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| CNSTQ.PK > SEC Filings for CNSTQ.PK > Form 8-K on 6-Jan-2009 | All Recent SEC Filings |
6-Jan-2009
Entry into a Material Definitive Agreement, Termination of a Material D
On December 31, 2008, Constar International Inc. ("Constar" or the "Company") entered into a Senior Secured Super-Priority Debtor in Possession and Exit Credit Agreement (the "DIP Credit Agreement") among the Company, certain of its subsidiaries (the "Subsidiaries"), the lenders and issuers party thereto, Citicorp USA Inc. as Administrative Agent, and Wells Fargo Foothill, LLC as Sole Syndication Agent and Sole Documentation Agent. The DIP Credit Agreement provides for a revolving credit facility of up to $75 million. The proceeds of the loans and other financial accommodations incurred under the DIP Credit Agreement will be used to, among other things, provide the Company with working capital. The DIP Credit Agreement will terminate upon the earlier of September 30, 2009 and the effective date of the Company's Plan of Reorganization. The DIP Credit Agreement is convertible into a $75 million exit facility (the "Exit Facility") upon the Company's emergence from Chapter 11, subject to the satisfaction of various conditions precedent. The Exit Facility's scheduled expiration date is December 31, 2011. $15 million of the DIP Credit Agreement and the Exit Facility is available for the issuance of letters of credit. The DIP Credit Agreement and the Exit Facility include a $15 million swing loan subfacility. In order to access the final $5 million of the DIP Credit Agreement and Exit Facility, the Company would have to satisfy certain consolidated fixed charge coverage ratios in the indentures governing the Company's Senior Subordinated Notes and the Company's Senior Secured Floating Rate Notes. The Company cannot currently satisfy these ratios.
Pursuant to the terms of the DIP Credit Agreement and the Bankruptcy Court order providing interim approval for that agreement, which was entered by the Bankruptcy Court on December 31, 2008, any payments received by the Company after the Petition Date that constitute collateral under its previous Credit Agreement, dated as of February 11, 2005 (as amended, the "Prior Credit Agreement"), and related documents will be used to pay down the outstanding balance under the Prior Credit Agreement (such balance, excluding undrawn letters of credit, the "Outstanding Balance"). A reserve has been established against availability under the DIP Credit Agreement for the Outstanding Balance. As the Outstanding Balance is reduced so too is the reserve under the DIP Credit Agreement on a dollar-for-dollar basis and, upon the repayment in full of the Outstanding Balance, the Company will have full availability under the DIP Credit Agreement subject to the limitation regarding the final $5 million described above. The DIP Credit Agreement is subject to final approval by the Bankruptcy Court at a hearing scheduled for January 20, 2009.
Borrowings under the DIP Credit Agreement and Exit Facility are limited to a borrowing base comprised of the sum of (i) up to 85% of the Company's and its domestic subsidiaries' Eligible Trade Receivables, (ii) up to 80% of Eligible Trade Receivables of Constar International U.K. Limited, (iii) the lesser of the sum of, for each category of Eligible Inventory, (A) up to 85% of the Orderly Liquidation Percentage for such category of Eligible Inventory of the Company and its domestic subsidiaries and (B) up to 75% of the value of such category of Eligible Inventory of the Company and its domestic subsidiaries (in each case . . .
On December 31, 2008, the Company and the Subsidiaries entered into the DIP Credit Agreement, as described in Item 1.01 above. Upon the reduction of the Outstanding Balance under the Prior Credit Agreement to zero, the ability to borrow under the Prior Credit Agreement will be terminated.
On December 30, 2008 (the "Petition Date"), Constar and certain of its subsidiaries (collectively, the "Debtors") filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). The chapter 11 cases are being jointly administered under the caption In re Constar International Inc., et al., Chapter 11 Case No. 08-13432 (PJW) (the "Chapter 11 Cases"). The Debtors will continue to operate their businesses and manage their properties as debtors in possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
On December 30, 2008, Constar issued a press release announcing the filing of the Chapter 11 Cases (the "Press Release"). A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 1.03.
On December 31, 2008, the Company and the Subsidiaries entered into the DIP Credit Agreement. The information provided in Item 1.01 above is incorporated by reference into this Item 2.03.
The filing of the Chapter 11 Cases described in Item 1.03 above constituted an event of default or otherwise triggered repayment obligations under a number of instruments and agreements relating to direct and indirect financial obligations of the Debtors (the "Debt Documents"). As a result of the events of default, all obligations under the Debt Documents became automatically and immediately due and payable. The Debtors believe that any efforts to enforce the payment obligations under the Debt Documents are stayed as a result of the filing of the Chapter 11 Cases in the Bankruptcy Court. The Debt Documents, and the approximate principal amount of debt currently outstanding thereunder, include:
1. $75 million Credit Agreement, dated as of February 11, 2005, among Constar International Inc., as Borrower, the Lenders and Issuers party thereto, and Citicorp USA Inc., as Administrative Agent. The amount outstanding under this Credit Agreement as of December 29, 2008 was approximately $20 million.
2. Indenture, dated as of February 11, 2005, between Constar International Inc., the Note Guarantors party thereto and The Bank of New York as Trustee, governing $220 million of Senior Secured Floating Rate Notes.
On December 30, 2008, the Company was given notice by the NASDAQ Stock Market that in connection with the Company's filing of the Chapter 11 Cases, and in accordance with Marketplace Rules 4300, 4450(f) and IM-4300, the Nasdaq staff has determined that the Company's common stock will be delisted from The Nasdaq Stock Market. Trading will be suspended at the opening of business on January 8, 2009. The Company does not intend to appeal the Nasdaq staff's determination and therefore expects that the Company's common stock will be delisted after completion by Nasdaq of application to the Securities and Exchange Commission. The Company issued a press release regarding this matter, which press release is attached hereto as Exhibit 99.2.
Court filings and claims information regarding the Chapter 11 Cases will be available at http://chapter11.epiqsystems.com/constar. Constar expects to begin submitting monthly operating reports to the Bankruptcy Court in March 2008, and also plans to post these monthly reports and other information to the "Company-Restructuring" portion of the Company's website at www.constar.net. Constar expects to continue to file reports with the United States Securities and Exchange Commission, which will also be available in the Investor Relations section of the Company's website at www.constar.net.
(c) Exhibits.
Exhibit 10.1 Senior Secured Super-Priority Debtor in Possession and Exit Credit Agreement, dated as of December 31, 2008, among Constar International Inc., as Borrower, certain of its Subsidiaries, the Lenders and Issuers party thereto, Citicorp USA, Inc. as Administrative Agent, and Wells Fargo Foothill, LLC as Sole Syndication Agent and Sole Documentation Agent.
Exhibit 99.1 Press Release dated December 30, 2008
Exhibit 99.2 Press Release dated January 6, 2009
Forward-looking statements
This Current Report on Form 8-K (including the exhibits) may contain
forward-looking statements within the meaning of the federal securities laws,
including statements regarding the intent, belief or current expectations of the
Company and its management which are made with words such as "will," "expect,"
"believe," and similar words. These forward-looking statements involve a number
of risks, uncertainties and other factors, which may cause the actual results to
be materially different from those expressed or implied in the forward-looking
statements. Important factors that could cause the actual results of operations
or financial condition of the company to differ from expectations include:
(i) the Company's ability to continue as a going concern; (ii) the ability of
the Company to operate pursuant to the terms of any debtor-in-
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