EXHIBIT 2.2
================================================================================
THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS
NOT BEEN APPROVED BY THE BANKRUPTCY COURT. THIS IS NOT A
SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN.
ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL A
DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT.
================================================================================
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------x
:
IN RE
:
CHAPTER 11
:
WHX CORPORATION,
:
CASE NO. 05-11444 (ALG)
:
DEBTOR.
:
--------------------------------------x
-------------------------------------------------------------
DISCLOSURE STATEMENT
WITH RESPECT TO CHAPTER 11 PLAN OF REORGANIZATION
OF WHX CORPORATION
-------------------------------------------------------------
JONES DAY
222 East 41st Street
New York, New York 10017
(212) 326-3939
Richard H. Engman, Esq. (RE - 7861)
Veerle Roovers, Esq. (VR - 5777)
Counsel to the Debtor and
Debtor in Possession
Dated: March 7, 2005
================================================================================
THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS
NOT BEEN APPROVED BY THE BANKRUPTCY COURT. THIS IS NOT A
SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR
REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS
BEEN APPROVED BY THE BANKRUPTCY COURT.
================================================================================
DISCLOSURE STATEMENT, DATED MARCH 7, 2005
ALL CREDITORS AND EQUITY INTEREST HOLDERS ARE ENCOURAGED TO READ
AND
CAREFULLY CONSIDER THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR
ENTIRETY
BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. THE SUMMARIES OF THE
PLAN AND THE
OTHER STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED BY
REFERENCE TO
THE PLAN AND THE EXHIBITS ANNEXED TO THE PLAN AND THIS DISCLOSURE
STATEMENT.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH
SECTION 1125
OF THE BANKRUPTCY CODE AND RULE 3016 OF THE BANKRUPTCY RULES AND
NOT NECESSARILY
IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES OR OTHER APPLICABLE
LAWS. THIS
DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY
THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") OR BY ANY REGULATORY AUTHORITY
OF ANY STATE,
NOR HAS THE SEC OR ANY SUCH AUTHORITY PASSED UPON THE ACCURACY OR
ADEQUACY OF
THE STATEMENTS CONTAINED HEREIN. ANY ENTITY TRADING IN OR OTHERWISE
PURCHASING,
SELLING, OR TRANSFERRING SECURITIES OF THE DEBTOR SHOULD EVALUATE
THIS
DISCLOSURE STATEMENT IN LIGHT OF THE PURPOSES FOR WHICH THEY WERE
PREPARED.
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED
HEREIN
FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN AND MAY NOT BE
RELIED UPON
FOR ANY OTHER PURPOSE. NO PERSON IS AUTHORIZED BY THE DEBTOR IN
CONNECTION WITH
THE PLAN OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN TO GIVE ANY
INFORMATION
OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
DISCLOSURE
STATEMENT AND THE EXHIBITS AND SCHEDULES ATTACHED HERETO OR
INCORPORATED BY
REFERENCE OR REFERRED TO HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR
REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE DEBTOR.
ALTHOUGH THE DEBTOR WILL MAKE AVAILABLE TO ALL PARTIES ENTITLED TO
VOTE ON THE
PLAN SUCH ADDITIONAL INFORMATION AS MAY BE REQUIRED BY APPLICABLE
LAW PRIOR TO
THE VOTING DEADLINE, THE DELIVERY OF THIS DISCLOSURE STATEMENT WILL
NOT UNDER
ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
EXCEPT AS OTHERWISE INDICATED, THE INFORMATION IN THIS DISCLOSURE
STATEMENT
REFLECTS THE BUSINESS AND FINANCIAL CONDITION OF THE DEBTOR AS OF
MARCH 7, 2005
AND HAS NOT BEEN UPDATED TO REFLECT SUBSEQUENT EVENTS.
THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY PROCEEDING
OTHER
THAN THE DEBTOR'S CHAPTER 11 CASE, NOR SHALL IT BE CONSTRUED TO BE
CONCLUSIVE
ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS TO ANY PERSON
OR ENTITY
THAT MAY RESULT FROM CONSUMMATION OF THE PLAN OR THE TRANSACTIONS
CONTEMPLATED
BY THE PLAN. AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND
OTHER ACTIONS
OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT AND THE STATEMENTS
MADE HEREIN
SHALL NEITHER CONSTITUTE NOR BE CONSTRUED AS ANY ADMISSION,
STIPULATION, OR
WAIVER, BUT RATHER AS STATEMENT OR STATEMENTS MADE IN SETTLEMENT
NEGOTIATIONS.
TABLE OF CONTENTS
PAGE
INDEX OF DEFINED
TERMS........................................................vi
EXECUTIVE
SUMMARY..............................................................1
A. Summary of Anticipated Distributions Under the
Plan...................1
B. Summary of Post-Confirmation
Operations...............................4
I.
INTRODUCTION.............................................................5
A. Holders of Claims and Equity Interests Entitled to
Vote...............6
B. Voting
Procedures.....................................................7
C. Confirmation
Hearing..................................................9
II.
GENERAL INFORMATION REGARDING THE DEBTOR AND ITS REASONS FOR FILING
THE
CHAPTER 11
CASE.........................................................10
A. The Debtor's
Business................................................10
B. The Debtor's Outstanding
Securities..................................11
C. Prepetition Restructuring
Efforts....................................12
D. Legal
Proceedings....................................................13
III.
THE CHAPTER 11
CASE.....................................................14
A. Case Administration and Related
Activities...........................14
B. Other Restructuring
Matters..........................................15
IV.
OVERVIEW OF THE
PLAN....................................................15
A. Summary of Classes and Treatment of Claims and Equity
Interests......15
B. Provisions Governing Distributions Under the Plan and for
Resolving and Treating Contested
Claims..............................20
C. Effect of Confirmation and Effectiveness of the
Plan.................22
D. Retention of Jurisdiction by the Bankruptcy
Court....................25
V.
NEW
WHX.................................................................26
A. Continued Corporate
Existence........................................26
B. Projected Financial
Information......................................29
C. Value of New
WHX.....................................................30
D. Summary of Terms of New WHX Common Stock to be
Issued on the Effective
Date.........................................30
VI.
