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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): May 2, 2000
SOUTHERN INVESTORS SERVICE COMPANY, INC.
(Exact name of registrant as specified in Charter)
DELAWARE 0-04863 74-1223691
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
2727 NORTH LOOP WEST
SUITE 200
HOUSTON, TEXAS 77008
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (713) 869-7800
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Item 2. Acquisition or Disposition of Assets.
On March 10, 2000, Southern Investors Service Company, Inc. (the
"Company"), filed a definitive information statement ("Information Statement")
on Schedule 14C with the Securities Exchange Commission ("SEC") under the
Securities Exchange Act of 1934, as amended. The Information Statement
disclosed the Company's agreement to enter into a Purchase Agreement (the
"Purchase Agreement") and two Real Estate Purchase and Sale Agreements (the
"REPSAs") with Stephen R. Smith, a private investor from Austin, Texas, for the
Company's Lajitas Resort and two adjoining tracts of land in west Texas
(together, "Lajitas"). The Company agreed to sell Lajitas for $3,950,000 in
cash as the result of an auction in which Mr. Smith was the highest bidder.
Under the Purchase Agreement, dated February 24, 2000, the Company agreed
to sell and transfer its right, title and interest in the assets and real
property of the resort and town of Lajitas, excluding, among other items,
certain receivables and the two adjoining tracts of land that are covered by the
separate REPSAs. The transferred assets also included all of the outstanding
capital stock of Lajitas Utility Co., Inc., which provides water and related
utility services to the resort and town.
Under the REPSAs, each dated February 24, 2000, the Company agreed to
convey two tracts of land, "as is, where is" and "with all faults, if any." The
first REPSA, for the "North Tract," related to approximately 6,330 acres to be
conveyed by special warranty deed and approximately 940 acres to be conveyed by
quit claim deed. The second REPSA, for the "South Tract," related to
approximately 8,513 acres to be conveyed by special warranty deed and
approximately 3,430 acres to be conveyed by quit claim deed.
The descriptions above of the Purchase Agreement and the REPSAs are
qualified in their entirety by reference to the agreements themselves, which
have been filed as exhibits to this Form 8-K.
The Board of Directors of the Company considered Mr. Smith's bid to be a
fair purchase price for Lajitas based on (i) the Company's inquiries regarding
historical sales prices for undeveloped acreage similar to the undeveloped
acreage included in Lajitas, (ii) the Company's discussions with the company
that conducted the auction sale regarding its opinion of the possible range of
sales prices for the property and (iii) the nature of the auction process,
including the fact that the sale was subject to a minimum bid and was widely
advertised in national newspapers, local newspapers and business journals in
Texas and Los Angeles, and other publications such as Hotel and Motel
Management, the Robb Report, Millionaire Magazine and Unique Homes.
On May 2, 2000, the Company finalized the sale of Lajitas to two entities
to which Mr. Smith had assigned all of his rights under the Purchase Agreement
and REPSAs by means of an Assignment, Assumption, Amendment and Allocation
Agreement, dated as of May 2, 2000 (the "Assignment Agreement"), and attached as
Exhibit 2.4 hereto. The Company sold (i) the Town and Resort Real Property (as
defined in the Purchase Agreement), (ii) specified rights to withdraw water from
the Rio Grande River and (iii) the two tracts of land adjoining the resort to
Texas R and S Properties, Ltd., a Texas limited partnership ("R&S"). The
Company sold the
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remaining assets under the Purchase Agreement to Lajitas Resort, Ltd., a Texas
limited partnership ("LRL"). Each of R&S and LRL is controlled by Stephen R.
Smith, and each was formed for the purpose of acquiring Lajitas.
R&S and LRL agreed to pay the Company an aggregate of $3,550,000 (the
"Total Purchase Price") in cash for Lajitas under the Assignment Agreement,
which amount is $400,000 less than the purchase price under the Purchase
Agreement but in excess of the minimum purchase price approved by the Company's
Board of Directors and shareholders. The Company agreed to the reduction in
price in consideration of the release by R&S and LRL of the Company's obligation
to pay for certain corrective measures to be taken with respect to the Lajitas
water supply.
