Crown Cork & Seal Extends Term of Revolving Credit Facility and Raises a New Term Loan
PHILADELPHIA, March 12 /PRNewswire/ -- Crown Cork & Seal Company, Inc. (NYSE: CCK) (Paris Bourse: CCK) announced today the successful completion of its Amended and Restated Credit Agreement, which also provides $400 million in additional financing.
The Company's existing lenders, led by JPMorgan, as arranger, agreed to extend the maturity date of the Company's $2.5 billion multi-currency revolving credit facility to December 8, 2003 and along with new lenders provided a $400 million term loan. Terms of the agreement provide new and less restrictive financial covenants in addition to new operating covenants. The Company agreed to grant to the term loan lenders a first priority security interest primarily in U.S. and certain non-U.S. machinery and equipment, inventories, non-securitized accounts receivable, intellectual property and general intangibles. The existing lenders were granted a second security interest in these assets.
The pricing on the $2.5 billion original credit agreement was increased by 100 basis points to LIBOR plus 250 basis points. The new term loan is priced at LIBOR plus 350 basis points.
"This action was the necessary first step to provide the Company with adequate liquidity going forward," said Alan W. Rutherford, Executive Vice President and Chief Financial Officer. "We now have the flexibility to proceed with our asset sales program which, in turn, will enable the Company to realize the full value of these businesses."
The following forward-looking statements reflect the Company's expectations as of March 12, 2001. Given the various risk factors discussed below, actual results may differ materially.
Separately, the Company commented on its 2001 business outlook. The Company noted that it is currently experiencing mitigation of downward price pressure in many of its businesses. At the same time, the North American beverage can and beverage PET markets have not been able to increase pricing sufficient to offset increases in raw material costs, utility costs and transportation costs. Additionally, a destocking of certain filled inventories is underway across the North American food industry. The Company expects this effort by the food packaging industry to result in shipments of food cans being lower in 2001 compared to 2000. The Company currently expects the benefits of increased volumes across many product lines and cost reduction efforts to approximately offset the effects of these industry conditions. Operating income will, however, be impacted by a reduction in non-cash pension income of $44 million, or $29 million after-tax ($0.23 per diluted share), in 2001 compared to 2000. The reduction in pension income is the result of a decrease in the market value of plan assets during 2000.
The restructuring of the Company's debt, while at market rates, will result in higher net interest expense in 2001 compared to 2000. The Company realized the benefits of commercial paper rates for much of 2000. In 2001, borrowings will come primarily from the amended credit facility and new term loan. Net interest expense in 2001, including the amortization of bank fees, is projected to be approximately $500 million. This equates to an additional net after-tax charge of approximately $0.71 per diluted share over 2000 levels.
The Company currently anticipates a net loss from continuing operations of approximately $0.50 per diluted share in 2001 compared to 2000 net earnings of $0.73 per diluted share. For the first quarter ending March 31, the Company expects to report a net loss from continuing operations of approximately $0.40 compared to 2000 first quarter net earnings of $0.17 per diluted share.
"The market challenges that we faced in 2000 will not reverse in one year," said John W. Conway, Chairman, President and Chief Executive Officer, "but having refinanced the Company's major credit facility, we will now concentrate on reducing overall debt and refocusing the business for the future. We are determined to drive the future of the Company through our leading research and development position by introducing the best packaging solutions for our customers and to continue to remain low cost by employing continuous efficiency initiatives to improve our results in a very competitive industry."
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release consists of forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve a number of risks, uncertainties and other factors, which may cause the actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the actual results of operations or financial condition of the Company to differ include, without limitation, competitive pressures affecting the Company, its customers and suppliers; the Company's ability to generate significant free cash and maintain appropriate debt levels; the Company's ability to maintain adequate sources of capital and liquidity, including through the consummation of appropriate asset sales; cost reduction efforts and expected savings; the outcome of asbestos-related litigation (including the level of future claims and the terms of settlements, and the impact of bankruptcy filings by other companies with asbestos-related liabilities, which could increase the Company's asbestos-related costs over time, and the adequacy of reserves established for asbestos-related liabilities) and other litigation and contingencies; changes in the availability and pricing of raw materials and the Company's ability to pass price increases through to its customers; costs and difficulties related to the integration of acquired businesses; the impact of any potential dispositions or other strategic realignments; and changes or differences in U.S. or international economic, monetary or political conditions. In addition, other factors have been discussed under the caption "Forward-Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 1999 and in subsequent filings. The Company does not intend to review or revise any particular forward-looking statement in light of future events.
Crown Cork & Seal is the leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania.
The Company will hold a conference call today, March 12, 2001 at 11:00 am (ET) to discuss this news release. The dial-in numbers for the conference call are (712) 257-3096 or toll free (800) 779-1598 and the access password is "packaging." A replay of the conference call will be available for a one-week period ending at midnight on Monday, March 19. The telephone numbers for the replay are (402) 344-6840 or toll free (800) 568-3705 and the access code is 4639.
SOURCE Crown Cork & Seal Company, Inc.
Web site: http: //www.crowncork.com
CONTACT: Timothy J. Donahue, Senior Vice President - Finance of Crown Cork & Seal, 215-698-5088; or Edward Bisno of Edelman Financial, 212-704-8212