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): February 4, 2005
(January 31, 2005)
Friedman's Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22356 58-20583
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
171 Crossroads Parkway
Savannah, Georgia 31422
(Address of Principal Executive Offices)
(912) 233-9333
(Registrant's telephone number, including area code)
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))
Item 1.01 Entry into a Material Definitive Agreement.
As previously announced on January 24, 2005, Friedman's Inc. ("Friedman's" or
the "Company") received a commitment for up to $150 million in
debtor-in-possession ("DIP") financing from a group of lenders led by Citicorp
USA, Inc. ("Citicorp USA") and arranged by Citigroup Global Markets, Inc., and
received interim court approval permitting the Company to borrow up to $40
million of the DIP financing (the "Interim Financing").
On January 31, 2005, Friedman's, a debtor and debtor in possession under
chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") and
its wholly-owned subsidiaries, FI Stores Limited Partnership, Friedman's
Management Corp., Friedman's Florida Partnership, Friedman's Holding Corp.,
FCJV Holding Corp., Friedman's Investments LLC and Friedman's Beneficiary Inc.,
each a debtor and debtor in possession (collectively, the "Subsidiary
Guarantors"), entered into a Secured Super-Priority Debtor In Possession
Revolving Credit Agreement (the "DIP Financing Facility") with the lenders and
issuers party to thereto, and Citicorp USA as Administrative Agent.
Availability under the DIP Financing Facility is subject to the satisfaction
of a borrowing base.
As previously announced in a press release on January 31, 2005 (the "January
31 Press Release"), Friedman's had used less than $13 million of the Interim
Financing under the DIP Financing Facility to prepay the Company's prepetition
revolving credit facility in full. The balance of the Interim Financing under
the DIP Financing Facility is currently available to purchase inventory and
for other general corporate purposes, subject to conditions set forth in the
interim order of the Bankruptcy Court and the satisfaction of a borrowing
base. Borrowings under the DIP Financing Facility in excess of $40 million
(the "Incremental Financing") will become available to Friedman's upon, among
other things, fulfillment of customary conditions, completion of satisfactory
diligence review by the lenders, satisfaction of a borrowing base, and the
final approval of the DIP Financing Facility by the Bankruptcy Court. The text
of the January 31 Press Release is included as Exhibit 99.1 to this Current
Report on Form 8-K.
To the extent that (i) the lenders under the DIP Financing Facility have
satisfactorily completed due diligence, (ii) the full $150 million under the
DIP Financing Facility is approved by the Bankruptcy Court at the final
hearing relating to the DIP Financing Facility, and (iii) all other conditions
to the Incremental Facility under the DIP Financing Facility are met, the
Company has agreed to use the Incremental Financing to repay principal,
interest and reasonable fees under its prepetition term loan facility, to fund
certain payments to vendors under its prepetition secured trade credit
program, to purchase additional inventory, and for other general corporate
purposes. If, among other things, the foregoing requirements are not met or
waived prior to April 30, 2005, the total commitments by the lenders under the
DIP Financing Facility will be reduced to the amount of the Interim Financing.
The DIP Financing Facility is subject to periodic interest payments,
commitment fees and various other fees. The DIP Financing Facility contains
various covenants, including among other things, meeting certain financial
tests and limitations with respect to capital expenditures. In addition, under
the DIP Financing facility the Company is required to provide certified annual
and monthly consolidated financial statements, certified periodic collateral
reports, annual business plans, weekly statements of cash flows and weekly
borrowing base determinations. The Company is also subject to customary
covenants regarding the incurrence of additional indebtedness and liens,
permitted investments, the sale and disposition of assets, affiliate
transactions and the incurrence of certain claims and expenses. Under the DIP
Financing Facility, the Company and its subsidiaries are subject to customary
defaults, including, among other things, payment defaults, the failure to meet
financial tests, material inaccuracies of representations and warranties,
breach of covenants, and cross-defaults to other post-petition indebtedness.
The DIP Financing Facility also contains other customary default provisions in
connection with DIP financing, including at any time on or after April 30, 2005,
the unsatisfactory conclusion of due diligence by Citicorp USA.
The Company and the Subsidiary Guarantors each guarantee the loans and
obligations under the DIP Financing Facility, and secure such guarantees and
obligations with a security interest in the property of the Company and such
Subsidiary Guarantors. Within ten business days of the closing of the
Incremental Financing, two of the Company's other subsidiaries, Cougar
Reinsurance Company Ltd. and FCJV, L.P. (to the extent that it has assets),
shall each deliver, among other things, guarantees of the obligations of
Company's obligations under the DIP Financing Facility.
The foregoing descriptions are qualified in their entirety by reference to the
DIP Financing Facility, a copy of which is included with this Current Report
on Form 8-K as Exhibit 10.1.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K,
regarding the DIP Financing Facility, is incorporated by reference into this
Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
------- -----------
Exhibit 10.1 Secured Super-Priority Debtor In Possession Revolving
Credit Agreement, dated as of January 31, 2005, by and
among Friedman's Inc., and certain of its subsidiaries
party thereto, and the lenders and issuers parties
thereto, and Citicorp USA, Inc., as Administrative Agent
Exhibit 99.1 Press release dated January 31, 2005
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FRIEDMAN'S INC.
Date: February 4, 2005 By: /s/ Ken Maher
------------------------------
Ken Maher
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
Exhibit 10.1 Secured Super-Priority Debtor In Possession Revolving
Credit Agreement, dated as of January 31, 2005, by and
among Friedman's Inc., and certain of its subsidiaries
party thereto, and the lenders and issuers parties
thereto, and Citicorp USA, Inc., as Administrative Agent
Exhibit 99.1 Press release dated January 31, 2005