-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JxqjxZeP4m/AsBDg3VrGlrD1xCT//x7A8GId8MLJaAIQtbQzRRBQClSYC8900aT3 ElATv7nrur7cwGar6E70wA== /in/edgar/work/0000033073-00-000011/0000033073-00-000011.txt : 20000927 0000033073-00-000011.hdr.sgml : 20000927 ACCESSION NUMBER: 0000033073-00-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000925 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISKASE COMPANIES INC CENTRAL INDEX KEY: 0000033073 STANDARD INDUSTRIAL CLASSIFICATION: [3089 ] IRS NUMBER: 952677354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05485 FILM NUMBER: 727869 BUSINESS ADDRESS: STREET 1: 6855 W. 65TH ST. CITY: CHICAGO STATE: IL ZIP: 60638 BUSINESS PHONE: 7084964200 FORMER COMPANY: FORMER CONFORMED NAME: ENVIRODYNE INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MGN INC DATE OF NAME CHANGE: 19790425 10-Q 1 0001.txt SECOND QTR - JUN 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______ FORM 10-Q /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 -------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------- ------------ Commission file number 0-5485 ----------- VISKASE COMPANIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 95-2677354 - -------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6855 W. 65th Street, Chicago, Illinois 60638 - ----------------------------------------- ---------- (Address of principal executive offices (Zip Code) Registrant's telephone number, including area code: (708) 496-4200 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of August 15, 2000, there were 15,106,456 shares outstanding of the registrant's Common Stock, $.01 par value. Page 1 of 19 Pages INDEX TO FINANCIAL STATEMENTS VISKASE COMPANIES, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PAGE Consolidated balance sheets at June 30, 2000 (unaudited) and December 31, 1999 4 Unaudited consolidated statements of operations for the three months ended June 30, 2000 and June 30, 1999 and for the six months ended June 30, 2000 and June 30, 1999 5 Unaudited consolidated statements of cash flows for the six months ended June 30, 2000 and June 30, 1999 6 Notes to consolidated financial statements 7 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- The financial information included in this quarterly report has been prepared in conformity with the accounting principles and practices reflected in the financial statements included in the annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1999 (1999 Form 10-K). These quarterly financial statements should be read in conjunction with the financial statements and the notes thereto included in the 1999 Form 10-K. The accompanying financial information, which is unaudited, reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The condensed consolidated balance sheet as of December 31, 1999 was derived from the audited consolidated financial statements in the Company's annual report on Form 10-K. Reported interim results of operations are based in part on estimates which may be subject to year-end adjustments. In addition, these quarterly results of operations are not necessarily indicative of those expected for the year. VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2000 1999 -------- -------- (unaudited) (in thousands) ASSETS Current assets: Cash and equivalents $ 5,366 $ 6,243 Receivables, net 46,187 48,971 Inventories 80,466 78,672 Other current assets 13,872 14,540 -------- -------- Total current assets 145,891 148,426 Property, plant and equipment, including those under capital leases 488,509 488,369 Less accumulated depreciation and amortization 195,024 178,122 -------- -------- Property, plant and equipment, net 293,485 310,247 Deferred financing costs, net 1,528 3,059 Other assets 30,539 32,086 -------- -------- Total assets $471,443 $493,818 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligations under capital leases $125,711 $ 23,095 Accounts payable 30,330 35,202 Accrued liabilities 61,102 46,966 Current deferred income taxes 8,683 8,683 -------- -------- Total current liabilities 225,826 113,946 Long-term debt including obligations under capital leases 301,282 404,151 Accrued employee benefits 46,729 46,787 Deferred and noncurrent income taxes 14,477 18,376 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding Common stock, $.01 par value; 15,096,458 shares issued and outstanding at June 30, 2000 and 15,058,439 shares at December 31, 1999 151 151 Paid in capital 137,538 137,454 Accumulated (deficit) (253,299) (229,212) Cumulative foreign currency translation adjustments (1,261) 2,165 -------- -------- Total stockholders' (deficit) (116,871) (89,442) -------- -------- Total liabilities and stockholders' equity $471,443 $493,818 ======== ======== The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Six Months Ended --------------------------- ------------------------- June June June June 30, 2000 30, 1999 30, 2000 30, 1999 ----------- ------------ ----------- ----------- (in thousands, except for number of shares and per share amounts) NET SALES $51,134 $57,285 $102,904 $112,421 COSTS AND EXPENSES Cost of sales 40,685 40,505 79,390 80,998 Selling, general and administrative 10,937 10,457 22,123 22,742 Amortization of intangibles 500 500 1,000 1,000 Restructuring charges 2,700 0 2,700 0 -------- ------- -------- -------- OPERATING INCOME (LOSS) (3,688) 5,823 (2,309) 7,681 Interest income 95 178 148 281 Interest expense 12,594 10,997 24,753 21,287 Other expense, net 511 1,103 624 3,112 -------- ------- -------- -------- (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (16,698) (6,099) (27,538) (16,437) Income tax (benefit) (803) 12 (1,516) (2,361) -------- ------- -------- -------- NET (LOSS) FROM CONTINUING OPERATIONS (15,895) (6,111) (26,022) (14,076) DISCONTINUED OPERATIONS: Income (loss) from operations net of income taxes (Note 5) 704 (1,962) 1,935 (5,333) -------- ------- -------- -------- NET (LOSS) (15,191) (8,073) (24,087) (19,409) Other comprehensive (loss), net of tax: Foreign currency translation adjustments (785) (1,258) (2,090) (2,253) -------- ------- -------- -------- COMPREHENSIVE (LOSS) $(15,976) $(9,331) $(26,177) $(21,662) ======== ======= ======== ======== WEIGHTED AVERAGE COMMON SHARES - BASIC AND DILUTED 15,095,505 14,875,506 15,090,574 14,871,305 ========== ========== ========== ========== PER SHARE AMOUNTS: BASIC EARNINGS (LOSS) PER SHARE: - basic and diluted Continuing operations $(1.06) $(.41) $(1.73) $(.95) Discontinued operations: Income (loss) from operations .05 (.13) .13 (.36) ------ ----- ------ ------ Net (loss) $(1.01) $(.54) $(1.60) $(1.31) ====== ===== ====== ====== The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended June 30, June 30, 2000 1999 ---------- --------- (in thousands) Cash flows from operating activities: Net (loss) $(24,087) $(19,409) Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: Depreciation and amortization under capital lease 20,087 20,079 Amortization of intangibles 2,500 2,500 Amortization of deferred financing fees and discount 3,306 635 (Decrease) in deferred and noncurrent income taxes (2,717) (3,328) Foreign currency transaction loss 791 401 (Gain) on disposition of assets (5) 29 Bad debt provision 537 526 Changes in operating assets and liabilities: Receivables 972 (5,108) Inventories (3,322) 420 Other current assets 374 (4,478) Accounts payable and accrued liabilities 10,642 (5,911) Other (433) 2,062 -------- -------- Total adjustments 32,732 7,827 -------- -------- Net cash provided by (used in) operating activities 8,645 (11,582) Cash flows from investing activities: Capital expenditures (7,543) (13,706) Proceeds from disposition of assets 5 88 -------- -------- Net cash (used in) investing activities (7,538) (13,618) Cash flows from financing activities: Issuance of common stock 84 85 Deferred financing costs (1,777) (5,689) Proceeds from revolving loan and long-term borrowings 129,334 125,491 Repayment of revolving loan, long-term borrowings and capital lease obligation (129,478) (99,478) -------- -------- Net cash (used in) provided by financing activities (1,837) 20,409 Effect of currency exchange rate changes on cash (147) (499) -------- -------- Net (decrease) in cash and equivalents (877) (5,290) Cash and equivalents at beginning of period 6,243 9,028 -------- -------- Cash and equivalents at end of period $ 5,366 $ 3,738 ======== ======== - ---------------------------------------------------------------------------------------------- Supplemental cash flow information: Interest paid $16,961 $25,587 Income taxes paid $ 1,720 $ 1,382 The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. INVENTORIES (dollars in thousands) Inventories consisted of: June December 30, 2000 31, 1999 -------- ---------- Raw materials $10,141 $10,361 Work in process 29,221 31,039 Finished products 41,104 37,272 ------- ------- $80,466 $78,672 ======= ======= Approximately 61% of the inventories at June 30, 2000 were valued at Last-In, First-Out (LIFO). These LIFO values exceeded current manufacturing cost by approximately $7,964 at June 30, 2000. 2. DEBT OBLIGATIONS (dollars in thousands) Viskase Corporation and Viskase Sales Corporation entered into two-year secured credit agreements consisting of a $50 million senior revolving credit facility, including a $26 million sublimit for issuance of letters of credit (Senior Revolving Credit Facility), a $50 million senior term facility (Senior Term Facility), collectively the "Senior Secured Credit Facility," and $35 million of junior secured term loans (Junior Term Loans). The Senior Secured Credit Facility and Junior Term Loans have a maturity date of June 30, 2001. The Company entered into an Agreement dated March 3, 2000, amended March 9, 2000, March 23, 2000 and March 30, 2000, that extended the grace period for the payment of its February 28, 2000 annual GECC lease payment in the amount of $23.5 million. On April 13, 2000 the Company entered into an Agreement and Amendment that extended the payment date to June 30, 2000 and waived the noncompliance of the Fixed Charge Coverage Ratio for the quarter ended December 31, 1999 and March 31, 2000. The June 30, 2000 payment extension date was subsequently modified to September 26, 2000 under an Agreement dated June 13, 2000. Under the terms of the April 13, 2000 Agreement and Amendment with GECC, the Company agreed to amend the amortization schedule of annual lease payments, maintain a letter of credit in the amount of $23.5 million at all times, limit additional borrowings and provide a subordinated security interest collateralized by the Collateral Pool. Holders of the Senior Secured Credit Facility and the Junior Term Loans consented to the payment extensions and the subordinated security interest granted to GECC. The revised amortization schedule is presented below. The principal portion of the 2001 GECC lease payment, the Senior Secured Credit Facility and Junior Term Loans have been reclassed to current from long term. (See Note 9.) August 31, 2000 $46,998 November 1, 2001 11,750 February 28, 2002 11,749 February 28, 2003 23,499 February 28, 2004 23,499 February 28, 2005 23,499 Outstanding short-term and long-term debt consisted of:
June December 30, 2000 31, 1999 -------- -------- Short-term debt, current maturity of long-term debt, and capital lease obligation: Senior Revolving Credit Facility $13,232 Senior Term Facility 46,429 $ 7,144 Junior Term Facility 35,000 Current maturity of Viskase Capital Lease Obligation 30,238 14,377 Current maturity of Viskase Limited Term Loan (3.2%) 753 Other 812 821 -------- -------- Total short-term debt $125,711 $23,095 ======== ======== Long-term debt: Senior Revolving Credit Facility $8,551 Senior Term Facility 42,856 Junior Term Facility 35,000 10.25% Senior Notes due 2001 $219,262 219,262 Viskase Capital Lease Obligation 81,605 97,466 Other 415 1,016 -------- -------- Total long-term debt $301,282 $404,151 ======== ========
