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 (Date of earliest event reported) August 18, 2006
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AMERICAN BILTRITE INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-4773 04-1701350
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(State or other jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
57 River Street, Wellesley Hills, Massachusetts 02481-2097
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(Address of principal executive offices, including zip code)
(781) 237-6655
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(Registrant's telephone number, including area code)
Not Applicable
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(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 8.01 Other Events.
On August 21, 2006, American Biltrite Inc.'s majority-owned subsidiary Congoleum
Corporation ("Congoleum") filed a motion seeking the approval of the Bankruptcy
Court for the District of New Jersey for a settlement agreement between
Congoleum and Century Indemnity Company and its affiliates ("Century").
Congoleum has insurance policies with Century that provide Congoleum with excess
layer insurance coverage. Subject to various requirements set forth in the
settlement agreement, Century will pay $16.95 million to the trust for asbestos
claimants to be formed upon confirmation of Congoleum's plan of reorganization
in four installments over a three-year period commencing 60 days after all
conditions to the agreement have been satisfied. A hearing on the motion has
been scheduled for September 11, 2006.
On August 22, 2006, Congoleum announced that it had entered into the settlement
agreement with Century. Congoleum further reported in that announcement that it
has now reached over $207 million in insurance settlements, and that
negotiations will continue with other insurance carriers. In that announcement,
it was further provided that Congoleum remains hopeful that its proposed plan
would be confirmed in the first quarter of 2007.
On December 31, 2003, Congoleum filed a voluntary petition with the United
States Bankruptcy Court for the District of New Jersey (Case No. 03-51524)
seeking relief under Chapter 11 of the United States Bankruptcy Code as a means
to resolve claims asserted against it related to the use of asbestos in its
products decades ago.
Congoleum also announced on August 22, 2006 that that one of Congoleum's sheet
flooring production lines at its Marcus Hook, Pennsylvania plant sustained
extensive damage on Friday, August 18, 2006. Congoleum reported that there were
no injuries and the damage was limited to the components of the production line
in the area of the incident. Congoleum stated that it expects it will be able to
replace the capacity of the damaged line through a combination of available
overtime capacity on the other production line at the Marcus Hook plant and
outsourcing. Congoleum further stated that work on replacing the damaged line
had already commenced, and repairs are expected to be completed during the last
quarter of 2006. Congoleum further reported that it believes its contingency
plan will permit it to service its customers without any serious or long term
disruption, and expects its property and business interruption insurance
coverage will minimize the costs resulting from the incident, including
replacing the production capacity.
Forward-Looking Statements
Some of the information presented in this Current Report on Form 8-K constitutes
"forward-looking statements," within the meaning of the Private Securities
Litigation Reform Act of 1995, that involve risks, uncertainties and
assumptions. These forward-looking statements are based on American Biltrite
Inc.'s expectations, and American Biltrite Inc.'s understanding of Congoleum's
expectations, as of the date of this report, of future events, and American
Biltrite Inc. undertakes no obligation to update any of these forward-looking
statements except as required by the federal securities laws. Although American
Biltrite Inc. believes that these expectations are based on reasonable
assumptions, within the bounds of its knowledge of its business and operations,
there can be no assurance that actual results will not differ materially from
its expectations. Readers are cautioned not to place undue reliance on any
forward-looking statements. There can be no assurance that Congoleum will be
successful in obtaining confirmation of its proposed amended Chapter 11 plan of
reorganization in a timely manner or at all. There also can be no assurance that
Congoleum will be able to satisfactorily replace the capacity of its damaged
production line in a cost-effective manner and on a timely basis, that
Congoleum's contingency plans for servicing its customers while Congoleum works
to replace its damaged production line will be successful or that Congoleum will
be able to recover sufficient insurance proceeds for costs incurred resulting
from the incident.
Any alternative plan of reorganization pursued by Congoleum or confirmed by the
bankruptcy court could vary significantly from the version of the plan currently
being pursued by Congoleum. Furthermore, the estimated costs and contributions
required to confirm and to effect the proposed amended plan of reorganization or
an alternative plan could be significantly greater than currently estimated. Any
plan of reorganization pursued by Congoleum will be subject to numerous
conditions, approvals and other requirements, including bankruptcy court
approvals, and there can be no assurance that such conditions, approvals and
other requirements will be satisfied or obtained.
