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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): April 15, 1999
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GULF STATES STEEL, INC. OF ALABAMA
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(Exact name of registrant as specified in its charter)
Alabama 33-92496 63-1141013
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
174 South 26th Street, Gadsden, Alabama 35904-1935
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (256) 543-6100
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Item 5. Other Events.
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On April 16, 1999, the Registrant publicly disseminated a press release
announcing that it was unable to meet the April 15, 1999 interest payment on its
13 1/2 Series B First Mortgage Notes Due 2003 (the "Notes").
As discussed in the Registrant's Quarterly Report on Form 10-Q for the
period ended January 31, 1999, the Registrant had incurred significant losses,
expected such losses to continue in fiscal 1999, and expressed reservations
(absent, inter alia, improvements in sales volume and pricing and reductions in
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costs), concerning the sufficiency of its liquidity and capital resources to
enable it to meet its projected fiscal 1999 requirements, including the April
15, 1999 interest payment on the Notes. Consistent with the foregoing, the
Registrant has notified the indenture trustee for the Notes that the Registrant
has not made the semi-annual interest payment on the Notes. Pursuant to the
Indenture under which the Notes were issued, the non-payment does not become an
event of default unless it continues through May 15, 1999, at which time the
Notes would be subject to acceleration. Although the Registrant has a 30-day
grace period to pay the required interest payment in order to avoid being in
default, the Registrant does not foresee a sufficient improvement in market
conditions or its cash position that would enable it to make the interest
payment on the Notes before May 15, 1999.
The Registrant is currently in confidential discussions with bondholder
representatives covering the full range of financial restructuring alternatives,
including restructuring of the bonds and obtaining consent to additional
borrowings, and has employed BT Alex. Brown to assist in that endeavor.
The information contained in the press release is incorporated herein by
reference and filed as Exhibit 99.1 hereto.
Item 7. Financial Statements and Exhibits.
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(c) Exhibit.
99.1 The Registrant's Press Release dated April 16, 1999 (filed herewith).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GULF STATES STEEL, INC. OF ALABAMA
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(Registrant)
Date: April 19, 1999 /s/ James Grimm
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James Grimm, Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Sequential
Number Description Page Number
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99.1 The Registrant's Press Release 5
dated April 16, 1999
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[GULF STATES STEEL LETTERHEAD APPEARS HERE]
PRESS RELEASE
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Date: April 16, 1999
Contact: Robert Schaal, Gulf States Steel, Inc. (256/543-6105)
Gulf States Steel Misses Bond Interest Payment
Robert Schaal, Chairman and CEO of Gulf States Steel, announced that the Company
had not made its $12.8 million, semi-annual bond interest payment, which was due
yesterday.
While monthly shipments are improving and backlogs are growing, allowing the
Company to bring back some of the previously laid-off workers, sales prices
continue to be depressed. "Keeping our mill operating to continue to serve our
customers with superior quality and service is our first priority. We have been
getting good support from our vendors and customers, but with these depressed
prices, there is simply not enough cash generated from operations to make the
interest payment and to meet our operating obligations, including purchasing raw
materials and other necessities to support improving order rates," Mr. Schaal
said. Although there is a 30-day period during which the Company can make the
interest payment in order to avoid being in default, "I do not foresee a
sufficient improvement in market conditions or our cash position to change the
situation," Mr. Schaal said.
The Company is currently in confidential discussions with bondholder
representatives covering the full range of financial restructuring alternatives,
including restructuring of the bonds and obtaining consent for additional
borrowings. The Company has employed BT Alex. Brown, investment bankers, to
assist in that endeavor.
