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 12, 1997
Commission File No. 1-9364
FLAGSTAR CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3027522
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(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
203 EAST MAIN STREET
SPARTANBURG, SOUTH CAROLINA 29319-9966 (Zip Code)
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(Address of principal executive offices)
(864) 597-8000
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(Registrant's Telephone Number, including area code)
(N/A)
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(Former name or former address, if changed since last report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
(b) On July 11, 1997 (the "Petition Date"), Flagstar Companies, Inc., a
Delaware corporation ("FCI"), and its wholly-owned subsidiary Flagstar
Corporation, a Delaware corporation, ("Flagstar"), filed their joint prepackaged
plan of reorganization (the "Plan") pursuant to Chapter 11 of Title 11 of the
United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of South Carolina (the "Bankruptcy Court").
On November 12, 1997, subject to notice to creditors and other
interested parties, the Bankruptcy Court entered an order confirming an Amended
Joint Plan of Reorganization of FCI and Flagstar (the "Amended Plan"), which is
attached to this Form 8-K as Exhibit 2.1. Material features of the Amended Plan
are as follows:
(i) as of the Amended Plan's effective date (the "Effective Date")
Flagstar will merge with and into FCI which will be the
surviving corporation in the merger ("Reorganized Flagstar");
(ii) general unsecured claims will be unimpaired;
(iii) each holder of Flagstar's 10 7/8% Senior Notes due 2002 and
10 3/4% Senior Notes due 2001, (together, the "Old Senior
Notes"), will be entitled to receive such holder's pro rata
portion of 100% of the 11 1/4% Senior Notes due 2007 of
Reorganized Flagstar in exchange for 100% of the principal
amount of Old Senior Notes and accrued interest through the
Effective Date (subject to the right of Reorganized Flagstar
to pay accrued interest in cash);
(iv) each holder of Flagstar's 11.25% Senior Subordinated
Debentures due 2004 and 11 3/8% Senior Subordinated Debentures
due 2003 (together, the "Senior Subordinated Debentures") will
be entitled to receive on account of the unpaid principal
amount of its Senior Subordinated Debentures plus all unpaid
interest which accrued thereon prior to the Petition Date,
such holder's pro rata portion of shares of $0.01 par value
common stock of Reorganized Flagstar (the "New Common Stock")
equivalent to 95.5% of the New Common Stock to be outstanding
upon the Effective Date;
(v) each holder of Flagstar's 1O% Convertible Junior Subordinated
Debentures due 2014 (the "1O% Convertible Debentures"),
will be entitled to receive on account of the unpaid
principal amount of its 10% Convertible Debentures plus all
unpaid interest which accrued thereon prior to the
Petition Date, such holder's pro rata portion of shares
of New Common Stock equivalent to 4.5% of the New Common
Stock and certain warrants (the "New Warrants") to be
outstanding on the Effective Date; and
(vi) the remaining junior impaired classes under the Plan (FCI's
$2.25 Series A Cumulative Convertible Exchangeable Preferred
Stock and FCI's $.50 par value Common Stock (the "Old FCI
Common Stock")) will receive or retain no property under the
Amended Plan.
As of November 12, 1997, 42,434,668 shares of Old FCI Common Stock were
outstanding. As of the Effective Date, Reorganized Flagstar will have
100,000,000 authorized shares of New Common Stock and 25,000,000 authorized
shares of preferred stock. Approximately 40,000,000 shares of New Common Stock
will be issued in connection with the Amended Plan. As set forth in the Amended
Plan, ten percent (1O%) of the New Common Stock, on a fully diluted basis, will
be reserved for a new management stock option program, in addition to 4,000,000
shares of New Common Stock, which will be reserved for issuance upon the
exercise of the New Warrants.
The following condensed balance sheets of FCI and Flagstar (which have
been prepared using the equity method of accounting for reporting the results of
all wholly-owned subsidiaries of FCI that are not parties to such Chapter 11
proceedings) set forth the assets and liabilities of FCI and Flagstar as of
October 1, 1997:
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Flagstar Companies, Inc. and Flagstar Corporation
(Debtors-in-Possession)
Condensed Balance Sheet
(Unaudited)
October 1, 1997
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(In thousands)
Assets
Current Assets $ 3,273
Investment in operating subsidiaries, net (9,303)
Property owned, net 2,791
Property held under capital leases, net 2,220
Other assets:
Deferred financing costs 15,886
Receivable from operating subsidiaries 341,329
Other 19,693
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Total assets $ 375,889
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Liabilities
Liabilities not subject to compromise
Current liabilities $ 49,461
Long-term liabilities 58,182
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Total liabilities not subject to compromise 107,643
Liabilities subject to compromise 1,597,531
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Total liabilities 1,705,174
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Shareholders' deficit (1,329,285)
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Total liabilities and shareholders' deficit $ 375,889
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
Certain of the exhibits to this report, indicated by an asterisk, are
hereby incorporated by reference to other documents on file with the
Commission with which they are physically filed, to be a part hereof as
of their respective dates.
EXHIBIT NO. DESCRIPTION
*2.1 Amended Joint Plan of Reorganization of Flagstar
Companies, Inc. and Flagstar Corporation as confirmed
by order of the United States Bankruptcy Court for the
District of South Carolina filed November 12, 1997,
such cases jointly administered under Case No.
97-05431-B (incorporated by reference to Exhibit 2.1
to FCI's Current Report on Form 8-K, dated November 12,
1997).
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.
FLAGSTAR CORPORATION
By: /s/ Rhonda J. Parish
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Name: Rhonda J. Parish,
Title: Senior Vice President, General
Dated: November 21, 1997 Counsel and Secretary
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