SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1998
GOLF VENTURES, INC.
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(Exact name of registrant as specified in its charter)
Utah 0-21337 87-0403864
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(State or other jurisdiction (Commission File No.) (IRS Employer ID #)
of incorporation)
255 South Orange Avenue, Suite 1515, Orlando, Florida 32801
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(Address and zip code of principal executive offices)
407-245-7557
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Registrant's telephone number
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Item 5. Other Events
On July 2, 1998, the Company entered into several agreements with Credit Suisse
First Boston Mortgage Capital LLC. to provide a $50,950,000 financing facility
for various development projects at the Company's locations, as well as, for the
restructuring of various secured notes payable and for the reduction in accounts
payable of the Company. This borrowing is through a three year note at an annual
interest rate of 4.5 percentage points over the London Interbank Offered Rate
("LIBOR"), as defined in the Promissory Note. Interest on the borrowing will be
paid monthly with minimum principal repayments of $14,050,000 due on or before
July 1, 1999 and $36,550,000 on or before July 1, 2000.
The Company is provided a one time borrowing of funds under the Loan, and any
amount borrowed and repaid may not be reborrowed. Interest-bearing construction
escrow accounts are to be established by the Company for specific development
projects with construction draws for actual project expenditures released from
the construction escrow accounts. The loan also requires that certain reserve
and escrow accounts be established and maintained. These accounts include a tax
and insurance escrow account a replacement reserve account, an interest reserve
account and a working capital reserve account. The Company will operate within
approved operating budgets for the properties. These budgets set forth the
estimated operating expenses to be incurred in connection with the properties
for each month of the applicable calendar year. The working capital and cash
flow of the Company are managed through the cash management agreement as
described below.
The Loan includes certain terms and conditions whereby the Company is not
permitted to prepay all or any portion of the Loan except in connection with the
sale and release of all or any portion of the property securing the loan. The
Loan includes an exit fee in the amount of $1,298,250, as well as the rights of
first refusal to provide permanent financing and to purchase property.
The Note provides for a late payment charge of 5% over the applicable interest
rate for payments of principal or interest not paid when due.
Additionally, the Company is not permitted to create, incur or assume any
additional indebtedness, or modify, waive or release any easements, restrictive
covenants or other permitted encumbrances on its properties, nor is it permitted
to enter into any Lease without the prior written consent of Lender.
The loan requires that the Company submits annual audited and quarterly
unaudited financial statements as well as unaudited monthly financial statements
and other reports and information which the Lender may request. The loan also
required that the Company settle several outstanding claims, and that the
Company proceed by written shareholder consent to increase its authorized common
stock to 100,000,000 shares.
Under the provisions of the Loan the Company has agreed to sell its Red Hawk
property on or before March 31, 1999.
The Company used $29,856,492 of the net proceeds from this loan to pay-off
outstanding principal and accrued interest on its secured debt at July 2, 1998,
and has established certain property tax, insurance, and specific project
development and interest reserve accounts, all of which will be used in
connection with the further development of the Company's properties.
On July 2, 1998 the Company held-back borrowing $6,500,000 of the total loan
until it becomes necessary for these funds to be used for certain development
and improvement projects in order to reduce interest expense. Project
development and improvement funds as of July 2, 1998, as well as, any future
advances are deposited into a Construction Escrow Account and managed in
accordance with the draw provisions of the loan agreement.
<PAGE>
On July 2, 1998, the Company entered into a Cash Management Agreement as a
provision of the Loan Agreement whereby the management of the various tax,
insurance, interest and operating accounts is specified. The terms and
conditions of the cash management agreement requires the Company to establish an
interest-bearing cash collateral account for the purpose of allocating all
receipts and other amounts transferred to the Company. Allocations of these
receipts will be directed to special purpose fund, a monthly debt service fund,
a casualty and condemnation proceeds fund, and extraordinary receipts fund and a
borrower remainder fund. Disbursements required for these activities will be
drawn from the amounts set aside within the fund balances. The working capital
reserve account, established from the proceeds of the loan, is intended to
support and deficiencies in the tax and insurance impound fund and the
replacement escrow fund. This reserve will also be available to pay the costs of
operating expenses incurred by the Company in any period in excess of the
budgeted expenses for such period.
Also, on July 2, 1998, the Company guaranteed a similar financing facility with
Credit Suisse First Boston Mortgage Capital LLC. for the Company's Pelican
Strand, Ltd. development project ("Pelican Strand"). This financing facility
provides for the borrowing of $35,600,000 for various development projects, as
well as, for the restructuring of the secured notes payable at Pelican Strand.
This borrowing also is through a three year note at an annual interest rate of
4.5 percentage points over LIBOR. Interest on the borrowing is to be paid
monthly with minimum principal repayments of $5,778,765 due on or before July 1,
1999 and $15,033,015 on or before July 1, 2000.
