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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):
November 6, 1996
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AMRESCO, INC.
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(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-8630 59-1781257
(Commission File Number) (I.R.S. Employer Identification No.)
700 North Pearl Street
Suite 2400, LB 342
Dallas, Texas 75201-7424
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 953-7700
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No Change
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(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OF ASSETS.
On October 9, 1996, AMRESCO Residential Mortgage Corporation ("ARMC") (an
indirect, wholly-owned subsidiary of AMRESCO, INC. (the "Company")) entered into
an Asset Purchase Agreement (the "Quality Purchase Agreement") with Quality
Mortgage USA, Inc. ("Quality") and certain other parties. Pursuant to the
Quality Purchase Agreement, on October 25, 1996, ARMC purchased various assets
of Quality, including certain subsidiaries, substantially all cash on hand,
mortgage loans held, foreclosed residential real property held, all accounts
receivable, certain subordinated certificates retained from certain prior
securitizations of its loans, three office buildings in Irvine, California and
all furniture, fixtures, and equipment on Quality's balance sheet as of the date
of closing. ARMC assumed certain contracts and obligations, principally
short-term leases associated with Quality's branch offices, obligations under
Quality's health insurance plans and indebtedness incurred by Quality in
connection with all loans held by Quality and conveyed to ARMC at closing as
well as indebtedness incurred in respect of the subordinated certificates
acquired by ARMC. Quality retained various rights to prepayment fees and late
payment penalties from mortgages previously originated by Quality.
ARMC paid $65.0 million in cash and assumed Quality's warehouse
indebtedness and current receivables existing as of closing. The purchase price
was the result of arms-length negotiation between the parties, based on ARMC's
evaluation of the fair value of Quality's tangible and intangible assets. The
Company financed ARMC's Quality acquisition through borrowings under the
Company's First Amended and Restated Revolving Loan Agreement dated as of April
25, 1996 and as subsequently amended, among the Company, NationsBank of Texas,
as agent, and the lenders which are parties thereto from time to time. The
Company has filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 relating to the proposed sale by the Company and certain
selling stockholders of the Company's common stock, par value $0.05 per share
("Common Stock"). The Company intends to use the net proceeds of the sale of its
shares of Common Stock in such offering, in part, to repay the borrowings
incurred in connection with the Quality acquisition.
ARMC anticipates using the assets acquired from Quality in the same
business in which they were used prior to the Quality acquisition.
Quality is based in Irvine, California. Prior to ARMC's acquisition of
Quality's assets, Quality was an independent originator of B&C residential
loans. Quality originated B&C loans through a nationwide network of
approximately 50 branch offices in 31 states. Each branch office provided a
local "back office" for independent mortgage brokers. These offices enable
Quality to maintain local relationships with over 4,500 Quality-approved
mortgage brokers. At September 30, 1996, Quality employed approximately 450
people. The Company believes that the Quality acquisition will enable the
Company to expand further its residential mortgage banking business and to
establish a substantial position as an originator of B&C loans. Quality
originated, funded and sold in excess of $5.0 billion in such loans since
October 1, 1992.
Quality was incorporated in 1984 and, in 1991, was acquired by Calmac
Funding ("Calmac") for the purpose of commencing operations as an originator and
seller of B&C loans. Calmac arranged for DLJ Mortgage Capital, Inc. ("DLJ
Mortgage") to provide various lines of credit and to act as a
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Conduit Purchaser for Quality's loan production, in exchange for which DLJ
Mortgage received a 49% equity interest in Quality. Since 1992, Quality sold
substantially all of its loan volume to DLJ Mortgage through whole loan sales at
prices below that which the Company believes it could obtain in the future.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Quality
The financial statements required by Article 3 of Regulation S-X are
incorporated by reference to pages F-26 through F-44 of the Company's
Registration Statement on Form S-3, as amended, filed with the Securities and
Exchange Commission on October 23, 1996 (File No. 0-8630)
(b) Pro forma financial information
The pro forma financial information required by Article 11 of Regulation
S-X is incorporated by reference to pages 22-27 of the Company's Registration
Statement on Form S-3, as amended, filed with the Securities and Exchange
Commission on October 23, 1996 (File No. 0-8630)
(c) Exhibits
2.0 Asset Purchase Agreement dated October 9, 1996 by and among AMRESCO
Residential Mortgage Corporation, on the one hand, and Quality
Mortgage USA, Inc., Calmac Funding, Inc., DLJ Mortgage Capital, Inc.,
DLJ Quality Partners, L.P., Russell Jedinak and Rebecca Jedinak, on
the other hand (incorporated by reference to Exhibit No. 2.1 to the
Company's Registration Statement on Form S-3, as amended, filed with
the Securities and Exchange Commission on October 23, 1996 (File No.
0-8630).
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SIGNATURE
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.
By: AMRESCO, INC.
By: /s/ Ronald B. Kirkland
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Name: Ronald B. Kirkland
Title: Vice President and
Chief Accounting Officer
Dated: November 6, 1996
