As filed with the Securities and Exchange Commission on March 15, 2002
Registration No. 333-_____
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------------
BUCKEYE TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 62-1518973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 Tillman Street
Memphis, Tennessee 38112
(901) 320-8100
(Address,including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
David B. Ferraro
President
Buckeye Technologies Inc.
1001 Tillman Street
Memphis, Tennessee 38112
(901) 320-8100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Sheila Jordan Cunningham Linda M. Crouch, Esq.
Senior Vice President, General Counsel Baker, Donelson, Bearman & Caldwell
Buckeye Technologies Inc. 207 Mockingbird Lane, Suite 300
1001 Tillman Street Johnson City, Tennessee 37604
Memphis, Tennessee 38112 423-975-7623
901-320-8100
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement in light of market
conditions and other factors. If the only securities being registered on this
form are being offered pursuant to dividend or interest reinvestment plans,
please check the following box: / / If any of the securities being registered on
this form are to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box: |X| If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / / If this Form is a
post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering: /
/ If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box: / /
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
to be Offering Price Aggregate Registration
Title of Each Class of Registered Per Unit(1) Offering Fee
Securities to be Registered Price(1)
------------------------------------------------------------------------------------------------------------------------------------
Debt Securities(2).................................................... (3) (3) (3) (3)
Preferred Stock(2).................................................... (3) (3) (3) (3)
Common Stock, par value $.01 per share and associated Preferred Stock
Purchase Rights(2).................................................. (3) (3) (3) (3)
Warrants(2)........................................................... (3) (3) (3) (3)
Rights(2)............................................................. (3) (3) (3) (3)
Purchase Contracts(2)................................................. (3) (3) (3) (3)
Units(2)..............................................................
Total(4).............................................................. $300,000,000 100% $300,000,000 $27,600
(1) Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
(2) Includes such indeterminate amounts of Debt Securities, such indeterminate
number of shares of Preferred Stock, such indeterminate number of shares of
Common Stock and associated Preferred Stock Purchase Rights, such indeterminate
number of Warrants, such indeterminate number of Rights, such indeterminate
number of Purchase Contracts, such indeterminate number of Units, and such
indeterminate amount of securities as may be issued upon conversion of or in
exchange for, or upon exercise of, convertible or exchangeable securities
(including securities issuable upon stock splits and similar transactions
pursuant to Rule 416 under the Securities Act) as may be offered pursuant to
this registration statement.
(3) Omitted pursuant to General Instruction II(D) of Form S-3 under the
Securities Act.
(4) In no event will the aggregate offering price of all securities issued at
various times pursuant to this registration statement exceed $300,000,000 or the
equivalent thereof in one or more foreign currencies, foreign currency units or
composite currencies.
--------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
Subject to Completion, Dated March 15,2002
Prospectus
$300,000,000
BUCKEYE TECHNOLOGIES Inc.
Debt Securities
Preferred Stock
Common Stock
Warrants
Rights
Purchase Contracts
Units
-----------
Buckeye Technologies Inc. may offer and sell debt securities, shares of
preferred stock, shares of common stock, warrants, rights, purchase contracts
and units. These securities may be offered and sold from time to time for an
aggregate offering price of up to $300,000,000. We will provide the specific
terms and the initial public offering prices of these securities in an
accompanying prospectus supplement.
We may sell the securities to or through underwriters and also to other
purchasers or through agents. The names of any underwriters or agents will be
stated in an accompanying prospectus supplement. See "Risk Factors" beginning
on page 7 to read about factors you should consider before investing in the
securities.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is____________, 2002.
TABLE OF CONTENTS
About This Prospectus........................................................2
Where You Can Find More Information..........................................2
Summary......................................................................4
Risk Factors.................................................................7
A Warning About Forward-Looking Statements...................................12
Ratios of Earnings to Fixed Charges..........................................13
Use of Proceeds..............................................................13
Legal Ownership..............................................................13
Description of Debt Securities We May Offer..................................15
Description of Preferred Stock We May Offer..................................24
Description of Common Stock We May Offer.....................................25
Description of Warrants We May Offer.........................................30
Description of Rights We May Offer...........................................31
Description of Purchase Contracts We May Offer...............................32
Description of Units We May Offer............................................32
Plan of Distribution.........................................................33
Legal Matters................................................................33
Experts......................................................................33
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
About This Prospectus
This prospectus is part of a registration statement that we filed with
the U.S. Securities and Exchange Commission, which we refer to in this document
as the "SEC," using a shelf registration process. Under this process, we may
sell any combination of the securities described in this prospectus in one or
more offerings up to a total of $300,000,000.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms
of that offering. The prospectus supplement may add to or update other
information contained in this prospectus. You should read both this prospectus
and the accompanying prospectus supplement together with additional
information described below under the heading "Where You Can Find More
Information."
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available on the SEC's Website at
"http://www.sec.gov."
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the securities
covered by this prospectus:
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- Our Annual Report on Form 10-K for the year ended June 30, 2001
- Our Quarterly Reports on Form 10-Q for the quarters ended September
30, 2001 and December 31, 2001
- The description of our common stock and preferred share purchase
rights contained in Amendment No. 2 to the Registration Statement on
Form S-1 filed on November 20, 1995 with regard to our common stock.
You may request a copy of these filings, at no cost, by writing or
telephoning:
Buckeye Technologies Inc.
1001 Tillman Street
Memphis, Tennessee 38112
Attention: Shirley Spears
Telephone: (901) 320-8100
Facsimile: (901) 320-8836
E-mail: info@bkitech.com
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We will not make an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
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Summary
This summary highlights information about the company and the offering.
Because this is a summary, it may not contain all the information that may be
important to you. To understand our business and this offering fully, you should
read the entire prospectus carefully, including the "Risk Factors" section
beginning on page 7, the documents incorporated by reference into this
prospectus and the prospectus supplement relating to the securities that you
propose to buy, especially any description of investment risks that we may
include in the prospectus supplement. Unless the context otherwise indicates,
references in this prospectus to "we," "us," "our" and Buckeye" refer to Buckeye
Technologies Inc. and its direct and indirect subsidiaries.
Who We Are
Headquartered in Memphis, Tennessee, Buckeye is a leading manufacturer
and worldwide marketer of value-added cellulose-based specialty products. We
utilize our expertise in polymer chemistry and our state-of-the-art
manufacturing facilities to develop and produce innovative proprietary products
for our customers. We sell our products to a wide array of technically demanding
niche markets in which our proprietary products and commitment to customer
technical service give us a competitive advantage. We are the world's only
manufacturer offering cellulose-based specialty products made from both wood and
cotton utilizing wetlaid technology and also offering products made from wood
utilizing airlaid technology. We believe that we have leading positions in most
of the markets in which we compete.
Our strategy is to:
- focus on technically demanding niche markets,
- develop proprietary product innovations, and
- strengthen long-term alliances with customers.
Our products can be broadly grouped into three categories:
- chemical cellulose,
- absorbent products, and
- customized paper.
The chemical cellulose and customized paper are derived from wood and
cotton cellulose materials using wetlaid technologies. Fluff pulps are
derived from wood using wetlaid technology. The airlaid nonwovens materials are
derived from wood pulps using airlaid technology. Below is a breakdown of major
product categories, percentage of related sales, and the related attributes and
applications for our products.
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% of
Fiscal
Product Groups 2001 Sales Unique Product Attributes End Use Applications
-------------------------------------------------------------------------------------------------------------------------
Chemical Cellulose 30%
Food Casings Purity and strength Hot dog and sausage casings
Rayon Filament Strength and heat stability Coat linings, fashion wear, and tire,
belt, and hose reinforcement
Ethers High viscosity, purity, and Thickeners for food, cosmetics,
solution clarity pharmaceuticals, and construction
materials
Acetate Permanent transparency and LCD screens, high clarity plastics, and
uniformity photographic film
-------------------------------------------------------------------------------------------------------------------------
Absorbent Products 53%
Fluff Pulp Absorbency and fluid transport Disposable diapers, feminine hygiene
products, and adult incontinence products
Airlaid Nonwovens Absorbency, fluid management, Feminine hygiene products, wipes, table
and strength top items, food pads, and household
cleaning products
-------------------------------------------------------------------------------------------------------------------------
Customized Paper 17%
Filters High porosity and product life Automotive, laboratory, and industrial
filters
Premium Papers Aesthetics, color permanence, Letterhead, currency, stock certificates,
and tear resistance and personal stationery
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The Securities We Are Offering
We may offer any of the following securities from time to time:
- debt securities
- preferred stock
- common stock
- warrants
- rights
- purchase contracts
- units
This prospectus describes the general terms that may apply to the
securities; the specific terms of any particular securities that we may offer
will be described in a separate supplement to this prospectus.
5
Risk Factors
Investing in our securities involves risks. You should carefully
consider all of the information in this prospectus. In particular, you should
evaluate the specific risk factors set forth under "Risk Factors" beginning on
page 7 for a discussion of certain risks involved with an investment in the
offering.
Our Address
Buckeye Technologies Inc. was incorporated in the State of Delaware in
1992. Our principal executive offices are located at 1001 Tillman Street,
Memphis, Tennessee 38112. Our telephone number is (901) 320-8100, our facsimile
number is (901) 320-8836 and our e-mail address is info@bkitech.com.
6
Risk Factors
Before you purchase our securities, you should carefully consider
these risk factors, as well as the other information contained in this
prospectus. The risks described below are not the only ones facing our company.
Additional risks not presently known to us or that we currently deem immaterial
may also impair our business operations. If any of the adverse events described
in the "Risk Factors" section actually occurs, our business, results of
operations and financial condition could be materially adversely affected; the
trading price, if any, of our securities could decline; and you might lose all
or part of your investment.
Risks related to our business
Our substantial indebtedness could adversely affect our financial health.
We have a high level of debt. As of December 31, 2001, our total debt
was approximately $681 million and our total debt, as a percentage of total
capitalization, was 75%. Our high level of debt could have a significant adverse
future effect on our business. For example:
- we may have limited ability to borrow additional amounts for working
capital, capital expenditures, acquisitions, debt service
requirements, execution of our growth strategy, research and
development costs or other purposes;
- a substantial portion of our cash flow may be used to pay principal
and interest on our debt, which will reduce the funds available for
working capital, capital expenditures, acquisitions and other
purposes;
- our senior credit facility covenants require us to meet certain
financial objectives and impose other significant restrictions on
business operations. These covenants and the covenants contained in
the indentures governing our senior subordinated notes will limit our
ability to borrow additional funds or dispose of assets and limit our
flexibility in planning for and reacting to changes in our business;
- we may be more vulnerable to adverse changes in general economic,
industry and competitive conditions and adverse changes in government
regulation;
- our high debt level and the various covenants contained in the
indentures related to our senior subordinated notes and the documents
governing our other existing indebtedness may place us at a relative
competitive disadvantage as compared to certain of our competitors;
and
- our interest rate swap agreement and borrowings under our senior
credit facility and our receivables based credit facility are at
floating rates of interest, which could result in higher interest
expense in the event of an increase in interest rates.