CONFIRMATION AND CONSUMMATION
PROCEDURES................................31
A. Conditions Precedent to Confirmation of the
Plan.....................31
B. Conditions Precedent to the Occurrence of the Effective
Date.........31
C. Requirements of Section 1129(a) of the Bankruptcy
Code...............32
D. Best Interests of
Creditors..........................................33
E.
Feasibility..........................................................34
F. Requirements of Section 1129(b) of the Bankruptcy
Code...............34
VII.
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE
PLAN...............36
A. Liquidation Under Chapter
7..........................................36
B. Alternative Plan of Reorganization or
Liquidation....................37
VIII. RISK
FACTORS............................................................37
A. Certain Bankruptcy
Considerations....................................38
B. Risks Relating to New WHX's Financial
Condition......................38
C. Risks Relating to the Company's
Businesses...........................39
iii
TABLE OF CONTENTS
(continued)
PAGE
D. Factors Affecting the Value of Securities to be Issued
Under the
Plan.......................................................40
IX.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF CONSUMMATION OF THE
PLAN.....41
A.
General..............................................................41
B. Federal Income Tax Consequences to the
Debtor........................41
C. Federal Income Tax Consequences to Holders of Claims and
Equity
Interests.....................................................44
D. Certain Other Tax Considerations for Holders of
Claims...............45
E. Importance of Obtaining Professional Tax
Assistance..................46
X.
APPLICABILITY OF CERTAIN FEDERAL AND STATE SECURITIES
LAWS..............47
A.
General..............................................................47
B. Bankruptcy Code Exemptions from Registration
Requirements............47
C. Certain Transactions by
Stockbrokers.................................49
XI.
RECOMMENDATION AND
CONCLUSION...........................................50
iv
TABLE OF EXHIBITS
Exhibit A
-
Form of Chapter 11 Plan of Reorganization of WHX Corporation
Exhibit B
-
Liquidation Analysis
Exhibit C
-
Subsidiaries of Debtor
Exhibit D
-
Business Plan, Assumptions and Financial Projections
Exhibit E
-
Form 10-K filed by the Debtor for the fiscal year ending
December 31, 2004
Exhibit F
-
Form 10-K filed by the Debtor for the fiscal year ending
December 31, 2003
Exhibit G
-
Approval and Procedures Order, entered by the Bankruptcy Court
on _______ __, 2005
v
INDEX OF DEFINED TERMS
acceptance.......................6
Innisfree........................1
accumulators....................47
Jefferies.......................14
Ad Hoc Committee................13
Liquidation Analysis............36
AICPA...........................29
NOLs............................15
All Holders Rule................13
Notice and Balloting Agent.......1
AMT.............................43
Offer...........................13
AMTI............................43
ownership change................42
Annual Limitation...............42
PBGC............................13
Approval and Procedures Order....5
Plan.............................1
Bankruptch Exception............43
Preferred Shares................12
Bankruptcy Code..................5
Projections.....................29
Business Continuity Requirement.42
SEC..............................2
COD.............................41
street name......................8
DCA.............................13
Superfund.......................14
Disbursing Agent................25
Termination Litigation..........14
Disclosure Statement.............1
Voting Deadline..................7
distributors....................47
WHX Group.......................10
EPA.............................14
WHX Pension Plan................13
Exchange Act....................13
WPC.............................12
Fee Claim.......................19
WPC Group.......................12
H&H.............................11
WPSC............................12
vi
EXECUTIVE SUMMARY
The
Debtor
in this
chapter
11
case,
WHX
Corporation,
filed a
petition for relief under chapter 11 of the Bankruptcy Code on
March 7, 2005. On
that date,
the Debtor also filed its chapter 11 plan of
reorganization,
dated
March 7, 2005 (the "PLAN"),
a copy of which is attached
hereto as Exhibit "A."
If
confirmed
by the
Bankruptcy
Court,
the Plan will
govern and control the
treatment
afforded all Claims against and Equity Interests in the Debtor.
This
disclosure statement, dated March 7, 2005 (the "DISCLOSURE
STATEMENT") describes
certain
aspects of the Plan,
the
Debtor's
business
operations,
significant
events occurring in its chapter 11 case, and related matters.
This executive summary highlights some of the information
discussed
in greater detail elsewhere in this Disclosure
Statement.
THIS SUMMARY MAY NOT
CONTAIN
ALL OF THE
INFORMATION
THAT
IS
IMPORTANT
TO
YOU.
FOR A
COMPLETE
UNDERSTANDING OF THE PLAN, YOU SHOULD READ THE DISCLOSURE
STATEMENT,
THE PLAN,
AND THE
EXHIBITS
THERETO IN THEIR
ENTIRETY.
All Exhibits to the Plan will be
filed with the Bankruptcy Court and available for review, free of
charge, on the
website of the Debtor
(WWW.WHXCORP.COM) no later than 10 days before the Voting
Deadline).
Copies of all
Exhibits
to the Plan also may be
obtained,
free of
charge,
from
Innisfree
M&A
Incorporated
("INNISFREE"
or
the
"NOTICE
AND
BALLOTING AGENT" by calling (877) 750-2689.
THE
PRECEDING
PAGE
CONTAINS AN INDEX OF TERMS USED AND DEFINED IN
THIS DISCLOSURE STATEMENT. OTHER CAPITALIZED TERMS THAT ARE USED
BUT NOT DEFINED
HEREIN HAVE THE MEANINGS ASCRIBED TO THEM IN THE PLAN.
A.
SUMMARY OF ANTICIPATED DISTRIBUTIONS UNDER THE PLAN
A Claim or Equity
Interest is placed in a particular
class for the
purposes of voting on the Plan and for receiving
distributions
pursuant to the
Plan only to the extent that such Claim or Equity
Interest is an Allowed
Claim
or an Allowed
Equity
Interest in that Class and such Claim or Equity
Interest
has not been paid, released or otherwise settled prior to the
Distribution Date.
In accordance
with section
1123(a)(1) of the Bankruptcy
Code,
Administrative
Claims and Priority Tax Claims of the kinds specified in sections
507(a)(1) and
507(a)(8) of the Bankruptcy Code, respectively,
have not been classified. Under
the Plan, all other Claims against and Equity
Interests in the Debtor have been
placed into seven (7) Classes and will receive the
distributions and recoveries
(if any) described in the table below.
THE
ESTIMATED
RECOVERIES
ASSUME
THAT THE VALUE OF NEW WHX COMMON
STOCK TO BE ISSUED UNDER THE PLAN WILL BE $113,722,700.
