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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Selection 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 28, 1997
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LONG BEACH FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 000-29272 33-0739843
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1100 Town & Country Road, Suite 900, Orange, California 92868
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 541-5378
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N/A
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(Former name or former address, if changed since last report)
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This Report is filed pursuant to Item 5 of Form 8-K to report the
adoption of a stockholder rights plan by Long Beach Financial Corporation.
Pursuant to General Instruction F and Item 7 of Form 8-K, the following
documents are incorporated by reference herein and attached as exhibits hereto:
EXHIBIT DESCRIPTION
20.1 Summary of the Rights issued pursuant to the Rights
Agreement dated as of November 10, 1997 between Long
Beach Financial Corporation and American Stock
Transfer & Trust Company, as Rights Agent.
20.2 Long Beach Financial Corporation press release of
November 7, 1997 regarding approval by Long Beach
Financial Corporation's board of directors of the
adoption of a stockholder rights plan.
20.3 Form of letter to be sent to stockholders announcing
the adoption of a stockholder rights plan and
transmitting the Summary of the Rights.
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 hereunto duly authorized.
Date: November 17, 1997 LONG BEACH FINANCIAL CORPORATION
By: /s/ M. JACK MAYESH
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M. Jack Mayesh
Chief Executive Officer and
Chairman of the Board
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EXHIBIT 20.1
DESCRIPTION OF REGISTRANT'S
SECURITIES TO BE REGISTERED
On October 28, 1997 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board
of Directors of Long Beach Financial Corporation (the "COMPANY") declared a
dividend of one right (a "RIGHT") to purchase fractions of shares of its Series
A Junior Participating Preferred Stock, par value $.001 per share, having the
rights, preferences, privileges and restrictions described in Paragraph K below
(the "PREFERRED STOCK"), and, under certain circumstances, other securities, for
each outstanding share of the Company's common stock, par value $.001 per share
(the "COMMON STOCK"), to be distributed to stockholders of record at the close
of business on November 21, 1997 (the "RECORD DATE"). The description and terms
of the Rights are set forth in a Rights Agreement (the "RIGHTS AGREEMENT") dated
as of November 10, 1997 between the Company and American Stock Transfer & Trust
Company, as Rights Agent.
The following is a brief description of the Rights. It is intended to
provide a general description only and is qualified in its entirety by reference
to the Rights Agreement which has been filed as an exhibit to the Company's
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission concurrently herewith.
A. ISSUANCE OF THE RIGHTS
Each share of Common Stock outstanding at the close of business on the
Record Date will receive one Right. In addition, prior to the earliest of the
Distribution Date, a Section 13 Event or the Expiration Date (as each is
hereinafter defined), one additional Right (as such number may be adjusted
pursuant to the provisions of the Rights Agreement) shall be issued with each
share of Common Stock issued after the Record Date. Following the Distribution
Date and prior to the expiration or redemption of the Rights, the Company will
issue one Right (as such number may be adjusted pursuant to the provisions of
the Rights Agreement) for each share of Common Stock issued pursuant to the
exercise of stock options or under employee plans or upon the exercise,
conversion or exchange of securities issued by the Company prior to the
Distribution Date. A "SECTION 13 EVENT" shall mean any event in which (i) the
Company merges or consolidates with another and the Company is not the surviving
corporation; (ii) the Company merges or consolidates with another, the Company
is the surviving corporation, and all or part of the Company's common stock is
exchanged for other securities, cash or property; or (iii) the Company sells or
transfers more than 50% of its assets or earning power. The "EXPIRATION DATE"
shall mean the earliest of (i) November 9, 2007; (ii) the date of redemption of
the Rights; (iii) the date the Board orders an exchange of Rights; or (iv) the
date of consummation of a tender offer approved as fair to and in the best
interests of the Company and its stockholders and adequately priced with each
stockholder receiving the same consideration per share in the same manner.
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B. COMMON STOCK CERTIFICATES REPRESENT THE RIGHTS PRIOR TO THE DISTRIBUTION
DATE
Prior to the Distribution Date (as hereinafter defined), no separate
Rights certificates will be issued. Instead, the Rights will be evidenced by the
certificates for the Common Stock to which they are attached and will be
transferred with and only with such Common Stock certificates. The surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. New Common Stock certificates issued after the Record Date will
contain a legend incorporating the Rights Agreement by reference.
