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) July 29, 2010
U.S.
CONCRETE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-34530
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76-0586680
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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2925
Briarpark, Suite 1050, Houston, Texas 77042
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (713) 499-6200
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:
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
1.03. BANKRUPTCY OR RECEIVERSHIP.
As
previously reported, on April 29, 2010 (the “Petition Date”), U.S.
Concrete, Inc. (the “Company”), 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 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 U.S. Concrete, Inc., et al., Case No. 10-11407 (the
“Chapter 11
Cases”).
On July
29, 2010 (the “Confirmation Date”),
the Bankruptcy Court entered an order (the “Confirmation Order”)
confirming the Debtors’ Joint Plan of Reorganization, pursuant to Chapter 11 of
the Bankruptcy Code, which was originally filed with the Bankruptcy Court on the
Petition Date and supplemented by the Supplement to Debtors’ Joint Plan of
Reorganization pursuant to Chapter 11 of the Bankruptcy Code filed with the
Bankruptcy Court on July 19, 2010 and July 22, 2010, and amended on July 27,
2010 (as so amended and supplemented, the “Plan”). Copies
of the Plan and the Disclosure Statement are filed as Exhibits 2.1 and 2.2
hereto, respectively, and are incorporated herein by reference. On July 30,
2010, the Company issued a press release announcing the entry of the
Confirmation Order by the Bankruptcy Court, a copy of which is attached hereto
as Exhibit 99.1 and incorporated herein by reference. The Debtors
plan to emerge from Chapter 11 after satisfying the remaining conditions to
effectiveness contemplated under the Plan (the date that all conditions to the
effectiveness of the Plan have been satisfied or waived, the “Effective
Date”).
The
following is a summary of the material matters contemplated to occur either
pursuant to or in connection with the confirmation and implementation of the
Plan. This summary only highlights certain of the substantive provisions of the
Plan and is not intended to be a complete description of, or a substitute for a
full and complete reading of, the Plan. This summary is qualified in its
entirety by reference to the full text of the Plan. Capitalized terms used but
not defined in this Form 8-K have the meanings set forth in the
Plan.
The Plan
contemplates that upon the Effective Date (i) holders of the Company’s 8.375%
senior subordinated notes due 2014 (the “Existing Notes”) will
receive their proportionate share of the new common stock, par value $0.001 per
share, of the reorganized Company (the “New Common Stock”);
(ii) holders of the Company’s existing common stock the (“Existing Common
Stock”) will receive their proportionate share of Class A Warrants (the
“Class A
Warrants”) to purchase shares of New Common Stock and Class B Warrants to
purchase shares of New Common Stock (the “Class B Warrants” and
together with the Class A Warrants, the “New Warrants”); and
(iii) trade creditors will continue to be paid in full in the ordinary course of
business.
Treatment
of Executory Contracts
The Plan
provides that all of the Debtors’ Executory Contracts or Unexpired Leases shall
be deemed assumed on the Effective Date, subject to the Debtors’ right to reject
any Executory Contract or Unexpired Leases prior thereto. Any motions
to assume Executory Contracts or Unexpired Leases pending on the Effective Date
will be subject to approval by the Bankruptcy Court on or after the Effective
Date.
Any
monetary defaults under each Executory Contract and Unexpired Lease to be
assumed pursuant to the Plan shall be satisfied by payment of the default amount
in cash on the Effective Date or in the ordinary course of business or on such
other terms as the parties to such Executory Contracts or Unexpired Leases may
otherwise agree. In the event of a dispute regarding matters
pertaining to assumption, the cure payments shall be made following the entry of
a final order or orders resolving the dispute and approving the
assumption.
Indemnification
Obligations
Each
Indemnification Obligation of directors, officers and employees of the Debtors
who served in such capacity prior to, on, or after the Petition Date shall be
assumed by the applicable Debtor as of the Effective Date, to the extent such
Indemnification Obligation is executory.
