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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re: ) Chapter 11
)
COMDISCO, INC. ) (Jointly Administered)
et al., )
Debtors. ) Case No. 01-24795
DISCLOSURE STATEMENT WITH
RESPECT TO THE FIRST AMENDED JOINT PLAN
OF REORGANIZATION OF COMDISCO, INC.
AND ITS AFFILIATED DEBTORS AND DEBTORS IN POSSESSION
----------------------------------------------------
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
John Wm. Butler, Jr.
George N. Panagakis
Felicia Gerber Perlman
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Attorneys for Debtors and Debtors in Possession
Dated: June 13, 2002
{PAGE}
DISCLAIMER
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT (THE
"DISCLOSURE STATEMENT") IS INCLUDED HEREIN FOR PURPOSES OF SOLICITING
ACCEPTANCES OF THE FIRST AMENDED JOINT PLAN OF REORGANIZATION OF COMDISCO,
INC. AND ITS AFFILIATED DEBTORS AND DEBTORS IN POSSESSION (THE "PLAN") AND
MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE
ON THE PLAN. NO PERSON MAY GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED
IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN OR THE SOLICITATION OF
ACCEPTANCES OF THE PLAN.
ALL CREDITORS AND EQUITY HOLDERS ARE ADVISED AND ENCOURAGED TO
READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING
TO ACCEPT OR REJECT THE PLAN. PLAN SUMMARIES AND STATEMENTS MADE IN THIS
DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE
PLAN AND THE EXHIBITS AND SCHEDULES ANNEXED TO THE PLAN AND THIS DISCLOSURE
STATEMENT. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE
ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE
STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH
SECTION 1125 OF THE UNITED STATES BANKRUPTCY CODE AND RULE 3016(b) OF THE
FEDERAL RULES OF BANKRUPTCY PROCEDURE AND NOT NECESSARILY IN ACCORDANCE
WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAW. THIS
DISCLOSURE STATEMENT HAS BEEN NEITHER APPROVED NOR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), NOR HAS THE SEC PASSED UPON
THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. PERSONS OR
ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING
SECURITIES OR CLAIMS OF COMDISCO, INC. OR ANY OF THE AFFILIATED DEBTORS AND
DEBTORS IN POSSESSION IN THESE CASES SHOULD EVALUATE THIS DISCLOSURE
STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED.
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS
OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE
CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION OR WAIVER,
BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE
STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR
SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR
OTHER LEGAL EFFECTS OF THE PLAN AS TO HOLDERS OF CLAIMS AGAINST, OR EQUITY
INTERESTS IN, COMDISCO, INC. OR ANY OF THE AFFILIATED DEBTORS AND DEBTORS
IN POSSESSION IN THESE CASES.
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NONE OF THE COMDISCO AFFILIATES LOCATED OUTSIDE OF THE UNITED
STATES HAVE COMMENCED CHAPTER 11 CASES OR SIMILAR PROCEEDINGS IN ANY OTHER
JURISDICTIONS, ARE NOT AFFECTED BY THE CHAPTER 11 CASES AND CONTINUE TO
OPERATE THEIR BUSINESSES OUTSIDE OF BANKRUPTCY.
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{PAGE}
SUMMARY OF PLAN
The following introduction and summary is a general overview only
and is qualified in its entirety by, and should be read in conjunction
with, the more detailed discussions, information, and financial statements
and notes thereto appearing elsewhere in this Disclosure Statement and the
Joint Plan of Reorganization of Comdisco, Inc. and Its Affiliated Debtors
and Debtors in Possession (the "Plan"). All capitalized terms not defined
in this Disclosure Statement have the meanings ascribed to such terms in
the Plan. A copy of the Plan is annexed hereto as Appendix A.
This Disclosure Statement contains, among other things,
descriptions and summaries of provisions of the Plan being proposed by
Comdisco, Inc. ("Comdisco" or the "Company") and fifty of its domestic
subsidiaries and affiliates (the "Affiliate Debtors"), debtors and
debtors-in-possession (collectively, the "Debtors") as filed on April, 26,
2002, with the United States Bankruptcy Court for the Northern District of
Illinois, Eastern Division (the "Bankruptcy Court"). Certain provisions of
the Plan, and thus the descriptions and summaries contained herein, are the
subject of continuing negotiations among the Debtors and various parties,
have not been finally agreed upon, and may be modified. Such modifications,
however, will not have a material effect on the distributions contemplated
by the Plan.
A. Business Overview
Comdisco provided global technology services to its customers to
help maximize their technology functionality, predictability and
availability, while freeing them from the complexity of managing their
technology. The Company offered leasing to key vertical industries,
including semiconductor manufacturing and electronic assembly, healthcare,
telecommunications, pharmaceutical, biotechnology and manufacturing.
Comdisco also provided equipment leasing and other financing and services
to venture capital-backed companies. The Company's operations are currently
conducted through its principal office in Rosemont, Illinois, and
approximately 35 locations in the United States, Canada and additional
locations in Europe and the Pacific Rim. For the fiscal year ended
September 30, 2001, the Company had consolidated net revenues of
approximately $2.7 billion and administered assets of $6.1 billion. The Old
Common Stock was listed on the New York Stock Exchange until April 15, 2002
when it was delisted. Currently, the Old Common Stock trades over the
counter.
Prior to filing for chapter 11 protection and the commencement of
these cases (the "Chapter 11 Cases"), the Company's product offering was
divided along three primary business lines: (1) technology services
("Availability Solutions"), which included continuity services, storage
services, Web services, network services, desktop management services
(marketed under the Company's IT CAP Solutions brand name) and software
tools to support these areas; (2) global leasing ("Leasing"), which
included the leasing and remarketing of distributed systems, such as PCs,
servers, workstations and routers, communications equipment, equipment
leasing and technology life-cycle management services; and (3) venture
financing, referred to as Comdisco Ventures group, which provided venture
leases, venture debt and direct equity financing to venture capital-backed
companies ("Ventures").
The primary events leading to the chapter 11 filings were (a)
significant cash losses due to the February, 1999 acquisition of Prism
Communication Services, Inc. ("Prism"), a provider of dedicated high-speed
connectivity, (b) a market downturn in the technology and Internet-based
sectors resulting in a substantial decrease in the revenues of the Ventures
group, and (c) the resulting downgrading of the Company's debt ratings to
below investment grade causing the Company to lose access to the commercial
paper market and forcing the Company to borrow the remaining availability
under the Prepetition Credit Agreements in April 2001. Additionally, the
Company's debt structure involved relatively short-term debt maturities over
the next several years and longer-term lease and financing obligations
associated with their principal business products. Accordingly, although the
Debtors' operations typically generated sufficient cash to meet their working
capital needs, without access to the commercial paper market, the Debtors
could not generate sufficient cash to retire all of the debt maturities
scheduled to be repaid during 2001 and 2002. As a result of these events, the
Debtors retained financial advisors to evaluate the strategic alternatives
regarding the Debtors' business operations. The Debtors concluded that the
commencement of these Chapter 11 Cases was in the best interests of all
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