A. M. CASTLE & CO. (OTCMKTS:CASL) Files An 8-K Entry into a Material Definitive Agreement

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A. M. CASTLE & CO. (OTCMKTS:CASL) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 – Entry into a Material Definitive Agreement

On June 16, 2017, A.M. Castle Co. (the Company) and four of its
subsidiaries entered into a Commitment Agreement with certain of
their creditors (the Commitment Parties). The subsidiaries party
to the Commitment Agreement are Keystone Tube Company, LLC,
HY-Alloy Steels Company, Keystone Service, Inc. and Total
Plastics, Inc. The Commitment Parties are the holders (or the
investment advisors or managers for the holders) of term loans
made to the Company and its subsidiaries under a Credit and
Guaranty Agreement dated December 8, 2016, as amended, by and
among the Company, its subsidiaries, the lenders party thereto
and Cantor Fitzgerald Securities, as Administrative and
Collateral Agent.
The Commitment Agreement has been entered into to the previously
announced Restructuring Support Agreement dated April 6, 2017, as
amended, by and among the Company, its subsidiaries, and certain
of their creditors, including the Commitment Parties (the RSA).
The RSA provides for a consensual restructuring of the debt and
equity of the Company, which the Company seeks to effect by means
of a Prepackaged Joint Chapter 11 Plan of Reorganization (the
Plan).
Under the Commitment Agreement, the Commitment Parties have
agreed, subject to the terms and conditions set forth in the
Commitment Agreement, to purchase new notes to be issued by the
reorganized Company under the Plan (the New Money Notes) for an
aggregate purchase price of up to $40 million (the New Money
Amount), subject to decrease based on the Companys Opening
Liquidity (as defined in the Commitment Agreement) as of the
effective date of the Plan. The New Money Notes will be on the
same terms as the new notes issued by the Company under the Plan
to holders of certain other classes of claims.
The New Money Notes will be issued at a price of $800 in cash for
each $1,000 in principal amount of New Money Notes. The
Commitment Agreement provides for the payment by the Company, in
consideration for the Commitment Parties agreements in the
Commitment Agreement, of a put option payment equal to $2.0
million, which represents 5.0% of the maximum New Money Amount.
In addition, the Company has agreed to reimburse the reasonable
fees and expenses incurred by: (a) the legal and financial
advisors to the Commitment Parties and (b) subject to an
aggregate cap of $125,000, inclusive of amounts payable under the
RSA, the legal and financial advisors to SGF, Inc. The Company is
required to indemnify the Commitment Parties in a manner
generally consistent with the provisions of the creditor
indemnification provisions of the RSA.
Under the Commitment Agreement, the Company and its subsidiaries
are required to meet the same milestones as set forth in the RSA,
including that they (a) file voluntary chapter 11 petitions on or
before June 20, 2017, (b) file the Plan and motions to assume the
RSA and Commitment Agreement no later than one business day after
filing such petitions, (c) obtain orders of the bankruptcy court
in the Companys chapter 11 cases approving the Companys
assumption of the RSA and the Commitment Agreement within 30 days
following the commencement of the Companys chapter 11 cases, and
(d) obtain orders of such bankruptcy court confirming the Plan on
or before the sixtieth day after filing such petitions. Further,
the Commitment Agreement may be terminated if the effective date
of the Plan has not occurred by August 31, 2017, if the RSA is
terminated, and upon other specified events.
The foregoing description is a summary and is qualified in its
entirety by reference to the Commitment Agreement. A copy of the
Commitment Agreement is attached to this Current Report on Form
8-K as Exhibit 99.1 and is incorporated herein by this reference.
Additionally, the foregoing is qualified in its entirety by
reference to the Plan, a copy of which was included within the
Disclosure Statement for Debtors Prepackaged Joint Chapter 11
Plan of Reorganization, a copy of which was attached as Exhibit
99.2 to the Companys Current Report on Form 8-K filed on May 15,
2017.
Item 1.03 – Bankruptcy or Receivership
On June 18, 2017, to the terms of the RSA, the Company and four
of its subsidiaries commenced voluntary chapter 11 proceedings
under the United States Bankruptcy Code (the Bankruptcy Code)
with the United States Bankruptcy Court for the District of
Delaware in Wilmington, Delaware (the Bankruptcy Court). The
Company has filed a motion with the Bankruptcy Court seeking to
administer all of the chapter 11 cases jointly under the caption
In re Keystone Tube Company, LLC., et al. (Case No.
17-11330).>>The four subsidiaries in the chapter 11 cases
are Keystone Tube Company, LLC, HY-Alloy Steels Company, Keystone
Services, Inc. and Total Plastics, Inc.
No trustee has been appointed in the chapter 11 cases, and the
Company and the four named subsidiaries continue to operate their
business as debtors in possession subject to the supervision and
orders of the Bankruptcy Court in accordance with the Bankruptcy
Code. It is expected that the Company and its subsidiaries will
continue their respective operations without interruption during
the pendency of the chapter 11 cases. To maintain and continue
ordinary course operations without interruption, the Company is
seeking approval from the Bankruptcy Court of a variety of first
day motions seeking certain relief and authorizing the Company
