-----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, SA823+El6gHnWlyMD8KDiMUufbl2Pma0FvcdVNY21F/G8A4ON8PY7YZ0Uiu0CXYp wf/suMkrD5WFJ5fxbEVbWg== 0000950129-99-001766.txt : 19990428 0000950129-99-001766.hdr.sgml : 19990428 ACCESSION NUMBER: 0000950129-99-001766 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER AMERICAS INC /TX CENTRAL INDEX KEY: 0000944649 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 061420850 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-91702 FILM NUMBER: 99601688 BUSINESS ADDRESS: STREET 1: 700 LOUISIANA ST STREET 2: STE 4200 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7132253831 MAIL ADDRESS: STREET 1: 700 LOUISIANA ST STREET 2: SUITE 4200 CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: PIONEER AMERICAS ACQUISITION CORP DATE OF NAME CHANGE: 19950428 10-Q 1 PIONEER AMERICAS, INC. - DATED 03/31/99 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 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 33-98828 PIONEER AMERICAS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 06-1420850 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 4300 BANK OF AMERICA CENTER, 700 LOUISIANA STREET, HOUSTON, TEXAS 77002 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (713) 570-3200 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 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 | | On April 20, 1999, there were outstanding 1,000 shares of the Registrant's Common Stock, $.01 par value. All of such shares are owned by Pioneer Companies, Inc. The Registrant meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q, and is therefore filing this form with the reduced disclosure format permitted by General Instruction (H)(2) of Form 10-Q. 2 PIONEER AMERICAS, INC. TABLE OF CONTENTS
Page ---- PART I--FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets--March 31, 1999 and December 31, 1998 3 Consolidated Statements of Operations--Three Months Ended March 31, 1999 and 1998 4 Consolidated Statements of Cash Flows--Three Months Ended March 31, 1999 and 1998 5 Notes to Consolidated Financial Statements 6 PART II--OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9
Certain statements in this Form 10-Q regarding future expectations of the Company's business and the Company's results of operations may be regarded as "forward looking statements" within the meaning of the Securities Litigation Reform Act. Such statements are subject to various risks, including the Company's high financial leverage, the cyclical nature of the markets for many of the Company's products and raw materials and other risks. Actual outcomes may vary materially. 2 3 PART I --FINANCIAL INFORMATIOn PIONEER AMERICAS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
MARCH 31, DECEMBER 31, 1999 1998 ---------- ------------ ASSETS Current assets: Cash and cash equivalents $ 36,635 $ 50,593 Accounts receivable, less allowance for doubtful accounts of $1,851 at March 31, 1999 and $2,017 at December 31, 1998 40,836 46,145 Inventories 27,907 26,360 Prepaid expenses 3,178 2,759 ---------- ---------- Total current assets 108,556 125,857 Property, plant and equipment: Land 10,622 10,727 Buildings and improvements 59,745 60,520 Machinery and equipment 303,551 306,989 Construction in progress 33,410 28,348 ---------- ---------- 407,328 406,584 Less accumulated depreciation (79,601) (72,525) ---------- ---------- 327,727 334,059 Due from affiliates 17,598 16,512 Other assets, net of accumulated amortization of $7,814 at March 31, 1999 and $6,152 at December 31, 1998 49,105 48,327 Excess cost over fair value of net assets acquired, net of accumulated amortization of $25,236 at March 31, 1999 and $22,950 at December 31, 1998 199,323 201,609 ---------- ---------- Total assets $ 702,309 $ 726,364 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 27,003 $ 30,825 Accrued liabilities 32,477 31,384 Current portion of long-term debt 2,688 2,684 ---------- ---------- Total current liabilities 62,168 64,893 Long-term debt, less current portion 564,020 564,689 Accrued pension and other employee benefits 13,965 25,836 Other long-term liabilities 18,984 22,063 Commitments and contingencies Stockholder's equity: Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding 1 1 Additional paid-in capital 65,483 65,483 Retained deficit (22,312) (16,601) ---------- ---------- Total stockholder's equity 43,172 48,883 ---------- ---------- Total liabilities and stockholder's equity $ 702,309 $ 726,364 ========== ==========
