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) March 22, 1999
MFN Financial Corporation
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(Exact name of registrant as specified in charter)
Delaware 1-10176 36-3627010
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Field Drive, Lake Forest, Illinois 60045
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 295-8600
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n/a
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(Former name or former address, if changed since last report)
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Item 4. Changes in Registrant's Certifying Accountant.
(a) On March 22, 1999, Arthur Andersen LLP informed MFN Financial
Corporation, formerly known as Mercury Finance Company (the "Registrant") that
it has declined to stand for re-appointment as the Registrant's independent
accountant for the 1999 fiscal year. Arthur Andersen LLP indicated that as a
result of the confirmation by the United States Bankruptcy Court for the
Northern District of Illinois of the Registrant's Second Amended Plan of
Reorganization, the Registrant was considered by the firm to be a "new client",
and the firm is not currently accepting new audit engagements in the sub prime
consumer finance industry.
The audit reports of Arthur Andersen LLP on the financial statements of
the Registrant for each of the Registrant's last two fiscal years were qualified
as to uncertainty regarding the Registrant's ability to continue as a going
concern. More specifically, Arthur Andersen LLP's report relating to the
Registrant's financial statements for the year ended December 31, 1997, noted
that (i) the Registrant had incurred losses in 1997 and 1996 and was continuing
to incur losses in 1998, (ii) all of the Registrant's debt was subject to
acceleration or had matured by its terms as a result of the Registrant's
defaults of its various lending agreements, (iii) the Registrant was a defendant
in various litigation arising from the restatement of previously reported
financial information for 1995 and interim earnings in 1996, and (iv) such
matters raised doubt about the Registrant's ability to continue as a going
concern. Similarly, Arthur Andersen LLP's report relating to the Registrant's
financial statements for the year ended December 31, 1998, noted that (i) the
Registrant had incurred losses in 1996 through 1998 and was continuing to incur
losses in 1999, (ii) the continuation of the business after the effective date
of the Registrant's Second Amended Plan of Reorganization was dependent on the
Registrant's ability to achieve sufficient cash flow to meet its restructured
debt obligations, and (iii) such matters raised substantial doubt about the
Registrant's ability to continue as a going concern. The audit reports of Arthur
Andersen LLP on the financial statements for the Registrant's last two fiscal
years did not contain any adverse opinion or disclaimer of opinion, nor was
either opinion qualified or modified as to audit scope or accounting principles.
During Registrant's two most recent fiscal years, there have been no
disagreements with Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Arthur Andersen LLP, would
have caused it to make reference to the subject matter of the disagreements in
connection with its report. There have occurred no "reportable events" within
the meaning of Item 304(a)(1)(v) of Regulation S-K during Registrant's two most
recent fiscal years.
The Registrant has requested that Arthur Andersen LLP furnish it with a
letter addressed to the Securities and Exchange Commission ("SEC") stating
whether or not it agrees with the above statements. A copy of such letter dated
March 26, 1999 is filed as Exhibit 16 hereto.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description of Document
16 Letter dated March 26, 1999, from Arthur
Andersen LLP to the SEC.
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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.
MFN Financial Corporation
Date: March 26, 1999 By: /s/ Jeffrey B. Weeden
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Its: EVP & CFO
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ARTHUR ANDERSEN
Arthur Andersen LLP
33 West Monroe Street
Chicago, IL 60603-5385
March 25, 1999
Office of the Chief Accountant
SECPS Letter File
Securities and Exchange Commission
Mail Stop 11-3
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir or Madam:
We have read Item 4 included in the Form 8-K dated March 26, 1999 of MFN
Financial Corporation to be filed with the Securities and Exchange Commission
and are in agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP
Copy to:
Mr. Jeffrey Weeden, Chief Financial Officer
MFN Financial Corporation
