SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 17, 1995 (November 10, 1995)
CAPITAL ASSOCIATES, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-15525
(State of Incorporation) (Commission File Number)
84-1055327
(IRS Employer Identification No.)
7175 WEST JEFFERSON AVENUE, LAKEWOOD, COLORADO 80235
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 980-1000
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Item 1. Change in Control of Registrant
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On November 10, 1995, MCC Financial Corporation ("MCC") acquired
voting control of Capital Associates, Inc. (the "Company") through a
private stock transaction and the delivery of proxies for shares of
common stock subject to purchase in the future pursuant to agreements
(the "Stock Purchase Agreements") executed by and between MCC and
Gary M. Jacobs and Jack M. Durliat, two of the Company's largest
shareholders. Pursuant to these Stock Purchase Agreements, MCC
acquired 65,120 shares of common stock for a purchase price of $3.30
per share or an aggregate amount of $214,896. In addition, MCC
acquired the right to purchase an additional 1,245,000 shares of
common stock in the future for an aggregate purchase price of
approximately $4.5 million. The number of shares reported reflects a
one-for-two reverse stock split effective November 3, 1995. The funds
for the purchase of the 65,120 shares of common stock were obtained
by MCC from a revolving line of credit with NationsBank of Virginia,
N.A. that is secured by existing assets and leases of MCC (the "MCC
Credit Facility"). The funds for the purchase of the additional
1,245,000 shares of common stock will be obtained by MCC from the MCC
Credit Facility, through a sale or financing of assets or a
combination of such sources.
As of close of business on November 10, 1995, MCC beneficially owned
and/or had voting control over a total of 2,833,369 shares of common
stock constituting 56% of the shares of common stock outstanding
calculated after giving effect to the Company's one-for-two reverse
stock split. Of the 2,833,369 shares, 1,245,000 shares are not owned
by MCC, but MCC is entitled to vote those shares pursuant to proxies
executed by the current owners, and MCC has entered into Stock
Purchase Agreements to purchase these shares in the future. The
determination of the percentage of shares beneficially owned is based
on information that 4,988,348 shares (after the stock split) of
common stock were outstanding as of November 3, 1995.
As 50% owners of MCC sharing authority with respect to the voting and
disposition of securities owned by MCC, Messrs. William H. Buckland
and James D. Walker each indirectly beneficially owned, as of
November 10, 1995, the 2,833,369 shares of common stock held by or
beneficially owned by MCC constituting 56% of the shares of common
stock outstanding.
MCC and Durliat and Jacobs entered into a stock pledge agreement,
dated as of November 10, 1995, whereby MCC (1) granted Durliat and
Jacobs a security interest in, and pledged, the shares of common
stock purchased on that date from Durliat and Jacobs as security for
MCC's payment and performance obligations under the Stock Purchase
Agreements and (2) agreed to grant to Durliat and Jacobs a security
interest in, and agreed to pledge, any additional shares of Common
Stock purchased from Durliat and Jacobs after November 10, 1995, as
security for MCC's payment and performance obligations under the
Stock Purchase Agreements.
Pursuant to the terms of the Stock Purchase Agreement:
(1) MCC, on behalf of itself and its affiliates, has agreed not to
cause the Company to merge into another corporation or enter
into any other transaction resulting in a change of control or
the issuance of a new class of securities or any other
restructure of the Company's equity capital structure that
materially impairs the capital of the Company without
Durliat's and Jacobs' written consent, which consent shall not
be unreasonably withheld.
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(2) MCC has agreed not to enter into any material related-party
transactions with the Company without first obtaining
Durliat's and Jacobs' prior written consent, which consent
shall not be unreasonably withheld; provided, however, that
MCC shall not be prohibited from (a) entering into
transactions in the ordinary course of business on an
"arm's-length" basis, (b) entering into management services or
consulting agreements with the Company as approved by
disinterested members of the Company's board of directors (the
"Board") or (c) receiving expenses, reimbursements and bonuses
earned under the Executive Committee Compensation Plan as
approved by disinterested members of the Board, or other fees
and bonuses as directors, consistent with currently existing
agreements, compensation terms and conditions.
(3) MCC has agreed to vote its shares of stock in the Company,
including the shares of common stock purchased pursuant to the
Stock Purchase Agreements, and the shares of common stock for
which MCC has been granted a proxy by Durliat and Jacobs to
cause Jacobs, or a representative duly appointed by Durliat
and Jacobs and satisfactory to MCC, to retain his seat on the
Board or be elected to the Board.
The restrictions and agreements described in paragraphs (1), (2) and
(3) above with respect to the shares of common stock subject to each
Stock Purchase Agreement shall lapse upon payment in full of the
purchase price for such shares of common stock.
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EXHIBIT INDEX
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ITEM
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99 Additional Exhibits
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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.
CAPITAL ASSOCIATES, INC.
Registrant
Date: November 22, 1995 By: /s/John E. Christensen
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John E. Christensen
Senior Vice President and
Chief Financial Office
FOR IMMEDIATE RELEASE: November 10, 1995
Contact: Mr. William H. Buckland
Chairman
MCC Financial Corporation
(703) 847-6597
MCC FINANCIAL CORPORATION ACQUIRES A
CONTROLLING INTEREST IN CAPITAL ASSOCIATES, INC.
McLean, Virginia -- MCC Financial Corporation (MCC) announced today
that it has acquired voting control of Capital Associates, Inc. (CAI) of Denver,
Colorado, through a private stock transaction and the delivery of proxies for
shares to be purchased in the future pursuant to agreements executed today with
Gary M. Jacobs and Jack M. Durliat, two of CAI's largest shareholders.
The purchase price for the shares purchased today is $3.30 per share.
This price per share reflects the CAI one for two reverse stock split effective
as of November 3, 1995. The total purchase price for the 1,310,120 shares
purchased or to be purchased is approximately $4.7 million.
As a result of the transaction, MCC's share ownership of CAI will
increase from 1,523,249 to 2,833,369 shares or approximately 55% of CAI's
outstanding shares on a post split basis.
MCC is an aircraft and equipment lessor located in McLean, Virginia
that specializes in aircraft operating leases to the regional airline industry.
William H. Buckland and James D. Walker acquired MCC from Fairchild Industries,
Inc. in 1988.
CAI is one of the larger independent leasing companies in the United
States, and principally engaged in (1) buying, selling, leasing and remarketing
new and used equipment, (2) managing equipment on and off-lease, (3) sponsoring,
co-sponsoring, managing and co-managing publicly-registered income funds, and
(4) arranging equipment-related financing. In its fiscal year ended May 31,
1995, CAI had net income of $1.1 million on revenues of $104.9 million and total
assets of $158.7 million. CAI is headquartered in Denver, Colorado and is listed
on NASDAQ.
MCC originally acquired 23% of CAI in a private transaction in June
1994. Both Buckland and Walker are currently members of CAI's Board of
Directors. Walker was elected chairman of the CAI Board at the October 27, 1995
stockholder's meeting.
In commenting on the acquisition, Buckland, MCC's Chairman of the
Board, stated "this represents a strategic investment for MCC in a company we
understand and believe we can add value, especially in the areas of marketing
and acquisitions". MCC's President and CEO and CAI's Chairman of the Board, Jim
Walker stated "We believe CAI is now positioned for growth in revenues and
profitability. In the last year that we have been associated with the Company,
it has settled its lawsuit on MBank and collected $8.5 million in cash,
refinanced its bank line of credit and has significantly rebuilt its sales
force".
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