Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4/A Amendment #4 to Form S-4 316 1.91M
2: EX-2.A Plan of Reorganization 26 146K
3: EX-12 Statement re: Computation of Ratios 1 9K
4: EX-23.A Consent of Independent Public Accountants 1 7K
8: EX-99.AC Zenith Electronics Melrose Park Plant #25 232 890K
9: EX-99.AD Zenith Electronics Matamoros Mexico 77 358K
10: EX-99.AE Zenith Electronics 66 346K
11: EX-99.AF Zenith Electronics Microcircutis Plant 21 92K
12: EX-99.AG Zenith Electronics Franklin Park Plant 9 33K
13: EX-99.AH Zenith Electronics Cuidad Juarez Mexico 99 421K
14: EX-99.AI Zenith Electronics Glenview Illinois Plant 79 395K
6: EX-99.J Form of Letter to Securityholders 3 19K
7: EX-99.T Consent of Insignia 1 7K
5: EX-27.C Financial Data Schedule (Pre-XBRL) 2 10K
EX-99.J — Form of Letter to Securityholders
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Exhibit 99j
[Zenith Letterhead]
_______, 1999
Dear Zenith Security Holder:
Enclosed are several documents related to our planned financial and
operational restructuring. We are asking holders of our subordinated debt to
vote whether to accept the terms of our proposed prepackaged plan of
restructuring under the U.S. Bankruptcy Code. If the financial restructuring is
completed:
. holders of our 6 1/4% subordinated debentures will receive
approximately $483 in principal amount of new 8.19% debentures due
2009 for each $1,000 principal amount of our 6 1/4% subordinated
debentures they hold; and
. holders of our Common Stock will not receive any distribution, because
the Company does not have enough value for a distribution to
equityholders under the restructuring.
We realize that the enclosed documents are lengthy. We urge you to read
them carefully, however, because they describe our planned restructuring.
First, however, let me try to put our restructuring plan into perspective for
you in a summary fashion.
Background of the Restructuring
Our operations have historically included the design, development,
manufacturing and marketing of video products (including color television sets
and other consumer products), and related parts and accessories. Unfortunately,
we have experienced severe financial difficulties for many years. We incurred
losses in all but one of the years since 1985. In addition, we project that our
future cash flows will not be sufficient to meet all of our working capital
requirements, scheduled cash debt service obligations and anticipated capital
expenses without the restructuring.
In light of our persistent losses, we implemented various programs and
initiatives designed to lower costs and increase profits. These programs and
initiatives were financed primarily by LG Electronics, Inc. If the financial
restructuring is completed, LG Electronics, Inc. will receive a promissory note
having a projected principal amount of $135.1 million, certain plant, property
and equipment located in Reynosa, Mexico that has an appraised value of
approximately $32.4 million and 1,000 shares of common stock, representing 100%
of our outstanding common stock following the restructuring.
The Restructuring Plan
In May 1998, we announced that we were developing a long-term restructuring
plan designed to enhance our long-term viability by reducing production costs
and concentrating on areas in which we believe we can operate profitably. As a
result of this operational restructuring, we will become a sales, distribution
and technology company, we will discontinue substantially all of our
manufacturing operations and will outsource substantially all components and
products.
At that time, we also concluded that we could not implement our operational
restructuring with our current capital structure. Therefore, we developed a
financial restructuring plan designed to reduce our total outstanding debt and
annual interest payments. That plan, which was developed in conjunction with LG
Electronics, Inc., our bank lenders, and an ad hoc committee of holders of our
subordinated debt is described in the enclosed documents.
We believe that the restructuring is the best alternative for achieving a
capital structure that is appropriate based on current industry conditions and
our financial projections. A Special Committee of our Board of Directors
composed of directors who are not officers or directors of LG Electronics, Inc.
or current officers of the Company has unanimously recommended the proposed
restructuring to the complete Board of Directors of the Company. The Board of
Directors has recommended that the holders of the subordinated debt and other
impaired claims accept the restructuring. When LG Electronics, Inc. and its
affiliate took a majority stake in the Company, they acquired the right to
designate six members of the Board of Directors. One of the members originally
designated by LG Electronics, Inc. is a member of the Special Committee. Since
1995, LG Electronics, Inc. has had the ability to elect all of the members of
the Board of Directors by virtue of the ownership by LG Electronics, Inc. and
its affiliate of over 50% of our common stock.