Pelican Strand is provided a one time borrowing of funds under its loan, and any
amount borrowed and repaid may not be reborrowed. Interest-bearing construction
escrow accounts are to be established by Pelican Strand for specific development
projects with construction draws for actual projects expenditures released from
the construction escrow accounts. The loan also requires that certain reserve
and escrow accounts be established and maintained. These accounts include a tax
and insurance escrow account a replacement reserve account, an interest reserve
account and a working capital reserve account. Pelican Strand will operate
within approved operating budgets for the properties. These budgets set forth
the estimated operating expenses to be incurred in connection with the
properties for each month of the applicable calendar year. The working capital
and cash flow of Pelican Strand are managed through the cash management
agreement as described below.
The Pelican Strand's loan includes certain terms and conditions whereby Pelican
Strand is not permitted to prepay all or any portion of its loan except in
connection with the sale and release of all or any portion of the property
securing the loan. The loan includes the rights of first refusal to provide
permanent financing and to purchase property.
The Pelican Strand note provides for a late payment charge of 5% over the
applicable interest rate for payments of principal or interest not paid when
due.
Additionally, Pelican Strand is not permitted to create, incur or assume any
additional indebtedness, or modify, waive or release any easements, restrictive
covenants or other permitted encumbrances on its properties, nor is it permitted
to enter into any lease without the prior written consent of Lender.
The loan requires that Pelican Stand submits annual audited and quarterly
unaudited financial statements as well as unaudited monthly financial
statements and other reports and information which the Lender may request.
On July 2, 1998, Pelican Strand used $20,712,856 of the net proceeds from the
loan to pay-off the outstanding principal and accrued interest on its secured
note and established certain property tax, insurance, project development and
interest reserve accounts which will be used in connection with the further
development of Pelican Strand's properties.
<PAGE>
On July 2, 1998, Pelican Strand held-back borrowing $3,500,000 of the total loan
until it becomes necessary for these funds to be used for certain development
and improvement projects. Project development and improvement funds as of July
2, 1998 as well as any future advances are deposited into a construction escrow
account and managed in accordance with the draw provisions of the Pelican Strand
loan agreement.
Also, on July 2, 1998, Pelican Strand entered into a separate Cash Management
Agreement as a provision of its Loan Agreement whereby the management of the
various tax, insurance, interest and operating funds is specified. The terms and
conditions of the cash management agreement requires Pelican Strand to establish
an interest-bearing cash collateral account for the purpose of allocating all
receipts and other amounts transferred to Pelican Strand. Allocations of these
receipts will be directed to special purpose funds, including a tax and
insurance impound fund, a replacement escrow fund, and operating expense fund, a
monthly debt service fund, a casualty and condemnation proceeds fund, and
extraordinary receipts fund and a borrower remainder fund. Disbursements
required for these activities will be drawn from the amounts set aside within
the fund balances. The working capital reserve account, established from the
proceeds of the loan, is intended to support any deficiencies in the tax and
insurance impound fund and the replacement escrow fund. This reserve will also
be available to pay the costs of operating expenses incurred by Pelican Strand
in any period in excess of the budgeted expenses for such period.
As consideration for structuring and advisory services provided by Credit Suisse
First Boston Mortgage Capital LLC. for these loans, the Company and Pelican
Strand, Ltd. paid fees of $4,327,500 at closing and are obligated for an
additional $5,000,000 payment by November 15, 1998. The Company also issued
13,651,710 shares of its Common Stock to Credit Suisse First Boston Mortgage
Capital LLC., representing 24.9% of the current and committed shares of stock to
be outstanding after the effectiveness of modifications to the Articles of
Incorporation increasing the amount of common stock authorized. At July 2, 1998
the Company had issued a total of 13,648,182 shares in payment of the common
stock portion of this fee, which represented 55.5% of the then outstanding
shares of the Company.
The following are brief descriptions of sales of securities by the Company for
settlements, services, property or cash to support and advance the Company's
business plan since the first quarterly filing on Form 10Q for the three month
period ended March 31, 1998.
- - On April 8, 1998, the Company issued 218,182 shares to Credit Suisse First
Boston Mortgage Capital LLC., as a due diligence deposit for structuring and
advisory services in connection with securing an adequate financing facility to
further the development of the Company's properties. The Company believes this
transaction was exempt from registration with the Commission under Section 4(2)
of the Securities Act of 1933.
- - On July 6, 1998, the Company issued 862,000 shares of its common stock to
American Resource and Development Company in settlement of certain claims for
compensation for services. The Company believes this transaction was exempt from
registration with the Commission under Section 4(2) of the Securities Act of
1933.