The Company's Senior Secured Credit Facility and Junior Term Loans contain a number of financial covenants that, among other things, require the maintenance of a minimum level of tangible net worth, a minimum fixed charge coverage ratio and a minimum leverage ratio of total liabilities to EBDIAT, and a limitation on capital expenditures. As of June 30, 2000, the Company received an amendment and waiver under the Company's Senior Secured Credit Facility and Junior Term Loans. The Company determined that, as of June 30, 2000, without the amendment and waiver, it would not have been in compliance with the tangible net worth and leverage ratio covenants. The Company's 10.25% Notes, of which $219.3 million principal amount is outstanding, will mature in December 2001. The Company anticipates it will refinance the 10.25% Notes or seek alternative strategies including, but not limited to, using proceeds from asset sales, litigation, if any, or selling additional equity capital. (See Note 9.) 3. CONTINGENCIES In late 1993, Viskase commenced a legal action against American National Can Company (ANC) in Federal District Court for the Northern District of Illinois, Eastern Division, 93C7651. Viskase claimed that ANC's use of two different very low density polyethylene plastic resins in the manufacture of ANC's multi-layer barrier shrink film products was infringing various Viskase patents relating to multi-layer barrier plastic films used for fresh red meat, processed meat and poultry product applications. In November 1996, after a three-week trial, a jury found that ANC had willfully infringed Viskase's patents and awarded Viskase $102.4 million in compensatory damages. The Court also entered an order permanently enjoining ANC from making or selling infringing products. In September 1997, the Court set aside the jury verdict in part and ordered a retrial on certain issues. The Court upheld the jury finding on the validity of all of Viskase's patents and the jury finding that ANC had willfully infringed Viskase's patents by ANC's use of Dow Chemical Company's "Attane" brand polyethylene plastic resin in ANC's products. However, the Court ordered a new trial on the issue of whether ANC's use of Dow Chemical Company's "Affinity" brand polyethylene plastic resin infringed Viskase's patents and whether such conduct was willful. Because the jury rendered one general damage verdict, the Court ordered a retrial of all damage issues. By operation of the Court's order, the injunction in respect of ANC's future use of the "Affinity" brand resin was removed. On August 19, 1998, the Court granted Viskase's motion for partial summary judgment finding that ANC's use of the "Affinity" brand resin infringed Viskase's patents. The Court also reinstated the permanent injunction. Viskase filed a motion to have the jury verdict as to compensatory damages reinstated. ANC filed a motion to dismiss the lawsuit claiming that Viskase's patents are invalid and Viskase failed to join an indispensable party to the lawsuit. On May 10, 1999, the Court granted Viskase's motion to have the jury verdict as to the compensatory damages reinstated. In May and June 1999, the parties briefed the issue of enhanced damages and on July 2, 1999, the Court awarded Viskase total damages of $164.9 million. ANC filed a motion for reconsideration which was denied. On May 3, 1999, ANC commenced legal action in the Federal District Court for the Northern District of Illinois seeking declaratory relief that one of the litigated patents is invalid. ANC also filed a motion to consolidate the declaratory action with the 1993 suit. ANC's motion to consolidate was granted and then the Court dismissed ANC's suit with prejudice at the same time the Court awarded Viskase total damages of $164.9 million. ANC has filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. Oral arguments before the United States Circuit of Appeals for the Federal Circuit were held on June 6, 2000 and Viskase expects a decision during fourth quarter of 2000 or first quarter of 2001. In addition, ANC has challenged two of the five Viskase patents in suit by filing requests for reexamination with the United States Patent and Trademark office (USPTO). Both patents under reexamination have been rejected by the USPTO. In both cases, Viskase has filed appeals to the Board of Patent Appeals and Interferences of the USPTO. For the first patent, Viskase's brief was filed July 13, 2000, and the Examiner's Answer is awaited. For the second patent, Viskase's brief is due October 23, 2000. On January 14, 2000, Pechiney Plastic Packaging, Inc. and Pechiney Emballage Flexible Europe, Inc. (successors in interest in ANC) filed suit against the Company and Viskase in the United States District Court for the Northern District of Illinois, Eastern Division. This suit alleges infringement of U.S. Reissue Patent No. 35,567, which patent is set to expire on April 26, 2002, and further alleges patent interference with one of the five Viskase patents litigated in Viskase's legal action against ANC. In May 2000, the District Court dismissed the patent interference count. Pechiney filed an Amended Complaint on June 30, 2000 seeking to reinstate the dismissed count (Count III). On July 25, 2000, Viskase filed a Motion to Dismiss Count III of the Amended Complaint and also filed a Motion for Sanctions related thereto. On August 9, 2000, Viskase filed a Supplemental Motion for Sanctions. On August 24, 2000, Pechiney responded to these motions and Viskase filed its reply on September 14, 2000. Rulings on these motions are presently set for October 13, 2000. Viskase's Answer to the Amended Complaint is presently due October 23, 2000. No part of the pending claims has been recorded in the Company's finan- cial statements. Through June 30, 2000, $5.2 million in patent defense costs had been accrued and capitalized. In March 1997, Viskase received a subpoena from the Antitrust Division of the United States Department of Justice relating to a grand jury investigation of the sausage casings industry. In September 1999, Viskase Corporation received a subpoena from the Antitrust Division of the United States Department of Justice relating to the expansion of the grand jury investigation into the specialty films industry. Viskase is cooperating fully with the investigations. In November 1999, the Company and certain of its subsidiaries and one other sausage casings manufacturer were named in a civil complaint, Leon's Sausage Company, on behalf of itself and all others similarly - -------------------------------------------------------------------- situated v. Viskase Companies, Inc., Envirodyne Industries, Inc., - ----------------------------------------------------------------- Viskase Corporation, Devro-Teepak, Inc., Civil Action No. 99C7200, - --------------------------------------- United States District Court for the Northern District of Illinois, Eastern Division. This complaint alleged that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. In December 1999, the plaintiff in this action voluntarily dismissed the complaint without prejudice. In late 1999 and early 2000, the Company and certain of its subsidiaries and one other sausage manufacturer were named in ten virtually identical civil complaints filed in the District of New Jersey by the following plaintiffs: Smith Provision Co., Inc.; Parks LLC (d/b/a Parks Sausage Company); Real Kosher Sausage Company, Inc.; Sahlen Packing Co., Inc.; Marathon Enterprises, Inc.; Ventures East, Inc.; Keniston's, Inc.; Smithfield Foods, Inc.; Clougherty Packing Co.; and Klement Sausage Co. The District Circuit ordered all of these cases consolidated in the District of New Jersey. Civil Action No. 99-5195-MLC (D.N.J.). Each complaint brought on behalf of a purported class of sausage casings customers alleges that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. The Company and its subsidiaries have filed answers to each of these complaints denying liability. The Company and its subsidiaries are involved in various legal proceedings arising out of their business and other environmental matters, none of which is expected to have a material adverse effect upon results of operations, cash flows or financial position. 4. UNUSUAL CHARGE (dollars in millions) During the second quarter of 2000, the Company committed to a restructuring plan to re-focus its remaining business. These actions will reduce fixed costs. Restructuring actions resulted in a charge to continuing operations of $2.7 million before tax and included costs associated with voluntary and involuntary severance. As of June 30, 2000 cash payments against the reserve were $.1 million. During the third quarter of 1998, due to the business conditions leading to the Viskase plan of restructuring, the Company evaluated the recoverability of long-lived assets including property, plant and equipment, patents and excess reorganization on a consolidated basis. Based upon the analysis, the Company recognized an impairment because the estimated consolidated undiscounted future cash flows derived from long-lived assets were determined to be less than their carrying value. The amount of the impairment was calculated using the present value of the Company's estimated future net cash flows to determine the assets' fair value. Based on this analysis, an impairment charge of $91.2 million for excess reorganization and $4.3 million for the write-down of the Chicago facility was taken. In addition, the Viskase plan of restructuring included charges for the decommissioning of the Chicago plant and the decommissioning of some of its foreign operations. In the second quarter of 2000, cash payments against the reserve were $.2 million; total payments through June 30, 2000 were $9.8 million. An amount of $.3 million identified as an excess reserve was reversed. A remaining restructuring reserve of $1.4 million is included in accrued liabilities on the balance sheet. 5. DISCONTINUED OPERATIONS (dollars in thousands) On January 17, 2000, the Company's Board of Directors announced its intent to sell the plastic barrier and non-barrier shrink film business. The business being sold includes production facilities in the United States, United Kingdom, and Brazil. The sale of the films business was completed on August 31, 2000. The aggregate purchase price of $245 million will be used principally to retire debt, including the Senior Secured Credit Facility and Junior Term Loans, pay GECC $47.0 million per the amended amortization schedule, and for general corporate purposes. The Company expects an approximate net gain on the sale in the amount of $52 million. The gain will be recorded in the third quarter 2000 results. In conjunction with the sale of the films business, the Company will shut down its oriented polypropylene (OPP) films business located in Newton Aycliffe, England and the films operation in Canada; the costs of this are included in the business discontinuance. Operating results from discontinued operations are as follows:
Three Months Ended Six Months Ended ------------------------ ---------------------- June June June June 30, 2000 30, 1999 30, 2000 30, 1999 ---------- ---------- --------- ---------- Net sales $40,877 $39,813 $79,727 $76,744 Costs and expenses Cost of sales 30,763 32,660 59,559 61,549 Selling, general and administrative 7,298 8,092 14,497 16,084 Amortization of intangibles 750 750 1,500 1,500 ------- ------- ------- ------- Operating income 2,066 (1,689) 4,171 (2,389) Interest income - 5 - 5 Interest expense 21 43 48 86 Other expense (income), net 1,274 374 1,668 1,449 ------- ------- ------- ------- Income (loss) from discontinued operations before taxes 771 (2,101) 2,455 (3,919) Income tax provision (benefit) 67 (139) 520 1,414 ------- ------- ------- ------- Net income (loss) from discontinued operations $ 704 $(1,962) $ 1,935 $(5,333) ======= ======= ======= =======
The net assets of the films segment included in the accompanying Balance Sheets as of June 30, 2000 and December 31, 1999 consisted of the following: June 30, 2000 December 31, 1999 ------------- ----------------- Accounts receivable, net $18,184 $19,537 Inventories 34,109 33,965 Other current assets 4,501 4,156 -------- -------- Total current assets 56,794 57,658 Property, plant and equipment, net 103,125 110,657 Long-term assets 10,926 12,459 -------- -------- Total assets 170,845 180,774 Accounts payable and other current liabilities 26,942 28,396 Short-term debt 254 1,016 -------- -------- Total current liabilities 27,196 29,412 Long-term debt and lease obligations 305 465 Deferred and noncurrent income taxes 5,356 5,762 -------- -------- Total liabilities 32,857 35,639 Net Assets $137,988 $145,135 ======== ======== 6. COMPREHENSIVE INCOME (dollars in thousands) The following sets forth the components of other comprehensive (loss) and the related income tax provision (benefit): Three Months Three Months Six Months Six Months Ended June Ended June Ended June Ended June 30, 2000 30, 1999 30, 2000 30, 1999 ---------- ---------- ---------- ---------- Foreign currency translation adjustment (1) $(785) $(1,258) $(2,090) $(2,253) (1) Net of related tax (benefit) of $(502) and $(804) for the second quarter ended 2000 and 1999, respectively, and $(1,336) and $(1,440) for the first six months ended 2000 and 1999, respectively. 7. EARNINGS PER SHARE (EPS) Following are the reconciliations of the numerators and denominators of the basic and diluted EPS.