UNDER THE PLAN, HOLDERS
OF ALLOWED
SENIOR
NOTES
CLAIMS
WILL BE ENTITLED TO 85% OF THE NEW WHX COMMON
STOCK (WITH AN ESTIMATED VALUE OF $96,664,295) AND HOLDERS OF
ALLOWED
PREFERRED
SHARES WILL BE ENTITLED
TO 15% OF THE NEW WHX COMMON
STOCK (WITH AN
ESTIMATED
VALUE OF $17,058,405).
THERE CAN BE NO ASSURANCE,
HOWEVER, THAT SUCH ESTIMATED
VALUES AND
RECOVERIES
RELATING
TO THE NEW WHX COMMON
STOCK ARE
ACCURATE
OR
RELIABLE.
------------------------------------------------------------------------------------------------------------
Class & Description
Treatment Under the Plan
------------------------------------------------------------------------------------------------------------
CLASS 1 -- PRIORITY NON-TAX CLAIMS (IF ANY):
UNIMPAIRED
Non-tax Claims, such as employee compensation
Allowed Priority Non-Tax Claims are unimpaired by
and benefits that do not exceed $4,650, that
the Plan and will be paid in the ordinary course of
are entitled to priority under the Bankruptcy Code.
the Debtor's business. Holders of Allowed Class 1
Claims will not be entitled to cast a ballot with
respect to the Plan and, instead, will conclusively
be deemed to have accepted the Plan.
ESTIMATED AGGREGATE ALLOWED AMOUNT: $0.00
PERCENTAGE RECOVERY:
100%
------------------------------------------------------------------------------------------------------------
CLASS 2 -- SECURED CLAIMS (IF ANY):
UNIMPAIRED
All Claims secured by a valid, perfected and
Class 2 Claims are unimpaired by the Plan and will be
enforceable Lien on any Asset of the Debtor.
treated in accordance with section 1124 of the
Bankruptcy Code. Holders of Allowed Class 2 Claims
will not be entitled to vote on the Plan, and
instead, will be deemed to have accepted the
Plan.
ESTIMATED AGGREGATE ALLOWED AMOUNT: $0.00
PERCENTAGE RECOVERY:
100%
------------------------------------------------------------------------------------------------------------
CLASS 3 -- SENIOR NOTES CLAIMS:
IMPAIRED
All Claims arising under or in connection with
The Plan provides for the distribution of
the Senior Notes Indenture.
approximately 85% of the equity in the
reorganized Debtor to holders of Allowed Senior
Notes Claims on the Distribution Date, each
holder of an Allowed Senior Notes Claim will
receive its Pro Rata Share of 8,500,000 shares
of New WHX Common Stock. Class 3 Claims are
impaired by the Plan and holders of Allowed
Class 3 Claims will be entitled to vote to
accept or reject the Plan.
ALLOWED AMOUNT: $96,664,295
ESTIMATED PERCENTAGE RECOVERY: 100%
------------------------------------------------------------------------------------------------------------
CLASS 4 -- OTHER UNSECURED CLAIMS:
IMPAIRED
All Claims against the Debtor that are not
On the Distribution Date, each holder of an
Administrative Claims, Priority Tax Claims,
Allowed Other Unsecured Claim will receive Cash
Priority Non-Tax Claims, Secured Claims or
in an amount equal to the amount of its Allowed
Senior Notes Claims.
Claim (i.e., the amount owed to such creditor
as of the Petition Date). Class 4 Claims are
impaired by the Plan and holders of Allowed
Class 4 Claims will be entitled to vote to
accept or reject the Plan.
ESTIMATED AGGREGATE ALLOWED AMOUNT:
$0.00
ESTIMATED PERCENTAGE RECOVERY: 100%
------------------------------------------------------------------------------------------------------------
-2-
------------------------------------------------------------------------------------------------------------
Class & Description
Treatment Under the Plan
------------------------------------------------------------------------------------------------------------
CLASS 5 -- SERIES A PREFERRED EQUITY INTERESTS:
IMPAIRED
All shares or other instruments
evidencing a
On the Effective Date, each and every Series A
preferred Series A stock ownership in the Debtor.
Preferred Equity Interest WHX will be cancelled
and discharged and, on the Distribution Date,
the holder thereof will receive its Pro Rata
Share of 686,853 shares of New WHX Common Stock
(Collectively, holders of Class 5 and Class 6
Preferred Equity Interests will receive their
Pro Rata Share of 1,500,000 shares of New WHX
Common Stock). Class 5 Series A Preferred
Equity Interests are impaired by the Plan and
holders of Allowed Series A Preferred Equity
Interests will be entitled to vote to accept or
reject the Plan.
SERIES A SHARES OUTSTANDING:
2,573,926
ESTIMATED AGGREGATE VALUE OF RECOVERY:
$7,811,076
------------------------------------------------------------------------------------------------------------
CLASS 6 -- SERIES B PREFERRED EQUITY INTERESTS:
IMPAIRED
All shares or other instruments evidencing a
On the Effective Date, each and every Series B
preferred Series B stock ownership in the Debtor.
Preferred Equity Interest in WHX will be
cancelled and discharged and, on the
Distribution Date, the holder thereof will
receive its Pro Rata Share of 813,147 shares of
New WHX Common Stock (Collectively, holders of
Class 5 and Class 6 Preferred Equity Interests
will receive their Pro Rata Share of 1,500,000
shares of New WHX Common Stock). Class 6 Series
B Preferred Equity Interests are impaired by
the Plan and holders of Allowed Series B
Preferred Equity Interests will be entitled to
vote to accept or reject the Plan.
SERIES B SHARES OUTSTANDING:
2,949,000
ESTIMATED AGGREGATE VALUE OF RECOVERY:
$9,247,329
------------------------------------------------------------------------------------------------------------
CLASS 7 -- COMMON EQUITY INTERESTS:
IMPAIRED
All shares or other instruments evidencing a
On the Effective Date, each and every Common
stock ownership interest in the Debtor.
Equity Interest in the Debtor will be cancelled
and discharged and the holder thereof will
receive no distribution under the Plan. Class 7
Common Equity Interests are impaired by the
Plan and holders of such Common Equity
Interests will not be entitled to vote on the
Plan and, instead, will be deemed to have
rejected the Plan.
