8-K

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 26, 2002

PACIFIC AEROSPACE & ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)

Washington	000-26088	91-1744587
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

430 Olds Station Road, Third Floor, Wenatchee, WA	98801
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number,
including area code: (509) 667-9600

Item 5. Other Events

On March 26, 2002, the Company issued a press release relating to (i) the completion of the exchange transaction whereby 100% of the holders of the Company’s 11 1/4% senior subordinated notes (the “Old Notes”) exchanged their Old Notes for common stock, preferred stock and new 10% senior subordinated pay-in-kind notes of the Company and (ii) the entering by the Company into a new five-year senior secured loan in the principal amount of $36.0 million which provided proceeds to the Company of $22.0 million. The press release is attached to this current report as Exhibit 99.1 and incorporated by reference in this current report.

Item 7. Financial Statements and Exhibits

(c) Exhibits

The following are filed as exhibits to this current report:

99.1 Press Release, dated March 26, 2002.

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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 hereunto duly authorized.

PACIFIC AEROSPACE & ELECTRONICS, INC.
By:	/s/     Donald A. Wright
	Donald A. Wright President & Chief Executive Officer

Dated: March 26, 2002

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EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press release dated March 26, 2002.

EX-99.1 3 f80364ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 FOR IMMEDIATE RELEASE CONTACTS: Donald A. Wright, President and Chief Executive Officer Charles A. Miracle, Chief Financial Officer Pacific Aerospace & Electronics (509) 667-9600 PACIFIC AEROSPACE & ELECTRONICS, INC. ANNOUNCES COMPLETION OF EXCHANGE AND NEW SECURED FINANCING WENATCHEE, WA - MARCH 26, 2002 - Pacific Aerospace & Electronics, Inc. (OTCBB: PCTH), a diversified manufacturing company specializing in metal and ceramic components and assemblies, announced today that it has completed an exchange of all of its 11 1/4% senior subordinated notes ("Old Notes") for new senior subordinated notes, preferred stock and common stock of the Company (the "Exchange"). The Company had been in default in the payment of interest on the Old Notes for failure to make its last two interest payments. Pursuant to the Exchange, all of the Old Notes have been cancelled. Accordingly, the defaults related to those notes no longer exist. "We are very pleased to complete this exchange and secure new senior financing" said Don Wright, the Chief Executive Officer of the Company. "We can now move forward with a greatly reduced level of debt and refocus our energy on providing innovative and quality solutions for our customers. We are particularly excited to complete the introduction of several of our new ceramic and metal composite technologies to the market. Recently, we were issued two new patents which will allow us to provide lightweight, high-performance electronic composite packages to the aerospace and defense industries." Matthew Kaufman, a Managing Director of GSC Partners, the new majority shareholder of the Company, stated, "We are very pleased to help with the restructuring of the Company. We are impressed with the Company's technology and look forward to a long and beneficial relationship." In addition to consummating the Exchange, the Company has entered into a new five-year senior secured loan (the "New Senior Loan") in the principal amount of $36.0 million. The New Senior Loan was issued at a discount and will bear interest at a rate of 5% per annum. The net proceeds of the loan totaled approximately $22 million, which was used, in part, to pay off the Company's 21% senior secured loan (the "Old Senior Loan"). The Company had also been in payment and covenant default under the Old Senior Loan prior to its repayment. The remainder of the proceeds of the New Senior Loan will be used for working capital, to pay the fees and costs of the restructuring and for other general corporate purposes. Pursuant to the Exchange, the holders of the Old Notes (the "Noteholders") exchanged $63.7 million aggregate principal amount of Old Notes, together with accrued interest thereon, for shares of common stock of the Company, shares of preferred stock of the Company ("New Preferred") and $15 million in aggregate principal amount of 10% pay-in-kind senior subordinated notes ("New Notes"). The Noteholders, by virtue of their ownership of the common stock and the New Preferred, in the aggregate control 97.5% of the voting power of the Company. The New Preferred will be automatically converted into common stock following shareholder approval of an increase in the number of authorized shares of common stock. Votes with respect to the increase in the number of authorized shares of common stock will be solicited only pursuant to a proxy statement filed with and cleared by the Securities and Exchange Commission The Noteholders have agreed to vote in favor of the increase in authorized shares of common stock and hold a sufficient number of shares to ensure such increase's approval. Following the conversion of the New Preferred into common stock, the Noteholders will beneficially own 97.5% of the outstanding shares of common stock of the Company on a fully-diluted basis. In connection with the Exchange, the Board of Directors was reconstituted to consist of five directors, all of whom are designated by the Noteholders. Donald A. Wright, the Company's President and Chief Executive Officer, will remain a member of the Company's Board of Directors. Pacific Aerospace & Electronics, Inc. is an international engineering and manufacturing company specializing in technically demanding component designs and assemblies for global leaders in the aerospace, defense, electronics, medical, telecommunications, energy and transportation industries. The Company utilizes specialized manufacturing techniques, advanced materials science, process engineering and proprietary technologies and processes to its competitive advantage. The Company has approximately 850 employees worldwide and is organized into three operational groups -- U.S. Aerospace, U.S. Electronics and European Aerospace (Aeromet). More information may be obtained by contacting the Company directly or by visiting its Web site at www.pcth.com. Forward-looking statements in this release concerning trends or anticipated results are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied in the forward-looking statements. The forward-looking statements in this release are not guarantees of future performance and are subject to risks and uncertainties related to the Company's operations and its ability to obtain sufficient cash if and when needed. These risks and uncertainties include, but are not limited to, competitive factors (including the possibility of increased competition or technological development, competitors, and price pressures); legal factors (such as limited protection of the Company's proprietary technology and changes in government regulation); financial factors (such as the Company's debt load); and the Company's dependence on key personnel and significant customers. More information about potential factors that could affect the Company's financial results is included in the Company's filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based on information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements. -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

