-----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, Jvw3Q1bbaMZCMgWDwPINgMcEzEHwZ2VCB9ABCkzfdVdJAr6SLh5uZNYChnvF1lAq Am9lg+ogdOvMJOmi2xNySA== 0000862255-96-000005.txt : 19960530 0000862255-96-000005.hdr.sgml : 19960530 ACCESSION NUMBER: 0000862255-96-000005 CONFORMED SUBMISSION TYPE: 8-K CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960515 ITEM INFORMATION: Other events FILED AS OF DATE: 19960529 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEENE CORP /DE/ CENTRAL INDEX KEY: 0000862255 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 132596288 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18434 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 757 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2124863200 MAIL ADDRESS: STREET 1: 757 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 15, 1996 KEENE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 0-18434 13-2596288 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 757 THIRD AVENUE, NEW YORK, N.Y. 10017 (Address of principal executive officers) Zip Code) Registrant's telephone number, including area code (212) 486-3200 N/A (Former name or former address, if change since last report.) Item 5. Other Events On May 15, 1996, Keene Corporation ("Keene") filed its operating report for the period March 31, 1996 to April 27, 1996 with the United States Bankruptcy Court for the Southern District of New York and the United States Trustee. These financial statements were prepared in accordance with the United States Trustee guidelines. Item 7. Financial statements, pro forma financial statements and exhibits (c) Exhibits 99(a) Operating Report dated May 15, 1996 for the period March 31, 1996 to April 27,1996. 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 hereunto duly authorized. KEENE CORPORATION (Registrant) /s/ Timothy E. Coyne Timothy E. Coyne President Date: May 29, 1996 EXHIBIT 99(a) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: CHAPTER 11 KEENE CORPORATION, Debtor. CASE NO. 93 B 46090 (SMB) OPERATING REPORT FOR THE PERIOD MARCH 31, 1996 TO APRIL 27, 1996 DEBTOR'S ADDRESS: 757 THIRD AVENUE SUITE 850 NEW YORK, NEW YORK 10017 PERIOD DISBURSEMENTS: $410,000 DEBTOR'S ATTORNEYS: BERLACK, ISRAELS & LIBERMAN LLP GENERAL COUNSEL REPORT PREPARER: TRACEY KARM KEENE CORPORATION PERIOD OPERATING PROFIT (LOSS): $(547,000) The undersigned, having reviewed the attached report and being familiar with the Debtor's financial affairs, verifies under penalty of perjury, that the information contained therein is complete, accurate and truthful to the best of my knowledge. DATE SIGNATURE AND TITLE 5/15/96 /s/ Timothy E. Coyne Indicate if this an amended statement by checking here. _____ AMENDED STATEMENT UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: CHAPTER 11 KEENE CORPORATION, Debtor. CASE NO. 93 B 46090 (SMB) OPERATING REPORT FOR KEENE CORPORATION FOR THE PERIOD MARCH 31, 1996 - APRIL 27, 1996 THE DEBTOR HAS OBTAINED THE CONSENT OF THE U.S. TRUSTEE TO USE FISCAL MONTHS IN ACCORDANCE WITH ITS NORMAL ACCOUNTING PRACTICE TO PREPARE ITS FINANCIAL REPORTS. THE DEBTOR MAILED ITS SECOND AMENDED DISCLOSURE STATEMENT REGARDING DEBTOR'S FOURTH AMENDED PLAN OF REORGANIZATION DATED MARCH 11, 1996 (THE "DISCLOSURE STATEMENT"), DEBTOR'S FOURTH AMENDED PLAN OF REORGANIZATION DATED MARCH 11, 1996 (THE "PLAN") AND RELATED VOTING MATERIALS ON MARCH 29, 1996. THE VOTING DEADLINE FOR THE PLAN IS MAY 14,1996. THE BANKRUPTCY COURT HAS SCHEDULED A CONFIRMATION HEARING ON THE PLAN FOR JUNE 12, 1996. Keene Corporation (Debtor-in-Possession) Operating Report For the Period March 31, 1996 - April 27, 1996 INDEX PAGE # Operating Results for the Period March 31, 1996- April 27, 1996 1-3 Summary of Cash and Cash Equivalents and Investments as of April 27, 1996 4 Receivables and Payables Summary as of 5 Other Potential Recoveries as of April 27, 1996 6-8 Other Potential Payments as of April 27, 1996 9 Insurance Payment Report for the Period March 31, 1996 - April 27, 1996 10 Taxes Paid Summary for the Period March 31, 1996- April 27, 1996 11 Schedule of General Operating Expenses for the Period March 31, 1996 - April 27, 1996 12 Keene Corporation (Debtor-in-Possession) Income Statement For the Period March 31, 1996 - April 27, 1996 (Unaudited) ($000's)