Over the last year, the Company has been discussing the terms of the
planned restructuring with a committee of three holders of our subordinated
debt, Loomis Sayles & Company, L.P., Mariner Investment Group and Caspian
Capital Partners L.L.P. These holders informed the Company that they
collectively hold or control over 50% of the outstanding principal amount of the
subordinated debt. On March 31, 1999, the members of this committee entered into
an agreement with the Company and LG Electronics, Inc. pursuant to which they
have agreed to vote for and support the planned restructuring. The committee
retained Crossroads Capital Partners LLC as its financial advisor and Hebb &
Gitlin as its legal advisor to assist in the negotiations which resulted in the
agreement.
How to Vote on the Restructuring
As described in the enclosed documents, we are asking holders of our
subordinated debt to accept the restructuring.
To vote on the restructuring, each holder of subordinated debt should:
(i) fill in the enclosed Ballot;
(ii) check the box entitled "Accepts the Prepackaged Plan" or "Rejects the
Prepackaged Plan;"
(iii) sign the Ballot; and
(iv) return the Ballot to the Solicitation Agent as directed in the
enclosed disclosure statement.
If you hold subordinated debt and do not wish to consent to the releases
granted in favor of certain directors of the Company, certain investors in the
Company and certain holders of the subordinated debt as provided for in the
restructuring plan, you should check the box under Item 5 of your Ballot. The
Company is aware that certain security holders have asserted or may assert that
claims exist against one or more of the investors and/or directors designated by
LG Electronics, Inc. relating to the development of the proposed restructuring.
Such claims include or might include alleged breach of fiduciary duties,
violation of securities laws, or other conduct allegedly inconsistent with
applicable law. To the extent any such claims exist, and to the extent that such
claims are held by the Company or by holders of the subordinated debt that have
accepted the restructuring, or if the class of holders of subordinated debt has
voted in favor of the restructuring or if the holder of subordinated debt is
entitled to receive a distribution of property under the restructuring, such
claims will be released by the terms of the restructuring, unless such holder of
subordinated debt has marked a ballot so as not to consent to the releases.
Moreover, all of the directors, investors and holders of subordinated debt
entitled to receive the releases, including the directors designated by LG
Electronics, Inc., would receive the benefits of the exculpation provisions of
the restructuring, which might impair certain causes of action not affected by
the releases in the restructuring.
It is a condition to consummation of our restructuring plan that no more
than 5% of the holders of the subordinated debt shall have checked the box under
Item 5.
If you hold subordinated debentures in "street name" through a
brokerage firm, bank, trust company or other sources, return the Ballot to the
nominee as promptly as possible so that the nominee may complete a Master Ballot
that will reflect your vote.
All holders of our Common Stock are automatically deemed to reject the
restructuring and are therefore not being asked to submit Ballots.
Finalizing the Restructuring
Once the voting period has ended, we will determine, based on the results
of the voting, whether we can finalize the restructuring. If a majority in
number of holders of subordinated debt who vote accept the restructuring,
and they hold at least 66 2/3% of the dollar amount of subordinated debt voted,
each of the holders of subordinated debt will be deemed to have accepted the
restructuring.
If we receive enough votes in favor of the restructuring, we will seek to
consummate the restructuring plan. If we do not receive enough votes to accept
the restructuring from holders of the subordinated debt, we intend to seek the
approval of the Bankruptcy Court to carry out the restructuring without such
approval by using provisions of the Bankruptcy Code that would allow us to
implement the restructuring over the rejection of the holders of the
subordinated debt. If the Bankruptcy Court grants our request pursuant to those
provisions, holders of subordinated debt will receive no distribution and retain
no property under the restructuring instead of the current offer being made to
them. While we believe that this treatment is permissible under the Bankruptcy
Code, we recognize that arguments exist that certain case law would permit the
Bankruptcy Court to reach a contrary conclusion.
Alternatives to Restructuring
If we do not receive the vote necessary to finalize the restructuring or
the Bankruptcy Court does not permit us to carry out the restructuring, we will
be forced to consider some unattractive alternatives, including a liquidation of
our assets or development of an alternative restructuring plan. We believe that
the current restructuring will minimize the disruption to our business and
ultimately results in a larger distribution for creditors than would occur under
our other alternatives.
In Conclusion
Again, we urge you to read all the enclosed documents carefully and to
follow the instructions for participating in the restructuring before the
expiration date on _________________.
We believe the restructuring provides the best alternative for creating a
capital structure that is appropriate given our operational capabilities. We
are nearing the end of a very lengthy process that is the most likely of the
alternatives to result in a stronger and well-positioned Company with manageable
debt obligations. As we work toward completing the restructuring, we thank you
for your continued support.
Sincerely,
Jeffrey P. Gannon
President and Chief Executive Officer
Dates Referenced Herein and Documents Incorporated by Reference
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