I believe that the existing shares prior to the bankruptcy filing were delisted and cancelled, and new shares reducing the commons significantly were reissued.....Which may make them exempt in court ruling. JMO
In September 2002, Congoleum and Wachovia amended the Credit Facility to revise certain
financial and other covenants. In February 2003, Congoleum and Wachovia further amended the Credit Facility to
revise certain financial and other covenants on terms negotiated to reflect the transactions contemplated by
Congoleum’s intended global settlement of its asbestos claims liability. Pursuant to this amendment, CSI and CFI
granted a limited guarantee in favor of Wachovia with regard to the obligations of Congoleum under the Credit
Facility, which limited guarantee is substantially similar to the limited guarantee that was previously granted by
Congoleum Financial Corporation and Congoleum Intellectual Properties, Inc., which entities are no longer in
existence. As of the Petition Date, the principal amount of all pre-petition obligations owed by the Debtors to
Wachovia, both absolute and contingent, pursuant to the Credit Facility existing as of December 31, 2003 consisted
of the principal amount of not less than $14,325,937, plus all interest accrued and accruing thereon and fees, costs,
expenses and other charges accrued, accruing or chargeable with respect thereto.
Wachovia has provided debtor-in-possession financing during the pendency of the Reorganization
Cases. See Section 5.2(b) - - “Administration of the Reorganization Cases - DIP Financing”.
(2) The Senior Notes
On August 3, 1998, Congoleum issued $100 million in aggregate principal amount of 8?% Senior
Notes Due 2008 (the “Senior Notes”) priced at 99.505 to yield 8.70%. Interest is payable on the Senior Notes
semiannually on February 1 and August 1. The Senior Notes matured on August 1, 2008. The Senior Notes are
redeemable at the option of Congoleum, in whole or in part, at any time on or after August 1, 2003 at predetermined
redemption prices (ranging from 104% to 100%), plus accrued and unpaid interest to the date of redemption. The
Indenture under which the notes were issued includes certain restrictions on additional indebtedness and uses of
cash, including dividend payments.
In March 2003, Congoleum and the trustee under the Indenture governing the Senior Notes (the
“Indenture Trustee”) amended the Indenture to expressly provide Congoleum, under the terms of that Indenture,
with greater flexibility to pursue possible resolutions of its current and future asbestos claims liability, including
negotiating a global settlement with current asbestos plaintiffs and the Futures Representative, and soliciting
acceptances of and filing a prepackaged plan of reorganization under Chapter 11 of the Bankruptcy Code. Prior to
the amendment, holders of a majority in aggregate principal amount of the Senior Notes outstanding as of the record
date for determining the holders entitled to vote on the proposed amendment had consented to the amendment.
In August 2003, Congoleum and the Indenture Trustee amended the Indenture to expressly
provide Congoleum, under the terms of the Indenture, with greater flexibility to pursue approval of its pre-packaged
plan of reorganization under Chapter 11 of the Bankruptcy Code. Prior to the amendment, holders of a majority in
aggregate principal amount of the Senior Notes as of the record date for determining the holders entitled to vote on
the proposed amendment had consented to the amendment. See Section 6.3(d) -- “Treatment of Classified Claims
and Interests” for a description of the treatment of the Senior Notes under the Plan.
(b) Description of Capital Stock
(1) Congoleum
Congoleum currently has 31,000,000 shares of capital stock authorized, of which 20,000,000
shares are designated as Class A Common Stock, 10,000,000 shares are designated as Class B Common Stock and
1,000,000 shares are designated as preferred stock (the “Preferred Stock”).and no shares of Preferred Stock were issued and outstanding. As of that date, ABI held 151,100
shares of Class A Common Stock and 4,395,605 shares of Class B Common Stock.
Upon the filing of amended certificates of incorporation in connection with the Effective Date, the
Class A Common Stock, the Class B Common Stock and the Preferred Stock will be eliminated. Congoleum will
have authority to issue only common stock and the Debtors will be prohibited from issuing non-voting capital stock
in accordance with section 1123(a)(5) of the Bankruptcy Code.
(A) Class A Common Stock
The Class A Common Stock is entitled to one vote per share and, generally, votes together with
the Class B Common Stock as a single class. The Class A Common Stock and Class B Common Stock are on parity
on a per share basis with respect to dividend and liquidation rights. The Class A Common Stock will be cancelled
under the Plan.
The Company’s Class A Stock was delisted by Amex on February 19, 2008 because it did not
meet the Amex listing standards for share value, share price, and aggregate market capitalization. The Congoleum
shares are currently traded on the OTC Pink Sheets.
Following the Effective Date, unless otherwise determined by the Plan Proponents in accordance
with applicable law, Congoleum’s common stock will not be publicly traded.
(B) Class B Common Stock
Generally, the Class B Common Stock is entitled to two votes per share and votes together with
the Class A Common Stock as a single class. The Class B Common Stock is only entitled to one vote per share with
regard to certain extraordinary transactions. The Class B Common Stock and Class A Common Stock are on parity
on a per share basis with respect to dividend and liquidation rights.
A holder of Class B Common Stock may convert any shares of such stock into an equal number of
shares of Class A Common Stock at any time at the holder’s option. The Class B Common Stock is subject to
automatic conversion into Class A Common Stock on a one-for-one basis upon the adoption of a resolution
authorizing such conversion approved by the holders of a majority of the outstanding shares of Class B Common
Stock voting as a separate class. In addition, any shares of Class B Common Stock sold or otherwise transferred to a
person or entity other than an affiliate of the transferor will be automatically converted into an equal number of
shares of Class A Common Stock upon such sale or transfer. A pledge of shares of Class B Common Stock is not
considered a transfer for this purpose unless and until the pledge is enforced. Also, with respect to shares of Class B
Common Stock held by ABI, those shares will automatically be converted into an equal number of shares of Class A
Common Stock upon the occurrence of a “change of control” of ABI (as defined under Congoleum’s Certificate of
Incorporation).