Insurance
Policies
On the
Effective Date, the Debtors shall be deemed to have assumed all insurance
policies and any agreements, documents and instruments relating to coverage of
all insured Claims.
Contracts
and Leases Entered Into After the Petition Date
Contracts
and leases entered into after the Petition Date by any Debtor, including any
Executory Contracts and Unexpired Leases assumed by such Debtor, will be
performed by the applicable Debtor or reorganized Debtor liable thereunder in
the ordinary course of its business.
Management
Incentive Plan
The Plan
also provides for a management equity incentive plan (the “Management Equity Incentive
Plan”), under which 9.5% of the equity of the reorganized Company
authorized pursuant to the Plan (the “New Equity”), on a
fully-diluted basis, will be reserved for issuance as equity-based awards to
management and employees, and 0.5% of the New Equity, on a fully-diluted basis,
will be reserved for issuance to directors of the reorganized
Company.
The Plan
contemplates that a minimum of 3.5% of the fully-diluted New Equity will be
issued to management and employees within 30 days of the Effective Date pursuant
to the terms of the Management Equity Incentive Plan. Such initial
awards of New Equity will vest quarterly 33% in the first year after the
Effective Date, 33% in the second year after the Effective Date, and 33% in the
third year after the Effective Date, provided that in the event an employee is
terminated without cause, any New Equity previously awarded and any New Equity
awards that would have vested in the six month period following such employee’s
termination will vest immediately and will be exercisable by such employee
within the twelve month period following termination. A material
portion of such New Equity will consist of restricted stock
units. The Plan contemplates that all New Equity reserved pursuant to
the Management Equity Incentive Plan and not issued shall be granted to managers
of the reorganized Company within five years of the Effective Date.
Assumption
of Employee and Retiree Benefits
All
employment, retirement, indemnification and other agreements or arrangements in
place as of the Effective Date with the officers and employees of the Debtors
and certain non-Debtor subsidiaries, or all other or retirement income plans and
welfare benefit plans for such persons, or discretionary bonus plans or variable
incentive plans regarding payment of a percentage of annual salary based on
performance goals and financial targets for certain employees identified as key
leaders, top level managers, or sales leaders or indemnification arrangements
with directors of the Debtors and the non-Debtor subsidiaries will be assumed by
the reorganized Debtors (other than any equity-based compensation or
incentive-based plan existing as of the Petition Date).
Employment
Severance Agreements
On the
Effective Date, the Company shall assume the existing executive employment
severance agreements with the Company’s management, on terms acceptable to the
Debtors, counsel to the Informal Noteholders Committee and the executive
officers. For the Company’s Chief Executive Officer, Chief Financial
Officer, General Counsel and Vice President of Human Resources, the cash
severance benefit payable in the event such executive is terminated without
cause or if such executive terminates his employment for good cause, shall be
not less than twice the amount of such executive’s base salary.
Composition
of New Board of Directors After the Effective Date
Under the
Plan, as of the Effective Date, the reorganized Company’s initial Board of
Directors will be composed of six members, consisting of Michael W. Harlan, the
Chief Executive Officer of the reorganized Company, and the following five
directors who were selected by the Informal Noteholders Committee and disclosed
to the Bankruptcy Court in advance of the hearing to consider confirmation of
the Plan: Michael D. Lundin, Robert M. Rayner, Colin M. Sutherland, Eugene I.
Davis and Kurt M. Cellar.
Sources
of Funds
The Plan
is to be funded with cash from operations, proceeds of a senior secured
asset-based revolving credit facility to be entered into by the reorganized
Debtors (the “Exit
Loan Facility”), proceeds of the Convertible Notes (as defined below) and
the exchange of the Company’s securities for New Warrants and New Common Stock
as described below.
