SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
________________
Date of Report (Date of earliest event reported) October 24 1995
________________
SINECURE FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
COLORADO 33-20863 95-4143708
(State of other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification
No.)
3120 Cohasset Rd.
Suite 10
Chico, California 95926
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 916-898-9550
________________
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On October 24, 1995, Sinecure Financial Corp. ("SFC")
entered into a non-binding letter of intent to sell the net
assets of Team Players Inc. ("TPI"), a chain of seven sports
bar/billiards establishments to American Recreation Centers, Inc.
("ARC"). ARC is the largest public company in the United States
whose principal business is bowling. ARC operates 40 bowling
centers with 1,592 lanes in six states.
Although the exact terms of the transaction have not been
finalized, Sinecure will receive approximately 260,000 shares of
restricted ARC common stock valued at approximately $1.6 million
plus cash for liquor licenses, inventories, and cash on hand at
closing. In addition, over the next three years Sinecure will
receive additional ARC stock based upon a multiple of actual cash
flows resulting from the acquired businesses.
The transaction is subject to further due diligence, and
upon completion, a definitive agreement is expected to be
signed with a closing date in early December.
It is intended that the management staff of Sinecure will be
the operating officers of this newly formed ARC subsidiary during
the earn-out period.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
1. Non-binding letter of intent dated October 24, 1995 as
described above in Item 5 of this report.
2. Press Release dated November 3, 1995.
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 hereto duly authorized.
SINECURE FINANCIAL CORP.
(Registrant)
Jeffrey L. Hilgert
President
Dated: November 6, 1995
[ Company Letterhead
ARC
American Recreation Centers, Inc.
Executive Offices
11171 Sun Center Drive, Suite 120
Rancho Cordova, California 95670
916/ 852-8005
FAX 916/ 852-8004 ]
October 24, 1995
VIA FAX 898-9552
Mr. Jeffrey L. Hilgert, President
Sinecure Financial Corp.
3120 Cohasset Road, Suite 10
Chico, CA 95926
Dear Jeff:
American Recreation Centers, Inc. (ARC) is interested in acquiring all
the operating assets of Sinecure Financial Corporation's billiard operations
currently operating under the name of Team Players with seven locations, six
in California and one in New Mexico. ARC is willing to offer Sinecure
Financial Corporation (Sinecure), an amount equal to five times actual annual
cash flow of the seven locations.
The total purchase price will bc calculated over the three years
immediately following the closing date and the price will be recalculated
each of the three years. Initially, Sinecure will be paid for the net book
value of the operating assets of each billiard location as well as the cash
and resale inventory as agreed to by both parties. ARC will pay Sinecure for
the netbook value of the operating assets with ARC newly issued common stock
valued at the three week average of ARC's stock as quoted on the NASDAQ market
just prior to close. ARC will pay Sinecure cash for the value of the cash and
resale inventory on site at each billiard location at close. In addition, ARC
will pay Sinecure the net book value of each liquor license in cash. ARC will
agree to invest approximately $320,000 in cash for capital improvements
pursuant to a specific list of needed changes.
At the conclusion of the first year, a five multiple of the actual cash
flow generated will be calculated after a charge for both management and
overhead as agreed to be both ARC and Sinecure. From this amount, the amount
initially paid by ARC for the operating assets, cash, resale inventory and
liquor licenses will be deducted along with the invested capital. Any amount
remaining will be divided by three and one third paid to Sinecure in the form
of stock valued in the same fashion as described above. This process will be
repeated for two additional years which will allow Sinecure to share in the
operational improvements that may occur in the existing seven locations that
have been sold.
ARC understands that because of existing liquor laws, it may be required
to acquire the stock of Team Players, Inc. New Mexico to preserve the liquor
license. As such, ARC will require certain indemnifications regarding unknown
liabilities associated with the purchase of stock. ARC further understands
that some of the assets to be acquired from Sinecure may be subject to
liabilities as such any liabilities assumed will be an offset to the value
paid to Sinecure in ARC stock.
As part of the transaction, ARC will enter into an employment contract
with you for five years and provide an incentive compensation program based
upon operating cash flow of existing and new locations for you and other
members of your management team. The incentive plan will be designed to
provide incentive to both grow the business internally and through creation
of new locations. ARC will commit to at least two bowling center locations
to be expansion sites for Team Players locations within the first year after
closing.
If during the first eighteen months of operation, actual
cash flow from existing operations falls below 50% of the projected
first year's cash flow, as agreed to in advance by both parties, then ARC
shall have the right to return to Sinecure all the assets purchased and any
liabilities still outstanding relative to those assets, in exchange for all
the shares of ARC stock given Sinecure, at the same value used in the original
transaction. In addition, ARC will sell back to Sinecure for cash, the cash
on hand and resale inventory. The capital invested by ARC will be converted
to debt with terms that Sinecure and ARC mutually agree will provide a payback
to ARC over a minimum of five years. Any outstanding obligations under the
employment contract would be cancelled and incentive compensation earned to
the date of sell-back would be paid. At the conclusion of the eighteen month
period, this right by ARC would expire.
