EXHIBIT 99.1
CONTACT: Daniel T. Phillips, Chairman/CEO
FIRSTPLUS FINANCIAL GROUP, INC.
(214) 231-7600
FIRSTPLUS announces formation of residual trust for shareholders and
creditors and acquisition of limited liability company interests of
Freedom Commercial Credit LLC
DALLAS, November 6, 2001 / FIRSTPLUS Financial Group, Inc. (OTC Pink Sheets:
FPFX) announced today that it is forming a residual trust for the benefit of its
shareholders and creditors and has acquired twenty-five percent of the
outstanding limited liability company interests of Freedom Commercial Credit LLC
("Freedom Commercial Credit"). The acquisition was in exchange for 25,000 shares
of a new series of convertible preferred stock of FIRSTPLUS and cash in the
amount of $250,000, subject to adjustment based on a final valuation of Freedom
Commercial Credit. The preferred stock is convertible into 45,000,000 shares of
FIRSTPLUS' common stock at the option of Freedom Commercial Credit on or after
the first anniversary date of the issuance of the preferred stock, but votes
with the common stock prior to conversion. As a result of the foregoing
transaction, Freedom Commercial Credit acquired control of FIRSTPLUS and now
holds approximately 51% of the outstanding voting securities of FIRSTPLUS. Also
as a result of the foregoing transaction, Freedom Commercial Credit has the
right to replace management and the board of directors of FIRSTPLUS.
In addition, the terms of the preferred stock provide that neither Freedom
Commercial Credit nor any of its affiliates and assigns will be entitled to any
of FIRSTPLUS' rights in the cash flow from the derivative interests in
mortgage-backed or asset-backed securitization transactions ("Residuals") of
FIRSTPLUS Financial, Inc. ("FPFI"). The transaction was based upon an
independent third-party valuation of FIRSTPLUS, excluding any cash flow rights
from the Residuals. Consequently, the appraiser determined that there was no
remaining net value in FIRSTPLUS.
As previously disclosed, FIRSTPLUS' then main operating subsidiary, FPFI, filed
for reorganization under Chapter 11 of the United States Bankruptcy Code on
March 5, 1999. On May 10, 2000, the bankruptcy plan (the "Plan") for FPFI
closed. The Plan, as approved, was initially filed on July 2, 1999 with the
United States Bankruptcy Court, Northern District of Texas, Dallas Division. In
connection with the Plan, a trust (the "FPFI Trust") was formed in order to
facilitate implementation of the Plan, into which the assets of FPFI, including
the stock of FPFI owned by FIRSTPLUS, were transferred for the benefit of the
creditors of FPFI, including FIRSTPLUS. As a result, FIRSTPLUS no longer owns
FPFI, but as a creditor of FPFI through its intercompany claim, it is a
beneficiary of the FPFI Trust, last in line behind the other creditors.
As a beneficiary of the FPFI Trust, FIRSTPLUS' only significant asset is an
instrument representing its portion of the cash flow rights from the Residuals
held by the FPFI Trust. The Residuals are illiquid (and encumbered) and may not
produce cash flow to the FPFI Trust for many years, if ever. In any event, the
first cash flows from the Residuals are committed to funding a portion of the
monies owed to Plan creditors. Contrary to public speculation, FIRSTPLUS has not
received any cash flows from the Residuals through its cash flow instrument.
The terms of the preferred stock provide that neither Freedom Commercial Credit,
nor any of its affiliates or assigns, are entitled to any of the cash flow from
the Residuals. The cash flow instrument to FIRSTPLUS will be set aside in a
trust (the "Residual Trust"). The beneficiary of the Residual Trust is
FIRSTPLUS, for the benefit of its shareholders and creditors, but excluding
Freedom Commercial Credit and its affiliates and assigns. The Residual Trust
will be formed by FIRSTPLUS and managed by a trustee appointed by FIRSTPLUS.
During the term of the Residual Trust, the trustee will distribute to FIRSTPLUS
all of the net income from the Residual Trust.
Freedom Commercial Credit is a Utah limited liability company, which, following
the transaction, is owned 75% by New Freedom Mortgage Corporation. It is in the
business of buying, repackaging and selling mortgage loans.
As previously disclosed, FIRSTPLUS has no operating business and it is unlikely
that FIRSTPLUS will reconstitute any of its previous business plans, such as
originating mortgage loans, servicing mortgage loan portfolios, or investing in
mortgage loan portfolios and interest only strips.
The above statements contained in this press release that are not historical
facts, including, but not limited to, statements that can be identified by the
use of forward-looking terminology such as "may," "will," "expect," anticipate,"
"estimate," or "continue" or the negative thereof or other variations thereon or
comparable terminology, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, and involve a number of risks
and uncertainties. The actual results of the future events described in such
forward-looking statements in this press release could differ materially from
those stated in such forward-looking statements. Among the factors that could
cause actual results to differ materially are: short term interest rate
fluctuations, level of defaults and prepayments, general economic conditions,
competition, government regulation and possible litigation, as well as the risks
and uncertainties set forth from time to time in the FIRSTPLUS' public reports
and filings and public statements.
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