and its subsidiaries to maintain their operations in the ordinary
course. Bankruptcy Court filings and other information related to
the chapter 11 cases are available at a website administered by
the Debtors claims agent, Kurtzman Carson Consultants, LLC, at
http://www.kccllc.net/amcastle.
Also to the terms of the RSA, on June 18, 2017 the Company
filed a Prepackaged Joint Chapter 11 Plan of Reorganization
(the Plan) with the Bankruptcy Court. The Plan implements a new
senior secured exit financing facility and the issuance of new
second lien secured notes in consideration of a capital
infusion of up to $40 million to refinance or exchange the
existing first lien secured claims and to provide working
capital for the reorganized Company. The Plan also deleverages
the Debtors balance sheet by exchanging approximately $200
million of the existing second lien notes and third lien notes
for new common stock in the reorganized Company and certain
convertible new second lien secured notes, together with
certain cash distributions. All of the existing equity
interests in the Company will be extinguished, but holders of
such equity interests will have the opportunity to receive a
20% share of new common stock in the reorganized Company,
subject to dilution, as part of a settlement encompassed in the
Plan. Allowed general unsecured claims and all creditors who
are unimpaired under the Plan will receive a complete recovery.
The description of the Plan in this Current Report on Form 8-K
does not purport to be complete and is qualified in its
entirety by reference to the Plan, a copy of which is attached
to the Disclosure Statement for Debtors Prepackaged Joint
Chapter 11 Plan of Reorganization>filed as Exhibit 99.2 to
the Companys Current Report on Form 8-K filed on May 15, 2017.
As previously announced, the Company has completed its
solicitation of votes to accept or reject the Plan from the
holders of Prepetition First Lien Secured Claims, Prepetition
Second Lien Secured Claims, and Prepetition Third Lien Secured
Claims, as such terms are defined in the Plan. In dollar value,
50% of the votes cast by holders of both the Prepetition First
Lien Secured Claims and the Prepetition Second Lien Secured
Claims, as well as 79.24% of the votes cast by holders of the
Prepetition Third Lien Secured Claims, approved the Plan. In
the aggregate, 98.32% of the voting secured creditors by dollar
value voted in favor of the Plan. Additionally, a majority of
voting holders in number in each class approved the Plan, with
an aggregate of 88.68% of voting holders in number approving
the Plan.
Item 2.04 – Triggering Events that Accelerate or Increase a
Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement
The filing of the bankruptcy petitions described above in Item
1.03 constituted a default or event of default that accelerated
the Companys obligations under (i) the Credit Agreement dated
December 8, 2016 by and among the Company, Highbridge Capital
Management, LLC, Corre Partners Management, LLC, Whitebox
Credit Partners, L.P., WFF Cayman II Limited, and SGF, LLC, and
Cantor Fitzgerald (the Credit Agreement), (ii) the Indenture
dated February 8, 2016 by and between the Company, as Issuer
and Guarantors, and U.S. Bank National Association, as Trustee
(the Senior Notes Indenture) and the 12.75% Senior Secured
Notes due 2018 issued thereto, and (iii) the Indenture dated
May 19, 2016 by and between the Company, as Issuer and
Guarantors, and U.S. Bank National Association, as Trustee (the
Convertible Notes Indenture) and the 5.25% Convertible Senior
Secured Notes due 2019 issued thereto. The Credit Agreement,
the Senior Notes Indenture, and the Convertible Notes Indenture
provide that, as a result of the filing of the bankruptcy
petitions, all outstanding indebtedness due thereunder shall be
immediately due and payable. Any efforts to enforce such
payment obligations under the Credit Agreement, the Senior
Notes Indenture, and the Convertible Notes Indenture are
automatically stayed as a result of the bankruptcy petitions,
and the creditors rights of enforcement in respect of the
Credit Agreement, the Senior Notes Indenture, and the
Convertible Notes Indenture are subject to the applicable
provisions of the RSA and the Bankruptcy Code.
Item 7.01 – Regulation FD Disclosure
On June 19, 2017, the Company issued a press release announcing
the filing of the chapter 11 cases, as disclosed in Item 1.03
of this Current Report on Form 8-K. A copy of the press release
is attached to this Current Report on Form 8-K as Exhibit 99.2
and is incorporated herein by this reference.
The information included in this Form 8-K under Item 7.01 and
Exhibit 99.1 is being furnished and shall not be deemed filed
for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the Exchange Act), or otherwise subject to
liabilities of that Section, unless the Company specifically
states that the information is to be considered filed under the
Exchange Act or incorporates it by reference into a filing
under the Exchange Act or the Securities Act of 1933, as
amended.
Item 8.01 – Other Events
The Company cautions that trading in its securities during the
pendency of the chapter 11 cases is highly speculative and
poses substantial risks. Trading prices for the Companys
securities may not bear any substantive relationship to the
probable outcome for security holders in the chapter 11 cases.
If the reorganization contemplated by the Plan is consummated,
all existing equity interests of the Company, including common
stock and any outstanding preferred stock, warrants or options,
will be extinguished.
Cautionary Note Regarding Forward-Looking Statements