INCOME Investment Income $135 GENERAL & ADMINISTRATIVE EXPENSES Salary, Wages, Benefits and Payroll Taxes 93 Rent and Utilities 27 Insurance 31 General Operating Expenses (See Page 12) 47 _____ Loss Before Reorganization Items, Income Taxes and Equity in Loss of Subsidiary (63) Reorganization Items: Debtor's Counsel Legal Fees $50 Creditors Committee Counsel Legal Fees 100 Other 100 250 ______ Loss Before Income Taxes and Equity in Loss of Subsidiary (313) Income Tax Expense 80 ______ Loss Before Equity in Loss of Subsidiary (393) Equity in Loss of Subsidiary (154) ______ NET LOSS $(547) ====== 1
Keene Corporation (Debtor-in-Possession) Balance Sheet As of April 27, 1996 (Unaudited) ($000's)
ASSETS Current Assets Cash and Cash Equivalents $7,558 Investments at Market 23,821 Accounts Receivable-Insurance Proceeds 15,000 Accounts Receivable-Surety Companies 3,282 Income Taxes Receivable 393 Investment Income Receivable 327 Due from Subsidiary (1) 555 Prepaid and Other Current Assets 193 _______ Total Current Assets 51,129 Net Fixed Assets 82 Investment in Subsidiary 7,142 Intangible Pension Asset 125 _______ TOTAL ASSETS $58,478 =======
LIABILITIES Current Liabilities Accounts Payable - Trade $124 Uncleared Outstanding Checks 26 Accrued Expenses 469 _______ Total Current Liabilities 619 Liabilities Subject to Chapter 11 Proceedings Accounts Payable - Trade (Pre-Petition) 406 Accounts Payable - Retained Professionals' Hold 2,862 FASB 5 Asbestos Litigation Reserve (Pre-Petition) 5,311 Accrued Expenses 6,619 _______ Total Liabilities Subject to Chapter 11 Proceedings 15,198 Long Term Minimum Pension Liability 2,539 STOCKHOLDERS' INVESTMENT Common Stock 1 Paid-in-Capital 120,286 Retained Loss (77,742) Unrealized loss on Investment Securities (9) Additional Pension Liability in Excess of Unrecognized Prior Service Cost (2,414) _______ Total Stockholders' Investment 40,122 _______ TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $58,478 ======= (1) Subsidiary is included in the consolidated federal income tax return of Keene. Substantially all of this amount represents subsidiary's federal income tax liability computed as if a separate tax return was filed. 2
Keene Corporation (Debtor-in-Possession) Statement of Cash Flows For the period March 31, 1996 - April 27, 1996 (Unaudited) ($000's)
RECEIPTS Investment Income $107 Other 11 ______ Total Receipts 118 DISBURSEMENTS Salary, Wages, Benefits and Payroll Taxes 75 First Quarter Pension Funding 174 Other General and Administrative Expenses General Operating 71 Bankruptcy-related 90 ______ Total Disbursements 410 Decrease in Uncleared Outstanding Checks (74) ______ Net Cash used in Operating Activities (366) ______ Net Decrease in Cash and Cash Equivalents (366) Cash and Cash Equivalents at Beginning of Period 7,924 ______ Cash and Cash Equivalents at End of Period $7,558 ====== 3
Keene Corporation (Debtor-in-Possession) Summary of Cash and Cash Equivalents and Investments As of April 27, 1996 (Unaudited) (000's)
Purchase Maturity Interest Market Amount Bank Date Date Issue Rate Cost Value Pledged Chemical Bank On Demand Cash in Bank 42 42 - Citibank On Demand Cash in Investment Accts 26 26 26 Bank of America - IL (1) On Demand Cash in Investment Accts 1 1 - Bank of America - IL On Demand Horizon Treasury Fund 5.0800% 7,380 7,380 - _______ _______ ______ Total Bank of America - IL 7,381 7,381 - _______ _______ ______ Fleet National Bank On Demand Fidelity Institutional of Connecticut (2) Money Market 5.1800% 109 109 - _______ _______ ______ Total Fleet National Bank of Connecticut 109 109 - _______ _______ ______ TOTAL CASH AND CASH EQUIVALENTS $7,558 $7,558 $26 ======= ======= ====== Citibank 07-Apr-93 30-Sep-96 T-Note 7.0000% 91 85 85 Citibank 30-Sep-91 30-Sep-96 T-Note 7.0000% 236 239 239 Citibank 06-Oct-92 30-Sep-96 T-Note 7.0000% 93 85 85 _______ _______ ______ Total Citibank 420 409 409 _______ _______ ______ Bank of America - IL 07-Dec-95 06-Jun-96 T-Bill 5.1800% 9,981 10,193 - Bank of America - IL 15-Feb-96 08-Aug-96 T-Bill 4.6900% 519 523 519 Bank of America - IL 13-Mar-96 08-Aug-96 T-Bill 4.8200% 2,160 2,173 2,160 Bank of America - IL 15-Feb-96 08-Aug-96 T-Bill 4.9650% 6,818 6,857 - Bank of America - IL 29-Jul-93 5-May-96 T-Note 4.2500% 23 23 - Bank of America - IL 30-Sep-93 30-Sep-96 T-Note 7.0000% 22 20 - Bank of America - IL 30-Sep-91 30-Sep-96 T-Note 7.0000% 379 383 - Bank of America - IL 30-Sep-91 30-Sep-96 T-Note 7.0000% 230 233 - Bank of America - IL 07-Apr-93 30-Sep-96 T-Note 7.0000% 64 60 - Bank of America - IL 29-Oct-91 31-Oct-96 T-Note 6.8750% 103 104 - Bank of America - IL 02-Dec-91 30-Nov-96 T-Note 6.5000% 138 139 - Bank of America - IL 31-Dec-91 31-Dec-96 T-Note 6.1250% 26 26 - Bank of America - IL 20-May-93 28-Feb-98 T-Note 5.1250% 69 68 - Bank of America - IL 15-Apr-93 31-Mar-98 T-Note 5.1250% 6 6 - _______ _______ ______ Total Bank of America - IL 20,538 20,808 2,679 _______ _______ ______ Fleet National Bank of Connecticut 15-Mar-96 19-Sep-96 T-Bill 5.0000% 2,872 2,890 556 _______ _______ ______ Total Fleet National Bank 2,872 2,890 556 of Connecticut _______ _______ ______ LESS: T-BILL INTEREST IN MARKET VALUE (3) - 286 - _______ _______ ______ TOTAL INVESTMENTS $23,830 $23,821 $3,644 ======= ======= ====== GRAND TOTAL - CASH AND CASH EQUIVALENTS AND INVESTMENTS $31,388 $31,379 $3,670 ======= ======= ====== (1) Formerly Continental Bank, N.A. (2) Formerly Shawmut Bank Connecticut, N.A. (3) T-Bills are purchased at a discount and as interest is earned over time the market value of the T-Bills increases. For accounting purposes, interest earned on T-Bills is classified as investment income receivable. It is deducted from the market value on this schedule so that it is not accounted for twice (once in the market value of the investments and once in investment income receivable). 4
Keene Corporation (Debtor-in-Possession) Receivables and Payables Summary As of April 27, 1996 (Unaudited) ($000's) Accounts Receivable-Trade $0 Accounts Receivable-Insurance Proceeds $15,000 FACE VALUE OF POLICIES EXPECTED TO BE AVAILABLE FROM THE EXPECTED SUCCESSFUL OUTCOME OF THE KEENE IV INSURANCE COVERAGE LITIGATION. HOWEVER, SUCCESSFUL OUTCOME OF THE LITIGATION AND REALIZATION AND TIMING OF THE RECEIPT OF THIS RECEIVABLE CAN NOT BE ASSURED. Accounts Receivable-Surety Companies $3,282 AMOUNT OF CASH PROCEEDS RECEIVED BY SURETY COMPANIES FROM LETTER OF CREDIT PRESENTMENTS IN EXCESS OF THE SURETY COMPANIES' APPEAL BOND OBLIGATIONS, COSTS AND ATTORNEYS' FEES ASSOCIATED WITH THE ISSUANCE AND HONORING OF APPEAL BONDS ON KEENE'S BEHALF. BY STIPULATION AND AGREED ORDERS, EACH SURETY COMPANY HOLDING EXCESS CASH PROCEEDS MUST INVEST SUCH EXCESS PROCEEDS ON KEENE'S BEHALF AND PERIODICALLY REMIT ANY INTEREST EARNED ON THE EXCESS PROCEEDS TO KEENE. Accounts Payable (Post-petition) $124 THE COMPANY DOES NOT AGE ITS ACCOUNTS PAYABLE. PAYMENTS ARE MADE IN THE NORMAL TERMS. 5 Keene Corporation (Debtor-in-Possession) Other Potential Recoveries (Unaudited) As of April 27, 1996 The Debtor potentially might recover additional amounts as described below. However, the recovery of these amounts is uncertain and no assurance can be given at this time as to whether any recovery will ultimately be obtained and in what amounts. Insurance Issued by Insolvent Insurance Companies Approximately $30 million of Keene's total aggregate available insurance coverage applicable to asbestos-related claims is due from insolvent insurance companies. Keene settled claims against certain state guaranty funds arising from the lack of availability of the insurance coverage issued by the insolvent