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): June 30, 2005
SILGAN HOLDINGS INC.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-22117 06-1269834
--------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
4 Landmark Square, Stamford, Connecticut 06901
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 975-7110
N/A
--------------------------------------------------------------------------------
(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:
[ ] 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))
Section 1--Registrant's Business and Operations
Item 1.01. Entry into a Material Definitive Agreement.
On June 30, 2005, we and certain of our wholly owned subsidiaries completed the
refinancing of our previous senior secured credit facility by entering into a
new $1 billion senior secured credit facility with Deutsche Bank AG New York
Branch, as Administrative Agent, Bank of America, N.A. and Morgan Stanley Bank,
as Co-Syndication Agents, BNP Paribas and JPMorgan Chase Bank, N.A., as
Co-Documentation Agents, and various lenders. Our new credit facility also
contains an uncommitted incremental loan facility of up to $350 million, of
which no more than $150 million may be in the form of incremental revolving
loans.
All amounts owing under our previous senior secured credit facility, dated as of
June 28, 2002 (as amended), were repaid with proceeds from loans made under the
new credit facility. Upon closing this refinancing, the Company recorded a
non-cash, pre-tax charge of $11.0 million for a loss on early extinguishment of
debt to write-off the unamortized debt issuance costs of the previous credit
facility.
Description of the New Credit Facility
The following is a summary of certain terms of our new credit facility and is
qualified in its entirety by reference to the agreements filed as exhibits
hereto.
The Available Credit Facility
Our new credit facility provides us with an aggregate principal amount of $425
million of term loans designated A term loans and $125 million of term loans
designated B term loans and provides Silgan Containers Corporation, Silgan
Plastics Corporation and certain of our other wholly owned subsidiaries up to an
aggregate principal amount (determined on a U.S. dollar equivalent basis) of
$450 million of revolving loans, letters of credit and swingline loans,
denominated in U.S. Dollars, Euros or Pounds Sterling.
The revolving loans generally can be borrowed, repaid and reborrowed from time
to time until June 30, 2011, on which date all revolving loans mature and are
payable in full. Amounts repaid under the term loans cannot be reborrowed.
We may use proceeds from future revolving loans for working capital and general
corporate purposes, including permitted acquisitions. Up to $75 million of the
revolving credit facility may be used for letters of credit and up to $30
million may be used to incur swingline loans.
The uncommitted incremental revolving facility provides, among other things,
that any incremental revolving loan borrowing shall:
o be denominated in U.S. dollars or certain foreign currencies; and
o not exceed an aggregate of $150 million.
2
The A term loans mature on June 30, 2011 and are payable in installments as
follows:
A Term Loan
Scheduled Repayment Date Amount
------------------------ ------
December 31, 2007 $63,750,000
December 31, 2008 $63,750,000
December 31, 2009 $85,000,000
December 31, 2010 $85,000,000
June 30, 2011 $127,500,000
The B Term Loans mature on June 30, 2012 and are payable in installments as
follows:
B Term Loan
Scheduled Repayment Date Amount
------------------------ ------
December 31, 2005 $1,250,000
December 31, 2006 $1,250,000
December 31, 2007 $1,250,000
December 31, 2008 $1,250,000
December 31, 2009 $1,250,000
December 31, 2010 $1,250,000
December 31, 2011 $1,250,000
June 30, 2012 $116,250,000
Our new credit facility also contains certain mandatory repayment provisions,
including requirements to prepay loans with proceeds received from the
incurrence of certain indebtedness, with proceeds received from certain asset
sales, and, under certain circumstances, with 50% of our excess cash flow. The
mandatory repayment provisions are no more restrictive in the aggregate than
under our previous credit facility. Generally, mandatory prepayments of term
loans are allocated pro rata to the A term loans and B term loans and applied
first to the scheduled amortization payments in the year of such prepayment and,
to the extent in excess thereof, pro rata to the remaining installments of term
loans. Voluntary prepayments of term loans may be applied to any tranche of term
loans at our discretion and are applied first to the scheduled amortization
payments in the year of such prepayment and, to the extent in excess thereof,
pro rata to the remaining installments.
The uncommitted incremental term loan facility, which shall not exceed $350
million less any amount outstanding under the incremental revolving loan
facility, provides, among other things, that any incremental term loan borrowing
shall:
o be denominated in a single currency, either in U.S. dollars or certain
foreign currencies;
o be in a minimum aggregate amount for all lenders participating in a
given tranche of at least $50 million;
3
o have a maturity date no earlier than the maturity date for the B Term
Loans and a weighted average life to maturity of no less than the weighted
average life to maturity as then in effect for the B Term Loans; and
o be used to finance acquisitions and refinance any indebtedness
assumed as a part of such acquisitions, to refinance or repurchase subordinated
debt as permitted and to repay outstanding revolving loans.
