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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Amendment No. 1
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Wilshire Financial Services Group Inc.
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(Name of Issuer)
Common Stock, par value
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$0.01 per share
(Title of Class of Securities)
971867106
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(CUSIP Number)
Wilshire Real Estate Investment Trust Inc.
1776 S.W. Madison Street
Portland, Oregon 97205
(503) 223-5600
with a copy to:
Daniel E. Titelbaum, Esq.
Heller Ehrman White & McAuliffe
333 Bush Street, San Francisco, California 94104
(415) 772-6000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 18, 1999
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(Date of Event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
.
(Continued on following pages)
(Page 1 of 9 pages)
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SCHEDULE 13D
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CUSIP No. 971867106 Page 2 of 9 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wilshire Real Estate Investment Trust Inc.
EIN: 52-2081138
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2 CHECK THE APPROPRIATE BOX, IF A MEMBER OF A GROUP*
(a) [X]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
Maryland
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7 SOLE VOTING POWER
None
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NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED 2,874,791
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BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH None
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10 SHARED DISPOSITIVE POWER
2,874,791
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,874,791
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.35%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE,
AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 971867106 Page 3 of 9 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wilshire Real Estate Partnership, L.P.
EIN: 93-1236269
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2 CHECK THE APPROPRIATE BOX, IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
Delaware
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7 SOLE VOTING POWER
None
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NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED 2,874,791
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BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH None
10 SHARED DISPOSITIVE POWER
2,874,791
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,874,791
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.35%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE,
AND THE SIGNATURE ATTESTATION.
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INTRODUCTION
The Reporting Persons herein named hereby file this Amendment No. 1 to the
Statement on Schedule 13D filed by the Reporting Persons on June 10, 1999 (the
"Statement") in respect of shares of Common Stock Wilshire Financial Services
Group Inc. Defined terms not otherwise defined herein have the meanings
ascribed thereto in the Statement.
Only those Items amended are reported herein.
Item 4. Purpose of Transaction
Item 4 is amended by adding the following paragraph:
WREI has forwarded a letter to the directors of the Issuer and certain
shareholders of the Issuer outlining concerns about the influence WREI
believes that such shareholders are exerting over the Issuer. The letter
also addresses certain concerns WREI has relating to the management
agreement between WREI and Wilshire Realty Services Corporation, a
subsidiary of the Issuer, and other matters of concern to WREI. A copy of
the letter is attached hereto as Exhibit 4(2).
Item 7. Material to Be Filed as Exhibits
Item 7 is amended by adding the following:
Exhibit 4(2): Letter to the board of directors and certain shareholders
of the Issuer dated June 18, 1999.
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: June 18, 1999 Wilshire Real Estate Investment Trust Inc.
By: /s/ Andrew A. Wiederhorn
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Andrew A. Wiederhorn
Title: Chief Executive Officer
Wilshire Real Estate Partnership, L.P.
By: Wilshire Real Estate Investment Trust
Inc.
Its: General Partner
By: /s/ Andrew A. Wiederhorn
-----------------------------------------
Andrew A. Wiederhorn
Title: Chief Executive Officer
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List of Exhibits
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<CAPTION>
Exhibit No. Description Page
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<S> <C> <C>
4(2) Letter to the board of directors and 7
certain shareholders of the Issuer dated
June 18, 1999
</TABLE>
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Exhibit 4(2)
[WREI LETTERHEAD]
June 18, 1999
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Ms. Elizabeth F. Aaroe Mr. Robert Deutschman
Principal Cappello Group, Inc.
Fisher Consulting, LLC 1299 Ocean Avenue, Suite 306
8181 SW Edgewater, West Santa Monica, CA 90401
Wilsonville, OR 97070
Mr. Daniel A. Markee Mr. Larry B. Faigin
Senior Vice President President
LendSource, Inc. GreenPark Group, LLC
566 Prairie Center Drive, Suite 201 3030 Old Ranch Parkway, Suite 450
Eden Prairie, MN 55344 Seal Beach, CA 90740
Mr. Geoffrey Hawkins Mr. Brian Lavin
Capital Research and Management American Express Financial Advisors
11100 Santa Monica Boulevard 3000 IDS Tower 10
Los Angeles, CA 90025 Minneapolis, MN 55440
Mr. Lawrence Mendelsohn Mr. Andrew Wiederhorn
President Chairman and Chief Executive Officer
Wilshire Financial Services Group Inc. Wilshire Financial Services Group Inc.
1776 SW Madison Street 1776 SW Madison Street
Portland, OR 97205 Portland, OR 97205
</TABLE>
Duties as Directors and Controlling Shareholders of Wilshire
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Financial Services Group Inc.