Our ability to pay principal of and interest on our senior
subordinated notes, to service our other debt and to refinance indebtedness when
necessary depends on our financial and operating performance, each of which is
subject to prevailing economic conditions and to financial, business and other
factors beyond our control.
We cannot assure you that we will generate sufficient cash flow from
operations or that we will be able to obtain sufficient funding to satisfy all
of our obligations. If we are unable to pay our debts, we will be required to
pursue one or more alternative strategies, such as selling assets, refinancing
or restructuring our indebtedness or selling additional equity capital. However,
we cannot assure you that any alternative strategies will be feasible at the
time or prove adequate. Also, certain alternative strategies will require the
consent of our senior secured lenders before we engage in any such strategy.
Our bank credit facility imposes significant restrictions on our business.
We entered into a revolving credit facility on April 16, 2001,
providing for borrowings up to $215 million. This facility matures on March 31,
2005. We amended this facility on September 7, 2001 to modify the financial
covenants for the period September 30, 2001 through September 30, 2002 and to
place restrictions on certain expenditures, including the repurchase of treasury
7
shares and other new indebtedness at any time that total leverage exceeds 3.5x
EBITDA (earnings before interest, taxes, depreciation and amortization). Due to
difficult economic conditions, we believe we will not be in compliance with some
of the existing financial covenants under this facility as of March 31, 2002. We
are presently engaged in negotiations with our lenders to amend the financial
covenants through June 30, 2003, and other terms of the facility in order to
avoid an event of default and to provide greater financial flexibility. While we
believe we will be successful in these negotiations, we cannot assure you that
these negotiations will be successful and that we will avoid an event of
default.
In the event of a default, depending upon the actions taken by the
lenders under the facility, we could be prohibited from making any payments of
principal, premium, if any, or interest on securities which are subordinate to
the facility, including certain offered securities. In addition, the lenders
could elect to declare all amounts borrowed under the facility, together with
accrued and unpaid interest, to be due and payable. These restrictions, in
combination with our leverage, could limit our ability to respond to changing
market and economic conditions and to provide for capital expenditures. If we
are unable to generate sufficient cash flow from operations, we may be required
to refinance outstanding debt or to obtain additional financing. We cannot
assure you that a refinancing would be possible or that any additional financing
could be obtained on acceptable terms.
If we cannot maintain the fixed charge coverage ratio as required by the
indentures related to our senior subordinated notes, our ability to incur
additional indebtedness to fund our operations would be restricted.
The indentures governing our senior subordinated notes specify that if
our fixed charge ratio, as defined by those indentures, falls below 2:1, then
our debt is limited to "permitted indebtedness," also defined in the indentures,
until the ratio again equals or exceeds 2:1. If operating earnings do not
improve from the level achieved during the first six months of this fiscal year,
this ratio, which is measured on a rolling four-quarter basis, will fall below
2:1 by June 30, 2002. Since we have utilized substantially all of the permitted
indebtedness allowed under the indentures maturing in 2005 and 2008, the effect
of falling below this ratio would be to prevent us from incurring any additional
debt until the ratio is again equal to or greater than 2:1. Additionally, if the
ratio were less than 2:1, our availability under our receivables based credit
facility would be capped at $25 million instead of $30 million, until the ratio
is again equal to or greater than 2:1. We would not be required to repay any of
our outstanding debt, and falling below the 2:1 ratio would not create an event
of default under any of our credit facilities or our indentures.
We cannot assure you that if the fixed charge coverage ratio falls
below 2:1, resulting in a $5 million decrease in credit availability under our
receivables based credit facility, our cash flow from operations along with
borrowings under our credit facilities will be sufficient to fund capital
expenditures (expected to total $40 million for this fiscal year), meet
operating expenses and service all debt requirements for the foreseeable future.
If our significant customer fails to perform under our supply agreements, our
business could be adversely impacted.
Procter & Gamble is our largest single customer. We supply Procter &
Gamble with fluff pulp and airlaid nonwovens on supply agreements that run
through calendar year 2002. While Procter & Gamble has previously accounted for
a higher percentage of our total revenues, sales to Procter & Gamble are
estimated to account for approximately 17% of our sales in calendar year 2002.
In the event that Procter & Gamble fails to perform under these supply
agreements for any reason or fails to continue to purchase these products from
us in substantial volume, our results of operations and financial condition
could be materially and adversely affected.
Market fluctuations in the availability and cost of raw materials is beyond our
control and may adversely impact our business.
Amounts we pay for wood and cotton fiber represent the largest
component of our variable costs of production. The availability and cost of
these materials are subject to market fluctuations caused by factors beyond our
control, including weather conditions. Significant decreases in availability or
increases in the cost of wood or cotton fiber, to the extent not reflected in
the prices for our products, could materially and adversely affect our business,
results of operations and financial condition.
Compliance with extensive general and industry specific environmental laws and
regulations requires significant resources, and the significant associated costs
may adversely impact our business.
8
Our operations are subject to extensive general and industry specific
federal, state, local and foreign environmental laws and regulations. We devote
significant resources to maintaining compliance with these laws and regulations.
We expect that, due to the nature of our operations, we will be subject to
increasingly stringent environmental requirements (including standards
applicable to wastewater discharges and air emissions) and will continue to
incur substantial costs to comply with these requirements. Because it is
difficult to predict the scope of future requirements, there can be no assurance
that we will not in the future incur material environmental compliance costs or
liabilities.
Our plant in Perry, Florida, which we call the "Foley Plant,"
discharges treated wastewater into the Fenholloway River. Under the terms of an
agreement with the Florida Department of Environmental Protection, approved by
the U.S. Environmental Protection Agency , which we call the "EPA," in 1995, we
agreed to a comprehensive plan to attain Class III ("fishable/swimmable") status
for the Fenholloway River under applicable Florida law. We call this agreement
the "Fenholloway Agreement." It requires us, among other things,
- to make process changes within the Foley Plant to reduce the
coloration of its wastewater discharge,
- to restore certain wetlands areas,
- to relocate the wastewater discharge point into the Fenholloway River
to a point closer to the mouth of the river and
- to provide oxygen enrichment to the treated wastewater prior to
discharge.
We have already made significant expenditures to make certain in-plant process
changes required by the Fenholloway Agreement, and we estimate, based on 1997
projections, we may incur additional capital expenditures of approximately $40
million through fiscal 2005 to comply with our remaining obligations under the
Fenholloway Agreement.
The EPA has requested additional environmental studies to identify
possible alternatives to the relocation of the wastewater discharge point and to
determine the most cost-effective technologies available to address both Class
III water quality standards for the Fenholloway River and anticipated EPA
"cluster rules" applicable to wastewater discharges from dissolving kraft pulp
mills, like the Foley Plant. We have completed the process changes within the
Foley Plant as required by the Fenholloway Agreement. The other requirements of
the Fenholloway Agreement have been deferred until the EPA objections to the
renewal permit are satisfactorily resolved. Consequently, the capital
expenditures required to complete any remaining modifications may be delayed,
and the total capital expenditures may increase if costs increase or if we are
required by the "cluster rules" to implement other technologies.
While the EPA has not yet finalized the wastewater standards under the
"cluster rules" applicable to dissolving kraft pulp mills like the Foley Plant,
the EPA has issued air emission standards applicable to the Foley Plant. In
addition, the EPA is proposing boiler air emission standards that could be
applicable to the Foley Plant. It is not possible to accurately estimate the
cost of future compliance, but substantial capital expenditures could be
required in fiscal year 2004 and thereafter. These possible expenditures could
have a material adverse effect on our business, results of operations or
financial condition.
Because approximately 75% of our sales are to customers outside the United
States, we are subject to the economic and political conditions of foreign
nations.
We have manufacturing facilities in five countries and sell products in
approximately 50 countries. For the fiscal year ended June 30, 2001, sales of
our products outside the United States represented approximately 75% of our
sales. The weak global economy and the strong U. S. dollar have recently
negatively impacted our sales and may continue to do so in the future. In
addition, although approximately 90% of our sales are denominated in U.S.
dollars, it is possible that as we expand globally, we will face increased risks
associated with operating in foreign countries, including:
- the risk that foreign currencies will be devalued or that currency
exchange rates will fluctuate;
- the risk that limitations will be imposed on our ability to convert
foreign currencies into U.S. dollars or on our foreign subsidiaries'
ability to remit dividends and other payments to the United
States;
- the risk that our foreign subsidiaries will be required to pay
withholding or other taxes on remittances and other payments
to us or that the amount of any such taxes will be increased;
9
- the risk that the U. S. tax laws are changed so that the Foreign Sales
Corporation (FSC) and/or the Extraterritorial Income Exclusion (EIE)
are eliminated, or their benefits are substantially reduced, which
would increase our taxes;
- the risk that certain foreign countries may experience hyperinflation;
and
- the risk that foreign governments may impose or increase investment or
other restrictions affecting our business.
Exposure to commodity products creates volatility in pricing and profits.
If our research and development efforts do not result in the
commercialization of new, proprietary products, we will continue to have
significant exposure to fluff pulp and other commodity products, which could
result in volatility in sales prices and profits.
If our negotiations with the representatives of the unions, to which many of our
employees belong, are not successful, our operations could be subject to
interruptions at many of our facilities.
On December 31, 2001, we employed approximately 2,075 individuals at
our facilities. We have collective bargaining agreements in place at the Foley
Plant (which has approximately 520 hourly employees) with the Paper,
Allied-Industrial, Chemical and Energy Workers International Union, AFL-CIO,
Local No. 1192; at our cotton cellulose plant in Memphis, Tennessee (the
"Memphis Plant" which has approximately 165 hourly employees) with Local Union
910 Pulp and Processing Workers and the Retail, Wholesale, and Department Store
Union, AFL-CIO; and at our airlaid plant in Vancouver, Canada (the "Delta Plant"
which has approximately 100 hourly employees) with the Communication, Energy and
Paperworkers Union of Canada, Local 433. The preceding labor agreements expire
as follows: Foley Plant, April 1, 2002; Memphis Plant, March 18, 2003; and the
Delta Plant, June 30, 2003. A Works Council provides employee representation for
non-management workers at our cotton cellulose plants in Glueckstadt, Germany
and Americana, Brazil, and our airlaid plant in Steinfurt, Germany. Our plants
in Gaston, Lumberton and King, North Carolina and Cork, Ireland are not
unionized. An extended interruption of operations at any of our facilities could
have a material adverse effect on our business.
Risks related to our industry
We are subject to the cyclicality of our industry.