See notes to consolidated financial statements. 3 4 PIONEER AMERICAS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 ---------- ---------- Revenues $ 68,039 $ 94,619 Cost of sales 53,750 64,948 ---------- ---------- Gross profit 14,289 29,671 Selling, general and administrative expenses 9,407 12,180 ---------- ---------- Operating income 4,882 17,491 Equity in net loss of unconsolidated subsidiaries -- (1,136) Interest expense, net (11,917) (12,448) Other income (expense), net (1,007) 3,089 ---------- ---------- Income (loss) before taxes (8,042) 6,996 Income tax provision (benefit) (2,331) 3,376 ---------- ---------- Net income (loss) $ (5,711) $ 3,620 ========== ========== Net income (loss) per share $ (5,711) $ 3,620 ========== ========== Weighted average number of common shares outstanding 1 1 ========== ==========
See notes to consolidated financial statements. 4 5 PIONEER AMERICAS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 ---------- ---------- Operating activities: Net income (loss) $ (5,711) $ 3,620 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 12,886 11,383 Equity in net loss of unconsolidated subsidiaries -- 1,136 Net change in deferred taxes (2,331) 3,293 Reduction in post-retirement medical expense (12,530) -- Loss on disposals 1,057 -- Foreign exchange loss (260) (186) Net effect of changes in operating assets and liabilities (388) (5,021) ---------- ---------- Net cash flows from operating activities (7,277) 14,225 ---------- ---------- Investing activities: Investment in and advances to unconsolidated subsidiaries -- (1,006) Capital expenditures (7,270) (4,146) Proceeds received from disposals of assets 1,143 -- ---------- ---------- Net cash flows from investing activities (6,127) (5,152) ---------- ---------- Financing activities: Payments on long-term debt (665) (647) ---------- ---------- Net cash flows from financing activities (665) (647) ---------- ---------- Effect of exchange rate on cash 111 204 ---------- ---------- Net change in cash (13,958) 8,630 Cash at beginning of period 50,593 50,995 ---------- ---------- Cash at end of period $ 36,635 $ 59,625 ========== ==========
See notes to consolidated financial statements. 5 6 PIONEER AMERICAS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND BASIS OF PRESENTATION The consolidated balance sheet at March 31, 1999 and the consolidated statements of operations and cash flows for all periods presented are unaudited and reflect all adjustments, consisting of normal recurring items, which management considers necessary for a fair presentation. Operating results for the first three months of 1999 are not necessarily indicative of results to be expected for the year ending December 31, 1999. The consolidated financial statements include the accounts of Pioneer Americas, Inc. ("Pioneer") and its consolidated subsidiaries (collectively referred to as the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. All dollar amounts in the tabulations in the notes to the financial statements are stated in thousands of dollars unless otherwise indicated. The consolidated balance sheet at December 31, 1998 is derived from the December 31, 1998 audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles, since certain information and disclosures normally included in the notes to the financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission. The accompanying unaudited financial statements should be read in conjunction with the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 1998. 2. SUPPLEMENTAL CASH FLOW INFORMATION Net effects of changes in operating assets and liabilities are as follows:
THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 ---------- ---------- Accounts receivable $ 5,754 $ 11,082 Due from affiliates (1,086) (2,541) Inventories (1,800) (3,272) Prepaid expenses (52) 1,366 Other assets (28) (409) Accounts payable (4,076) (15,380) Accrued liabilities 814 3,717 Other long-term liabilities 86 416 ---------- ---------- Net change in operating assets and liabilities $ (388) $ (5,021) ========== ==========
Following are supplemental disclosures of cash flow information:
THREE MONTHS ENDED MARCH 31, ------------------------- 1999 1998 ---------- ---------- Cash payments for: Interest $ 3,479 $ 4,359 Income taxes $ 351 --
Non-cash investing activity: In March 1999, the Company's subsidiary, Kemwater North America Company ("KNA"), sold certain fixed assets. Proceeds received included cash plus a $2.5 million note receivable. 6 7 3. INVENTORIES Inventories consist of the following:
MARCH 31, DECEMBER 31, 1999 1998 ---------- ---------- Raw materials, supplies and parts $ 16,563 $ 17,014 Finished goods and work-in-process 9,456 9,045 Inventories under exchange agreements 1,888 301 ---------- ---------- $ 27,907 $ 26,360 ========== ==========
