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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
February 11, 1998
(Date of Report, date of earliest event reported)
VALHI, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-5467 87-011015
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, TX 75240-2697
(Address of principal executive offices) (Zip Code)
(972) 233-1700
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
Item 5: Other Events
On February 6, 1998, Valhi, Inc. ("Valhi"), as lender, entered into a $120
million revolving credit agreement with Contran Corporation ("Contran"), as
borrower (the "Credit Agreement"), to be effective as set forth below. Contran
may be deemed to control Valhi. Substantially all of Contran's outstanding
voting stock is held by trusts (the "Trusts") established for the benefit of Mr.
Harold C. Simmons' children and grandchildren, of which Mr. Simmons is the sole
trustee. Mr. Simmons is chairman of the board, president and chief executive
officer of both Contran and Valhi.
The Trusts and certain other parties entered into a settlement agreement
arising from that certain civil action styled In re: The Harold C. Simmons
Family Trust No. 1 (No. 96-306-P) pending in the Probate Court of Dallas County,
Texas (the "Settlement Agreement"). The Settlement Agreement contemplates a
dismissal with prejudice of all claims among the parties to the related
litigation and no change to Harold C. Simmons' positions as trustee of the
Trusts or as a director or officer of the various businesses owned directly and
indirectly by the Trusts, including Contran and Valhi. On February 10, 1998,
the Probate Court approved the Settlement Agreement.
On February 11, 1998, the Credit Agreement became effective upon the
termination of the credit agreement dated as of November 5, 1997 among Contran,
National City Lines, Inc. ("National") and Valhi Group, Inc., as borrowers, and
United Sates National Bank of Oregon and Societe Generale, Southwest Agency, as
lenders, as such agreement had been amended to that date.
The closing under the Settlement Agreement occurred on February 11, 1998.
Pursuant to the Settlement Agreement, one of the Trusts, the Harold C. Simmons
Family Trust No. 2 dated January 1, 1964, distributed shares of Contran's Class
A Common Stock, par value $0.01 per share (the "Contran Class A Common Stock"),
to or on behalf of certain parties to the Settlement Agreement and certain
trusts created for the benefit of certain parties to the Settlement Agreement
and/or their descendants. Such distributions included the right to cause
Contran to redeem such distributed shares of Contran Class A Common Stock for
consideration including cash, promissory notes and real estate. All of such
redemption rights with respect to the Contran Class A Common Stock were
exercised in full.
In conjunction with the closing of the Settlement Agreement and the
subsequent exercise in full of the redemption of the Contran Class A Common
Stock, Valhi advanced to Contran an aggregate of $77,175,000 under the Credit
Agreement. Contran used such advance to fund the cash portion of the redemption
and certain other payments contemplated by the Settlement Agreement.
Additionally, an aggregate of $25,000,000 of prior intercompany borrowings from
Valhi to Contran were converted into an advance under the Credit Agreement.
Valhi understands that Contran intends to use any additional advances under the
Credit Agreement for general corporate purposes, including the payment of
interest on Contran's outstanding indebtedness.
Borrowings under the Credit Agreement will bear interest at the prime rate
in effect from time to time The maturity date under the Credit Agreement is
August 10, 1998.
Contran's obligations under the Credit Agreement are secured by a pledge to
Valhi of:
(1) all of Contran's stock ownership in:
(A) Southwest Louisiana Land Company, Inc. ("Southwest"), or
88.6% of Southwest's voting stock;
(B) Dixie Rice Agricultural Corporation, Inc. ("Dixie Rice"), or
53.8% of Dixie Rice's voting stock;
(C) NOA, Inc. ("NOA"), or 49.99% of NOA's voting stock, the
other 50.01% of which is directly owned by Southwest; and
(D) National, or 85.7% of National's voting stock, the other
14.3% of which is directly owned by NOA;
all of which corporations in the aggregate may be deemed to control,
directly or indirectly, 84.7% of Valhi's outstanding common stock; and
(2) 7,958,958 shares of Valhi common stock directly held by Contran
or 6.9% of the outstanding Valhi common stock.
The Credit Agreement requires Contran to pay to Valhi a commitment fee in
the amount of 1/2% per annum on the average daily unused and available revolving
credit commitment. Contran may prepay borrowings under the Credit Agreement at
any time upon Contran's election. In addition, Contran may at any time upon
notice to Valhi terminate or reduce the unused amount of the revolving credit
commitment; provided, however, that any such termination or reduction shall be
permanent.
The Credit Agreement contains certain affirmative and negative covenants of
Contran, including restrictions on indebtedness and liens.
The foregoing summary of the Credit Agreement is qualified in its entirety
by reference to Exhibit 99.1 to this report, which is incorporated herein by
this reference.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibit
Item No. Exhibit Index
---------- ------------------------------------------
99.1 Credit Agreement between Contran Corporation, as
Borrower, and Valhi, Inc., as Lender (incorporated by
reference to Exhibit 7 to Amendment 60 to the Schedule
13D filed by Valhi Group, Inc., National City Lines,
Inc., NOA, Inc., Dixie Holding Company, Dixie Rice
Agricultural Corporation, Inc., Southwest Louisiana Land
Company, Inc., Contran Corporation and Harold C.
Simmons, with respect to the common stock of Valhi,
Inc.)
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.
VALHI, INC.
(Registrant)
By: /s/ Steven L. Watson
-----------------------------
Steven L. Watson
Vice President & Secretary
Date: February 17, 1998