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
(July 8, 1998)
(Date of earliest event reported)
Sovereign Credit Finance I, Inc.
(Exact name of registrant as specified in its charter)
Texas 75-2645150
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
333-04072
(Commission File Number)
4015 BeltLine Road, Building B
Addison, Texas 75001-4383
(Address of principal executive offices)
(972) 960-5500
(Registrant's telephone number, including area code)
4015 Beltline Road, Building B
Dallas, Texas 75244
(Former name or former address, if changed since last report)
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This report includes forward-looking statements regarding the
registrant's intended plans for the future. Such statements are subject to
various risks and uncertainties. There is no assurance that all intentions
stated herein regarding future transactions or events will take place, or take
place exactly as outlined in this report or take place on a basis favorable to
the registrant's note holders.
Item 1. Change in Control of Registrant
Item 1(a).
Austin Starke ("Tracy") Taylor, III, was the principal who syndicated
approximately 60 private offerings and two registered public offerings of
promissory notes to investors, starting in 1994. The notes were sold primarily
through broker-dealers. Each syndication took place through a separate entity
and the separateness of the entities has been maintained. In the case of each
separate entity, the funds raised from investors were invested primarily in
non-prime retail installment sales contracts on used vehicles. As a result,
each program entity has its own separate portfolio of contracts, and only the
note holders of that specific entity have any rights with respect to those
contracts. The noteholders of one entity do not have any rights with respect to
the contracts owned by any of the other entities.
Mr. Taylor and his family interests also established separate
businesses to manage, administer, purchase for and service the entities, their
businesses and portfolios of contracts. The Taylor family interests sold most of
the servicing businesses in February 1998 to a company owned by Ray B.
Williamson and another person who has since ceased to be active in the operation
or control of the business. One of the reasons for the sale of the servicing
businesses was that the portfolios of a number of the privately syndicated
programs had deteriorated in quality through a higher than anticipated rate of
delinquencies on contracts and subsequent inability to recoup through
repossessions, reconditioning and resale as much as anticipated. Since February
1998, this deterioration has continued and has also been experienced by the
registrant.
Last fall, Messrs Taylor and Williamson concluded in principle that the
most efficient solution appeared to involve combining the assets of
substantially all the program entities into one entity and persuading the note
holders to exchange their notes for stock in the single entity. This would
likely result in a debt-free public owned in large part by the approximately
3200 former note holders. It appeared that a Chapter 11 bankruptcy
reorganization would be required to accomplish this, and that it would be
desirable to try to negotiate as much of a so-called "pre-packaged" situation as
possible with note holders and representatives of the note holders prior to
filing the Chapter 11 petition.
Mr. Taylor then formed a corporation into which the program entities
could be merged. It is anticipated this corporation will be named "North Texas
Motorcars, Inc." ("NTM") when it files the Chapter 11 petition described below.
Subsequent discussions involving many of the parties involved have
recently resulted in the following consensus, which is still subject to change:
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o The entities to be combined have been identified but there
might still be some changes.
o The registrant would be included in this process, but the
other public program entity, Sovereign Credit Finance II, Inc.
("SCF II") will remain a separate entity controlled by
Mr. Williamson.
o Mr. Taylor and companies controlled by him and his family
interests would transfer ownership or control to Mr.
Williamson of NTM and transfer to NTM all the program entities
to be combined, including the registrant.
o Mr. Williamson will cause the entities to be combined,
including the registrant, to be combined into NTM.
o NTM will file a Chapter 11 petition, and Mr. Williamson will
own NTM at the time of the filing.
In December 1998 and January 1999, Mr. Taylor resigned as the sole
officer and Director of NTM, the registrant and SCF II. Mr. Williamson was
elected to succeed him. On July 8, 1999, Mr. Taylor transferred all the stock of
NTM to Mr. Williamson, and a company controlled by Mr. Taylor transferred all
the stock of the registrant and SCF II to NTM. Mr. Williamson owns all the stock
of NTM and thereby beneficially owns all the stock of and has sole control of
the registrant and SCF II.
Mr. Williamson anticipates the combination of selected program entities
into NTM will take place in early August 1999, and that NTM will probably file a
Chapter 11 petition in August or September 1999. The interest payment due July
15 on the registrant's notes has been paid, but the registrant anticipates the
Chapter 11 petition will probably be filed before the 30-day grace period
expires on the interest payment due August 15.
NTM will become the successor in interest to the registrant in the
combination and will attempt a Chapter 11 reorganization, the purpose of which
is to transform the noteholders of the registrant and the other combined
entities into stockholders of NTM, which will be a public company upon emerging
from bankruptcy.
Since August 1998, Mr. Williamson, age 58, has been President of
Sovereign Associates, Inc. ("SAI") the principal servicing company purchased
from Mr. Taylor's family interests in February 1998. His business address since
that time has been the same as SAI's address, which is located at the same
address as the registrant.
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Item 1 (b).
Various of the disclosures made in Item 1(a) above involve arrangements
known to the registrant, the operation of which are intended, at a subsequent
date in the future, result in a change of control of the registrant.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
Not applicable
(b) Proforma financial information
Not applicable
(c) Exhibits
[The only documents concerning Mr. Williamson's acquisition of
the stock of the registrant is the stock certificate which has
been endorsed for transfer.]
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SIGNATURES
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 thereto duly authorized.
Date: July 22, 1999 SOVEREIGN CREDIT FINANCE I, INC.
(Registrant)
/s/ Ray B. Williamson
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Ray B. Williamson
President and Chief Executive Officer
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