Information provided and statements contained in this Current
Report on Form 8-K or the Exhibits hereto that are not purely
historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), Section 21E of the Securities Exchange Act
of 1934, as amended (the Exchange Act), and the Private
Securities Litigation Reform Act of 1995. Such
forward-looking statements speak only as of the date of this
report and the Company assumes no obligation to update the
information included in this report. Such forward-looking
statements include information concerning our possible or
assumed future results of operations, including descriptions
of our business strategy and the cost savings and other
benefits that we expect to achieve from our restructuring.
These statements often include words such as believe, expect,
anticipate, intend, predict, plan, “should,” or similar
expressions. These statements are not guarantees of
performance or results, and they involve risks,
uncertainties, and assumptions. Although we believe that
these forward-looking statements are based on reasonable
assumptions, there are many factors that could affect our
actual financial results or results of operations and could
cause actual results to differ materially from those in the
forward-looking statements. These factors include or relate
to: our ability to timely conclude definitive documentation
for, and to satisfy all conditions to the consummation of,
the Commitment Agreement and any required
debtor-in-possession or exit financing or other Plan
agreements; our ability to obtain sufficient acceptances in
connection with our solicitation of debt holder support; our
ability to obtain the bankruptcy courts approval with respect
to motions or other requests made in our chapter 11 cases,
including any required approvals of our assumption of the
Commitment Agreement or any required debtor-in-possession
financing; our ability to maintain strategic control as
debtor-in-possession; the availability of the Bankruptcy
Court for hearings on our motions, which may affect the
timing of any required approvals and our emergence from our
chapter 11 cases; our ability to confirm and consummate a
chapter 11 plan of reorganization in our chapter 11 cases;
the effects of the filing of our chapter 11 cases on our
business and the interests of various constituents; the
bankruptcy courts rulings in our chapter 11 cases, as well
the outcome of any such case in general; the length of time
that we will operate under chapter 11 protection and the
continued availability of operating capital during the
pendency of our chapter 11 cases; risks associated with third
party motions or objections in our chapter 11 cases, which
may interfere with our ability to confirm and consummate a
chapter 11 plan of reorganization; the potential adverse
effects of our chapter 11 cases on our liquidity or results
of operations; our ability to execute the Companys business
and financial reorganization plan; and increased advisory
costs to execute our reorganization. Other factors include
our ability to effectively manage our operational initiatives
and restructuring activities, the impact of volatility of
metals prices, the cyclical and seasonal aspects of our
business, our ability to effectively manage inventory levels,
our ability to successfully complete the remaining steps in
our strategic refinancing process, and the impact of our
substantial level of indebtedness, as well as including those
risk factors identified in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2016 and our Quarterly
Report on Form 10-Q for the first quarter ended March 31,
2017. All future written and oral forward-looking statements
by us or persons acting on our behalf are expressly qualified
in their entirety by the cautionary statements contained or
referred to above. Except as required by the federal
securities laws, we do not have any obligations or intention
to release publicly any revisions to any forward-looking
statements to reflect events or circumstances in the future,
to reflect the occurrence of unanticipated events or for any
other reason.
Item 9.01 – Financial Statements and Exhibits
Exhibit Number
Description
99.1
Commitment Agreement dated as of June 16, 2017 by
and among A.M. Castle Co., Total Plastics, Inc.,
Hy-Alloy Steels Company, Keystone Tube Company,
LLC, Keystone Service, and the Commitment Parties
thereto.
99.2
Press release dated June 19, 2017



CASTLE A M & CO Exhibit
EX-99.1 2 casl-ex991commitmentagreem.htm EXHIBIT 99.1 Exhibit EXHIBIT 99.1EXECUTION VERSIONCOMMITMENT AGREEMENT AMONG A.M. CASTLE & CO.,…
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About A. M. CASTLE & CO. (OTCMKTS:CASL)

A. M. Castle & Co. is a specialty metals distribution company. The Company operates through two segments: Metal and Plastics. In its Metals segment, the Company focuses on distributing engineered specialty grades and alloys of metals, as well as providing specialized processing services. Its products include alloy, aluminum, nickel, stainless steel, carbon and titanium. Inventories of these products assume various forms, such as plate, sheet, extrusions, round bar, hexagon bar, square and flat bar, tubing and coil. The Company’s Plastics segment includes its subsidiary, Total Plastics, Inc. (TPI). The Plastics segment stocks and distributes a range of plastics in forms that include plate, rod, tube, clear sheet, tape, gaskets and fittings. Processing activities within this segment include cut-to-length, cut-to-shape, bending and forming according to customer specifications. The Company distributes and performs processing on both metals and plastics.

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