Current Report Filing (8-k)
November 04 2016 - 4:36PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report
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November 1, 2016
(Date of earliest event reported)
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A. M. CASTLE & CO.
(Exact name of registrant as specified in its charter)
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Maryland
(State or other jurisdiction of incorporation)
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1-5415
(Commission File Number)
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36-0879160
(IRS Employer Identification No.)
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1420 Kensington Road, Suite 220
Oak Brook, IL 60523
(Address of principal executive offices)
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Registrant’s telephone number including area code:
(847) 455-7111
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Not Applicable
(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 (see General Instruction A.2. below):
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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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☐ 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 13 e-4(c) under the Exchange Act (17 CFR 240.13 e-4(c))
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Item 1.01
Entry
into a Material Definitive Agreement.
On November 3, 2016, A.M. Castle & Co. (the “Company”) entered into a Settlement Agreement (the “Agreement”) with Raging Capital
Management, LLC (“Raging Capital”) and certain of its affiliates (the “Raging Capital Group”), and Steven
W. Scheinkman, Kenneth H. Traub, Allan J. Young, and Richard N. Burger. The Agreement supersedes the two prior settlement agreements
(as amended) by and among the Company and the Raging Capital Group dated March 17, 2015, and May 27, 2016, which shall have no
further force or effect.
The members of
the Raging Capital Group, Kenneth H. Traub, Allan J. Young, and Richard N. Burger have agreed to customary
standstill restrictions during the standstill period beginning on the date of execution of the Agreement and ending on the
date that is one day after the Company’s 2018 annual meeting of stockholders, including specified prohibitions against
solicitation of proxies, submission of stockholder proposals, nomination of director candidates, formation of a group,
calling a special meeting, and engaging in extraordinary transactions with or involving the Company. The standstill
restrictions are substantially consistent with those set forth in the settlement agreement dated May 27, 2016, entered into
with the Raging Capital Group in connection with their nomination of director candidates for the 2016 annual meeting of
stockholders.
The standstill will
also restrict the members of the Raging Capital Group from acquiring beneficial ownership of shares of the Company’s
common stock (excluding (i) 18,888 shares of common stock held by Mr. Traub as of the date of the Agreement; (ii) 18,667
shares of common stock held by Mr. Young as of the date of the Agreement; and (iii) shares of common stock underlying
the Company’s 5.25% Convertible Senior Notes due 2019 owned by the Raging Capital Group as of the date of the
Agreement) or beneficial ownership of any of the Company’s 12.75% Senior Secured Notes due 2018, 7% Convertible Notes
due 2017, 5.25% Convertible Senior Notes due 2019 or any other interests in the Company’s indebtedness (excluding
$27,500,000 principal amount of the Company’s 12.75% Senior Secured Notes due 2018 and $2,940,000 principal amount of
the Company’s 5.25% Convertible Senior Notes due 2019 currently owned by the Raging Capital Group).
The Agreement
is entered into in connection with that certain transaction pursuant to which W.B. & Co. has purchased 4,630,795 shares
of common stock in the Company owned by Raging Capital Master Fund, Ltd. Jonathan B. Mellin, a director of the Company, is
one of the general partners of W.B. & Co. and shares voting power with respect to the shares of the Company’s
common stock owned by W.B. & Co. Following this purchase, W.B. & Co. will own approximately 35% of the
Company’s outstanding common stock.
The foregoing description
of the Agreement does not purport to be a complete summary of the terms of the Agreement and is qualified in its entirety by reference
to the full text of the Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated by reference herein.
Item 5.02
Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
In connection with the
Agreement, effective November 4, 2016 Kenneth H. Traub and Richard N. Burger each resigned from their respective positions as members
of the Board of the Directors of the Company (the “Board”) and all committees of the Board on which they served. Neither
Mr. Traub’s nor Mr. Burger’s resignations were because of a disagreement with the Company on any matters relating to
the Company’s operations, policies, or practices.
Item 5.03
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On November 3, 2016, the
Board approved an amendment to the Amended and Restated Bylaws of the Company (the “Amendment”). The Amendment amended
Section 1 of Article III to change the minimum number of directors on the Board from eight (8) directors to four (4) directors.
The description above of
the Amendment to the Company’s Amended and Restated Bylaws does not purport to be complete, and is qualified in its entirety
by reference to the full text of Section 1 of Article III of the Amended and Restated Bylaws, set forth in Exhibit 3.1 to this
Form 8-K and incorporated in this Item by reference.
Item 8.01
Other Events.