The demand and pricing of our products, particularly fluff pulp, are
influenced by the much larger market for papermaking pulps which is highly
cyclical. The markets for most cellulose and absorbent products are sensitive to
both changes in general global economic conditions and to changes in industry
capacity. Both of these factors are beyond our control. The price of these
products can fluctuate significantly when supply and demand become imbalanced
for any reason. Our financial performance can be heavily influenced by these
pricing fluctuations and the general cyclicality of the industries in which we
compete. We cannot assure you that current prices will be maintained, that any
price increases will be achieved, or that industry capacity utilization will
reach favorable levels. The demand, cost and prices for our products may thus
fluctuate substantially in the future and downturns in market conditions could
have a material adverse effect on our business, results of operations and
financial condition.
Risks related to the securities we may offer
The debt securities and the debt securities issuable upon the exercise of
warrants will be subordinated.
The debt securities and debt securities issued upon exercise of debt
warrants will be unsecured and subordinated in right of payment to all of our
existing and future senior indebtedness. In the event of our bankruptcy,
liquidation or reorganization or upon acceleration of the debt securities due to
an event of default under the indenture and in other limited events, our assets
will be available to pay obligations on the debt securities only after all
senior indebtedness has been paid. As a result, there may not be sufficient
assets remaining to pay amounts due on any or all of the outstanding debt
securities. The debt securities also will be effectively subordinated to the
liabilities, including trade payables, of any of our subsidiaries. Neither we
nor our subsidiaries are prohibited from incurring debt, including senior
10
indebtedness, under the indenture. If we or our subsidiaries were to incur
additional debt or liabilities, our ability to pay our obligations on the debt
securities could suffer. We and our subsidiaries may from time to time incur
additional debt, including senior indebtedness, and other liabilities. For more
information, see the section entitled "Description of Debt Securities We May
Offer."
Holders of common and preferred stock are subordinate to holders of debt
securities.
In the event of a liquidation of the company, holders of common and
preferred stock are not entitled to a liquidation preference ahead of holders of
debt securities. Accordingly, in the event of a liquidation, holders of common
and preferred stock may lose their entire investment.
A public market may not develop for the debt securities or preferred stock.
In the event either debt securities or preferred stock is issued, it is
possible there will be little or no trading market for these securities. The
underwriters may advise us that they intend to make a market in the securities.
However, the underwriters are not obligated to make a market and may discontinue
this market making activity at any time without notice. In addition, market
making activity by the underwriters will be subject to the limits imposed by the
Securities Act of 1933 and the Securities Exchange Act of 1934. As a result, we
cannot assure you that any market for the debt securities or preferred stock
will develop or, if one does develop, that it will be maintained. If an active
market for the debt securities or preferred stock fails to develop or be
sustained, the trading price of the debt securities or preferred stock could be
materially adversely affected.
Holding debt securities in the form of global securities may impair your ability
to have securities registered in your own name or otherwise be recognized as a
holder.
As an indirect holder, an investor's rights relating to a global
security will be governed by the account rules of the investor's financial
institution and of the depositary, as well as general laws relating to
securities transfers. We do not recognize this type of investor as a holder of
securities and instead deal only with the depositary that holds the global
security.
You should be aware that if securities are issued only in the form of
global securities:
- You cannot get securities registered in your own name.
- You cannot receive physical certificates for your interest in the
securities.
- You will be a "street name" holder and must look to your own bank or
broker for forwarding payments on the securities and protection of
your legal rights relating to the securities. See "Street name" and
other indirect holders" on page 13.
- You may not be able to sell interests in the securities to some
insurance companies and other institutions that are required by law to
own their securities in the form of physical certificates.
- The depositary's policies will govern payments, transfers, exchange
and other matters relating to your interest in the global security.
- We and the trustee have no responsibility for any aspect of the
depositary's actions or for its records of ownership interests in the
global security.
- We and the trustee also do not supervise the depositary in any way.
Payment for purchases and sales in the market for corporate bonds and
notes is generally made in next-day funds. In contrast, the depositary will
usually require that interests in a global security be purchased or sold within
its system using same-day funds. This difference could have some effect on how
global security interests trade, but we do not know what that effect will be.
11
A Warning About Forward-Looking Statements
Some of the matters discussed in this prospectus may constitute
forward-looking statements within the meaning of the federal securities laws
that involve risks and uncertainties, including but not limited to economic,
competitive, governmental and technological factors affecting our operations,
markets, products, services and prices, and other factors. For further
information on factors which could impact Buckeye and the statements in this
prospectus, please refer to the public filings which we have referred to under
the section entitled "Where You Can Find More Information."
12
Ratios of Earnings to Fixed Charges
Our unaudited ratios of earnings to fixed charges are presented below.
Earnings consist of net income or (loss) from operations before income taxes,
the cumulative effect of change in accounting principles, plus fixed charges
(excluding capitalized interest) and amortization of capitalized interest. Fixed
charges consist of interest expense, amortization of debt issuance costs,
capitalized interest and that portion of rental expense we believe to be
representative of interest. During the six month period ended December 31, 2001,
our earnings were insufficient to cover our fixed charges.
Year Ended June 30, Six Months Ended
December 31,
1997 1998 1999 2000 2001 2001
---- ---- ---- ---- ---- ------------
Ratios of earnings to fixed charges 3.6x 3.1x 2.7x 3.0x 2.2x
Coverage deficiency $(3,511,000)
Use of Proceeds
Unless otherwise indicated in an accompanying prospectus supplement, the net
proceeds of the offering will be used for general corporate purposes, including
repayment of debt. We may temporarily invest funds that we do not immediately
need for these purposes in short-term marketable securities.
Legal Ownership
"Street Name" and other indirect holders
Investors who hold securities in accounts at banks or brokers will
generally not be recognized by us as legal holders of securities. When we refer
to the "holders" of securities, we mean only the actual legal holders of the
securities. Holding securities in accounts at banks or brokers is called holding
in "street name." If you hold securities in "street name," we will recognize
only the bank or broker, or the financial institution the bank or broker uses to
hold its securities. These intermediary banks, brokers and other financial
institutions pass along principal, interest and other payments on the
securities, either because they agree to do so in their customer agreements or
because they are legally required to. If you hold securities in "street name,"
you should check with your own institution to find out:
- how it handles securities payments and notices,
- whether it imposes fees or charges,
- how it would handle voting if ever required,
- whether and how you can instruct it to send you securities registered
in your own name so you can be a direct holder as described below, and
- how it would pursue rights under the securities if there were a
default or other event triggering the need for holders to act to
protect their interests.
Direct holders
Our obligations, as well as the obligations of the trustee and those of
any third parties employed by us or the trustee, run only to persons who are
registered as holders of securities. As noted above, we do not have obligations
to you if you hold in "street name" or other indirect means, either because you
choose to hold securities in that manner or because the securities are issued in
the form of global securities as described below. For example, once we make
payment to the registered holder, we have no further responsibility for the
payment even if that holder is legally required to pass the payment along to you
as a "street name" customer but does not do so.
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Global securities
A global security is a special type of indirectly held security, as
described above under "'Street name' and other indirect holders." If we choose
to issue securities in the form of global securities, the ultimate beneficial
owners can only be indirect holders. We do this by requiring that the global
security be registered in the name of a financial institution we select and by
requiring that the securities included in the global security not be transferred
to the name of any other direct holder unless the special circumstances
described below occur. The financial institution that acts as the sole direct
holder of the global security is called the "depositary." Any person wishing to
own a security must do so indirectly by virtue of an account with a broker, bank
or other financial institution that in turn has an account with the depositary.
The prospectus supplement indicates whether your series of securities will be
issued only in the form of global securities.
Special investor considerations for global securities. As an indirect
holder, an investor's rights relating to a global security will be governed by
the account rules of the investor's financial institution and of the depositary,
as well as general laws relating to securities transfers. We do not recognize
this type of investor as a holder of securities and instead deal only with the
depositary that holds the global security.
You should be aware that if securities are issued only in the form of
global securities:
- You cannot get securities registered in your own name.
- You cannot receive physical certificates for your interest in the
securities.
- You will be a "street name" holder and must look to your own bank or
broker for payments on the securities and protection of your legal
rights relating to the securities. See "Street name' and other
indirect holders" on page 13.
- You may not be able to sell interests in the securities to some
insurance companies and other institutions that are required by law to
own their securities in the form of physical certificates.
- The depositary's policies will govern payments, transfers, exchange
and other matters relating to your interest in the global security.
- We and the trustee have no responsibility for any aspect of the
depositary's actions or for its records of ownership interests in the
global security.
- We and the trustee also do not supervise the depositary in any way.
Payment for purchases and sales in the market for corporate bonds and
notes is generally made in next-day funds. In contrast, the depositary will
usually require that interests in a global security be purchased or sold within
its system using same-day funds. This difference could have some effect on how
global security interests trade, but we do not know what that effect will be.
Special situations when a global security will be terminated. In a few
special situations described later, the global security will terminate and
interests in it will be exchanged for physical certificates representing
securities. After that exchange, the choice of whether to hold securities
directly or in "street name" will be up to the investor. Investors must consult
their own bank or brokers to find out how to have their interests in securities
transferred to their own name, so that they will be direct holders. The rights
of "street name" investors and direct holders in the securities have been
previously described in the subsections entitled "'Street name' and other
indirect holders" and "Direct holders" on page 13.
The special situations for termination of a global security are:
- When the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary.
- When an Event of Default on the securities has occurred and has not
been cured. Defaults are discussed later under "Default and related
matters" on page 22.
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The prospectus supplement may also list additional situations for
terminating a global security that would apply only to the particular series of
securities covered by the prospectus supplement. When a global security
terminates, the depositary (and not we or the trustee) is responsible for
deciding the names of the institutions that will be the initial direct holders.
In the remainder of this description "you" means direct holders and not
"street name" or other indirect holders of securities. Indirect holders should
read the previous subsection on page 13 entitled "'Street name' and other
indirect holders."
Description of Debt Securities We May Offer
As required by federal law for all bonds and notes of companies that
are publicly offered, the debt securities are governed by a document called the
"indenture." The indenture is a contract between us and _____________, which
acts as trustee. The trustee has two main roles. First, the trustee can enforce
your rights against us if we default. There are some limitations on the extent
to which the trustee acts on your behalf, described later on page 23 under
"Remedies if an event of default occurs."
Second, the trustee performs administrative duties for us, such as
sending you interest payments, transferring your debt securities to a new buyer
if you sell and sending you notices.
The indenture and its associated documents contain the full legal text
of the matters described in this section. The indenture and the debt securities
are governed by New York law. A copy of the indenture has been filed with the
SEC as part of our registration statement. See "Where You Can Find More
Information" on page 2 on how to obtain a copy.
We may issue as many distinct series of debt securities under the
indenture as we wish. This section summarizes all the material terms of the debt
securities that are common to all series unless otherwise indicated in the
prospectus supplement relating to a particular series.