insurance companies for a total aggregate payment of $9.5 million, which was received in 1993 and 1994. In addition, Keene received a distribution of $1.4 million in 1995 from the liquidator of one insolvent insurance company. Keene is continuing to pursue claims against the liquidators of the insolvent insurance companies. In 1993, prior to the filing of the Chapter 11 petition, Keene filed a lawsuit against the Pennsylvania Insurance Guaranty Association ("PIGA") seeking indemnification from PIGA for up to approximately $20 million of asbestos-related payments made by Keene to Pennsylvania citizens as a result of the lack of availability of the insurance coverage issued by the insolvent insurance companies. This lawsuit is in the pre-trial phase. Ten Year Net Operating Loss Carryback Keene has carried back, and anticipates carrying back in the future, federal tax net operating losses arising from asbestos-related litigation to prior tax periods, which could generate federal tax refunds of as much as approximately $32 million in the aggregate. However, approximately $30 million of such refunds will be paid to Bairnco Corporation ("Bairnco"), Keene's former parent company, because the refunds relate to tax periods in which Bairnco filed consolidated federal tax returns for an affiliated group of companies of which Keene was a member. Bairnco claims a legal right to such funds, which Bairnco refuses to release to Keene. On September 9, 1994, Keene filed a lawsuit (the "Bairnco NOL Lawsuit") in Bankruptcy Court against Bairnco seeking, among other things, injunctive relief and a declaratory judgment that the approximately $30 million in refunds which are presently due, or are anticipated to become due, on account of federal income taxes previously paid by Keene in the years 1983 through 1989 when Keene was a member of the Bairnco consolidated federal tax return, are property of Keene's estate. On January 4, 1995, Keene obtained Bankruptcy Court approval of an escrow arrangement with Bairnco, providing for the segregation and investment of the refunds at issue in the Bairnco NOL Lawsuit until the lawsuit is resolved. To date, federal tax refunds of approximately $30 million have been received. Of the approximately $30 million received, approximately $28.5 million has been received by Bairnco and placed in escrow and approximately $1.5 million was received by Keene. By stipulation and agreed order, Keene and the Official Committee of Unsecured Creditors (the "Committee") agreed that the Bairnco NOL Lawsuit originally filed by Keene would be prosecuted by the Committee for the benefit of Keene's estate. On February 13, 1995, the Committee filed an amended complaint substituting the Committee as the party plaintiff and alleging additional counts. Pursuant to Stipulation and Order dated June 27, 1995, the Committee filed a second amended complaint on July 5, 1995 alleging additional counts. On or about March 7, 1996, the Internal Revenue Service informed Keene that it planned to amend its previously filed administrative expense claim from approximately $3,500 to approximately $31.8 million as a protective filing pending final approval by the Joint Committee on Taxation of the United States Congress of the tax refunds at issue in the Bairnco NOL Lawsuit. 6 Keene Corporation (Debtor-in-Possession) Other Potential Recoveries (Unaudited) As of April 27, 1996 (Continued) Co-Defendant Contributions Keene has claims against co-defendants in asbestos litigation for contribution or indemnification based on payments made by Keene under theories of joint and several liability and other theories. Likewise, co-defendants in asbestos litigation may have claims against Keene for contribution and indemnification under joint and several liability and other theories. However, the amounts of such potential contribution or indemnification claims cannot be estimated at this time. On June 20, 1995, as a direct result of Keene's active