (or the equivalent) or
higher by S&P and Baa3 (or the equivalent) or higher by Moody's); PROVIDED, that
in the event S&P or Moody's is no longer in existence or issuing ratings, for
purposes of determining whether the Notes are rated "Investment Grade", such
organization may be replaced by a nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) designated by the
Company with notice to the Trustee and the provisions of this definition shall
apply to the rating issued by such replacement rating agency.
"ISSUE DATE" means September 20, 1996.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any Affiliate of the seller, any option or other agreement
to sell, or any filing of or any agreement to give any security interest).
"LINE OF BUSINESS" means, with respect to any Person, a "business" as
defined in Rule 11-01 under Regulation S-X promulgated by the Commission.
"MATERIALS HEDGING CONTRACT" means any metals or commodities purchase or
hedging agreement or other agreement or arrangement, in each case, that is
designed to protect against exposures to price risk in the aluminum market or in
commodities used in the Aluminum Business.
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"NET CASH PROCEEDS" means, with respect to any Asset Disposition, the
proceeds of such Asset Disposition in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of (i) brokerage commissions and
other fees and expenses (including, without limitation, fees and expenses of
counsel and investment bankers) related to such Asset Disposition, (ii)
provisions for all taxes (whether or not such taxes will actually be paid or are
payable) as a result of such Asset Disposition without regard to the
consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Disposition that either
(A) is secured by a Lien on the property or assets sold or (B) is required to be
paid as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Disposition, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Disposition, all as determined in conformity with
GAAP.
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"NEW BANK CREDIT FACILITY" means the Credit Agreement dated on or about the
Issue Date among the Company, certain subsidiaries of the Company, the Lenders
party thereto and NatWest, as agent for such Lenders, together with any related
documents thereto (including, without limitation, any security documents and
guarantee agreements), in each case as such agreements may be amended,
supplemented, extended, renewed, restated, replaced, refinanced or modified from
time to time, including, without limitation, by adding additional parties
thereto or increasing the commitment thereunder; provided that there may not be
more than one New Bank Credit Facility at any one time, which shall be
designated by the Company.
"OBLIGATIONS" means all obligations (whether in existence on the Issue Date
or arising thereafter) for, or Guaranteeing the payment of, principal, premium,
interest (including, without limitation, all interest accrued or accruing after
the commencement of any Reorganization of any Person obligated with respect
thereto in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such case or proceeding), penalties, fees, indemnifications,
reimbursements and other amounts in respect of any Indebtedness under the New
Bank Credit Facility.
"OFFER" has the meaning specified in the definition of Offer to Purchase.
"OFFER TO PURCHASE" means a written offer (the "Offer") sent by the Company
by first class mail, postage prepaid, to each Holder at its address appearing in
the Security Register on the date of the Offer offering to purchase up to the
principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify (i) the expiration
date (the "Expiration Date") of the Offer to Purchase which shall be, subject to
any contrary requirements of applicable law, the date 20 Business Days from the
date such Offer is mailed, at which time the Company will accept for payment all
Notes or portions thereof properly tendered pursuant to the Offer and (ii) a
settlement date (the "Purchase Date") for the payment of such purchase price
within three Business Days after the Expiration Date. The Company shall notify
the Trustee at least 15 Business Days (or such shorter period as is acceptable
to the Trustee) prior to the mailing of the Offer of the Company's obligation to
make an Offer to Purchase, and the Offer shall be mailed by the Company or, at
the Company's request, by the Trustee in the name and at the expense of the
Company. The Offer shall contain or incorporate by reference information
concerning the business of the Company and its Subsidiaries which the Company in
good faith believes will assist such Holders to make an informed decision with
respect to the Offer to Purchase, including a brief description of the events
requiring the Company to make the Offer to Purchase, and any other information
required by applicable law to be included therein. The Offer shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Offer to Purchase. The Offer shall also state: (A) the covenant
of the Indenture pursuant to which the Offer to Purchase is being made; (B) the
Expiration Date and the Purchase Date; (C) the aggregate principal amount of the
outstanding Notes offered to be purchased by the Company pursuant to the Offer
to Purchase (including, if less than 100%, the manner by which such amount has
been determined pursuant to the covenant of the Indenture requiring the Offer to
Purchase) (the "Purchase Amount"); (D) the purchase price to be paid by the
Company for each $1,000 aggregate principal amount of Notes accepted for payment
(as specified pursuant to the Indenture) (the "Purchase Price"); (E) that the
Holder may tender all or any portion of the Notes registered in the name of such
Holder and that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount; (F) the place or places where Notes are to
be surrendered for tender pursuant to the Offer to Purchase; (G) that interest
on any Note not tendered or tendered but not purchased by the Company pursuant
to the Offer to Purchase will continue to accrue; (H) that on the Purchase Date
the Purchase Price will become due and payable upon each Note being accepted for
payment pursuant to the Offer to Purchase and that interest thereon shall cease
to accrue on and after the Purchase Date; (I) that each Holder electing to
tender a Note pursuant to the Offer to Purchase will be required to surrender
such
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Note at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the Trustee
so requires, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing); (J) that Holders
will be entitled to withdraw all or any portion of Notes tendered if the Company
(or its Paying Agent) receives, not later than the close of business on the
Expiration Date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note the Holder tendered, the
certificate number of the Note the Holder tendered and a statement that such
Holder is withdrawing all or a portion of its tender; (K) that (1) if Notes in
an aggregate principal amount less than or equal to the Purchase Amount are duly
tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall
purchase all such Notes and (2) if Notes in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant to the
Offer to Purchase, the Company shall purchase Notes having an aggregate
principal amount equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only Notes in denominations of
$1,000 or integral multiples thereof shall be purchased); and (L) that in the
case of any Holder whose Note is purchased only in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Note without a service charge, a new Note or Notes, with the Subsidiary
Guarantees endorsed thereon executed by the Guarantors, of any authorized
denomination as requested by such Holder, in an aggregate principal amount equal
to and in exchange for the unpurchased portion of the principal of the Note so
tendered.
"PERMITTED BUSINESS VENTURE" means an Investment in a Person (other than a
Restricted Subsidiary) for the principal purpose of securing materials or
commodities related to the production or processing of the Company's or any
Restricted Subsidiary's products in the Aluminum Business.
"PERMITTED LIENS" means, with respect to any Person, (i) Liens existing on
the Issue Date, (ii) pledges or deposits by such Person under worker's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits
to secure public or statutory obligations of such Person or deposits of cash or
United States government bonds to secure surety or appeal bonds to which such
Person is a party, or deposits as security for contested taxes or import duties
or for the payment of rent, in each case Incurred in the ordinary course of
business, (iii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens, in each case for sums not yet due or being contested in good
faith by appropriate proceedings or other Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review, (iv) Liens for
property taxes not yet subject to penalties for non-payment or which are being
contested in good faith and by appropriate proceedings, (v) Liens in favor of
issuers of surety bonds or letters of credit issued pursuant to the request of
and for the account of such Person in the ordinary course of its business;
PROVIDED, that such letters of credit do not constitute Indebtedness, (vi) minor
survey exceptions, minor encumbrances, easements or reservations of, or rights
of others for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate materially impair
their use in the operation of the business of such Person, (vii) Liens securing
Indebtedness Incurred to finance the construction, purchase or lease of, or
repairs, improvements or additions to, inventory or other property of such
Person; PROVIDED that the Lien may not extend to any other property owned by
such Person or any of its Subsidiaries at the time the Lien is Incurred, and the
Indebtedness secured by the Lien may not be Incurred more than 365 days after
the later of the acquisition, completion of construction, repair, improvement,
addition or commencement of full operation of the property subject to the Lien,
(viii) Liens securing Indebtedness (including all Obligations) under the New
Bank Credit Facility, (ix) Liens on property or shares of Capital Stock of
another Person at the time such other Person becomes a Subsidiary of such
Person; PROVIDED, that such Lien may not extend to any other property owned by
such Person or any of its Subsidiaries, (x) Liens on property at the time
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such Person or any of its Subsidiaries acquires the property, including any
acquisition by means of an exchange, merger or consolidation with or into such
Person or a Subsidiary of such Person; provided that such Liens may not extend
to any other property owned by such Person or any of its Subsidiaries, (xi)
Liens securing Indebtedness or other obligations of a Subsidiary of such Person
owing to such Person or a Wholly Owned Subsidiary of such Person or, in the case
of the Company, to a Wholly Owned Subsidiary), (xii) Liens securing Hedging
Obligations so long as such Hedging Obligations relate to Indebtedness that is,
and is permitted to be under the Indenture, secured by a Lien on the same
property securing such Hedging Obligations, (xiii) Liens on Receivables and
Related Assets securing Indebtedness or otherwise permitted to be Incurred, in
each case, in connection with a Permitted Receivables Facility, (xiv) Liens
arising in connection with a Sale/Leaseback Transaction permitted by the
provisions (whether or not then in effect) described under "--Certain Positive
Credit Events," (xv) Liens securing Indebtedness represented by any industrial
revenue bonds, pollution control bonds or other tax exempt financing; PROVIDED,
that the aggregate amount of any Indebtedness to which such Liens relate at any
one time outstanding shall not exceed $10 million, (xvi) other Liens securing
Indebtedness (including Attributable Indebtedness) in an aggregate amount not
exceeding 10% of Consolidated Net Tangible Assets, and (xvii) extensions,
renewals or replacements of any Liens referred to in clauses (i) through (xvi).
