eps3592.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): October 22,
2009
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AMERICAN
BILTRITE INC.
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(Exact
Name of Registrant as Specified in
Charter)
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Delaware
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1-4773
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04-1701350
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(State
or other jurisdiction of Incorporation)
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(Commission
File No.)
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(IRS
Employer Identification No.)
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57 River Street, Wellesley Hills, Massachusetts
02481-2097 |
(Address
of principal executive offices, including zip
code) |
(781)
237-6655
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(Registrant's
telephone number, including area
code)
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Not
Applicable
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(Former
name or former address, if changed since last
report)
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Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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□
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
8.01. Other Events.
On
October 22, 2009, Congoleum Corporation ("Congoleum"), a majority-owned
subsidiary of American Biltrite Inc. ("American Biltrite"), together with the
official asbestos claimants' committee and the official committee of
bondholders, jointly filed a revised plan of reorganization (the "Second Amended
Joint Plan") and a related proposed disclosure statement (the "Disclosure
Statement") in Congoleum's chapter 11 case with the United States District Court
for the District of New Jersey (the "District Court"). The District
Court has scheduled a hearing for November 19, 2009, to consider the adequacy of
the Disclosure Statement for the Second Amended Joint Plan.
If
the District Court confirms the Second Amended Joint Plan and that plan becomes
effective, the Second Amended Joint Plan would permit Congoleum to exit its
chapter 11 case free of liability for existing and future asbestos claims
as provided in the Second Amended Joint Plan. Under the proposed
terms of the Second Amended Joint Plan, it is contemplated that a trust would be
created on or after the date the District Court confirms the Second Amended
Joint Plan and by the effective date of the Second Amended Joint Plan (the "Plan
Trust"), which trust would assume the liability for Congoleum's current and
future asbestos claims. The Plan Trust would receive the proceeds of
various settlements Congoleum has reached with a number of insurance carriers
and would be assigned Congoleum's rights under its remaining insurance policies
covering asbestos product liability. That trust also would receive
50.1% of the newly issued common stock of reorganized Congoleum on the effective
date of the Second Amended Joint Plan.
Under
the proposed terms of the Second Amended Joint Plan, existing shares of Class A
and Class B common stock of Congoleum would be cancelled and holders of those
shares, including American Biltrite, would not receive anything on account of
their cancelled shares.
The
Second Amended Joint Plan would govern an intercompany settlement and ongoing
intercompany arrangements among American Biltrite and its subsidiaries and
reorganized Congoleum. The Amended Joint Plan provides that the final
terms of the intercompany arrangements among American Biltrite and its
subsidiaries and reorganized Congoleum would be memorialized in a new agreement
to be entered into by reorganized Congoleum and American Biltrite in form and
substance mutually agreeable to the official committee of bondholders, the
official asbestos claimants' committee and American Biltrite. The
existing intercompany arrangements providing for management services by American
Biltrite to reorganized Congoleum and other business relationships expire on the
earlier of (a) the effective date of a plan of reorganization for Congoleum,
following a final order of confirmation, or (b) March 31, 2010, unless
renewed. Although there can be no assurances, American Biltrite
currently expects that the terms of any new intercompany agreement would be
substantially similar to the form of that agreement that was included in
previous proposed plans of reorganization for Congoleum and would provide for
the provision of management services by American Biltrite to reorganized
Congoleum and other business relationships substantially consistent with their
traditional relationships.
The
prior form of new intercompany agreement contemplated the agreement becoming
effective on the date the plan became effective and having a term of two
years. In addition, consistent with the terms of previous plans of
reorganization proposed for Congoleum, under the terms of the Second Amended
Joint Plan, American Biltrite's rights and claims to indemnification from
Congoleum under the existing joint venture agreement between American Biltrite
and Congoleum that relate to American Biltrite's contribution to Congoleum in
1993 of American Biltrite's tile division, and the joint venture agreement
itself, would be deemed rejected and disallowed upon the effective date of the
Second Amended Joint Plan, and therefore eliminated. The Second
Amended Joint Plan's rejection and disallowance of the joint venture agreement
and American Biltrite's claims thereunder would include any unfunded
indemnification claims American Biltrite may have had prepetition and during the
pendency of Congoleum's chapter 11 case as well as any such claims American
Biltrite might otherwise be entitled to assert after the Second Amended Joint
Plan becomes effective.