Exit
Loan Facility
On the
Effective Date, the reorganized Debtors will consummate the Exit Loan Facility
and will use the proceeds of the Exit Loan Facility to fund ongoing operations
and obligations under the Plan. On the Effective Date, all letters of
credit outstanding under the revolving credit, term loan and guarantee agreement
among the Company, as borrower, certain of its subsidiaries, as guarantors,
JPMorgan Chase Bank, N,A, as administrative agent, and the lenders party thereto
from time to time, providing the Company with a debtor-in-possession term loan
and revolving credit facility (the “DIP Facility”) shall
be deemed letters of credit outstanding under the Exit Loan
Facility.
The terms
of the commitment letter for the Exit Loan Facility are described in the
Company’s Current Report on Form 8-K filed on July 27, 2010, which description
is incorporated herein by reference.
Purchase
Letter, Put Option and Convertible Note Issuance
As part
of the exit financing contemplated by the Plan, the reorganized Company expects
to issue $50 million in aggregate principal amount of 9.5% convertible
secured notes due 2015 (the “Convertible Notes”),
which are expected to initially be convertible into shares of New Common
Stock. In consultation with counsel to the Creditors’ Committee and
counsel to the Informal Noteholders Committee, and with the consent of the
parties to the Purchase Letter (as defined below) and the commitment letter for
the Exit Loan Facility, the Debtors are authorized to increase the aggregate
principal amount of the Convertible Notes.
As
previously reported, on July 20, 2010, the Company entered into a Purchase
Letter (the “Purchase
Letter”) among the Company and Monarch Alternative Capital, L.P.,
Whitebox Advisors, LLC and York Capital Management Global Advisors, LLC
(collectively, the “Put Option Parties”)
pursuant to which the Put Option Parties have granted the Company a put option
(the “Put
Option”). If the Company exercises the Put Option, the Put
Option Parties will be obligated to purchase an aggregate of $50 million of
the Convertible Notes, subject to the satisfaction or waiver of the conditions
set forth in the Purchase Letter.
The
Purchase Letter contemplates that the other holders of the Existing Notes, to
the extent they are Qualified Institutional Buyers (as defined in Rule 144A
under the Securities Act of 1933 (the “Securities Act”)) or
institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act), will be offered the opportunity to purchase
Convertible Notes in an amount up to their pro rata holdings of the Existing
Notes, pursuant to a supplement to the Disclosure Statement relating to the
Plan. The offer of Convertible Notes to holders of the Existing Notes
and the purchase of Convertible Notes by the Put Option Parties and holders of
the Existing Notes have not been and will not be registered under the Securities
Act and the Convertible Notes may not be offered or sold in the United States
absent an applicable exemption from registration requirements. The
amount of Convertible Notes purchased by the holders of the Existing Notes will
reduce the aggregate commitment of the Put Option Parties pursuant to the Put
Option.
The terms
of the Purchase Letter are described in the Company’s Current Report on Form 8-K
filed on July 22, 2010, which description is incorporated herein by
reference.
The
proceeds from the Convertible Notes will be used to repay the amounts
outstanding under the DIP Facility and to fund ongoing operations and
obligations under the Plan.
Securities
to be Issued under the Plan
On the
Effective Date, all of the Company’s existing equity securities, including Old
Common Stock and options to purchase Old Common Stock, will be
cancelled. The reorganized Company will issue New Warrants to the
holders of all Existing Common Stock. Holders of the Existing Notes
will receive their proportionate share of the New Common Stock of the
reorganized Company in exchange for their Existing Notes. The
authorized capital stock of the reorganized Company will consist of New Common
Stock and preferred stock.
Pursuant
to the Plan:
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(a)
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the
reorganized Company expects to issue shares of New Common Stock pro rata
to holders of the Existing Notes;
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(b)
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the
reorganized Company expects to issue Class A Warrants to purchase 7.5% of
the New Equity on a fully-diluted basis to holders of Existing Common
Stock. Such warrants will expire seven years after the date of
issuance; and
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(c)
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the
reorganized Company expects to issue Class B Warrants to purchase 7.5% of
the New Equity on a fully-diluted basis to holders of Existing Common
Stock. Such warrants will expire seven years after the date of
issuance.