If the borrowings are made in dollars, each of the term loans, revolving loans
and, when committed, the incremental term loans and incremental revolving loans,
at our election, may consist of loans designated as Eurodollar loans or Base
Rate loans. Each of the dollar-denominated loans can be converted from a Base
Rate loan to a Eurodollar loan and vice versa. Borrowings in Euros or Pounds
Sterling are designated as Euro Rate loans. The interest periods for Eurodollar
and Euro Rate loans may be one, two, three, six or, to the extent available,
twelve months or seven days.
As of June 30, 2005, the outstanding principal amounts of A term loans, B term
loans and revolving loans under our new credit facility were $425 million, $125
million and $351.6 million, respectively.
Security and Guarantees
Under the terms of a security agreement, a pledge agreement and a
borrowers/subsidiaries guaranty made in favor of the lenders, we and certain of
our subsidiaries guarantee on a secured basis all of the obligations of the
borrowers under the new credit facility and pledge substantially all of our
respective assets and properties (other than real property) as collateral to
secure the obligations under the new credit agreement, subject to limited
exceptions.
Interest and Fees
Interest on term loans and revolving loans maintained as Base Rate loans accrues
at floating rates equal to the sum of the Base Rate plus the applicable margin.
The Base Rate is the higher of the prime lending rate of the administrative
agent or 1/2 of 1% in excess of the overnight federal funds rate. Interest on
term loans and revolving loans maintained as Eurodollar loans, Euro loans or
Pounds Sterling loans accrues at floating rates equal (i) in the case of
Eurodollar loans, to the sum of the applicable margin plus the applicable rate
for deposits in dollars appearing on Page 3750 of the Telerate screen or, if
such page is not available, a formula rate determined with reference to the rate
offered by the administrative agent for dollar deposits in the New York
interbank eurodollar market, (ii) in the case of Euro and Pounds Sterling loans,
to the sum of the applicable margin plus either the applicable LIBOR rate as
provided under the new credit facility or a rate per annum as agreed by the
administrative agent, the applicable lenders and the borrower.
The applicable margin for B term loans that are maintained as Base Rate loans is
fixed through maturity at 0.25% and for B term loans that are maintained as
Eurodollar loans is fixed through maturity at 1.25%. For the period from June
30, 2005 through the date of the delivery of financial statements with respect
to our fiscal quarter ending September 30, 2005, the applicable margin for A
term loans and revolving loans that are maintained as Base Rate loans is 0.125%
and as Eurodollar and Euro Rate loans is 1.125%. For the period following the
delivery of our September 30, 2005, financial statements, the applicable margin
for A term loans and revolving loans will be reset quarterly based on our
leverage ratio.
4
The revolving borrowers have agreed to pay to the applicable lenders a
commitment commission calculated initially as 0.30% per annum on the daily
average unused portion of the lenders' commitment in respect of the revolving
loans until such commitment is terminated. The commitment commission rate ranges
from 0.20% to 0.50% and is subject to change on a quarterly basis beginning
after the delivery of our September 30, 2005 financials based on our leverage
ratio. Each of the revolving borrowers is also required to pay to the applicable
lenders under our new credit facility a letter of credit fee equal to the
applicable margin in effect from time to time for revolving loans maintained as
Eurodollar loans, and to pay to the issuers of the letter of credit a facing fee
of 1/8 of 1% per annum, in each case calculated on the aggregate stated amount
of letters of credit for the stated duration. Additionally, in connection with
the closing of our new credit facility, the agents and the lenders also received
certain other fees.
Certain Covenants
Our new credit facility contains certain financial and operating covenants that
are generally no more restrictive in the aggregate than the covenants contained
in our previous credit facility. Subject to certain exceptions as described in
the new credit facility, the covenants limit, among other things, our ability
to:
o incur additional indebtedness;
o create liens;
o consolidate, merge or sell assets;
o make certain capital expenditures;
o make certain advances, investments and loans;
o enter into certain transactions with affiliates;
o engage in any business other than the packaging business and related
businesses;
o pay dividends; and
o repurchase stock.
Our new credit facility requires our interest coverage ratio on the last day of
the fiscal quarter of any four consecutive fiscal quarters to be at least 3:1
and our leverage ratio on the last day of the fiscal quarter of any four
consecutive fiscal quarters to be no greater than 4:1.
Events of Default
Our new credit facility contains certain customary provisions concerning events
of default. Upon the occurrence of any such event of default under our new
credit facility, the lenders are permitted, among other things, to accelerate
the maturity of the term loans and the revolving loans and all other outstanding
indebtedness under the facility and terminate their commitment to make any
further revolving loans or to issue any letters of credit.
5
Item 1.02. Termination of a Material Definitive Agreement.
The information provided under Item 1.01 of this Current Report is incorporated
herein by reference with respect to the termination of our previous senior
secured credit facility.
Section 2--Financial Information
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of Registrant.