SHARES OUTSTANDING: 5,485,856
PERCENTAGE RECOVERY:
0%
------------------------------------------------------------------------------------------------------------
-3-
After careful review of the Debtor's
current
business
operations,
estimated
recoveries
in a
liquidation
scenario,
and prospects as an ongoing
business,
the Debtor has
concluded
that the recovery to creditors
and Equity
Interest
holders will be maximized
by the
Debtor's
continued
operation as a
going concern. The Debtor believes that its business and Assets
have significant
value that would not be realized
in the
liquidation
of the Debtor,
either in
whole or in substantial part.
According to the liquidation analysis prepared by
the Debtor
(attached
hereto as Exhibit "B"), the Debtor is worth
considerably
more to its creditors in general as a going concern.
B.
SUMMARY OF POST-CONFIRMATION OPERATIONS.
Attached hereto as Exhibit "D" are financial statements that
project
financial
performance for a reorganized
WHX, on a consolidated
basis with its
subsidiaries,
through
December
31,
2008.
These
projections
are based upon
information
available as of ____________ __, 2005 and the current business plan
for reorganized WHX and its
subsidiaries.
For context,
a copy of the Debtor's
Form 10-K for Fiscal Year Ended
December 31, 2004 is annexed
hereto as Exhibit
"E" and a copy of the Debtor's Form 10-K for Fiscal Year Ended
December 31, 2003
is annexed hereto as Exhibit "F."
-4-
I.
INTRODUCTION
The Debtor submits this
Disclosure
Statement , pursuant to section
1125 of title 11 of the United States Code (11 U.S.C.
ss.ss.
101 et seq.,
the
"BANKRUPTCY
CODE") in connection
with the
solicitation
of acceptances of its
Plan.
The Debtor is seeking
approval
of the Plan.
Unless
otherwise
defined
herein,
all
capitalized
terms
used in this
Disclosure
Statement
have
the
meanings ascribed to them in the Plan.
A BALLOT IS ENCLOSED
WITH THIS
DISCLOSURE
STATEMENT
IF YOU ARE A
HOLDER OF A CLAIM OR EQUITY
INTEREST
ENTITLED
TO VOTE TO ACCEPT OR REJECT THE
PLAN, WHICH ARE CLASS 3 (SENIOR NOTE CLAIMS),
CLASS 4 (OTHER UNSECURED CLAIMS),
CLASS 5 (SERIES A PREFERRED EQUITY
INTERESTS),
AND CLASS 6 (SERIES B PREFERRED
EQUITY INTERESTS).
THE BALLOT CONTAINS PROVISIONS:
(1) ENABLING
EACH HOLDER OF AN ALLOWED
CLAIM OR
PREFERRED
EQUITY
INTEREST IN CLASS 3 (SENIOR
NOTE
CLAIMS),
CLASS 4 (OTHER
UNSECURED
CLAIMS),
CLASS 5 (SERIES A
PREFERRED
EQUITY
INTERESTS)
OR CLASS 6 (SERIES B PREFERRED
EQUITY INTERESTS) TO VOTE ON ACCEPTANCE OR REJECTION OF THE PLAN;
AND
(2)
ENABLING
EACH
HOLDER
OF AN
ALLOWED
CLAIM IN CLASS 4 (OTHER
UNSECURED
CLAIMS) TO ELECT TO RECEIVE SHARES OF NEW WHX COMMON STOCK INSTEAD
OF
CASH THAT OTHERWISE WOULD BE DISTRIBUTED ON ACCOUNT OF SUCH
HOLDER'S CLAIM.
IF A HOLDER OF AN ALLOWED
CLASS 4 CLAIM FAILS TO MAKE THE
ELECTION
DESCRIBED
IN THE
PRECEDING
PARAGRAPH,
SUCH
HOLDER
SHALL BE
DEEMED TO HAVE
ELECTED TO RECEIVE ITS ENTIRE DISTRIBUTION IN CASH.
HOLDERS OF PRIORITY NON-TAX CLAIMS AND SECURED CLAIMS ARE
UNIMPAIRED
BY THE PLAN,
ARE
CONCLUSIVELY
PRESUMED
TO HAVE
ACCEPTED
THE PLAN,
ARE NOT
ENTITLED
TO VOTE TO
ACCEPT
OR REJECT
THE
PLAN,
AND ARE THUS NOT
RECEIVING
BALLOTS.
HOLDERS OF COMMON
EQUITY
INTERESTS IN THE DEBTOR ARE
RECEIVING NO
DISTRIBUTIONS
UNDER THE PLAN,
ARE DEEMED TO HAVE
REJECTED
THE PLAN,
AND ARE
THEREFORE NOT RECEIVING BALLOTS.
On ______,
2005,
after notice and a hearing,
the Bankruptcy Court
approved this Disclosure
Statement as containing adequate information of a kind
and in sufficient detail to enable hypothetical, reasonable
investors typical of
the Debtor's
creditors and Equity Interest holders to make an informed judgment
whether to accept or reject the Plan. APPROVAL OF THIS DISCLOSURE
STATEMENT DOES
NOT,
HOWEVER,
CONSTITUTE A
DETERMINATION
BY THE
BANKRUPTCY
COURT AS TO THE
FAIRNESS OR MERITS OF THE PLAN.
The order
approving the
Disclosure
Statement
(the
"APPROVAL AND
PROCEDURES ORDER"), a copy of which is annexed hereto as Exhibit
"G," sets forth
in detail the
deadlines,
procedures and
instructions
for voting to accept or
reject the Plan and for
filing
objections
to
confirmation
of the Plan,
the
record date for voting
purposes,
and the
applicable
standards for tabulating
Ballots. In addition,
detailed voting instructions
accompany each ballot. Each
holder of a Claim or Equity
Interest
entitled
to vote on the Plan should read
the Disclosure
Statement,
the Plan, the Approval and Procedures
Order and the
instructions
accompanying
the ballot in their
entirety
before
voting on the
Plan.
These
documents
contain,
among
other
things,
important
information
-5-
concerning the classification of Claims and Equity Interests for
voting purposes
and the tabulation of votes.
No solicitation of votes to accept the Plan may be
made except pursuant to section 1125 of the Bankruptcy Code.
A.