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Dear Elizabeth and Gentlemen,
As you know, Wilshire Real Estate Partnership L.P. and its parent Wilshire
Real Estate Investment Trust Inc. (together "WREI") are the third-largest
shareholders of Wilshire Financial Services Group Inc. as a result of the recent
restructuring. WREI was nonetheless excluded by the noteholders committee from
participating in that group and from participating in selection of the new
board. WREI would therefore like to bring some concerns to the attention of the
new WFSG board.
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WREI's primary concern relates to the relationship between the majority of
the new board and the two shareholders receiving this letter. The board of WFSG
has a fiduciary duty to act in the interest of all shareholders. It is not to
take direction from a controlling group of shareholders, or share confidential
information with that group that it does not share with all shareholders, unless
these controlling shareholders treat themselves as "insiders" for all purposes,
including the federal securities laws.
WREI believes that Capital Research and American Express Financial Advisors
may be substantially directing the business of WFSG, and receiving confidential
information about WFSG not available to other shareholders. WREI believes this
to be contrary to WFSG's representations to noteholders, other creditors of
WFSG, and WFSG shareholders that WFSG would be managed by an independent board
of directors. For this and other reasons, WREI believes that these shareholders
are "affiliates" and "controlling persons" of WFSG under federal banking and
securities laws. Among other duties and obligations, these investors may be
liable for violations of securities laws by WFSG, and will be subject to
limitations on their ability to sell WFSG's equity securities such as those
contained in Rule 144. It is the obligation of both these investors and the
board of WFSG to see that Rule 144 is followed with regard to the equity
securities owned by these two investors.
WREI would expect that the board of WFSG would function as an independent
and collegial body. That means that matters would be discussed by board members
with all other board members, and not by some board members with two
shareholders. WREI would expect that all board members would consult, for
example, about an appropriate replacement for Ed Foehl.
As you know, WREI is managed by a wholly owned subsidiary of WFSG, Wilshire
Realty Services Corporation ("WRSC"). In light of this relationship, the
independent directors of WREI are extremely concerned about the effect the
restructuring may or will have on the existing management team of WFSG and its
subsidiaries, particularly WRSC. WREI believes that unjustified changes in the
management team of WRSC could have a deleterious effect on the activities and
returns of WREI. WREI would view any unwarranted change in management of WRSC
as a default under the management agreement between WRSC and WREI. Similar to
the effect a material change in continuity of management of WFSG will have on
WREI directly, WREI is concerned about changes both in the board of directors
and employees in other WFSG subsidiaries, including First Bank of Beverly Hills
F.S.B.
WREI is already seeing evidence of interference with management of WFSG and
its subsidiaries that causes concern. For example, WREI understands that the
WFSG board has recently stated that management cannot take any material action
without board authorization. If true, hamstringing of management both prevents
WREI from obtaining the
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level of service to which it is entitled under its management agreement with
WRSC, and suggests that the board may be improperly interfering with the
management of First Bank. It also risks destroying morale among the employees of
WFSG and its subsidiaries. These matters are of serious concern to WREI. This is
particularly the case with First Bank, since interference with the management of
First Bank is not only an issue for WREI but also for the Office of Thrift
Supervision.
WREI is also concerned about who advises WFSG. In light of WFSG's position
as the parent company of the manager of WREI, WREI believes that it is essential
that WFSG not be advised (other than in disputes between WFSG and WREI) by a
party whose interests are directly adverse to WREI. Because of the past and
present disputes between WREI, WFSG and certain advisors hired by WFSG, and the
risk of potential future conflicts, WREI should be consulted before WFSG hires
advisors. WREI reserves the right to publicly note its objection to any advisor
hired by WFSG to the extent that advisor has a conflict of interest with WREI.
Finally, as you know, there is a dispute between WREI and WFSG (principally
with the members of the noteholders committee and their advisors) with regard to
the dollar amount of a servicing-fee credit at WFSG's 50.01% owned subsidiary,
Wilshire Credit Corporation ("WCC"), which provides loan servicing to WREI.
WREI expects the board of directors of WFSG to determine with WREI the
resolution of such dispute without ongoing input and advice from other
shareholders unless they seek such advice from all shareholders.
WREI has confined this letter to matters that affect it directly,
including the independence of WFSG' board, the effect of events at WFSG or WREI
through the Management Agreement and the fee dispute between our companies.
These are matters of concern to the independent directors of WREI. We seek only
to safeguard the interests of our stockholders. In this spirit, WREI's
independent board would like to discuss these issues with you, as well as a
response to the proposal in our May 11 letter. WREI must, of course, reserve its
right to take whatever action it deems appropriate to enforce both its rights as
a shareholder and as a contracting party under the Management Agreement and the
loan servicing arrangement with WCC.
Very truly yours,
WREI by its Independent Board of Directors