C. DISTRIBUTION DATE; ISSUANCE OF RIGHTS CERTIFICATES
The Rights will separate from the Common Stock and become exercisable
and a Distribution Date will occur (the "DISTRIBUTION DATE") upon the earlier of
ten days after (i) public announcement that a person or group of affiliated or
associated persons has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock (an "ACQUIRING PERSON") or such earlier date
as a majority of the directors shall become aware of the existence of an
Acquiring Person (the "STOCK ACQUISITION DATE"), or (ii) the commencement of a
tender or exchange offer by any person or group, if upon consummation thereof,
such person or group of affiliated or associated persons would be the beneficial
owner of 15% or more of the shares of Common Stock then outstanding. As soon as
practicable after the Distribution Date, Rights certificates will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights certificates alone will
represent the Rights.
D. EXERCISE OF THE RIGHTS
1. RIGHTS INITIALLY NOT EXERCISABLE. Prior to the Distribution Date,
the Rights are not exercisable.
2. EXERCISE OF THE RIGHTS TO PURCHASE PREFERRED STOCK OF THE
COMPANY. At any time after the Distribution Date but prior to the earlier of the
expiration or redemption of the Rights, each Right may be exercised at the
stated purchase price of $68.75 (subject to adjustment, the "EXERCISE PRICE")
for one one-thousandth of a share of the Preferred Stock; provided, however,
that upon the occurrence of any of the events described below the Rights may no
longer be exercised for the Preferred Stock and may only be exercised for
certain other securities described below.
3. EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF THE COMPANY.
In the event that at any time following the Rights Dividend Declaration Date, a
person, alone or with affiliates, becomes the beneficial owner of 15% or more of
the then outstanding shares of the Company's Common Stock (except pursuant to an
offer for all outstanding shares of Common Stock which is determined by both (a)
the Board of Directors acting by Special Vote, and (b) a majority of the
Directors who are not associated with an Acquiring Person ("CONTINUING
DIRECTORS") and who are also not employees of the Company, to be fair to and
otherwise in the
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best interests of the Company and its stockholders (a "PERMITTED OFFER")), then
each holder of a Right will thereafter have the right to exercise the Right for
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the Exercise Price of the
Right. If the Company does not have sufficient Common Shares available for all
Rights to be exercised, the Company may substitute for all or any portion of the
Common Stock that would be issuable upon exercise of the Rights, cash, assets,
or other securities having the same aggregate value as such Common Stock. The
Rights are exercisable as described in this paragraph only after the Company's
right of redemption (as described below) has expired. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph (a
"SECTION 11(a)(ii) EVENT"), all Rights that are, or under certain circumstances
specified in the Rights Agreement were, beneficially owned by an Acquiring
Person will be null and void. A "SPECIAL VOTE" of the Board of Directors is
approval by both a majority of the Continuing Directors and a majority of the
entire Board, including the Continuing Directors.
4. EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF AN ACQUIRING
COMPANY. In the event that, at any time following the Stock Acquisition Date,
(a) the Company is merged or consolidated with another company in a business
combination transaction in which the Company is not the surviving corporation or
in which the Company is the surviving corporation and all or part of the Common
Stock of the Company is exchanged for stock of any other person, cash or any
other property (other than a merger which follows an offer described in the
preceding paragraph), or (b) more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) is sold or transferred, then
each holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to exercise the Right for common
stock of the acquiring company having a value equal to two times the Exercise
Price of the Right. (An event described in this paragraph is a "SECTION 13
EVENT.")
5. ADJUSTMENT OF NUMBER OF RIGHTS, PURCHASE PRICE AND NUMBER OF UNITS OF
PREFERRED STOCK. The Exercise Price payable and/or the number of shares of
Preferred Stock or other securities or property issuable upon exercise of the
Rights are subject to proportionate adjustment from time to time to prevent
dilution (a) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (b) in the event holders of the
Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock, or (c) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above). If at any time after the Rights Dividend Declaration Date and prior to
the Distribution Date the Company declares a stock dividend on, subdivides or
combines the outstanding shares of Common Stock, the number of Rights associated
with each share of Common Stock shall be proportionately adjusted.
E. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
The Company is generally not required to issue fractional Rights,
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share), or fractions of shares of Common
Stock and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Rights, Preferred Stock, or Common Stock, respectively.
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F. REDEMPTION OF THE RIGHTS
In general, the Company may redeem all (but not less than all) of the
Rights at a price of $.005 per Right (subject to adjustment to reflect stock
splits, stock dividends, or similar transactions), at any time until the earlier
of the tenth day following the Stock Acquisition Date or November 9, 2007
(provided that any redemption after any person becomes an Acquiring Person may
be effected only by the Board of Directors acting by Special Vote). This
redemption period may be extended by the Board of Directors by amending the
Rights Agreement as described in Paragraph H below prior to the time when the
Rights become nonredeemable. The redemption price may be paid in cash, shares of
Common Stock, or any other consideration the Board of Directors deems
appropriate. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.005 redemption price.
