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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): June 28, 2002
FIRSTPLUS Financial Group, Inc.
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(Exact name of registrant as specified in its charter)
NEVADA 0-27750 75-2561085
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
1349 Empire Central, Suite 1300 Dallas Texas 75247
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 231-7600
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Item 1. Change in Control of Registrant.
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On June 28, 2002, CL Capital Lending, LLC, a Texas limited liability company
("Capital Lending"), acquired 25,639 shares of Series D Convertible Preferred
Stock (the "Series D Preferred") of FIRSTPLUS Financial Group, Inc. (the
"Company"). The sale of Series D Preferred to Capital Lending was unanimously
approved by the Board of Directors of the Company, with the exception of Daniel
T. Phillips, Chairman and Chief Executive Officer of the Company, who abstained
from the vote because of his affiliation with Capital Lending. See "Item 2.
Acquisition or Disposition of Assets," below. The Series D Preferred is
convertible into 46,150,200 shares of the Company's common stock at the option
of Capital Lending on or after the first anniversary date of the issuance of the
Series D Preferred, but votes with the common stock prior to conversion. As a
result of the foregoing transaction, Capital Lending acquired control of the
Company and now holds approximately 51% of the outstanding voting securities of
the Company. In connection with the transaction, the Company agreed to expand
its Board of Directors to seven members. Consequently, George T. Davis, a
significant shareholder of the Company, and Jack Roubinek, the founder of
Capital Lending, have become members of the Board of Directors. Mr. Davis also
agreed to serve as Vice President--Investor Relations for the Company. The name
of the Company will not change as a result of this transaction, nor should this
transaction impact trading of the Company's shares. Because the Company was
previously delisted from trading on the New York Stock Exchange, there is no
requirement for a shareholder vote for this transaction. See "Item 2.
Acquisition or Disposition of Assets," below.
Item 2. Acquisition or Disposition of Assets.
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On June 28, 2002, the Company acquired (the "Acquisition") 42.3% of the
outstanding limited liability company interests (the "LLC Interest") of Capital
Lending. The aggregate purchase price paid by the Company for the LLC Interest
was 25,639 shares of Series D Preferred of the Company.
In August 2001, the Company invested seed capital for a one-third profits
interest in Capital Lending. In connection with the above described transaction,
the profits interest was converted to an equity interest in Capital Lending. Mr.
Phillips provided consulting advice and direction to Capital Lending in
connection with its formation and development and, for such services, an
affiliate of Mr. Phillips received a one-third profits interest in Capital
Lending. As a result of the transaction, and after accounting for certain
employee interests, the Company will hold a 40.2% equity interest in Capital
Lending, and a trust controlled by Mr. Roubinek will hold a 27.4% interest. Mr.
Phillips' affiliate's interest will be 27.4%.
The terms of the Series D Preferred provide that neither Capital Lending, nor
any of its affiliates or assigns, will be entitled to any of the Company's
rights in the cash flow from the derivative interests in mortgage-backed or
asset-backed securitization transactions (the "Residuals") of FIRSTPLUS
Financial, Inc. ("FPFI"), which has been set aside for the benefit of the
creditors and current shareholders of the Company in a trust (the "Trust"). The
beneficiary of the Trust is the Company, for the benefit of its shareholders and
creditors, but excluding Capital Lending and its affiliates and assigns. The
Trust has been formed and is managed by George T. Davis, as trustee. During the
term of the Trust, the trustee will distribute to the Company all of the net
income from the Trust. Capital Lending will not have the right to alter or amend
the Trust. Capital Lending will not receive any extraordinary benefits as a
holder of the Series D Preferred, or as a holder of common stock issued to
Capital Lending upon conversion of the Series D Preferred. Capital Lending will
share with the Company's other shareholders in any distributions made by the
Company to its shareholders, with the exception of distributions made from the
Trust.
As a requirement of the transaction, the Company received a fairness opinion
from Business Valuation Services ("BVS") as to the fairness to the Company's
shareholders, from a financial point of view, of the interest in Capital Lending
acquired by Company in exchange for the Series D Preferred and the other
consideration paid. BVS valued Capital Lending in a range from approximately $9
million to $11 million. A copy of the fairness opinion is attached as an exhibit
to this Form 8-K.
Capital Lending is a Texas limited liability company formed in August 2001. It
is in the business of providing lending institutions with access to a loan
origination system that has the ability to allow the underwriting of loans using
the institution's existing lending criteria, while at the same time capturing
data to qualify loans for a credit enhancement program, on a loan-by-loan basis,
which, without such credit enhancement, the institution could not otherwise
offer.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of business acquired.
Financial statements of Capital Lending, LLC are not yet available. CL
Capital Lending, LLC is a startup entity. The valuation of CL Capital
Lending, LLC was based upon, among other things, the present worth of
anticipated future net cash flows generated by the business. Any
financial statements required by this Item 7(a) will be completed and
filed by amendment to this Form 8-K Current Report within 60 days
after the date this Form 8-K Current Report is required to be filed
with the Securities and Exchange Commission.
(b) Pro forma financial information.
The pro forma financial statements of the Company required by this
Item 7(b) are not yet available. The Company expects that the pro
forma financial statements will be completed and filed by amendment to
this Form 8-K Current Report within 60 days after the date this Form
8-K Current Report is required to be filed with the Securities and
Exchange Commission.
(c) Exhibits.
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K.
2.1 Purchase Agreement, dated June 28, 2002, between CL Capital
Lending, LLC and FIRSTPLUS Financial Group, Inc.
3.1 FIRSTPLUS Financial Group, Inc. Amended and Restated Bylaws,
dated June 28, 2002.
4.1 Second Amendment to Rights Agreement, dated June 27, 2002, by and
between FIRSTPLUS Financial Group, Inc. and Mellon Investor
Services LLC (formerly Chasemellon Shareholder Services, L.L.C.).
4.2 Certificate of Designation Establishing Series D Convertible
Preferred Stock of FIRSTPLUS Financial Group, Inc.
99.1 Press Release of FIRSTPLUS Financial Group, Inc., dated as of
July 1, 2002.
99.2 Fairness Opinion of Business Valuation Services, dated June 24,
2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRSTPLUS FINANCIAL GROUP, INC.
Dated: July 15, 2002 By: /s/ Daniel T. Phillips
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Daniel T. Phillips
President and Chief Executive Officer
Exhibit Index
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2.1 Purchase Agreement, dated June 28, 2002, between CL Capital Lending, LLC
and FIRSTPLUS Financial Group, Inc.
3.1 FIRSTPLUS Financial Group, Inc. Amended and Restated Bylaws, dated June 28,
2002.
4.1 Second Amendment to Rights Agreement, dated June 27, 2002, by and between
FIRSTPLUS Financial Group, Inc. and Mellon Investor Services LLC (formerly
Chasemellon Shareholder Services, L.L.C.).
4.2 Certificate of Designation Establishing Series D Convertible Preferred
Stock of FIRSTPLUS Financial Group, Inc.
99.1 Press Release of FIRSTPLUS Financial Group, Inc., dated as of July 1, 2002.
99.2 Fairness Opinion of Business Valuation Services, dated June 24, 2002.