"PERMITTED RECEIVABLES FINANCING" means a transaction or series of
transactions (including amendments, supplements, extensions, renewals,
replacements, refinancings or modifications thereof) pursuant to which a
Securitization Subsidiary purchases Receivables and Related Assets from the
Company or any Restricted Subsidiary and finances such Receivables and Related
Assets through the issuance of indebtedness or equity interests or through the
sale of the Receivables and Related Assets or a fractional undivided interest in
the Receivables and Related Assets; provided that (i) the Board of Directors
shall have determined in good faith that such Permitted Receivables Financing is
economically fair and reasonable to the Company and the Securitization
Subsidiary, (ii) all sales of Receivables and Related Assets to or by the
Securitization Subsidiary are made at fair market value (as determined in good
faith by the Board of Directors), (iii) the financing terms, covenants,
termination events and other provisions thereof shall be market terms (as
determined in good faith by the Board of Directors), (iv) no portion of the
Indebtedness of a Securitization Subsidiary is Guaranteed by or is recourse to
the Company or any Restricted Subsidiary (other than recourse for customary
representations, warranties, covenants and indemnities, none of which shall
relate to the collectibility of the Receivables and Related Assets) and (v)
neither the Company nor any Subsidiary has any obligation to maintain or
preserve the Securitization Subsidiary's financial condition.
"PREFERRED STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference stock, whether
now outstanding or hereafter issued, including, without limitation, all series
and classes of such preferred or preference stock.
"PUBLIC EQUITY OFFERING" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"PURCHASE AMOUNT" has the meaning specified in the definition of Offer to
Purchase.
"PURCHASE DATE" has the meaning specified in the definition of Offer to
Purchase.
"PURCHASE PRICE" has the meaning specified in the definition of Offer to
Purchase.
"RECEIVABLES AND RELATED ASSETS" means accounts receivable and instruments,
chattel paper, obligations, general intangibles and other similar assets, in
each case, relating to such receivables, including interests in merchandise or
goods, the sale or lease of which gave rise to such receivable, related
contractual rights, guarantees, insurance proceeds, collections, other related
assets and proceeds of all of the foregoing.
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"REDEEMABLE STOCK" means any class or series of Capital Stock of any Person
that by its terms or otherwise is (i) required to be redeemed prior to the
Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above (other than Capital Stock convertible or
exchangeable solely at the option of the Company) or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the Notes; PROVIDED that any
Capital Stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the Stated Maturity of the Notes shall not
constitute Redeemable Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in the "Limitation on Asset
Sales" covenant and under "--Repurchase of Notes upon a Change of Control"
described below and such Capital Stock specifically provides that such Person
will not repurchase or redeem any such stock pursuant to such provisions prior
to the Company's repurchase of such Notes as are required to be repurchased
pursuant to the "Limitation on Asset Sales" covenant and under "--Repurchase of
Notes upon a Change of Control" described below. Notwithstanding the foregoing,
Capital Stock shall not be deemed to be Redeemable Stock if it may only be so
redeemed in exchange for Capital Stock that is not Redeemable Stock.
"REORGANIZATION" means, with respect to any Person, any reorganization,
bankruptcy, insolvency, receivership or other similar statutory or common law
proceedings or arrangements, including without limitation any proceeding under
Title 11, United States Code or any similar federal, state or foreign law for
the relief of debtors, involving such Person or the readjustment of such
Person's liabilities or any assignment for the benefit of creditors or any
marshaling of the assets or liabilities of such Person.
"REPRESENTATIVE" means any trustee, agent or representative for an issue of
Senior Indebtedness.
"RESTRICTED INVESTMENT" means any Investment by the Company or any
Restricted Subsidiary in any Person other than (i) an Investment in a Restricted
Subsidiary or in any Person that, as a result of such Investment, becomes a
Restricted Subsidiary, (ii) cash, (iii) U.S. Government Obligations, (iv) time
deposits and certificates of deposit or Eurodollar deposits due within one year
of any commercial bank whose outstanding senior long-term debt securities are
rated either A- or higher by S&P or A3 or higher by Moody's, (v) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (iii) of this paragraph with any bank meeting the
qualifications specified in clause (iv) of this paragraph, (vi) commercial paper
rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, maturing within one year after the date of
acquisition, (vii) an Investment in a money market mutual fund substantially all
of the assets of which are comprised of securities of the types described in
clauses (iii) through (vi) of this paragraph, (viii) securities due within six
months or less from the date of acquisition issued or fully and unconditionally
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least A by S&P or Moody's, (ix) loans or advances made to employees of the
Company or any Restricted Subsidiary in the ordinary course of business and in
furtherance of the Company's or such Restricted Subsidiary's business in an
aggregate amount not to exceed $4.0 million at any time outstanding, (x) any
Investment in a Permitted Business Venture; provided, that (A) as a result of
such Investment the Company or such Restricted Subsidiary, as the case may be,
will be entitled to a share of the production of, or services provided by, such
Permitted Business Venture at least approximately proportionate to its ownership
interest in such Permitted Business Venture and (B) immediately after giving
effect to such Investment, the aggregate fair market value (fair market value to
be determined as of the date of such exchange in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) of all such Investments after the Issue Date shall not exceed 10% of
Consolidated Net Tangible Assets, (xi) in the event the Company or any
Restricted Subsidiary maintains any unfunded deferred compensation plan (within
the meaning of Title I of the Employee Retirement
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Income Security Act of 1974, as amended), to the extent benefits under such plan
are defined by reference to specific investments, whether at the participant's
or the beneficiaries' election or otherwise, any Investment in such a specific
investment, and (xii) other Investments that do not in the aggregate exceed
$15.0 million at any time outstanding.
"RESTRICTED SUBSIDIARY" means any Subsidiary other than an Unrestricted
Subsidiary.
"REVOLVING LOAN FACILITY" means the revolving credit facility provided under
the New Bank Credit Facility.
"SALE/LEASEBACK TRANSACTION" means an arrangement with any Person providing
for the leasing by the Company or any Restricted Subsidiary of any property or
assets (other than any such arrangement involving a lease for a term, including
renewal rights, for not more than three years) whereby such property or assets
have been or are to be sold or transferred by the Company or any Restricted
Subsidiary to such Person.
"SECURED INDEBTEDNESS" means any Indebtedness of the Company secured by a
Lien.
"SECURITIZATION SUBSIDIARY" means a Wholly Owned Restricted Subsidiary of
the Company, which is established for the limited purpose of acquiring and
financing Receivables and Related Assets and engaging in activities ancillary
thereto.
"SENIOR INDEBTEDNESS" means, with respect to any Person, all principal of
(premium, if any) and interest (including interest accruing on or after the
filing of any petition in bankruptcy or for Reorganization relating to such
Person whether or not a claim for post filing interest is allowed in such
proceedings) with respect to all Indebtedness of such Person (including with
respect to the New Bank Credit Facility, all Obligations of such Person),
whether outstanding on the Issue Date or thereafter Incurred; PROVIDED that
Senior Indebtedness shall not include (i) any Indebtedness of such Person that,
by its terms or the terms of the instrument creating or evidencing such
Indebtedness, is PARI PASSU with or expressly subordinate in right of payment to
the Notes or, in the case of a Guarantor, its Subsidiary Guarantee, (ii) any
obligation of such Person to any Subsidiary of such Person or, in the case of a
Guarantor, to the Company or any other Subsidiary of the Company, (iii) any
liability for Federal, state, local or other taxes owed or owing by such Person,
(iv) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (v) any Indebtedness of such Person (and any
accrued and unpaid interest in respect thereof) which is subordinate or junior
in any respect to any other Indebtedness or other obligation of such Person,
(vi) that portion of any Indebtedness which at the time of Incurrence is
Incurred in violation of the Indenture, or (vii) Redeemable Stock of such
Person.
"SENIOR SUBORDINATED INDEBTEDNESS" means (i) with respect to the Company,
the Notes and any other Indebtedness of the Company that specifically provides
that such Indebtedness is to rank PARI PASSU with the Notes in right of payment
and is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness and (ii) with
respect to any Guarantor, the Subsidiary Guarantee of such Guarantor and any
other Indebtedness of such Guarantor that specifically provides that such
Indebtedness is to rank PARI PASSU with such Subsidiary Guarantee in right of
payment and is not subordinated by its terms in right of payment to any
Indebtedness or other Obligation of such Guarantor which is not Senior
Indebtedness.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any Restricted
Subsidiary that, together with its Subsidiaries, (i) accounted for more than 10%
of the consolidated revenues of the Company and its Restricted Subsidiaries for
the then most recent four fiscal quarters prior to such date of determination
for which financial information is available at such date of determination or
(ii) was the owner of more than 10% of the consolidated assets of the Company
and its Restricted Subsidiaries as of such date of determination.