G. EXCHANGE OF THE RIGHTS
At any time after a Section 11(a)(ii) Event or a Section 13 Event and
before any person or group acquires 50% or more of the outstanding Common Stock,
the Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange some or all of the outstanding and exercisable Rights for
Common Stock at a one-to-one exchange ratio (appropriately adjusted to reflect
stock splits, dividends or similar transactions). Rights may not be exercised
after the Board orders their exchange. If there is not sufficient authorized
unissued Common Stock to fund an exchange, the Board, acting by Special Vote,
may fund the exchange through other consideration, including issuance of debt
and/or equity. In addition, at any time before any person or group becomes in
Acquiring Person, the Board, acting by Special Vote, may exchange some or all of
the Rights for rights of substantially equivalent value.
H. AMENDMENTS
Other than those provisions relating to the redemption price or the
final expiration date of the Rights, any of the provisions of the Rights
Agreement may be supplemented or amended by the Board of Directors of the
Company prior to the Distribution Date, without approval of the Rights holders,
whether or not a supplement or amendment is adverse to the Rights holders. After
the Distribution Date, any provisions of the Rights Agreement (other than those
provisions relating to the redemption price or the final expiration date of the
Rights) may be amended by the Board of Directors acting by Special Vote in order
to (i) cure any ambiguous, defective or inconsistent provision, (ii) shorten or
lengthen any time period hereunder, or (iii) otherwise change a provision which
the Board of Directors acting by Special Vote may deem necessary or desirable
and which does not materially and adversely affect the interests of holders of
Rights (other than any Acquiring Person); provided, the Rights Agreement may not
be amended to (A) make the Rights again redeemable after the Rights have ceased
to be redeemable, or (B) change any other time period unless such change is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to the holders of the Rights (other than any Acquiring Person).
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I. EXPIRATION
The Rights will expire upon the earliest to occur of the close of
business on November 9, 2007, the exchange or redemption of the Rights by the
Company, or the consummation of a Permitted Offer transaction followed by a
merger or consolidation of the Company with another company in which all
stockholders of the Company receive the same consideration and terms as in the
Permitted Offer.
J. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
K. TERMS OF THE PREFERRED STOCK
The Company has initially reserved 150,000 shares of Preferred Stock for
issuance upon exercise of the Rights, such number to be subject to adjustment
from time to time in accordance with the Rights Agreement. The Preferred Stock
will be nonredeemable. The dividend, liquidation and voting rights, and the
rights upon consolidation or merger of the Preferred Stock are designed so that
the value of the one one-thousandth interest in a share of Preferred Stock
purchasable with each Right will approximate the value of one share of Common
Stock. Each whole share of Preferred Stock will be entitled to receive a
quarterly preferential dividend of 1,000 times the dividend declared on the
Common Stock. In the event of liquidation, the holders of the Preferred Stock
will be entitled to receive a preferential liquidation payment of $1,000 per
share plus the amount of accrued unpaid dividends thereon, the holders of the
Common Stock will then be entitled to receive a liquidation payment equal to
$1.00 per share (subject to proportionate adjustment to reflect stock splits,
dividends or combinations), and the holders of the Preferred Stock and Common
Stock will then share ratably in all assets remaining available for distribution
to stockholders. Each share of Preferred Stock will have 1,000 votes (subject to
proportionate adjustment to reflect stock splits, dividends and combinations),
and will generally vote together with the Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or other
property, each share of Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock (subject to proportionate
adjustment to reflect stock splits, dividends and combinations).
L. ANTI-TAKEOVER EFFECTS
The Rights are designed to protect and maximize the value of
stockholders' interests in the Company in the event of an unsolicited takeover
attempt in a manner or on terms not approved by the Board of Directors. Takeover
attempts frequently include coercive tactics to deprive the Board of Directors
and stockholders of any real opportunity to determine the destiny of the
Company. The Rights have been declared by the Board in order to deter such
tactics, including a gradual accumulation in the open market of a 15% or greater
position, followed by a merger or a partial or two-tier tender offer that does
not treat all stockholders equally. These tactics can
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unfairly pressure stockholders, squeeze them out of their investment without
giving them any real choice and deprive them of the full value of their shares.
The Rights are not intended to prevent a takeover of the Company and
will not do so. The rights may be redeemed by the Company as described in
Paragraph F, and accordingly, the Rights should not interfere with any merger or
business combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Company or interfere with its
business plans. The issuance of the Rights themselves has no dilutive effect,
will not affect reported earnings per share, should not be taxable to the
Company or to its stockholders, and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors believes
that the Rights represent a sound and reasonable means of addressing the complex
issues of corporate policy created by the current takeover environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on terms or in a manner not approved by the
Company's Board of Directors, except pursuant to an offer conditioned upon the
negation, purchase or redemption of the Rights.
