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 15, 1998
(Exact name of registrant as specified in its charter) Sunstates Corporation
Delaware 1-5300 22-1664434
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4600 Marriott Drive, Suite 200, Raleigh, N. C. 27612
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (919) 781-5611
(Former name or former address, if changed since last report.)
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ITEM 2 - DISPOSITION OF ASSETS
On May 15, 1998, LaSalle National Bank, pursuant to a Notice of Private
Sale of Collateral dated May 7, 1998 and as approved by an order issued by the
Illinois Circuit Court, sold the common stock of Alba-Waldensian, Inc. (938,700
shares) and Rocky Mountain Chocolate Factory, Inc. (799,357 shares) it held
under a loan to certain of the Company's subsidiaries. The Company was not
involved in the determination of the transaction pricing and substantially all
of the proceeds from the sale were utilized to retire the subsidiaries' debt to
LaSalle, which had been in default since January 1997.
The 938,700 shares of Alba-Waldensian, Inc. ("Alba"), representing 50.27%
of Alba's outstanding stock, was sold to investors, including Alba (295,000
shares) and Mr. Clyde Wm. Engle (543,700 shares), the Company's Chairman and
beneficial owner of a substantial amount of the Company's stock, for cash
proceeds totaling $7,040,250. Prior to the transaction, Alba was a consolidated
subsidiary of the Company and accordingly the Company utilized the equity method
to account for its investment in Alba common stock. The recorded carrying value
of these shares totaled $13,148,799 resulting in a loss of $6,108,549 upon the
sale.
The 799,357 shares of Rocky Mountain Chocolate Factory, Inc. ("Rocky
Mountain"), representing 27.45% of Rocky Mountain's outstanding stock, was sold
to investors including Rocky Mountain (336,000 shares), certain of Rocky
Mountain's officers and directors (104,000 shares), and Mr. Clyde Wm. Engle
(194,357 shares) for cash proceeds totaling $4,116,689. The Company utilized the
equity method of accounting for its investment in Rocky Mountain common stock
with a carrying value of $2,268,257 resulting in a gain of $1,848,432 upon the
sale.
The Company's only remaining consolidated operating units are its textile
equipment-manufacturing subsidiary, Sew Simple Systems, Inc. and its
neighborhood newspaper-publishing subsidiary, Lerner Communications.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUNSTATES CORPORATION
Date: May 29, 1998 /s/ Glenn J. Kennedy
Chief Financial Officer
