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 (or Date of Earliest Event Reported): March 6, 1999
FIRSTPLUS FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
NEVADA 27550 75-256108
State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
1600 Viceroy Dallas, Texas 75235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 599-6400
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ITEM 5. OTHER EVENTS
As previously announced, two of FIRSTPLUS Financial Group, Inc.'s (the
"Company" or the "Registrant"), wholly-owned subsidiaries, FIRSTPLUS Financial,
Inc., and FIRSTPLUS Special Funding Corp. filed for reorganization under Chapter
11 of the United States Bankruptcy Code on March 5, 1999. The filing was made in
the United States Bankruptcy Court for the Northern District of Texas in Dallas.
Neither the Registrant, nor any of its other subsidiaries has sought bankruptcy
protection.
FIRSTPLUS Financial, Inc. is one of the Company's main operating sub-
sidiaries. It produced, sold, and serviced the majority of the Company's High
LTV loan originations. FIRSTPLUS Special Funding Corp. is a special purpose
entity formed to facilitate certain borrowings by FIRSTPLUS Financial, Inc.
The liquidity issues leading to the subsidiary's bankruptcy filing have
required significant focus by Senior Management. Additionally, Senior Management
has been concentrating on related strategic issues such as negotiating with
lenders and creditors, finding new sources of financing and whole loan
purchasers, and reorganizing and recapitalizing the Company. The resources
available to the Company have been limited by the liquidity issues and resulting
downsizing previously disclosed.
The Registrant is currently not subject to any bankruptcy proceedings.
However, the Registrant has no income producing activities and is dependent on
its subsidiaries to fund its obligations. FIRSTPLUS Financial, Inc. will be
severely limited in its ability or will not be able to provide such funds as a
result of the bankruptcy filing. The Registrant's other significant operating
subsidiary, Western Interstate Bancorp ("WIB"), is limited in its ability to
release funds to the parent company du to its debt covenant restrictions.
Additionally WIB's main operating company is a FDIC-insured industrial loan
company, FIRSTPLUS Bank, that is also limited in the amount of funds that it can
release by way of dividends or intercompany loans due to regulatory
restrictions. These limitations may cause the Registrant or its other
subsidiaries to experience liquidity issues similar to FIRSTPLUS Financial, Inc.
Additionally, on March 18, 1999 an event of default occurred on an
interest payment following a 30-day grace period on the Company's 7.25 percent
convertible subordinated notes due August 15, 2003. The Company is currently
negotiating with note holders for an additional grace period. The Company is
also in default on several of its lease obligations and is negotiating with
those lenders to resolve such defaults. No assurance can be made as to whether
the negotiations will be successful or if the negotiations are unsuccessful what
the ultimate outcome will be for the Company.
As a result of limited resources and conflicting demands, the Company
has not completed the analysis necessary to complete the previously announced
restatement nor the preparation of its financial statements. As such, the
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Company is delaying the release of earnings for the fiscal year ended December
31, 1998 and does not expect to timely file its Annual Report on Form 10-K. The
Company has previously stated that it is in the process of restating its
financial statements for each of the fiscal years in the three-year period ended
September 30, 1997, the three-month transition period ended December 31, 1997,
and the first three quarters of the fiscal year ended December 31, 1998. The
restatement is the result of revising its methodology for estimating the fair
value of I/O Strips and Receivable from Trusts assets to the "cash-out" method
from the previously used "cash-in" method to comply with the Securities and
Exchange Commission guidance announced on December 8, 1998.
The Company currently cannot estimate when it will complete its
restatement, release results for fiscal year 1998, and file its Form 10-K for
the year ending December 31, 1998 with the Securities and Exchange Commission.
It is expected that the impact of the restatement will be material to the
results of all prior periods. Accordingly, previously issued financial results
for the periods indicated as affected by the restatement above should not be
relied upon.
FIRSTPLUS Financial Group, Inc. is a diversified consumer finance com-
pany that originates, services, and sells consumer finance receivables.
FIRSTPLUS is headquartered in Dallas, Texas.
The above statements contained in this report that are not historical
facts, including, but not limited to, statements that can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, and
involve a number of risks and uncertainties. The actual results of the future
events described in such forward-looking statements in this press release could
differ materially from those stated in such forward-looking statements. Among
the factors that could cause actual results to differ materially are: the
ultimate outcome of any negotiations, short-term interest rate fluctuations,
level of defaults and prepayments, general economic conditions, competition,
government regulation and possible future litigation, as well as the risks and
uncertainties discussed in the Company's Current Report on Form 8-K, dated
December 19, 1996, including without limitation, the uncertainties set forth
from time to time in the Company's other public reports and filings and public
statements.
ITEM 7. Financial Statements and Exhibits.
(c.Exhibits
(i) Press release dated January 29, 1999
(ii) Press release dated March 6, 1999
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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.
Dated: March 30, 1999
FIRSTPLUS FINANCIAL GROUP, INC.
By: /s/William P. Benac
--------------------------
Name: William P. Benac
Title: Chief Financial Officer
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CONTACT: Daniel T. Phillips, Chairman/CEO
Eric C. Green, President
William P. Benac, CFO
John R. Hauge, Group Executive
FIRSTPLUS Financial Group, Inc.
