UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) November 18, 2005
Footstar, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-11681 22-3439443
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(Commission File Number) (IRS Employer Identification No.)
933 MacArthur Boulevard
Mahwah New Jersey 07430
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(Address of Principal Executive Offices) (Zip Code)
(201) 934-2000
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (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 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
As previously disclosed, on March 2, 2004, Footstar, Inc. (the
"Company") and certain of its subsidiaries (collectively, the "Debtors") filed
voluntary petitions under chapter 11 of title 11, United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of New York (the "Court") (Case No. 04-22350 (ASH)) (the "Chapter 11
Case"). The Debtors remain in possession of their assets and properties, and
continue to operate their businesses and manage their properties as
debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code.
As of November 18, 2005, the Company entered into the Second
Amendment (the "Amendment") to the Amended and Restated Debtor-in-Possession and
Exit Credit Agreement, dated as of June 25, 2004, as amended by the First
Amendment, dated as of May 31, 2005 (the "Credit Agreement"), by and among the
Company, Footstar Corporation, Fleet National Bank, Fleet Retail Group, Inc.,
General Electric Capital Corporation, The CIT Group/Business Credit, Inc.,
AmSouth Bank and National City Business Credit, Inc. The effectiveness of the
Amendment is subject to the approval of the Court. The Amendment is attached
hereto as Exhibit 10.1 and incorporated herein by reference.
Upon the occurrence of the Exit Facility Date (as defined in the
Credit Agreement) and the satisfaction of the conditions set forth in Section
5.1 of the Amended and Restated Exit Credit Agreement attached to the Amendment
as Exhibit A (the "Amended and Restated Credit Agreement"), the terms and
conditions of the Credit Agreement shall be amended and restated in their
entirety and replaced with the terms and conditions set forth in the Amended and
Restated Credit Agreement. Because the Amended and Restated Credit Agreement
will not be effective until the Company consummates its chapter 11 plan of
reorganization, the Amended and Restated Credit Agreement provides exit
financing only and not debtor-in-possession financing, which will continue to be
provided under the Credit Agreement until the effectiveness of the Amended and
Restated Credit Agreement. Accordingly, the Amended and Restated Credit
Agreement, in addition to certain other revisions to the Credit Agreement,
deletes those terms and conditions which were applicable only to the
debtor-in-possession financing.
The Amended and Restated Credit Agreement, among other things,
reflects the change in the maturity date from (a) the earlier of (i) thirty-six
months after the Company's emergence from chapter 11 and (ii) March 4, 2009 to
(b) the earlier to occur of (i) November 30, 2008 and (ii) thirty days prior to
the termination of the Amended and Restated Master Agreement dated as of August
24, 2005, between Kmart Corporation, Sears Holdings Corporation and the Company,
as may be amended or modified from time to time. In addition, the Amended and
Restated Credit Agreement changes the definition of "Appraisal Percentage" from
(a) 85% to (b)(i) 90% for the period commencing on the Exit Facility Date
through and including the six month anniversary of the Exit Facility Date, (ii)
87.5% for the period commencing on the day following the six month anniversary
of the Exit Facility Date through and including the one year anniversary of the
Exit Facility Date, and (iii) 85% thereafter.