This section is a summary and describes the material provisions of the
indenture. It does not describe every aspect of the debt securities. This
summary is subject to and qualified in its entirety by reference to all the
provisions of the indenture, including definitions of various terms used in the
indenture. Whenever we refer to particular sections or defined terms of the
indenture in this prospectus or in the prospectus supplement, those sections or
defined terms are incorporated by reference here or in the prospectus
supplement.
We may issue the debt securities as original issue discount securities,
which will be offered and sold at a substantial discount below their stated
principal amount. A prospectus supplement relating to original issue discount
securities will describe federal income tax consequences and other special
considerations applicable to them. The debt securities may also be issued as
indexed securities or securities denominated in foreign currencies or currency
units, as described in more detail in a prospectus supplement relating to any of
these types of debt securities. A prospectus supplement relating to indexed debt
securities or foreign currency debt securities will also describe any additional
tax consequences or other special considerations applicable to these types of
debt securities.
As of December 31, 2001, we had outstanding approximately $150 million
of our 8.5% Senior Subordinated Notes due 2005, $100 million of our 9.25% Senior
Subordinated Notes due 2008, and $150 million of our 8.0% Senior Subordinated
Notes due 2010. The debt securities we may issue under this prospectus will be
unsecured and subordinate to or pari passu with these notes.
In addition, the material specific financial, legal and other terms
particular to debt securities of each series will be described in the prospectus
supplement relating to the debt securities of that series. The prospectus
supplement relating to debt securities of the series will describe the following
terms of the debt securities:
- the title of the debt securities of the series;
- any limit on the total principal amount of the debt securities of the
series (including any provision for the future offering of additional
debt securities of the series beyond any such limit);
15
- the date or dates on which the debt securities of the series will
mature;
- any annual rate or rates, which may be fixed or variable, at which the
debt securities of the series will bear interest, if any, and the date
or dates from which any interest will accrue;
- the date or dates on which any interest on the debt securities of the
series will be payable and the regular record date or dates we will
use to determine who is entitled to receive each interest payment;
- the place or places where the principal and any premium and interest
will be payable;
- any period or periods within which and the price or prices at which we
will have the option to redeem the debt securities of the series, and
the other detailed terms and provisions of any optional redemption
right;
- any obligation we will have to redeem the debt securities of the
series under a sinking fund or analogous provision or to redeem your
debt securities at your option and the period or periods during which,
the price or prices at which and the other specific terms under which
we would be obligated to redeem the debt securities of the series
under any obligation of this kind;
- if other than integral multiples of $1,000, the denominations in which
we will issue the debt securities of the series;
- if other than U.S. dollars, the currency of payment of the principal
and any premium and interest on the debt securities of the series;
- any index or other special method we will use to determine the amount
of principal or any premium or interest we will pay on the debt
securities of the series;
- if we or you have a right to choose the currency or currency units in
which payments on any of the debt securities of the series will be
made, the currencies or currency units that we or you may elect, when
the election may be made and the other specific terms of the right to
make an election of this kind;
- if other than the principal amount, the portion of the principal
amount of the debt securities of the series which will be payable upon
the declaration of acceleration of the maturity of the debt securities
of the series;
- the applicability of the provisions described on page 21 under
"Defeasance;"
- if we will issue the debt securities of the series only in the form of
global securities as described above under "Global securities" on page
14, the name of the depository for the debt securities of the series
and the circumstances under which the global securities may be
terminated and separate debt securities may be registered in the names
of persons other than the depositary or its nominee if other than
those circumstances described on page 14 under "Special situations
when a global security will be terminated;" and
- any other special terms of the debt securities of the series that are
not inconsistent with the provisions of the indenture.
The prospectus supplement relating to the debt securities of the series
will be attached to the front of this prospectus.
We may issue debt securities from time to time that are convertible
into our common stock. If you hold convertible debt securities, you will be
permitted from time to time as specified in the applicable prospectus supplement
to convert your debt securities into shares of common stock at a specified
price. We will describe the conversion price (or the method for determining the
conversion price) and the other terms applicable to conversion in the applicable
prospectus supplement.
16
The general provisions of the indentures relating to our outstanding
notes protect the holders of debt securities against transactions involving us,
such as a change of control or a highly leveraged transaction that may adversely
affect the holders of the securities. The provisions of the indentures relating
to the event of a change of control require us to redeem the outstanding debt at
101% of the principal amount.
We may issue debt securities other than the debt securities described
in this prospectus. There is no requirement that any other debt securities that
we issue be issued under the indenture. Thus, any other debt securities that we
issue may be issued under other indentures or documentation. This documentation
may contain provisions different from those included in the indenture or
applicable to one or more issues of the debt securities described in this
prospectus.
Overview of the remainder of this description
The remainder of this description summarizes:
- Additional mechanics relevant to the debt securities under normal
circumstances, such as how you transfer ownership and where we make
payments;
- your rights under several special situations, such as if we merge
with another company or, if we want to change a term of the debt
securities;
- promises we make to you about how we will run our business, or
business actions we promise not to take (known as "restrictive
covenants"); and
- your rights if we default or experience other financial difficulties.
Additional Mechanics
Form, exchange and transfer. The debt securities will be issued:
- only in fully registered form;
- without interest coupons; and
- in denominations that are even multiples of $1,000 unless otherwise
specified in a prospectus supplement.
You may have your debt securities broken into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. This is
called an "exchange."
You may exchange or transfer debt securities at the office of the
trustee. The trustee acts as our agent for registering debt securities in the
names of holders and transferring debt securities. We may change this
appointment to another entity or perform it ourselves. The entity performing the
role of maintaining the list of registered holders is called the "security
registrar." The security registrar will also perform transfers.
You will not be required to pay a service charge to transfer or
exchange debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will only be made if the security registrar is satisfied with your
proof of ownership.
If we have designated additional transfer agents, they are named in the
prospectus supplement. We may cancel the designation of any particular transfer
agent. We may also approve a change in the office through which any transfer
agent acts.
If the debt securities are redeemable and we redeem less than all of
the debt securities of a particular series, we may block the transfer or
exchange of debt securities during the period beginning 15 days before the day
we mail the notice of redemption and ending on the day of that mailing, in order
17
to freeze the list of holders to prepare the mailing. We may also refuse to
register transfers or exchanges of debt securities selected for redemption,
except that we will continue to permit transfers and exchanges of the unredeemed
portion of any security being partially redeemed.
Payment and paying agents. We will pay interest to you if you are a
direct holder listed in the trustee's records at the close of business on a
particular day in advance of each due date for interest, even if you no longer
own the security on the interest due date. That particular day, usually about
two weeks in advance of the interest due date, is called the "regular record
date" and is stated in the prospectus supplement. Holders buying and selling
debt securities must work out between them how to compensate for the fact that
we will pay all the interest for an interest period to the one who is the
registered holder on the regular record date. The most common manner is to
adjust the sale price of the debt securities to allocate interest fairly between
buyer and seller. This allocated interest amount is called "accrued interest."
We will pay interest, principal and any other money due on the debt
securities at the corporate trust office of the trustee in New York City. That
office is currently located at ________, New York, New York. You must make
arrangements to have your payments picked up at or wired from that office. We
may also choose to pay interest by mailing checks.
"Street name" and other indirect holders should consult their banks or
brokers for information on how they will receive payments.
We may also arrange for additional payment offices, and may cancel or
change these offices, including our use of the trustee's corporate trust office.
These offices are called "paying agents." We may also choose to act as our own
paying agent. We must notify you of changes in the paying agents for any
particular series of debt securities.
Notices. We and the trustee will send notices regarding the debt
securities only to direct holders, using their addresses as listed in the
trustee's records.
Regardless of who acts as paying agent, all money paid by us to a
paying agent that remains unclaimed at the end of two years after the amount is
due to direct holders will be repaid to us. After that two-year period, you may
look only to us for payment and not to the trustee, any other paying agent or
anyone else.
Special Situations
Mergers and similar events. Except as we may be limited by our senior
credit facility and our senior subordinated notes, we are generally permitted to
consolidate or merge with another company or firm, to sell substantially all of
our assets to another firm, or to buy substantially all of the assets of another
firm. However, we may not take any of these actions unless all the following
conditions are met:
- Where we merge out of existence or sell our assets, the other company
or firm must agree to be legally responsible for the debt securities.
- The merger, sale of assets or other transaction must not cause a
default on the debt securities, and we must not already be in default
(unless the merger or other transaction would cure the default). For
purposes of this no-default test, a default would include an event of
default that has occurred and not been cured, as described later on
page 22 under "Events of default" A default for this purpose would
also include any event that would be an event of default if the
requirements for giving us default notice or our default having to
exist for a specific period of time were disregarded.
- It is possible that the merger, sale of assets or other transaction
would cause some of our property to become subject to a mortgage or
other legal mechanism giving lenders preferential rights in that
property over other lenders or over our general creditors if we fail
to pay them back. We have promised to limit these preferential rights
on our property, called "liens," as discussed later on page 20 under
"Restrictive covenants -- Restrictions on liens." If a merger or other
transaction would create any liens on our property, we must comply
with that restrictive covenant. We would do this either by deciding
that the liens were permitted, or by following the requirements of the
restrictive covenant to grant an equivalent or higher-ranking lien on
the same property to you and the other direct holders of the debt
securities.
18
- We must deliver certain certificates and other documents to the
trustee.
- We must satisfy any other requirements specified in the prospectus
supplement.
Modification and waiver. There are three types of changes we can make
to the indenture and the debt securities.
1. Changes Requiring Your Approval. First, there are changes that
cannot be made to your debt securities without your specific approval. Following
is a list of those types of changes:
- change the stated maturity of the principal or interest on a debt
security;
- reduce any amounts due on a debt security;
- reduce the amount of principal payable upon acceleration of the
maturity of a debt security following a default,
- change the place or currency of payment on a debt security;
- impair your right to sue for payment;
- reduce the percentage of holders of debt securities whose consent is
needed to modify or amend the indenture,
- reduce the percentage of holders of debt securities whose consent is
needed to waive compliance with certain provisions of the indenture or
to waive certain defaults, and
- modify any other aspect of the provisions dealing with modification
and waiver of the indenture.
2. Changes Requiring a Majority Vote. The second type of change to the
indenture and the debt securities is the kind that requires a vote in favor by
holders of debt securities owning a majority of the principal amount of the
particular series affected. Most changes fall into this category, except for
clarifying changes and certain other changes that would not adversely affect
holders of the debt securities. The same vote would be required for us to obtain
a waiver of all or part of the restrictive covenants described under
"Restrictive covenants" on page 20, or a waiver of a past default. However, we
cannot obtain a waiver of a payment default or any other aspect of the indenture
or the debt securities listed in the first category described previously on page
19 under "Changes Requiring Your Approval" unless we obtain your individual
consent to the waiver.
3. Changes Not Requiring Approval. The third type of change does not
require any vote by holders of debt securities. This type is limited to
clarifications and certain other changes that would not adversely affect
holders of the debt securities in any material way.