4. COMMITMENTS AND CONTINGENCIES The Company and its operations are subject to extensive United States and Canadian federal, state, provincial and local laws, regulations, rules and ordinances relating to pollution, the protection of the environment and the release or disposal of regulated materials. The operation of any chemical manufacturing plant and the distribution of chemical products entail certain obligations under current environmental laws. Present or future laws may affect the Company's capital and operating costs relating to compliance, may impose cleanup requirements with respect to site contamination resulting from past, present or future spills and releases and may affect the markets for the Company's products. The Company believes that its operations are currently in general compliance with environmental laws and regulations, the violation of which could result in a material adverse effect on the Company's business, properties or results of operations on a consolidated basis. There can be no assurance, however, that material costs will not be incurred as a result of instances of noncompliance or new regulatory requirements. The Company relies on indemnification from the previous owners in connection with certain environmental liabilities at its chlor-alkali plants and other facilities. There can be no assurance, however, that such indemnification agreements will be adequate to protect the Company from environmental liabilities at these sites or that such third parties will perform their obligations under the respective indemnification arrangements, in which case the Company would be required to incur significant expenses for environmental liabilities, which would have a material adverse effect on the Company. The Company is subject to various legal proceedings and potential claims arising in the ordinary course of its business. In the opinion of management, the Company has adequate legal defenses and/or insurance coverage with respect to these matters and management does not believe that they will materially affect the Company's operations or financial position. 5. PCI CHEMICALS CANADA INC. Pioneer is a holding company with no operating assets or operations. A subsidiary of Pioneer, PCI Chemicals Canada Inc. ("PCICC"), has outstanding $175.0 million of 9 1/4% Senior Secured Notes, due October 15, 2007. These notes are fully and unconditionally guaranteed on a joint and several basis by Pioneer and Pioneer's other direct and indirect wholly-owned subsidiaries. Together, PCICC and the subsidiary note guarantors comprise all of the direct and indirect subsidiaries of Pioneer. Summarized financial information of PCICC and the guarantors of these notes are as follows:
NOTE CONSOLIDATED NOTE CONSOLIDATED PCICC GUARANTORS COMPANY PCICC GUARANTORS COMPANY ------------- ------------- ------------- ------------- ------------- -------------- AS OF MARCH 31, 1999 AS OF DECEMBER 31, 1998 ----------------------------------------------- ----------------------------------------------- Current assets $ 34,915 $ 73,641 $108,556 $ 29,962 $ 95,895 $ 125,857 Non-current assets 182,468 411,285 593,753 191,004 409,503 600,507 Current liabilities 22,570 39,598 62,168 22,103 42,790 64,893 Non-current liabilities 182,690 414,279 596,969 185,031 427,557 612,588
FOR THE THREE MONTHS ENDED MARCH 31, 1999 FOR THE THREE MONTHS ENDED MARCH 31, 1998 ----------------------------------------------- ----------------------------------------------- Revenues $ 26,406 $ 41,633 $ 68,039 $ 34,907 $ 59,712 $ 94,619 Gross profit 4,212 10,077 14,289 11,765 17,906 29,671 Net income (loss) (1,709) (4,002) (5,711) 2,866 754 3,620
Separate financial statements of PCICC and the guarantors of the PCICC notes are not included as management has determined that separate financial statements of these entities are not material to investors. 7 8 6. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997 Revenues. Revenues decreased by $26.6 million, or approximately 28%, to $68.0 million for the three months ended March 31, 1999, as compared to the three months ended March 31, 1998. The decrease in revenues was primarily attributable to lower electrochemical unit ("ECU") prices. ECU prices were approximately 36% lower during the first quarter of 1999, versus the first quarter of 1998. Partially offsetting this decrease was a slight increase in chlor-alkali sales volumes in 1999, as 1998 production volumes were negatively impacted by three failed transformers, which are now fully operational. Total revenues at the Company's downstream subsidiaries did not materially change during the first quarter of 1999 compared to the first quarter of 1998. KNA became a wholly-owned subsidiary of the Company on September 30, 1998 and its results are included in the Company's consolidated financial statements since that date; this increased reported revenues during the quarter ended March 31, 1999 by $3.6 million. However, the majority of this increase was offset by decreases resulting from the disposition of the household bleach operations during the third quarter of 1998 and the pool chemicals business in the fourth quarter of 1998. These businesses were considered non-strategic and the Company retained supply agreements with the purchasers. Cost of Sales. Cost of sales decreased $11.2 million, or approximately 17%, for the three months ended March 31, 1999, as compared to the same period in 1998. $10.9 million of this decrease was due to the modification of the Company's retiree health care benefits. Benefits under the plan to current retirees were not impacted, but current employees will no longer receive benefits under this plan. The inclusion of KNA in the consolidated cost of sales increased the Company's cost of sales. This increase was offset by lower cost of sales as a result of the disposal of the operations discussed above. Gross Profit. Gross profit margin decreased to 21% in 1999 from 31% in 1998 primarily as a result of the ECU pricing decrease and the other items discussed above. Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $2.8 million, or approximately 23%, for the three months ended March 31, 1999. $1.6 million of this decrease was due to the modification of the Company's retiree health care benefits discussed above. The remaining decrease is primarily due to the absence of incentive compensation accruals during 1999. The inclusion of KNA in the 1999 consolidated results increased selling, general and administrative expenses, partially offsetting these decreases. Equity in Net Loss of Unconsolidated Subsidiary. Equity in net loss of unconsolidated subsidiaries represented the Company's 50% ownership in KNA prior to September 30, 1998. Before September 30, 1998, Pioneer owned 50% of KNA, which owned 100% of KWT, Inc. ("KWT"). The remaining 50% of KNA was owned indirectly by Pioneer's parent, Pioneer Companies, Inc. ("PCI"). On September 30, 1998, KNA exchanged its ownership in KWT for the remaining 50% of KNA held by PCI. No gain or loss was recognized on this exchange. Following this transaction, KNA's results of operations are reflected in the consolidated results of operations of the Company. Interest Expense, Net. Interest expense, net decreased slightly in 1999 as a result of lower interest rates in 1999 compared to 1998. Other Income (Expense), Net. Other income (expense), net decreased from an income amount of $3.1 million for the quarter ended March 31, 1998 to an expense of $1.0 million for the quarter ended March 31, 1999. Other income in 1998 included a gain from the settlement of a lawsuit, an insurance recovery and a state franchise tax refund. The 1999 amount was primarily a loss resulting from the sale of the iron chlorides business in the first quarter of 1999 of $1.0 million. Net Income (Loss). Due to the factors described above, net loss for the three months ended March 31, 1999 was $5.7 million, compared to net income of $3.6 million for the same period in 1998. 8 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10 Amendment No. 1, dated March 29, 1999, to Amended and Restated Loan and Security Agreement dated as of May 29, 1998, among Pioneer Americas, Inc., PCI Chemicals Canada Inc., the lenders party thereto, Bank of America National Trust and Savings Association, as Administrative Agent and U.S. Funding Agent, and Bank America Robertson Stephens, as Arranger. 27 Financial Data Schedule. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter ended March 31, 1999. 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. PIONEER AMERICAS, INC. April 27, 1999 By: /s/ Philip J. Ablove ----------------------- Philip J. Ablove Vice President and Chief Financial Officer 9 10 INDEX TO EXHIBITS
Exhibit Number Description ------- ----------- 10 Amendment No. 1, dated March 29, 1999, to Amended and Restated Loan and Security Agreement dated as of May 29, 1998, among Pioneer Americas, Inc., PCI Chemicals Canada Inc., the lenders party thereto, Bank of America National Trust and Savings Association, as Administrative Agent and U.S. Funding Agent, and Bank America Robertson Stephens, as Arranger. 27 Financial Data Schedule.