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The Amended and Restated Credit Agreement revises the definition of
"Excess Availability" to mean as of any date of determination, the result of (a)
the lesser of the Borrowing Base or the Commitments minus (b) the sum of (i) the
outstanding Credit Extensions and (ii) all then held checks, accounts payable
which are beyond payment practices followed by the Loan Parties as of the Exit
Facility Date (each capitalized terms as defined in the Amended and Restated
Credit Agreement) and consistent with past practices, and overdrafts. The
Amended and Restated Credit Agreement also changes the amount of the Excess
Availability the Company and its subsidiaries are required to maintain from (a)
an amount greater than or equal to 10% of the Borrowing Base to (b) an amount
greater than or equal to (i) five percent (5%) of the Borrowing Base for the
period commencing on the Exit Facility Date through the one year anniversary of
the Exit Facility Date and (ii) ten percent (10%) of the Borrowing Base (as
defined in the Amended and Restated Credit Agreement) thereafter.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report and the exhibit hereto may contain
forward-looking statements made in reliance upon the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements may be identified
by their use of words, such as "anticipate," "estimates," "should," "expect,"
"guidance," "project," "intend," "plan," "believe" and other words and terms of
similar meaning. Factors that could affect the Company's forward-looking
statements include, among other things: the pace at which Kmart terminates its
business relationship with the Company and the Company's ability to develop
viable business alternatives to offset the termination of such relationship; the
Company's ability to emerge from bankruptcy protection and operate as a going
concern without those protections; the Company's ability to operate pursuant to
the terms of its debtor in possession and exit financing facility and to
otherwise obtain financing necessary to operate the Company's business on
satisfactory terms both during and after its emergence from bankruptcy
protection; the Company's ability to obtain Court approval and any other
required approvals with respect to motions in the Chapter 11 Case prosecuted by
the Company from time to time; the Company's ability to develop, prosecute,
confirm and consummate its plan of reorganization with respect to the Chapter 11
Case, including resolution of the interest rate payable to unsecured creditors;
risks associated with third parties seeking and obtaining Court approval to
terminate or shorten the exclusivity period that the Company has to propose and
confirm its plan of reorganization, to appoint a Chapter 11 trustee or to
convert the Chapter 11 Case to a Chapter 7 case; the Company's ability to obtain
and maintain normal terms with vendors and service providers and the ability to
maintain contracts that are critical to the Company's operations; the Company's
compliance with the requirements of Sarbanes-Oxley; negative reactions from the
Company's stockholders, creditors or vendors to the delay in providing financial
information and the delisting of the Company's common stock from the New York
Stock Exchange; the impact and result of any litigation (including private
litigation), or any action by the U.S. Securities and Exchange Commission (the
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"SEC") relating to the Company or the financial statement restatement process;
the Company's ability to successfully implement internal controls and procedures
that ensure timely, effective and accurate financial reporting; delays in the
filing of required periodic or current reports with the SEC; the Company's
ability to reduce overhead costs commensurate with any decline in sales; higher
than anticipated employee levels, capital expenditures and operating expenses,
including the Company's ability to reduce overhead and rationalize assets, both
generally and with respect to changes made to address the results of the
investigation and the restatement; adverse results on the Company's business
relating to increased review and scrutiny by regulatory authorities, media and
others of financial reporting issues and practices or otherwise; any adverse
developments in existing commercial disputes or legal proceedings; intense
competition in the markets in which the Company competes; and the Company's
ability to attract and retain qualified personnel. Additionally, due to material
uncertainties, it is not possible to predict the length of time the Company will
operate under Chapter 11 protection, the outcome of the proceeding in general,
whether the Company will continue to operate under its current organizational
structure, or the effect of the proceeding on the Company's businesses and the
interests of various creditors and security holders.
Because the information herein is based solely on data currently
available, it is subject and should not be viewed as providing any assurance
regarding the Company's future performance. Actual results and performance may
differ from the Company's current projections, estimates and expectations and
the differences may be material, individually or in the aggregate, to the
Company's business, financial condition, results of operations, liquidity or
prospects. Additionally, the Company assumes no obligation to update any of its
forward-looking statements based on changes in assumptions, changes in results
or other events subsequent to the date hereof.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
10.1 Second Amendment to Amended and Restated Debtor-in-Possession and Exit
Credit Agreement.
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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.
Date: November 23, 2005
FOOTSTAR, INC.
By: /s/ Maureen Richards
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Maureen Richards
Senior Vice President, General Counsel
and Corporate Secretary
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EXHIBIT INDEX
Exhibit No. Description
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10.1 Second Amendment to Amended and Restated
Debtor-in-Possession and Exit Credit Agreement.
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