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Releases
Except as
otherwise provided in the Plan, or in any contract, instrument, release or other
agreement or document created pursuant to the Plan, on the Effective Date and
concurrently with the applicable distributions made pursuant to the Plan and, in
the case of a Secured Claim, satisfaction in full of the portion of the Secured
Claim that is allowed as of the Effective Date, all mortgages, deeds of trust,
liens, pledges or other security interests against any property of the estates
will be fully released and discharged, and all of the right, title, and interest
of any holder of such mortgages, deeds of trust, liens, pledges or other
security interests will revert to the reorganized Debtors and their successors
and assigns.
Except as
otherwise specifically provided in the Plan, on and after the Effective Date,
the Debtors, the reorganized Debtors and the estates will be deemed to have
released and discharged various parties and their respective affiliates,
officers, directors, employees and representatives from any and all claims,
whether known or unknown, foreseen or unforeseen, existing or subsequently
arising, in law, equity or otherwise, that the Debtors, the reorganized Debtors,
the estates or their affiliates would have been legally entitled to assert in
their own right (whether individually or collectively) or on behalf of the
holder of any claim or interest or other entity, based on or relating to, or in
any manner arising from, in whole or in part, the Debtors or their Affiliates,
the Chapter 11 Cases or related matters described in the Plan, upon any other
act or omission, transaction, agreement, event or other occurrence taking place
on or before the Confirmation Date of the Plan, other than claims or liabilities
arising out of or related to any contractual or fixed monetary obligation owed
to the Debtors or the reorganized Debtors. However, the Debtors and the
non-Debtor subsidiaries will not release any claims related to the operation of
the Michigan joint venture, including, but not limited to, any claims against
the Michigan joint venture entities or the Michigan joint venture partner or any
rights under any agreements related to the Michigan joint venture.
Except as
otherwise specifically provided in the Plan, on the Effective Date, each holder
of a claim or an interest in the Debtors, except to the extent that such holder
either voted to reject the Plan or is classified in a class that is deemed to
accept or reject the Plan, will be deemed to have released and discharged the
Debtors, the reorganized Debtors and various other parties and their respective
affiliates, officers, directors, employees and representatives from any and all
claims, whether known or unknown, foreseen or unforeseen, existing or
subsequently arising, in law, equity or otherwise, that such entity would have
been legally entitled to assert (whether individually or collectively), based on
or in any way relating to, or in any manner arising from, in whole or in part,
the Debtors, certain non-Debtor subsidiaries, the Debtors’ restructuring, the
Chapter 11 Cases or related matters described in the Plan, upon any other act or
omission, transaction, agreement, event or other occurrence taking place on or
before the Effective Date of the Plan.
Certain
Information Regarding Assets and Liabilities of the Company
Information
regarding the assets and liabilities of the Company as the most recent
practicable date is hereby incorporated by reference to the Company’s quarterly
report on Form 10-Q for the fiscal quarter ended March 31, 2010 filed with the
Securities and Exchange Commission on May 10, 2010.
