- Current report filing (8-K)
December 18 2009 - 12:10PM
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)
December 15, 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
2.04.
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Triggering
Events That Accelerate or Increase a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement.
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As previously disclosed
in its Form 8-K/A filed on March 5, 2009, on December 10, 2008,
CLST Holdings, Inc. (the
Company
),
through CLST Asset Trust II (
Trust II
),
a trust wholly owned by CLST Asset II, 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, subject to certain limitations, on or before February 28,
2009, certain receivables, installment sales contracts and related assets of at
least $2 million owned by SSPE Investment Trust I (the
SSPE
Trust
) and SSPE, LLC (
SSPE
) (the
Purchase Agreement
). The purchases of receivables by Trust II were
financed by cash on hand and by advances under a non-recourse, revolving loan,
effective as of December 10, 2008, by and among Trust II, Summit Consumer
Receivables Fund, L.P., as Originator, SSPE and SSPE Trust, as Co-Borrowers,
Summit and Eric J. Gangloff, as Guarantors, Fortress Credit Corp. (
Fortress
), as the Lender, Summit
Alternative Investments, LLC, as the Initial Servicer, Lyon Financial Services, Inc.,
as the backup servicer, and U.S. Bank National Association, as the collateral
custodian (the
Trust II Credit Agreement
)
and the letter agreement, effective as of December 10, 2008, among Trust
II, Financo, the Originator, the Co-Borrowers, the Initial Servicer, and the
Guarantors (the
Letter Agreement
).
On December 15,
2009, we received a notice of default from Fortress stating that a servicer
default has occurred and is continuing under the Trust II Credit Agreement, as
a result of a material adverse effect with respect to the servicer. The notice is dated December 2, 2009,
but was not addressed to the Companys offices.
The Company received a copy of the notice on December 15,
2009. The Fortress notice states that
Fair Finance Company (
Fair
), in
its capacity as a sub-servicer for assets held by the SSPE Trust, has failed to
perform its servicing duties with respect to that portion of the receivables
portfolio owned by SSPE Trust for which Fair has been retained as a
sub-servicer by the SSPE Trust. This
failure, the Fortress notice asserts, results from the ongoing federal
investigation of Fair and Timothy Durham, and constitutes a material adverse
effect with respect to the servicer and thus a breach of a covenant under the
Trust II Credit Agreement. The
investigation of Fair and Mr. Durham has been previously disclosed in the
Companys Form 8-K filed on December 1, 2009. We are reviewing the matters described in
Fortress notice, and have not formed an opinion as to whether a default under
the Trust II Credit Agreement has occurred and remains uncured. Fair is not a sub-servicer for receivables
purchased by Trust II. However, Trust II
is a co-borrower with SSPE Trust under the Trust II Credit Agreement, and all
of its assets are pledged to secure obligations to Fortress under the Trust II
Credit Agreement.
If a default in the
covenants has occurred under the Trust II Credit Agreement, the interest rate
payable by Trust II will increase by an additional 2% per annum, and Fortress
will be entitled to accelerate and declare immediately due all of Trust IIs
obligations under the Trust II Credit Agreement. In addition, if a default under the Trust II
Credit Agreement exists and is continuing, Fortress is entitled to foreclose on
the assets of Trust II and sell them to satisfy amounts due it under the Trust
II Credit Agreement. In the event of such
foreclosure, pursuant to the Letter Agreement, Trust II may have certain rights
against SSPE Trust in the event of a default by SSPE Trust under the Trust II
Credit Agreement that permit Trust II to receive an amount equal to what Trust
II would have received on assets owned by Trust II which are foreclosed upon
due to the default by SSPE Trust. Only
Trust II is liable for amounts due Fortress under the Trust II Credit
Agreement. Thus, although the Company could lose some or all of its investment
in Trust II, we will not be obligated to pay any amounts due Fortress under the
Trust II Credit Agreement.
2
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: December 18,
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
and Treasurer
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3
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