HOLDERS OF CLAIMS AND EQUITY INTERESTS ENTITLED TO VOTE
Pursuant to the provisions of the Bankruptcy
Code,
only holders of
Allowed Claims or Equity Interests in classes of Claims or Equity
Interests that
are impaired
under the terms and
provisions of a chapter 11 plan and that will
receive
distributions
under the chapter 11 plan are entitled to vote to accept
or reject the plan.
Classes of Claims or Equity
Interests in which the holders
will not
receive or retain any
property
under a chapter 11 plan are deemed to
have
rejected
the plan and are not
entitled
to vote to accept or reject
the
plan.
Classes of Claims or Equity Interests in which the holders are
unimpaired
under a
chapter
11 plan
are
deemed
to have
accepted
the
plan and are not
entitled to vote to accept or reject the plan.
With respect to the Debtor's Plan, each of Class 1 (Priority
Non-Tax
Claims) and Class 2 (Secured
Claims) are unimpaired by the Plan and the holders
of Claims in each of such Classes are conclusively presumed to have
accepted the
Plan and are not entitled to vote to accept or reject the Plan.
Class 3 (Senior
Note
Claims),
Class 4 (Other
Unsecured
Claims),
Class 5 (Series A Preferred
Equity
Interests)
and Class 6 (Series B Preferred
Equity Interests) are entitled to vote to accept or reject the
Plan.
Holders of Common
Equity
Interests
in Class 7 are not entitled to
receive
or
retain
any
property
under the Plan,
they are
presumed
to have
rejected the Plan, and therefore, are not entitled to vote on the
Plan .
The Bankruptcy Code defines "ACCEPTANCE" of a plan (i) by a class
of
Claims as acceptance by creditors in that class that hold at least
two-thirds in
dollar amount and more than
one-half in number of the Allowed
Claims that cast
ballots for
acceptance or rejection of the plan,
and (ii) by a class of Equity
Interests as acceptance
by holders in that class that hold at least
two-thirds
in amount of
Allowed
Equity
Interests
in such class
that cast
ballots
for
acceptance
or
rejection
of
the
Plan.
For a
complete
description
of
the
requirements
for
confirmation of the Plan, see Article VI,
"Confirmation
and
Consummation Procedures."
UNDER SECTION 1129 OF THE
BANKRUPTCY
CODE, A PLAN CAN BE CONFIRMED
ONLY IF AT LEAST ONE IMPAIRED CLASS ACCEPTS THE PLAN. THEREFORE,
IN ADDITION TO
THE
OTHER
REQUIREMENTS
FOR
CONFIRMATION
DESCRIBED
BELOW,
THE
PLAN CAN BE
CONFIRMED ONLY IF IT IS ACCEPTED BY AT LEAST ONE OF THE FOLLOWING
CLASSES: CLASS
3 (SENIOR NOTE
CLAIMS),
CLASS 4 (OTHER
UNSECURED
CLAIMS),
CLASS 5 (SERIES A
PREFERRED EQUITY INTERESTS) OR CLASS 6 (SERIES B PREFERRED EQUITY
INTERESTS). IF
AT LEAST ONE
IMPAIRED
CLASS
ACCEPTS THE PLAN,
BUT ONE OR MORE OTHER
CLASSES
REJECTS THE PLAN, THE DEBTOR HAS THE RIGHT TO REQUEST
CONFIRMATION
OF THE PLAN
PURSUANT TO SECTION 1129(b) OF THE BANKRUPTCY CODE.
SECTION 1129(b) PERMITS THE
CONFIRMATION
OF A PLAN
NOTWITHSTANDING
THE
NON-ACCEPTANCE
OF
ONE
OR
MORE
IMPAIRED CLASSES OF CLAIMS OR EQUITY INTERESTS.
UNDER THAT SECTION,
A PLAN MAY
BE CONFIRMED BY A BANKRUPTCY COURT IF IT DOES NOT "DISCRIMINATE
UNFAIRLY" AND IS
"FAIR AND
EQUITABLE"
WITH
RESPECT
TO EACH
NON-ACCEPTING
CLASS.
FOR A MORE
DETAILED
DESCRIPTION OF THE
REQUIREMENTS
FOR
CONFIRMATION OF A NONCONSENSUAL
PLAN, SEE ARTICLE VI, SECTION D,
"CONFIRMATION
AND CONSUMMATION
PROCEDURES --
REQUIREMENTS OF SECTION 1129(b) OF THE BANKRUPTCY CODE."
The Debtor
will
request
confirmation
of the Plan over the deemed
rejection
of the Plan by Class 7 if the
Plan is
accepted
by each of Class 3,
Class 4, Class 5 and Class 6, the only Classes
entitled to vote on the Plan. If
Class 3, Class 4, Class 5 or Class 6 votes to reject the Plan,
the Debtor
will
announce
at or before the
Confirmation
Hearing
whether the Debtor will still
seek
confirmation
of the Plan
pursuant to section
1129(b) of the
Bankruptcy
Code.
-6-
B.
VOTING PROCEDURES
If you are
entitled to vote to accept or reject the Plan,
a ballot
is enclosed
for the purpose of voting on the Plan.
Holders of impaired
Claims
and Equity
Interests
voting on the Plan should complete and sign the ballot in
accordance with the
instructions
thereon,
being sure to check the appropriate
box
entitled
"Accept the Plan" or "Reject the Plan." In order for your vote to
be counted,
you must complete and sign your original ballot (copies will not be
accepted) and return it in the envelope provided.
If you are a holder of a Claim or Equity
Interest
entitled to vote
on the Plan and did not receive a ballot, received a damaged ballot
or lost your
ballot, or if you have any questions
concerning the Disclosure
Statement,
the
Plan, or the
procedures
for voting on the Plan,
please contact the Notice and
Balloting Agent:
Innisfree M&A Incorporated
501 Madison Avenue, 19th Floor
New York, New York 10022
Tel:
(877) 750-2689
DO
NOT
RETURN
ANY
NOTE,
STOCK
CERTIFICATE
OR
OTHER
SECURITY
INSTRUMENT WITH YOUR BALLOT.
TO BE COUNTED, YOUR BALLOT INDICATING ACCEPTANCE OR REJECTION OF
THE
PLAN MUST BE RECEIVED NO LATER THAN _:00 _.M., EASTERN TIME, ON
__________, 2005
(THE "VOTING DEADLINE").