Three Months Three Months Six Months Six Months Ended June Ended June Ended June Ended June 30, 2000 30, 1999 30, 2000 30, 1999 ---------- ---------- ---------- ---------- (in thousands, except for weighted average shares outstanding) NUMERATOR (in thousands): Net (loss) available to common stockholders: From continuing operations: $(15,895) $(6,111) $(26,022) $(14,076) Discontinued operations: Income (loss) from discontinued operations: 704 (1,962) 1,935 (5,333) -------- ------- -------- -------- Net (loss) available to common stockholders for basic and diluted EPS $(15,191) $(8,073) $(24,087) $(19,409) ======== ======= ======== ======== DENOMINATOR: Weighted average shares outstanding for basic EPS 15,095,505 14,875,506 15,090,574 14,871,305 Effect of dilutive securities 0 0 0 0 ---------- ---------- ---------- ---------- Weighted average shares outstanding for diluted EPS 15,095,505 14,875,506 15,090,574 14,871,305 ========== ========== ========== ==========
Common stock equivalents are excluded from the loss-per-share calculations as the result is antidilutive since the numerator is a loss from continuing operations. 8. ACCOUNTING STANDARDS The Company will adopt the provisions of Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" (SFAS No. 137). SFAS No. 137 is effective for the Company's 2001 financial statements. 9. SUBSEQUENT EVENTS On January 17, 2000, the Company's Board of Directors announced its intent to sell the plastic barrier and non-barrier shrink film business. The business being sold includes production facilities in the United States, United Kingdom, and Brazil. The sale of the films business was completed on August 31, 2000. The aggregate purchase price of $245 million will be used principally to retire debt, including the Senior Secured Credit Facility and Junior Term Loans, pay GECC $47.0 million per the amended amortization schedule, and for general corporate purposes. The Company expects an approximate net gain on the sale in the amount of $52 million. The gain will be recorded in the third quarter 2000 results. In conjunction with the sale of the films business, the Company will shut down its oriented polypropylene (OPP) films business located in Newton Aycliffe, England and the films operation in Canada; the costs of this are included in the business discontinuance. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- The accompanying management's discussion and analysis of financial condition and results of operations should be read in conjunction with the following table:
Three Months Ended Six Months Ended ----------------------------- ------------------------------ June June June June 30, 2000 30, 1999 30, 2000 30, 1999 ---------- ---------- ------------ ------------ (in thousands) Net sales: Casings - continuing operations $51,134 $57,285 $102,904 $112,421 Films - discontinued operations 40,877 39,813 79,727 76,744 ------- ------- -------- -------- $92,011 $97,098 $182,631 $189,165 ======= ======= ======== ======== Operating income: Casings - continuing operations $(3,688) $ 5,823 $(2,309) $ 7,681 Films - discontinued operations 2,066 (1,689) 4,171 (2,389) ------- ------- ------- -------- $(1,622) $ 4,134 $ 1,862 $ 5,292 ======= ======= ======= ========
June December 30, 2000 31, 1999 ---------- ---------- (in thousands) Identifiable assets: Casings - continuing operations $300,598 $313,044 Films - discontinued operations 170,845 180,774 -------- -------- $471,443 $493,818 ======== ======== Results of Operations - --------------------- The Company's net sales from continuing operations for the first six months and second quarter of 2000 were $102.9 million and $51.1 million, respectively, which represent a decrease of 8.5% and 10.7%, respectively, from comparable periods of 1999. The decline in sales reflects the continuing effect of reduced selling prices in the casings industry. European sales were also negatively affected by foreign currency translation due to the strengthening of the U.S. dollar. Operating loss from continuing operations for the first six months and second quarter of 2000 were $(2.3) million and $(3.7) million, respectively. The operating loss resulted primarily from reduced selling prices in the worldwide casings industry and a second quarter $2.7 million restructuring charge intended to re-focus the remaining business. Net interest expense from continuing operations for the six-month period in 2000 totaled $24.8 million, representing an increase of $3.5 million from the six-month period in 1999. The increase is primarily due to deferred fees amortization and interest cost due to the refinancing in June 1999. (Refer to Note 2.) Other expense from continuing operations of approximately $.6 million and $3.1 million for the first six months of 2000 and 1999, respectively, consists principally of foreign exchange losses. The Company uses foreign exchange forward contracts to hedge some of its non-functional currency receivables and payables, which are denominated in major currencies that can be traded on open markets. This strategy is used to reduce the overall exposure to the effects of currency fluctuations on cash flows. The Company's policy is not to speculate in financial instruments. Receivables and payables, which are denominated in non-functional currencies, are translated to the functional currency at month end and the resulting gain or loss is taken to other income/expense on the income statement. Gains and losses on hedges of receivables and payables are marked to market. The result is recognized in other net expense on the income statement. The tax benefit for the first six months of 2000 resulted from the benefit of U.S. losses partially offset by the provision related to income from foreign subsidiaries. Due to the permanent differences in the U.S. resulting from foreign losses for which no tax benefit is provided, a benefit of $1.5 million was provided on a loss from continuing operations of $27.5 million. The U.S. tax benefit is recorded as a reduction of the deferred tax liability and does not result in a refund of income taxes. Discontinued operations - ------------------------ On January 17, 2000, the Company's Board of Directors announced its intent to sell the plastic barrier and non-barrier shrink film business. The business being sold includes production facilities in the United States, United Kingdom, and Brazil. The sale of the films business was completed on August 31, 2000. The aggregate purchase price of $245 million will be used principally to retire debt, including the Senior Secured Credit Facility and Junior Term Loans, pay GECC $47.0 million per the amended amortization schedule, and for general corporate purposes. The Company expects an approximate net gain on the sale in the amount of $52 million. The gain will be recorded in the third quarter 2000 results. In conjunction with the sale of the films business, the Company will shut down its oriented polypropylene (OPP) films business located in Newton Aycliffe, England and the films operation in Canada; the costs of this are included in the business discontinuance. Other - ----- The Company will adopt the provisions of Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" (SFAS No. 137). SFAS No. 137 is effective for the Company's 2001 financial statements. Liquidity and Capital Resources - ------------------------------- Cash and equivalents decreased by $.9 million during the six months ended June 30, 2000. Cash flows provided by operating activities of $8.6 million were used in investing activities of $7.5 million and financing activities of $1.8 million. Cash flows provided by operating activities were principally attributable to the Company's loss from operations offset by a decrease in working capital usage and the effect of depreciation and amortization. Cash flows used in financing activities were principally due to fees incurred on the financing. Cash flows used in investing activities consist principally of capital expenditures for property, plant and equipment. During June 1999, Viskase Corporation and Viskase Sales Corporation entered into two-year secured credit agreements consisting of a $50 million senior revolving credit facility, including a $26 million sublimit for issuance of letters of credit (Senior Revolving Credit Facility), a $50 million senior term facility (Senior Term Facility), collectively the "Senior Secured Credit Facility", and $35 million of junior secured term loans (Junior Term Loans). The proceeds of the Senior Secured Credit Facility and the Junior Term Loans were used to repay the $55 million Senior Secured Notes outstanding and obligations outstanding under the Company's existing Revolving Credit Facility. The Senior Secured Credit Facility has a maturity date of June 30, 2001. The Company finances its working capital needs through a combination of internally generated cash from operations and borrowings under its $50 million Senior Revolving Credit Facility entered into in June 1999. The availability of funds under the Senior Revolving Credit Facility is subject to the Company's compliance with certain covenants, borrowing base limitations measured by accounts receivable and inventory of the Company, and reserves that may be established at the discretion of the lenders. There is approximately $13.2 million outstanding under the Senior Revolving Credit Facility at June 30, 2000. The Company's Senior Secured Credit Facility and Junior Term Loans contain a number of financial covenants that, among other things, require the maintenance of a minimum level of tangible net worth, a minimum fixed charge coverage ratio and minimum leverage ratio of total liabilities to EBDIAT, and a limitation on capital expenditures. As of June 30, 2000, the Company received an amendment and waiver under the Company's Senior Secured Credit Facility and Junior Term Loans. The Company determined that, as of June 30, 2000, without the amendment and waiver, it would not have been in compliance with the tangible net worth and leverage ratio covenants. The Company entered into an Agreement dated March 3, 2000, amended March 9, 2000, March 23, 2000 and March 30, 2000, that extended the grace period for the payment of its February 28, 2000 annual GECC lease payment in the amount of $23.5 million. On April 13, 2000 the Company entered into an Agreement and Amendment that extended the payment date to June 30, 2000 and waived the noncompliance of the Fixed Charge Coverage Ratio for the quarter ended December 31, 1999 and March 31, 2000. The June 30, 2000 payment extension date was subsequently modified to September 26, 2000 under an Agreement dated June 13, 2000. Under the terms of the April 13, 2000 Agreement and Amendment with GECC, the Company agreed to amend the amortization schedule of annual lease payments, maintain a letter of credit in the amount of $23.5 million at all times, limit additional borrowings and provide a subordinated security interest collateralized by the Collateral Pool. Holders of the Senior Secured Credit Facility and the Junior Term Loans consented to the payment extensions and the subordinated security interest granted to GECC. The revised amortization schedule is presented below. (See Note 9.) August 31, 2000 $46,998 November 1, 2001 11,750 February 28, 2002 11,749 February 28, 2003 23,499 February 28, 2004 23,499 February 28, 2005 23,499 The Company anticipates that its current cash position, its operating cash flows, the availability under its credit agreement and proceeds from asset sales will be sufficient to meet its operating expenses and current debt service requirements. The Company's 10.25% Notes, of which $219.3 million principal amount is outstanding, will mature in December 2001. The Company anticipates it will refinance the 10.25% Notes or seek alternative strategies including, but not limited to, using proceeds from asset sales, litigation, if any, or selling additional equity capital. Capital expenditures for continuing operations for the first six months of 2000 and 1999 totaled $6.3 million and $8.6 million, respectively. Capital expenditures for discontinued operations for the first six months of 2000 totaled $1.2 million. Significant 2000 and 1999 capital expenditures for continuing operations included costs associated with the Nucel(R) project and a new information technology system at Viskase. Capital expenditures for discontinued operations included additional production capacity for specialty films. Capital expenditures for continuing operations for 2000 are expected to be approximately $7.5 million. Capital expenditures for continuing operations for 2001 are expected to be $6.0 million. The Company has spent approximately $8 million annually on research and development programs, including product and process development, and on new technology development during each of the past three years. The 2000 research and development and product introduction expenses are expected to be in the $9 million range. Among the projects included in the current research and development efforts is the application of certain patents and technology licensed by Viskase to the manufacture of cellulosic casings under the Nucel(R) process. The commercialization of these applications and the related fixed asset expense associated with such commercialization may require substantial financial commitments in future periods. Forward-looking Statements - -------------------------- Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and Company plans and objectives to differ materially from those projected. Such risks and uncertainties include, but are not limited to, general business and economic conditions; competitive pricing pressures for the Company's products; changes in other costs; opportunities that may be presented to and pursued by the Company; determinations by regulatory and governmental authorities; and the ability to achieve synergistic and other cost reductions and efficiencies. ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------- The Company is exposed to certain market risks related to foreign currency exchange rates. In order to manage the risk associated with this exposure to such fluctuations, the Company uses derivative financial instruments. The Company does not enter into derivatives for trading purposes. The Company also prepared sensitivity analyses to determine the impact of a hypothetical 10% devaluation of the U.S. dollar relative to the European receivables and payables denominated in U.S. dollars. Based on its sensitivity analyses at June 30, 2000, a 10% devaluation of the U.S. dollar would affect the Company's annual consolidated operating results, financial position and cash flows by approximately $0.4 million. The Company uses foreign exchange forward contracts to manage the risk associated with its exposure to foreign currency exchange rate fluctuations. At June 30, 2000, there were no foreign exchange forward contracts outstanding. PART II. OTHER INFORMATION Item 1 - Legal Proceedings ----------------- For a description of pending litigation and other contingencies, see Part 1, Note 3, Contingencies in Notes to Consolidated Financial Statements for Viskase Companies, Inc. and Subsidiaries. Item 2 - Changes in Securities --------------------- No reportable events occurred during the quarter ended June 30, 1999. Item 3 - Defaults Upon Senior Securities ------------------------------- None. Item 4 - Submission of Matters to a Vote of Security Holders --------------------------------------------------- None. Item 5 - Other Information ----------------- None. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 10.39 Agreement and Amendment dated as of April 13, 2000, between Viskase Corporation (the Lessee) and State Street Bank and Trust Company (the Lessor) as Owner Trustee under the Trust Agreement relating to the Lease Agreement dated as of December 18, 1990 (as amended and supplemented to the date hereof, between the Lessee and the Lessor, as successor trustee to Fleet National Bank formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank. 10.40 Letter Agreement dated June 13, 2000, from GECC re (i) Financing Agreement dated as of June 14, 1999, among The CIT Group/Business Credit, Inc., the lenders party thereto and Viskase Corporation and Viskase Sales Corporation, (ii) a Financing Agreement dated as of June 14, 1999 among D.P. Kelly & Associates, L.P. and Viskase, and (iii) a Financing Agreement dated as of June 14, 1999, among the lenders party thereto and Viskase. 10.41 Letter Agreement dated June 13, 2000, from CIT Group re Financing Agreement dated as of June 14, 1999 by and among Viskase Corporation, Viskase Sales Corporation and CIT Group/Business Credit, Inc., as agents for the Lenders. 10.42 Letter Agreement dated June 13, 2000, from Magten Asset Management Corporation re that certain Financing Agreement dated as of June 14, 1999, by and among Viskase Corporation, Viskase Sales Corporation, and the financial institutions that are or may from time to time become parties thereto. 10.43 Letter Agreement dated June 13, 2000, from D.P. Kelly & Associates re that certain Financing Agreement dated as of June 14, 1999, by and among Viskase Corporation, Viskase Sales Corporation, and D.P. Kelly & Associates. 10.44 Amendment No. 1 dated as of June 30, 2000, to the Letter Agreement and Amendment dated as of April 13, 2000, between Viskase Corporation and State Street Bank and Trust Company, as Owner Trustee under the Trust Agreement relating to the Lease Agreement dated as of December 18, 1990 (as amended and supplemented to the date hereof). 27 Financial Data Schedules. (b) Reports on Form 8-K (1) On July 7, 2000, Viskase Companies, Inc. announced that it has signed a definitive agreement to sell its plastic barrier and non-barrier shrink film business to Bemis Company, Inc. for a purchase price of $245 million, which includes $228 million in cash upon consummation of the transaction and $17 million in accounts receivable excluded from the transaction. The sale is subject to customary conditions, including the receipt of governmental and third party consents, and is expected to close in August 2000. 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 thereunto duly authorized. VISKASE COMPANIES, INC. ----------------------- Registrant By: /s/ ------------------------- Gordon S. Donovan Vice President, Chief Financial Officer and Treasurer (Duly authorized officer and principal financial officer of the registrant) Date: September 22, 2000 EX-10.39 2 0002.txt AGREEMENT AND AMENDMENT dated as of April 13, 2000 (this "Agreement"), between VISKASE CORPORATION, a Pennsylvania corporation (the "Lessee"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity but solely as Owner Trustee under the Trust Agreement (the "Lessor"), relating to the Lease ------ Agreement dated as of December 18, 1990 (as amended and supplemented to the date hereof, the "Lease"), between the Lessee and the Lessor, as successor trustee to Fleet National Bank, formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank (capitalized terms used herein and not defined have the meanings assigned to such terms in the Lease). Whereas, the Lessee was obligated under the terms of the Lease to pay to the Lessor the 2000 Basic Rent Payment (as defined below) on the Basic Rent Payment Date occurring on February 28, 2000, but failed to make such payment on such date; Whereas, the Lessee has requested that the Lessor allow the Lessee to make payment of the 2000 Basic Rent Payment at a later time; and Whereas, the Lessor has agreed, subject to the terms and conditions set forth herein, to permit the payment of the 2000 Basic Rent Payment to be made on or prior to the Extension Date (as defined below), pursuant to the terms and subject to the conditions set forth herein. Now therefore, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Letter of Credit. The Lessee agrees to ----------------- cause, on or prior to the Extension Date (as defined below), the face amount available to be drawn under the Rent Letter of Credit to be increased from $17,226,610.35 to $23,499,190.49. Such increase shall be effected by the Lessor either delivering an amendment to the outstanding Rent Letter of Credit issued by The Chase Manhattan Bank in favor of the Lessor dated June 14, 1999 (the "Current Rent LC"), or a new Rent Letter of Credit, in either --------------- case in substantially the form of the Current Rent LC, with any substantive changes in such form approved by the Lessor. From and after the Extension Date, the amount available to be drawn upon under the Rent Letter of Credit and each successor or replacement Rent Letter of Credit shall be in an amount not less than $23,499,190.49 (this requirement shall remain throughout the Lease Term notwithstanding anything to the contrary set forth in the Lease, including, without limitation, Section 21.01 (e) and (f) and Section 21.02 thereof). SECTION 2. Security Interest. The Lessee has entered ------------------ into (i) a Financing Agreement dated as of June 14, 1999, among The CIT Group/Business Credit, Inc., the lenders party thereto and the Lessee and Viskase Sales Corporation (collectively, the Lessee and Viskase Sales Corporation, "Viskase"), (ii) a Financing Agreement ------- dated as of June 14, 1999, among D.P. Kelly & Associates, L.P., and Viskase and (iii) a Financing Agreement dated as of June 14, 1999, among the lenders party thereto and Viskase (each of the foregoing Financing Agreements collectively, the "Financing Agreements"). -------------------- Subject to obtaining any consent of the lenders required in connection with the Financing Agreements, within 45 days from the date hereof the Lessee shall provide the Lessor with a perfected security interest in the Collateral (as defined in each of the Financing Agreements), pursuant to documentation with lien-related provisions in substantially the form executed in connection with the Financing Agreements, as security for the obligations of the Lessee to the Lessor hereunder and to the Lessor and Owner Participant under the Basic Documents, such security interest to be (i) subordinated to the existing security interest of each of the lenders in the Financing Agreements and (ii) limited, if required under the Indenture dated December 31, 1993, between Envirodyne Industries, Inc. and Bankers Trust Company, to the amount of the Capital Lease Obligation (as defined therein) in respect of the Lease. The Lessor's security interest in the Collateral shall remain in effect until such time as all of the Lessee's obligations secured by such interest (other than contingent indemnity obligations) have been satisfied. Notwithstanding anything contained herein to the contrary, the documentation executed in connection with the grant of such security interests shall not restrict the ability of any grantor to dispose of assets and shall provide that Lessor shall release its liens on such assets so disposed of if no Event of Default is then continuing. SECTION 3. Additional Financial Covenants. ------------------------------- Section XVII(h) of the Lease is hereby amended by adding the following provision prior to the period at the end of such Section: "or the incurrence by Lessee, Guarantor and any Subsidiary of Debt incurred after April 7, 2000 (either occurring in a single borrowing or occurrence or successive borrowings or occurrences), in an aggregate amount in excess of $20,000,000 exclusive of any Debt incurred under existing unutilized commitments as of April 7, 2000 (aggregating $22,000,000) and refinancings of Debt which existed as of April 7, 2000 (aggregating $110,000,000), without the prior approval of Lessor" SECTION 4. 2000 Payment. The Lessee has informed the ------------- Lessor that it is currently actively seeking to sell its speciality plastics film business consisting of shrinkable plastic films (the "Films Operation"). The Lessee hereby agrees to provide notice to --------------- the Lessor in the event that the Lessee suspends or abandons its efforts to sell the Films Operation. For as long as no Event of Default shall be continuing (or Default with respect to subsection (g) of Article XVII of the Lease), the Lessor and the Lessee agree that the $23,499,190.49 payment of Basic Rent due on February 28, 2000 (the "2000 Basic Rent Payment"), may be paid on or prior to ----------------------- the earliest to occur of (i) the sale of Films Operation, (ii) notice by the Lessee to the Lessor that it has suspended or abandoned its efforts to sell the Films Operation and (iii) June 30, 2000 (such earliest date, the "Extension Date"). In the event that a Default shall be continuing after the date hereof (or Default with respect to subsection (g) of Article XVII of the Lease) and prior to the Extension Date, payment in respect of the 2000 Basic Rent Payment shall be due one day after a written demand for such payment has been made to the Lessee by the Lessor. Upon the Extension Date (or such earlier date as the 2000 Basic Rent Payment is required to be paid pursuant to this Section 4), the Lessee shall pay to the Lessor the 2000 Basic Rent Payment. If the 2000 Basic Rent Payment is not made on or prior to June 30, 2000, the Lessor shall earn, and the Lessee shall pay to the Lessor, a restructuring fee in the amount of $1,000,000 on July 1, 2000. SECTION 5. 2001 Payment. The Lessor and the Lessee ------------- agree that with respect to the Basic Rent payment due under the current terms of the Lease on February 28, 2001, the amount of Basic Rent otherwise due on that date shall be due and payable on the Extension Date. For the avoidance of doubt, any failure by the Lessee to make the required payment on the Extension Date shall result, among other things, in the relevant provisions of the Lease regarding late payments and payment defaults becoming effective with respect to such failure. SECTION 6. 