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 (date of earliest event reported): May 5, 1999
SOUTHERN PACIFIC FUNDING CORPORATION
(Exact name of registrant as specified in its charter)
California 1-11785 33-0636924
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
One Centerpointe Drive, Suite 551
Lake Oswego, Oregon 97035
(Address of principal executive offices) (Zip Code)
(503) 684-6316
(Registrant's telephone number, including area code)
Item 5. Other Events.
Effective May 5, 1999, Southern Pacific Funding Corporation
(the "Company") entered into definitive agreements with The Goldman Sachs Group,
L.P. and its affiliates ("Goldman") for the acquisition of the Company and
certain assets of the Company by Goldman in connection with the Company's
proposed plan of reorganization under Chapter 11 of the Bankruptcy Code, subject
to confirmation of the plan by the Bankruptcy Court. The sales price is a
combination of $35 million in cash payable at closing plus the right to receive
50 percent of the cash flows from certain financial and other assets, which
include subordinated interest only and residual certificates representing
interests in the Company's mortgage loan pool securitization trusts, the right
to prepayment income from the trusts and mortgage loan servicing rights.
Concurrently with entering into the definitive agreements, Goldman refinanced
the Company's existing debtor-in-possession financing; the refinancing closed on
May 5, 1999.
In connection with the sale transaction, the parties have
entered into a Stock Subscription and Purchase Agreement and an Asset Purchase
Agreement. Under the terms of the Asset Purchase Agreement, the Company will
sell Goldman its rights to interest only certificates (or "IO strips") and
prepayment income from the securitization trusts. Under the terms of the
separate Stock Subscription and Purchase Agreement, the Company, pursuant to its
plan of reorganization, will cancel its outstanding stock and the reorganized
Company will issue new stock to Goldman. The reorganized Company acquired by
Goldman will hold the residual interests in the Company's securitization trusts,
the Company's rights to service certain
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securitization trusts, and the Company's rights under the securitization trust
pooling and servicing agreements.
Prior to the sale of the Company to Goldman, certain remaining
assets will be distributed to a liquidating trust (the "Liquidating Trust")
established for the benefit of the Company's creditors. The right to receive 50
percent of the cash flows from the assets held by Goldman and the reorganized
Company will be in the form of an instrument given by the reorganized Company to
the Liquidating Trust, pursuant to which funds will be distributed to the
Liquidating Trust. Additionally, in the event that Goldman sells or finances the
financial assets covered by the instrument, 50 percent of the net proceeds will
be remitted to the Liquidating Trust. Goldman has agreed to certain asset
management standards in connection with the cash flow instrument. The
Liquidating Trust will be responsible for making distributions to creditors.
The Company filed its initial disclosure statement and plan of
reorganization with the Bankruptcy Court on April 7, 1999. A continued hearing
on the disclosure statement filed by the Company is scheduled for May 12, 1999,
and the confirmation hearing on the Company's plan of reorganization is
scheduled for June 11, 1999. Subject to confirmation of the plan, the sale of
the Company and certain of its assets to Goldman is expected to close on or
before June 30, 1999.
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.
SOUTHERN PACIFIC FUNDING CORPORATION
Dated: May 10, 1999 By: /s/ TIMOTHY A. BREEDLOVE
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Name: Timothy Breedlove
Title: Chief Financial Officer
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