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): November 27, 1998
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IMC MORTGAGE COMPANY
(Exact name of registrant as specified in its charter)
Florida 333-3954 59-3350574
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
5901 E. Fowler Avenue,
Tampa, Florida 33167
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (813) 984-2548
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Item 5. Other Events.
IMC Mortgage Company (the "Company") entered into a non-binding
letter of intent (the "Letter of Intent") with Greenwich Street Capital Partners
II, L.P. ("GSCP") on November 27, 1998.
Pursuant to the transaction contemplated by the Letter of Intent,
GSCP would invest sufficient additional equity in the Company and arrange for
credit facilities to permit the Company to repay in full its existing bank loans
and credit facilities, and GSCP would obtain newly issued stock equal to 95% of
the total outstanding equity interests of the Company on a diluted basis,
leaving the existing common shareholders with 5% of the outstanding equity. No
payment would be made to the Company's common shareholders in the proposed
transaction, but the Letter of Intent provides for warrants to be issued to the
Company's common shareholders on terms not yet negotiated. The Company may
continue to seek other buyers without restriction under the Letter of Intent.
The proposed transaction is subject to a number of conditions,
including the negotiation and signing of a definitive agreement, and the
operation of the Company in the ordinary course of its business. There is no
assurance that a definitive agreement will be executed or that the proposed
transaction will be consummated, and the Letter of Intent may be terminated by
either GSCP or the Company at any time.
As previously disclosed, the Company recently entered into
intercreditor agreements with each of its major warehouse lenders and its bank
lender. Pursuant to these intercreditor agreements, subject to certain
conditions, the lenders agreed to take no action with respect to their loan
facilities for a period of 45 days. The term of each intercreditor agreement
automatically extends for an additional 45 days if, within the initial 45-day
period, the Company enters into a letter of intent with a third party relating
to a potential change in control of the Company. The Company believes that the
Letter of Intent satisfies this condition and that the standstill period with
its warehouse and revolving credit lenders now extends to mid-January, 1999. If
the proposed transaction with GSCP (or an alternative transaction with a third
party) is not consummated by then, the lenders would no longer be subject to the
intercreditor agreements and would be free to take action under their lending
facilities.
As previously disclosed, the Company recently entered into a loan
agreement (the "Greenwich Loan Agreement") with GSCP and certain of its
affiliates (collectively "Greenwich") for a standby revolving credit facility.
Pursuant to the Greenwich Loan Agreement, upon maturity of the facility or if
the Company enters into a definitive agreement for a transaction that will
result in a change in control of the Company, Greenwich may elect to receive (i)
repayment of the facility, plus accrued interest and a take-out premium, if any,
or (ii) additional preferred stock. The amount of take-out premium is based upon
the average outstanding balance of the facility and the time elapsed between the
Greenwich Loan Agreement and the date of such definitive agreement or maturity
date, as applicable, and ranges from 20% to
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200% of the facility balance. The amount of additional preferred stock is based
upon the time elapsed between the Greenwich Loan Agreement and the date of such
definitive agreement or maturity date, as applicable, and ranges from zero to
the equivalent of 50% of the common stock of the Company on a fully diluted
basis (in addition to the 40% initially received upon provision of the
facility).
Pursuant to the terms of the Greenwich Loan Agreement, if the
Company were to enter into a definitive agreement for a change in control
between now and mid-January, Greenwich could assert that it is entitled either
to increase its equity interests in the Company by 20% (from 40% to 60%) or to
require a larger take-out premium. However, if GSCP and the Company consummate
the proposed transaction, that transaction will supersede any rights Greenwich
might have under the Greenwich Loan Agreement to obtain equity in the Company.
The foregoing discussion is qualified by reference to the full text of
the Letter of Intent, which is attached hereto as Exhibit 10.61 and is
incorporated herein by reference in its entirety.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
10.61 Letter of Intent dated November 27, 1998 between the
Company and GSCP, Inc.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, IMC
Mortgage Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 3, 1998 IMC MORTGAGE COMPANY
By: /s/ Thomas G. Middleton
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Thomas G. Middleton
President, Chief Operating Officer and
Assistant Secretary
By: /s/ Stuart D. Marvin
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Stuart D. Marvin
Chief Financial Officer
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GSCP, Inc.
