Fomr 8K 2nd Qtr 05
UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
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Date of Report (Date of earliest event reported)
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July 28, 2005
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A. M. Castle & Co.
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(Exact name of registrant as specified in its
charter)
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Maryland
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1-5415
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36-0879160
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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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3400
N. Wolf Road, Franklin Park, Illinois
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60131
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number including area code:
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847/455-7111
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(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):
[
]
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 13 e-4(c) under the Exchange
Act (17 CFR 240.13 e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
On
July
29, 2005 the Company and its subsidiary, A. M. Castle & Co. (Canada) Inc.,
(the åCanadian Subsidiaryæ), entered into an $82.0 million in U.S. dollars,
five-year revolving credit agreement (the "Revolver") with a syndicate of
lenders including Bank of America, N.A., as a lender and as U.S. agent, and
Bank
of America, N.A., Canada Branch, as a lender and as Canadian agent. The Revolver
consists of (i) a $75.0 million revolving loan (the "U.S. Facility") and (ii)
a
$7.0 million revolving loan (the "Canadian Facility") to be drawn by the
borrower from time to time. The Canadian Facility can be drawn in U.S. dollars
and/or Canadian dollars.
The
U.S.
Facility is guarantied by the material domestic subsidiaries of the Company
and
is secured by substantially all of the assets of the Company and such domestic
subsidiaries. Pursuant to that certain Collateral Agency and Intercreditor
Agreement, dated as of March 20, 2003, among U.S. Bank, National Association,
as
Collateral Agent, the long-term noteholders of the Company, The Northern Trust
Company, the Company and its material domestic subsidiaries, the obligations
of
the Company under the U.S. Facility rank pari-passu with the Company’s long-term
notes and its trade acceptance facility with Northern Trust Company. The U.S.
Facility provides for a swing line subfacility in an aggregate amount up to
$5,000,000 and for a letter of credit subfacility providing for the issuance
of
letters of credit in an aggregate amount up to $10,000,000. Depending on the
type of borrowing selected by the Company, the applicable interest rate for
loans under the U.S. Facility is calculated as a per annum rate equal to (i)
LIBOR plus a variable margin or (ii) the greater of (x) the U.S. prime rate
or
(y) the federal funds effective rate plus 0.5%. The margin on LIBOR loans will
initially be 1.375% through September 30, 2005 and may fall or rise as set
forth
on a grid depending on the Company’s debt-to-total capital ratio as calculated
on a quarterly basis. As of August 3, 2005 there were $1,000,000. in revolving
loans outstanding under the U.S. Facility.
The
Canadian Facility is guarantied by the Company and is secured by substantially
all of the assets of the Canadian Subsidiary. The Canadian Facility provides
for
a letter of credit subfacility providing for the issuance of letters of credit
in an aggregate amount up to Cdn.$2,000,000. Depending on the type of borrowing
selected by the Canadian Subsidiary, the applicable interest rate for loans
under the Canadian Facility is calculated as a per annum rate equal to (i)
for
loans drawn in U.S. dollars, the rate is the same as the U.S. Facility and
(ii)
for loans drawn in Canadian dollars, (x) the applicable CDOR rate for banker’s
acceptances of the applicable face value and tenor or (y) the greater of (I)
the
Canadian prime rate and (II) the one-month CDOR rate plus 0.5%. As of August
3,
2005 there were Cdn.$8,105,100. in revolving loans outstanding under the
Canadian Facility.
The
Revolver is an asset-based loan with a borrowing base that fluctuates primarily
with the Company’s and Canadian Subsidiary’s receivables and inventory levels.
The covenants contained in the Revolver, including the financial covenants,
match those set forth in the Company’s long-term note agreements. These
covenants limit certain matters, including the incurrence of liens, the sale
of
assets and mergers and consolidations, and include a maximum debt-to working
capital ratio, a maximum debt-to-total capital ratio and a minimum net worth
provision. The Revolver is also similar to the Company’s other senior
indebtedness, includes a provision to release liens on the assets of the Company
and all of its subsidiaries should the Company achieve an investment grade
rating.
The
Company used proceeds available under the U.S. Facility to repay in full and
terminate its accounts receivable purchase facility (the "RPF") with General
Electric Capital Corporation. In connection with the Canadian Facility, the
Canadian Subsidiary repaid in full and terminated its former revolving credit
facility with The Bank of Nova Scotia. With the termination of the RPF, future
financial statement filings by the Company will contain all trade receivables
of
the Company and its subsidiaries, and outstanding borrowings under the Revolver
will be classified as debt.
Available
proceeds under the Revolver may be used for general corporate
purposes.
A
copy of
the agreement is attached to this filing as Exhibit 10.
Item
1.02 Termination of a Material Definitive Agreement
On
Friday, July 29, 2005 the Company’s Receivables Purchase Facility dated December
26, 2002 with General Electric Capital Corporation was terminated. The
termination was made in connection with the closing of the Company’s new secured
revolving credit facility described in Item 1.01 above. There was no additional
cost to the Company in connection with the early termination of this
agreement.
Item
2.02 Results of Operation and Financial Condition
On
Tuesday, August 2, 2005 the Company disseminated a press release, attached
as
Exhibit A, announcing the Company’s operational results for the Second Quarter
ending June 30, 2005.
As
part
of the press release there is a bridge of non-GAAP financial measurement of
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to
reported net income. It is shown below the disclosure of the GAAP
figures
for Operating income, Net income and Diluted earnings per share. This
reconciliation of EBITDA to Net income is for the Six Months Ended June 30,
2005
and June 30, 2004.
The
Company believes, however, that EBITDA is an important term and concept because
of its use by the professional investment community, including the Company’s
primary lenders. The Company believes the use of this Term is necessary to
a
proper understanding of the changes in the Company’s earnings.
Item
5.02 Departure of Directors or Principal Officers; Election of
Directors;
Appointment
of Principal Officers
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On
Thursday, July 28, 2005, Mr. John W. McCarter, Jr. announced his
retirement from the Company’s Board of Directors. Mr. McCarter served as a
Director of the Company for 22 years and was Chairman of the Board’s Human
Resource Committee.
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| (b.) |
On
Thursday, July 28, 2005, at the Company’s regularly scheduled quarterly
Board meeting, the Board of Directors elected Mr. Brian P. Anderson
and
Mr. Thomas A. Donahoe as directors of A. M. Castle &
Co.
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Mr.
Anderson is former Executive Vice President/CFO of Office Max, Inc. (November
2004 to January 2005). Prior to that, Mr. Anderson was Corporate Vice President
Finance, Senior Vice President/CFO of Baxter International (May 1977 to June
2004). Mr. Anderson is a member of the Board of Directors of WW Grainger since
1999. Mr. Anderson was appointed a member of the Company’s Audit
Committee.
Mr.
Donahoe, retired Vice Chair of Price Waterhouse LLP, is a director of NiCor,
Inc. and Andrew Corp. Mr. Donahoe was appointed a member of the Company’s Audit
Committee.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
On
Thursday, July 28, 2005 the Company amended its Bylaws to increase the size
of
its Board of Directors by to 9. A copy of the amendment is attached as Exhibit
3.
Exhibits:
Correspondence
- Press Release
Exhibit
10 - Credit Agreement
Exhibit
3
- Amendment to By-Laws
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A. M. Castle & Co.
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/s/ Lawrence A. Boik
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Lawrence A. Boik
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Vice President,
Controller/Treasurer
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