Further details concerning voting. When taking a vote, we will use the
following rules to decide how much principal amount to attribute to a security:
- For original issue discount securities, we will use the principal
amount that would be due and payable on the voting date if the
maturity of the debt securities were accelerated to that date because
of a default.
- For debt securities whose principal amount is not known (for example,
because it is based on an index), we will use a special rule for that
security described in the prospectus supplement.
- For debt securities denominated in one or more foreign currencies or
currency units, we will use the U.S. dollar equivalent.
19
Debt securities will not be considered outstanding, and therefore not
eligible to vote, if we have deposited or set aside in trust for you money for
their payment or redemption. Debt securities will also not be eligible to vote
if they have been fully defeased as described later on page 21 under "Full
defeasance."
We will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding debt securities that are
entitled to vote or take other action under the indenture. In certain limited
circumstances, the trustee will be entitled to set a record date for action by
holders. If we or the trustee set a record date for a vote or other action to be
taken by holders of a particular series, that vote or action may be taken only
by persons who are holders of outstanding debt securities of that series on the
record date and must be taken within 180 days following the record date or a
shorter period that we may specify (or as the trustee may specify, if it set the
record date). We may shorten or lengthen (but not beyond 180 days) this period
from time to time.
"Street name" and other indirect holders should consult their banks or
brokers for information on how approval may be granted or denied if we seek to
change the indenture or the debt securities or request a waiver.
Restrictive covenants
Restrictions on liens.. Some of our property may be subject to a
mortgage or other legal mechanism that gives our lenders preferential rights in
that property over other lenders (including you and the other direct holders of
the debt securities) or over our general creditors if we fail to pay them back.
These preferential rights are called "liens."
We do not need to comply with this restriction if the amount of all
debt that would be secured by liens on principal manufacturing properties
(including the new debt, the debt securities which we would so secure as
described in the previous sentence, and all "attributable debt," as described
under "Restriction on sales and leasebacks" below, that results from a sale and
leaseback transaction involving principal manufacturing properties) is less than
10% of our consolidated net tangible assets.
This restriction on liens does not apply to debt secured by certain
types of liens, and we can disregard this debt when we calculate the limits
imposed by this restriction. These types of liens include:
- liens on the property of any of our principal subsidiaries, or on
their shares of stock or debt, if those liens existed at the time the
corporation became our principal subsidiary;
- liens in favor of us or our principal subsidiaries;
- liens in favor of U.S. Governmental bodies that we granted in order to
assure our payments to such bodies that we owe by law or because of a
contract we entered into;
- liens on property that existed at the time we acquired the property
(including property we may acquire through a merger or similar
transaction) or that we granted in order to purchase the property
(sometimes called "purchase money mortgages"); and
- liens on the buildings or property of our facilities.
We can also disregard debt secured by liens that extend, renew or
replace any of these types of liens.
We and our subsidiaries are permitted to have as much unsecured debt as
we may choose.
Restrictions on sales and leasebacks.. We promise that neither we nor
any of our principal subsidiaries will enter into any sale and leaseback
transaction involving a principal manufacturing property, unless we comply with
this restrictive covenant. A "sale and leaseback transaction" generally is an
arrangement between us or a principal subsidiary and a bank, insurance company
or other lender or investor where we or the principal subsidiary lease a
property which was or will be sold by us or the principal subsidiary to that
lender or investor more than 120 days after the completion of construction of
the property and the beginning of its full operation.
20
We can comply with this restrictive covenant in either of two different
ways. First, we will be in compliance if we or our principal subsidiary could
grant a lien on the principal manufacturing property in an amount equal to the
attributable debt for the sale and leaseback transaction without being required
to grant an equivalent or higher-ranking lien to you and the other direct
holders of the debt securities under the restrictions on liens covenant
described above on page 20. Second, we can comply if we retire an amount of
funded debt, within 120 days of the transaction, equal to at least the net
proceeds of the sale of the principal manufacturing property that we lease in
the transaction or the fair value of that property (subject to credits for
certain voluntary retirements of debt securities and funded debt we may make),
whichever is greater.
This restriction on sale and leasebacks does not apply to any sale and
leaseback transaction that is between us and one of our principal subsidiaries
or between principal subsidiaries, or that involves a lease for a period of
three years or less.
Certain definitions relating to our restrictive covenants. . Following
are the meanings of the terms that are important in understanding the
restrictive covenants previously described.
- "attributable debt" means, in connection with any sale or leaseback
transaction, the lesser of (i) the fair value of the property subject
to the sale and leaseback transaction (as determined by our board of
directors) and (ii) the total net amount of rent (discounted at a rate
per annum equal to a composite rate of interest on all outstanding
debt securities) that is required to be paid during the remaining term
of the lease on this property.
- "consolidated net tangible assets" is the total amount of assets (less
reserves and certain other permitted deductible items), after
subtracting all current liabilities and all goodwill, trade names,
trademarks, patents, unamortized debt discounts and expenses and
similar intangible assets, as such amounts appear on our most recent
consolidated balance sheet and computed in accordance with generally
accepted accounting principles.
- "funded debt" means all debt for borrowed money that either has a
maturity of 12 months or more from the date on which the calculation
of funded debt is made or has a maturity of less than 12 months from
that date but is by its terms renewable or extendible beyond 12 months
from that date at the option of the borrower.
- A "principal manufacturing property" is any building or other
structure or facility, and the land on which it sits and its
associated fixtures, that we or our principal subsidiaries use
primarily for manufacturing or processing, other than a building,
structure or other facility that our board of directors has determined
is not of material importance to the total business that we and our
principal subsidiaries conduct.
- A "principal subsidiary" means any of Buckeye Florida Corporation;
Buckeye Florida, Limited Partnership; BKI Holding Corporation; Buckeye
Lumberton Inc.; Buckeye Technologies Ireland Ltd.; Merfin Systems Inc;
Buckeye Holdings GmbH; BKI South America LLC; BKI Lending Inc.; and
Buckeye Technologies Canada Inc.
Defeasance
The following discussion of full defeasance and covenant defeasance
will be applicable to your series of debt securities only if we choose to have
them apply to that series. If we do so choose, we will state that in the
prospectus supplement.
Full defeasance. If there is a change in federal tax law, as described
below, we can legally release ourselves from any payment or other obligations on
the debt securities (called "full defeasance") if we put in place the following
other arrangements for you to be repaid:
- We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
debt securities on their various due dates.
21
- There must be a change in current federal tax law or an IRS ruling
that lets us make the above deposit without causing you to be taxed
on the debt securities any differently than if we did not make the
deposit and just repaid the debt securities ourselves. (Under current
federal tax law, the deposit and our legal release from the debt
securities would be treated as though we took back your debt
securities and gave you your share of the cash and notes or bonds
deposited in trust. In that event, you could recognize gain or loss
on the debt securities you give back to us.)
- We must deliver to the trustee a legal opinion of our counsel
confirming the tax law change described above.
If we ever did accomplish full defeasance, as described above, you
would have to rely solely on the trust deposit for repayment on the debt
securities. You could not look to us for repayment in the unlikely event of any
shortfall. Conversely, the trust deposit would most likely be protected from
claims of our lenders and other creditors if we ever become bankrupt or
insolvent.
Covenant defeasance. Under current federal tax law, we can make the
same type of deposit described above and be released from some of the
restrictive covenants in the debt securities. This is called "covenant
defeasance." In that event, you would lose the protection of those restrictive
covenants but would gain the protection of having money and securities set aside
in trust to repay the debt securities. In order to achieve covenant defeasance,
we must do the following:
- We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
debt securities on their various due dates.
- We must deliver to the trustee a legal opinion of our counsel
confirming that under current federal income tax law we may make the
above deposit without causing you to be taxed on the debt securities
any differently than if we did not make the deposit and just repaid
the debt securities ourselves.
If we accomplish covenant defeasance, the following provisions of the
indenture and the debt securities would no longer apply:
- Our promises regarding conduct of our business previously described
under "Restrictive covenants" on page 20, and any other covenants
applicable to the series of debt securities and described in the
prospectus supplement.
- The condition regarding the treatment of liens when we merge or engage
in similar transactions, as previously described on page 18 under
"Mergers and similar events."
- The events of default relating to breach of covenants and acceleration
of the maturity of other debt, described later under "Default and
related matters."
If we accomplish covenant defeasance, you can still look to us for
repayment of the debt securities if there were a shortfall in the trust deposit.
In fact, if one of the remaining events of default occurred (such as our
bankruptcy) and the debt securities become immediately due and payable, there
may be such a shortfall. Depending on the event causing the default, you may not
be able to obtain payment of the shortfall.
Default and related matters
Events of default. You will have special rights if an event of default
occurs and is not cured, as described later in this subsection.
The term "event of default" means any of the following:
- We do not pay the principal or any premium on a debt security on its
due date.
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- We do not pay interest on a debt security within 30 days of its due
date.
- We do not deposit any sinking fund payment on its due date.
- We remain in breach of a restrictive covenant described beginning on
page 20 or any other term of the indenture for 60 days after we
receive a notice of default stating we are in breach. The notice must
be sent by either the trustee or holders of 10% of the principal
amount of debt securities of the affected series.
- We file for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur.
- Any other event of default described in the prospectus supplement
occurs.
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under the indenture.
Remedies if an event of default occurs. If an event of default has
occurred and has not been cured, the trustee or the holders of 25% in principal
amount of the debt securities of the affected series may declare the entire
principal amount of all the debt securities of that series to be due and
immediately payable. This is called a declaration of acceleration of maturity.
If an event of default occurs because of certain events in bankruptcy,
insolvency or reorganization, the principal amount of all the debt securities of
that series will be automatically accelerated, without any action by the trustee
or any holder. A declaration of acceleration of maturity may be canceled by the
holders of at least a majority in principal amount of the debt securities of the
affected series.
Except in cases of default, where the trustee has some special duties,
the trustee is not required to take any action under the indenture at the
request of any holders unless the holders offer the trustee satisfactory
protection from expenses and liability. This protection is called an
"indemnity."
If satisfactory indemnity is provided, the holders of a majority in
principal amount of the outstanding debt securities of the relevant series may
direct the time, method and place of conducting any lawsuit or other formal
legal action seeking any remedy available to the trustee. These majority holders
may also direct the trustee in performing any other action under the indenture.
Before you bypass the trustee and bring your own lawsuit or other
formal legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
- You must give the trustee written notice that an event of default has
occurred and remains uncured.
- The holders of 25% in principal amount of all outstanding debt
securities of the relevant series must make a written request that the
trustee take action because of the default, and must offer reasonable
indemnity to the trustee against the cost and other liabilities of
taking that action.
- The trustee must have not taken action for 60 days after receipt of
the above notice and offer of indemnity.