Sanjay H. Patel
Senior Managing Director
GSCP, Inc.
388 Greenwich Street
New York, New York 10013
Tel: (212) 816-1149
November 27, 1998
Mr. George Nicholas
Chief Executive Officer
IMC Mortgage Company
5901 East Fowler Avenue
Tampa, FL 33617
via fax @: 609-653-0239
Dear George:
This letter of intent sets forth the terms and conditions pursuant to which
Greenwich Street Capital Partners II, L.P. or designated affiliates ("GSCP")
will acquire all or substantially all of the economic interests of IMC Mortgage
Company ("IMC" or the "Company") either through the acquisition of all or
substantially all of the assets and business of the Company and its
subsidiaries, taken as a whole, in return for cash or through a merger,
consolidation, share exchange, or other similar transaction where additional
equity would be infused into the Company, or the surviving entity, with a change
of control where the existing shareholders receive new securities. This
transaction will result in the repayment in full of all of the bank loans and
credit facilities.
1. Purchase Price:
Funds to be made available through this transaction will be equal to
$484.2 million (or such greater amount as may be required), which will
be applied to effect repayment of the Company's debt and preferred stock
obligations as follows. In addition, we anticipate working with the
Company's warehouse lenders to refinance or pay back through a
securitization their outstanding warehouse loans.
Interest-only and residual financing $276.0 (a)
BankBoston revolving credit facility 92.5 (a)
GSCP revolving credit facility 36.4 (b)
Unsecured bank revolving credit facility 6.8 (a)
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Mortgage Note payable 4.6 (a)
Unsecured note to former owner 12.9 (a)
Preferred Stock 55.0 (c)
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Total $484.2
Post-transaction, existing common shareholders will own 5% of the common
equity of the Company and will receive warrants, under terms to be
determined, for the purchase of additional equity.
(a) Per IMC 9/30/98 10Q.
(b) Based on principal amount plus take-out premium due upon a change of control
as of November 25, 1998.
(c) Based on principal plus premium due upon a change of control.
2. Financing
In order to finance a portion of the Purchase Price, GSCP will commit to
providing additional equity. As you know, GSCP has over $1 billion in
capital commitments. In July 1998, when we made our initial investment
in the Company of $40 million, we were very positive about the Company's
prospects and we continue to have a favorable view of the Company, its
management team and its future prospects. To date, GSCP and Travelers
total investment in debt and preferred stock of IMC is $91 million. In
addition to equity financing, GSCP is in discussions with several of its
banking relationships to provide a refinancing of the Company's existing
debt at par, to repay in full the existing lenders. As part of this
transaction, GSCP would contemplate such a refinancing, if required by
the Company's existing creditors for repayment in full.
3. Conduct of Business
The Purchase Price assumes that from the date of the signing of this
letter through the closing date, IMC shall:
(i) conduct the Company's business solely in the ordinary course;
(ii) not sell any assets of the Company in excess of $25,000 other than
mortgages held on its balance sheet, without the approval of GSCP;
(iii) not make any capital expenditures in excess of $50,000 without the
approval of GSCP;
(iv) not grant or increase any salary, bonus, severance or other
compensation or similar arrangement in favor of executives;
(v) maintain all necessary governmental licenses, permits,
registrations, consents and approvals;
(vi) maintain in full force and effect
its credit arrangements with BankBoston, and its
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residual debt and warehouse lines of credit at present levels as
reasonably necessary to fund ongoing operations;
(vii) maintain in full force and effect the existing forbearance and
standstill arrangements with its lenders; and
(viii) maintain accounts receivable, inventory, accounts payable, and
other working capital accounts at levels consistent with normal business
practices.
4. Purchase Agreement
IMC and GSCP intend to negotiate in good faith a definitive purchase
agreement ("Purchase Agreement") to be signed within 45 days of
acceptance of this offer.
5. Inspection and Access to Information
From and after the date of execution of this letter by IMC and GSCP, IMC
will permit GSCP and its authorized representatives full access to, and
make available to GSCP and its representatives, for inspection and
review, all properties, books, records, accounts, and documents of or
relating to IMC and its subsidiaries as may be reasonably requested from
time to time; and make the employees and attorneys of IMC and its
subsidiaries available for consultation and permit access to other third
parties reasonably requested for verification of any information so
obtained.