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"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"STATED MATURITY" means (i) with respect to any debt security or other debt
instrument, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security or other debt instrument, the date specified in such debt
security as the fixed date on which such installment is due and payable.
"STOCKHOLDER PROTECTION RIGHTS AGREEMENT" means the Company's Stockholder
Protection Rights Agreement, dated as of March 6, 1996, as in effect on the
Issue Date and as it may be amended, extended, renewed or replaced from time to
time; PROVIDED that no such amendment, extension, renewal or replacement shall
increase any obligation thereunder that may be a Restricted Payment, and "STOCK
PURCHASE RIGHTS" means the rights issued under such Stockholder Protection
Rights Agreement.
"SUBORDINATED INDEBTEDNESS" means, with respect to any Person, any
Indebtedness (whether outstanding on the Issue Date or thereafter Incurred)
which is subordinated or junior in right of payment, in the case of Indebtedness
of the Company, to the Notes pursuant to a written agreement to that effect and,
in the case of Indebtedness of any Guarantor, to the Guarantees pursuant to a
written agreement to that effect.
"SUBSIDIARY" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the outstanding Voting Stock
is owned, directly or indirectly, by (i) such Person, (ii) such Person and one
or more other Subsidiaries of such Person or (iii) one or more Subsidiaries of
such Person. Unless otherwise specified, "Subsidiary" means a Subsidiary of the
Company.
"TERM LOAN FACILITY" means the term loan facility provided under the New
Bank Credit Facility.
"TRANSACTION DATE" means, with respect to the Incurrence of any Indebtedness
by the Company or any of its Restricted Subsidiaries, the date such Indebtedness
is to be Incurred and, with respect to any Restricted Payment, the date such
Restricted Payment is to be made.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Company in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Restricted Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Redeemable Stock of the Company or any Capital Stock of any Restricted
Subsidiary, or owns or holds any Lien on any property of the Company or any
Restricted Subsidiary; PROVIDED that (1) such designation would be permitted
under the "Limitation on Restricted Payments" covenant described below, (2) no
portion of the Indebtedness or any other obligation (contingent or otherwise) of
such Subsidiary (A) is Guaranteed by the Company or any Restricted Subsidiary,
(B) is recourse to the Company or any Restricted Subsidiary or (C) subjects any
property or asset of the Company or any Restricted Subsidiary, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, and (3) no
default or event of default with respect to any Indebtedness of such Subsidiary
would permit any holder of any Indebtedness of the Company or any Restricted
Subsidiary to declare such Indebtedness of the Company or any Restricted
Subsidiary due and payable prior to its Stated Maturity. The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that immediately after giving effect to such designation
(x) the Company could Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) and (y) no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing provisions.
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"U.S. GOVERNMENT OBLIGATION" means (i) any security which is (x) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (y) an obligation
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America and (ii) any depositary receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S.
Government Obligation which is specified in clause (i) above and held by such
bank for the account of the holder of such depositary receipt, or with respect
to any specific payment of principal of or interest on any U.S. Government
Obligation which is so specified and held, provided that for purposes of
defeasance, in the case of any U.S. Government obligation specified in clause
(i) above such obligation is not callable or redeemable at the option of the
issuer thereof and in the case of any depositary receipt referred to in clause
(ii) above (except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depositary receipt
from any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by such
depositary receipt.
"VOTING STOCK" means, with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person, such
Subsidiary if all of the outstanding Capital Stock or other similar equity
ownership interests (other than Preferred Stock) in such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) is owned directly or indirectly by such Person.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, those set forth
below. If an Investment Grade Rating is assigned to the Notes, then, at the
election of the Board of Directors of the Company, which election shall be
evidenced by a Board Resolution, the Company shall be released from its
obligations under the covenants described below under "--Limitation on
Indebtedness," "--Limitation on Restricted Payments," "--Limitation on Dividend
and other Payment Restrictions Affecting Restricted Subsidiaries," "--Limitation
on the Issuance of Capital Stock of Restricted Subsidiaries" and "--Limitation
on Asset Sales" and clause (iii) under "Consolidation, Merger and Sale of
Assets," and the occurrence of any event specified in clause (iii) under
"--Events of Default," with respect to such covenants and such clause, shall be
deemed not to result in an Event of Default. See "--Certain Positive Credit
Events."
LIMITATION ON INDEBTEDNESS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, Incur any Indebtedness (other than Permitted Indebtedness); PROVIDED that
the Company may Incur Indebtedness if, on the date of such Incurrence, after
giving effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Consolidated Fixed Charge Coverage
Ratio exceeds 2.25:1 if such Indebtedness is Incurred on or prior to October 1,
1999 and 2.5:1 if such Indebtedness is Incurred thereafter.
Notwithstanding the foregoing, the Company and, to the extent provided
below, any Restricted Subsidiary may Incur the following Indebtedness (each, a
"Permitted Indebtedness"):
(i) Indebtedness of the Company and/or any Restricted Subsidiary
pursuant to the New Bank Credit Facility in an aggregate principal amount at
any time outstanding not to exceed (A) $100.0 million under the Term Loan
Facility (less the amount thereof which has been permanently repaid as
PROVIDED under the "Limitation on Asset Sales" covenant described below) and
(B) the greater of (1) $225.0 million (less the amount of net proceeds which
have been received in connection with a
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Permitted Receivables Financing; provided that, such reduction shall apply
only for so long as a Permitted Receivables Financing is in effect) and (2)
the aggregate Borrowing Base under the Revolving Loan Facility;
(ii) Indebtedness of the Company or any Restricted Subsidiary to the
Company or any Wholly Owned Restricted Subsidiary as long as such
Indebtedness continues to be owed to the Company or any Wholly Owned
Restricted Subsidiary;
(iii) Indebtedness of the Company pursuant to the Notes and Indebtedness
of any Guarantor pursuant to a Subsidiary Guarantee of the Notes;
(iv) Indebtedness ("Permitted Refinancing Indebtedness") issued in
exchange for, or the net proceeds of which are used to refinance or refund,
then outstanding Indebtedness (Incurred under the first paragraph of this
description of the "Limitation on Indebtedness" covenant or under clause
(iii), (vi), (vii), (viii) or (xii) of this paragraph), and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses); PROVIDED that
Indebtedness the proceeds of which are used to refinance or refund the Notes
or Indebtedness that is PARI PASSU with, or subordinated in right of payment
to, the Notes shall only be permitted under this clause (iv) if (A) in case
the Notes are refinanced in part or the Indebtedness to be refinanced is
PARI PASSU with the Notes, such new Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such new Indebtedness
is outstanding, is expressly made PARI PASSU with, or subordinate in right
of payment to, the remaining Notes, (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made
subordinate in right of payment to the Notes at least to the extent that the
Indebtedness to be refinanced is subordinated to the Notes and (C) such new
Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded; and PROVIDED FURTHER that in no
event may Indebtedness of the Company be refinanced pursuant to this clause
(iv) by means of any Indebtedness of any Restricted Subsidiary;
(v) Indebtedness of the Company or any Restricted Subsidiary in respect
of performance bonds, letters of credit, bankers' acceptances and surety or
appeal bonds issued in the ordinary course of business;
(vi) Acquired Indebtedness of any Restricted Subsidiary; PROVIDED that,
with respect to this clause (vi), after giving effect to the Incurrence
thereof, the Company could Incur at least $1.00 of Indebtedness (other than
Permitted Indebtedness);
(vii) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the Issue Date (other than Indebtedness described in clause
(i), (ii) or (iii) of this paragraph);
(viii) Indebtedness of the Company or any Restricted Subsidiary
represented by Capital Lease Obligations, mortgage financings or purchase
money obligations, in each case Incurred for this purpose of financing not
more than 80% of the purchase price or cost of construction or improvement
of property used in an Aluminum Business or Incurred to refinance any such
purchase price or cost of construction or improvement, in each case Incurred
no later than 365 days after the date of such acquisition or the date of
completion of such construction or improvements; PROVIDED that the aggregate
principal amount of any Indebtedness Incurred pursuant to this clause (viii)
and any refinancing thereof at any one time outstanding shall not exceed
$40.0 million;
(ix) Indebtedness of a Securitization Subsidiary pursuant to a Permitted
Receivables Financing; PROVIDED that after giving effect to the Incurrence
thereof, the Company could Incur at least $1.00 of
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Indebtedness under the first paragraph or clause (i) of this second
paragraph of this description of the "Limitation on Indebtedness" covenant;
(x) Indebtedness of the Company or any Restricted Subsidiary under
Materials Hedging Contracts entered into in the ordinary course of business
for the purpose of limiting risks to the Company or any Restricted
Subsidiary of changes in prices for aluminum or commodities relating to the
Aluminum Business;
(xi) Indebtedness consisting of Interest Rate Agreements directly
related to Indebtedness permitted to be Incurred by the Company or any
Restricted Subsidiary pursuant to the Indenture or consisting of Currency
Agreements entered into in the ordinary course of business;
(xii) Indebtedness of the Company or any Restricted Subsidiary
represented by any industrial revenue bonds, pollution control bonds or
other tax exempt financing; provided, that the aggregate amount of any
Indebtedness Incurred pursuant to this clause (xii) and any refinancing
thereof at any one time outstanding shall not exceed $10.0 million;
(xiii) Guarantees by any Restricted Subsidiary of Indebtedness Incurred
by the Company in compliance with the provisions set forth under the first
paragraph or clause (xiv) of this paragraph of this description of the
"Limitation on Indebtedness" covenant may be guaranteed pursuant to this
clause (xiii);
and (xiv) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not to exceed $40.0
million.