Holders
of Congoleum's $100 million in 8.625% Senior Notes due in August 2008 would
receive on a pro rata basis $33 million in new 9% senior secured notes (the "New
Senior Notes") maturing December 31, 2017. The Second Amended Joint
Plan provides that the indenture to govern the New Senior Notes will provide for
possible additional issuances of New Senior Notes by reorganized Congoleum (the
"Additional Notes") with the amount of Additional Notes to be issued being
determined as of the end of reorganized Congoleum's fiscal year ending December
31, 2011, and on an annual basis at the end of each of the succeeding five
years, and based on prescribed financial measurements relating to reorganized
Congoleum's financial results for those years. In no event would the
cumulative amount of Additional Notes issued exceed $37 million. The
New Senior Notes would be subordinated to the liens or security interests
granted by reorganized Congoleum under the working capital facility contemplated
by the Second Amended Joint Plan to be provided to Congoleum on the effective
date of the Second Amended Joint Plan. In addition, holders of the
$100 million in 8.625% Senior Notes due in August 2008 would receive 49.9% of
the common stock of reorganized Congoleum. Congoleum's obligations
for the $100 million in 8.625% Senior Notes due in August 2008, including
accrued pre-petition interest (which amounted to $3.6 million), would be
satisfied by the New Senior Notes and 49.9% of the common stock of reorganized
Congoleum to be issued if the Second Amended Joint Plan becomes
effective.
Copies
of the Second Amended Joint Plan and the Disclosure Statement are attached
hereto as Exhibits 99.1 and 99.2, respectively, and the Second Amended Joint
Plan and the Disclosure Statement are incorporated by reference
herein.
On
December 31, 2003, Congoleum filed a voluntary petition with the United States
Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court") (Case
No. 03-51524) seeking relief under Chapter 11 of the United States Bankruptcy
Code as a means to resolve claims asserted against it related to the use of
asbestos in its products decades ago. On August 17, 2009, the
District Court withdrew Congoleum's chapter 11 case from the Bankruptcy Court
and assumed authority over the proceedings.
Warning
About Forward-Looking Statements and Certain Risks
Some
of the information presented in this Current Report on Form 8-K constitutes
"forward-looking statements," within the meaning of the Private Securities
Litigation Reform Act of 1995, that involve risks, uncertainties and
assumptions. These forward-looking statements are based on American
Biltrite's expectations, and American Biltrite's understanding of Congoleum's
expectations, as of the date of this report, of future events, and American
Biltrite undertakes no obligation to update any of these forward-looking
statements except as required by the federal securities laws. Although American
Biltrite believes that these expectations are based on reasonable assumptions,
within the bounds of its knowledge of its business and operations, there can be
no assurance that actual results will not differ materially from its
expectations. Any or all of these statements may turn out to be
incorrect. Readers are cautioned not to place undue reliance on any
forward-looking statements. Actual results could differ significantly
as a result of various factors. Any forward-looking statements made
in this Current Report on Form 8-K speak only as of the date of such
statement. It is not possible to predict or identify all factors that
could potentially cause actual results to differ materially from expected and
historical results. This report may imply that the Second Amended
Joint Plan or other plan of reorganization for Congoleum will be
confirmed by the District Court and that the plan will become
effective. However, there can be no assurance that the Second Amended
Joint or any other plan of reorganization that may be submitted to the District
Court will receive the acceptances necessary for confirmation, that the
conditions to any such plan will be satisfied or waived, that such plan will
timely receive necessary court approvals, that such plan will be confirmed, that
such plan, if confirmed, will become effective, or that Congoleum will have
sufficient funds to pay for completion of legal proceedings with respect to its
chapter 11 case, including continued litigation over any plan of reorganization
and the state court insurance coverage litigation that Congoleum has been
involved in with certain of its insurers.
This
report states that American Biltrite currently expects that the terms of any new
intercompany agreement between it and reorganized Congoleum governing the
ongoing intercompany arrangements among American Biltrite and its subsidiaries
and reorganized Congoleum would be substantially similar to the form of
that agreement that was included in previous proposed plans of reorganization
for Congoleum and would provide for the provision of management services by
American Biltrite to reorganized Congoleum and other business relationships
substantially consistent with their traditional
relationships. However, there can be no assurance that American
Biltrite, Congoleum and other applicable Congoleum constituencies will be able
to reach agreement on the terms of any management services proposed to be
provided by American Biltrite to reorganized Congoleum or any other proposed
business relationships among American Biltrite and its affiliates and
reorganized Congoleum. Any plan of reorganization for Congoleum that
may be confirmed by the District Court and become effective may have terms that
differ significantly from the terms included in or contemplated by the Second
Amended Joint Plan or otherwise described in this report, including with respect
to any management services that may be provided by American Biltrite to
reorganized Congoleum and American Biltrite's claims and interests and other
business relationships with reorganized Congoleum.