participation in the proposed settlement of a class action brought by beneficiaries of the Manville Personal Injury Settlement (the "Manville Trust") in Findley v. Falise, Keene was initially allocated in excess of $3.8 million of the $35 million Contribution Claim Fund established for claimants holding indemnification or contribution claims against the Manville Trust as part of the settlement. This allocation, however, is subject to the resolution of objections filed by certain other co-defendants to the co-defendant allocation scheme. To date, Keene is informed that it has been allocated at least $3.5 million, subject to an upward adjustment to approximately $3.8 million if certain pending objections are resolved in the Manville Trust's administrator's favor. Pursuant to the governing distribution principles, Keene may use its portion of the $35 million co-defendant settlement fund either for direct payments to individual asbestos health claimants or for transfer to an asbestos creditors' trust. Challenge to Bank of America Illinois (the "Bank") Claims Upon the presentation of certain letters of credit issued by the Bank to secure appeal bonds posted on Keene's behalf by certain sureties, the Bank filed a motion for relief from the automatic stay to foreclose its asserted security interests in Keene's book-entry United States Treasury securities (the "Collateral") pledged against the Bank's issuance of letters of credit to secure appeal bonds posted on Keene's behalf. In response to the Bank's motion, the Committee challenged such security interests as not being properly perfected, contending that the Bank's claims to these Keene assets should be equitably subordinated or otherwise avoided. In a Memorandum Decision and Order dated October 17, 1995, the Bankruptcy Court denied the Bank relief from the automatic stay and directed, among other things, that an evidentiary hearing be conducted to determine the intention of the Bank and Keene concerning the creation of the security interests in the Collateral and the ambiguous description of the Collateral in the related security agreements. Pursuant to this decision and order and a November 30, 1995 Bankruptcy Court ruling, the Committee filed an adversary proceeding against the Bank on December 1, 1995 seeking to avoid and recover certain allegedly preferential transfers made by Keene for the Bank's benefit in connection with Keene's granting the Bank security interests in the Collateral and challenging the Bank's allegedly perfected security interests. Approximately $32 million was at issue in this action. On March 11, 1996, the Bank, the Debtor and the Committee announced that they had settled all the disputes concerning the validity of the Bank's security interests. The settlement provides for, among other things, the Bank's payment of $0.2 million to the Keene estate and the Committee's dismissal with prejudice of its adversary proceeding against the Bank and its appeal of the October 17, 1995 Memorandum Decision and Order. 7 Keene Corporation (Debtor-in-Possession) Other Potential Recoveries (Unaudited) As of April 27, 1996 (Continued) Transactions Lawsuits Prior to September 1993, a number of lawsuits were filed, including two lawsuits filed in federal court in New York (collectively, the "Prepetition Transactions Lawsuits"), alleging that the sale of certain Keene assets during the 1980s to certain subsidiaries of Bairnco, Keene's former parent company, were not for fair value or were otherwise improper. Keene is not a named party in some of the cases, although certain of its former and current officers and directors are named defendants in some of the cases. The Prepetition Transactions Lawsuits generally seek several forms of relief, including the setting aside of the asset sales and the appointment of a receiver for those assets, a declaration that Bairnco and certain of its present and former subsidiaries are responsible for asbestos-related claims