2002 Payment. The Lessor and the Lessee ------------- agree that with respect to the Basic Rent payment otherwise due under the current terms of the Lease on February 28, 2002, the amount of Basic Rent due on that date which is in respect of the period from February 28, 2002, to August 31, 2002, namely $11,749,595.25 (the "Initial 2002 Payment"), shall be due on -------------------- November 1, 2001, and the balance of the Basic Rent payment owed in respect of the February 28, 2002, Basic Rent Payment Date covering the period from September 1, 2002, to February 27, 2003, namely $11,749,595.25 (the "Remaining 2002 Payment"), shall be due and ---------------------- payable on February 28, 2002. For the avoidance of doubt, any failure by the Lessee to make the required payment on November 1, 2001, or February 28, 2002, as the case may be, shall result, among other things, in the relevant provisions of the Lease regarding late payments and payment defaults becoming effective with respect to such failure. SECTION 7. Representations and Warranties. The Lessee ------------------------------- represents and warrants to the Lessor that after giving effect to this Agreement, no Event of Default or Default has occurred and is continuing. SECTION 8. Waiver. The Lessor hereby waives any Event ------- of Default (i) arising from the Lessee's failure to make the 2000 Basic Rent payment on the date required under the Lease, for, so long as such payment is made on the date required to be made hereunder, (ii) arising by virtue of the Lessee's failure to meet the Fixed Charge Coverage Ratio required under Section 5.09 of the Participation Agreement for the fiscal quarters ending on December 31, 1999, and March 31, 2000, and (iii) arising prior to the Extension Date, from Lessee's failure to deliver audited financial statements and related auditors' letter for the fiscal year ending December 31, 1999. SECTION 9. Effectiveness and Termination. This ------------------------------ Agreement shall become effective as of the date first above written when the parties hereto shall have received counterparts of this Agreement that, when taken together, bear the signatures of the Lessee and the Lessor; provided, however, if any lender consent -------- ------- required pursuant to Section 2 has not been obtained by Viskase on or prior to April 21, 2000, Lessor has the option, at its sole discretion, to terminate this Agreement, upon which termination all the provisions hereof shall become null and void. SECTION 10. Lease. Except with respect to the relevant ------ provisions hereof, the Lease shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. This Agreement shall be a Basic Document as defined in the Lease. Accordingly, the parties hereto acknowledge that any breach of the Lessee's representations, warranties or covenants hereunder may result in an Event of Default, together with any consequences relating thereto, as set forth in the Basic Documents. SECTION 11. Effect of Extension Date. Except as ------------------------- expressly set forth herein, the provisions of this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lessor under the Lease or the Lessor or Owner Participant under any other Basic Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Lease or any other Basic Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Except with respect to the specific provisions hereof, nothing herein shall be deemed to entitle the Lessee or the Guarantor to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Lease or any other Basic Document in similar or different circumstances. SECTION 12. Expenses. The Lessee agrees to reimburse --------- the Owner Participant and the Lessor for its out-of-pocket expenses in connection with this Agreement and any actions taken in connection herewith, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Owner Participant. SECTION 13. Covenants; Further Assurances. The Lessee ------------------------------ hereby covenants and agrees with the Lessor that, from and after the date of this Agreement until satisfaction of all of the obligations of the Lessee hereunder, at any time and from time to time, upon the written request of the Lessor, and at the sole expense of the Lessee, Lessee will promptly and fully execute and deliver such further instruments and documents and take such further actions as the Lessor may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights herein granted. SECTION 14. Applicable Law. THIS AGREEMENT SHALL BE --------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 15. Counterparts. This Agreement may be ------------- executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. SECTION 16. Integration. This Agreement represents the ------------ entire agreement of the parties with respect to the subject matter hereof and there are no other promises or representations, written or oral, by the parties relative to the subject matter hereof not reflected or referred to herein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the date and year first above written. STATE STREET BANK AND TRUST COMPANY, as Owner Trustee, by --------------------------- Name: Title: VISKASE CORPORATION, by ---------------------------- Name: Title: EX-10.40 3 0003.txt General Electric Capital Corporation June 13, 2000 Letter Agreement ---------------- Gentlemen: Viskase Corporation, a Pennsylvania corporation ("Lessee"), has entered into (i) a Financing Agreement dated as of ------ June 14, 1999, among The CIT Group/Business Credit, Inc., the lenders party thereto and the Lessee and Viskase Sales Corporation (collectively, the Lessee and Viskase Sales Corporation, "Viskase"), (ii) a Financing Agreement dated as of June 14, 1999, ------- among D.P. Kelly & Associates, L.P., and Viskase and (iii) a Financing Agreement dated as of June 14, 1999, among the lenders party thereto and Viskase (each of the foregoing Financing Agreements and the other agreements relating to such financings collectively, the "Financing Agreements" and each of the lenders in -------------------- each of the Financing Agreements collectively, the "Lenders"). ------- General Electric Capital Corporation ("GE"), acting through the -- Owner Trustee, State Street Bank and Trust Company, a Massachusetts trust company, has entered into a Lease Agreement dated as of December 18, 1990, with Lessee (the Lease Agreement, together with the other agreements relating to such lease financing, the "Lease ----- Agreements"). This letter agreement (this "Agreement") will - ---------- --------- confirm our agreement with respect to the following matters relating to the Financing Agreements and the Lease Agreements: 1. Lenders agree that they will forbear for 105 days from the date hereof from exercising any remedies or accelerating any obligations under the Financing Agreements arising in respect of any events of default existing on the date hereof, or any events of default occurring after the date hereof solely in respect of defaults that existed on or prior to the date hereof. 2. GE agrees that it will forbear for 105 days from the date hereof from exercising any remedies or accelerating any obligations under the Lease Agreements arising in respect of any events of default existing on the date hereof, or any events of default occurring after the date hereof solely in respect of defaults that existed on or prior to the date hereof; provided, such requirement will terminate upon the occurrence of either (i) Viskase refusing to grant the security interest referred to in Paragraph 4 below within 5 days of the date hereof or (ii) the rental obligation of Viskase due to the Lessor (as defined in the Lease Agreement) on June 30, 2000, having not been made, unless the specialty plastic films business has not been sold and no lender willing to make the Loan (as defined below) has been found. GE agrees to cause the Owner Trustee to comply with this letter agreement and to be liable and responsible for any actions taken by the Owner Trustee in violation of this letter agreement. 3. Lenders hereby agree to consent under the Financing Agreements to the incurrence of additional unsecured indebtedness by Viskase in the amount of $23,499,190 on or prior to June 30, 2000 (the "Loan"), and to consent to the proceeds of such ---- indebtedness being used to pay the rental obligation of Viskase due to the Owner Trustee on June 30, 2000. 4. Lenders hereby agree to consent to the granting of subordinated security interests in the Collateral (as such term is defined in each of the Financing Agreements), pursuant to security documentation in substantially the form executed in connection with the Financing Agreements, as security for the obligations of the Lessee to the Owner Trustee or GE under the Lease Agreements, such security interests to be subordinated to the existing security interests for the benefit of each of the Lenders in the Financing Agreements pursuant to a subordination agreement mutually acceptable to the Lenders and GE which would be entered into and become effective prior to the granting of such security interests. Notwithstanding anything herein to the contrary, GE, on behalf of the Owner Trustee, and Viskase agree that: (i) no security interest of any kind whatsoever shall in any way be granted or deemed to have been granted to the Owner Trustee until such subordination agreements are entered into and become effective; (ii) the Lenders' consent hereunder to the granting of such a subordinated security interest is only effective upon such subordination agreements having been entered into and becoming effective; and (iii) any purported grant of a security interest to Owner Trustee prior to the effectiveness of such subordination agreements shall be void and of no force and effect. 5. This Agreement will be governed by New York law. This Agreement may be executed in one or more counterparts. Very truly yours, GENERAL ELECTRIC CAPITAL CORPORATION, on behalf of the Owner Trustee By: ----------------------------- Name: ------------------------ Its: ------------------------ Accepted and Agreed by each of the Lenders: THE CIT GROUP/BUSINESS CREDIT, INC., as Agent By: ------------------------------ Name: ------------------------- Its: ------------------------- GENERAL MOTORS EMPLOYEE GLOBAL GROUP PENSION TRUST By: Magten Asset Management Corp., as its attorney-in-fact By: --------------------------- Name: Robert Capozzi Its: Managing Director DEPARTMENT OF PENSIONS - CITY OF LOS ANGELES By: Magten Asset Management Corp., as its attorney-in-fact By: ------------------------- Name: Robert Capozzi Its: Managing Director NAVY EXCHANGE SERVICE COMMAND RETIREMENT TRUST By: Magten Asset Management Corp., as its attorney-in-fact By: -------------------------- Name: Robert Capozzi Its: Managing Director RAYTHEON CO. MASTER PENSION TRUST By: --------------------------- Name: ---------------------- Its: ---------------------- FIRST DATA CORPORATION MASTER RETIREMENT TRUST By: Magten Asset Management Corp., as its attorney-in-fact By: ------------------------ Name: Robert Capozzi Its: Managing Director D.P. KELLY & ASSOCIATES, L.P., a Delaware limited partnership By: C&G Management Company, Inc., a Delaware corporation, its general partner By: --------------------------------- Name: Mr. Stephen M. Schuster Its: Vice President EX-10.41 4 0004.txt The CIT Group/Business Credit, Inc. 10 South LaSalle Street Chicago, Illinois 60603-1097 June 13, 2000 Gordon S. Donovan Viskase Corporation 6855 West 65th Street Bedford Park, Illinois 60638 Re: The CIT Group/Viskase Companies, Inc. ------------------------------------ Dear Mr. Donovan: Reference is hereby made to that certain Financing Agreement (the "Agreement") dated as of June 14, 1999 by and among Viskase Corporation, a Pennsylvania corporation ("Viskase Corporation"), Viskase Sales Corporation, a Delaware corporation ("Viskase Sales"; Viskase Corporation and Viskase Sales are collectively referred to as the "Companies"), the financial institutions that are or may from time to time become parties thereto (together with their respective successors and assigns, the "Lenders") and The CIT Group/Business Credit, Inc., a New York corporation (in its individual capacity, "CITBC"), as agent for the Lenders. Terms not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. Pursuant to the request of the Companies, Agent and each of the Lenders hereby (A) agree to forbear for 105 days from the date hereof from exercising any remedies (including, but not limited to, ceasing to make Revolving Loans and/or open Letters of Credit as permitted upon the occurrence of an Event of Default by Section 10.2 of the Agreement) or accelerating the Obligations as a result of any presently existing Default or Event of Default under the Agreement or any other Loan Document (i) arising as a result of Viskase Corporation agreeing