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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
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) July 13, 2005
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REUNION INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 01-15739 06-1439715
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(State of Incorporation) (Commission File No.) (IRS Employer ID No.)
11 STANWIX STREET, SUITE 1400
PITTSBURGH, PENNSYLVANIA 15222
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(Address of principal executive offices, including zip code)
(412) 281-2111
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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 (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 - Entry into Material Definitive Agreements
On July 8, 2005, Reunion Industries, Inc. (?Reunion?) entered into a
Settlement Agreement (the ?Settlement Agreement?) with Shaw NapTech, Inc.
(?NapTech?). Pursuant to the Settlement Agreement, on July 12, 2005, Reunion
paid NapTech $1.65 million (the ?Reunion Settlement Payment?) in settlement of
Reunion?s indebtedness to NapTech in the approximate amount of $5.1 million
under a promissory note and related judgment.
In connection with the NapTech settlement, Wachovia Bank, National
Association (?Wachovia?) made a $3.1 million supplemental loan to Reunion
under its existing $25 million loan facility, thereby increasing the total
amount of the supplemental loan portion of the facility to $6.1 million.
Reunion used $1.65 million of this additional supplemental loan to make the
Reunion Settlement Payment to NapTech and will use the balance of the loan
proceeds for inventory purchases and to support letters of credit that may be
issued for it under the Wachovia facility. Wachovia required, as a condition
to making the additional supplemental loan, that LC Capital Master Fund, Ltd.
(?LCC?) purchase an additional $3.1 million junior participation interest in
the Wachovia loan facility, and LCC did so, thereby increasing its junior
participation interest in the facility to $6.1 million. LCC in turn
simultaneously sold a 50% interest in its junior participation interest to
WebFinancial Corporation (?Web?).
To induce LCC to purchase the additional junior participation interest
in the Wachovia loan facility and to induce Web to purchase a 50% interest in
such junior participation interest, Reunion issued warrants to LCC and Web, as
described in Item 3.02, below.
Reunion?s indebtedness under the Wachovia loan facility, including the
supplemental loans, is secured by liens on substantially all of Reunion?s
assets.
As a result of the NapTech settlement, Reunion will recognize a gain on
debt extinguishment of approximately $3.4 million.
Item 3.02 ? Unregistered Sales of Equity Securities
On July 12, 2005, Reunion issued two warrants (the ?Warrants?), one to
LCC and one to Web, to purchase, in each case, 387,500 shares of Reunion?s
common stock at a price of $0.01 per share. The Warrants are exercisable at
anytime until July 12, 2010.
Reunion issued the Warrants in consideration of (1) LCC?s purchase of an
additional $3.1 million junior participation interest in the Wachovia loan
facility and (2) Web?s purchase from LCC of a 50% participation interest in
such junior participation interest, as described above in Item 1.01. Reunion
did not receive any cash consideration for the issuance of the Warrants.
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The issuance of the Warrants is exempt from registration under Section
4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated by
the Securities and Exchange Commission under such Act, based on the following:
(1) This transaction was a private placement, with the Warrants being issued
to only two entities, LCC and Web. (2) Each of LCC and Web has represented to
Reunion that it is an ?accredited investor? within the meaning of Rule 501(a)
of Regulation D. (3) Both LCC and Web at all relevant times had access to the
same kind of information about Reunion that would be included in a
registration statement covering the Warrants and the shares issued upon
exercise thereof. (4) Each of LCC and Web has represented to Reunion that it
is or will be acquiring the Warrants and the shares issuable upon exercise
thereof for its own account and not with a view to the distribution thereof.
(5) Neither the Warrants nor the shares issuable upon exercise thereof may be
sold or transferred by LCC or Web in the absence of an effective registration
statement under the Act covering such securities or an applicable exemption
from such registration.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned, hereunto duly authorized.
Date: July 13, 2005 REUNION INDUSTRIES, INC.
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By: /s/ John M. Froehlich
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John M. Froehlich
Executive Vice President
of Finance and Chief
Financial Officer
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