SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT ON FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report, October 1, 1998
Commission File Number: 0-20307
AVALON COMMUNITY SERVICES, INC.
(Exact name of Registrant as
specified in its corporate charter)
Nevada 13-3592263
(State of Incorporation) (I.R.S. Employer I.D. Number)
13401 Railway Drive, Oklahoma City, Oklahoma 73114
(Address of Principal executive offices)
(405) 752-8802
(Issuer's telephone number)
ITEM 2. Acquisition of Assets
On September 16, 1998, Avalon Community Services Inc. closed a private
placement with the firm of Rice Sangalis Toole & Wilson. The Company received
gross proceeds through the private placement of $15 million from RSTW Partners
III L.P. Neither the Company, nor any of its affiliates, officers or directors
has any material relationship with RSTW Partners III L.P. The Company will
utilize the proceeds to construct, develop and expand existing and new programs
and facilities, acquisitions and working capital requirements for the purpose of
growing the Company's business.
The private placement provides for a $10 million senior subordinated note
facility under a Note Purchase Agreement. The senior subordinated note accrues
interest at the rate of 12.5%, with interest payable in quarterly installments.
The maturity date of the senior subordinated note is September 15, 2006. The
private placement provides for a Stock Purchase Agreement for the issuance of
1,622,448 shares of class A common stock. The Stock Purchase Agreement provides
for certain rights and anti-dilution provisions which will effectively maintain
an equity position on a fully diluted basis of 25% of the Company. The Stock
Purchase Agreement provides for additional rights which may be terminated upon
the successful completion of a public secondary offering. A separate Shareholder
Agreement was executed to restrict sales of shares of stock by certain
beneficial owners.
ITEM 7. Financial Statements and Exhibits
a. Note Purchase Agreement dated September 16,1998 between RSTW Partners III,
L.P., Avalon Community Services Inc. and Southern Corrections Systems Inc.
b. Stock Purchase Agreement dated September 16,1998 between RSTW Partners III,
L.P. and Avalon Community Services Inc.
c. Shareholder Agreement dated September 16,1998 between RSTW Partners III,
L.P., Avalon Community Services Inc., Donald E. Smith and Jerry M.
Sunderland.
d. Accounting for this transaction requires the use of estimates and valuation
models which are not complete at this time. A pro forma balance sheet
reflecting the transation as if it had occurred at the quarter ended June
30, 1998, will be filed no later than November 15, 1998.
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AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: October 1, 1998 AVALON COMMUNITY SERVICES, INC.
By: \Jerry Sunderland
Jerry Sunderland, President