6. Conditions
The obligations of the parties hereto to consummate the transaction
shall be subject to fulfillment of the following conditions:
(i) Preparation of a Purchase Agreement and other transaction
documentation satisfactory to all parties and their counsel;
(ii) GSCP's completion of and satisfaction with the
inspection referred to in the above paragraph headed
"Inspection and Access to Information" by GSCP and other
normal due diligence procedures, concerning matters relating
to the acquisition of IMC;
(iii) GSCP obtaining sufficient financing, on terms
satisfactory to GSCP, to satisfy or otherwise repay in full
the Company's current creditors, as referred to in the above
paragraph headed "Financing";
(iv) There has been no material adverse change in the
business, operations, assets, liabilities, condition
(financial or otherwise) or prospects of the Company;
(v) Any required governmental, regulatory or third-party
filings, permits or
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approvals shall have been made or received;
(vi) Arrangements satisfactory to the GSCP and current
management and other key employees regarding their continued
employment with IMC; and
(vii) Approval of the transaction by the Boards of Directors
of IMC.
We anticipate our due diligence to be completed within six weeks of
acceptance of this offer.
7. Hart-Scott-Rodino
IMC and GSCP agree to cooperate in making any filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("H-S-R") and each
will provide access to information for the filing.
8. Expenses
IMC and GSCP shall each bear their respective costs and expenses of all
attorneys, accountants and advisors retained by or representing them in
connection with this transaction. If a transaction is consummated by IMC
and GSCP, IMC shall reimburse GSCP for all transaction expenses.
9. Non-Disclosure
IMC and GSCP agree that prior to execution of the aforesaid Purchase
Agreement they will not disclose or discuss this offer, its existence or
its terms and conditions, to or with any persons other than their
attorneys, accountants, financial advisors and such of their executives
as may be required to know same in implementing the provisions of this
Letter of Intent, except as may be required by law, provided that the
disclosing party shall use its best efforts to consult with the others
in advance of any such disclosure, and further provided that IMC may
disclose this letter of intent to IMC's lenders and may disclose this
letter of intent in a Form 8-K and in a press release on November 30,
1998 if recommended by Company securities counsel.
10. Nonsolicitation
IMC shall provide immediate notice to GSCP of any inquiries or proposals
received from any person by IMC or its subsidiaries, directors, officers
or any of their respective affiliates, agents or representatives
relating to a sale, lease or other disposition, direct or indirect,
whether by merger, consolidation, liquidation, dissolution, spin-off or
otherwise, to any person or persons, of all or any portion of, or any
interest in, the stock or assets of IMC or any subsidiary,
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specifying the identity of such person and the details of the inquiry
or proposal.
11. Intent to Proceed
This letter constitutes a non-binding statement of the present intention
of GSCP and does not constitute a binding offer or obligation to
consummate the transaction contemplated hereby. A binding commitment
with respect to such transaction will exist upon the execution of
definitive agreements. Notwithstanding the foregoing, the provisions of
paragraphs 5, 8, 9, 10, 11, 12 and 13 shall be binding upon the parties
hereto. This letter of intent may be terminated by the Company or GSCP
at any time by written notice to the other. Upon such termination, this
letter shall be in no further force or effect, except that the
provisions of paragraphs 8 and 13 shall survive such termination.
12. Expiration Date
This offer shall remain open until 5:00 p.m. Eastern Standard Time on
November 27, 1998. If this offer has not been agreed to by IMC by that
time, the offer will be deemed to have lapsed.
13. Miscellaneous
This letter shall be governed by and construed in accordance with the
laws of the State of New York. This letter may be executed in two or
more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same letter. No party may assign
this letter or any of its rights, interests or obligations hereunder
without the prior written consent of the other parties hereto.
If you are in agreement with the foregoing, please sign the enclosed copy of
this letter in the space indicated below and return it to us.
Very truly yours,
GSCP, Inc.
By: /s/ Sanjay Patel
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AGREED AND ACCEPTED:
IMC Mortgage Company
By: /s/ Stuart D. Marvin
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