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Hexcel emerges from Chapter 11; rights offering to commence.

PLEASANTON, Calif.--(BUSINESS WIRE)--Feb. 9. 1995--Hexcel Corp. (NYSE/PSE:HXL) Thursday announced that the plan of reorganization it proposed together with the Official Committee of Equity Security Holders ("Equity Committee") has become effective, marking the company's formal emergence from Chapter 11 bankruptcy protection.

Arrangements for exit financing have been completed. As previously announced, Citicorp USA Inc. is the agent on Hexcel's $45 million revolving credit facility.

In addition, the company announced it has restructured its letter of credit agreements with Banque Nationale de Paris. The letters of credit support Hexcel's outstanding industrial development revenue bonds. All other allowed creditors' claims will be reinstated or satisfied in full with interest under the plan.

Mutual Series Fund Inc. ("Mutual Series") has provided reorganized Hexcel with a $50 million cash infusion, $9 million of which represents an equity investment in the company at $4.625 per share; the other $41 million is an advance that backstops the rights offering.

This $41 million rights offering of common stock, also priced at $4.625 per share, is available to current shareholders of record, with Mutual Series acting as a standby purchaser. Today marks the record date for the rights offering.

As previously reported, certificates representing the rights will be distributed within 15 days of today's effective date. The rights will become exercisable on Feb. 24 and will expire at 5 p.m. EST on March 27, 1995.

Existing shareholders will retain an approximate 40% interest in Hexcel, assuming they do not exercise any of their rights. If shareholders exercise all of the rights distributed to them, they will have an approximate 89% interest in the reorganized company.

John J. Lee. chief executive officer of Hexcel, said: "We've written the final chapter in a model turnaround case study, and we're enormously pleased with the result.

"In just 13 months, Hexcel reduced costs substantially, realized approximately $40 million in proceeds from non-core asset sales and satisfied approximately $130 million in outstanding liabilities -- all while contending with the burdens of a bankruptcy filing. On top of that, the company was able to develop a consensual plan of reorganization that has attracted $50 million in new equity financing. Hexcel can now look forward to a new beginning."

The company has commenced a search for a permanent CEO for Hexcel. Lee, who has served as CEO since January 1994, when he was asked by Hexcel's board to lead the company during reorganization, will remain in that position until his replacement is selected. Subsequently, he will continue to serve as a director of Hexcel and will provide Hexcel with strategic planning direction as a consultant to the company.

Finally, the company announced the appointment of a new board for reorganized Hexcel. Lee, Dr. George S. Springer and Marshall S. Geller, all members of the current board, will continue to serve as directors.

New directors include: Frank Wimer of UniRock Management Co., the outside strategic planning adviser to the company; Peter A. Langerman of Mutual Series; Joseph L. Harrosh and Robert L. Witt, both members of the Equity Committee; and Peter D. Wolfson, counsel to the Equity Committee. One seat remains vacant for a new CEO, and an additional seat may be added depending on Mutual Series' holdings at the conclusion of the rights offering.

Arthur Andersen LLP/Andersen Consulting served as financial adviser to Hexcel. The firms of Kronish, Lieb, Weiner & Hellman and Goldberg, Stinnett, Meyers & Davis served as legal counsel to Hexcel. Rothschild Inc. served as financial adviser to the Equity Committee. The firm of Marcus Montgomery Wolfson P.C. served as legal counsel to the Equity Committee.

This announcement does not constitute an offer to sell or to buy any security or the solicitation of any consents or proxies.

Hexcel Corp. is an international developer and manufacturer of honeycomb, advanced composites and reinforcement fabrics used in the commercial aerospace, space and defense and general industrial markets.

CONTACT: Hexcel Corp.

Tara Owen, 212/484-7724
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Publication:Business Wire
Date:Feb 9, 1995
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