- The holders of a majority in principal amount of all outstanding debt
securities of the relevant series must not have given the trustee a
direction that is inconsistent with the above notice.
However, you are entitled at any time to bring a lawsuit for the
payment of money due on your debt security on or after its due date.
"Street name" and other indirect holders should consult their banks or
brokers for information on how to give notice or direction to or make a request
of the trustee and to make or cancel a declaration of acceleration.
We will furnish to the trustee every year a written statement of
certain of our officers certifying that to their knowledge we are in compliance
with the indenture and the debt securities, or else specifying any default.
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Regarding the Trustee
The Bank of New York currently acts as trustee under the indentures for
our outstanding senior subordinated notes.
Description of Preferred Stock We May Offer
Each series of preferred stock will have specific financial and other
terms which will be described in a prospectus supplement. The description of the
preferred stock that is set forth in any prospectus supplement is not complete
without reference to our charter.
Our charter authorizes the board of directors to issue up to 10,000,000
shares of preferred stock, $.01 par value per share, in one or more series. As
of December 31, 2001, we had neither designated nor issued shares of preferred
stock. The number of authorized shares of preferred stock may be increased or
decreased by the affirmative vote of the holders of a majority of the
outstanding stock of Buckeye without the separate vote of holders of preferred
stock as a class.
Our board of directors is authorized to designate, for each series of
preferred stock, the following items, among others:
- the maximum number of shares in the series;
- the designation of the series;
- the dividend rate, or basis for determining such rate, if any, on the
shares of the series;
- whether dividends will be cumulative and, if so, from which date or
dates;
- whether the shares of the series will be redeemable and, if so, the
dates, prices and other terms and conditions of redemption;
- whether we will be obligated to purchase or redeem shares of the
series pursuant to a sinking fund or otherwise, and the prices,
periods and other terms and conditions upon which the shares of the
series will be redeemed or purchased;
- whether the shares of the series will be convertible into, or
exchangeable for, shares of stock of any other class or classes and,
if so, the rate or rates of conversion or exchange, the terms of
adjustment, if any, and whether the shares of the series will be
convertible or exchangeable at our option or the option of holders of
preferred shares, or both;
- whether the shares of the series will have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of those
voting rights;
- the rights of the shares of the series in the event of the voluntary
or involuntary liquidation, dissolution or winding up of Buckeye; and
- any other relative rights, powers, preferences, qualifications,
limitations or restrictions relating to the shares of the series.
The shares of preferred stock of any one series will be identical with
each other except for the dates from which dividends will cumulate, if at all.
The shares of preferred stock will be fully paid and nonassessable.
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Description of Common Stock We May Offer
This section describes the general terms and provisions of the shares
of our common stock. The prospectus supplement will describe the specific terms
of the common stock offered through that prospectus supplement and any general
terms outlined in this section that will not apply to that common stock.
We have summarized certain terms and provisions of the common stock in
this section. The summary is not complete. We have also filed our Restated
Certificate and our bylaws as exhibits to the registration statement. You should
read our Restated Certificate and our bylaws for additional information before
you buy any of the securities offered by this prospectus.
General
Shares Outstanding. As of February 8, 2002, our authorized common
stock was 100,000,000 shares, of which 34,763,900 shares were issued and
outstanding.
Dividends. Holders of common stock may receive dividends when declared
by our board of directors out of our funds that we can legally use to pay
dividends. We may pay dividends in cash, stock or other property. In certain
cases, holders of common stock may not receive dividends until we have satisfied
our obligations to any holders of outstanding preferred stock. We have never
paid cash dividends on our common stock. We anticipate that for the foreseeable
future, we will retain our earnings, if any.
Voting Rights. Holders of common stock have the exclusive power to vote
on all matters presented to our shareholders unless Delaware law or the
certificate of designation for an outstanding series of preferred stock gives
the holders of that preferred stock the right to vote on certain matters. Each
holder of common stock is entitled to one vote per share. Holders of common
stock have no cumulative voting rights for the election of directors (i.e., a
holder of a single share of common stock cannot cast more than one vote for each
position to be filled on our board of directors).
Other Rights. If we voluntarily or involuntarily liquidate, dissolve or
wind up our business, holders of common stock will receive pro rata, according
to shares held by them, any remaining assets distributable to our shareholders
after we have provided for any liquidation preference for outstanding shares of
preferred stock. When we issue securities in the future, holders of common stock
have no preemptive rights (i.e., the holders of common stock have no right, as
holders of common stock, to buy any portion of those issued securities). Each
share of common stock does include a right to purchase Series A Preferred Stock
if certain conditions occur. The conditions under which a holder may exercise
that purchase right are discussed under the heading "-Rights Agreement" below.
Listing. Our understanding shares of common stock are listed on the New
York Stock Exchange under the symbol "BKI." Wachovia Bank serves as the transfer
agent and registrar for the common stock.
Fully Paid. The outstanding shares of common stock are fully paid and
nonassessable (i.e., the full purchase price for the outstanding shares of
common stock has been paid and the holders of such shares will not be assessed
any additional monies for such shares). Any additional common stock that we may
issue in the future pursuant to an offering under this prospectus or upon the
conversion or exercise of other securities offered under this prospectus will
also be fully paid and nonassessable.
Anti-takeover Provisions
Certain provisions of our Restated Certificate, our Amended and
Restated Bylaws and the Delaware General Corporation Law may have the effect of
encouraging persons considering unsolicited tender offers or unilateral takeover
proposals to negotiate with our board of directors. These provisions may also
make it less likely that our management would be changed or someone would
acquire voting control of our company without our board's consent. These
provisions may delay, deter or prevent tender offers or takeover attempts that
shareholders may believe are in their best interests, including tender offers or
attempts that might allow shareholders to receive premiums over the market price
of their common stock.
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Supermajority Vote for Certain Events. Our Restated Certificate
provides that the affirmative vote of the holders of at least 75% of the
outstanding shares of common stock, voting as a single class, is required to
approve any merger or consolidation of our company with any other entity (other
than a subsidiary of our company) or the sale, lease exchange or disposition of
all or substantially all of our assets, taken as a whole. This provision may
only be amended or repealed by the affirmative vote of the holders of 75% of the
outstanding shares of common stock.
Classified Board. Our Restated Certificate provides that members of our
board of directors are divided into three classes and serve staggered three-year
terms. This means that only approximately one-third of our directors are elected
at each annual meeting of shareholders and that it would take two years to
replace a majority of the directors unless they are removed for cause. A
majority of the directors then in office, though less than a quorum, or the sole
remaining director, may fill any vacancy on the Board. These provisions of our
Restated Certificate may only be altered, amended or repealed by the affirmative
vote of the holders of 80% of the outstanding shares of common stock.
Blank Check Preferred Stock. Our Restated Certificate provides that our
board of directors may at any time, without stockholder approval, issue one or
more new series of Preferred Stock. In some cases, the issuance of Preferred
Stock without stockholder approval could discourage or make more difficult
attempts to take control of our company through a merger, tender offer, proxy
contest or otherwise or remove incumbent management. Preferred stock with
special voting rights or other features issues to persons favoring our
management could stop a takeover by preventing the person trying to take control
of our company from acquiring enough voting shares necessary to take control.
Delaware Takeover Statute. We are subject to the "business combination"
provisions of the Delaware General Corporation Law. In general, these provisions
prohibit us from engaging in various "business combination" transactions with
any "interested stockholder" for a period of three years after the date of the
transaction by which the person became an "interested stockholder," unless (i)
the transaction is approved by our board of directors prior to the date such
person becomes an "interested stockholder," (ii) upon consummation of the
transaction which resulted in the stockholder becoming an "interested
stockholder," the "interested stockholder," owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding those
shares owned by (a) persons who are directors and also officers and (b) employee
stock plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (iii) on or subsequent to such date the "business
combination" is approved by our board of directors and authorized at an annual
or special meeting of our stockholders by affirmative vote of at least 66 2/3%
of the outstanding voting stock which is not owned by the "interested
stockholder." A "business combination" is defined to include mergers, asset
sales and other transactions resulting in financial benefit to a stockholder. In
general, an "interested stockholder" is a person who, together with affiliates
and associates, owns (or within three years, did own) 15% or more of our voting
stock.
Our board of directors has approved any acquisition of shares by Robert
E. Cannon, our Chief Executive Officer and Chairman of the Board, that would
otherwise result in Mr. Cannon, his spouse or issue, any trust of which Mr.
Cannon and/or his spouse is the grantor or of which Mr. Cannon, his spouse, his
issue or any charity is a beneficiary, including the Cannon Family Trust,
becoming an "interested stockholder."
No Action by Written Consent. Our Restated Certificate provides that
stockholder action may only be taken at a duly called annual or special meeting
of stockholders and not by written consent.
Limitations on Who May Call a Special Meeting of Stockholders. Our
Restated Certificate provides that a special meeting of our stockholders may
only be called by a majority or our entire board of directors, our chairman or
our president. Our stockholders are not permitted to call a special meeting or
to require our board to call a special meeting.
Supermajority Vote to Amend Charter and Bylaws. Certain provisions of
our Restated Certificate and our Amended and Restated Bylaws may only be
altered, amended or repealed by the affirmative vote of the holders of 80% of
the outstanding shares of common stock.
Procedures for Nomination of Directors and Stockholder Proposals. In
addition to our board of directors, stockholders may nominate candidates for our
board of directors. Our stockholders may also propose that business other than
26
nominations to our board of directors to be considered at an annual meeting of
stockholders. However, a stockholder must follow the advance notice procedures
described in our bylaws. In general, a stockholder must submit a written notice
of the nomination or proposal to our corporate secretary at least 60 days before
a scheduled meeting of our stockholders. At least 80% of our outstanding voting
stock, voting together as one class, must approve any proposal to amend or
repeal, or adopt any provisions inconsistent with, this provision of our
Restated Certificate. Although our bylaws do not give our board of directors the
power to approve or disapprove stockholder nominations of candidates or
proposals regarding other business to be conducted at a special annual meeting,
our bylaws may have the effect of precluding the conduct of certain business at
a meeting if the proper procedures are not followed or may discourage or defer a
potential acquiror from conducting a solicitation of proxies to elect its own
slate of directors or otherwise attempting to obtain control of our company.
Amendment of Bylaws. Under our bylaws, our board of directors may
alter, amend, change, add to or repeal the bylaws, subject to limitations under
the Delaware General Corporation Law. Our stockholders also have the power to
change or repeal our bylaws.
Rights Agreement
Summary. In general, each share of common stock, including those that
may be issued in an offering under this prospectus or upon the conversion of
other securities offered under this prospectus, carries with it one preferred
share purchase right (which we refer to in this prospects as a "Right"). If the
Rights become exercisable, each Right entitles the registered holder to purchase
one one-thousandth of a share of the Series A Preferred Stock, at a price of $60
per one one-thousandth share of the Series A Preferred Stock. We call this the
"Purchase Price." Until a Right is exercised, the holder of the Right has no
right to vote or receive dividends or any other rights as a shareholder as a
result of holding the Right. The Rights will expire on November 28, 2005, unless
we redeem or exchange them before then. The description and terms of the Rights
are described in the Rights Agreement, dated as of November 17, 1995, as amended
on April 22, 1997, between us and Wachovia Bank, as Rights Agent.
