Document RpvEzEeZeVm9G38xdx9bRpMZX

7AN 6 '92 7:31 FROM UYGEN ASHTABULA PAGE.001 0 Middle Road RO. Sox 68 Ashtabula, Ohio 44004 (216) 998-1120 FAX: (216) 992-3385 January 6, 1992 GenCorp Polymer Products 350 Springside Drive Akron/ Ohio 44309-3545 Attention: Mr. Ken Patterson Re: Revised InterGreditor Agreement/ Conversation: January 3/ 1992/ 5:00 P.M. Dear Ken: The following information and comments are presented to help explain the current Vygen financial crisis. 1. Losses for fiscal year ending 2/28/91 were $731M with the majority ($480M) occurring in November and December of 1990. The losses were a result of the petrochemical price spikes coupled with a recessionary climate in which the price increases could not be passed on. 2. Bank forbearance effective 3/1/91. Mellon Bank/ , N-A. imposed a Forbearance Agreement effective 3/1/91 and called the loan. We have continued to operate with Mellon granting month to month extensions. In addition/ they accelerated Vygen's term debt as follows: Term debt 3/1/91 Term debt 12/31/91 $1,350M 400M Paydown Normal pay down required approx. $ 950M 250M Accelerated cash drain $700M 3. LCP Bankruptcy July 11, 1991. With a new financing agreement 90% complete LCP National (a newly formed company) was included in the bankruptcy filing of their parent Hanlin Chemicals. then current refinancing plan. This proceeded to kill the Cash impact $940M The total impact of the above items is approximately $2/371 In October of 1991 with three marginally profitable months behind us we again attempted to refinance Vygen Corp. After pursuing the GENC 001782 JAN 6 '92 7:31 FROM UYGEN ASHTABULA PAGE.002 GenCorp Polymer Products Akron/ Ohio 44309-3545 Attention: Mr. Ken Patterson January 6, 1992 page 2 deal with several conventional and unconventional financing sources we were able to structure a deal with the star Bank in conjunction with an additional loan through the Ashtabula 503 Corporation. This is the only offer that we have received. Initially/ the star/503 deal was to close December 27, 1991/ however/ Star Bank then surfaced the GenCorp note issue {being due in 1992) which we have been unable to negotiate away. Their condition and only outstanding item for closing is that GenCorp Polymer Products accept only interest payment for the term of their financing deal. Vygen Corp. is prepard to resume the interest payments to both GenCorp and the 503 Corporation directly after the closing. Included for your review are the following: 1. Revised and lined InterCreditor Agreement withall changes indicated. Note. The only change of substance involves the GenCorp 2. November 30th financial statements. 3. Most current borrowing base certificate- 4. New 503 loan comments. Please review these items at your earliest convenience. If you find the InterCreditor Agreement acceptable we will hand deliver a signing copy on Monday afternoon, 1/6/92. If you require any further information either byphone or in person, I await your immediate request as vygen's very existence is involved. We sincerely appreciate your prompt consideration. Very truly yours, VYGEN CORPORATION Robert J. Snyder vice President, Finance and Treasurer RJS/rah Enclosures GENC 001783