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)
February 13, 2009
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.
Effective
February 13, 2009, we, through CLST Asset III, LLC (the
Subsidiary
), a newly formed, wholly owned subsidiary of
CLST Financo, Inc. (
Financo
),
which is one of our direct, wholly owned subsidiaries, purchased certain
receivables, installment sales contracts and related assets owned by Fair
Finance Company, an Ohio corporation (
Fair
), James
F. Cochran, Chairman and Director of Fair, and by Timothy S. Durham, Chief
Executive Officer and Director of Fair and an officer, director and stockholder
of our company (the
Purchase Agreement
). Messrs. Durham and Cochran own all of
the outstanding equity of Fair. In
return for assets acquired under the Purchase Agreement, the Subsidiary paid
the sellers total consideration of $3,594,354 as follows:
(1)
cash
in the amount of $1,797,178.00 of which $1,417,737 was paid to Fair, $325,440
was paid to Mr. Durham and $54,000 was paid to Mr. Cochran,
(2)
2,496,077
newly issued shares of our common stock, par value $.01 per share (
Common Stock
) at a price of $0.36 per share, of which
1,969,077 shares of Common Stock were issued to Fair, 452,000 shares of Common
Stock were issued to Mr. Durham and 75,000 shares of Common Stock were
issued to Mr. Cochran and
(3)
six
promissory notes (the
Notes
) issued
by the Subsidiary in an aggregate original stated principal amount of $898,588.00,
of which two promissory notes in an aggregate original principal amount of
$708,868 were issued to Fair, two promissory notes in an aggregate original
principal amount of $162,720 were issued to Mr. Durham and two promissory
notes in an aggregate original principal amount of $27,000 were issued to Mr. Cochran.
We
received a fairness opinion of Business Valuation Advisors (
BVA
) stating that BVA is of the opinion that the
consideration paid by us pursuant to the Purchase Agreement is fair, from a
financial point of view, to our nonaffiliated stockholders. A copy of the fairness opinion has been
attached to this Current Report on Form 8-K as Exhibit 10.8. The shares of Common Stock were issued by us
in a transaction exempt from registration pursuant to Section 4(2) of
the Securities Act of 1933, as amended. As
additional inducement for the Subsidiary to enter into the Purchase Agreement,
Fair agreed to use its best efforts to facilitate negotiations to add the
Subsidiary or one of its affiliates as a co-borrower under one of Fairs existing
lines of credit with access to at least $15,000,000.00 of credit for our own
purposes.
Substantially
all of the assets acquired by the Subsidiary are in one of two portfolios. Portfolio
A is a mixed pool of receivables from several asset classes, including health
and fitness club memberships, membership resort memberships, receivables
associated with campgrounds and timeshares, in-home food sales and services,
buyers clubs, delivered products and home improvement and tuitions. Portfolio B is made up entirely of
receivables related to the sale of tanning bed products. At least initially, Fair will continue to act
as servicer for these receivables. Fair
will receive no additional consideration for acting as servicer.
As
of February 13, 2009, the portfolios of receivables acquired pursuant to
the Purchase Agreement collectively consisted of approximately 3,000 accounts
with an aggregate outstanding balance of approximately $3,709,500 and an
average outstanding balance per account of approximately $1,015 for Portfolio A
and approximately $5,740 for Portfolio B.
As of February 13, 2009, the weighted average interest rate of the
portfolios exceeded 18%. The sellers are
required to repurchase any accounts, for the outstanding balance (at the time
of repurchase) of such account plus interest accrued thereon, that do not
satisfy certain specified eligibility requirements set out in the Purchase
Agreement. Additionally, each of the
sellers is required to jointly and severally pay the Subsidiary, up to the
aggregate stated principal amount of the Notes issued to such seller, the
outstanding balance of any receivable that becomes a defaulted receivable
within the parameters of the Purchase Agreement.
The
Notes issued by the Subsidiary in favor of the sellers are full-recourse with
respect to the Subsidiary and are unsecured. The three Notes relating to Portfolio A (the
Portfolio A Notes
) are payable in 11 quarterly
installments, each consisting of equal principal payments, plus all interest
accrued through such payment date at a rate of 4.0% plus the LIBOR Rate (as
defined in the Portfolio A Notes). The three
Notes relating to Portfolio B (the
Portfolio B Notes
)
are payable in 21 quarterly installments, each consisting of equal principal
payments, plus all
2
interest
accrued through such payment date at a rate of 4.0% plus the LIBOR Rate (as
defined in the Portfolio B Notes).
The
foregoing description of the Purchase Agreement, the Portfolio A Notes and the
Portfolio B Notes is not complete and is qualified in its entirety by reference
to the full text of the agreements (or forms thereof, as applicable) which are
attached to this Current Report on Form 8-K as Exhibits 10.1-10.8,
respectively, and are incorporated herein by reference.
Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
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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.
Item 3.02.
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Unregistered Sales of Equity Securities.
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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 3.02.
Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits
10.1
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Purchase
Agreement, effective as of February 13, 2009.
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10.2
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Promissory
Note issued to Fair Finance Company (Portfolio A).
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10.3
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Promissory
Note issued to Timothy S. Durham (Portfolio A).
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10.4
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Promissory
Note issued to James F. Cochran (Portfolio A).
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10.5
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Promissory
Note issued to Fair Finance Company (Portfolio B).
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10.6
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Promissory
Note issued to Timothy S. Durham (Portfolio B).
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10.7
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Promissory
Note issued to James F. Cochran (Portfolio B).
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10.8
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Opinion
of Business Valuation Advisors.
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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:
February 20, 2009
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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 Executive Officer,
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Chief
Financial Officer, Treasurer and Assistant Secretary
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