Safety Components Discusses Restructuring of Its Balance Sheet
13 January 2000
Safety Components Announces Discussions Regarding Restructuring of Its Balance Sheet
GREENVILLE, S.C., Jan. 13 -- Safety Components International,
Inc. , one of the world's leading manufacturers of automotive
airbag fabric and cushions, today reported that it is in discussions with its
senior lenders and the holders of its Senior Subordinated Notes regarding the
restructuring of its balance sheet. The Company further announced that it has
reached agreement with its senior lenders that it will not make the
January 15, 2000 interest payment on the Notes and will use the 30 day grace
period for such interest payment to continue such discussions. The senior
lenders have notified the trustee for the Company's Note holders that they are
exercising their rights to block the January 15, 2000 interest payment.
Robert A. Zummo, Chairman and Chief Executive Officer of the Company,
stated: "As previously announced, we have engaged Bank of America Securities
to assist with the restructuring of our balance sheet. We are currently
evaluating two preliminary proposals from prospective senior lenders to
refinance a significant portion of the Company's existing senior facility.
Those proposals would entail a restructuring of the Company's outstanding
senior and subordinated indebtedness which would require the consent of the
Company's senior lenders and Note holders and the waiver of certain existing
defaults. The Company is in discussions with its banks and Note holders in
order to seek agreement on the terms of a restructuring."
Mr. Zummo also stated: "Our core businesses remain strong, evidenced by
two significant new airbag awards received within the last month, and we are
optimistic that a consensual arrangement can be reached with our banks and
Note holders that will enable us to take advantage of certain very promising
opportunities for new customer orders. The Company is current in its
obligations to trade creditors and does not anticipate any change in the
status of such payments. Of course, the consummation of any new credit
facility would require the completion of due diligence by the new senior
lender and the completion of the audit of our restated financial statements
for fiscal 1998 and 1999. In that regard, I am pleased to report that the
special committee of our board, consisting of independent directors, with the
assistance of independent counsel and accountants, is close to completion of
its investigation. The Company's auditors, Arthur Andersen, are now working
diligently towards completion of their review within the next ten days."
The Company also announced that a hearing with Nasdaq has been scheduled
for January 13, 2000 to discuss the continued listing of the Company's Common
Stock on the Nasdaq National Market. The Company is not currently in
compliance with Nasdaq's maintenance standards regarding market value of
public float and minimum bid price and is also out of compliance with Nasdaq
reporting obligations until its restated financial statements are filed for
fiscal years 1998 and 1999. In the event that the Company is not successful
at the hearing, its Common Stock is expected to be quoted on the Nasdaq
Bulletin Board.
This press release contains forward-looking statements. There can be no
assurance that the Company will be able to successfully refinance or
restructure any of its indebtedness or obtain the requisite consent from its
senior lenders and Note holders or complete the audit in a timely fashion.
The Company also wishes to caution the reader of this press release that
actual results may differ from those discussed in the forward-looking
statements and may be adversely affected by, among other things, insufficient
working capital, inability to obtain new customer orders or to maintain
relationships with existing customers, materially adverse consequences
resulting from the inability to reach agreement with the Company's senior
lenders or subordinated Note holders, delays in completion of the audit or
additional adverse findings in the investigation and other factors that could
potentially affect the Company's financial results which are described in the
Company's filings with the Securities and Exchange Commission.
Safety Components International, Inc. is a leading, low-cost supplier of
automotive airbag fabric and cushions with operations in North America and
Europe. The Company is also a leading manufacturer of value-added synthetic
fabrics used in a variety of niche industrial and commercial applications. In
addition, Safety Components supplies metal airbag components to its airbag
customers utilizing its machining and stamping capabilities gained from years
of experience as a military ordnance manufacturer and continues as a systems
integrator and manufacturer for ordnance programs.