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):
March 6,1995
DIXIE NATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
Mississippi 0-3296 64-0440887
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(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
3760 I-55 North 39211-6323
Post Office Box 22587, Jackson, Mississippi 39225-2587
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(601) 982-8210
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Item 5. Other Events
On March 6, 1995, Dixie National Corporation (Corporation) entered into
a Letter of Intent with Standard Management Corporation (SMC) to sell to SMC all
of the capital stock of Dixie National Life Insurance Company (Dixie Life) which
the Corporation owns. Dixie Life is a 99.3% subsidiary of the Corporation and
represents 94% of the consolidated assets and substantially all of the
consolidated operations of the Corporation.
The Corporation owes Standard Life Insurance Company of Indiana, a
subsidiary of SMC, $3,688,746 under a Term Loan due March 31, 1995. The Letter
of Intent extends the due date of the Term Loan until closing or, if the
transaction contemplated therein is canceled by either party, for 90 days beyond
such cancellation. Except as to the extension of the due date of the Term Loan,
a prohibition against the Corporation negotiating with other parties and certain
other customary provisions, the Letter of Intent is not binding and is subject
to a Definitive Purchase Agreement which the parties intend to sign before April
1, 1995.
The Definitive Purchase Agreement will contain usual and customary
conditions, including, among others, a requirement to obtain all requisite
regulatory approvals and approval of the transaction by the shareholders of the
Corporation at a meeting to be held on or before August 1, 1995. The general
terms of the Letter of Intent are set forth in the following paragraph.
At closing SMC will cancel the Term Loan obligation, assume the
Corporation's indebtedness of $1,720,000 under certain Convertible Subordinated
Notes due May 1, 1995, pay the Corporation $2,500,000 in cash and issue to the
Corporation SMC common shares equal to $500,000 valued at the average trading
price of SMC's shares for the five days prior to closing. The Corporation will
also receive the first $175,000 of agent advances that Dixie Life collects after
closing. These payments constitute a selling price of at least $8,408,746 and up
to $8,583,746 if agent advances equal at least $175,000 at closing and at least
$175,000 is collected. Agent advances, net of allowance for doubtful accounts,
at December 31, 1994 were approximately $270,000. The selling price will be
adjusted by the change in Dixie Life's capital and surplus and asset valuation
reserve between December 31, 1994 and closing. In addition, Dixie Life will
continue to pay $15,000 per month rent to Vanguard, Inc., a wholly-owned
subsidiary of the Corporation, through 1996, on an existing lease which expires
December 31, 1996, on the office building occupied by the Corporation and Dixie
Life. There is no assurance that the transaction will be consummated.
Although the transaction provides means to satisfy the Convertible
Subordinated Notes at closing, such notes are due before the anticipated closing
date and there are no assurances that the Corporation will be able to extend
such notes beyond their May 1, 1995 maturity, or effect any alternative
accommodations. However, management is exploring several options and believes
that the Convertible Subordinated Notes will be satisfied or extended at their
due date.
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If the transaction is completed, the Corporation would have total
assets of approximately $5,650,000 composed of approximately $2,750,000 in cash;
$2,500,000 in equity securities of two issuers; the building discussed above,
built in 1971 at a cost of $700,000, which has a current basis of $270,000 and
other assets of approximately $130,000. The value of the equity securities is
subject to adjustment based on market fluctuations. The Corporation's principal
indebtedness would be a mortgage on the building with a principal balance of
approximately $450,000, which the Corporation believes is significantly less
than current market value of the property. The Corporation expects to use these
assets to facilitate its entry into new lines of business unrelated to the life
insurance industry. At this time, the Corporation is exploring a possible
opportunity in the health care field, but it has no understandings or agreements
in that regard.
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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.
DIXIE NATIONAL CORPORATION
(REGISTRANT)
BY: /s/ Robert B. Neal
ROBERT B. NEAL
PRESIDENT
Date: March 13, 1995