to grant a subordinated security interest in the Collateral to Lessor (as defined below) pursuant to Section 2 of that certain Lease Agreement (the "Lease") dated as of December 18, 1990, as amended by that certain Agreement and Amendment dated as of April 13, 2000 (the "GECC Amendment") between State Street Bank and Trust Company, a Massachusetts trust company, as owner trustee under the Trust Agreement (as defined in the Lease) (the "Lessor"), and Viskase Corporation, (ii) occurring as a result of the failure of the Companies to deliver to Agent audited financial statements for the fiscal year ended December 31, 1999 within the time periods set forth in the Agreement (it being understood that if such audited financial statements are delivered to Agent while the aforesaid forbearance period is in force and effect, such Event of Default regarding such audited financial statements shall be deemed waived by Agent and each of the Lenders), and (iii) under Section 10.1(j)(i) of the Agreement, and (B) consent to the Companies entering into the GECC Amendment (as of the time immediately prior to the execution of such GECC Amendment) and granting the subordinated security interests in the Collateral to Lessor, pursuant to security documentation and a subordination agreement in form and substance (and containing subordination terms) acceptable to Agent; provided, however, that the foregoing waiver and forbearance is subject to and conditioned upon: (i) the forbearance by the Lessor or General Electric Capital Corporation ("GECC") from exercising any remedies or accelerating any obligations under the Lease for 105 days from the date hereof pursuant to an executed letter agreement among GECC, the Lessor and the Subordinating Creditors attached hereto as Exhibit A (the "GECC Forbearance Letter"), received on the date of - --------- this letter agreement (it being understood that if any forbearance so granted by the Lessor terminates or is withdrawn for any reason, then (a) such termination or withdrawal shall be deemed a new and additional Event of Default under the Agreement, (b) Agent and the Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 10 of the Financing Agreement and in the other Loan Documents, and (c) the forbearance granted by Agent and the Lenders shall automatically terminate and be of no force and effect); and (ii) Lessor and Agent, and Lessor and each Subordinating Creditor, entering into a subordination agreement with respect to the subordinated security interest in the Collateral granted to Lessor on terms mutually agreeable to Lessor and Agent within thirty (30) days of the date of this letter agreement (it being understood that such security interest shall not be granted until the subordination agreements referenced above are entered into and become effective and if such security interest is granted prior to entry and effectiveness of the subordination agreements, then (a) the granting of such security interest shall be deemed an Event of Default under the Agreement, (b) Agent and Lenders shall have all of the remedies upon an Event of Default set forth in Section 10 of the Financing Agreement and in the other Loan Documents, and (c) the forbearance granted by Agent and the Lenders shall automatically terminate and be of no further force and effect); and (iii) the waiver of or forbearance from exercising any remedies or accelerating any obligations (on terms substantially similar to those set forth herein) with respect to all defaults and events of default existing as of the date hereof under the Term Financiers Loan Documents and the D.P. Kelly Loan Documents between the Companies and each of the Subordinating Creditors, as applicable, pursuant to executed letter agreements attached as Exhibits B and C, respectively, hereto (it being understood that if - ---------------- any such waiver or forbearance is terminated or withdrawn for any reason, then (a) such termination or withdrawal shall be deemed a new and additional Event of Default under the Agreement, (b) Agent and the Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 10 of the Financing Agreement and in the other Loan Documents, and (c) the forbearance granted by Agent and the Lenders shall automatically terminate and be of no force and effect). The Agent and Lenders hereby waive any Event of Default arising (i) from Viskase Corporation's failure to make the 2000 Basic Rent (as defined in the GECC Amendment) payment on the date required under the Lease Documents, for so long as such payment is made on the date required to be made under the GECC Amendment or any such later date as agreed by Viskase and the Lessor by further written amendment or (ii) under Section 10.1(k) of the Agreement due to the "Events of Default" under the Lease Documents specified in Section 4 of the GECC Amendment (it being understood that if such waiver is no longer effective for any reason, then (a) a new Event of Default shall occur, (b) Agent and Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 10 of the Financing Agreement and in the other Loan Documents, and (c) the forbearance granted by Agent and the Lenders shall automatically terminate and be of no further force and effect). Notwithstanding anything contained herein to the contrary, in the event that (i) the 2000 Basic Rent Payment (as defined in the GECC Amendment) is paid in full and satisfied by whatever means within the time frame set forth in the GECC Amendment or such later date as agreed by Viskase Corporation and Lessor in writing, (ii) the requirements with respect to the Current Rent LC (as defined in the GECC Amendment) or the 2001 Payment (as defined in the GECC Amendment) are not satisfied by the Companies and (iii) --- Lessor does not declare an "Event of Default" under the Lease as a result of any failure to make the payment described in clause (i) above or any such failure described in clause (ii) of this paragraph or GECC does not otherwise terminate its forbearance under the GECC Forbearance Letter, the forbearance granted by this letter agreement shall not be terminated as a result of the failure described in clause (ii) of this paragraph. The Companies hereby acknowledge that the waiver and forbearance contained in this letter is granted only for the limited purpose set forth herein and each term and provision of the Agreement continues in full force and effect. The waiver and forbearance is granted only for the specific instance specified herein and for the specific period provided herein, and in no manner creates a course of dealing or otherwise impairs the future ability of Agent or any Lender to declare an Event of Default under or otherwise enforce the terms of the Agreement. In consideration of Agent and each of the Lender's agreement to the forbearance and waiver set forth herein, the Companies hereby agree to pay a fee in the amount of $1,200,000 which shall be fully earned upon execution of this letter agreement and payable and distributed as follows: (i) $500,000 due and payable on Monday, June 5, 2000; $250,000 of which shall be for the sole account of the Agent and the remaining $250,000 will be allocated among the Lenders in accordance with their pro-rata shares of the loans under the Agreement; (ii) $450,000 due and payable upon the earlier of (a) June 30, 2000 and (b) the closing of the sale of the Film Business; $200,000 of which shall be for the sole account of the Agent and the remaining $250,000 will be allocated among the Lenders in accordance with their pro-rata shares of the loans under the Agreement; and (iii) $250,000 due and payable upon the earlier of (a) August 1, 2000 and (b) the closing of the sale of the Film Business, allocated among the Lenders in accordance with their pro- rata shares of the loans under the Agreement. By virtue of this letter agreement, Agent and Lenders agree, upon delivery of an executed purchase agreement with respect to the sale of the Film Business (in form and substance satisfactory to Required Lenders) and subject to no additional Events of Default occurring after the date of this letter agreement, to make "overadvances" under the Revolving Line of Credit up to $2,000,000 at any one time outstanding, which overadvances shall be repaid in full, plus accrued and unpaid interest, upon the earlier of (a) ninety (90) days from the date of the funding of the initial overadvance, (b) the closing of the sale of the Film Business, (c) the date upon which the forbearance evidenced by this letter agreement is terminated or withdrawn for any reason and, (d) the date upon which the purchase agreement for the sale of the Film Business referenced above is terminated, withdrawn or expires for any reason. The failure of the Companies to timely repay such "overadvances" shall be deemed an Event of Default and Agent and the Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 10 of the Financing Agreement and in the other Loan Documents. Agent and Lenders agree that no further "overadvances" will be made to the Companies during the effectiveness of the forbearance described in this letter agreement. None of the terms or conditions of this letter agreement may be changed, modified, waived, or canceled, except by writing signed by all the parties hereto specifying such change, modification, waiver, or cancellation. Any agreements or waivers made by the Lenders hereunder shall be deemed binding and effective as to all Lenders by virtue of the approval thereof by the Required Lenders. Except as otherwise specifically set forth herein, the Agreement and all the other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. This letter agreement shall be governed by and construed in accordance with the laws of the State of Illinois. This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement. A facsimile copy of a signature page hereto shall be deemed an original for all purposes. Very truly yours, THE CIT GROUP/BUSINESS CREDIT, INC., for itself and as Agent on behalf of the Lenders By: ------------------------ Name: ------------------------ Title: ------------------------ VISKASE SALES CORPORATION By: ---------------------- Its: ---------------------- COMPANIES: VISKASE CORPORATION By: ---------------------- Its: ---------------------- COMPANIES: VISKASE CORPORATION By: --------------------- Its: --------------------- VISKASE SALES CORPORATION By: ---------------------- Its: ---------------------- ACKNOWLEDGED AND AGREED: LASALLE BANK NATIONAL ASSOCIATION, as a Lender By: --------------------- Its: --------------------- Lenders: GMAC COMMERCIAL CREDIT LLC, as a Lender By: -------------------------- Its: -------------------------- GMAC BUSINESS CREDIT LLC, as a Lender By: -------------------------- Its: -------------------------- TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender By: ------------------------- Its: ------------------------- EX-10.42 5 0005.txt June 13, 2000 Gordon S. Donovan Viskase Corporation 6855 West 65th Street Bedford Park, Illinois 60638 Re: Viskase Companies, Inc. ---------------------- Dear Mr. Donovan: Reference is hereby made to that certain Financing Agreement (the "Agreement") dated as of June 14, 1999 by and among Viskase Corporation, a Pennsylvania corporation ("Viskase Corporation"), Viskase Sales Corporation, a Delaware corporation ("Viskase Sales"; Viskase Corporation and Viskase Sales are collectively referred to as the "Companies"), the financial institutions that are or may from time to time become parties thereto (together with their respective successors and assigns, the "Lenders"). Terms not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. Pursuant to the request of the Companies, each of the Lenders hereby (A) agree to forbear for 105 days from the date hereof from exercising any remedies or accelerating the Obligations as a result of any presently existing Default or Event of Default under the Agreement or any other Loan Document (i) arising as a result of Viskase Corporation agreeing to grant a subordinated security interest in the Collateral to Lessor (as defined below) pursuant to Section 2 of that certain Lease Agreement (the "Lease") dated as of December 18, 1990, as amended by that certain Agreement and Amendment dated as of April 13, 2000 (the "GECC Amendment") between State Street Bank and Trust Company, a Massachusetts trust company, as owner trustee under the Trust Agreement (as defined in the Lease) (the "Lessor"), and Viskase Corporation, (ii) occurring as a result of the failure of the Companies to deliver to the Lenders its audited financial statements for the fiscal year ended December 31, 1999 within the time periods set forth in the Agreement (it being understood that if such audited financial statements are delivered to Lenders while the aforesaid forbearance period is in force and effect, such Event of Default regarding such audited financial statements shall be deemed waived by the Lenders) and (iii) under Section 