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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): APRIL 9, 1997
CITYSCAPE FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-27314 11-2994671
STATE OR OTHER JURISDICTION COMMISSION (IRS EMPLOYER
OF INCORPORATION FILE NUMBER IDENTIFICATION NO.)
565 TAXTER ROAD, ELMSFORD, NEW YORK 10523-5200
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES) ZIP CODE
Registrant's telephone number, including area code: (914) 592-6677
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FORMER NAME OR FORMER ADDRESS,
IF CHANGED SINCE LAST REPORT
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Item 5. Other Events.
ISSUANCE OF 6% CONVERTIBLE PREFERRED STOCK, SERIES A AND RELATED
WARRANTS
On April 9, 1997, the Company completed the private placement of 5,000
shares of 6% Convertible Preferred Stock, Series A (the "Series A Preferred
Stock"), with a liquidation preference (the "Liquidation Preference") of $10,000
per share, and related Warrants, pursuant to which the Company received
aggregate net proceeds (after transaction fees and expenses) of approximately
$49 million. The net proceeds from the sale of the Series A Preferred Stock will
be used for working capital purposes or for the repayment of outstanding
indebtedness under the Company's Senior Secured Credit Agreement.
Dividends on the Series A Preferred Stock are cumulative at the rate of
6% of the Liquidation Preference per annum payable quarterly. Dividends are
payable, at the option of the Company, (i) in cash, (ii) in shares of Common
Stock valued at the closing price on the day immediately preceding the dividend
payment date or (iii) by increasing the Liquidation Preference in an amount
equal to and in lieu of the cash dividend payment.
The Series A Preferred Stock is redeemable at the option of the Company
at a redemption price equal to 105% of the Liquidation Preference at any time
prior to July 9, 1997 or thereafter at a redemption price equal to 120% of the
Liquidation Preference if the closing price of the Common Stock is less than
$17.50 per share (subject to adjustments) for ten consecutive trading days. In
addition, the Series A Preferred Stock is redeemable at the option of the
Company at a redemption price equal to 120% of the Liquidation Preference within
30 days of the occurrence of any of the following events: (i) the Common Stock
ceases to be listed on Nasdaq or a national securities exchange; (ii) the
Company is unable for any reason to issue Common Stock upon receipt of a notice
of conversion (such redemption only to the effected holders); (iii) the Company
fails to make certain cash payments when due as described below (such redemption
only to the effected holders); (iv) trading in the Common Stock is suspended by
Nasdaq or the principal market on which the Common Stock is traded for more than
seven consecutive trading days; and (v) the registration statement the Company
is required to file with respect to the resale of the Common Stock issuable upon
conversion of the Series A Preferred or exercise of the Warrants (the "Preferred
Registration Statement") has not been declared effective on or before October 6,
1997.
The Series A Preferred Stock is convertible into shares of Common Stock
subject to the following restrictions: each holder is entitled to convert up to
25% of its Series A Preferred Stock on the date of issuance; up to 50% (on a
cumulative basis) after 90 days; up to 75% (on a cumulative basis) after 180
days; and up to 100% after 270 days. The conversion price is equal to the lowest
daily sales price of the Common Stock during the four consecutive trading days
immediately preceding conversion (the "Conversion Period"), discounted by 2% for
conversions occurring on days 91 through 180 following original issuance, 3% for
conversions occurring on days 181 through 270 and 4% thereafter. Upon the
occurrence of any of the events that give rise to the Company's optional
redemption right described in clauses (i) through (v) of the previous paragraph,
the conversion restrictions will be lifted, the Conversion Period will be
increased to 15 consecutive trading days and the conversion discount will be
increased to 10%. In addition, during the continuance of such events or the
failure (beyond certain specified periods) of the Preferred Registration
Statement to remain effective and available for use, the dividend rate will be
increased to 15% and the Company will be obligated to make certain cash payments
to the holders of the Series A Preferred Stock, provided that if the Company is
prohibited from making such payments, such amounts will be added to the
Liquidation Preference. Any shares of Series A Preferred Stock outstanding on
the fifth anniversary of the original issuance date (subject to certain
extensions as provided in the Certificate of Designations) will be automatically
converted into Common Stock at the conversion price in effect on the date
thereof.
In the event of a Change of Control (as defined below) of the Company,
the conversion restrictions will be lifted and holders of the Series A Preferred
Stock may elect, within a specified period, to have the Company redeem such
stock at a redemption price equal to 110% of the Liquidation Preference. For
purposes of the Series A Preferred Stock, a Change of Control is defined as (i)
the sale, conveyance or disposition of all or substantially all of the assets of
the Company, (ii) the consolidation or merger of the Company, in which the
stockholders of the Company immediately preceding the merger or consolidation
fail to continue to own more than 50% of the voting power of the capital stock
of the surviving entity and (iii) the acquisition of more than 50% of the
voting power of the Company's capital stock by any entity or "group," subject to
certain exceptions.
The Warrants are exercisable at any time within five years of issuance
for an aggregate of 500,000 shares of Common Stock at an exercise price per
share of $20.625, which is equal to 125% of the closing sale price of the Common
Stock on the date immediately prior to the date of original issuance of the
Warrants.
The Company has provided registration rights in connection with the
resale of the Common Stock issued upon conversion of the Series A Preferred
Stock or the exercise of the Warrants and has agreed to file the Preferred
Registration Statement.
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A copy of the underlying Securities Purchase Agreement by and
between the Company and the purchasers named therein, the Certificate of
Designation of the Series A Preferred Stock, the Registration Rights Agreement
and the Form of Warrant have been filed with this Form 8-K as exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
4.1 Certificate of Designation of 6% Convertible Preferred Stock, Series
A.
4.2 Securities Purchase Agreement dated April 9, 1997 by and among the
Company and the purchasers named therein.
4.3 Registration Rights Agreement dated April 9, 1997 by and among the
Company and the purchasers named therein.
4.4 Form of Common Stock Purchase Warrant.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
CITYSCAPE FINANCIAL CORP.
(Registrant)
By: /s/ ROBERT C. PATENT
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Name: Robert C. Patent
Title: Executive Vice President
Dated: April 10, 1997
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INDEX TO EXHIBITS
EXHIBITS DESCRIPTION PAGE
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4.1 Certificate of Designation of 6% Convertible Preferred Stock, Series A.
4.2 Securities Purchase Agreement dated April 9, 1997 by and among the
Registrant and the purchasers named therein.
4.3 Registration Rights Agreement dated April 9, 1997 by and among the Company
and the purchasers named therein.
4.4 Form of Common Stock Purchase Warrant.