ANY CLAIM IN AN IMPAIRED
CLASS AS TO WHICH AN
OBJECTION OR REQUEST
FOR
ESTIMATION IS PENDING OR WHICH IS SCHEDULED BY THE DEBTOR AS
UNLIQUIDATED,
DISPUTED OR
CONTINGENT
IS NOT ENTITLED TO VOTE UNLESS THE HOLDER OF SUCH CLAIM
HAS OBTAINED AN ORDER OF THE BANKRUPTCY
COURT
TEMPORARILY
ALLOWING SUCH CLAIM
FOR THE PURPOSE OF VOTING ON THE PLAN.
PURSUANT
TO THE
ORDER
APPROVING
THE
DISCLOSURE
STATEMENT,
THE
BANKRUPTCY
COURT SET
_______,
2005 AS THE RECORD DATE FOR VOTING ON THE PLAN.
ACCORDINGLY,
ONLY
HOLDERS
OF RECORD AS OF
_______,
2005 THAT ARE
OTHERWISE
ENTITLED TO VOTE UNDER THE PLAN WILL RECEIVE A BALLOT AND MAY VOTE
ON THE PLAN.
ANY
EXECUTED
BALLOT
RECEIVED
THAT
DOES NOT
INDICATE
EITHER AN
ACCEPTANCE
OR REJECTION OF THE PLAN SHALL BE DEEMED TO CONSTITUTE AN
ACCEPTANCE
OF THE PLAN.
1. BALLOTS
All votes to accept or reject the Plan with
respect to any Class of
Claims
or
Equity
Interests
must be
cast by
properly
submitting
the
duly
completed and executed form of ballot designated for such Class.
Ballots
cast
by
the
beneficial
holders
of
Claims
and
Equity
Interests
and
Master
Ballots
completed
by
brokerage
firms
or
other
intermediaries
having power of attorney to vote on behalf of beneficial
owners
(SEE below,
Article I Section B.2 "Beneficial
Holders of Securities")
must be
delivered to the Notice and Balloting Agent, at its address set
forth above, and
received by the Voting Deadline.
THE METHOD OF SUCH DELIVERY IS AT THE ELECTION
AND RISK OF THE VOTER.
If such
delivery
is by mail,
it is
recommended
that
voters use an air courier
with a
guaranteed
next day
delivery or
registered
mail, properly insured, with return receipt requested.
In all cases, sufficient
time should be allowed to ensure timely delivery.
-7-
In accordance with Bankruptcy Rule 3018(c), the ballots are based
on
Official
Form No. 14, but have been
modified to meet the
particular
needs of
these cases.
PLEASE CAREFULLY FOLLOW THE DIRECTIONS
CONTAINED ON EACH ENCLOSED
BALLOT.
Each ballot enclosed with this Disclosure Statement has been
encoded
with the amount of the Allowed Claim or Allowed
Preferred
Equity
Interest for
voting purposes (if the Claim is a Contested
Claim,
this amount may not be the
amount ultimately allowed for purposes of distribution) and the
Class into which
the Claim or Preferred Equity Interest has been placed under the
Plan. In voting
to accept or reject the Plan, you must use only the coded ballot or
ballots sent
to you with this Disclosure Statement.
2. BENEFICIAL OWNERS OF SECURITIES
If you are the beneficial owner of a Senior Note or Preferred
Equity
Interest and hold such security in your own name, you can vote by
completing and
signing
the
enclosed
ballot
and
returning
it
directly
to the
Notice and
Balloting Agent using the enclosed preaddressed, postage prepaid
envelope.
If you hold Senior
Notes or Preferred
Equity
Interests in "street
name" (i.e.,
through a brokerage firm,
commercial bank, trust company or other
nominee) or an
authorized
signatory
(a brokerage
firm or other
intermediary
having
power of attorney
to vote on behalf of a
beneficial
owner),
you will
receive a ballot from a bank or brokerage firm (or its agent), in
which case you
must return the ballot to that bank or
brokerage
firm (or its agent),
and you
can vote by following the instructions set forth below:
o
fill in all the applicable information on the ballot;
o
sign the ballot (unless the ballot has already been signed by
the bank, trust company or other nominee); and
o
return the ballot to the address indicated on the ballot in the
preaddressed, postage prepaid envelope enclosed with the ballot.
If no envelope was enclosed, contact your brokerage firm,
commercial bank, trust company or other nominee or agent thereof
for instructions.
IF YOU HOLD YOUR
SENIOR
NOTES OR
PREFERRED
EQUITY
INTERESTS
IN
STREET NAME,
YOU SHOULD
RETURN YOUR BALLOT NO LATER THAN
__________,
2005 TO
PROVIDE SUFFICIENT TIME FOR YOUR BROKERAGE FIRM,
COMMERCIAL BANK, TRUST COMPANY
OR OTHER
NOMINEE,
OR THE AGENT
THEREOF,
TO PROCESS AND TALLY YOUR BALLOT AND
DELIVER IT TO THE NOTICE AND BALLOTING AGENT BY THE VOTING
DEADLINE.
You may
receive
multiple
mailings of this
Disclosure
Statement,
especially if you own Senior Notes or Preferred
Equity
Interests
through more
than one brokerage firm, commercial bank, trust company or other
nominee. If you
submit
more
than one
ballot
for a Class
because
you
beneficially
own the
securities in that Class through more than one broker or bank, you
must indicate
in the
appropriate
item of the
ballot(s)
the names of ALL broker
dealers or
other intermediaries who hold securities for you in the same Class.
Authorized
signatories voting on behalf of more than one beneficial
owner must complete a separate ballot for each such beneficial
owner. Any ballot
submitted to a brokerage
firm or proxy
intermediary
will not be counted until
the brokerage firm or proxy intermediary (a) properly executes the
ballot(s) and
delivers them to the Notice and Balloting
Agent, or (b) properly
completes and
delivers a corresponding master ballot to the Notice and Balloting
Agent.
By
voting
on the
Plan,
you
are
certifying
that
you
are
the
beneficial
owner of the Senior Notes or Preferred
Equity Interests being voted
or an authorized signatory for the beneficial owner. Your
submission of a ballot
will
also
constitute
a
request
that
you (or in the
case of an
authorized
signatory,
the
beneficial
owner) be
treated
as the
record
holder of those
securities for purposes of voting on the Plan.