Item 7. Financial Statements and Exhibits.
(b) The following unaudited financial statements of the Company are filed with
this report:
. Pro Forma Consolidated Balance Sheet as of March 31, 2000
. Pro Forma Consolidated Statements of Loss for the Following Periods:
Three Months Ended March 31, 2000
Year Ended December 31, 1999
The Pro Forma Consolidated Balance Sheet as of March 31, 2000, reflects the
pro forma financial position of the Company after giving effect to the sale of
Lajitas at March 31, 2000.
The Pro Forma Consolidated Statements of Loss for the Three Months ended
March 31, 2000, and the year ended December 31, 1999, assumes that the sale of
Lajitas occurred immediately prior to the first day of each respective period.
The notes following the unaudited pro forma financial statements are an
integral part of those financial statements.
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SOUTHERN INVESTORS SERVICE COMPANY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2000
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PRO FORMA
ASSETS HISTORICAL ADJUSTMENTS PRO FORMA
- ------ ---------- ----------- ---------
<S> <C> <C> <C>
Resort Development, Net $ 2,122 $(2,122)(a) $ 0
Equity in Real Estate Joint Ventures 361 361
Cash 155 2,386(b) 2,541
Accounts Receivable 331 331
Other Assets 251 (237)(c) 14
------- ------- -------
$ 3,220 $ 27 $ 3,247
======= ======= =======
LIABILITIES AND
STOCKHOLDERS' DEFICIT
- ----------------------
Liabilities:
Notes Payable $ 5,684 $ (500)(d) $ 5,184
Accounts Payable and Accrued Expenses 2,875 (301)(e) 2,574
------- ------- -------
8,559 (801) 7,758
------- ------- -------
Stockholders' Deficit (5,339) 828 (4,511)
------- ------- -------
$ 3,220 $ 27 $ 3,247
======= ======= =======
</TABLE>
The accompanying notes on page 7 are
an integral part of this Balance Sheet.
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SOUTHERN INVESTORS SERVICE COMPANY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF LOSS
THREE MONTHS ENDED MARCH 31, 2000
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Resort Revenues $ 775 $(775)(a) $ (0)
Real Estate Revenues 9 9
------ ----- ------
784 (775) 9
------ ----- ------
Resort Expenses 710 (710)(a) 0
Other Expenses 54 54
------ ----- ------
764 (710) 54
------ ----- ------
Income (Loss) From Operations 20 (65) (45)
Interest Expense $ (102) 12(b) (90)
------ ----- ------
Net Loss $ (82) $ (53) $ (135)
====== ===== ======
(Loss) Per Common Share $(0.03) $(0.04)
====== ======
</TABLE>
The accompanying notes on page 7 are
an integral part of this Statement of Loss.
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SOUTHERN INVESTORS SERVICE COMPANY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF LOSS
YEAR ENDED DECEMBER 31, 1999
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ -----------
<S> <C> <C> <C>
Resort Revenues $ 2,352 $(2,352)(a) $ (0)
Real Estate Revenues 202 202
------- ------- ------
2,554 (2,352) 202
------- ------- ------
Resort Expenses 2,598 (2,598)(a) 0
Other Expenses 102 102
------- ------- ------
2,700 (2,598) 102
------- ------- ------
Income (Loss) From Operations (146) 246 100
Interest Expense (381) 38(b) (343)
------- ------- ------
Loss Before Extraordinary Gains (527) 284 (243)
Extraordinary Gains on Debt Settlements 116 116
------- ------- ------
Net Loss $ (411) $ 284 $ (127)
======= ======= ======
(Loss) Per Common Share:
Loss before extraordinary gains $ (0.17) $(0.08)
======= ======
Net Loss $ (0.13) $(0.04)
======= ======
</TABLE>
The accompanying notes on page 7 are
an integral part of this Statement of Loss.