In
addition, in view of American Biltrite's relationships with Congoleum, American
Biltrite could be affected by the litigation regarding Congoleum's chapter 11
case and insurance coverage and Congoleum's negotiations regarding its pursuit
of a plan or reorganization, and there can be no assurance as to what that
impact might be. In any event, the failure of Congoleum to obtain
confirmation and consummation of a chapter 11 plan of reorganization would have
a material adverse effect on Congoleum's business, results of operations or
financial condition and could have a material adverse effect on American
Biltrite's business, results of operations or financial condition.
Some
additional factors that may cause actual results to differ from Congoleum's and
American Biltrite's objectives for resolving asbestos liability include: (i) the
future cost and timing of estimated asbestos liabilities and payments; (ii) the
availability of insurance coverage and reimbursement from insurance companies
that underwrote the applicable insurance policies for asbestos-related claims,
including insurance coverage and reimbursement for asbestos claimants under any
plan of reorganization for Congoleum, which certain insurers have objected to in
the applicable courts adjudicating Congoleum's chapter 11 case and are
litigating in New Jersey State Court; (iii) the costs relating to the execution
and implementation of any plan of reorganization for Congoleum; (iv) timely
reaching agreement with other creditors, or classes of creditors, that exist or
may emerge; (v) satisfaction of the conditions and obligations under American
Biltrite's and Congoleum's outstanding debt instruments, and amendment or waiver
of those outstanding debt instruments, as necessary, to permit Congoleum and
American Biltrite to satisfy their obligations under any plan of reorganization
for Congoleum; (vi) the response from time-to-time of the lenders, customers,
suppliers, holders of Congoleum's senior notes and other creditors and
constituencies to the chapter 11 process and related developments arising from
the strategy to resolve asbestos liability; (vii) Congoleum's ability to
maintain debtor-in-possession financing sufficient to provide it with funding
that may be needed during the pendency of its chapter 11 case and to obtain exit
financing sufficient to provide it with funding that may be needed for its
operations after emerging from the bankruptcy process, in each case, on
reasonable terms; (viii) timely obtaining sufficient creditor and court approval
(including the results of any relevant appeals) of any reorganization plan for
Congoleum, and the court overruling any objections to that plan that may be
filed; (ix) costs of, developments in, and the outcome of insurance coverage
litigation pending in New Jersey State Court involving Congoleum and certain
insurers; (x) the impact any adopted federal legislation addressing asbestos
claims may have on American Biltrite's and Congoleum's businesses, results of
operations or financial conditions; (xi) compliance with the United States
Bankruptcy Code, including section 524(g); and (xii) the possible adoption of
another party's plan of reorganization, which may prove to be
unfeasible.
Other
factors that could cause or contribute to actual results differing from its
expectations include those factors discussed in American Biltrite's other
filings with the Securities and Exchange Commission, including its Annual Report
on Form 10-K for the fiscal year ended December 31, 2008, its Quarterly Report
on Form 10-Q for the quarter ended June 30, 2009, and its subsequent
filings.
Item
9.01. Financial Statements and
Exhibits.
(d)
Exhibits.
Exhibit
No.
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Description
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99.1
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Second
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy
Code of the Debtors, the Official Asbestos Claimants' Committee and the
Official Committee of Bondholders for Congoleum Corporation, et al., dated
as of October 22, 2009.
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99.2
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Proposed
Disclosure Statement with respect to the Second Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code of the Debtors, the
Official Asbestos Claimants' Committee and the Official Committee of
Bondholders for Congoleum Corporation, et al., dated as of October 22,
2009.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: October
28, 2009
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AMERICAN
BILTRITE INC.
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By:
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/s/ Howard N. Feist
III
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Name: Howard
N. Feist III
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Title: Chief
Financial Officer
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EXHIBIT
INDEX
Exhibit
No.
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Description
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99.1
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Second
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy
Code of the Debtors, the Official Asbestos Claimants' Committee and the
Official Committee of Bondholders for Congoleum Corporation, et al., dated
as of October 22, 2009.
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99.2
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Proposed
Disclosure Statement with respect to the Second Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code of the Debtors, the
Official Asbestos Claimants' Committee and the Official Committee of
Bondholders for Congoleum Corporation, et al., dated as of October 22,
2009.
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