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EXHIBIT 20.2
PRESS RELEASE
Long Beach Financial Corporation Adopts Stockholder Rights Plan
Business Editors
ORANGE, Calif. -- (BUSINESS WIRE) - Nov. 7, 1997 - Long Beach Financial
Corporation (NASDAQ:LBFC) announced today that its board of directors has
approved the adoption of a Stockholder Rights Plan similar to those adopted by
many public companies.
The Plan is intended to allow all Long Beach Financial stockholders to
realize the long-term value of their investment by giving the board and
management sufficient time to evaluate and respond to any proposed takeover of
the Company.
"This action by the board was not taken in response to any specific
takeover threat," said M. Jack Mayesh, chairman and chief executive officer of
Long Beach Financial.
"The Plan will not, and is not intended to, prevent an acquisition of
the Company on terms that are fair and in the best interest of all stockholders.
The Plan is designed to increase the Board's flexibility in the event Long Beach
Financial is confronted with coercive or unfair takeover tactics."
The Plan provides for the distribution to Long Beach Financial's
stockholders of one preferred stock purchase "right" for each outstanding share
of common stock owned. The rights will trade with the Company's common stock and
will not be exercisable until the occurrence of certain takeover related events.
If a person or group acquires 15% or more of Long Beach's common stock, the
holders of the rights (other than the acquiring person or group) would, under
certain circumstances, have the right to purchase additional shares of Long
Beach common stock (or, in soma cases, of the acquiring entity) at a discount to
the then market price.
The rights can be redeemed by the Company at any time, and will
otherwise expire on November 9, 2007. Further details regarding the Plan will be
provided to stockholders of record in a forthcoming letter.
Long Beach Financial Corporation is the holding company for Long Beach
Mortgage Company, which originates, purchases and sells sub-prime residential
home mortgage loans. The Company's strategy is to sell its loans for cash to
institutional investors, limiting its level of risk in holding residual
interests.
CONTACT: Long Beach Financial Corporation
M. Jack Mayesh, 714/835-5743
or
Morgen-Walke Associates
John Swenson/Doug Sherk, 415/296-7383
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(Investor relations)
Carol Lehrman, 415/296-7383 (Media Relations)
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EXHIBIT 20.3
FORM OF LETTER TO STOCKHOLDERS
Dear Stockholder:
On October 28, 1997, your Board of Directors adopted a stockholder
rights plan in an effort to assure that all Long Beach Financial Corporation
stockholders receive maximum value in the event of an attempted or actual
takeover of the Company. We have enclosed a summary description of the plan,
which we urge you to read carefully.
Adoption of rights plans is a common practice among public companies in
the United States. Rights plans are intended to provide the Board of Directors
with additional time and bargaining power to protect stockholder interests in
the event of an unsolicited takeover bid. Long Beach Financial's rights plan
will not prevent a takeover of the Company on terms that are in the best
interests of all stockholders. However, the rights plan should encourage a
potential acquiror to negotiate with the Board prior to attempting a takeover.
This should position the Board to protect your interests.
The Long Beach Financial rights plan involves distribution of one
"Right" for each share of common stock outstanding on November 21, 1997.
Thereafter, each newly issued share of common stock will also include a Right.
Initially, there will be no separate Rights certificates. Instead, each Right
will simply be a part of the share of common stock to which it is attached. It
will be represented by the common stock certificate, it will trade automatically
with the common stock, and it will not be separable or exercisable unless
certain events occur.
If a person or group acquires 15% or more of Long Beach Financial's
outstanding common stock, each Right not owned by the acquiror or its affiliates
will entitle its holder to pay the Company $68.75 (the exercise price per Right)
and receive newly issued shares of common stock worth $137.50. For example, if
the stock were trading at $20, each Right would entitle its holder to purchase
6.875 shares for $68.75, or $10 per share. This ability of stockholders other
than the acquiror to purchase additional shares at a 50% discount from market
would cause an unapproved takeover to be much more expensive to an acquiror. As
a result, a potential acquiror would have a strong incentive not to pursue a
hostile strategy, and instead to negotiate with your Board of Directors to
redeem the Rights or approve the transaction so that the Rights do not become
exercisable.
Adoption of the rights plan does not affect the financial strength of
the Company and will not interfere with our business strategy and plans. The
issuance of the Rights alone will not affect earnings per share or change the
way in which you can presently trade the Company's shares.
The attached summary describes the Rights in more detail. Thank you for
your continued support of Long Beach Financial Corporation.
Sincerely,
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M. Jack Mayesh
Chief Executive Officer and
Chairman of the Board
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