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NOTES TO PRO FORMA FINANCIAL STATEMENTS
A. Notes to Pro Forma Consolidated Balance Sheet:
(a) Retirement of assets sold.
(b) Proceeds from sale of net of closing costs, commissions, purchase of
employee housing, repayment of notes payable secured by assets sold and
related accrued interest.
(c) Prepaid expenses of sale.
(d) Repayment of notes payable secured by assets sold.
(e) Repayments of accrued interest and accrued expenses.
B. Notes to Pro Forma Consolidated Statements of (Loss)
(a) Remove revenues and expenses associated with assets sold.
(b) Adjustment of interest expense in connection with the repayment of
notes secured by assets sold.
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(c) Exhibits.
Exhibit No. Description
----------- ------------
2.1 -- Purchase Agreement (incorporated by reference to
Annex B to the Company's Information Statement on
Schedule 14C, dated March 10, 2000, SEC File
No. 0-04863).
2.2 -- Real Estate Purchase and Sale Agreement (incorporated
by reference to Annex C-1 to the Company's
Information Statement on Schedule 14C, dated March
10, 2000, SEC File No. 0-04863).
2.3 -- Real Estate Purchase and Sale Agreement
(incorporated by reference to Annex C-2 to the
Company's Information Statement on Schedule
14C, dated March 10, 2000, SEC File No. 0-04863).
*2.4 -- Assignment, Assumption, Amendment and
Allocation Agreement.
_________
* Filed herewith.
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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.
SOUTHERN INVESTORS SERVICE COMPANY, INC.
Date: May 16, 2000 /s/ Eric Schumann
------------------------------------
By: Eric Schumann
------------------------------------
Senior Vice President
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INDEX TO EXHIBITS
Exhibit No. Description
----------- ------------
2.1 -- Purchase Agreement (incorporated by reference to
Annex B to the Company's Information Statement on
Schedule 14C, dated March 10, 2000, SEC File
No. 0-04863).
2.2 -- Real Estate Purchase and Sale Agreement (incorporated
by reference to Annex C-1 to the Company's Information
Statement on Schedule 14C, dated March 10, 2000, SEC
File No. 0-04863).
2.3 -- Real Estate Purchase and Sale Agreement (incorporated
by reference to Annex C-2 to the Company's Information
Statement on Schedule 14C, dated March 10, 2000, SEC
File No. 0-04863).
*2.4 -- Assignment, Assumption, Amendment and
Allocation Agreement.
_________
* Filed herewith.
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EXHIBIT 2.4
ASSIGNMENT, ASSUMPTION, AMENDMENT AND ALLOCATION AGREEMENT
Reference is made to each of (i) the Purchase Agreement, dated as of
February 24, 2000 (the "Asset Purchase Agreement"), between Southern Investors
Service Company, Inc. (the "Seller") and Stephen R. Smith ("Smith") and (ii)
each of the two Real Estate Purchase and Sale Agreements dated as of February
24, 2000 between the Seller and Smith (the "Real Estate Purchase Agreements"
and, together with the Asset Purchase Agreement, the "Agreements").
Smith does hereby assign and transfer
(i) to Lajitas Resort, Ltd., a Texas limited partnership ("LRL"), all of
Smith's rights under the Asset Purchase Agreement, other than the right to
acquire (a) the Town and Resort Real Property (as defined in Section 1.1(a) of
the Asset Purchase Agreement) and (b) the right to withdraw water as described
in Section 1.1(j) of the Asset Purchase Agreement (the "Water Rights"); and
(ii) to Texas R and S Properties, Ltd., a Texas limited partnership
("R and S"), (a) Smith's right under the Asset Purchase Agreement to acquire the
Town and Resort Real Property and the Water Rights and (b) all of Smith's rights
under the Real Estate Purchase Agreements.
