UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of Earliest Event Reported):
March 3,
2010
PANELTECH
INTERNATIONAL HOLDINGS, INC.
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(Exact
name of registrant as specified in its charter)
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Delaware
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000-53896
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20-4748555
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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2999
John Stevens Way, Hoquiam, WA
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98550
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
Telephone Number, Including Area Code:
(360)
538-1480
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(Former
Name or Former Address, If Changed Since Last
Report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
see
General
Instruction A.2. below):
¨
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
1.01
ENTRY INTO A MATERIAL
DEFINITIVE AGREEMENT
On March 3, 2010, Paneltech Products,
Inc. (“Paneltech Products”), a wholly-owned subsidiary and principal operating
business of Paneltech International Holdings, Inc. (the “Registrant”); Paneltech
International L.L.C., the predecessor to Paneltech Products (“Paneltech
LLC”); L.D. Nott Company, an entity controlled by the Registrant’s
President, CEO and Director
(“LD Nott”); SORB
Management Corporation, an entity controlled by the Registrant’s CFO, Secretary
and Director
(“SORB”); and
Anchor Mutual Savings Bank (“Anchor Bank”) entered into a change in terms
agreement in connection with each of the five loan agreements between Paneltech
LLC and Anchor Bank listed below (the “Anchor Loan Agreements”). The
Change in Terms Agreements entered into with respect to the Anchor Loan
Agreements are referred to in this Current Report on Form 8-K as the Anchor CIT
Agreements.
The agreement change date for each
Anchor CIT Agreements is January 21, 2010 and each Anchor CIT Agreement is
effective as of March 3, 2010. The Anchor CIT Agreements are each in
substantively the same form, other than in their description of the security
agreement entered into with respect to the corresponding Anchor Loan
Agreement. Under the terms of each Anchor CIT Agreement, Paneltech
Products, being the surviving entity of the merger between Paneltech Products
and Paneltech LLC that was effective as of December 23, 2009 (the “Merger”),
agreed to assume and be liable for all Paneltech LLC debt with Anchor Bank under
all original loan documentation with Anchor Bank, including the Anchor Loan
Agreements.
Anchor Loan Agreements:
1.
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Loan Agreement
entered into on January 22, 2007, having an original principal balance of
$61,000. As of January 21, 2010, the outstanding principal balance was
$27,964.49. Interest accrues at a rate of 8.0% per
annum.
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2.
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Loan Agreement
entered into on February 2, 2006, having an original principal balance of
$320,000. As of January 21, 2010, the outstanding principal balance was
$219,348.67. Interest accrues at a rate per annum of 1.25%
above the prime rate.
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3.
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Loan Agreement
entered into on October 4, 2005, having an original principal balance of
$45,000. As of January 21, 2010, the outstanding principal
balance was $7,711.71. Interest accrues at a rate of 7.5% per
annum.
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4.
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Loan Agreement
entered into on April 22, 2005, having an original principal balance of
$1,750,000. As of January 21, 2010, the outstanding principal balance was
$1,170,423.66. Interest accrues at a rate per annum of 1.5%
above the prime rate.
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5.
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Loan Agreement
entered into on November 18, 2008, amended on September 16, 2009, having
an original principal balance of $1,819,000. As of January 21,
2010, the outstanding principal balance was
$470,462.30. Interest accrues at a rate of 6.75% per
annum.
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ITEM 2.03
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CREATION
OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE
SHEET ARRANGEMENT OF A REGISTRANT
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The
information set forth in Item 1.01 of this Current Report on Form 8-K is hereby
incorporated by reference.
ITEM 2.04
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TRIGGERING EVENTS THAT
ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET
ARRANGEMENT.
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On March
10, 2010, Paneltech Products received a Notice of Default dated March 3, 2010
(the “Default Letter”) from ShoreBank Pacific (“ShoreBank”) with respect to that
certain Business Loan Agreement dated January 26, 2001, as amended (the
“ShoreBank Loan Agreement”) entered into by the Paneltech LLC and
ShoreBank. Pursuant to an Assumption Agreement dated December 23,
2009 (the “Assumption Agreement”), between Paneltech Products and ShoreBank,
which was entered into in connection with the Merger, Paneltech Products assumed
and agreed to pay and perform all covenants and obligations of Paneltech LLC set
forth in the loan documents between ShoreBank and Paneltech LLC, as if such loan
documents had originally been made, executed and delivered by Paneltech
Products. The maturity date under the ShoreBank Loan Agreement was
February 28, 2010.
The Default Letter alleges that
Paneltech Products failed to comply with certain affirmative covenants,
including certain financial covenants and ratios set forth in the ShoreBank Loan
Agreement. The Default Letter also alleges that the Paneltech Products’ default
under the ShoreBank Loan Agreement is also a default under the promissory note
of the same date and the promissory notes associated with all other
cross-defaulted loans entitling ShoreBank to exercise all default rights and
remedies under that instrument as well.
In
connection with the default alleged in the Default Letter, ShoreBank retained
the right to take appropriate legal action, which may include declaring the
entire debt fully due and payable, filing a lawsuit to collect the debt, and
seeking to recover all of its court costs and attorney fees. As of
March 3, 2010, the outstanding principal balance under the ShoreBank Loan
Agreement was $697,473. The Registrant is currently discussing an
extension agreement with ShoreBank in order to provide additional liquidity
beyond the maturity date of the ShoreBank Loan Agreement and to provide time to
address the alleged defaults under the ShoreBank Loan Agreement, which has
resulted in an additional 5% default rate adjuster. There can be no
assurance that an extension agreement will be entered into or that the
Registrant will be successful in negotiating a new or amended loan agreement
with ShoreBank.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date:
March 16, 2010
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PANELTECH
INTERNATIONAL HOLDINGS, INC.
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By:
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/s/
Scott
Olmstead
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Scott
Olmstead
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Chief
Financial Officer and Secretary
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