-8-
3.
BROKERAGE FIRMS, BANKS AND OTHER NOMINEES
A brokerage firm,
commercial
bank,
trust company or other nominee
that is the registered
holder of a Senior Note or a Preferred
Equity
Interest
for a beneficial owner, or that is a participant in a securities
clearing agency
and is authorized to vote in the name of the securities clearing
agency pursuant
to an omnibus proxy and is acting for a beneficial
owner, can vote on behalf of
such beneficial owner by:
o
distributing a copy of this Disclosure Statement and all
appropriate ballots to the beneficial owner;
o
collecting all such ballots;
o
completing a master ballot compiling the votes and other
information from the ballots collected; and
o
transmitting the completed master ballot to the Notice and
Balloting Agent.
A proxy
intermediary
acting on behalf of a brokerage
firm or bank
may follow the procedures
outlined in the preceding
sentence to vote on behalf
of the beneficial owner. In lieu of collecting
ballots from beneficial
owners,
compiling the votes and other
information from those ballots on a master ballot
and
transmitting the completed Master Ballot to the Notice and
Balloting Agent,
a
brokerage
firm,
commercial
bank,
trust
company
or
other
nominee
may
prevalidate a beneficial
owner's ballot and distribute the prevalidated
ballot
with a copy of this Disclosure
Statement to the beneficial owner for voting. In
that case,
beneficial owners should complete the prevalidated ballot and
return
it
directly to the Notice and
Balloting
Agent in the
enclosed
preaddressed,
postage prepaid
envelope.
A brokerage firm,
commercial bank, trust company or
other
nominee
prevalidates
a beneficial
owner's
ballot by indicating on the
ballot
the
record
holder of the
securities
to be voted and the
appropriate
account numbers of the beneficial owner.
4. VOTING MULTIPLE CLAIMS
Separate
forms of ballots
are
provided
for
voting
the
various
Claims, and Classes of Claims and Preferred Equity Interests.
A SEPARATE ballot
must be used for each Claim or Preferred Equity
Interest.
Any Person who holds
Claims in more than one Class or multiple
Claims
within a Class is required to
vote
separately
with
respect
to each
Claim.
Please
sign,
and
return
in
accordance with the instructions in this section, a separate ballot
with respect
to each such Claim or Preferred
Equity
Interest.
Only
ballots with
original
signatures
will
be
accepted.
Ballots
with
copied
signatures
will
NOT be
accepted.
C.
CONFIRMATION HEARING
The Bankruptcy Code requires the Bankruptcy Court,
after notice, to
conduct a
Confirmation
Hearing at which it will hear
objections
(if any) and
consider
evidence with respect to whether the Plan should be confirmed.
At the
Confirmation
Hearing, the Bankruptcy Court will confirm the Plan only if all of
the requirements of section 1129 of the Bankruptcy Code are met.
The Confirmation
Hearing has been scheduled to begin on __________,
2005, at ___:___ __.m.
(Eastern Time) before the Honorable
__________,
United
States
Bankruptcy
Judge,
United
States
Bankruptcy
Court
for the
Southern
District of New York,
Alexander
Hamilton Customs House, One Bowling Green, New
York,
New York 10004.
The
Confirmation
Hearing may be adjourned from time to
time by the Bankruptcy Court without further notice,
except for an announcement
of the adjourned date made at the Confirmation Hearing.
Any
objection
to the
confirmation
of the
Plan
must
be made in
writing
and date in detail (1) the name and
address of the
objector,
(2) the
-9-
amount and nature of the Claim or Equity
Interest
held by the objector and (3)
all
grounds
for the
objection.
Any such
objection
must be
filed
with the
Bankruptcy Court, with a copy to Judge __________'s Chambers, and
served so that
it is received by the Bankruptcy Court,
Judge
__________'s
Chambers,
and the
following parties on or before __________, 2005 at ___:___ __.m.
(Eastern Time):
(a) the Debtor, 110 East 59th Street, New York, New York 10022
(Attn: Stewart E.
Tabin, Esq.); (b) Jones Day, Attorneys for the Debtor, 222 East
41st Street, New
York, New York 10017 (Attn: Richard H. Engman,
Esq.); and (c) the Office of the
United
States
Trustee
for the
Southern
District of New York,
33
Whitehall
Street, 21st floor, New York, New York 10004 (Attn: __________,
Esq.).
FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND EQUITY INTERESTS,
THIS
DISCLOSURE
STATEMENT
SUMMARIZES
THE
TERMS OF THE PLAN,
BUT THE PLAN
ITSELF
QUALIFIES ALL SUMMARIES.
IF ANY
INCONSISTENCY
EXISTS BETWEEN THE PLAN AND THE
DISCLOSURE
STATEMENT,
THE TERMS OF THE PLAN ARE
CONTROLLING.
THE
DISCLOSURE
STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE
OTHER THAN TO DETERMINE
WHETHER
TO VOTE TO ACCEPT OR REJECT THE PLAN, AND NOTHING STATED HEREIN
SHALL CONSTITUTE
AN
ADMISSION OF ANY FACT OR LIABILITY
BY ANY PARTY,
OR BE
ADMISSIBLE
IN ANY
PROCEEDING
INVOLVING
THE DEBTOR OR ANY OTHER
PARTY,
OR BE DEEMED
CONCLUSIVE
EVIDENCE OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON THE
DEBTOR, OR HOLDERS
OF CLAIMS OR EQUITY INTERESTS.
CERTAIN OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT,
BY
NATURE, ARE FORWARD-LOOKING AND CONTAIN ESTIMATES AND ASSUMPTIONS.
THERE CAN BE
NO ASSURANCE THAT SUCH
STATEMENTS
WILL BE REFLECTIVE OF ACTUAL
OUTCOMES.
ALL
HOLDERS OF CLAIMS OR EQUITY
INTEREST
ENTITLED
TO VOTE TO ACCEPT OR REJECT THE
PLAN
SHOULD
CAREFULLY
READ AND
CONSIDER
FULLY
THIS
DISCLOSURE
STATEMENT,
INCLUDING,
BUT NOT LIMITED TO,
ARTICLE VIII "RISK
FACTORS,"
BEFORE VOTING TO
ACCEPT OR REJECT THE PLAN.
