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): July 19, 2000
1ST ATLANTIC GUARANTY CORPORATION
(Exact Name of Registrant as Specified in Charter)
Maryland 333-41361 54-1322110
(State or Other Jurisdiction (Commission File Number) (IRS Employer of
Incorporation) Identification No.)
2 Wisconsin Circle, Suite 700, Chevy Chase, Maryland 20815
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 656-4200
Item 2. Acquisition or Disposition of Assets.
On July 19, 2000, State Bond and Mortgage Company, L.L.C. ("State
Bond"), a Maryland limited liability company that is 100% owned by 1st Atlantic
Guaranty Corporation (the "Company"), a Maryland corporation, completed the
purchase of 100% of the issued and outstanding shares of common stock of SBM
Certificate Company ("SBM-MN"), a Minnesota corporation, from ARM Financial
Group ("ARM"), a Delaware corporation (the "Acquisition"). At the time of the
Acquisition, SBM-MN was a registered investment company under the Investment
Company Act of 1940, as amended, that has offered for sale and issued
face-amount certificates. SBM-MN's total assets at the time of the Acquisition
were approximately $28 million, virtually all of which consisted of cash and
securities.
State Bond effected the Acquisition as assignee under a Stock Purchase
Agreement, dated March 28, 2000, by and among the Company, SBM-MN and ARM (the
"Agreement"). A copy of the Agreement (exhibits omitted) was included as an
exhibit to the Company's Form 8-K dated March 28, 2000, previously filed with
the Commission.
The purchase price paid by State Bond in the Acquisition was $1,350,000,
of which $950,000 has been paid to ARM, and $400,000 is being held by an escrow
agent as security for certain post-closing obligations and liabilities of ARM
under the Agreement. The purchase price was determined by negotiation and an
auction amongst interested bidders in the United States Bankruptcy Court for the
District of Delaware on April 27, 2000, in which the Company ultimately
prevailed.
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SBM-MN has been merged into SBM Certificate Company ("SBM-MD"), a
Maryland corporation 100% owned by State Bond. SBM-MD had nominal assets at the
time of the merger and was formed for purposes of redomestication from Minnesota
to Maryland. As result of the Acquisition transactions, SBM-MD has succeeded
SBM-MN as the "registrant" in all filings made by SBM-MN under the Securities
Act of 1933, Securities Exchange Act of 1934 and Investment Act of 1940.
The Acquisition was financed by a short-term bank loan made to State
Bond, in the amount of $1,500,000. The loan provided for a floating and
fluctuating rate of interest equal to prime, and a non-refundable commitment fee
of $100,000. The loan was guaranteed by John J. Lawbaugh, the Company's
President, and his wife, and other officers of the Company, and was secured by a
contingent pledge of State Bond's ownership of SBM-MD, and other liens, terms
and conditions of the bank's commitment letter. State Bond also bore all of the
bank's costs in making the loan. The full amount of the loan, including the
bank's costs, was paid by State Bond on July 19, 2000. The name of the bank has
been filed separately with the Commission.
On July 19, 2000, SBM-MD declared and paid a cash dividend in the amount
of $1,500,000 to its parent, State Bond, which used those proceeds to defray the
bank borrowing described above.
Item 7. Financial Statements, Pro-forma Financial Information and Exhibits.
As permitted by Item 7 of Form 8-K, the financial statements
and pro forma financial statements required by this item will
be included in a report on Form 8-K to be filed with the
Commission no later than 60 days after the date that this
report must be filed.
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 hereunto duly authorized.
Date: August 3, 2000
1ST ATLANTIC GUARANTY CORPORATION
By: /s/ John J. Lawbaugh
Name: John J. Lawbaugh
Title: President