I believe this letter generally outlines what we have discussed during
the last several meetings and I believe it is the basis for drafting the legal
documents necessary to finalize a deal. Of course, the entire transaction
will be subject to necessary due diligence and board approval, which I believe
will be obtained. I also understand there may be both board and proxy
approval requirements on the part of Sinecure before a transaction can be
completed.
If you agree to the general outline presented in this letter, please
indicate your approval by signing the letter where indicated. If you have
areas of disagreement, or would like certain issues expanded upon, please let
me know.
Please review this and get back to either Karen or myself with your
thoughts. I look forward to making this project happen.
Sincerely,
Robert A. Crist /me
President and Chief Executive Officer
ACCEPTED BY:
_Jeffrey L. Hilgert__________ Date:__10-24-95_____________
Jeffrey L. Hilgert, President
Sinecure Financial Corp.
[Company Letterhead
SFC
Sinecure Financial Corp.
3120 Cohasset Road, Suite 10
Chico, California 95926]
NEWS RELEASE
Contact: Jeffrey L. Hilgert
Chuck Tritten
(9l6) 898-9550
SINECURE FINANCIAL CORP to sell assets of Team Players, Inc.,
a chain of billiards/sports bar establishments to ARC.
Chico, CA November 3, 1995 - Sinecure Financial Corp (NASDAQ Bulletin Board
SCUF) announced today that it has entered into a letter of intent to sell the
net assets of Team Players, Inc., a chain of seven sports bar/billiards
establishments to American Recreation Centers, Inc. (NASDAQ AMRC) of Rancho
Cordova, CA. ARC is the largest public company in the United States whose
principal business is bowling. ARC operates 40 bowling centers with 1,592
lanes in six states.
Based in Chico, CA, Team Players is the primary business unit of Sinecure
Financial Corp., a small public company whose shares trade on the NASDAQ's
Bulletin Board under the symbol SCUF. Team Players owns seven sports
bar/billiards night clubs, six in California and one in New Mexico. Its
establishments feature pocket billiards with as many as 40 tables in one
location, broad coverage of most major sporting events provided on cable and
satellite television, live entertainment, beverage and food service. Team
Players holds private parties and special events in addition to casual and
tournament billiards competition.
Although the exact terms of the transaction have not been finalized, Sinecure
will initially receive approximately 260,000 shares of restricted ARC common
stock valued at around $1.6 million plus cash for liquor licenses, inventories,
and cash on hand at closing. In addition, over the next three years, Sinecure
can receive additional ARC stock based upon a multiple of actual cash flows
resulting from the acquired businesses. ARC will invest approximately
$300,000 in cash immediately for planned improvements to several of Team
Players existing clubs. The transaction is subject to further due diligence
and is expected to close in early December.
"The opportunities that can result from bringing our two companies together
are very exciting," said Robert A. Crist, president and chief executive
office of ARC, owner and operator of 40 bowling centers in six states. "It's
a natural combination since both our companies deal in leisure sports,
recreation and entertainment. ARC has the resources to expand not only Team
Players' existing sports/billiards night club concept, but to convert some
portion of any under performing bowling centers into alternative uses. The
billiards industry has been growing in excess of 16 percent annually in
recent years and this acquisition enables ARC to participate in this growth
market."
Moreover, Crist said, ARC already incorporated billiards in many of its
bowling centers, "although none of our centers have the total concept that
Team Players offers the customer. The acquisition fits ARC's corporate
strategy of diversifying into broader forms of family entertainment to lessen
reliance on bowling," Crist added.
Jeff Hilgert, President of Sinecure Financial and Team Players, will be
responsible for overseeing the continued growth of the billiards unit,
including developing a plan to convert a portion of at least two existing ARC
bowling center locations to the sports bar/billiards concept within the next
year.
Crist and Hilgert anticipate substantial increases in revenue generated from
improvements that will be made at Team Players' existing sites within the
first 60 days after acquisition.
"The model program on which the improvement program is based grossed
approximately $1 million at one site in the last 12 months," Hilgert said.
Also, Team Players recently announced that it is holding eight qualifying
tournaments at its centers for the ESPN World Open Billiard Championships.
Both men and women champions will eventually compete at Team Players
Billiards in Santa Rosa, CA from Jan. 10-14, 1996. ESPN, in cooperation with
Billiards International, Inc., will tape these championships and air them
on ESPN beginning in the spring of 1996 as 40 one-hour prime time programs.
The total prize fund for the championships is reported to be $310,000.
"The televised billiards championships of ESPN will give excellent exposure
for Team Players and ARC," said Crist. "Pocket billiards is increasingly
popular with young adults and we hope to benefit from this in both billiards
and bowling. "