- - On July 1, 1998, the Company issued 250,000 shares of its common stock to Dr.
B. Menne to repay a $312,500 indebtedness. The Company believes this transaction
was exempt from registration with the Commission under Section 4(2) of the
Securities Act of 1933.
- - On July 2, 1998, the Company issued 13,430,000 shares to Credit Suisse First
Boston Mortgage Capital LLC., as further consideration for structuring and
advisory services in connection with securing an adequate financing facility to
further the development of the Company's properties. The Company believes this
transaction was exempt from registration with the Commission under Section 4(2)
of the Securities Act of 1933.
<PAGE>
The Company has committed as a condition to close the Credit Suisse First Boston
Loan Agreements to settle certain pre-merger disputed obligations, interest and
loan fees with certain 3rd parties, which will require the Company to issue an
additional 2,045,000 shares of common stock. Additionally, the Company has
agreed to the conversion of approximately $1,845,950 of unsecured debt in
exchange for the issuance of 1,476,761 shares of common stock. These additional
issuance's of common stock are subject to effectiveness of an increase in the
amount of common stock authorized under the Company's Articles of Incorporation.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the Securities and Exchange Commission. The
Company shall furnish copies of exhibits for a reasonable fee (covering the
expense of furnishing copies) upon request.
<PAGE>
Exhibit No. Exhibit Name
10.1 Loan Agreement, dated as of July 2, 1998, between Cutter Sound
Development, Ltd., Montverde Property, Ltd., Northshore Golf
Partners, Ltd., Northshore Development, Ltd., U.S. Golf
Pelican Strand, Inc., U.S. Golf Pinehurst Plantation, Ltd.,
FSD Golf Club, Ltd., RH Holdings, Inc., Wedgefield Limited
Partnership and Credit Suisse First Boston Mortgage Capital
LLC.*
10.2 Loan Agreement, dated as of July 2, 1998, between Pelican
Strand, Ltd. and Credit Suisse First Boston Mortgage Capital
LLC.*
10.3 Cash Management Agreement, dated as of July 2, 1998, between
Cutter Sound Development, Ltd., Montverde Property, Ltd.,
Northshore Golf Partners, Ltd., Northshore Development, Ltd.,
U.S. Golf Pelican Strand, Inc., U.S. Golf Pinehurst
Plantation, Ltd., FSD Golf Club, Ltd., RH Holdings, Inc.,
Wedgefield Limited Partnership and U. S. Golf Management, Inc.
and Credit Suisse First Boston Mortgage Capital LLC.*
10.4 Cash Management Agreement, dated as of July 2, 1998, between
Pelican Strand, Ltd. and U. S. Golf Management, Inc. and
Credit Suisse First Boston Mortgage Capital LLC.*
10.5 Agreement, dated as of July 2, 1998, between Golf Ventures,
Inc. and Credit Suisse First Boston Mortgage Capital LLC. with
respect to Capital Stock of Golf Ventures, Inc.*
10.6 $50,950,000 Promissory Note, dated as of July 2, 1998, between
Cutter Sound Development, Ltd., Montverde Property, Ltd.,
Northshore Golf Partners, Ltd., Northshore Development, Ltd.,
U.S. Golf Pelican Strand, Inc., U.S. Golf Pinehurst
Plantation, Ltd., FSD Golf Club, Ltd., RH Holdings, Inc.,
Wedgefield Limited Partnership and Credit Suisse First Boston
Mortgage Capital LLC.*
10.7 $35,600,000 Promissory Note, dated as of July 2, 1998, between
Pelican Strand, Ltd. and Credit Suisse First Boston Mortgage
Capital LLC.*
10.8 Guaranty, dated as of July 2, 1998, by Cutter Sound
Development, Ltd., Montverde Property, Ltd., Northshore Golf
Partners, Ltd., Northshore Development, Ltd., U.S. Golf
Pelican Strand, Inc., U.S. Golf Pinehurst Plantation, Ltd.,
FSD Golf Club, Ltd., RH Holdings, Inc., Wedgefield Limited
Partnership and U. S. Golf Management, Inc. for the benefit of
Credit Suisse First Boston Mortgage Capital LLC., for the
$35,600,000 indebtedness of Pelican Strand, Ltd.*
10.9 Guaranty, dated as of July 2, 1998, by Golf Ventures, Inc. for
the benefit of Credit Suisse First Boston Mortgage Capital
LLC., for the $35,600,000 indebtedness of Pelican Strand,
Ltd.*
* Incorporated by reference from the Company's Form 8-K filed with the
Commission on July 17, 1998.
GOLF VENTURES, INC.
/s/ Warren Stanchina
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Warren Stanchina, President
Dated: September 17, 1998