For purposes of determining compliance with the "Limitation on Indebtedness"
covenant described in the two preceding paragraphs, (i) in the event that an
item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the clauses of the preceding paragraph, the Company,
in its sole discretion, shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of such
clauses, (ii) an item of Indebtedness may be divided and classified in more than
one of the types of Indebtedness described above and (iii) the amount of
Indebtedness issued at a price that is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined in
conformity with GAAP.
Notwithstanding the foregoing, the Company will not, and will not permit any
Guarantor to, Incur (i) any Indebtedness if such Indebtedness is subordinate or
junior in ranking in any respect to any Senior Indebtedness of the Company or
such Guarantor, as the case may be, unless such Indebtedness is Senior
Subordinated Indebtedness of the Company or such Guarantor, as the case may be,
or is expressly subordinate in right of payment to Senior Subordinated
Indebtedness of the Company or such Guarantor, as the case may be, or (ii) any
Secured Indebtedness that is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes or the Guarantees, as
the case may be, equally and ratably with such Secured Indebtedness for so long
as such Secured Indebtedness is secured by a Lien.
LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, after the Issue Date (such payments and other actions
described in clauses (i) through (iv) being collectively referred to as
"Restricted Payments"): (i) declare or pay any dividend or make any distribution
on its Capital Stock (other than dividends or distributions payable solely in
shares of its or such Restricted Subsidiary's Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to acquire such shares
of Capital Stock) held by Persons other than the Company or any of its Wholly
Owned Restricted Subsidiaries; (ii) purchase, redeem, retire or otherwise
acquire for value any shares of Capital Stock of the Company or any Restricted
Subsidiary (including options, warrants or other rights to acquire such shares
of Capital Stock) held by Persons other than the Company or any of its Wholly
Owned
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Restricted Subsidiaries; (iii) make any voluntary or optional principal payment,
or voluntary or optional redemption, repurchase, defeasance or other acquisition
or retirement for value of any Subordinated Indebtedness; or (iv) make any
Investment that is a Restricted Investment; if, at the time of, and after giving
effect to, the proposed Restricted Payment: (A) a Default or Event of Default
shall have occurred and be continuing, (B) the Company could not Incur at least
$1.00 of Indebtedness (other than Permitted Indebtedness) or (C) the aggregate
amount (without duplication) expended for all Restricted Payments (the amount so
expended, if other than in cash, to be determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and evidenced
by a Board Resolution) after the Issue Date shall exceed the sum (without
duplication) of (1) 50% of the aggregate amount of the Adjusted Consolidated Net
Income (or, if the Adjusted Consolidated Net Income is a loss, minus 100% of
such amount) (determined by excluding income created by transfers of assets
received by the Company or a Restricted Subsidiary from an Unrestricted
Subsidiary) accrued on a cumulative basis during the period (taken as one
accounting period) beginning on October 1, 1996 and ending on the last day of
the Company's last fiscal quarter ended before the Transaction Date plus (2) the
aggregate net proceeds (including the fair market value of non-cash proceeds as
determined in good faith by the Board of Directors of the Company) received by
the Company from the issuance and sale permitted by the Indenture of its Capital
Stock (other than Redeemable Stock) to a Person who is not a Restricted
Subsidiary, including an issuance or sale permitted by the Indenture for cash or
other property upon the conversion of any Indebtedness of the Company subsequent
to the Issue Date, or from the issuance of any options, warrants or other rights
to acquire Capital Stock of the Company (in each case, exclusive of any
Redeemable Stock or any options, warrants or other rights that are redeemable at
the option of the holder, or are required to be redeemed, prior to the Stated
Maturity of the Notes) plus (3) an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other transfers of
assets, in each case to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries, or from redesignations of Unrestricted Subsidiaries
as Restricted Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company and any Restricted
Subsidiary in such Unrestricted Subsidiary, plus (4) $10.0 million.
The provisions of the foregoing paragraph shall not prohibit: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at such date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness including premium, if any, and
accrued and unpaid interest, with the proceeds of, or in exchange for, Permitted
Refinancing Indebtedness; (iii) the repurchase, redemption or other acquisition
of Capital Stock of the Company in exchange for, or out of the proceeds of a
substantially concurrent offering of, shares of Capital Stock (other than
Redeemable Stock) of the Company; (iv) the acquisition of Subordinated
Indebtedness of the Company in exchange for, or out of the proceeds of, a
substantially concurrent offering of, shares of the Capital Stock of the Company
(other than Redeemable Stock); (v) the purchase, redemption, acquisition,
cancellation or other retirement for value of shares of Capital Stock of the
Company, options on any such shares or related stock appreciation rights or
similar securities held by officers, directors or employees or former directors,
officers or employees (or their transferees, estates or beneficiaries under
their estates), upon death, disability, retirement, severance or termination of
employment or service or pursuant to any agreement under which such shares of
stock or related rights were issued; provided that the aggregate cash
consideration paid for such purchase, redemption, acquisition, cancellation or
other retirement of such shares of Capital Stock or related rights after the
Issue Date does not exceed an aggregate amount of $6.0 million and that any
consideration in excess of such $6.0 million is in the form of Permitted
Indebtedness; (vi) the redemption of any Stock Purchase Rights issued under the
Stockholder Protection Rights Agreement; (vii) the payment by the Company of one
or more cash dividends; PROVIDED that (A) the aggregate amount of such dividends
does not exceed $8.0 million and (B) at the time of such payment, a majority of
the Voting Stock of the Company shall be held by persons other than Affiliates
of the Company; (viii) payments or distributions
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pursuant to or in connection with a consolidation, merger or transfer of assets
that complies with the provisions of the Indenture applicable to consolidations,
mergers, conveyances, transfers or leases and (ix) payments pursuant to the plan
of merger relating to the CasTech Acquisition as in effect on the Issue Date or
pursuant to the assertion of appraisal rights in connection with the CasTech
Merger; PROVIDED that, in each case except in clauses (i), (iii) and (ix), no
Default or Event of Default shall have occurred and be continuing or occur as a
consequence of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payments referred to in clauses (i) through (iv) and (ix)
thereof) shall be included once in calculating whether the conditions of clause
(C) of the second preceding paragraph have been met with respect to any
subsequent Restricted Payments. For purposes of determining compliance with this
"Limitation on Restricted Payments" covenant, in the event that a Restricted
Payment meets the criteria of more than one of the types of Restricted Payments
described in clauses (i) through (ix) of the preceding paragraph, the Company,
in its sole discretion, shall classify such Restricted Payment and only be
required to include the amount and type of such Restricted Payment in one of
such clauses.
In the event of an issuance of Capital Stock of the Company and (i) the
repurchase, redemption or other acquisition of Capital Stock in exchange for or
out of the proceeds of such issuance or (ii) the redemption, repurchase,
defeasance or other acquisition or retirement of Subordinated Indebtedness with
the proceeds of or in exchange for such issuance, then, in calculating whether
the conditions of clause (C) of the third preceding paragraph have been met with
respect to any subsequent Restricted Payments, the proceeds of any such issuance
shall be included under such clause (C) only to the extent such proceeds are not
applied as described in clause (i) or (ii) of this paragraph.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by the
Company or any other Restricted Subsidiary, (ii) pay any Indebtedness or other
obligations owed to the Company or any other Restricted Subsidiary, (iii) make
loans or advances to the Company or any other Restricted Subsidiary or (iv)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Issue Date in the New Bank Credit Facility,
the Indenture or any other agreements in effect on the Issue Date, and any
amendments, supplements, extensions, refinancings, renewals, restatements,
replacements or modifications of any of the foregoing; PROVIDED that the
encumbrances and restrictions in any such amendments, supplements, extensions,
refinancings, renewals, restatements, replacements or modifications are no less
favorable in any material respect to the Holders than those encumbrances or
restrictions that are then in effect and that are being amended, supplemented,
extended, refinanced, renewed, restated, replaced or modified; (ii) existing
under or by reason of applicable law; (iii) existing with respect to any Person
or the property or assets of such Person acquired by the Company or any
Restricted Subsidiary and existing at the time of such acquisition, which
encumbrances or restrictions (A) are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired and (B) were not put in place in anticipation
of such acquisition, and any amendments, supplements, extensions, refinancings,
renewals, restatements, replacements or modifications of any of the foregoing;
PROVIDED that the encumbrances and restrictions in any such amendments,
supplements, extensions, refinancings, renewals, restatements, replacements or
modifications are no less favorable in any material respect to the Holders than
those encumbrances or restrictions that are then in effect and that are being
amended, supplemented, extended, refinanced, renewed, restated, replaced or
modified; (iv) in the case of clause (iv) of the preceding paragraph, arising or
agreed to in the ordinary course of business (A) that restrict in a customary
manner the subletting, assignment or transfer of any property or asset that
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is a lease, license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by the Indenture or (C) not
relating to any Indebtedness and, in each of case (A), (B) or (C), that do not,
individually or in the aggregate, detract from the value of property or assets
of the Company or any Restricted Subsidiary in any manner material to the
Company or any Restricted Subsidiary; (v) with respect to a Restricted
Subsidiary and imposed pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary; or (vi) with respect to a
Securitization Subsidiary, pursuant to an agreement relating to Indebtedness of
a Securitization Subsidiary which is permitted under the covenant described
above under "Limitation on Indebtedness" or pursuant to an agreement relating to
a Permitted Receivables Financing by a Securitization Subsidiary. Nothing
contained in the preceding paragraph shall prevent the Company or any Restricted
Subsidiary from restricting the sale or other disposition of property or assets
of the Company or any of its Restricted Subsidiaries that secure Indebtedness of
the Company or any of its Restricted Subsidiaries.