against Keene, the imposition of a constructive trust on certain assets of Bairnco and certain of Bairnco's present and former subsidiaries, compensatory damages in an unspecified amount and attorneys' fees and costs. By Orders dated April 15, 1994 and May 11, 1994, the Bankruptcy Court appointed an examiner to investigate whether or not the claims or causes of action asserted in the Prepetition Transactions Lawsuits were valid. The examiner's preliminary report was released on September 23, 1994. The examiner concluded, among other things, that there may arguably be valid claims or causes of action related to the sale of some of the Keene assets to Bairnco. The potential for any recovery arising from these claims or causes of action cannot be accurately estimated at this time. By Stipulation of Settlement Regarding a Consensual Plan of Reorganization for the Debtor, approved by the Bankruptcy Court on March 28, 1995 (the "Stipulation"), Keene, the Committee and the Legal Representative for Future Claimants agreed, among other things, that the Committee would prosecute the claims or causes of actions investigated by the examiner, subject to such terms and conditions deemed appropriate by the Bankruptcy Court. By Order dated May 3, 1995 (the "May 3 Order") , the prosecution of the claims or causes of action asserted in the Prepetition Transactions Lawsuits was transferred to the Committee. On June 8, 1995, the Committee filed a lawsuit in Bankruptcy Court on behalf of the Debtor, as contemplated by the May 3 Order (the "Transactions Lawsuit"). The Transactions Lawsuit names 21 corporate and individual defendants and alleges, among other things, violations of the fraudulent conveyance laws, the New York Business Corporation Law and the Racketeer Influenced and Corrupt Organizations Act, tort liability based on theories of successor liability and veil piercing and breach of fiduciary duties. The damages (including treble damages) and attorneys fees and costs asserted in the various counts pleaded in the Transactions Lawsuit, if aggregated, seek a total recovery in excess of $7 billion. At a hearing on January 31, 1995, the Bankruptcy Court ruled, among other things, that the Transactions Lawsuit would be stayed until March 11, 1996, with the exception of certain discovery, and that Committee Counsel would be compensated for prosecuting the lawsuit at its regular hourly rates subject to Bankruptcy Court approval. On March 11, 1996, the Bankruptcy Court approved an agreement relating to the Transactions Lawsuit which provided for, among other things, the withdrawal of the action from the Bankruptcy Court to the District Court seventy one days after the Bankruptcy Court confirms the Debtor's consensual plan of reorganization. Unjust Enrichment Lawsuit On June 3, 1994, Keene filed a lawsuit in Bankruptcy Court against 27 law firms alleging violations of federal anti-trust laws, the Racketeer Influenced and Corrupt Organizations Act, professional ethics rules and fiduciary obligations. The lawsuit seeks damages of $130 million along with treble damages, punitive damages and attorneys' fees and costs, which, if awarded, could bring the total recovery to up to $390 million. The Stipulation provides for, among other things, the dismissal with prejudice of this lawsuit on the effective date of a consensual plan of reorganization 8 Keene Corporation (Debtor-in-Possession) Other Potential Payments (Unaudited) The Debtor may be required to pay certain amounts as described below. However, the payment of these amounts is uncertain and no assurance can be given at this time as to the ultimate payments. Secured Judgments On the date of its Chapter 11 filing, approximately 60 non-final judgments totaling approximately $22 million and a number of final judgments totaling approximately $29 million were outstanding against Keene and secured by appeal bonds or escrow arrangements. The appeal bonds were backed by letters of credit issued