FOR IMMEDIATE RELEASE
Michele Katz, Ian Hirsch
Press: Brian Maddox, Estelle Bieber
Morgen-Walke Associates
(212) 850-5600
FIRSTPLUS ANNOUNCES IMPLEMENTATION OF
NEW ACCOUNTING GUIDANCE
DALLAS, Texas, January 29, 1999 - FIRSTPLUS Financial Group, Inc. (NYSE: FP)
today announced it will be implementing new accounting guidance regarding the
valuation of its retained interests from securitization transactions recently
provided by the Financial Accounting Standards Board ("FASB"). As reported in
the Company's September 30, 1998 Form 10-Q, the FASB issued a draft Special
Report ("A Guide to Implementation of Statement 125 on Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, Questions
and Answers, Second Edition") which was finalized during December 1998. In this
Special Report, the FASB concluded that the "cash-out" method of valuing
retained interests should be used to estimate fair value. The Securities and
Exchange Commission Staff announced on December 8, 1998 that the change to the
"cash-out" method should be made by restatement. Based on this guidance, the
Company is revising its methodology for estimating the fair value of I/O Strips
and Receivable from Trusts assets to the "cash-out" method from the previously
used "cash-in" method.
Prior to the issuance of the FASB's Special Report, one of two different
valuation techniques, the "cash-in" method or the "cash-out" method, had been
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used under Statement 125 to estimate the fair value of retained interests such
as I/O Strips and other credit enhancements by specialty finance companies. The
basic difference between the two methods concerns the period over which the
estimated cash flows are discounted. The discount period in the "cash-in" method
ends when it is estimated the trust will collect the cash. The "cash-out" method
discounts cash flows from the date it is estimated that the trust will return
the cash to the Company.
The Company will restate its financial statements for each of the fiscal
years in the three-year period ended September 30, 1997, the three-month
transition period ended December 31, 1997, and the first three quarters of the
fiscal year ended December 31, 1998. The Company is currently in the process of
estimating the ultimate impact of the restatement. However, as disclosed in the
Company's Form 10-Q for the September 1998 quarter, it is expected that the
impact will be material to the results of all prior periods. As a result of the
restatement, the Company will release results for the fiscal year ended December
31, 1998 following the completion of the restatement of prior financial
statements and the filing of its Annual Report for fiscal year 1998 on Form
10-K. The Company presently anticipates completing this process by mid-March
1999.
-more-
FIRSTPLUS Financial Group, Inc.
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FIRSTPLUS Financial Group, Inc. is a diversified consumer finance company
that originates, services, and sells consumer finance receivables. FIRSTPLUS is
headquartered in Dallas, Texas.
The above statements contained in this press release that are not historical
facts, including, but not limited to, statements that can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, and
involve a number of risks and uncertainties. The actual results of the future
events described in such forward-looking statements in this press release could
differ materially from those stated in such forward-looking statements. Among
the factors that could cause actual results to differ materially are: the
ultimate outcome of any negotiations, short-term interest rate fluctuations,
level of defaults and prepayments, general economic conditions, competition,
government regulation and possible future litigation, as well as the risks and
uncertainties discussed in the Company's Current Report on Form 8-K, dated
December 19, 1996, including without limitation, the uncertainties set forth
from time to time in the Company's other public reports and filings and public
statements.
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CONTACT: Daniel T. Phillips, Chairman/CEO
Eric C. Green, President
William P. Benac, CFO
John R. Hauge, Group Executive
FIRSTPLUS Financial Group, Inc.
(214) 5996300
FOR IMMEDIATE RELEASE
Michele Katz, Ian Hirsch
Press: Brian Maddox, Estelle Bieber
MorgenWalke Associates
(212) 8505600
FIRSTPLUS ANNOUNCES SUBSIDIARY'S BANKRUPTCY FILING
DALLAS, Texas - March 6, 1999 -- FIRSTPLUS Financial Group, Inc. (NYSE: FP)
today announced that one of its wholly-owned subsidiaries, FIRSTPLUS Financial,
Inc. ("INC"), and FIRSTPLUS Special Funding Corp. (a subsidiary of INC created
to facilitate a financing from Deutsche Bank) filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. The filing was made in the
United States Bankruptcy Court for the Northern District of Texas in Dallas.
Neither FIRSTPLUS Financial Group, the paren company, nor any of its other
subsidiaries has sought bankruptcy protection.
Daniel T. Phillips, Chairman and CEO of FIRSTPLUS Financial Group, said: "The
tremendous recent turmoil in the asset-backed securitization markets and the
lack of a reliable, committed secondary take out source for high LTV loans have
made this step necessary. We have attempted to address this industry-wide
phenomenon by focusing the company on its retail loan origination business,
selling off non-core businesses, executing whole loan sales, and reducing costs.
However, FIRSTPLUS Financial, Inc. has been unable to meet certain of its
obligations and, accordingly, this action was taken."
FIRSTPLUS Financial Group, Inc. is a diversified consumer finance company that
originates, services and sells consumer finance receivables. FIRSTPLUS is
headquartered in Dallas, Texas. Information can be found on FIRSTPLUS' website
at WWW.FIRSTPLUS.COM
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The above statements contained in this press release that are not historical
facts are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and involve a number of risks and
uncertainties. The actual results of the future events described in such
forward-looking statements in this press release could differ materially from
those stated in such forward-looking statements. Among the factors that could
cause actual results to differ materially are: short-term interest rate
fluctuations, level of defaults and prepayments, general economic conditions,
competition, government regulation and possible future litigation, as well as
the risks and uncertainties discussed in the Company's Current Report on Form
8-K, dated December 19, 1996, including without limitation, the uncertainties
set forth from time to time in the Company's other public reports and filings
and public statements.
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