LIMITATION ON THE ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to issue or sell any shares of its Capital Stock (including options,
warrants or other rights to purchase shares of such Capital Stock) except (i) to
the Company or a Wholly Owned Restricted Subsidiary, (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary or (iii) to the extent such shares
represent directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary.
LIMITATION ON ASSET SALES
The Company will not, and will not permit any Restricted Subsidiary to,
effect any Asset Disposition unless: (i) such Asset Disposition is effected at
fair market value (as determined in good faith by the Board of Directors of the
Company); (ii) in the case of any Asset Disposition or series of related Asset
Dispositions for a total consideration in excess of $5.0 million, at least 75%
of the consideration is received in cash; and (iii) in the event and to the
extent that the Net Cash Proceeds received by the Company or any of its
Restricted Subsidiaries from one or more Asset Dispositions occurring on or
after the Issue Date in any period of 12 consecutive months exceed the lesser of
(A) $20 million or (B) 10% of Consolidated Net Tangible Assets as of the
beginning of such 12-month period, then the Company shall or shall cause the
relevant Restricted Subsidiary to within 12 months after the date Net Cash
Proceeds so received exceeds the lesser of (x) $20.0 million or (y) such 10% of
Consolidated Net Tangible Assets, apply an amount equal to such excess Net Cash
Proceeds as provided in the following paragraph.
An amount equal to such excess Net Cash Proceeds shall be applied (i) first,
to the extent the Company or such Restricted Subsidiary elects or is otherwise
required to, to permanently repay Senior Indebtedness of the Company or Senior
Indebtedness of any Restricted Subsidiary, in each case owing to a Person other
than the Company or any of its Restricted Subsidiaries; PROVIDED that
notwithstanding the foregoing, if, after first applying such excess Net Cash
Proceeds to permanently repay all of the then outstanding Senior Indebtedness
other than Indebtedness under the Revolving Loan Facility, the application of
any remaining portion of such excess Net Cash Proceeds to repay Senior
Indebtedness under the Revolving Loan Facility shall satisfy the requirements of
this clause (i) whether or not such repayment results in a permanent reduction
in the commitments available under such Revolving Loan Facility, (ii) second, to
the extent of the balance of such excess Net Cash Proceeds after application in
accordance with clause (i), and to the extent the Company elects, to invest such
amount (or enter into a definitive agreement committing to so invest within 12
months after the date of such agreement), in property or assets that are to be
used in the Aluminum Business (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and evidenced
by a Board Resolution) and (iii) third, to the extent of the balance of such
excess Net Cash Proceeds after application in accordance with clauses (i) and
(ii), offer to apply (no later than the end of the 12-month period referred
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to in clause (iii) of the preceding paragraph) such excess Net Cash Proceeds (to
the extent not applied pursuant to clauses (i) and (ii) above) ("Excess
Proceeds") as provided in the following paragraph.
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least $10.0 million, the Company will, not later than the
fifteenth Business Day of such month, mail an Offer (an "Excess Proceeds Offer")
with respect to an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount of the Notes plus
accrued interest to the Purchase Date (the "Excess Proceeds Payment"). Any Offer
to Purchase shall be governed by and effected in accordance with the Offer for
such Offer to Purchase.
The Company will publicly announce the results of the Excess Proceeds Offer
as soon as practicable after the Purchase Date.
For purposes of the "Limitation on Asset Sales" covenant, any Excess
Proceeds not required to purchase Notes tendered in response to the Offer to
Purchase shall no longer constitute Net Cash Proceeds received from Asset
Dispositions.
Notwithstanding the foregoing provisions of the "Limitation on Asset Sales"
covenant, the Company and its Restricted Subsidiaries may, in the ordinary
course of business, exchange all or a portion of their assets for assets which
are of a type used in the Aluminum Business or Capital Stock of a Person all or
substantially all of whose assets are of a type used in the Aluminum Business,
or a combination of any such assets and cash; PROVIDED that (i) no Default or
Event of Default shall have occurred and be continuing or occur as a consequence
of such Asset Disposition, (ii) a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the Asset Disposition
shall have pursuant to a Board Resolution determined that such Asset Disposition
is fair to the Company or such Restricted Subsidiary, as the case may be, (iii)
any cash received pursuant to any such Asset Disposition shall be applied in the
manner applicable to excess Net Cash Proceeds from an Asset Disposition as set
forth in the preceding paragraphs discussing the "Limitation on Asset Sales"
covenant and (iv) in the event the Company or the Restricted Subsidiary, as the
case may be, receives any Capital Stock of a Person pursuant to such exchange,
(A) such Person becomes a Restricted Subsidiary of the Company by virtue of such
exchange or (B) such exchange constitutes an Investment excepted from the
definition of Restricted Investment pursuant to clause (x) of the definition
thereof.
LIMITATION ON TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any Person known to the Company to be the
holder (or any Affiliate of such holder) of 10% or more of any class of Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary (each, a "Related Party Transaction"), except upon fair and
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate.
Without limiting the foregoing, (i) any Related Party Transaction or series
of Related Party Transactions with an aggregate value in excess of $5.0 million
must first be approved by a majority of the Board of Directors of the Company
who are disinterested in the subject matter of the transaction pursuant to a
Board Resolution and (ii) with respect to any Related Party Transaction or
series of Related Party Transactions with an aggregate value in excess of $15.0
million, the Company must first obtain a favorable written opinion from a
nationally recognized investment banking firm as to the fairness from a
financial point of view of such transaction to the Company or such Restricted
Subsidiary, as the case may be.
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The foregoing limitation does not limit, and shall not apply to: (i) the
payment of reasonable and customary regular fees to directors of the Company who
are not employees of the Company; (ii) any Restricted Payments not prohibited by
the "Limitation on Restricted Payments" covenant; (iii) transactions in
connection with a Permitted Receivables Financing; (iv) any loans or advances by
the Company to employees of the Company or a Restricted Subsidiary in the
ordinary course of business and in furtherance of the Company's business, in an
aggregate amount not to exceed $2.0 million at any one time outstanding; (v) any
grant of stock options or other rights to employees or directors of the Company
or any of its Subsidiaries pursuant to benefit plans or agreements adopted or
authorized by the Company's non-employee Directors; (vi) payments by the Company
or a Restricted Subsidiary to employees of the Company or any of its
Subsidiaries (A) of salary, bonus and other ordinary compensation in the
ordinary course of business and (B) pursuant to employment agreements entered
into in compliance with the foregoing two paragraphs; (vii) any transaction
between the Company and any Wholly Owned Restricted Subsidiary or between any
Wholly Owned Restricted Subsidiaries; and (viii) the consummation of the
transactions contemplated by the Plan of Merger as in effect on the Issue Date.
