|
UNITED
STATES 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: July 15, 2008
|
|
(Date
of Earliest Event Reported)
|
|
|
|
Commission
file number: 1-3203
|
|
|
|
|
|
|
|
CHESAPEAKE
CORPORATION
|
|
(Exact
name of registrant as specified in its charter)
|
|
|
|
|
Virginia
|
54-0166880
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
|
|
1021
East Cary Street
|
|
|
Richmond,
Virginia
|
23219
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
|
|
Registrant's
telephone number, including area code:
804-697-1000
|
|
|
|
Not
Applicable
|
|
(Former
name or former address, if changed since last report)
|
|
|
|
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[
]Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[
]Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[
]Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[
]Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
|
ITEM
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On July
15, 2008, one of our U.K. subsidiaries agreed with the Trustee of the Field
Group Pension Plan (the “Plan”) on an amended recovery plan (the “Amended
Recovery Plan”). As disclosed in a Current Report on Form 8-K dated
April 17, 2008, the previous recovery plan required that the U.K. subsidiary
make supplementary annual cash contributions to the Plan of at least £6 million
over and above those needed to cover benefits and expenses and, if an interim
funding level for the Plan of 90% was not achieved by April 5, 2008, an
additional supplementary contribution to achieve an interim funding level of 90%
to be paid on or before July 15, 2008. An interim valuation of the
Plan as of April 5, 2008 determined that the supplementary payment necessary, in
addition to the £6 million annual payment due on or before July 15, 2008, to
achieve an interim funding level of 90% was £29.6 million.
Under the
terms of the Amended Recovery Plan, the Plan Trustee agreed to accept annual
supplemental payments of £6 million over and above those needed to cover
benefits and expenses until the earlier of (a) 2021 or (b) the Plan attaining
100% funding on an on-going basis after 2014, and has waived the requirement for
the additional cash payment due on or before July 15, 2008 to achieve an interim
funding level of 90%. Our U.K. subsidiary has agreed, subject to
certain terms and conditions, to grant fixed equitable and floating charges on
assets of the U.K. subsidiary and its subsidiaries in the United Kingdom and the
Republic of Ireland securing an amount not to exceed the Plan funding deficit on
a scheme-specific basis. The security being granted to the Plan Trustee would be
subordinated to the security given to the lenders under the Senior Revolving
Credit Facility in Amendment No. 6, dated as of March 5, 2008, to the Second
Amended and Restated Credit Agreement, dated as of February 23, 2004, by and
among Chesapeake and various subsidiary borrowers, the banks and other
institutional lenders and Wachovia Bank, National Association, as administrative
agent for the lenders (as amended, the “Credit Facility”). Our
subsidiary's agreement with the Plan Trustee also includes provisions for
releases of the Plan Trustee’s security interest under certain conditions in the
event of the sale, transfer or other disposal of assets over which the Plan
Trustee holds a security interest or upon the Plan Trustee’s receipt of agreed
cash payments to the Plan in addition to those described above. Our
U.K. subsidiary has made the £6 million supplemental payment to the Plan due for
2008.
Also on
July 15, 2008, we agreed with our lenders on an amendment of certain provisions
of our Credit Facility in Amendment No. 7, dated July 15, 2008 (the “Seventh
Amendment”) to the Credit Facility. The Seventh Amendment increases
the total leverage ratio to 7.00:1 for the second fiscal quarter of 2008 and the
senior leverage ratio to 3.40:1 for the second fiscal quarter. The
Seventh Amendment also provides for agreement on the Amended Recovery Plan,
including providing for an intercreditor agreement among the Credit Facility
lenders, Chesapeake and the Trustee, places a limit on the future borrowing of
the U.S. borrower under the Credit Facility, and provides for a new Event of
Default if The Pensions Regulator in the U.K. issues a Contribution Notice or
Financial Support Direction.
Based on
our current projections, we expect that we may not be in compliance with the
financial covenants set forth in the Seventh Amendment as of the end of the
third fiscal quarter of 2008.
We expect
to avoid compliance issues with these financial covenants by improving cash
flows, reducing outstanding indebtedness, replacing or amending the Credit
Facility or obtaining waivers from our lenders, but there can be no assurances
that these alternatives will be successfully implemented. Failure to
comply would be an event of default under the Credit Facility. If
such an event were to occur, the lenders under the Credit Facility could require
immediate payment of all amounts outstanding under the Credit Facility and
terminate their commitments to lend under the Credit Facility and, pursuant to
cross-default provisions in many of the instruments that govern other
outstanding indebtedness, immediate payment of our other outstanding
indebtedness could be required, all of which would likely have a material
adverse effect on our business, results of operations and financial
condition.
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 thereunto duly
authorized.
|
|
|
CHESAPEAKE
CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date: July
16, 2008
|
BY:
|
/s/ J. P. Causey Jr.
|
|
|
|
J.
P. Causey Jr.
|
|
|
|
Executive
Vice President,
|
|
|
|
Secretary
& General Counsel
|
|
|
|
|