SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 (Date of earliest event reported) September 15, 1999
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FIRSTCITY FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 1-7614 76-0243729
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
6400 Imperial Drive, Waco, TX 76712
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (254) 751-1750
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
- - Press Release of September 15, 1999 (attached as exhibit 99.1). On
September 15, 1999, the registrant issued a press release announcing it
had reached an agreement with its lenders under its working line of
credit waiving existing and future defaults by its conventional
mortgage subsidiaries.
ITEM 7. EXHIBITS
Exhibit number Description
99.1 Press Release of September 15, 1999.
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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.
FIRSTCITY FINANCIAL CORPORATION
By: /s/ Gary H. Miller
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Name: Gary H. Miller
Title: Senior Vice President and
Chief Financial Officer
Date: September 22, 1999
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EXHIBIT INDEX
Exhibit number Description
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99.1 Press Release of September15, 1999
EXHIBIT NUMBER 99.1
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N E W S R E L E A S E
contact: Suzy W. Taylor
(713) 852-1810
FIRSTCITY FINANCIAL OBTAINS WAIVERS OF DEFAULTS
ANNOUNCES EXPECTATIONS ON HARBOR SUBSIDIARIES
WACO, TEXAS SEPTEMBER 15, 1999... FirstCity Financial Corporation today
announced that it has reached an agreement with the lenders under its working
capital revolving line of credit ("Revolving Lenders") that waives existing and
future defaults arising from defaults by its conventional mortgage subsidiaries
(Harbor Financial Mortgage Corporation, its subsidiary, New America Financial,
Inc. and its parent, FirstCity Financial Mortgage Corporation, the "Mortgage
Subsidiaries"). The working capital revolving line of credit was extended and
renewed in the amount of $93 million on August 11, 1999. The renewed facility
includes a sub-line for FirstCity Consumer Lending Corporation ("Consumer") and
matures on June 30, 2000.
The Company and its credit enhancement provider on the Consumer
residual assets and Consumer warehouse facility entered into extension
agreements providing for the waiver of the trigger and termination events under
those facilities until October 15, 1999. The trigger and termination events
resulted from the losses occurring at the Company's Mortgage Subsidiaries that
caused the Company to fail to meet certain net worth and liquidity covenants
under the agreement. The extension agreements between Consumer, the credit
enhancement provider and Consumer's lenders provide for continued funding of
Consumer during the extension period through October 15, 1999. Consumer and the
Company are in negotiations to obtain alternative borrowing facilities for
Consumer and its subsidiaries.
The Company disclosed in its Form 10-Q for the period ended June 30,
1999, that certain defaults relating to net worth and liquidity covenants
existed under a $4.3 million credit facility secured by certain automobile
residual assets. These defaults were waived by the lender in connection with an
additional extension of credit, which refinanced certain automobile residual
assets previously financed under a repurchase agreement with another lender.
The Mortgage Subsidiaries remain in default under their agreements with
the mortgage warehouse lenders and other credit providers. The mortgage
warehouse lenders continue to provide funding on a day-to-day basis, but the
lenders have not waived any of the defaults under the credit agreements.
Pursuant to the waivers provided by the Revolving Lenders, the defaults at the
Mortgage Subsidiaries will not constitute a default under the Company's
revolving line of credit.
The Mortgage Subsidiaries are engaged in negotiations with possible
purchasers for the sale of certain assets and operations of New America
Financial, Inc. As a result of the significant decline in value of the offers
for purchase of those assets and operations, as well as the expected costs and
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losses arising from the liquidation of the remaining assets and operations of
the Mortgage Subsidiaries, the Company believes that it is unlikely that it will
recover any of its investment in the Mortgage Subsidiaries, which at June
30,1999, was $50.5 million. While the discussions concerning the sale of assets
and operations of New America Financial, Inc. continue, there can be no
assurance that any transaction will result from these discussions.
The Company also announced that Rick R. Hagelstein, Thomas E. Smith and
Buddy L. Terrell, members of its Board of Directors have resigned. Mr.
Hagelstein has also resigned from his positions as Executive Vice President and
Executive Committee member with the parent company, FirstCity Financial, where
he has served since July 1995. Mr. Hagelstein will continue as chairman and
director of the Mortgage Subsidiaries, where he has served since August of 1998.
Mr. Smith became a director in June of 1997 and Mr. Terrell has served on the
Board since April of 1999. Mr. Terrell also has resigned as officer and director
of the Mortgage Subsidiaries.
Due to liquidity constraints, the Company believes that payment of the
quarterly dividends on its preferred stock due on October 15, 1999 will be
postponed. Currently the Company has 1.2 million shares of preferred stock
outstanding. The shares have a redemption value of $21 per share and carry a
quarterly dividend rate of $.525 per share. Dividends on the preferred stock are
cumulative. The Company believes that payment of this dividend will be made once
the Company's liquidity constraints are resolved.
Certain statements in this press release including, but not limited to,
statements relating to the Company's strategic objectives and future
performance, which are not historical fact, may be deemed to be forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any statement that may
project, indicate or imply future, results, performance or achievements, and may
contain the words "expect", "intend", "plan", "estimate", "believe", "will be",
"will continue", "will likely result", and similar expressions. Such statements
inherently are subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those projected. There are many
important factors that could cause the Company's actual results to differ
materially from those indicated in the forward-looking statements. Such factors
include, but are not limited to, the impact of certain covenants in loan
agreements of the Company and its subsidiaries; the degree to which the Company
is leveraged; its need for financing; the continued availability of the
Company's credit facilities; capital markets conditions, including the markets
for asset-backed securities and commercial mortgage-backed securities; the
performance of the Company's subsidiaries and affiliates; factors more fully
discussed and identified under Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations, risk factors and other risks
identified in the Company's current report on Form 10-K, filed March 31, 1999
and other Securities and Exchange Commission filings. Many of these factors are
beyond the Company's control. In addition, it should be noted that past
financial and operational performance of the Company is not necessarily
indicative of future financial and operational performance. Given these risks
and uncertainties, investors should not place undue reliance on forward-looking
statements. The forward-looking statements in this release speak only as of the
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date of this release. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statement to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any
forward-looking statement is based.
FirstCity is a diversified financial services company with operations
dedicated to mortgage lending, portfolio asset acquisition and resolution and
consumer lending with offices in the US and with affiliate organizations in
France, Japan and Mexico. Its common (FCFC) and preferred (FCFCO) stocks are
listed on the NASDAQ National Market System.
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