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
December 15, 2005
Date of Report (Date of earliest event reported)
NOVASTAR FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Maryland | | 001-13533 | | 74-2830661 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
8140 Ward Parkway, Suite 300, Kansas City, MO 64114
(Address of principal executive offices)
(Zip Code)
(816) 237-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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 (see General Instruction A.2. below):
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))
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On December 15, 2005, NovaStar Financial, Inc. (the “Company”) announced the completion of a $1.6 billion Asset Backed Securitization by its wholly-owned subsidiary, NovaStar Mortgage, Inc (“NMI”). A prospectus supplement was filed, pursuant to Rule 424(b)(5), with the Securities and Exchange Commission on December 13, 2005 by NovaStar Mortgage Funding Trust, Series 2005-4 (the “Trust”).
Lead managers Deutsche Bank Securities, Wachovia Securities and RBS Greenwich Capital with co-manager Morgan Stanley, underwrote NovaStar Mortgage Funding Trust, Series 2005-4, which closed December 15, 2005. The transaction offered 15 rated classes of certificates with a face value of $1,558,400,000.
NMI retained the M-9, M-10, M-11, M-12 and Class C certificates and also retains the right to service the underlying mortgage loans. The M-11, M-12 and class C certificates were not covered by the prospectus. Class M-9, M-10, M-11 and M-12 collectively represent $54.4 million in principal. Class M-9 is rated A/Baa3/BBB+ by S&P, Moody’s and Fitch, respectively. The Class M-10 is rated BBB+/Ba1/BBB by S&P, Moody’s and Fitch, respectively. The Class M-11 is rated BBB/BBB- by S&P and Fitch, respectively. The Class M-12 is rated BBB- by S&P. Class C has a notional amount of $1.6 billion, entitles NovaStar to excess and prepayment penalty fee cash flow from the underlying loan collateral and serves as overcollateralization. Other than prepayment penalty fee cash flow, Class C is subordinated to the other classes, all of which were offered pursuant to the prospectus supplement.
The initial level of overcollateralization is approximately $9.6 million. On any distribution date after the closing date, the Trust is required to maintain or restore overcollateralization at the initial level. The overcollateralization is available for the benefit of all classes of the offered and class I certificates.
A copy of the press release announcing this securitization is included as Exhibit 99 to the Form 8-K and is incorporated herein by reference. References to the registrant’s website in the press release do not incorporate by reference the information on the registrant’s website into this Current Report and the registrant disclaims any such incorporation by reference.
Item 9.01 – Financial Statements and Exhibits
99 | Press Release dated December 15, 2005, “NovaStar Closes $1.6 billion Asset Backed Securitization.” |
SIGNATURE
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 thereunto duly authorized.
| DATE: December 16, 2005 | /s/ Gregory S. Metz |
| Gregory S. Metz | |
Chief Financial Officer
Exhibit Index
Exhibit
Number
99 | Press Release dated December 15, 2005, “NovaStar Closes $1.6 billion Asset Backed Securitization.” |