EX-10 2 AMEND. NO.1 TO AMENDED LOAN & SECURITY AGREEMENT 1 EXHIBIT 10 AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT March 29, 1999 Pioneer Americas, Inc., formerly known as Pioneer Americas Acquisition Corp. 700 Louisiana Street Suite 4300 Houston, Texas 77002 Attn: Chief Financial officer and Corporate Secretary and PCI Chemicals Canada Inc./PCI Chimie Canada Inc. ("PCI Canada") 630 Rene-Levesque Boulevard West 31st Floor Montreal, Quebec Canada H3B 1S6 Ladies and Gentlemen: Reference is made to the Amended and Restated Loan and Security Agreement dated as of May 29, 1998 among Pioneer Americas, Inc., formerly known as Pioneer Americas Acquisition Corp. ("PAI"), PCI Chemicals Canada Inc./PCI Chimie Canada Inc. ("PCI Canada"), the lenders from time to time party thereto (the "Lenders"), Bank of America National Trust and Savings Association, formerly known as Bank of America Illinois, as Administrative Agent, as U.S. Funding Agent and as a Lender and Bank America Robertson Stephens, as Arranger (the "Loan Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such temps in the Loan Agreement. 1. Background. On or about August 20, 1998, Pioneer Americas, Inc. merged with and into Pioneer Americas Acquisition Corp., with Pioneer Americas Acquisition Corp. being the surviving entity and changing its name to "Pioneer Americas, Inc." (the "Merger"). As a consequence of the Merger, "Pioneer Americas, Inc." became the name of one of the Borrowers under the Loan Agreement. Borrowers have requested that Agents and Lenders agree to amend the Loan Agreement to reflect the foregoing transactions. In addition, Borrowers have requested that Agents and Lenders agree to amend the Loan Agreement in certain other respects, all as set forth herein. Agents and Lenders have agreed to the foregoing, on the terms and conditions described herein. 2. Amendments. The Loan Agreement is hereby amended as follows: (a) To the extent required by the context, references in the Loan Agreement to each of "PAAC" and "PAI" are hereby deemed to be references to "Pioneer Americas, Inc., formerly known as Pioneer Americas Acquisition Corp." 2 (b) All references to PAI as a "Designated Subsidiary" are hereby deleted from the Loan Agreement. (c) BankAmerica Robertson Stephens has been replaced as Arranger by NationsBanc Montgomery Securities. Consequently, all references in the Loan Agreement to "Bank America Robertson Stephens" as the "Arranger" are hereby deleted and replaced with references to "NationsBanc Montgomery Securities". (d) The definition of the term "Borrowing Base" contained in Section 1.l of the Loan Agreement is hereby amended and restated in its entirety, as follows: "'Borrowing Base" means an amount equal to 85% of the U.S. Dollar Equivalent of the net amount (after deduction of such reserves and allowances as Administrative Agent deems proper and necessary in its reasonable business judgment) of Eligible Account Receivable of each Borrower and each Designated Subsidiary.'" (e) The definition of the term "Kemwater" contained in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "'Kemwater means KWT, Inc., a Delaware corporation and a Subsidiary of Parent.'" (f) The definition of the term "Loan Limit" contained in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "'Loan Limit' at any time means with respect to (a) PAAC, an amount equal to US$27,000,000 (the "PAAC Maximum") and (b) PCI Canada, an amount equal to the U.S. Dollar Equivalent of $23,000,000 (the "PCI Canada Maximum"), in each case, minus any permanent reductions in such amounts made pursuant to Section 2.1.2, provided, that the PAAC Maximum and the PCI Canada Maximum may be reallocated by Borrowers two times during each 12 month period hereafter, by means of a written notice executed by Borrowers and received by Administrative Agent at least thirty (30) days prior to the effective date of such reallocation, so long as (i) the aggregate amount of the PAAC Maximum and the PCI Maximum does not at any time exceed the U.S. Dollar Equivalent of $50,000,000 minus any permanent reductions in such amount made pursuant to Section 2.1.2, (ii) the PAAC Maximum is not at any time less than US$25,000,000 or greater than the sum of the Maximum Loan Amounts of the U.S. Lenders, (iii) the PCI Canada Maximum is not at any time greater than the U.S. Dollar Equivalent of the sum of the Maximum Loan Amounts of the Canadian Lenders and (iv) at the effective date of each