SUMMARIES OF CERTAIN
PROVISIONS OF
AGREEMENTS
REFERRED TO IN THIS
DISCLOSURE
STATEMENT
DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE
QUALIFIED
IN THEIR
ENTIRETY BY REFERENCE
TO, THE FULL TEXT OF THE
APPLICABLE
AGREEMENT, INCLUDING THE DEFINITIONS OF TERMS CONTAINED IN SUCH
AGREEMENT.
THE DEBTOR
BELIEVES
THAT THE PLAN WILL
ENABLE IT TO
SUCCESSFULLY
REORGANIZE AND
ACCOMPLISH
THE OBJECTIVES OF CHAPTER 11 AND THAT
ACCEPTANCE OF
THE PLAN IS IN THE BEST
INTERESTS
OF THE DEBTOR AND ITS
CREDITORS
AND EQUITY
INTEREST
HOLDERS.
ACCORDINGLY,
AFTER
CAREFULLY
REVIEWING
THIS
DISCLOSURE
STATEMENT,
INCLUDING
THE
EXHIBITS,
EACH HOLDER OF AN ALLOWED CLAIM OR EQUITY
INTEREST IN CLASS 3 (SENIOR
NOTE
CLAIMS),
CLASS 4 (OTHER
UNSECURED
CLAIMS),
CLASS 5 (SERIES A PREFERRED
EQUITY
INTERESTS)
AND CLASS 6 (SERIES B PREFERRED
EQUITY
INTERESTS),
IS URGED BY THE
DEBTOR
TO VOTE IN FAVOR OF THE PLAN BY NO
LATER THAN ___:___ __.M., EASTERN TIME, ON ____________ __, 2005.
II.
GENERAL INFORMATION REGARDING THE DEBTOR AND
ITS REASONS FOR FILING THE CHAPTER 11 CASE
A.
THE DEBTOR'S BUSINESS
The
Debtor
is a
Delaware
corporation
that
maintains
principal
executive offices at 110 East 59th Street,
New York, New York 10022 and that is
structured to invest in and manage a diverse group of businesses
(collectively,
with the Debtor,
the "WHX GROUP").
The Debtor's
principal asset is its equity
-10-
interest in Handy & Harman ("H&H"). As a holding company
and the ultimate parent
of the direct and indirect subsidiaries listed on Exhibit "C"
hereto, the Debtor
is the
parent
company
of a group of
diversified
materials
engineering
and
specialty
manufacturing
companies.
In
its
Precious
Metals
segment,
H&H's
Electronic
Materials Group activities include precision stamping,
reel-to-reel
electroplating and reel-to-reel molding for electronic and
electrical components
and the
Precious
Metals
Fabrications
Group
produces
brazing and
soldering
materials for
metal-joining
applications.
H&H's Engineered
Materials segment
manufactures
specialty
fasteners
for
roofing
and
construction
industries,
products for the natural gas, electricity and water distribution
industries and
electro-galvanized
products used in the construction and appliance
industries.
In the Wire & Tubing
segment,
the Specialty
Tubing Group
manufactures
small
diameter
stainless,
carbon
steel
and
specialty
alloy
tubing
and
tubing
fabrications
principally
for
the
medical,
semi-conductor,
automotive
and
appliance markets.
The Debtor has commenced
this case because it believes that chapter
11 relief is
necessary
to
implement
its
business
strategy to grow its core
businesses,
improve profit margins, and maximize value for its stakeholders. To
date, growth has been achieved through emphasis on world-class
customer service,
product quality, new product
introductions and innovations and by building upon
the strengths of the WHX Group's most
profitable
businesses
while
constantly
assessing
exposure
to low
margin,
capital-intensive
businesses
than can be
improved or that should be discontinued.
Going forward,
in addition to product
line and
other
strategic
acquisitions,
the
Debtor
has
plans
for
several
significant capital projects that are expected to improve
profitability,
expand
capacity and strengthen customer affiliations.
The Debtor,
however,
will have little or no ability to execute its
strategy
and
achieve
its goals
without
fundamental
changes to its
current
capital
structure,
which includes not only the imminent maturity of over $96.6
million
of
Senior
Note
indebtedness,
but also an unduly
complex
ownership
structure,
four different types of issued and outstanding public securities,
an
unmanageable
level of funded debt relative to earnings,
and over $82.5 million
of accrued but unpaid preferred stock dividends.
The
Debtor
believes
that
consummation
of
the
transactions
contemplated
by its chapter 11 Plan will
simplify
and
de-lever
the Debtor's
capital
structure,
reduce
its
overall
cost of
capital,
align its
capital
structure
to match its
businesses
and provide
the basis for more
attractive
future debt and equity
financings.
In other words,
the Debtor
believes
that
consummation
of its Plan
will
afford
the best
opportunity
to
realize
the
benefits of its
business
strategy
and thereby
the best
opportunity
to both
maximize current enterprise value and stakeholder recoveries while
ensuring that
the
Debtor is
well-positioned
to take
advantage
of future
growth and value
opportunities.
FOR A MORE
COMPLETE
DISCUSSION
OF THE DEBTOR'S
BUSINESS AND PAST
PERFORMANCE,
PLEASE SEE THE DEBTOR'S
2004 AND 2003
YEAR-END
REPORTS FILED ON
FORM 10-K FOR THAT ARE ATTACHED HERETO AS EXHIBITS "E" AND "F."
B.
THE DEBTOR'S OUTSTANDING SECURITIES
1. SENIOR NOTES
On April 7, 1998,
the Debtor
issued its 10.50% Senior Notes due on
April 15, 2005.
Interest on the Senior Notes is payable
semi-annually on April
15 and October 15 of each year.
The Senior Notes are unsecured
obligations
of
the Debtor only and have not been guaranteed by any of its
subsidiaries.
As of
the Petition Date,
$96,664,295
was owed by the Debtor on account of the Senior
Notes, of which $92,820,000 is principal and $3,844,295 is accrued
interest.
2. PREFERRED STOCK
As of the Petition Date,
the Debtor's
authorized
preferred
stock
consisted of 10 million
shares,
$.01 par value per share,
of which
2,573,926
shares of series A convertible
preferred stock and 2,949,000 shares of series B
convertible
preferred stock were issued and outstanding as of December 31, 2004
-11-
(collectively, the "PREFERRED SHARES"). The Preferred Shares are
junior in right
to payment of all debt
obligations of the Debtor but seni