CERTAIN POSITIVE CREDIT EVENTS
The Indenture will provide that if an Investment Grade Rating is assigned to
the Notes, then at the election of the Board of Directors of the Company, which
election shall be evidenced by a Board Resolution, the following provisions
shall be effective as of the date of such Board Resolution: (i) the Company
shall be released from its obligations under the "Limitation on Indebtedness,"
"Limitation on Restricted Payments," "Limitation on Dividend and other Payment
Restrictions Affecting Restricted Subsidiaries," "Limitation on the Issuance of
Capital Stock of Restricted Subsidiaries" and "Limitation on Asset Sales"
covenants and clause (iii) under "--Consolidation, Merger and Sale of Assets"
described below, and the occurrence of any event specified in clause (iii) under
"--Events of Default" with respect to such covenants and such clause shall be
deemed not to result in an Event of Default; (ii) the Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, permit to
exist any Lien on any of its property or assets (including Capital Stock of a
Restricted Subsidiary) (other than Permitted Liens), without providing that the
Notes and, in the case of each Guarantor, the Subsidiary Guarantees of that
Guarantor, shall be equally and ratably secured; and (iii) the Company shall
not, and shall not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction unless (A) the Company or such Restricted Subsidiary
(1) would be entitled to create a Lien on such property or assets securing
Indebtedness in an amount equal to the Attributable Debt with respect to such
Sale/Leaseback Transaction without equally and ratably securing the Notes
pursuant to the covenant described under clause (ii) above, or (2) applies the
proceeds of such transaction within 12 months to (x) the purchase or acquisition
of property or assets that are to be used in the Aluminum Business (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution) or (y)
the redemption or repayment of Senior Indebtedness, and (B) the net proceeds
received by the Company or any Restricted Subsidiary in connection with such
Sale/Leaseback Transaction are at least equal to the fair value (as determined
by the Board of Directors of the Company) of such property or assets.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of a Note shall have
the right to have such Note repurchased by the Company on the terms and
conditions precedent set forth in the Indenture. The Company shall, within 30
days following a Change of Control, mail an Offer ("Change of Control Offer")
with respect to an Offer to Purchase all outstanding Notes at a purchase price
equal to 101% of the principal amount thereof plus accrued interest to the
Purchase Date (the "Change of Control Payment"). Prior to the mailing of any
Change of Control Offer, but in any event within 30 days following any Change of
Control, the Company will (i) repay in full all indebtedness of the Company that
would prohibit the repurchase of the Notes pursuant to the Offer to Purchase or
(ii) obtain any requisite consents under
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instruments governing any such indebtedness of the Company to permit the
repurchase of the Notes pursuant to the Offer to Purchase. Compliance with the
covenant in the preceding sentence shall be a condition precedent to the
obligation of the Company to repurchase Notes pursuant to the Indenture.
The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the applicable Purchase Date.
If the Company is unable to repay all of its indebtedness that would
prohibit repurchase of the Notes or is unable to obtain the consents of the
holders of indebtedness, if any, of the Company outstanding at the time of a
Change of Control whose consent would be so required to permit the repurchase of
Notes, then the Company will have breached the "Repurchase of Notes upon a
Change of Control" covenant of the Indenture. This breach will constitute an
Event of Default under the Indenture if it continues for a period of 30
consecutive days after written notice is given to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes
outstanding. In addition, the failure by the Company to repurchase Notes at the
conclusion of the Change of Control Offer will constitute an Event of Default
without any waiting period or notice requirements.
There can be no assurances that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the "Repurchase of Notes upon a
Change of Control" covenant of the Indenture (as well as may be contained in
other securities of the Company that might be outstanding at the time). The
"Repurchase of Notes upon a Change of Control" covenant of the Indenture will,
unless the consents referred to above are obtained, require the Company to repay
all indebtedness then outstanding that by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase. The New
Bank Credit Facility prohibits the Company from purchasing any Notes and also
provides that the occurrence of certain change of control events with respect to
the Company constitutes a default thereunder.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Neither the Company nor any Guarantor shall (A) consolidate with, merge with
or into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or substantially an
entirety in one transaction or a series of related transactions) to, any Person
(other than a consolidation with or merger with or into, or sale, conveyance,
transfer, lease or disposition to, the Company or a Wholly Owned Restricted
Subsidiary that is a Guarantor and has a positive net worth; PROVIDED that, in
connection with any such transaction between the Company or any Guarantor and
the Company or such Wholly Owned Restricted Subsidiary, no consideration (other
than common stock in the surviving Person or the Company) shall be issued or
distributed to the stockholders of the Company or such Guarantor, as the case
may be) or (B) permit any Person to merge with or into the Company or such
Guarantor, as the case may be, unless: (i) the Company or such Guarantor, as the
case may be, shall be the continuing Person, or the Person (if other than the
Company or such Guarantor) formed by such consolidation or into which the
Company or such Guarantor is merged or that acquired or leased such property and
assets of the Company or such Guarantor shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental indenture
executed and delivered to the Trustee, all of the obligations of the Company on
the Notes and under the Indenture or all obligations of such Guarantor under its
Subsidiary Guarantee, as the case may be; (ii) immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis, the Company could Incur at least $1.00 of Indebtedness (other than
Permitted Indebtedness); (iv) in the case of any sale, exchange or transfer of
all or substantially all of the assets of a Guarantor to an Affiliate of the
Company (other than a Wholly Owned Restricted Subsidiary that is a Guarantor),
the Company shall first have obtained a favorable written opinion from a
nationally recognized investment banking firm as to the fairness from a
financial point of view of such transaction to such Guarantor; and (v) the
Company delivers to the Trustee an officers' certificate (attaching the
arithmetic
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computations to demonstrate compliance with clause (iii) above) and opinion of
counsel, in each case stating that such consolidation, merger or transfer and
such supplemental indenture complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with; PROVIDED that clause (iii) above does not apply if, in the good faith
determination of the Board of Directors of the Company, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of the Company or the
Guarantor, as the case may be; and PROVIDED FURTHER that any such transaction
shall not have as one of its purposes the evasion of the foregoing limitations.
COMMISSION REPORTS
Notwithstanding that the Company may not be required to remain subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company will file with the Commission and provide the Trustee and Holders of the
Notes with such annual reports and such information, documents and other reports
as are specified in Sections 13 and 15(d) of the Exchange Act (excluding however
information with respect to benefit plans and long-term compensation
arrangements and, in the case of Holders of the Notes, exhibits to such reports
specified in Sections 13 and 15(d) of the Exchange Act) and applicable to a U.S.
corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture: (a) default in the payment of principal of, or premium, if any, on
any Note when the same becomes due and payable (whether or not such payment is
prohibited by the provisions described under "Ranking" above) at maturity, upon
acceleration, redemption or otherwise, including, without limitation, payments
of any Change of Control Payment or Excess Proceeds Payment; (b) default in the
payment of interest on any Note when the same becomes due and payable (whether
or not such payment is prohibited by the provisions described under "Ranking"
above), and such default continues for a period of 30 consecutive days; (c) the
Company or any Guarantor defaults in the performance of or breaches any other
covenant or agreement in the Indenture or under the Notes and such default or
breach continues for a period of 30 consecutive days after written notice by the
Trustee or the Holders of 25% or more in aggregate principal amount of the
Notes; (d) there occurs with respect to any issue or issues of Indebtedness of
the Company or any of its Significant Subsidiaries having an outstanding
principal amount, in the aggregate for all such issues of all such Persons, of
$10.0 million or more, whether such Indebtedness now exists or shall hereafter
be created, (i) an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated Maturity
and/or (ii) the failure to make a principal payment at the final (but not any
interim) fixed maturity; (e) any final judgment or order for the payment of
money in excess of $10.0 million in the aggregate for all such final judgments
or orders against all such Persons shall be rendered against the Company or any
of its Significant Subsidiaries and shall not be paid or discharged, and there
shall be any period of 60 consecutive days following entry of the final judgment
or order that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed $10.0
million during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; (f) a court
having jurisdiction in the premises enters a decree or order for (A) relief in
respect of the Company or any of its Significant Subsidiaries in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any of
its Significant Subsidiaries or for all or substantially all of the property and
assets of the Company or any of its Significant Subsidiaries or (C) the winding
up or liquidation of the affairs of the Company or any of its Significant
Subsidiaries and, in each case, such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; (g) the
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Company or any of its Significant Subsidiaries (A) commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any of its Significant
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Significant Subsidiaries or (C) effects any general
assignment for the benefit of creditors; or (h) a Subsidiary Guarantee ceases to
be in full force and effect (other than in accordance with the terms of such
Subsidiary Guarantee) or a Guarantor denies or disaffirms in writing its
obligations under its Subsidiary Guarantee.
If an Event of Default (other than an Event of Default specified in clause
(f) or (g) above) occurs and is continuing under the Indenture, the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by written notice to the Company (and to the Trustee if such notice
is given by the Holders (the "Acceleration Notice")), may, and the Trustee at
the request of such Holders shall, declare the principal of, premium, if any,
and accrued interest on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such principal of, premium, if any, and accrued
interest shall be immediately due and payable, provided, that so long as the New
Bank Credit Facility is in effect such declaration shall not become effective
until the earlier of (x) five business days after receipt of notice of such
declaration by the Representative of the holders of the Senior Indebtedness
under the New Bank Credit Facility from the Trustee and (y) acceleration of the
Senior Indebtedness under the New Bank Credit Facility. In the event of a
declaration of acceleration because an Event of Default set forth in clause (d)
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default or payment default
triggering such Event of Default pursuant to clause (d) shall be remedied or
cured by the Company and/or the relevant Significant Subsidiaries or waived by
the holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause
(f) or (g) above occurs, the principal of, premium, if any, and accrued interest
on the Notes then outstanding shall IPSO FACTO become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders of at least a majority in principal amount of the
outstanding Notes by written notice to the Company and to the Trustee may waive
all past defaults and rescind and annul a declaration of acceleration and its
consequences if (i) all existing Events of Default, other than the nonpayment of
the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(ii) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. For information as to the waiver of defaults, see
"--Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture or that may involve the
Trustee in personal liability, and may take any other action it deems proper
that is not inconsistent with any such direction received from Holders of Notes.