A holder of common stock may exercise the Rights only under the
circumstances described below. The Rights are designed to protect the interests
of our company and stockholders against coercive takeover tactics. The Rights
are also designed to encourage potential acquirors to negotiate with our board
of directors before attempting a takeover and to increase the ability of our
board to negotiate the terms of any proposed takeover proposals that may be in
the interests of our stockholders.
Exercise of Rights Following a Distribution Date. Holders may exercise
their Rights only following a "Distribution Date." A Distribution Date will
occur upon the earlier of:
(i) the day following the first date of public disclosure that a
person or group other than an Exempt Person (as defined below in this
paragraph) (an "Acquiring Person"), together with their affiliates and
associates (other than Exempt Persons), has acquired or obtains the
right to acquire beneficial ownership of 15% or more of the
outstanding shares of common stock (the "Stock Acquisition Date"); and
(ii) the tenth business day after the date a person or group (other
than an Exempt Person, our company and certain related entities)
commences or publicly discloses an intention to commence a tender
offer or exchange offer, which, if successful, would result in the
beneficial ownership of 15% or more of the outstanding shares of
common stock by such person or group, together with their affiliates
and associates (other than Exempt Persons). Our board, with the
concurrence of a majority of the Continuing Directors then in office,
may defer the Distribution Date set forth in this clause (ii) to a
specified later date or to an unspecified later date to be determined
by a subsequent action or event.
However, a Distribution Date will not occur, and the Rights may not be
exercised, as long as our board has the ability to redeem the Rights, as
described below. An "Exempt Person" is defined under the Rights Agreement to
include, among other things, Robert E. Cannon, his spouse or issue, any trust
of which Mr. Cannon and/or his spouse is the grantor or of which Mr. Cannon,
his spouse, his issue or any charity is a beneficiary, including, without
limitation, the Cannon Family Trust (the "Cannon Entities"), so long as the
Cannon Entities do not collectively become the beneficial owners of 45% or
more of the common stock.
Until the Distribution Date (Or earlier redemption, exchange or
expiration of the Rights),
27
- the Rights will be transferable only with the common stock (except
with the redemption of the Rights),
- common stock certificates will contain a notation incorporating the
Rights Agreement by reference, and
- surrender for transfer of any certificates for common stock will also
constitute a transfer of the Rights associated with the common stock
represented by such certificate.
As soon as practicable after the Distribution Date, separate certificates
evidencing the Rights will be mailed to holders of record of the common
stock as of the close of business on the Distribution Date. From and after
the Distribution Date, these separate Rights certificates alone will
evidence the Rights.
If a person becomes an Acquiring Person, the Rights will "flip-in" and
entitle each holder of a Right, except as provided below, to purchase, upon
exercise at the then-current Purchase Price, that number of shares of common
stock having a market value of two times such Purchase Price. In addition,
following a "flip-in," our board has the option of exchanging all or part of
the Rights, except as provided below, for common stock. In the event that,
following a "flip-in," we are acquired in a merger or other business
combination in which the common stock does not remain outstanding or is
exchanged or 50% or more of our consolidated assets or earning power is sold,
leased, exchanged, mortgaged, pledged or otherwise transferred or disposed of
(in one transaction or a series of related transactions), the Rights will
"flip-over" and entitle each holder (other than the Acquiring Person and
certain related persons or transferees) of a Right to purchase, upon the
exercise of the right at the then-current Purchase Price, that number of
shares of common stock of the acquiring company (or, in certain
circumstances, one of its affiliates) which at the time of such transaction
would have a market value of two times the then-current Purchase Price.
Rights Owned by an Acquiring Person. Any Rights beneficially owned at
any time on or after the earlier of the Distribution Date and the Stock
Acquisition Date by an Acquiring Person or an affiliate or associate (other
than an Exempt Person) of an Acquiring Person (whether or not such ownership
is subsequently transferred) will become null and void upon the occurrence of
a "Triggering Event," and any such holder of such Rights will have no right
to exercise such Rights or have such Rights exchanged as provided above. A
"Triggering Event" will be deemed to occur in the event that any person
becomes an Acquiring Person.
Exchange of Rights. A majority of the Continuing Directors may at their
option, at any time and from time to time after the occurrence of a
Triggering Event, cause us to exchange, for all or part of the
then-outstanding and exercisable Rights, shares of Common stock at an
exchange ratio of one share of Common stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction.
Redemption of Rights. At any time prior to the earlier of the Stock
Acquisition Date and the expiration date of the Rights, we may redeem all,
but not less than all, of the Rights, at an redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction.
Adjustment. The number of outstanding Rights, the number of shares of
Series A Preferred Stock or other securities, cash or other property issuable
upon exercise of the Rights, and the Purchase Price are subject to adjustment
- in the event of a stock dividend on the common stock payable in
common stock or subdivision or combination of the common stock
occurring, in any such case, prior to the Distribution Date,
- upon the grant to holders of the Series A Preferred Stock or
securities convertible into Series A Preferred Stock at less than
the current market price for the Series A Preferred Stock, or
- upon the distribution to holders of the Series A Preferred Stock of
other securities, cash (excluding regular periodic cash dividends),
property, evidences of indebtedness or assets.
Amendment of Rights Agreement. A majority of the Continuing Directors
may supplement or amend the terms of the Rights, without the consent of the
holders of the Rights, at any time before the Stock Acquisition Date
28
(including the date on which the Distribution Date will occur after
announcement of commencement of a tender offer). On or after the Stock
Acquisition Date, the Rights may be amended by a majority of the Continuing
Directors without the consent of the holders of the Rights, only if the
amendment cures ambiguities, corrects defective or inconsistent provisions,
or does not adversely affect the interests of holders of the Rights. The
affirmative vote of holders of a majority of the shares of common stock
voting for or against a proposed amendment at a shareholders meeting is
required to amend the terms of the Rights to change the Purchase Price, the
Redemption Price, the number of shares of Series A Preferred Stock, other
securities, cash or other property obtainable upon exercise of the Rights, or
the expiration date of the Rights.
Terms of the Series A Preferred Stock. Shares of Series A Preferred
Stock will rank junior to all other series of our Preferred Stock, including
the Preferred Shares offered under this prospectus, if our Board in creating
such Preferred Stock, provides that they will rank senior to the Series A
Preferred Stock. If our shareholders purchase Series A Preferred Stock, we
cannot repurchase such stock from shareholders who do not want to resell it.
Subject to the rights of our senior securities, a holder of the Series A
Preferred Stock will be entitled to receive, when, as and if declared by our
board of directors, a quarterly cash dividend payment equal to the greater of
(i) $25.50 per share or (ii) 1,000 times the aggregate per share amount of
all cash dividends and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends other than a dividend payable in share of
common stock, declared on the common stock since the immediately preceding
quarterly dividend payment date, before any amounts are distributing to
holders of common stock. If the dividend is not paid on the Series A
Preferred Stock in one or more quarters, no dividend may be paid on common
stock until all previously unpaid dividends on Series A Preferred Stock have
been paid.
Subject to the rights of our senior securities, a holder of the Series
A Preferred Stock will be entitled to receive, for each such share owned:
- 1,000 votes per share and will vote together with the common stock as
one class, unless applicable law requires otherwise;
- a liquidation payment equal to the greater of (i) $100 per share plus
all accrued and unpaid dividends and (ii) an aggregate amount per
share, equal to 1,000 times the aggregate amount to be distributed per
share to holders of common stock, if we liquidate, dissolve or wind-up
our company, before any amounts are distributed to holders of common
stock; and
- 1,000 times the aggregate amount received per share of common stock in
the event of any consolidation, merger, combination or other similar
transaction
These rights of the Series A Preferred Stock are protected by customary
antidilution provisions which automatically increase dividend, liquidation,
merger and voting rights in proportion to increases in common stock resulting
from stock dividends, stock splits and similar transactions. These rights are
proportionately decreased in the event of the decreases in common stock
resulting from reverse stock splits and similar transactions.
We may not materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock which would adversely affect such
shares without the vote of the holders of two-thirds of the outstanding shares
of Series A Preferred Stock.
We have summarized certain terms and provisions of the Rights and the
Series A Preferred Stock in this section. This summary is not complete. You
should read our Rights Agreement and the Certificate of Designation, Preferences
and Rights of Junior Participating Preferred Stock, Series A, which we have
filed with the Securities and Exchange Commission, for additional information,
including definitions of certain terms.
29
Description of Warrants We May Offer
We may issue, either separately or together with other securities,
warrants for the purchase of any of the other types of securities that we may
sell under this prospectus.
The warrants will be issued under warrant agreements to be entered into
between us and a bank or trust company, as warrant agent, all to be set forth in
the appropriate prospectus supplement relating to any or all warrants in respect
of which this prospectus is being delivered. Copies of the form of agreement for
each warrant, which we refer to collectively as "warrant agreements," including
the forms of certificates representing the warrants, which we refer to
collectively as "warrant certificates" and reflecting the provisions to be
included in such agreements that will be entered into with respect to the
particular offerings of each type of warrant, have been or will be filed as
exhibits to the registration statement of which this prospectus forms a part or
as exhibits to documents which have been or will be incorporated by reference in
this prospectus.
The following description sets forth some of the general terms and
provisions of the warrants to which any prospectus supplement may relate. The
particular terms of the warrants to which any prospectus supplement may relate
and the extent, if any, to which the general provisions may apply to the
warrants so offered will be described in the applicable prospectus supplement.
The following summary of some of the provisions of the warrants, warrant
agreements and warrant certificates does not purport to be complete and is
subject to, and is qualified in its entirety by express reference to, all the
provisions of the warrant agreements and warrant certificates, including the
definitions they contain of terms used.
General
The prospectus supplement shall set forth the terms of the warrants in
respect of which this prospectus is being delivered as well as the related
warrant agreement and warrant certificates, including the following where
applicable:
- the principal amount of, or the number of securities, as the case may
be, purchasable upon exercise of each warrant and the initial price at
which the principal amount or number of securities, as the case may
be, may be purchased upon such exercise;
- the designation and terms of the securities, if other than common
stock, purchasable upon exercise thereof and of any securities, if
other than common stock with which the warrants are issued;
- the procedures and conditions relating to the exercise of the
warrants:
- the date, if any, on and after which the warrants, and any securities
with which the warrants are issued, will be separately transferable;
- the offering price of the warrants, if any;
- the date on which the right to exercise the warrants will commence and
the date on which that right will expire;
- a discussion of any material United States federal income tax
considerations applicable to the exercise of the warrants;
- whether the warrants represented by the warrant certificates will be
issued in registered or bearer form, and, if registered, where they
may be transferred or registered;
- call provisions of the warrants, if any;
- antidilution provisions of the warrants, if any; and
- any other material terms of the warrants.