Some additional factors that could cause actual results to differ from
Congoleum's and American Biltrite Inc.'s objectives for resolving asbestos
liability include: (i) the future cost and timing of estimated asbestos
liabilities and payments; (ii) the availability of insurance coverage and
reimbursement from insurance companies that underwrote the applicable insurance
policies for asbestos-related claims, including insurance coverage and
reimbursement for asbestos claimants under Congoleum's proposed modified plan of
reorganization, which certain insurers have objected to in bankruptcy court and
are litigating in New Jersey state court, or any other plan of reorganization;
(iii) costs relating to the execution and implementation of any plan of
reorganization pursued by Congoleum or relating to any other plan or
reorganization proposed by any other party in interest; (iv) timely reaching an
agreement with other creditors, or classes of creditors, that exist or may
emerge; (v) satisfaction of the conditions and obligations under American
Biltrite Inc.'s and Congoleum's respective outstanding debt instruments, and
amendment of those outstanding debt instruments, as necessary, to permit
Congoleum and American Biltrite Inc. to satisfy their obligations under any plan
of reorganization and to make certain covenants in those debt instruments less
restrictive; (vi) the extent to which American Biltrite Inc.'s equity interest
in Congoleum is diluted or otherwise reduced in connection with any plan of
reorganization, including the possible elimination of the interests of all
existing shareholders of Congoleum through implementation of the "cram down"
provisions of the Bankruptcy Code if the holders of Congoleum's Senior Notes do
not vote as a class to accept Congoleum's plan of reorganization in the
requisite numbers and amounts required by the Bankruptcy Code; (vii) the
response from time-to-time of American Biltrite Inc.'s and Congoleum's lenders,
customers, suppliers, holders of Congoleum's Senior Notes and their
representatives, and other creditors and constituencies to the Chapter 11
process and related developments arising from the strategy to settle asbestos
liability; (viii) Congoleum's ability to maintain debtor-in-possession financing
sufficient to provide it with funding that may be needed during the pendency of
its Chapter 11 case and to obtain exit financing sufficient to provide it with
funding that may be needed for its operations after emerging from the bankruptcy
process, in each case, on reasonable terms; (ix) timely obtaining sufficient
creditor and court approval (including the results of any relevant appeals) of a
reorganization plan and the court overruling any objections to the plan that may
be filed; (x) developments in, costs associated with and the outcome of
insurance coverage litigation pending in New Jersey state court involving
Congoleum and certain insurers; (xi) the extent to which Congoleum is able to
obtain reimbursement for costs it incurs in connection with the insurance
coverage litigation; (xii) the impact any adopted federal legislation addressing
asbestos personal injury claims may have on American Biltrite Inc.'s and
Congoleum's businesses, results of operations or financial conditions; (xiii)
compliance with the Bankruptcy Code, including section 524(g); (xiv) the
possible adoption of another party in interest's proposed plan of reorganization
which may prove to be unfeasible; and (xv) the ability of American Biltrite Inc.
to timely replace or refinance its secured credit facility, which expires on
September 30, 2006. In addition, in view of American Biltrite Inc.'s
relationships with Congoleum, American Biltrite Inc. could be affected by
Congoleum's negotiations regarding its pursuit of a plan or reorganization, and
there can be no assurance as to what that impact, positive or negative, might
be. In any event, the failure of Congoleum to obtain confirmation and
consummation of a Chapter 11 plan of reorganization would have a material
adverse effect on Congoleum's business, results of operations or financial
condition and could have a material adverse effect on American Biltrite Inc.'s
business, results of operations or financial condition. Other factors that could
cause or contribute to actual results differing from its expectations include
those factors discussed in American Biltrite Inc.'s other filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K for
the fiscal year ended December 31, 2005, its Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006 and its subsequent filings.
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.
Date: August 24, 2006 AMERICAN BILTRITE INC.
By: /s/ Howard N. Feist III
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Name: Howard N. Feist III
Title: Chief Financial Officer