reallocation, Borrowers deliver to Administrative Agent such amended and restated Notes as Administrative Agent shall reasonably request in order to evidence the reallocated Loan Limits." (g) The definition of the term "Revolving Credit Amount" contained in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "'Revolving Credit Amount' means an amount equal to US$50,000,000, as such amount may be reduced from time to time pursuant to this Agreement." (h) A new definition of the term "TCP" is hereby inserted into Section 1.1 of the Loan Agreement, in appropriate alphabetical order, as follows: "'TCP' means T.C. Products, Inc., a Washington corporation and a Subsidiary of TCH. 2 3 (i) Section 4.29 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "4.29 Holding Companies: Licensing Companies. As of March 29, 1999, each of Parent, PAI, BMPC, TCH and Imperial is a holding company without material assets, operations or business, other than the ownership by (a) Parent of the common stock of PAI and Pioneer Water Technologies, Inc., (b) PAI of the common stock of its Subsidiaries, (c) TCH of the common stock of TCP and (d) Imperial of the common stock of Kemwater North America Company. As of March 29, 1999, neither of East or Pioneer Licensing, Inc. has any material assets, operations or business, other than the ownership of certain intellectual property held for license to the other Companies in the ordinary course of business. As of March 29, 1999, none of Parent, PAI, BMPC, East, TCH, Imperial or Pioneer Licensing, Inc. has any Indebtedness or other obligations other than Indebtedness of each of them in respect of the Seller Notes, the Senior Secured Loans, the Term Loans and this Agreement." (j) Section 5.32 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "5.32 Interest Coverage Ratio. Not permit the Interest Coverage Ratio (a) measured on the last day of any calendar month for the preceding twelve (12) month period or for the period from the beginning of the then current Fiscal Year through such measurement date, whichever yields the higher ratio, (a) to be less than 1.1:1.0 for more than one period of consecutive measurement dates, such period not to exceed fifteen (15) months, OR (b) within such period, to be less than 0.7:1.0 on any measurement date (except as provided in clause (c) below) OR (c) to be less than 0.6:1.0 on any measurement date between October 1, 1999 and March 31, 2000, inclusive. For purposes of this Section 5.32. interest expense shall include, without limitation, implicit interest expense on Capitalized Leases." (k) Section 6.1(n)(iii) of the Loan Agreement is hereby amended to delete therefrom the reference to "PAAC" and replace it with a reference to "Parent". (l) The Maximum Loan Amounts of the Lenders set forth in the signature pages to the Loan Agreement are hereby amended and restated in their entirety, as follows:
US Lender Maximum Loan Amount --------- ------------------- Bank of America National Trust and US $ 3,858,000 Savings Association Transamerica Business Credit Corporation US $11,571,000 Sanwa Business Credit Corporation US $11,571,000 -------------- Total US $27,000,000
Canadian Lender Maximum Loan Amount --------------- ------------------- Bank of America Canada US Dollar Equivalent of $15,333,000 Credit Lyonnais Canada US Dollar Equivalent of $ 7,667,000 ----------------------------------- Total US Dollar Equivalent of $23,000,000
(m) This Amendment No. 1 to Amended and Restated Loan and Security Agreement (the 3 4 "Amendment") shall have the effect of amending the Loan Agreement and the Related Agreements as appropriate to express the agreements contained herein. In all other respects, the Loan Agreement and the Related Agreements shall remain in full force and effect in accordance with their respective terms. 