by Bank of America Illinois (formerly Continental Bank, N.A.) or Fleet National Bank of Connecticut (formerly Shawmut Bank Connecticut, N.A.). The letters of credit were, in turn, secured by the pledge of certain Keene assets. By two separate Orders dated January 13, 1994 and January 26, 1994, the Bankruptcy Court authorized the payment of all final judgments. Accordingly, the related appeal bonds were drawn, the related letters of credit, in turn, were drawn and those assets pledged by Keene were liquidated or the escrow accounts were released. The non-final judgments are on appeal to higher courts, which appeals are subject to the automatic bankruptcy stay. Motions for relief from the automatic stay may be filed with the Bankruptcy Court for each individual non-final judgment and, if granted, the appeal may be completed. If the result of any appeal is adverse to Keene, the amount of the judgment may have to be paid, resulting in the appeal bonds securing these judgments being drawn in payment of these judgments, the letters of credit securing these appeal bonds, in turn, being drawn and certain Keene assets being liquidated by the banks which issued the letters of credit. To date, approximately 45 non-final judgments totaling approximately $20 million were settled for the payment of approximately $13 million in the aggregate. Avoidance Actions and Tolling Agreements On or about November 28, 1995 and with the Bankruptcy Court's approval, the Committee entered into tolling agreements with seven former and present directors and officers of Keene. These agreements extend until December 3, 1996 the time for commencing actions against each for alleged liability to Keene concerning, among other things, certain allegedly avoidable or recoverable transfers. Mr. Bailey, Keene's former Chairman and President, did not sign a tolling agreement and, as a consequence, the Committee was authorized by the Bankruptcy Court to file an adversary proceeding against him. On December 1, 1995, the Committee filed its complaint against Mr. Bailey alleging a number of grounds for liability. With limited exceptions, the claims that have been tolled against two of Keene's former and present officers and all of Keene's directors except Mr. Bailey, as well as the claims asserted against Mr. Bailey, would be released on the effective date of the amended consensual plan of reorganization filed on January 29, 1996 pursuant to the Stipulation. 9 Keene Corporation (Debtor-in-Possession) Insurance Payment Report For the period March 31, 1996 - April 27, 1996 (Unaudited) ($000's)
Insurance Carrier Due Date Amounts Paid General Liability Transamerica Pre-paid 6/95-6/96 $- Inland Marine Property Umbrella General Star National Pre-paid 6/95-6/96 - Workers' Compensation Paramount Pre-paid 6/95-6/96 - Commercial Crime The Hartford 3 Year Policy - 6/94 - 6/97 Directors & Officers United Capitol Pre-paid 8/95-8/96 - Executive Re Specialty Pre-paid 8/95-8/96 - Executive Re Additional discovery for Specialty 8/90-8/94 period Prepaid 8/95-8/98 - ___ TOTAL PAYMENTS $- === 10
Keene Corporation (Debtor-in-Possession) Taxes Collected, Received, Due or Withheld For the period March 31, 1996 - April 27, 1996 (Unaudited) ($000's)
Taxes Withheld/Due Taxes Paid Date Paid Gross Salaries and Wages $61 Total Federal Payroll Taxes Withheld $19 $19 4/17/96 Total Employer Payroll Taxes 5 5 4/17/96 Total State Payroll Taxes Withheld 3 3 4/18/96 Total Local Payroll Taxes Withheld 1 1 4/18/96 ___ ___ Totals $28 $28 === === 11
Keene Corporation (Debtor-in-Possession) Schedule of General Operating Expenses For the Period March 31, 1996 - April 27, 1996 (Unaudited) ($000) NORMAL COURSE CONSULTING $1 CORPORATE LEGAL FEES 5 APPEAL BOND COSTS 14 STOCK TRANSFER FEES 2 DEPRECIATION 1 BUSINESS TRAVEL AND EXPENSES 5 DIRECTORS FEES 8 COMMUNICATIONS & POSTAGE 2 SUPPLIES & DUPLICATION 1 BANK FEES 1 OTHER EXPENSES 7 ___ TOTAL $47 12
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