8.1(j) and (k) of the Agreement, and (B) consent to the Companies entering into the GECC Amendment (as of the time immediately prior to the execution of such GECC Amendment) and consent to the granting of the subordinated security interests to Lessor, pursuant to security documentation and a subordination agreement in form and substance (and containing subordination terms) acceptable to the Lenders; provided, however, that the foregoing waiver and forbearance is subject to and conditioned upon: the forbearance by the Lessor from exercising any remedies or accelerating any obligations under the Lease for 105 days from the date hereof pursuant to an executed letter agreement among GECC, the Lessor, CITBC, D. P. Kelly and the Lenders attached hereto as Exhibit A (the "GECC Forbearance Letter"), received on the date of this letter agreement (it being understood that if any forbearance so granted by the Lessor terminates or is withdrawn for any reason, then (a) such termination or withdrawal shall be deemed a new and additional Event of Default under the Agreement, (b) the Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Financing Agreement and in the other Loan Documents, and (c) the forbearance granted by the Lenders shall automatically terminate and be of no force and effect); Lessor and the Lenders, Lessor and CITBC, and Lessor and D.P. Kelly, entering into a subordination agreement with respect to the subordinated security interest in the Collateral granted to Lessor on terms mutually agreeable to Lessor and the Lenders within thirty (30) days of the date of this letter agreement (it being understood that such security interest shall not be granted until the subordination agreements referenced above are entered into and become effective and if such security interest is granted prior to entry and effectiveness of the subordination agreements, then (a) the granting of such security interest shall be deemed an Event of Default under the Agreement, (b) Lenders shall have all of the remedies upon an Event of Default set forth in Section 8 of the Agreement and in the other Loan Documents, and (c) the forbearance granted by the Lenders shall automatically terminate and be of no further force and effect); and the waiver of or forbearance from exercising any remedies or accelerating any obligations (on terms substantially similar to those set forth herein) with respect to all defaults and events of default existing as of the date hereof under the CITBC Loan Documents and the D.P. Kelly Loan Documents, as applicable, pursuant to executed letter agreements attached as Exhibits B and C, respectively, hereto (it being understood that if any such waiver or forbearance is terminated or withdrawn for any reason, then (a) such termination or withdrawal shall be deemed a new and additional Event of Default under the Agreement, (b) Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Financing Agreement and in the other Loan Documents, and (c) the forbearance granted by Agent and the Lenders shall automatically terminate and be of no force and effect). The Lenders hereby waive any Event of Default arising (i) from Viskase Corporation's failure to make the 2000 Basic Rent (as defined in the GECC Amendment) payment on the date required under the Lease Documents, for so long as such payment is made on the date required to be made under the GECC Amendment or any such later date as agreed by the Companies and the Lessor by further written amendment or (ii) under Section 8.1(k) of the Agreement due to the "Events of Default" under the Lease Documents specified in Section 4 of the GECC Amendment (it being understood that if such waiver is no longer effective for any reason, then (a) a new Event of Default shall occur, (b) Lenders shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Agreement and in the other Loan Documents, and (c) the forbearance granted by the Lenders shall automatically terminate and be of no further force and effect. Notwithstanding anything contained herein to the contrary, in the event that (i) the 2000 Basic Rent payment (as defined in the GECC Amendment) is paid in full and satisfied by whatever means within the time frame set forth in the GECC Amendment or such later date as agreed by Viskase Corporation and Lessor in writing, (ii) the requirements with respect to the Current Rent LC (as defined in the GECC Amendment) or the 2001 Payment (as defined in the GECC Amendment) are not satisfied by the Companies and (iii) Lessor does not declare an "Event of Default" under the Lease as a result of any failure to make the payment described in clause (i) above or any such failure described in clause (ii) of this paragraph or GECC does not otherwise terminate its forbearance under the GECC Forbearance Letter, the forbearance granted by this letter agreement shall not be terminated as a result of the failure described in clause (ii) of this paragraph. The Companies hereby acknowledge that the waiver and forbearance contained in this letter is granted only for the limited purpose set forth herein and each term and provision of the Agreement continues in full force and effect. The waiver and forbearance is granted only for the specific instance specified herein and for the specific period provided herein, and in no manner creates a course of dealing or otherwise impairs the future ability of any Lender to declare an Event of Default under or otherwise enforce the terms of the Agreement. In consideration of each of the Lender's agreement to the waiver set forth herein, the Companies hereby agree to pay a fee in the aggregate amount of $300,000 (the "Fee") to the Lenders which shall be fully earned and payable upon execution of this letter agreement. Notwithstanding anything herein to the contrary, this letter agreement shall only become effective upon receipt of the Fee by the Lenders, and shall be of no force and effect until such time. None of the terms or conditions of this letter agreement may be changed, modified, waived, or canceled, except by writing signed by all the parties hereto specifying such change, modification, waiver, or cancellation. Except as otherwise specifically set forth herein, the agreement and all the other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. This letter agreement shall be governed by and construed in accordance with the laws of the State of Illinois. This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement. A facsimile copy of a signature page hereto shall be deemed an original for all purposes. Very truly yours, GENERAL MOTORS EMPLOYEE GLOBAL GROUP PENSION TRUST By: Magten Asset Management Corp., as its attorney-in-fact By:______________________ ---------------------- Name: Robert Capozzi Its: Managing Director DEPARTMENT OF PENSIONS ! CITY OF LOS ANGELES By: Magten Asset Management Corp., as its attorney-in-fact By:____________________ ---------------------- Name: Robert Capozzi Its: Managing Director NAVY EXCHANGE SERVICE COMMAND RETIREMENT TRUST By: Magten Asset Management Corp., as its attorney-in-fact By:_______________________ ---------------------- Name: Robert Capozzi Its: Managing Director FIRST DATA CORPORATION MASTER RETIREMENT TRUST By: Magten Asset Management Corp., as its attorney-in-fact By:_______________________ ---------------------- Name: Robert Capozzi Its: Managing Director RAYTHEON CO. MASTER PENSION TRUST By: By:____________________________ --------------------------- Name: Its: COMPANIES: VISKASE CORPORATION By: -------------------- Its: -------------------- VISKASE SALES CORPORATION By: --------------------- Its: --------------------- EX-10.43 6 0006.txt June 13, 2000 Gordon S. Donovan Viskase Corporation 6855 West 65th Street Bedford Park, Illinois 60638 Re: Viskase Companies, Inc. ---------------------- Dear Mr. Donovan: Reference is hereby made to that certain Financing Agreement (the "Agreement") dated as of June 14, 1999 by and among Viskase Corporation, a Pennsylvania corporation ("Viskase Corporation"), Viskase Sales Corporation, a Delaware corporation ("Viskase Sales"; Viskase Corporation and Viskase Sales are collectively referred to as the "Companies"), and D.P. Kelly & Associates, L.P., a Delaware limited partnership (together with its successors and assigns, the "Lender"). Terms not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. Pursuant to the request of the Companies, the Lender hereby (A) agrees to forbear for 105 days from the date hereof from exercising any remedies or accelerating the Obligations as a result of any presently existing Default or Event of Default under the Agreement or any other Loan Document (i) arising as a result of Viskase Corporation agreeing to grant a subordinated security interest in the Collateral to Lessor (as defined below) pursuant to Section 2 of that certain Lease Agreement (the "Lease") dated as of December 18, 1990, as amended by that certain Agreement and Amendment dated as of April 13, 2000 (the "GECC Amendment") between State Street Bank and Trust Company, a Massachusetts trust company, as owner trustee under the Trust Agreement (as defined in the Lease) (the "Lessor"), and Viskase Corporation, (ii) occurring as a result of the failure of the Companies to deliver to the Lender its audited financial statements for the fiscal year ended December 31, 1999 within the time periods set forth in the Agreement (it being understood that if such audited financial statements are delivered to Lender while the aforesaid forbearance period is in force and effect, such Event of Default regarding such audited financial statements shall be deemed waived by the Lender) and (iii) under Section 8.1(j) and (k) of the Agreement, and (B) consent to the Companies entering into the GECC Amendment (as of the time immediately prior to the execution of such GECC Amendment) and consent to the granting of the subordinated security interests to Lessor, pursuant to security documentation and a subordination agreement in form and substance (and containing subordination terms) acceptable to the Lender; provided, however, that the foregoing waiver and forbearance is subject to and conditioned upon: the forbearance by the Lessor from exercising any remedies or accelerating any obligations under the Lease for 105 days from the date hereof pursuant to an executed letter agreement among GECC, the Lessor, CITBC, the Additional Term Lenders and the Lender, attached hereto as Exhibit A (the "GECC Forbearance Letter"), received on the date of this letter agreement (it being understood that if any forbearance so granted by the Lessor terminates or is withdrawn for any reason, then (a) such termination or withdrawal shall be deemed a new and additional Event of Default under the Agreement, (b) the Lender shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Agreement and in the other Loan Documents, and (c) the forbearance granted by the Lender shall automatically terminate and be of no force and effect); Lessor and the Lender, Lessor and CITBC, and Lessor and the Additional Term Lenders, entering into a subordination agreement with respect to the subordinated security interest in the Collateral granted to Lessor on terms mutually agreeable to Lessor and the Lender within thirty (30) days of the date of this letter agreement (it being understood that such security interest shall not be granted until the subordination agreements referenced above are entered into and become effective and if such security interest is granted prior to entry and effectiveness of the subordination agreements, then (a) the granting of such security interest shall be deemed an Event of Default under the Agreement, (b) Lender shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Agreement and in the other Loan Documents, and (c) the forbearance granted by the Lender shall automatically terminate and be of no further force and effect); and the waiver of or forbearance from exercising any remedies or accelerating any obligations (on terms substantially similar to those set forth herein) with respect to all defaults and events of default existing as of the date hereof under the CITBC Loan Documents and the Additional Term Lender Loan Documents, as applicable, pursuant to executed letter agreements attached as Exhibits B and C, respectively, hereto (it being understood that if any such waiver or forbearance is terminated or withdrawn for any reason, then (a) such termination or withdrawal shall be deemed a new and additional Event of Default under the Agreement, (b) Lender shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Agreement and in the other Loan Documents, and (c) the forbearance granted by Agent and the Lender shall automatically terminate and be of no force and effect). The Lender hereby waives any Event of Default arising (i) from Viskase Corporation's failure to make the 2000 Basic Rent (as defined in the GECC Amendment) payment on the date required under the Lease Documents, for