LRL hereby assumes and agrees to perform all of Smith's obligations under
the Asset Purchase Agreement as if it were the original buyer party thereto;
provided that R and S hereby assumes the obligation to pay that portion of the
purchase price under the Asset Purchase Agreement which is allocated to the Town
and Resort Real Property and Water Rights (as specified below).
The parties agree that the foregoing assignment and assumption shall not
expand or alter Seller's obligations under the Asset Purchase Agreement
(including, without limitation, its obligations under Article 7 thereof), and
Seller's obligations thereunder shall be limited as if there were a single buyer
under the Asset Purchase Agreement.
R and S hereby assumes and agrees to perform all of Smith's obligations
under the Real Estate Purchase Agreements.
Seller hereby consents to the foregoing assignment and assumption. In
addition, the parties hereto agree that Schedule 1.5 to the Asset Purchase
Agreement is hereby amended to add to the list of "Assumed Contracts" the Lease
Agreement, dated as of April 3, 1990, between The Mischer Corporation
(predecessor in interest to the Seller) and Boquillas Beverage Company
("Beverage"), as amended by Amendment to Lease Agreement, dated as of March 22,
2000, between the Seller and Beverage.
Pursuant to Section 4.8 of the Asset Purchase Agreement, Seller agreed to
paid certain amounts in respect of the agreed order with the TNRCC disclosed in
the Asset Purchase Agreement. The parties hereby agree that Section 4.8 of the
Asset Purchase Agreement is hereby deleted in its
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entirety. Seller shall have no obligations to LRL or any other Person with
respect to (and LRL and the other parties hereto hereby release, acquit and
forever discharge Seller from any obligations relating to or arising out of)
such agreed order or otherwise relating to any property or equipment used at or
in connection with the Resort, including any property or equipment owned or used
by Lajitas Utility. In consideration of such release, the purchase price is
being reduced by $400,000 from $3,950,000 to $3,550,000. Schedule 1.1B of the
Asset Purchase Agreement is hereby amended by (a) deleting the reference to a
"1990 Chevrolet 2 1/2T Truck" and the corresponding use of said truck as a
"Water/Fire truck" and inserting in lieu thereof the reference to a "1984 Ford
1/2T Pickup" and (b) inserting at the end of the list of vehicles and uses the
reference to a "1988 Ford 3/4 T Van" and the corresponding use of said van as a
"Rental".
Each Agreement is hereby ratified and confirmed as modified by this Agreement.
The parties hereto hereby agree that the total $3,550,000 purchase price under
all three Agreements is allocated among the various Agreements and properties as
follows:
1. Asset Purchase Agreement: $2,550,000 allocated among the Transferred
Assets as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
a. Town and Resort Real Property and water rights: $2,200,000
b. Personal property: $ 350,000
2. Real Estate Purchase Agreement relating to "Tract 2": $ 400,000
3. Real Estate Purchase Agreement relating to "Tract 3": $ 600,000
</TABLE>
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This agreement may be executed in multiple counterparts, each being an
original, but all such counterparts shall constitute one agreement dated to be
effective as of May 2, 2000.
SOUTHERN INVESTORS SERVICE COMPANY, INC.
By: /s/ Mark A. Kilkenny
-----------------------------------
Name: Mark A. Kilkenny, Vice President
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LAJITAS RESORT, LTD.
By: Lajitas Management, L.L.C., its general partner
By: /s/ Randall N. Williamson
-----------------------------------------------
Name: Randall N. Williamson
Title: Manager
TEXAS R AND S PROPERTIES, LTD.
By: Cottondale Corporation,, its general partner
By: /s/ Randall N. Williamson
-----------------------------------------------
Name: Randall N. Williamson
Title: Vice President
STEPHEN R. SMITH
/s/ Stephen R. Smith
-------------------------------------------------
Stephen R. Smith
[Signature page to Assignment, Assumption, Amendment and Allocation Agreement]
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