                                                                    Exhibit 99.1
FOR IMMEDIATE RELEASE


CONTACTS: Donald A. Wright, President and Chief Executive Officer
          Charles A. Miracle, Chief Financial Officer
          Pacific Aerospace & Electronics
          (509) 667-9600

          PACIFIC AEROSPACE & ELECTRONICS, INC. ANNOUNCES COMPLETION OF
                       EXCHANGE AND NEW SECURED FINANCING

WENATCHEE, WA - MARCH 26, 2002 - Pacific Aerospace & Electronics, Inc. (OTCBB:
PCTH), a diversified manufacturing company specializing in metal and ceramic
components and assemblies, announced today that it has completed an exchange of
all of its 11 1/4% senior subordinated notes ("Old Notes") for new senior
subordinated notes, preferred stock and common stock of the Company (the
"Exchange"). The Company had been in default in the payment of interest on the
Old Notes for failure to make its last two interest payments. Pursuant to the
Exchange, all of the Old Notes have been cancelled. Accordingly, the defaults
related to those notes no longer exist.

"We are very pleased to complete this exchange and secure new senior financing"
said Don Wright, the Chief Executive Officer of the Company. "We can now move
forward with a greatly reduced level of debt and refocus our energy on providing
innovative and quality solutions for our customers. We are particularly excited
to complete the introduction of several of our new ceramic and metal composite
technologies to the market. Recently, we were issued two new patents which will
allow us to provide lightweight, high-performance electronic composite packages
to the aerospace and defense industries."

Matthew Kaufman, a Managing Director of GSC Partners, the new majority
shareholder of the Company, stated, "We are very pleased to help with the
restructuring of the Company. We are impressed with the Company's technology and
look forward to a long and beneficial relationship."

In addition to consummating the Exchange, the Company has entered into a new
five-year senior secured loan (the "New Senior Loan") in the principal amount of
$36.0 million. The New Senior Loan was issued at a discount and will bear
interest at a rate of 5% per annum. The net proceeds of the loan totaled
approximately $22 million, which was used, in part, to pay off the Company's 21%
senior secured loan (the "Old Senior Loan"). The Company had also been in
payment and covenant default under the Old Senior Loan prior to its repayment.
The remainder of the proceeds of the New Senior Loan will be used for working
capital, to pay the fees and costs of the restructuring and for other general
corporate purposes.

Pursuant to the Exchange, the holders of the Old Notes (the "Noteholders")
exchanged $63.7 million aggregate principal amount of Old Notes, together with
accrued interest thereon, for shares of common stock of the Company, shares of
preferred stock of the Company ("New Preferred") and $15 million in aggregate
principal amount of 10% pay-in-kind senior subordinated notes ("New Notes"). The
Noteholders, by virtue of their ownership of the common stock and the New
Preferred, in the aggregate control 97.5% of the voting power of the Company.
The New Preferred will be automatically converted into common stock following
shareholder approval of an increase in the number of authorized shares of common
stock. Votes with respect to the increase in the number of authorized shares of
common stock will be solicited only pursuant to a proxy statement filed with and
cleared by the Securities and Exchange Commission The Noteholders have agreed to
vote in favor of the increase in authorized shares of common stock and hold a
sufficient number of shares to ensure such increase's approval. Following the
conversion of the New Preferred into common stock, the Noteholders will
beneficially own 97.5% of the outstanding shares of common stock of the Company
on a fully-diluted basis. In connection with the





Exchange, the Board of Directors was reconstituted to consist of five directors,
all of whom are designated by the Noteholders. Donald A. Wright, the Company's
President and Chief Executive Officer, will remain a member of the Company's
Board of Directors.

Pacific Aerospace & Electronics, Inc. is an international engineering and
manufacturing company specializing in technically demanding component designs
and assemblies for global leaders in the aerospace, defense, electronics,
medical, telecommunications, energy and transportation industries. The Company
utilizes specialized manufacturing techniques, advanced materials science,
process engineering and proprietary technologies and processes to its
competitive advantage. The Company has approximately 850 employees worldwide and
is organized into three operational groups -- U.S. Aerospace, U.S. Electronics
and European Aerospace (Aeromet). More information may be obtained by contacting
the Company directly or by visiting its Web site at www.pcth.com.

Forward-looking statements in this release concerning trends or anticipated
results are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from those stated or implied in the forward-looking statements. The
forward-looking statements in this release are not guarantees of future
performance and are subject to risks and uncertainties related to the Company's
operations and its ability to obtain sufficient cash if and when needed. These
risks and uncertainties include, but are not limited to, competitive factors
(including the possibility of increased competition or technological
development, competitors, and price pressures); legal factors (such as limited
protection of the Company's proprietary technology and changes in government
regulation); financial factors (such as the Company's debt load); and the
Company's dependence on key personnel and significant customers. More
information about potential factors that could affect the Company's financial
results is included in the Company's filings with the Securities and Exchange
Commission. All forward-looking statements included in this release are based on
information available to the Company as of the date of this release, and the
Company assumes no obligation to update any such forward-looking statements.