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) October 6, 2006
(Exact
name of registrant as specified in its charter)
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Delaware
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1-7677
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73-1015226
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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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16
South Pennsylvania, Oklahoma City, Oklahoma
(Address
of principal executive offices)
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73107
(Zip
Code) |
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Registrant's
telephone number, including area code (405) 235-4546
(Former
name or former address, if changed since last report)
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):
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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Section
1 - Registrant's Business and Operations
Item
1.01
Entry
into a Material Definitive Agreement.
On
October 6,
2006, LSB Industries, Inc. (the "Company") entered into two Exchange Agreements.
One Exchange Agreement with Paul J. Denby and his affiliates ("Denby") and
the
second with James W. Sight ("Sight"). Each Exchange Agreement provides for
(a)
the
issuance to Denby and Sight of 7.4 shares of the Company's common stock in
exchange for each share of the Company's
$3.25
Convertible Exchangeable Class C Preferred Stock, Series 2 (the "Series 2
Preferred") beneficially owned
by
each of them and (b) the waiver by Denby and Sight of all of their rights
to all
accrued and unpaid dividends on the Series 2 Preferred. Pursuant to the terms
of
each Exchange Agreement, the Company will (a) issue to Denby 303,400 shares
of
common stock in exchange for the 41,000 shares of Series 2 Preferred owned
by
Denby and (b) issue to Sight 262,167 shares of common stock in exchange for
the
35,428 shares of Series 2 Preferred owned by Sight.
On
October
11, 2006, the Company entered into separate Exchange Agreements with each
of
Brian J. Denby and his affiliates and Brent Cohen. Each such Exchange Agreement
was substantially similar to the Exchange Agreements entered into with Denby
and
Sight. Pursuant to the terms of each such Exchange Agreement, the Company
will
(a) issue to Brian J. Denby and his affiliates 51,800 shares of common stock
in
exchange for the 7,000 shares of Series 2 Preferred owned by them and (b)
issue
to Cohen 29,600 shares of common stock in exchange for the 4,000 shares of
Series 2 Preferred owned by Cohen.
Pursuant
to
the foregoing Exchange Agreements, the Company will issue an aggregate of
646,967 shares of its common stock in exchange for an aggregate of 87,428
shares
of Series 2 Preferred. As of September 30, 2006, the accrued and unpaid dividend
on the Series 2 Preferred was $23.2625 per share. Accordingly, the holders
of
Series 2 Preferred that entered into the Exchange Agreements waived an aggregate
of approximately $2,033,794 in accrued and unpaid dividends on the shares
of
Series 2 Preferred to be surrendered to the Company in accordance with the
Exchange Agreements. The Exchange Agreements are subject to the Company listing
the shares of common stock to be issued in connection with the Exchange
Agreements on the AMEX.
Each
Exchange
Agreement was separately solicited by and negotiated with the respective
holder
of the Company's Series 2 Preferred. Neither the Company nor the holders
of the
Company's Series 2 Preferred have paid or given, or agreed to pay or give,
directly or indirectly, any commission or other remuneration for soliciting
each
exchange. Each of the exchanges will be conducted under the exemption from
registration provided by Sections 3(a)(9) the Securities Act of 1933, as
amended
(the "Act"). The Series 2 Preferred is registered with the Securities and
Exchange Commission under the Form S-2 Registration Statement No. 33-61640,
effective May 19, 1993, and, as such, the Company believes that the shares
of
common stock issued pursuant to Section 3(a)(9) of the Act in exchange for
the
Series 2 Preferred will be freely tradable by the recipients of the shares
and
will not be considered restricted securities under Rule 144 of the Act.
Upon
completion of the foregoing exchanges, (a) 516,222 shares of Series 2 Preferred
(excluding 18,300 shares of Series 2 Preferred held by LSB in treasury) will
remain issued and outstanding and (b) there will a total of approximately
$12,008,614 in accrued and unpaid dividends relating to such issued and
outstanding Series 2 Preferred.
This
report is not an offer or a solicitation of an offer to sell or exchange
any
security.
Section 3
- Securities and Trading Markets
Item 3.02:
Unregistered
Sales of Equity Securities
Exchange
Agreements.
Pursuant
to the Exchange Agreements discussed in Item 1.01 of this report, which
disclosure is hereby incorporated by reference in this Item 3.02, the Company
will be issuing a total of 646,967 shares of its common stock, par value
$.10
per share, in unregistered exchanges of 87,428 shares of its Series 2 Preferred.
The exchanges will be conducted under the exemption from registration provided
by Sections 3(a)(9) the Act. Each exchange is subject to listing of the shares
of common stock with the AMEX.
Debenture
Conversion.
On
September 22, 2006, Technology Yield Fund (“Technology”) exercised its right to
convert $250,000 principal amount of the Company’s 7% Convertible Senior
Subordinated Debentures due 2011 (the “Debentures”). As a result of the
conversion, the Company has issued to Technology 35,313 shares of the common
stock of the Company. Pursuant to the terms of the Indenture, dated March
3,
2006, governing the Debentures, the conversion rate was 141.25 shares of
common
stock for each $1,000 principal amount of converted Debentures. The issuance
of
the common stock upon conversion of the Debentures was made in reliance on
the
exemption from registration provided by Section 3(a)(9) of the Act. The
conversion was made without any form of general solicitation or general
advertising. No commission or other remuneration was paid directly or indirectly
for soliciting the conversion. The shares of common stock issued upon conversion
of the outstanding Debentures are registered for resale under the Company’s Form
S-1 Registration Statement, file number 333-134111, declared effective May
26,
2006.
As
a
result of the above described conversion, $14.25 million of the principal
amount
of the Debentures remains outstanding. During the period from September 1,
2006
to February 28, 2009, the conversion rate of the Debentures declines every
six
months, starting at 141.25 shares and ending at 129.23 shares per $1,000
principal amount of Debentures (representing an approximate conversion price
of
between $7.08 and $7.74 during such period). On and after March 1, 2009,
the
conversion rate is 125 shares per $1,000 principal amount of Debentures
(representing a conversion price of $8.00 per share). The conversion rate
is
subject to certain anti-dilution adjustments.
This
report is not an offer or a solicitation of an offer to sell or exchange
any
security.