Item 2.05 Costs Associated with Exit or Disposal Activities
In order to reduce costs and align manufacturing capacity with lower levels of
projected demand, on August 16, 2020, Libbey Inc. (the "Company") committed to a
plan to close its manufacturing facility in Shreveport, Louisiana. The Company
intends to cease production at the Shreveport manufacturing facility by the end
of 2020, with full closure to be completed by the second half of 2022. The
Company continues to bargain with the unions representing the Company's
employees regarding the effects of the facility closure.
As a result of the plan, the Company expects to incur pre-tax cash charges of
approximately $14.0 million, consisting of approximately $7.5 million in
severance and other employee-related costs and approximately $6.5 million of
other cash shutdown costs. Approximately $6.5 million of the severance and other
employee-related costs are anticipated to be incurred in the fourth quarter of
2020, with the remaining pre-tax cash charges to be incurred throughout 2021 and
2022.
We are unable at this time to estimate an amount or range of amounts of any
non-cash charges that we may incur in connection with the facility closure. At
such time as we have determined an estimate or range of estimates of any such
non-cash charges, we will report the estimate or range of estimates as required
pursuant to Item 2.05 of Form 8-K.
The charges the Company expects to incur in connection with this plan are
subject to a number of assumptions, and actual results may differ materially.
The Company may also incur other material charges not currently contemplated due
to events that may occur as a result of, or in connection with, these actions.
Item 7.01 Regulation FD Disclosure
Amended Plan and Disclosure Statement
As previously reported, on June 1, 2020, the Company and certain of its direct
and indirect subsidiaries (collectively with the Company, the "Debtors") filed
voluntary petitions for relief under Chapter 11 of the United States Code (the
"Chapter 11 Cases") with the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11 Cases are being
jointly administered under the caption In re Libbey Glass Inc., et al., Case No.
20-11439 (LSS).
As previously disclosed, on June 21, 2020, the Debtors filed with the Bankruptcy
Court a proposed Plan of Reorganization (the "Plan") and a Disclosure Statement
describing the Plan and the solicitation of votes from certain of our creditors
to approve the Plan.
On August 17, 2020, the Debtors filed an Amended Plan of Reorganization (as may
be further amended from time to time, the "Amended Plan") and a related
Disclosure Statement (as may be further amended from time to time, the
"Disclosure Statement") describing the Amended Plan and the solicitation of
votes to approve the same from certain of the Debtors' creditors with respect to
the Chapter 11 Cases.
Information contained in the Amended Plan and the Disclosure Statement is
subject to change, whether as a result of amendments or supplements to the
Amended Plan or Disclosure Statement, third-party actions, or otherwise, and
should not be relied upon by any party. The Amended Plan and the Disclosure
Statement are available free of charge online at
https://cases.primeclerk.com/libbey.
This Current Report on Form 8-K is not a solicitation to accept or reject the
proposed Amended Plan. Any such solicitation will be made pursuant to and in
accordance with the Disclosure Statement and applicable law, including orders of
the Bankruptcy Court.
The Amended Plan and Disclosure Statement contain or discuss certain financial
projections and analysis (collectively, "Projections and Analysis"). The
Projections and Analysis are based on estimates and assumptions that, although
developed and considered reasonable by the Debtors and their advisors, are
inherently subject to significant economic, business, regulatory, and
competitive uncertainties and contingencies beyond the Debtors' control.
Inevitably, some assumptions will not materialize and unanticipated events and
circumstances may affect the actual financial results. It is expected that there
will be differences between actual and projected results, and the differences
may be material. The Projections and Analysis were not prepared with a view
toward compliance with the published guidelines of the SEC or the guidelines
established by the Public Company Accounting Oversight Board and should not be
relied upon to make an investment decision with respect to the Company. The
Projections and Analysis do not purport to present the Debtors' financial
condition in accordance with GAAP. The Projections and Analysis have not been
examined or compiled by the Company's independent registered public accounting
firm.
Sections 1113 and 1114 Motions
Additionally, as contemplated under the terms of the Amended Plan, the Debtors
filed motions with the Bankruptcy Court on August 17, 2020, to modify collective
bargaining agreements and certain union-related retiree benefits, in accordance
with Sections 1113 and 1114 of the United States Bankruptcy Code (the
"Bankruptcy Code").
Press Release
On August 17, 2020, the Company issued a press release announcing the filing of
the Amended Plan and Disclosure Statement and the motions under Sections 1113
and 1114 of the Bankruptcy Code. A copy of the press release is attached as
Exhibit 99.1.
The information furnished with this Item 7.01, including Exhibit 99.1, shall not
be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, except as expressly set forth by specific reference in
such a filing.
Filings with the Bankruptcy Court related to the Chapter 11 Cases are available
free of charge electronically at https://cases.primeclerk.com/libbey.
Information contained on, or that can be accessed through, such website or the
Bankruptcy Court is not part of this Current Report on Form 8-K, and we disclaim
liability for any such information.