On November 1, 2016,
and November 2, 2016, the Company entered into two commitment letters (eeach, a “Commitment Letter”) with (i)
Highbridge Capital Management, LLC (acting individually or through one or more of its affiliates) (“Highbridge”),
Corre Partners Management, LLC (acting individually or through one or more of its affiliates) (“Corre”), Whitebox
Credit Partners, L.P. (acting individually or through one or more of its affiliates) (“Whitebox”) and WFF Cayman
II Limited and (ii) SGF, LLC (acting individually or through one or more of its affiliates) (each, a “Financial
Institution” and collectively, the “Financial Institutions”) in order to replace and repay any amounts (and
cash collateralization of any undrawn letters of credit) outstanding under, the Company’s $100 million revolving loan
and security agreement with Wells Fargo Bank, National Association as lender and administrative agent (the “Existing
Credit Agreement”). Pursuant to the terms of the Commitment Letters, the Company’s new credit facilities from the
Financial Institutions will take the form of senior secured first lien term loan facilities (the “Facilities”) in
an aggregate principal amount of $100.0 million. In
connection therewith, commitments pursuant the Existing Credit Agreement will be terminated and liens granted to the
collateral agent pursuant thereto will be released in full.
Upon initial funding
of the Facilities, the Financial Institutions will be issued warrants (the “Warrants”) to purchase an aggregate
of 5,000,000 shares of common stock of the Company, pro rata based on the principal amount of each
Financial Institution’s commitment to the Facilities. The Warrants will have exercise prices as follows: (a) 50% of the Warrants
will have an exercise price of $0.50 per share and will expire 18 months from the date of grant and (b) the remaining 50% of
the Warrants will have an exercise price of $0.65 per share and will expire 18 months from the date of the grant.
The funding of the Facilities
is subject to original issue discount in an amount of equal to 3.00% of the full principal amount of the Facilities. The Facilities
will bear interest at a rate per annum equal to 11.00%, payable monthly in arrears. The outstanding principal amount of the Facilities
provided for in the Commitment Letters and all accrued and unpaid interest thereon will be due and be payable on September 14,
2018.
The commitment of
the Financial Institutions in respect of the Facilities is subject to, among other things, the negotiation, execution
and delivery of definitive documentation with respect to the Facilities. Although the Facilities will be in the form of
term loans as opposed to a revolver as was the case with the Existing Credit Agreement, the Company expects the terms
and conditions of the Facilities provided for in the Commitment Letter to be substantially similar to those relating to
the Existing Credit Agreement. The Company will be subject to certain financial covenants, consisting of (a) a minimum cash
EBITDA, (b) a minimum liquidity amount, and (c) a minimum working capital covenant.
A definitive agreement
with respect to the Facilities, as required by the Commitment Letter, has not been executed and there can be no assurances that
such agreement will be executed or as to the terms of such Facilities, or that certain other conditions required by the Commitment
Letter will be satisfied. The Existing Credit Agreement matures on December 10, 2019. The Company is in compliance with all covenants
related to the Existing Credit Agreement.
Item 9.01
Financial Statements
and Exhibits.
(d) The
following exhibits are filed as part of this report:
Exhibit No.
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Description
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Exhibit 3.1
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Amended and Restated Bylaws of A. M. Castle & Co., as adopted on November 3, 2016.
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Exhibit 10.1
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Settlement Agreement dated November 3, 2016, by and among A. M. Castle & Co., Raging Capital Management, LLC and certain of their affiliates, and Steven W. Scheinkman, Kenneth H. Traub, Allan J. Young, and Richard N. Burger.
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Cautionary Statement on Risks Associated
with Forward Looking Statements
Information provided and statements contained
in this release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (“Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange
Act”), and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date
of this release and the Company assumes no obligation to update the information included in this release. Such forward-looking
statements include information concerning our possible or assumed future results of operations, including descriptions of our business
strategy, and the cost savings and other benefits that we expect to achieve from our facility closures and organizational changes.
These statements often include words such as “believe,” “expect,” “anticipate,” “intend,”
“predict,” “plan,” "should," or similar expressions. These statements are not guarantees of performance
or results, and they involve risks, uncertainties, and assumptions. Although we believe that these forward-looking statements are
based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations
and could cause actual results to differ materially from those in the forward-looking statements, including our ability to effectively
manage our operational initiatives and restructuring activities, the impact of volatility of metals prices, the cyclical and seasonal
aspects of our business, our ability to effectively manage inventory levels, our ability to successfully complete the remaining
steps in our strategic refinancing process, and the impact of our substantial level of indebtedness, as well as including those
risk factors identified in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31,
2015, as amended. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified
in their entirety by the cautionary statements contained or referred to above. Except as required by the federal securities laws,
we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events
or circumstances in the future, to reflect the occurrence of unanticipated events or for any other reason.
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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.
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A. M. CASTLE & CO.
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/s/ Marec E. Edgar
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November 4, 2016
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By:
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Marec E. Edgar
Executive Vice President, General Counsel,
Secretary & Chief Administrative Officer
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EXHIBIT INDEX
Exhibit No.
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Description
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Exhibit 3.1
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Amended and Restated Bylaws of A. M. Castle & Co., as adopted on November 3, 2016.
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Exhibit 10.1
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Settlement Agreement dated November 3, 2016, by and among A. M. Castle & Co., Raging Capital Management, LLC and certain of their affiliates, and Steven W. Scheinkman, Kenneth H. Traub, Allan J. Young, and Richard N. Burger.
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