Cautionary
Statement Regarding Forward-Looking Statements
This
Current Report on Form 8-K contains various forward-looking statements and
information that are based on management’s belief, as well as assumptions made
by and information currently available to management. These forward-looking
statements speak only as of the date of this Current Report. The
Company disclaims any obligation to update these statements and cautions you not
to rely unduly on them. Forward-looking statements generally use
words such as “estimate,” “project,” “predict,” “believe,” “expect,”
“anticipate,” “plan,” “forecast,” “budget,” “goal” or other words that convey
the uncertainty of future events or outcomes. Forward-looking
statements include, but are not limited to, statements regarding the
confirmation and implementation of the Plan of Reorganization, the securities to
be issued pursuant to the Plan of Reorganization and the Company’s ability to
consummate, and any resulting effect of, the transactions contemplated by the
Plan of Reorganization. Although U.S. Concrete believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that those expectations will prove to have been
correct. Such statements are subject to certain risks, uncertainties
and assumptions. Important factors that could cause actual results to
differ materially from the forward-looking statements in this Current Report are
set forth in other reports or documents that the Company files from time to time
with the Securities and Exchange Commission, including the Company’s Quarterly
Reports on Form 10-Q filed in 2010 and the Company’s most recent Annual Report
on Form 10-K and include, but are not limited to:
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·
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the
completion of the Company’s restructuring, including the outcome and
impact on the Company’s business of the proceedings under Chapter 11 of
the Bankruptcy Code;
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·
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the
Company’s ability to satisfy closing conditions under the agreements with
certain holders of the Existing Notes, the Plan and related
documents;
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·
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the
Company’s total debt outstanding and the availability and access, in
general, of funds to meet the Company’s debt obligations and to fund the
Company’s operations and necessary capital expenditures, either through
cash on hand, cash flows from operating activities, further borrowings or
other sources;
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·
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the
Company’s ability to comply with all covenants in its indenture and credit
agreement, any violation of which, if not cured in a timely manner, could
trigger a default of the Company’s other obligations under cross-default
provisions;
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·
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the
Company’s ability to repay debt prior to or when it becomes due and/or
successfully access the capital or credit markets to refinance that debt
through new issuances, exchange offers or
otherwise;
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the
further tightening of mortgage lending or mortgage financing requirements
and the impact of these requirements on the residential construction
market;
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the
impact of the global financial crisis on the Company’s business and
financial condition;
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·
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the
Company’s ability to attract new customers, differentiate itself in a
competitive market, hire and retain employees and reduce operating and
overhead expenses;
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·
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future
goodwill impairments;
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·
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the
seasonal and cyclical nature of the markets the Company serves and the
variability of operating results from one reporting period to
another;
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the
Company’s inability to carry out its strategy of growth through
acquisitions;
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the
possibility of losing business to competitors who underbid the Company,
and competition in the Company’s highly competitive
industry;
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the
Company’s dependence on third parties for concrete equipment and supplies
essential to operate its business;
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the
impact of governmental regulations, including environmental regulations,
on the Company’s operating costs, capital expenditures and
earnings;
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operating
hazards that may cause personal injury or property
damage;
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departure
of key personnel and the Company’s inability to attract and retain
qualified employees;
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·
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the
effect of collective bargaining agreements, work stoppages and other labor
relations matters on the Company’s operating costs, business and
earnings;
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the
impact of price changes and minor variations in sales volumes on the
Company’s overall profitability;
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claims
that the Company’s products do not meet regulatory requirements or
contractual specifications; and
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general
business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall
economy.
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Should
one or more of these risks materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those
expected. All forward-looking statements attributable to the Company
or any person acting on its behalf are expressly qualified in their entirety by
this cautionary statement.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS.
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Exhibit
No.
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Exhibit
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2.1
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Debtors’
Joint Plan of Reorganization filed pursuant to Chapter 11 of the United
States Bankruptcy Code filed on July 27, 2010 with the United States
Bankruptcy Court for the District of Delaware in Case No. 10-11407
(Jointly Administered).
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2.2
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Debtors’
Disclosure Statement filed pursuant to Chapter 11 of the United States
Bankruptcy Code filed on June 2, 2010 with the United States Bankruptcy
Court for the District of Delaware in Case No. 10-11407 (Jointly
Administered).
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| 99.1 |
Press
release dated July 30, 2010. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, U.S. Concrete, Inc.
has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
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U.S. CONCRETE,
INC. |
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/s/ Michael
W. Harlan |
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| Date:
July 30, 2010 |
Name: |
Michael
W. Harlan |
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Title |
President
and Chief Executive Officer |
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