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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
DECEMBER 16, 1998
(Date of earliest event reported)
ACE CASH EXPRESS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-20774 75-2142963
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
1231 GREENWAY DRIVE, SUITE 800
IRVING, TEXAS 75038
(Address of principal executive offices)
(972) 550-5000
(Registrant's telephone number,
including area code)
NOT APPLICABLE
(Former Name or Former Address,
if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
In April 1998, the Company signed a money order agreement with Travelers Express
Company, Inc. ("Travelers Express"), under which the Company would exclusively
sell money orders issued by Travelers Express (the "Money Order Agreement"). In
July 1998, the Company signed a Credit Agreement with a syndicate of banks (the
"Lenders") represented by Wells Fargo Bank (Texas), National Association ("Wells
Fargo Bank"), as lead agent and Chase Bank of Texas as co-agent (the "Credit
Agreement"). Both the Money Order Agreement and the Credit Agreement were to
become effective upon the expiration or termination of the Company's 1992 Master
Agreement, as amended (the "Previous Money Order Agreement"), with Integrated
Payment Systems Inc. ("IPS").
On December 16, 1998, the Company:
* terminated the Previous Money Order Agreement and paid and made
arrangements to pay IPS all amounts due under the Previous Money
Order Agreement;
* first borrowed under the Credit Agreement;
* amended the Credit Agreement to increase the amounts that the Company
may borrow and to extend the time during which the Company may borrow
under the Credit Agreement; and
* began selling money orders issued by Travelers Express under the
Money Order Agreement.
With those events, the Credit Agreement, as amended (the "Amended Credit
Agreement"), and the Money Order Agreement became effective. Also, the original
Collateral Trust Agreement signed in November 1996 was terminated, and the
Amended and Restated Collateral Trust Agreement that was signed with the Credit
Agreement in July 1998 (the "Amended Collateral Trust Agreement") and other
documents ancillary to the Credit Agreement became effective.
The Company's initial borrowing under the Amended Credit Agreement was $60.5
million, composed of $50 million under the Revolving Facility (defined below)
and $10.5 million under the Term-Loan Facility (defined below). The borrowed
funds were used to pay IPS the proceeds of, and fees for, money order sales by
the Company and to repay all borrowings from IPS under the Previous Money Order
Agreement. The initial borrowing was therefore a re-funding of amounts used for
the Company's day-to-day operations, for capital expenditures (including opening
new business locations), and for acquisitions of third-party business locations.
The Company also delivered to IPS a stand-by letter of credit of $575,000,
issued under the Amended Credit Agreement, to pay or secure payment of amounts
due to IPS under the Previous Money Order Agreement; the amounts ultimately due
to IPS will be determined in accordance with a termination agreement between the
Company and IPS.
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The First Amendment to Credit Agreement signed by the Company, the Lenders, and
Wells Fargo Bank as agent for the Lenders:
* increased from $90 million to $110 million the maximum amount that
the Company may borrow under the revolving (line-of-credit) facility, to be used
for working capital and general corporate purposes (the "Revolving Facility");
* increased from $15 million to $20 million the maximum amount that the
Company may borrow from Wells Fargo Bank as additional ten-day revolving
advances in addition to the Revolving Facility;
* extended from July 30, 1999 to December 15, 1999 the availability of
the Revolving Facility and of the term-loan facility, to be used for store
construction and relocation and other capital expenditures, including
acquisitions (the "Term-Loan Facility");
* extended from July 31, 2004 to December 16, 2004 the date on which
the Company must pay all amounts due to the Lenders resulting from borrowings
under the Term-Loan Facility; and
* reallocated among the Lenders their respective commitments to lend
under the Term-Loan Facility (but without changing the total amount of the
Term-Loan Facility).
The Company's borrowings under the Revolving Facility and the Term-Loan Facility
bear interest at variable or "floating" rates. Borrowings under the Revolving
Facility bear interest at an annual rate equal to, at the Company's discretion,
either the prime rate publicly announced by Wells Fargo Bank (the "Prime Rate")
or the London InterBank Offered Rate ("LIBOR") plus 0.75%. Borrowings under the
Term-Loan Facility bear interest at an annual rate equal to, at the Company's
discretion, either the Prime Rate plus 0.25% or LIBOR plus 1.75%.
To reduce its risk of greater interest expense upon a rise in the Prime Rate or
LIBOR, the Company has entered into interest-rate swap agreements with
NationsBank, N.A. Those agreements will effectively convert a portion of the
Company's floating-rate interest obligations to fixed-rate interest obligations
for a two-year period beginning January 4, 1999. The agreements involve the
exchange of amounts calculated using a fixed interest rate, as applied to a
notional amount determined by the parties, for amounts calculated using a
floating interest rate, as applied to that same notional amount, over the two
years; the notional amount is merely a base for the rate calculations and is not
exchanged.
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The notional amount for interest rates under the Revolving Facility will be $33
million; the notional amount for interest rates under the Term-Loan Facility
will initially be $9.75 million, increasing to $10.75 million in September 1999,
with decreases in the second year of the swap agreement corresponding to
term-loan payments due from the Company under the Amended Credit Agreement. The
notional amounts were determined by the Company based on its minimum projected
borrowings during the next two years. Under the swap agreements, the fixed rate
applicable to the notional amount under the Revolving Facility will be 5.14% for
the 1999 calendar year and 5.23% for the 2000 calendar year. The fixed rate
applicable to the notional amount under the Term-Loan Facility will be 6.23% for
the 1999 calendar year and 6.38% for the 2000 calendar year.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibit is filed herewith in
accordance with the provisions of Item 601 of Regulation S-K:
10.43 First Amendment to Credit Agreement dated as of December
16, 1998, among the Company, Wells Fargo Bank (Texas),
National Association, as agent, and the Lenders named therein,
with Schedules 2.01(a) and 2.01(b) thereto.
[THE SIGNATURE FOLLOWS ON THE NEXT PAGE.]
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SIGNATURE
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 thereunto duly authorized.
ACE CASH EXPRESS, INC.
(Registrant)
By: /s/ JAY B. SHIPOWITZ December 23, 1998
---------------------------
Jay B. Shipowitz
Senior Vice President and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
10.43 First Amendment to Credit Agreement dated as of
December 16, 1998, among the Company, Wells Fargo
Bank (Texas), National Association, as agent, and
the Lenders named therein, with Schedules 2.01(a)
and 2.01(b) thereto.