A Holder may not pursue any remedy with respect to the Indenture or the Notes
unless: (i) the Holder gives the Trustee written notice of a continuing Event of
Default; (ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer the Trustee indemnity satisfactory to the
Trustee against any costs, liability or expense; (iv) the Trustee does not
comply with the request within 60 days after receipt of the request and the
offer of indemnity; and (v) during such 60-day period, the Holders of at least a
majority in aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request. However, such
limitations do not apply to the right of any Holder of a Note to receive payment
of the principal of, premium, if any, or interest on, such Note or to bring suit
for the enforcement of any such payment, on or after the due date expressed in
the Notes, which right shall not be impaired without the consent of the Holder.
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The Indenture will require certain officers of the Company to certify, on or
before a date not more than 120 days after the end of each fiscal year, that
they have conducted or supervised a review of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under the Indenture and that, to the best of such officer's
knowledge, based upon such review, the Company has fulfilled all obligations
thereunder or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof. The
Company will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Indenture.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
the Guarantors and the Trustee with the consent of the Holders of not less than
a majority in aggregate principal amount of the outstanding Notes; provided that
no such modification or amendment may, without the consent of each Holder of the
Notes affected thereby, (i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Note, (iii) change the place or currency
of payment of principal of, premium, if any, or interest on, any Note, (iv)
impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity (or, in the case of a redemption, on or after the
Redemption Date) of any Note, (v) reduce the above-stated percentage of
outstanding Notes the consent of whose Holders is necessary to modify or amend
the Indenture, (vi) waive a default in the payment of principal of, premium, if
any, or interest on the Notes, (vii) reduce the percentage or aggregate
principal amount of outstanding Notes the consent of whose Holders is necessary
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults, (viii) make any change to the subordination provisions of
the Indenture that could adversely affect the Holders of Notes or (ix) release
any Guarantor from any of its obligations under its Subsidiary Guarantee or the
Indenture other than in accordance with the provisions of the Indenture, or
amend or modify any provision relating to such release.
Neither the Company nor any of its subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise to any Holder of any Notes for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
DEFEASANCE
DEFEASANCE AND DISCHARGE. The Indenture will provide that the Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes (and each Guarantor will be discharged from any and all
obligations in respect of the Subsidiary Guarantees) on the 123rd day after the
deposit referred to below, and the provisions of the Indenture will no longer be
in effect with respect to the Notes and the Subsidiary Guarantees (except for,
among other matters, certain obligations to register the transfer or exchange of
the Notes, to replace stolen, lost or mutilated Notes, to maintain paying
agencies and to hold monies for payment in trust) if, among other things, (A)
the Company has deposited with the Trustee, in trust, money and/or U.S.
Government Obligations that through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, premium, if any, and accrued interest on the
Notes on the Stated Maturity of such payments in accordance with the terms of
the Indenture and the Notes, (B) the Company has delivered to the Trustee (i)
either (x) an opinion of counsel to the effect that Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of the
Company's exercise of its option under this "Defeasance" provision and will be
subject to Federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had
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not occurred, which opinion of counsel must be based upon (and accompanied by a
copy of) a ruling of the Internal Revenue Service to the same effect unless
there has been a change in applicable Federal income tax law after the date of
the Indenture such that a ruling is no longer required or (y) a ruling directed
to the Trustee received from the Internal Revenue Service to the same effect as
the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel to the
effect that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit, the
trust fund will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law and (C)
immediately after giving effect to such deposit on a pro forma basis, no Default
or Event of Default shall have occurred and be continuing on the date of such
deposit or during the period ending on the 123rd day after the date of such
deposit, and such deposit shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
Company is a party or by which the Company is bound.
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. The
Indenture further will provide that the provisions of the Indenture will no
longer be in effect with respect to clause (iii) under "--Consolidation, Merger
and Sale of Assets" and all the covenants described under "--Certain Covenants,"
and clause (c) under "--Events of Default" with respect to such covenants,
clause (iii) under "--Consolidation, Merger and Sale of Assets" and clauses (d)
and (e) under "--Events of Default" shall be deemed not to be Events of Default,
upon, among other things, the deposit with the Trustee, in trust, of money
and/or U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Notes on the Stated Maturity of such payments in accordance with
the terms of the Indenture and the Notes, the satisfaction of the provisions
described in clauses (B)(ii) and (C) of the preceding paragraph and the delivery
by the Company to the Trustee of an opinion of counsel to the effect that, among
other things, the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and defeasance of certain
covenants and Events of Default and will be subject to Federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred.
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT. In the event the Company
exercises its option to omit compliance with certain covenants and provisions of
the Indenture with respect to the Notes as described in the immediately
preceding paragraph and the Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Notes at the time of their Stated Maturity
but may not be sufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Event of Default. However, the Company will
remain liable for such payments.
REGARDING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture and is also
the Exchange Agent in the Exchange Offer. An affiliate of Harris Trust and
Savings Bank is a party to certain credit agreements with the Company and its
subsidiaries, including the New Bank Credit Facility, borrowings under which
constitute Senior Indebtedness under the Indenture. Harris Trust and Savings
Bank may also maintain other banking arrangements with the Company in the
ordinary course of business.
FORM, DENOMINATION AND BOOK-ENTRY PROCEDURES
Old Notes initially sold to institutional "accredited investors" were issued
only in fully registered definitive form without coupons, in denominations of
$250,000 of principal amount and integral multiples of $1,000 in excess thereof.
New Notes may be issued only in fully registered definitive form without
coupons, in denominations of $1,000 and integral multiplies thereof.
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The Old Notes initially sold to Qualified Institutional Buyers (as defined
in Rule 144A under the Securities Act) were represented by a single global Note
(the "Global Old Note") in definitive fully registered form without coupons,
registered in the name of a nominee of DTC, as depositary. The Global Old Note,
to the extent directed by the holders thereof in their Letters of Transmittal,
will be exchanged through book-entry electronic transfer for a new single global
New Note in definitive fully registered form without coupons, registered in the
name of a nominee of DTC, as depositary (the "Global New Note" and collectively
with the Global Old Note, the "Global Notes" and each a "Global Note"). The
Global New Note will, upon request, be exchangeable for other New Notes in
definitive fully registered form without coupons, in denominations of $1,000 and
integral multiples thereof, but only upon ten days prior written notice to the
Trustee given in accordance with DTC's customary procedures. The Global New Note
will also be exchangeable in certain other limited circumstances discussed
below. The Company, the Trustee and any agent thereof will be entitled to treat
DTC's nominee as the sole owner and holder of the unexchanged portion of the
Global Notes for all purposes.
In connection with the issuance of the Global New Note, DTC will credit on
its book-entry registration and transfer system the principal amount of Global
New Note represented by New Notes deposited with it to the accounts of
institutions that have accounts with DTC or its nominee ("participants").
Ownership of beneficial interests in Global New Note will be limited to
participants or persons that may hold beneficial interests through participants.
Ownership of beneficial interests in Global New Note will be shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by DTC (with respect to participants' interests) or such participants
(with respect to the owners of beneficial interests in the Global New Note).
So long as DTC or its nominee is the registered holder and owner of a New
Note representing the Global New Note, DTC or such nominee, as the case may be,
will be considered the sole owner and holder of the Global New Note for all
purposes of such New Notes and for all purposes under the Indenture. Unless DTC
notifies the Company that it is unwilling or unable to continue as depositary
for such Global New Note, DTC ceases to be a clearing agency registered under
the Exchange Act, the Company delivers to the Trustee a written notice that the
Global New Note shall be exchangeable or an Event of Default (as defined in the
Indenture) or event that after notice or lapse of time, or both, would become an
Event of Default, has occurred and is continuing with respect to the New Notes,
owners of beneficial interests in the Global New Note will not be entitled to
have the New Notes represented by the Global New Note registered in their names,
will not receive or be entitled to receive physical delivery of certificated New
Notes in definitive form and will not be considered to be the owners or holders
of any New Notes under the Indenture or such Global New Note, except as
otherwise described herein.
Payment of principal of (and premium, if any) and interest on the Global New
Note will be made to DTC or its nominee, as the case may be, as the registered
owner and holder thereof. All payments of principal of (and premium, if any) and
interest on the Global New Note held by DTC will be made by the Company to DTC
in immediately available funds, and in turn by DTC to participants in
clearing-house or next day funds.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. The Company
expects that DTC will take any action permitted to be taken by a Holder of New
Notes only at the direction of one or more participants to whose account
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the DTC interests in a Global Note is credited and only in respect of such
portion of the aggregate principal amount of the Note as to which such
participant or participants has or have given such direction.
