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) May 20, 2005
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AMERICAN BILTRITE INC.
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(Exact name of registrant as specified in charter)
Delaware 1-4773 04-1701350
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(State or other jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
57 River Street, Wellesley Hills, Massachusetts 02481-2097
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(Address of principal executive offices, including zip code)
(781) 237-6655
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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:
|_| 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))
Item 1.01 Entry into a Material Definitive Agreement.
On May 20, 2005, American Biltrite Inc. (the "Company") entered into amendments
and restatements of its credit agreement (the "Credit Agreement") with Fleet
National Bank, a Bank of America company ("Fleet"), and Bank of America,
National Association, acting through its Canada branch (the Canadian Lender"),
and the note purchase agreement and facility guarantee (the "Note Purchase
Agreement") with The Prudential Insurance Company of America ("Prudential").
Amendments to the Credit Agreement.
The amendments to the Credit Agreement, among other things, extended the
maturity date of the credit facility under the Credit Agreement to September 30,
2006, added a new financial covenant that the Company is required to satisfy
beginning as of June 30, 2006 and added a new $12 million borrowing sublimit for
the Company's Canadian subsidiary American Biltrite (Canada) Ltd. ("ABI
Canada"). The Canadian Lender is a lender under the Canadian sublimit. Pursuant
to the amendments to the Credit Agreement, ABI Canada granted the Canadian
Lender a security interest in all of ABI Canada's personal property.
The new financial covenant requires the Company's consolidated adjusted EBITDA
for the four consecutive fiscal quarters ending June 30, 2006 to exceed 150% of
the Company's consolidated pro forma fixed charges for the 12-month period
beginning immediately after June 30, 2006, as determined under the Credit
Agreement.
The amount of borrowings available from time to time under the Credit Agreement
for ABI Canada in connection with the new sublimit is limited to the lesser of
(a) $12 million, (b) ABI Canada's borrowing base amount, which is based upon a
percentage of ABI Canada's accounts receivable, inventory and fixed assets, and
(c) $20 million less the amount of borrowings outstanding under the facility on
behalf the Company and K&M Associates L.P., a subsidiary of the Company and an
eligible borrower under the facility. The maximum amount of borrowings available
under the facility is $20 million. The Canadian sublimit facility also allows
ABI Canada to issue letters of credit in an aggregate amount at any time
outstanding of up to $1 million, subject to the maximum borrowing availability
discussed above. ABI Canada may borrow amounts under the Credit Agreement in
United States or Canadian dollar denominations; however, solely for purposes of
determining amounts outstanding and borrowing availability under the Credit
Agreement, all Canadian dollar denominated amounts will be converted into United
States dollars in the manner provided in the Credit Agreement.
Interest is payable on revolving loans under the Canadian sublimit facility
periodically at rates which vary depending on the applicable interest rate in
effect and are generally determined based upon: (a) if a LIBOR based rate is in
effect, at a rate between a LIBOR based rate plus 1.0% to a LIBOR based rate
plus 2.5%, depending on the Company's leverage ratio, as determined under the
Credit Agreement, and (b) if a LIBOR based rate is not in effect, for
outstanding revolving loans denominated in Canadian dollars, the higher of 0.50%
plus the applicable 30-day average bankers' acceptance rate as quoted on Reuters
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CDOR page and the Canadian Lender's applicable prime rate for loans made in
Canadian dollars to Canadian customers, and for outstanding revolving loans
denominated in United States dollars, the higher of 0.50% plus the federal funds
rate as calculated under the Credit Agreement and the applicable rate announced
by the Canadian Lender as its reference rate for commercial loans denominated in
United States dollars made to a person in Canada. Under the Credit Agreement,
ABI Canada may generally determine whether interest on revolving loans will be
calculated based on a LIBOR based rate.
Events of default under the Credit Agreement resulting from certain bankruptcy,
insolvency and receivership matters automatically terminates the lenders'
obligation to make borrowings available under the Credit Agreement and causes
all amounts outstanding under the Credit Agreement to become immediately due and
payable. With respect to all other events of default under the Credit Agreement,
the lenders under the Credit Agreement may terminate their obligation to make
borrowings available under the Credit Agreement and cause all amounts
outstanding under the Credit Agreement to become immediately due and payable.
In connection with the amendments to the Credit Agreement, except for certain
amounts pertaining to letters of credit and other operating-related
disbursements, ABI Canada repaid all amounts outstanding under its separate
credit agreement with another lender from the proceeds of borrowings of
approximately $11 million Canadian made by it under the Canadian sublimit of the
Credit Agreement on May 20, 2005 and from funds from the Company. Pursuant to
the terms of the amendments to the Credit Agreement and the Note Agreement, ABI
Canada must repay all remaining amounts outstanding under that prior facility by
no later than August 1, 2005. In connection with those remaining obligations,
the Company deposited approximately $1.35 million United States and ABI Canada
deposited approximately $575,000 Canadian with ABI Canada's prior lender as
collateral for the remaining amounts owed by ABI Canada under that other
facility. The lender under that facility will apply those deposited amounts to
the remaining amounts owed to it by ABI Canada as such remaining amounts become
due and as that lender and ABI Canada otherwise agree.
Amendments to the Note Purchase Agreement.
The amendments to the Note Purchase Agreement generally removed the application
of the financial covenants under the Note Purchase Agreement for any measurement
period prior to March 31, 2005, which effectively cured the Company's
preexisting failure to satisfy the adjusted EBITDA to interest expense covenant
(as determined under the Note Purchase Agreement) as of December 31, 2004. In
addition, the amendments modified the financial covenants for 2005 under the
Note Purchase Agreement to make them comparable to the applicable financial
covenants under the Credit Agreement for 2005. The amendments to the Note
Purchase Agreement also provide that an event of default under the Note Purchase
Agreement will occur if the Company fails to enter a definitive commitment to
replace or refinance the amount of the credit facility under the Credit
Agreement ($20 million) by June 30, 2006, consummate that replacement or
refinancing by September 30, 2006 and cause the lenders under that replacement
or refinancing to agree to enter into an intercreditor agreement with Prudential
governing those lenders' and Prudential's rights with respect to the collateral
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that is subject to the security interests granted by the Company and certain of
its domestic subsidiaries to its lenders on terms substantially similar to the
existing intercreditor agreement between Fleet and Prudential.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of the Registrant.
The description of the new Canadian sublimit facility under the Credit Agreement
contained in Item 1.01 of this Report is incorporated by reference herein.
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: May 26, 2005 AMERICAN BILTRITE INC.
By: /s/ Howard N. Feist III
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Name: Howard N. Feist III
Title: Chief Financial Officer
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