CNST » Topics » 26. Subsequent Event

This excerpt taken from the CNST 10-Q filed May 15, 2009.

23. Subsequent Event

On May 14, 2009, the Bankruptcy Court entered an order confirming Constar’s emergence from Chapter 11 in accordance with the Plan of Reorganization for Constar and its affiliated debtors. Constar expects to emerge from Chapter 11 on or about May 29, 2009. See Notes 1 and 2 for further discussion of Constar’s reorganization proceedings under Chapter 11.

As of the confirmation date, the Company is required to apply the fresh start accounting provisions of SOP 90-7. Fresh start reporting requires an allocation of the reorganization value to the reorganized entity’s assets and liabilities pursuant to SFAS No. 141 (revised 2007). During April 2009, the Company began the process of measuring the fair values for all assets and liabilities in accordance with SFAS No. 157 “Fair Value Measurements” along with the process of allocating the reorganization value to the assets and liabilities for Constar International Inc. and its subsidiaries. The Company anticipates the completion of the fair value measurements and the allocation of the reorganization value in June 2009. The Company anticipates a step up in value of the property, plant and equipment and the recognition of certain identifiable intangible assets. The Subordinated Notes will be converted into new common stock and the Secured Notes will be adjusted to fair value resulting in a decrease to reported liabilities.

Consequently, the financial statements of the reorganized Company will change materially in amounts and classifications due to the implementation of the fresh-start accounting provisions of SOP 90-7. The fresh start accounting adjustments will be reflected in the financial statements reported in the Company’s Form 10-Q for the six months ended June 30, 2009.



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This excerpt taken from the CNST 10-Q filed May 15, 2008.

21. Subsequent Event

On April 23, 2008, the Company decided to close its manufacturing facility in Houston, Texas by the end of May 2008. This decision resulted from previously disclosed customer losses, and a strategic decision to exit the limited extrusion blow-molding business supported by the Houston facility. The Company will continue to service the Houston plant’s PET business using existing assets at the Company’s Dallas, Texas facility. The cumulative cash flow impact to the Company is expected to turn positive in the fourth quarter of 2008, with cash restructuring expenses being offset by overhead cost savings.

In connection with the closing of the Houston facility, the Company expects to incur total restructuring charges of approximately $4.4 - $4.8 million. The total charges include (i) an estimated $2.1 million related to costs to exit the Houston facility, (ii) an estimated $0.5 million related to employee severance and other termination benefits, and (iii) an estimated $2.0 million of accelerated depreciation and other non-cash charges. Of these total charges, approximately $3.0 million represent cash expenditures expected to be approximately $1.0 million in each of 2008-2010.



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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This excerpt taken from the CNST 10-K filed Mar 29, 2007.

26.    Subsequent Event

On March 20, 2007, the Company executed Amendment No. 4 to the Revolver Loan (the “Amendment”). Terms of the Amendment are summarized below. This summary is not a complete description of the terms of the Amendment, the full text of which is filed as an exhibit to the Company’s 2006 Annual Report filed on Form 10-K.

The Amendment increased the aggregate lending commitments from $70.0 million to $75.0 million. The amendment also:



Lowered interest charges by 50 basis points;



Lowered the cost on the unused portion of the facility;



Lowered the excess collateral availability requirement by $5 million to $15 million from $20 million, and;



Extended the scheduled termination date of the Revolver Loan from February 11, 2009 to February 11, 2012.

In order to access the additional $5.0 million of the amended Revolver Loan (from $70 million to $75 million), the Company would have to satisfy the Consolidated Fixed Charge Coverage Ratios contained in the indentures governing the Company’s Senior Notes and Subordinated Notes. Currently, the Company cannot satisfy these ratios.



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Under the Revolver Loan, interest charges for loans are calculated based on a floating rate plus a fixed margin. Under the Amendment, the fixed margin rates are reduced by 50 basis points to the following rates:


Monthly Available Credit

   Base Rate
Rate Loans

Greater than $50.0 million

   0.50 %   1.50 %

Less than or equal $50.0 million and greater than $25.0 million

   0.75 %   1.75 %

Less than or equal to $25.0 million

   1.00 %   2.00 %

In addition, under the Revolver Loan, there was a 0.5% per annum unused commitment fee. Under the Amendment, this rate is reduced as follows:


Monthly Available Credit

   Fee Rate  

Greater than $25.0 million

   0.375 %

Less than or equal to $25.0 million

   0.25 %
This excerpt taken from the CNST 10-K filed Mar 31, 2005.

26.    Subsequent Event


On February 11, 2005, the Company completed a refinancing which consisted of the sale of $220 million of Senior Secured Floating Rate Notes due 2012 and entered into a new four year $70 million Senior Secured Asset Based Revolving Credit Facility. The proceeds, net of expenses, from the refinancing were used to repay amounts outstanding under the Revolver Loan, Term B Loan and Second Lien Loan. In connection with the repayment and termination of these facilities, the Company incurred approximately $3.5 million of prepayment penalties. The Company’s previously issued $175 million 11% Senior Subordinated Notes were not refinanced. See Note 10 for additional information related to the new loan facilities.


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