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Cautionary Note on Forward-Looking Statements
This Current Report on Form 8-K, including the exhibits hereto, includes
forward-looking statements as defined in Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
reflect only the Company's best assessment at this time and are indicated by
words or phrases such as "goal," "plan," "expects," "believes," "will,"
"estimates," "anticipates," or similar phrases. These forward-looking statements
include all matters that are not historical facts. These forward-looking
statements include all matters that are not historical facts. They include
statements regarding, among other things, the Company's intentions, beliefs or
current expectations concerning the timing of the shutdown of the Company's
manufacturing facility in Shreveport, Louisiana, and the timing and amounts of
the costs incurred in connection with the shutdown, the results of any vote on
the Company's Amended Plan and the outcome of Debtors' motions under Sections
1113 and 1114 of the Bankruptcy Code. By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future. Investors are
cautioned that forward-looking statements are not guarantees of future
performance and that our actual results of operations, financial condition and
liquidity, and the development of the industry in which we operate, may differ
materially from these statements. Investors should not place undue reliance on
such statements. Important factors potentially affecting performance include but
are not limited to risks and uncertainties related to the outcome of
negotiations with the unions representing the Company's employees at the
Shreveport, Louisiana manufacturing facility, the ability to confirm and
consummate the Amended Plan; the ability of the Debtors to modify their
collective bargaining agreements and certain union-related retiree benefits;
risks attendant to the bankruptcy process, including our ability to obtain court
approvals with respect to motions filed in the Chapter 11 Cases, the outcomes of
court rulings and the Chapter 11 Cases in general and the length of time that we
may be required to operate in bankruptcy; the effectiveness of the overall
restructuring activities pursuant to the Chapter 11 Cases and any additional
strategies that we may employ to address our liquidity and capital resources;
the actions and decisions of creditors, regulators and other third parties that
have an interest in the Chapter 11 Cases, which may interfere with the ability
to confirm and consummate the Amended Plan; restrictions on us due to the terms
of the proposed debtor in possession financing arrangements entered into in
connection with the bankruptcy process (the "DIP Credit Agreements") and
restrictions imposed by the applicable courts; potential delays in the Chapter
11 Cases due to the effects of COVID-19; the effects of the Chapter 11 Cases on
the Company and on the interests of various constituents, including holders of
the Company's common stock; other litigation and inherent risks involved in a
bankruptcy process; risks related to the trading of the Company's securities on
the OTC Pink marketplace; the impact of COVID-19 on the global economy, our
associates, our customers and our operations, our high level of indebtedness and
the availability and cost of credit; high interest rates that increase the
Company's borrowing costs or volatility in the financial markets that could
constrain liquidity and credit availability; the inability to achieve savings
and profit improvements at targeted levels in the Company's operations or within
the intended time periods; increased competition from foreign suppliers
endeavoring to sell glass tableware, ceramic dinnerware and metalware in our
core markets; global economic conditions and the related impact on consumer
spending levels; major slowdowns or changes in trends in the retail, travel,
restaurant and bar or entertainment industries, and in the retail and
foodservice channels of distribution generally, that impact demand for our
products; inability to meet the demand for new products; material restructuring
charges related to involuntary employee terminations, facility sales or
closures, or other various restructuring activities; significant increases in
per-unit costs for natural gas, electricity, freight, corrugated packaging, and
other purchased materials; our ability to borrow under the DIP Credit
Agreements; protracted work stoppages related to collective bargaining
agreements; increased pension expense associated with lower returns on pension
investments and increased pension obligations; increased tax expense resulting
from changes to tax laws, regulations and evolving interpretations thereof;
devaluations and other major currency fluctuations relative to the U.S. dollar
and the euro that could reduce the cost competitiveness of the Company's
products compared to foreign competition; the effect of exchange rate changes to
the value of the euro, the Mexican peso, the Chinese renminbi and the Canadian
dollar and the earnings and cash flows of our international operations,
expressed under U.S. GAAP; the effect of high levels of inflation in countries
in which we operate or sell our products; the failure of our investments in
e-commerce, new technology and other capital expenditures to yield expected
returns; failure to prevent unauthorized access, security breaches and
cyber-attacks to our information technology systems; compliance with, or the
failure to comply with, legal requirements relating to health, safety and
environmental protection; our failure to protect our intellectual property; and
the inability to effectively integrate future business we acquire or joint
ventures into which we enter. These and other risk factors that could cause
results to differ materially from the forward-looking statements can be found in
the Company's Annual Report on Form 10-K, the Company's Quarterly Report on Form
10-Q, the Company's other filings with the Securities and Exchange Commission
(the "SEC") and in the Disclosure Statement filed with the Bankruptcy Court in
connection with the Chapter 11 Cases. Refer to the Company's most recent SEC
filings for any updates concerning these and other risks and uncertainties that
may affect the Company's operations and performance. Any forward-looking
statements speak only as of the date of this Current Report on Form 8-K, and the
Company assumes no obligation to update or revise any forward-looking statement
to reflect events or circumstances arising after the date of this report.
Item 9.01 Financial Statements and Exhibits
d) Exhibits:
Exhibit No. Description
99.1 Press Release dated August 17, 2020
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