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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.
September 21, 1998
Date of Report (Date of earliest event reported)
CELTIC INVESTMENT, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-37436-C 36-3729989
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State of Commission File No. IRS Employer
Incorporation Identification No.
17W220 22nd Street, Suite 420
Oakbrook Terrace, IL 60181
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(Address of principal executive offices)
(630) 993-9010
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(Registrant's telephone number)
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Item 2. Acquisition or Disposition of Assets
General
Celtic Investment, Inc. (the "Company") is a financial services related
holding company engaged in the business of asset based lending (factoring) and
the real estate mortgage business.. On September 21, 1998, the Company's
wholly-owned subsidiary, U.S. Commercial Funding ("USCF") acquired all of the
issued and outstanding shares of Goodman Factors, Inc. ("Goodman"), a Dallas
based asset based lender. The acquisition of Goodman significantly increases the
size of the Company. As a result of the acquisition of Goodman, the unaudited,
consolidated assets of the Company on a proforma basis as of June 30, 1998
increased a total of 358% to approximnately $33,000,000 and consolidated
revenues increased a total of 221% to approximately $9,000,000
Terms of the Stock Purchase Agreement
The Stock Purchase Agreement was executed on May 19 and May 20, 1998, and
the stock purchase transaction (the "Acquisition") was closed on September 21,
1998. In connection with the Acquisition, all of the issued and outstanding
shares of Goodman owned by the two Goodman Shareholders, were purchased for
$11,750,000 in cash and notes. In addition to the payment of the purchase price,
USCF was required to provide Goodman with capital of $3,150,000 to allow it to
repay loans to its shareholders. USCF was also required to obtain sufficient
capital to repay Goodman's existing line of credit which was in the amount of
$6,750,000.
The total capital required to complete the Goodman transaction was
obtained from the following sources:
A $23,000,000 senior, secured line of credit facility with Capital
Business Credit, a division of Capital Factors, Inc. This is a combined
credit facility for U.S. Commercial Funding Corporation and Goodman
Factors to purchase accounts receivable from clients. Included in this
facility is a term loan in the amount of $3,000,000 for use as a part of
the purchase price of the Goodman Factors stock. It also provides a
revolving line of credit to fund asset based loans and machinery and
equipment loans to prospective clients.
An $1,500,000 subordinated debt-financing commitment from a private
investment firm.
$1,954,500 from the sale of the Company's Preferred Stock.
Seller Financing in the amount of $3,750,000.
Employment Agreements
As part of the Acquisition, the Company entered into Employment Agreements
with each of the Goodman Shareholders and with one key employee, copies of which
are attached hereto.
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Additional Information
The description contained herein of the Acquisition, the Stock Purchase
Agreement and other related Agreements is qualified in its entirety by reference
to the agreements attached hereto as exhibits.
Item 7. Financial Statements and Exhibits
(a) Financial Statements. As of the date of the filing of this Current
Report on Form 8-K, it is impractical for the Company to provide the financial
statements required by this Item 7(a). In accordance with Item 7(a)(4) of Form
8-K, such financial statements shall be filed by amendment to this Form 8-K no
later than 60 days after October 5, 1998.
(b) Pro Forma Financial Statements. As of the date of the filing of this
Current Report on Form 8-K, it is impractical for the Company to provide the pro
forma financial statements required by this Item 7(b). In accordance with Item
7(a)(4) of Form 8-K, such pro forma financial statements shall be filed by
amendment to this Form 8-K no later than 60 days after October 5, 1998
(c) Exhibits.
No. Description
2.1 Stock Purchase Agreement
10.1. Promissory Note - Harold Goodman
10.2. Promissory Note -Keith Reid
10.3. Pledge Agreement - Harold Goodman
10.4. Pledge Agreement -Keith Goodman
10.5 Employment Agreement - Harold Goodman.
10.6. Employment Agreement - Keith Reid
10.7. Employment Agreement - Bret M. Schuch
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: October 5, 1998 CELTIC INVESTMENT, INC.
By /s/ Douglas P. Morris
Douglas P. Morris
President
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