The Company understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC, is expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of DTC,
DTC is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of its obligations under the rules and
procedures governing their operations.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
REGISTRATION RIGHTS AGREEMENT
The Company is party to the Registration Rights Agreement with Morgan
Stanley & Co. Incorporated and NatWest Capital Markets Limited, as the initial
purchasers of the Old Notes, pursuant to which the Company has agreed, for the
benefit of the holders of the Old Notes, to use its reasonable best efforts, at
its cost, to file and cause to become effective a registration statement with
respect to the Exchange Offer to exchange the Old Notes for the New Notes. Upon
such registration statement being declared effective, the Company has agreed to
offer the New Notes in return for surrender of the Old Notes. For each Old Note
surrendered to the Company under the Exchange Offer, the Holder will receive a
New Note of equal principal amount. Interest on each New Note will accrue from
September 20, 1996. In the event that applicable interpretations of the staff of
the Commission do not permit the Company to effect the Exchange Offer or under
certain other circumstances, the Company has agreed, at its cost, to use its
reasonable best efforts to cause to become effective the Shelf Registration
Statement with respect to resales of the Old Notes and to keep such registration
statement effective until September 20, 1999. The Company shall, in the event of
such a shelf registration, provide to each holder copies of the prospectus,
notify each holder when the Shelf Registration Statement for the Old Notes has
become effective and take certain other actions as are required to permit
resales of the Old Notes.
In the event an Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective on or prior to April 1, 1997, then the
annual interest rate borne by the Old Notes shall be increased to 11 1/4%. If
such Exchange Offer is not consummated or such Shelf Registration Statement is
not declared effective by October 1, 1997, then the annual interest rate borne
by the Old Notes shall be increased by an additional 0.5%. Upon consummation of
such Exchange Offer or the effectiveness of such Shelf Registration Statement,
the interest rate borne by the Old Notes will revert to 10 3/4%.
In the event an exchange offer is consummated, the Company will not be
required under the Registration Rights Agreement to file the Shelf Registration
Statement to register any outstanding Old Notes, and the interest rate on such
Old Notes will remain at its initial level of 10 3/4%. The Exchange Offer
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shall be deemed to have been consummated upon the earlier to occur of (i) the
Company having exchanged New Notes for all outstanding Old Notes (other than Old
Notes held by a Restricted Holder) pursuant to the Exchange Offer and (ii) the
Company having exchanged, pursuant to the Exchange Offer, New Notes for all Old
Notes that have been tendered and not withdrawn on the date that is 30 days
following the commencement of such Exchange Offer. In such event, holders of Old
Notes seeking liquidity in their investment would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act. See "Risk Factors."
Interest on each New Note will accrue from September 20, 1996 or from the
most recent interest payment date to which interest was paid on the Old Note
surrendered in exchange therefor or on the New Note, as the case may be. The New
Notes will bear interest at the original interest rate borne by the Old Notes,
except that, if any interest accrues on the New Notes in respect of any period
prior to their issuance, such interest will accrue at the rate or rates borne by
the Old Notes from time to time during such period.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences applicable to the exchange of Old Notes for New Notes pursuant to
the Exchange Offer (the "Exchange") and the ownership and disposition of New
Notes. This summary deals only with New Notes held as capital assets by Holders
who purchased Old Notes at 100% of their principal amount, and not with special
classes of Holders, such as dealers in securities or currencies, banks,
tax-exempt organizations, life insurance companies, persons that hold New Notes
as a hedge (or hedged against) currency or interest rate risks or that are part
of a straddle or conversion transaction, or persons whose functional currency is
not the U.S. dollar. Investors who purchased the Old Notes at a price other than
100% of their principal amount should consult their tax advisor as to the
possible applicability to them of the amortizable bond premium or market
discount rules. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive effect.
HOLDERS OF OLD NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
CONSEQUENCES, IN THEIR PARTICULAR CIRCUMSTANCES, UNDER THE CODE AND THE LAWS OF
ANY OTHER TAXING JURISDICTION, OF THE EXCHANGE AND OWNERSHIP OF NEW NOTES.
EXCHANGE OFFER
For United States federal income tax purposes, the Exchange will be
disregarded and each New Note will be treated as a continuation of the
corresponding Old Note. Accordingly, holders will not recognize gain or loss
upon the Exchange.
UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest on a New Note will be taxable to a United States Holder (as defined
below), as ordinary income at the time it is received or accrued, depending on
the United States Holder's method of accounting for tax purposes. A "United
States Holder" is a beneficial owner who or that is (i) a citizen or resident of
the United States, (ii) a domestic corporation or (iii) otherwise subject to
United States federal income taxation on a net income basis in respect of the
New Notes.
PURCHASE, SALE, RETIREMENT AND OTHER DISPOSITION OF NEW NOTES
A United States Holder's tax basis in the New Note generally will be its
cost. Upon the sale, retirement or other disposition of a New Note, a United
States Holder will generally recognize gain or loss equal to the difference
between the amount realized (not including any amounts attributable to accrued
and unpaid interest) and the Holder's tax basis in the New Note. Such gain or
loss recognized on the sale or retirement of a New Note will be long-term
capital gain or loss if the holding period of the New Note was more than one
year. The holding period of a New Note acquired by a United States Holder in the
Exchange will include the holding period of the corresponding Old Note.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
Holder of a New Note who is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of income or
gain from a New Note.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
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(i) payments of principal, premium, if any, and interest by the Company or
any of its paying agents to any Holder of a New Note that is a United States
Alien Holder will not be subject to United States federal withholding tax if, in
the case of interest, (a) the beneficial owner of the New Note does not actually
or constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (b) the beneficial owner of
the New Note is not a controlled foreign corporation that is related to the
Company through stock ownership, and (c) either (A) the beneficial owner of the
New Note certifies to the Company or its agent, under penalties of perjury, that
it is not a United States Holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the New Note certifies to the Company or its
agent under penalties or perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof;
(ii) a United States Alien Holder of a New Note will not be a subject to
United States federal withholding tax on any gain realized on the sale or
exchange of a New Note; and
(iii) a New Note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's gross
estate for purposes of the United States federal estate tax as a result of the
individual's death if (a) the individual did not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote and (b) the income on the New Note would not have been
effectively connected with a United States trade or business of the individual
at the individual's death.
Recently proposed Internal Revenue Service Treasury regulations (the
"Proposed Regulations") would provide alternative methods for satisfying the
certification requirement described in clause (i)(c) above. The Proposed
Regulations also would require, with certain exceptions, in the case of New
Notes held by a foreign partnership, that (x) the certification described in
clause (i)(c) above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule generally
would apply in the case of tiered partnerships. The Proposed Regulations are
proposed to be effective for payments made after December 31, 1997. There can be
no assurance that the Proposed Regulations will be adopted or as to the
provisions that they will include if and when adopted in temporary or final
form.
BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a New Note and the proceeds of the
sale of a New Note before maturity within the United States to non-corporate
United States Holders, and "backup withholding" at a rate of 31% will apply to
such payments if the United States Holder fails to provide an accurate taxpayer
identification number or is notified by the Internal Revenue Service that it has
failed to report all interest and dividends required to be shown on its federal
income tax returns.
UNITED STATES ALIEN HOLDERS
Under current law, information reporting on Internal Revenue Service Form
1099 and backup withholding will not apply to payments of principal, premium, if
any, and interest made by the Company or a paying agent to a United States Alien
Holder on a New Note; provided, the certification described in clause (i)(c)
under "United States Alien Holders" above is received; and provided further that
the payor does not have actual knowledge that the Holder is a United States
person. The Company or a paying agent, however, may report (on Internal Revenue
Service Form 1042S) payments of interest on New Notes. See the discussion above
with respect to the rules under the Proposed Regulations.
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Payments of the proceeds from the sale by a United States Alien Holder of a
New Note made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payment. Payments of the
proceeds from the sale of a New Note to or through the United States office of a
broker is subject to information reporting and backup withholding unless the
Holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale for a period of 90 days from the date of this Prospectus,
or shorter period as will terminate when all Old Notes acquired by
broker-dealers for their own accounts as a result of market-making activities or
other trading activities have been exchanged for New Notes and resold by such
broker-dealers.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days from the date of this Prospectus, or such shorter
period as will terminate when all Old Notes acquired by broker-dealers for their
own accounts as a result of market-making activities or other trading activities
have been exchanged for New Notes and resold by such broker-dealers, the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that request such documents
in the Letter of Transmittal.
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VALIDITY OF NEW NOTES
The validity of the New Notes will be passed upon for the Company by
Sullivan & Cromwell, New York, New York. In rendering its opinion on the
validity of the Notes, Sullivan & Cromwell will express no opinion as to Federal
or state laws relating to fraudulent transfers. John E. Merow, a partner of
Sullivan & Cromwell, is a director of the Company and beneficially owns 11,000
shares of the Company's common stock.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995 and
1994, and the consolidated statements of income, stockholders' equity and cash
flows of the Company for each of the three years in the period ended December
31, 1995, incorporated by reference in this Prospectus, have been incorporated
herein in reliance on the report, which includes an explanatory paragraph with
respect to the Company's change in its method of accounting for postretirement
benefits other than pensions, of Coopers & Lybrand L.L.P., independent certified
public accountants, given on the authority of that firm as experts in accounting
and auditing.
The consolidated financial statements of CasTech as of March 31, 1996 and
1995 and for each of the years in the three-year period ended March 31, 1996
that are included in the Company's Current Report on Form 8-K filed September
26, 1996 have been audited by Ernst & Young LLP, independent auditors, as stated
in their report included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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