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 (Dated of earliest event reported): February 4, 1999
Resource America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-4408 72-0654145
(State of incorporation (Commission (I.R.S. Employer
or organization) File Number) Identification No.)
1521 Locust Street, 4th Floor Philadelphia, PA 19102
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (215) 546-5005
Item 2. Acquisition or Disposition of Assets
Pursuant to a Stock Purchase Agreement (the "Agreement") dated December
15, 1998 (as amended), Fidelity Leasing, Inc. ("FLI") acquired all of the
capital stock (the "JLA Stock") of JLA Credit Corporation ("JLA") from Japan
Leasing (U.S.A.), Inc. ("Japan Leasing") for cash consideration of $38 million,
including $5 million used to fund an escrow account (the "Closing Escrow
Account") for the purposes of (i) satisfying an obligation of JLA to Barclays
Bank and (ii) securing the obligation of Japan Leasing to reimburse FLI in the
event of any breach of Japan Leasing's representations and warranties under the
Agreement. The obligation owed to Barclay's Bank was satisfied by payment of $1
million from the Closing Escrow Account at closing.
At the time of acquisition, JLA's assets were subject to approximately
$305 million of outstanding debt obligations (excluding an additional $14
million of accounts payable and other current obligations). In connection with
(and as a condition to) closing the acquisition of the JLA Stock, these
obligations were partially refinanced as follows:
1. $143 million of obligations owed to a consortium of Japanese banks
was refinanced by a securitization loan from First Union Capital Markets Corp.
The loan is secured by a pledge of certain JLA lease assets. In addition, the
Company and FLI guaranteed the obligations of the borrower, a subsidiary of JLA,
arising from any breach of any representation, warranty, covenant or agreement
of the borrower contained in the loan documents.
2. An additional $2.3 million of obligations owed to the bank
consortium were repaid from funds in a pre-existing escrow account established
for that purpose by JLA.
3. An additional $8.7 million of obligations owed to the bank
consortium were repaid directly by FLI.
4. $6.7 million of obligations owed to Japan Leasing were assumed by
FLI through delivery of its promissory note (the "FLI Note") to Japan Leasing.
The FLI Note matures in five years and bears interest at 250 basis points above
the 5-year Treasury rate for the first two years and at 400 basis points above
the 5-year Treasury rate for the last three years. The FLI Note is secured by
certain lease assets and guaranteed by the Company.
At closing, Japan Leasing was unable to deliver complete lease files on
certain of JLA's lease assets. As a consequence, the balance of the Closing
Escrow Account ($4 million), after the payment to Barclays Bank, was paid to
FLI. To the extent that any lease file is subsequently completed, FLI must pay
66.15% of the net investment value of such lease (calculated as of the time the
file is completed) into the Closing Escrow Account. The maximum aggregate amount
which can be paid to the Closing Escrow Account is approximately $4 million. The
remaining 33.85% of the lease's net investment value will be applied to increase
the outstanding principal balance of the FLI Note. The maximum aggregate amount
by which the principal balance of the FLI Note can be increased is approximately
$2.1 million. Any amounts in the Closing Escrow Account as of April 30, 1999
will be released to Japan Leasing, unless at that time FLI has an
indemnification claim pending against Japan Leasing.
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In determining the amount of consideration paid for the JLA Stock, FLI
considered the book value of JLA's assets as well as the value of JLA as an
ongoing business, among other factors.
JLA underwrites, finances and services non-cancelable, full-payout
equipment leases, generally involving equipment costing $25,000 to $500,000, for
small- and medium-sized businesses. JLA originated leases with an aggregate
original equipment purchase price of $181.0 million and $151.0 million during
the years ended December 31, 1998 and 1997, respectively. As of December 31,
1998, JLA had a net investment in leases of $312.1 million.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The required financial statements will be filed with the
Securities and Exchange Commission on or before April 20,
1999.
(b) Pro Forma Financial Information
The required pro forma financial information will be filed
with the Securities and Exchange Commission on or before April
20, 1999.
(c) Exhibits
2.1 Stock Purchase Agreement, dated as of December 15,
1998, between Japan Leasing (U.S.A.), Inc. and
Fidelity Leasing, Inc.
Omitted schedules:
Exhibit 1: Accounting Policies
Seller Disclosure Letter
Exhibit 6.12(b): Promissory Note
Exhibit 6.16: Employee Escrow Agreement
Exhibit 7.1(g): Consents
Exhibit 7.1(h): Escrow Agreement
Exhibit 7.1(i): Security Agreement
Exhibit 7.1(j): Assignment and Assumption of
Interests in Receivables
Exhibit 7.2(j): Skadden Arps opinion
Exhibit 7.2(p): Secretary's Certificate
2.2 Amendment No. 1 to Stock Purchase Agreement, dated as
of December 31, 1998
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2.3 Amendment No. 2 to Stock Purchase Agreement, dated as
of January 12, 1998
2.4 Amendment No. 3 to Stock Purchase Agreement, dated as
of February 2, 1999
Omitted schedules:
Exhibit 4.28: Seller Disclosure
Exhibit 6.12(b): Promissory Note
Exhibit A: Guarantee
Exhibit 7.1(i): Security Agreement
Exhibit 7.2(j): Skadden Arps opinion
Exhibit 7.2(r): Minerva opinion
Exhibit 7.2(s): Reiko Kasano opinion
2.5 Amendment No. 4 to Stock Purchase Agreement, dated as
of January 3, 1999
Omitted schedules:
Schedule 2.4: Leases without original documentation
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SIGNATURES
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 hereunto duly authorized.
RESOURCE AMERICA, INC.
By: /s/ Steven J. Kessler
-------------------------
Steven J. Kessler
Chief Financial Officer
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