- Current report filing (8-K)
November 17 2008 - 4:41PM
Edgar (US Regulatory)
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)
November 10, 2008
CLST
Holdings, Inc.
(Exact name of registrant as specified in its
charter)
Delaware
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0-22972
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75-2479727
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(State or Other Jurisdiction
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(Commission File Number)
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(I.R.S. Employer
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of Incorporation)
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Identification No.)
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17304 Preston Road, Suite 420
Dallas, Texas, 75252
(Address of principal executive offices
including Zip Code)
(972)
267-0500
(Registrants
telephone number, including area code)
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:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
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
November 10, 2008, we, through CLST Asset I, LLC, a wholly owned
subsidiary of CLST Financo, Inc. (
Financo
), which
is one of our direct, wholly owned subsidiaries, entered into a purchase
agreement to acquire all of the
outstanding equity interests of FCC Investment Trust I (the
Trust
) from a third party for approximately $41.0 million
(the
Purchase Agreement
). Our board of directors unanimously approved
the transaction. Our acquisition of the
Trust was financed by approximately $6.1 million of cash on hand and by a non-recourse,
term loan of approximately $34.9 million
by an
affiliate of the seller of the Trust, pursuant to the terms and conditions set
forth in the credit agreement, dated November 10, 2008, among the Trust, the
lender, FCC Finance, LLC, as the initial servicer, the backup servicer, and the
collateral custodian (the
Credit Agreement
).
Financo
has historically conducted our financing business, including ownership of
receivables generated by our businesses and providing internal financing to our
other operating subsidiaries. Substantially
all of the assets of the Trust consist of a portfolio of home improvement
consumer receivables , some of which are collateralized or otherwise secured by
interests in real estate. We have
purchased the Trust and are engaging in the business of holding and collecting
the receivables with the intention of generating a higher rate of return on our
assets than we currently receive on our cash and cash equivalent balances. At the same time, we will continue to review
the relative benefits to our stockholders of continuing to wind down our
businesses pursuant to our plan of liquidation and dissolution or continuing to
do business in one or more of our historic lines of business or related
businesses or in a new line of business.
Although we have purchased the Trust and are now engaged in the business
of holding and collecting consumer accounts receivable, we have not abandoned
our plan of liquidation and dissolution.
We believe that should we decide that continuing with the plan of
liquidation and dissolution is in the best interest of our stockholders, we
will be able to dispose of the Trust on favorable terms prior to the time that
we would be in a position to make a final distribution to stockholders and terminate
our corporate existence.
The
cut-off date for the receivables acquired was October 31, 2008, with all
collections subsequent to that date inuring to our benefit. As of October 31, 2008, the portfolio
consisted of approximately 6,000 accounts with an aggregate outstanding balance
of approximately $41.5 million and an average outstanding balance per account
of approximately $6,900. As of October 31,
2008, the weighted average interest rate of the portfolio was 14.4%. We have the right to require the seller to
repurchase any accounts, for the original purchase price applicable to such
account, that do not satisfy certain specified eligibility requirements set out
in the Purchase Agreement.
The Credit Agreement
provides for a non-recourse, term loan of approximately $34.9 million,
maturing on November 10, 2013. The term loan bears interest at an annual
rate of 5.0% over the LIBOR Rate (as defined in the Credit Agreement). The obligations under the Credit Agreement are
secured by a first priority security interest in substantially all of the
assets of the Trust, including portfolio collections.
The
Credit Agreement provides the material terms and conditions for the services to
be performed by the servicer. In return,
the Trust pays the servicer a monthly servicing fee equal to 1.5% of the then
aggregate outstanding principal balance of the receivables.
Portfolio
collections are distributed on a monthly basis.
Absent an event of default, after payment of the servicing fee and other
fees and expenses due under the Credit Agreement and the required principal and
interest payments to the lender under the Credit Agreement, all remaining
amounts from portfolio collections are paid to the Trust and are available for
distribution to CLST Asset I, LLC and subsequently to Financo.
Principal
payments on the term loan are due monthly to the extent that the aggregate
principal amount of the term loan outstanding exceeds the sum of (a) the
sum for each outstanding receivable of the product of (1) 85%, (2) the
then-current aggregate unpaid principal balance of such receivable and (3) a
percentage specified in the Credit Agreement based upon the aging of such
receivable, and (b) amounts on deposit in the collection account for the
receivables net of any accrued and unpaid interest on the loan and fees due to
the servicer, the backup servicer, the collateral custodian and the owner
trustee (the
Maximum Advance Amount
). Principal payments are also due within 5
business days of any time that the aggregate principal amount of the term loan
outstanding exceeds the Maximum Advance Amount.
The remaining outstanding principal amount of the loan plus all accrued
interest, fees and expenses are due on the maturity date. Interest payments on the term loan are due
monthly.
2
The
Credit Agreement contains customary covenants for facilities of its type,
including among other things covenants that restrict the Trusts ability to incur
indebtedness, grant liens, dispose of property, pay dividends, make certain
acquisitions or to take actions that would negatively affect the Trusts
special purpose vehicle status. Generally,
these covenants do not impact the activities that may be undertaken by CLST
Holdings Inc. The Credit Agreement
contains various events of default, including failure to pay principal and
interest when due, breach of covenants, materially incorrect representations,
default under certain other agreements of the Trust, bankruptcy or insolvency
of the Trust, the occurrence of an event which causes a material adverse effect
on the Trust, the occurrence of certain defaults by the servicer, entry of certain
material judgments against the Trust, and the occurrence of a change of control
or certain material events and the issuance of a qualified audit opinion with
respect to the Trusts financials. In
addition, an event of default occurs if the three-month rolling average delinquent
accounts rate exceeds 10.0% or the three-month rolling average annualized
default rate exceeds 7.0%. If an event
of default occurs, all of the Trusts obligations under the Credit Agreement
could be accelerated by the lender, causing the entire remaining outstanding principal
balance plus accrued and unpaid interest and fees to be declared immediately
due and payable.
The
foregoing description of the Purchase Agreement and the Credit Agreement is not
complete and is qualified in its entirety by reference to the full text of the Purchase
Agreement and the Credit Agreement. The
Purchase Agreement and Credit Agreement are attached to this Current Report on Form 8-K
as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by
reference.
Item 2.01.
Completion of Acquisition or
Disposition of Assets.
See
the information set forth under Item 1.01 of this Current Report on Form 8-K,
all of which is incorporated by reference into this Item 2.01.
Item 2.03.
Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant.
See
the information set forth under Item 1.01 of this Current Report on Form 8-K,
all of which is incorporated by reference into this Item 2.03.
3
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of businesses
acquired.
(1)
Financial Statements of the Trust
All
required financial statements of the Trust will be filed by amendment to this Current
Report on Form 8-K no later than 71 days after the date this initial
Current Report on Form 8-K must be filed.
(2)
Pro Forma Financial Information
All
required pro forma financial information of CLST Holdings, Inc., taking
into account the acquisition of the Trust, will be filed by amendment to this
Current Report on Form 8-K no later than 71 days after the date this
initial Current Report on Form 8-K must be filed.
(d) Exhibits
*10.1
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Purchase Agreement, dated
November 10, 2008.
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*10.2
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Credit Agreement, dated
November 10, 2008.
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*
Portions of these
exhibits have been omitted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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CLST HOLDINGS, INC.
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Dated: November 17, 2008
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By:
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/s/ ROBERT A. KAISER
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Robert A. Kaiser
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President, Chief Financial Officer,
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Treasurer and Assistant Secretary
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