so long as such payment is made on the date required to be made under the GECC Amendment or any such later date as agreed by the Companies and the Lessor by further written amendment or (ii) under Section 8.1(k) of the Agreement due to the "Events of Default" under the Lease Documents specified in Section 4 of the GECC Amendment (it being understood that if such waiver is no longer effective for any reason, then (a) a new Event of Default shall occur, (b) Lender shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Agreement and in the other Loan Documents, and (c) the forbearance granted by the Lender shall automatically terminate and be of no further force and effect. Notwithstanding anything contained herein to the contrary, in the event that (i) the 2000 Basic Rent payment (as defined in the GECC Amendment) is paid in full and satisfied by whatever means within the time frame set forth in the GECC Amendment or such later date as agreed by Viskase Corporation and Lessor in writing, (ii) the requirements with respect to the Current Rent LC (as defined in the GECC Amendment) or the 2001 Payment (as defined in the GECC Amendment) are not satisfied by the Companies and (iii) Lessor does not declare an "Event of Default" under the Lease as a result of any failure to make the payment described in clause (i) above or any such failure described in clause (ii) of this paragraph or GECC does not otherwise terminate its forbearance under the GECC Forbearance Letter, the forbearance granted by this letter agreement shall not be terminated as a result of the failure described in clause (ii) of this paragraph. The Companies hereby acknowledge that the waiver and forbearance contained in this letter is granted only for the limited purpose set forth herein and each term and provision of the Agreement continues in full force and effect. The waiver and forbearance is granted only for the specific instance specified herein and for the specific period provided herein, and in no manner creates a course of dealing or otherwise impairs the future ability of Lender to declare an Event of Default under or otherwise enforce the terms of the Agreement. In consideration of each of the Lender's agreement to the waiver set forth herein, the Companies hereby agree to pay a fee in the aggregate amount of $50,000 (the "Fee") to the Lender which shall be due and payable upon the earlier of (a) August 31, 2000, or (b) the closing of the sale of the Film Business of the Companies and their affiliates (it being understood that if the Fees are not paid in their entirety when due, then (a) such failure to make such payment shall be deemed a new and additional Event of Default under the Agreement, (b) Lender shall have all of the remedies upon an Event of Default set forth in SECTION 8 of the Agreement, and (c) the forbearance granted by the Lender shall automatically terminate and be of no further force and effect). None of the terms or conditions of this letter agreement may be changed, modified, waived, or canceled, except by writing signed by all the parties hereto specifying such change, modification, waiver, or cancellation. Except as otherwise specifically set forth herein, the agreement and all the other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. This letter agreement shall be governed by and construed in accordance with the laws of the State of Illinois. [signature page follows] This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement. A facsimile copy of a signature page hereto shall be deemed an original for all purposes. Very truly yours, D.P. Kelly & Associates, L.P., a Delaware limited partnership By: __________________________ --------------------------- C&G Management Company, Inc., a Delaware corporation, its general partner By: _______________________ -------------------------- Name: Stephen M. Schuster Its: Vice President COMPANIES: VISKASE CORPORATION By: ------------------------ Its: ------------------------ VISKASE SALES CORPORATION By: ------------------------- Its: ------------------------- EX-10.44 7 0007.txt EXECUTION COPY AMENDMENT NO. 1 TO THE LETTER AGREEMENT AMENDMENT No. 1, dated as of June 30, 2000 (this "Amendment"), to the Agreement and Amendment, dated as of April --------- 13, 2000 (the "Letter Agreement"), between VISKASE CORPORATION, a ---------------- Pennsylvania corporation (the "Lessee"), and STATE STREET BANK ------ AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity but solely as Owner Trustee under the Trust Agreement (the "Lessor"), relating to the Lease Agreement dated ------ as of December 18, 1990 (as amended and supplemented to the date hereof, the "Lease"), between the Lessee and the Lessor, as ----- successor trustee to Fleet National Bank, formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank (capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Letter Agreement). Whereas, the Lessee and the Lessor entered into the Letter Agreement, which provided, inter alia, that the Lessee ----- ---- would pay the 2000 Basic Rent Payment and the 2001 Basic Rent Payment (as defined in the Letter Agreement, as amended hereby) on or prior to the Extension Date; Whereas, the Lessee has requested that the Lessor allow the Lessee to make the 2000 Basic Rent Payment and the 2001 Basic Rent Payment at a later time; and Whereas, the Lessor and the Lessee have agreed to amend the Letter Agreement pursuant to the terms and subject to the conditions set forth herein. Now therefore, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Amendment. (a) Section 2 of the Letter ---------- Agreement is hereby amended by replacing the second sentence thereof with the following sentences: "The Lessee hereby acknowledges and confirms that it has been authorized by all lenders party to any of the Financing Agreements (collectively, with their successors, endorsees, transferees and assigns, the "Lenders") to grant a security interest in the Collateral (as ------- defined in each of the Financing Agreements) in favor of the Lessor, such Lender consent being subject to the Lessor entering into a subordination agreement with the Lenders (the "Subordination Agreement"), which agreement shall contain ----------------------- language providing that in the event of a refinancing, refunding, replacement, renewal or creation of any new senior secured financing whenever incurred, the Lessor agrees to enter into a new subordination agreement on similar terms with such senior secured lenders, so long as such refinancing, refunding, replacement, renewal or creation of any new senior secured financing is in accordance with Section XVII(h) of the Lease, as amended by this Agreement. The security interest in the Collateral shall be perfected as of July 11, 2000 (provided, however, that if the Lessee is prevented from granting the perfected security interest solely as a result of the Lessor's unreasonable refusal to enter into the Subordination Agreement, such date will be extended until the date on which the Lessor enters into the Subordination Agreement), pursuant to documentation with lien-related provisions in substantially the form executed in connection with the Financing Agreements, as security for the obligations of the Lessee to the Lessor hereunder and to the Lessor and Owner Participant under the Basic Documents, such security interest to be (i) subordinated pursuant to the Subordination Agreement and (ii) limited, if required under the Indenture dated December 31, 1993, between Envirodyne Industries, Inc. and Bankers Trust Company, to the amount of the Capital Lease Obligation (as defined therein) in respect of the Lease." (b) Section 4 of the Letter Agreement is hereby amended by the following: (i) deleting the third, fourth and fifth sentences thereof and inserting the following text in place thereof: "The Lessor and the Lessee agree that the $23,499,190.49 payment of Basic Rent due on February 28, 2000 (the "2000 ---- Basic Rent Payment") shall be paid on or prior to the ------------------ earliest to occur of (i) the sale of the Films Operation, (ii) notice by the Lessee to the Lessor that it has suspended or abandoned its efforts to sell the Films Operation, (iii) the occurrence of any event which would entitle any Lender, with or without lapse of time or giving of notice, to terminate or withdraw its forbearance obligations with respect to the Lessee, (iv) the occurrence and continuance of an Event of Default under the Lease (or Default with respect to Section XVII(g) of the Lease), (v) two (2) Business Days (as defined below) after written notice from the Lessor to the Lessee of the Lessee's failure to grant the perfected security interest to the Lessor as required by Section 2 hereof, if such perfected security interests still have not been granted, and (vi) September 27, 2000 (such earliest date, the "Extension Date")"; and -------------- (ii) deleting the text "July 1, 2000." at the end thereof and inserting the following text in place thereof: "the earlier of (i) two (2) Business Days (as defined herein) after the date of execution of a definitive purchase agreement for the sale of the Films Operation and (ii) August 1, 2000. During the period commencing on June 30, 2000 and continuing through and including the date upon which the Lessee shall have paid the 2000 Basic Rent Payment to the Lessor, the Lessor shall earn, and the Lessee shall pay to the Lessor, interest on the 2000 Basic Rent Payment at the Stipulated Rate (as defined in the Lease), payable on the Extension Date. For the avoidance of doubt, any failure by the Lessee to make the required payment on the Extension Date shall result, among other things, in the relevant provisions of the Lease regarding late payments and payment defaults becoming effective with respect to such failure. As used in this Agreement, the term "Business Day" means any day other than a Saturday, ------------ Sunday or other day on which commercial banks in New York City are authorized or required by law to close." (c) Section 5 of the Letter Agreement is hereby amended by: (i) inserting the text "(the "2001 Basic Rent --------------- Payment")" between the words "date" and "shall"; and ------- (ii) inserting the following text between the first and second sentences thereof: "During the period commencing on June 30, 2000 and continuing through and including the date upon which the Lessee shall have paid the 2001 Basic Rent Payment to the Lessor, the Lessor shall earn, and the Lessee shall pay to the Lessor, interest on the 2001 Basic Rent Payment at the Stipulated Rate (as defined in the Lease), payable on the Extension Date." (d) Section 8 of the Letter Agreement is hereby amended by inserting the text "and June 30, 2000" after the text "March 31, 2000". (e) Section 9 of the Letter Agreement is hereby amended by deleting the following text: "provided, however, if any lender -------- ------- consent required pursuant to Section 2 has not been obtained by Viskase on or prior to April 21, 2000, Lessor has the option, at its sole discretion, to terminate this Agreement, upon which termination all the provisions hereof shall become null and void." SECTION 2. Effectiveness. This Amendment shall become ------------- effective as of the date first above written when the parties hereto shall have received counterparts of this Amendment that, when taken together, bear the signatures of the Lessee and the Lessor. SECTION 3. Letter Agreement. This Amendment shall ---------------- apply and be effective only with respect to the provisions of the Letter Agreement specifically referred to herein. After the date hereof, any reference to the Letter Agreement shall mean the Letter Agreement as amended hereby. SECTION 4. Applicable Law. THIS AMENDMENT SHALL BE -------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 5. Counterparts. This Amendment may be ------------ executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Amendment by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Amendment. SECTION 6. Expenses. The Lessee agrees to reimburse -------- the Owner Participant and the Lessor for its out-of-pocket expenses in connection with this Amendment and any actions taken in connection herewith, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Owner Participant. [signature page follows] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written. STATE STREET BANK AND TRUST COMPANY, as Owner Trustee, by ------------------------ Name: Title: VISKASE CORPORATION, by ------------------------ Name: Title: EX-27 8 0008.txt
5 6-MOS DEC-31-2000 JUN-30-2000 5,366,000 0 48,195,000 (2,008,000) 80,466,000 145,891,000 488,509,000 195,024,000 471,443,000 225,826,000 301,282,000 0 0 151,000 (117,022,000) 471,443,000 102,904,000 102,904,000 79,390,000 79,390,000 0 537,000 24,753,000 (27,538,000) (1,516,000) (26,022,000) 1,935,000 0 0 (24,087,000) (1.60) (1.60)
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