3. Conditions to Effectiveness. This Amendment shall be effective upon delivery of this Amendment to Administrative Agent, executed by each Agent and each Lender and accepted by each Borrower and each other Obligor, together with the following, all in form and substance satisfactory to Administrative Agent: (a) A new Note payable to each Lender and executed by the applicable Borrower, reflecting its revised Maximum Loan Amount; (b) A certificate executed by each Borrower to the effect that no Event of Default or Unmatured Event of Default has occurred and is continuing and that all representations and warranties contained in Section 4 of the Loan Agreement remain true and correct in all material respects as through made on the date thereof, except for those representations and warranties which were expressly made as of a specific date; and (c) a $125,000 amendment fee paid by Borrowers to Administrative Agent, for distribution to the Lenders in accordance with their respective Pro Rata Shares. Very truly yours, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, formerly known as BANK OF AMERICA ILLINOIS, as Administrative Agent and U.S. Funding Agent By: ------------------------------------ Its: ----------------------------------- BANK OF AMERICA CANADA, as Canadian Funding Agent By: ------------------------------------ Its: ----------------------------------- BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, formerly known as BANK OF AMERICA ILLINOIS, as a U.S. Lender By: ------------------------------------ Its: ----------------------------------- TRANSAMERIA BUSINESS CREDIT CORPORATION, as a U.S. Lender By: ------------------------------------ Its: ----------------------------------- 4 5 FLEET BUSINESS CREDIT CORPORATION, formerly known as SANWA BUSINESS CREDIT CORPORATION, as a U.S. Lender By: ------------------------------------ Its: ----------------------------------- BANK OF AMERICA CANADA, as a Canadian Lender By: ------------------------------------ Its: ----------------------------------- By: ------------------------------------ Its: ----------------------------------- Acknowledged and agreed to this ____ day of March, 1999 PIONEER AMERICA, INC., formerly known as PIONEER AMERICAS ACQUISITION CORP. By: ------------------------------------ Its: ----------------------------------- PCI CHEMICALS CANADA INC./ PCI CHIMIE CANADA INC. By: ------------------------------------ Its: ----------------------------------- 5 6 Acknowledgement and Acceptance of Subsidiary Guarantors Each of the undersigned is a party to the Master Corporate Guaranty dated as of May 29, 1998 in favor of Bank of America National Trust and Savings Association, formerly known as Bank of America Illinois, as Administrative Agent for the benefit of Agents and lenders (the "Guaranty"), pursuant to which each of the undersigned has guaranteed the Liabilities of each Borrower under the Loan Agreement and the Related Agreements. Each of the undersigned hereby acknowledges receipt of the foregoing Amendment No. 1 to Amended and Restated Loan And Security Agreement, accepts and agrees to be bound by the terms thereof, ratifies and confirms all of its obligations under the Guaranty, and agrees that the Guaranty shall continue in full force and effect as to it, notwithstanding such amendment. Acknowledged and Agreed to this ____ day of March, 1999. PIONEER CHLOR ALKALI COMPANY, INC. IMPERIAL WEST CHEMICAL CO. ALL-PURE CHEMICAL CO. BLACK MOUNTAIN POWER COMPANY PCI CAROLINA, INC. By: ------------------------------------ --------------------------------------- of each company listed above 6 7 Acknowledgement and Acceptance of Subsidiary Guarantors Each of the undersigned is a party to the Master Corporate Guaranty dated as of May 29, 1998 in favor of Bank of America National Trust and Savings Association, formerly known as Bank of America Illinois, as Administrative Agent for the benefit of Agents and lenders (the "Guaranty"), pursuant to which each of the undersigned has guaranteed the Liabilities of each Borrower under the Loan Agreement and the Related Agreements. Each of the undersigned hereby acknowledges receipt of the foregoing Amendment No. 1 to Amended and Restated Loan And Security Agreement, accepts and agrees to be bound by the terms thereof, ratifies and confirms all of its obligations under the Guaranty, and agrees that the Guaranty shall continue in full force and effect as to it, notwithstanding such amendment. Acknowledged and Agreed to this ____ day of March, 1999. PIONEER AMERICAS, INC. formerly known as PIONEER AMERICAS ACQUISITION CORP. By: ------------------------------------ --------------------------------------- of each company listed above PCI CHEMICALS CANADA INC./ PCI CHIMIE CANADA INC. By: ------------------------------------ Its: ----------------------------------- 7 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 36,635 0 42,687 1,851 27,907 108,556 407,328 79,601 702,309 62,168 564,020 0 0 1 43,171 702,309 68,039 68,039 53,750 53,750 9,407 0 11,917 (8,042) (2,331) (5,711) 0 0 0 (5,711) (5,711) (5,711)
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