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Exercise of Warrants
Each warrant will entitle the holder to purchase for cash that
principal amount of or number of securities, as the case may be, at the exercise
price set forth in, or to be determined as set forth in, the applicable
prospectus supplement relating to the warrants. Unless otherwise specified in
the applicable prospectus supplement, warrants may be exercised at the corporate
trust office of the warrant agent or any other office indicated in the
applicable prospectus supplement at any time up to 5:00 p.m. New York City time
on the expiration date set forth in the applicable prospectus supplement. After
5:00 p.m. New York City time on the expiration date, unexercised warrants will
become void. Upon receipt of payment and the warrant certificate properly
completed and duly executed, we will, as soon as practicable, issue the
securities purchasable upon exercise of the warrant. If less than all of the
warrants represented by the warrant certificate are exercised, a new warrant
certificate will be issued for the remaining amount of warrants.
No Rights of Security Holder Prior to Exercise
Prior to the exercise of their warrants, holders of warrants will not
have any of the rights of holders of the securities purchasable upon then
exercise of the warrants, and will not be entitled to:
- in the case of warrants to purchase debt securities, payments of,
premium, if any, or interest, if any, on the debt purchasable upon
exercise; or
- in the case of warrants to purchase equity securities, the right to or
to receive dividend payments or similar distributions on the
purchasable upon exercise.
Exchange of Warrant Certificates
Warrant certificates will be exchangeable for new warrant certificates
of different denominations at the corporate trust office of the warrant agent or
any other office indicated in the applicable prospectus supplement.
Description of Rights We May Offer
We may issue rights for the purchase of shares of preferred stock or
common stock. Each series of rights will be issued under a separate rights
agreement between us and a bank or trust company, all as set forth in the
prospectus supplement relating to the particular issue of rights. The bank or
trust company will act solely as our agent in connection with the certificates
relating to the rights and will not assume any obligation or relationship of
agency or trust for or with any holders of rights certificates or beneficial
owners of rights. The rights agreement and the rights certificates relating to
each series of rights have been or will be filed as exhibits to the registration
statement of which this prospectus forms a part or as exhibits to documents
which have been or will be incorporated by reference in this prospectus.
The applicable prospectus supplement will describe the terms of the
rights to be issued, including the following where applicable:
- the date for determining the stockholders entitled to the rights
distribution;
- the aggregate number of shares of preferred stock or common stock upon
exercise of these rights and the exercise price;
- the aggregate number of rights being issued;
- the date, if any, on and after which these rights may be transferable
separately;
- the date on which the right to exercise these rights shall commence
and the date on which this right shall expire;
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- any special United States federal income tax consequences; and
- any other terms of these rights, including terms, procedures and
limitations relating to the distribution, exchange and exercise of the
rights.
Description of Purchase Contracts We May Offer
We may issue, from time to time, purchase contracts, including
contracts obligating holders to purchase from us and us to sell to the holders,
a specified principal amount of debt securities or a specified number of shares
of common stock or preferred stock or any of the other securities that we may
sell under this prospectus at a future date or dates. The consideration payable
upon settlement of the purchase contracts may be fixed at the time the purchase
contracts are issued or may be determined by a specific reference to a formula
set forth in the purchase contracts. The purchase contracts may be issued
separately or as part of units consisting of a purchase contract and other
securities or obligations issued by us or third parties, including United States
treasury securities, securing the holders' obligations to purchase the relevant
securities under the purchase contracts. The purchase contracts may require us
to make periodic payments to the holders of the purchase contracts or units or
vice versa, and the payments may be unsecured or prefunded on some basis. The
purchase contracts may require holders to secure their obligations under the
purchase contracts.
The prospectus supplement will describe the terms of any purchase
contracts. The description in the prospectus supplement will not necessarily be
complete and will be qualified in its entirety by reference to the purchase
contracts, and, if applicable, collateral arrangements and depositary
arrangements, relating to the purchase contracts.
Description of Units We May Offer
We may, from time to time, issue units comprised of one or more of the
other securities that may be offered under this prospectus, in any combination.
Each unit will be issued so that the holder of the unit is also the holder of
each security included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security. The unit agreement
under which a unit is issued may provide that the securities included in the
unit may not be held or transferred separately at any time, or at any time
before a specified date.
Any applicable prospectus supplement will describe:
- the material terms of the units and of the securities comprising the
units, including whether and under what circumstances those securities
may be held or transferred separately;
- any material provisions relating to the issuance, payment, settlement,
transfer or exchange of the units or of the securities comprising the
units; and
- any material provisions of the governing unit agreement that differ
from those described above.
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Plan of Distribution
We may sell the securities offered by this prospectus through agents,
underwriters or dealers, directly or indirectly to one or more purchasers.
The accompanying prospectus supplement will identify or describe:
- any underwriters, dealers or agents;
- their compensation;
- the net proceeds to Buckeye;
- the purchase price of the securities;
- the initial public offering price of the securities; and
- any exchange on which the securities are listed.
Agents. We may designate agents who agree to use their reasonable
efforts to solicit purchases for the period of their appointment to sell
securities on a continuing basis.
Underwriters. If we use underwriters for a sale of securities, the
underwriters will acquire the securities for their own account. The underwriters
may resell the securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any initial public offering price and any discounts or
concessions allowed or re-allowed or paid to dealers may be changed from time to
time.
Direct sales. We may also sell securities directly to one or more
purchasers without using underwriters or agents. Underwriters, dealers, and
agents that participate in the distribution of the securities may be
underwriters as defined in the Securities Act of 1933, and any discounts or
commissions they receive from us and any profit on their resale of the debt
securities may be treated as underwriting discounts and commissions under the
Securities Act. We may have agreements with the underwriters, dealers and agents
to indemnify them against certain civil liabilities, including liabilities under
the Securities Act. Underwriters, dealers and agents may engage in transactions
with or perform services for us in the ordinary course of their businesses.
Legal Matters
Baker, Donelson, Bearman & Caldwell, a professional corporation, will
issue an opinion about the validity of the securities offered. The validity of
the securities offered will be passed upon for the underwriters, dealers or
agents, if any, by counsel named in the prospectus supplement.
Experts
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements and schedule incorporated by reference in our
Annual Report on Form 10-K for the year ended June 30, 2001, as set forth in
their report, which is incorporated by reference in this prospectus. Such
consolidated financial statements and schedule are, and audited consolidated
financial statements to be included in subsequently filed documents will be,
incorporated herein in reliance upon the reports of Ernst & Young LLP pertaining
to such financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given on the authority of such firm as
experts in accounting and auditing.
33
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J LMC 42428 v5
783824-074 03/13/2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission registration fee $ 27,600
Accounting fees and expenses 30,000
Legal fees and expenses 50,000
Printing Costs 25,000
Miscellaneous 18,000
-------
TOTAL $150,000
=======
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware ("Section
145") provides that a Delaware corporation may indemnify any person who is, or
is threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) , judgments, fines,
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any person who is, or is threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
The Company's Second Amended and Restated Certificate of Incorporation
provides for the indemnification of directors and officers of the Company to the
fullest extent permitted by Section 145.
In that regard, the Second Amended and Restated Certificate of
Incorporation provides that the Company shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director or officer of such corporation
or is or was serving at the request of such corporation as a director, officer,
or member of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of such
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Indemnification in
connection with an action or suit by or in the right of such corporation to
procure a judgment in its favor is limited to payment of settlement of such an
action or suit except that no such indemnification may be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
indemnifying corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
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determine that, despite the adjudication of liability but in consideration of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem proper.
In the form of underwriting agreement, filed as Exhibit 1.1 hereto, the
underwriters will agree to indemnify, under certain conditions, the Company, its
directors, certain of its officers and persons who control the Company within
the meaning of the Securities Act of 1933, as amended, against certain
liabilities.
ITEM 16. EXHIBITS.
1.1 Form(s) of Underwriting Agreement for the Debt Securities (1)
1.2 Form(s) of Underwriting Agreement for the Preferred Stock (1)
1.3 Form(s) of Underwriting Agreement for the Common Stock (1)
1.4 Form(s) of Underwriting Agreement for the Warrants (1)
1.5 Form(s) of Underwriting Agreement for the Rights (1)
1.6 Form(s) of Underwriting Agreement for the Purchase Contracts (1)
1.7 Form(s) of Underwriting Agreement for the Units (1)
4.1 Form(s) of Indenture(1)
4.2 Form(s) of Debt Securities(1)
4.3 Form of Warrant Agreement (including form of Warrant Certificate) (1)
4.4 Form of Rights Agreement (including form of Right Certificate) (1)
4.5 Form of Purchase Contract (including form of Purchase Contract
Certificate) (1)
4.6 Form of Unit Agreement (including form of United Certificate) (1)
4.7 Form of Stock Certificate (1)
4.8 Certificate of Designation of Preferred Stock (1)
4.9 Form of Preferred Stock Certificate (1)
5.0 Opinion of Baker, Donelson, Bearman & Caldwell
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Baker, Donelson, Bearman & Caldwell (included in Exhibit 5)
24.1 Powers of Attorney (included in signature page)
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended (1)
-----------------------
(1) To be filed by amendment or by a report on Form 8-K, to the extent
applicable, in connection with an offering.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any fact or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
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Section 13 or Section 15(d) of the Securities Act of 1934 (the "Exchange Act")
that are incorporated in this Registration Statement;
(2) That, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering;
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to the be initial bona fide offering thereof.
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under section
305(b)(2) of the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Memphis, State of Tennessee on March 15,
2002.
BUCKEYE TECHNOLOGIES INC.
/S/ ROBERT E. CANNON
---------------------------------------
By: Robert E. Cannon, Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby constitute and appoints Robert E. Cannon or David B. Ferraro, or either
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
Signature Title Date
/S/ ROBERT E. CANNON
____________________________ Chairman of the Board and Chief March 15, 2002
Robert E. Cannon Executive Officer (principal
executive officer)
/S/ DAVID B. FERRARO
____________________________ President and Director March 15, 2002
David B. Ferraro
/S/ GAYLE L. POWELSON
____________________________ Chief Financial Officer (principal March 15, 2002
Gayle L. Powelson financial officer)
/S/ GEORGE W. BRYAN
____________________________ Director March 15, 2002
George W. Bryan
/S/ R. HOWARD CANNON
____________________________ Director March 15, 2002
R. Howard Cannon
/S/ RED CAVANEY March 15, 2002
____________________________ Director
Red Cavaney
____________________________ Director ____________, 2002
Henry F. Frigon
____________________________ Director ____________, 2002
Samuel M. Mencoff
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