The information provided under Item 1.01 of this Current Report is incorporated
herein by reference to the extent applicable.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
---------- -----------
10.1 Credit Agreement, dated as of June 30, 2005, among Silgan
Holdings Inc., Silgan Containers Corporation, Silgan
Plastics Corporation, Silgan Containers Manufacturing
Corporation, Silgan Can Company, each other revolving
borrower party thereto from time to time, each other
incremental term loan borrower party thereto from time to
time, various lenders party thereto from time to time,
Deutsche Bank AG New York Branch, as Administrative Agent,
Bank of America, N.A. and Morgan Stanley Bank, as
Co-Syndication Agents, and BNP Paribas and JPMorgan Chase
Bank, N.A., as Co-Documentation Agents.
10.2 US Security Agreement, dated as of June 30, 2005, among
Silgan Holdings Inc., Silgan Containers Corporation, Silgan
Plastics Corporation, Silgan Containers Manufacturing
Corporation, Silgan Can Company, Silgan Corporation, Silgan
LLC, RXI Plastics, Inc., Silgan Closures Corporation, Silgan
Closures LLC, Silgan Closures Holding Company, Silgan
Closures International Holding Company, Silgan Equipment
Company, Silgan Tubes Corporation, Silgan Tubes Holding
Company, and Deutsche Bank AG New York Branch, as collateral
agent.
10.3 US Pledge Agreement, dated as of June 30, 2005, among Silgan
Holdings Inc., Silgan Containers Corporation, Silgan
Plastics Corporation, Silgan Containers Manufacturing
Corporation, Silgan Can Company, Silgan LLC, Silgan
Corporation, RXI Plastics, Inc., Silgan Closures
Corporation, Silgan Closures LLC, Silgan Closures Holding
Company, Silgan Closures International Holding Company,
Silgan Equipment Company, Silgan Tubes Corporation, Silgan
Tubes Holding Company, and Deutsche Bank AG New York Branch,
as collateral agent.
6
10.4 US Borrower/Subsidiaries Guaranty, dated as of June 30,
2005, made by each of Silgan Holdings Inc., Silgan
Containers Corporation, Silgan Plastics Corporation, Silgan
Containers Manufacturing Corporation, Silgan LLC, Silgan
Corporation, RXI Plastics, Inc., Silgan Closures
Corporation, Silgan Closures LLC, Silgan Closures Holding
Company, Silgan Closures International Holding Company,
Silgan Equipment Company, Silgan Tubes Corporation and
Silgan Tubes Holding Company, in favor of the creditors
thereunder.
7
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.
SILGAN HOLDINGS INC.
By: /s/ Frank W. Hogan, III
--------------------------------------
Frank W. Hogan, III
Senior Vice President, General Counsel
and Secretary
Date: July 7, 2005
8
INDEX TO EXHIBITS
Exhibit No. Description
---------- -----------
10.1 Credit Agreement, dated as of June 30, 2005, among Silgan
Holdings Inc., Silgan Containers Corporation, Silgan
Plastics Corporation, Silgan Containers Manufacturing
Corporation, Silgan Can Company, each other revolving
borrower party thereto from time to time, each other
incremental term loan borrower party thereto from time to
time, various lenders party thereto from time to time,
Deutsche Bank AG New York Branch, as Administrative Agent,
Bank of America, N.A. and Morgan Stanley Bank, as
Co-Syndication Agents, and BNP Paribas and JPMorgan Chase
Bank, N.A., as Co-Documentation Agents.
10.2 US Security Agreement, dated as of June 30, 2005, among
Silgan Holdings Inc., Silgan Containers Corporation, Silgan
Plastics Corporation, Silgan Containers Manufacturing
Corporation, Silgan Can Company, Silgan Corporation, Silgan
LLC, RXI Plastics, Inc., Silgan Closures Corporation, Silgan
Closures LLC, Silgan Closures Holding Company, Silgan
Closures International Holding Company, Silgan Equipment
Company, Silgan Tubes Corporation, Silgan Tubes Holding
Company, and Deutsche Bank AG New York Branch, as collateral
agent.
10.3 US Pledge Agreement, dated as of June 30, 2005, among Silgan
Holdings Inc., Silgan Containers Corporation, Silgan
Plastics Corporation, Silgan Containers Manufacturing
Corporation, Silgan Can Company, Silgan LLC, Silgan
Corporation, RXI Plastics, Inc., Silgan Closures
Corporation, Silgan Closures LLC, Silgan Closures Holding
Company, Silgan Closures International Holding Company,
Silgan Equipment Company, Silgan Tubes Corporation, Silgan
Tubes Holding Company, and Deutsche Bank AG New York Branch,
as collateral agent.
10.4 US Borrower/Subsidiaries Guaranty, dated as of June 30,
2005, made by each of Silgan Holdings Inc., Silgan
Containers Corporation, Silgan Plastics Corporation, Silgan
Containers Manufacturing Corporation, Silgan LLC, Silgan
Corporation, RXI Plastics, Inc., Silgan Closures
Corporation, Silgan Closures LLC, Silgan Closures Holding
Company, Silgan Closures International Holding Company,
Silgan Equipment Company, Silgan Tubes Corporation and
Silgan Tubes Holding Company, in favor of the creditors
thereunder.
9