U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential For Use of the Commission
Only (as Permitted by Rule 14a-6(e) (2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
FINET HOLDINGS CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE>
NOTICE AND CONSENT STATEMENT
FOR ACTION TO BE TAKEN BY WRITTEN CONSENT
IN LIEU OF A MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF FINET HOLDINGS CORPORATION:
Attached hereto is a Consent Statement which solicits the written consent
of the of the shareholders of Finet Holdings Corporation (the "Company") to
approve the issuance, offering and sale by the Company of up to 30,000,000
shares of its Common Stock in a private placement (the "Offering") at a price of
$0.60 per share, which Offering, if fully subscribed, would result in the
issuance in excess of 20% of the Company's outstanding Common Stock as of the
date hereof. The Offering was previously presented to and approved by
shareholders of the Company at the 1998 Annual Meeting. However, in order to
ensure that the Company has obtained the informed consent of its shareholders to
the Offering, the attached Consent Statement clarifies the price at which the
shares of Common Stock are expected to be sold in the Offering. The affirmative
written consent of a majority of the issued and outstanding shares of Common
Stock of the Company is required to approve the Offering at the price of $0.60
per share.
Attached to the Consent Statement is a Consent Card which provides for
approval of the Offering. The procedure for indicating approval of the Consent
Resolution is described in the Consent Statement. The Consent Statement and the
accompanying Consent Card are intended to be sent to Shareholders on or about
December 18, 1998. The Company has set December 21, 1998 as the target date by
which the Board of Directors desires to receive all written consents of
Shareholders.
All Shareholders are urged to sign and return the enclosed Consent
Card as promptly as possible.
By Order of the Board of Directors,
/s/ Jan C. Hoeffel
------------------------------------
Jan C. Hoeffel
Secretary
San Francisco, California
December 18, 1998
<PAGE>
FINET HOLDINGS CORPORATION
505 Sansome Street, 14th Floor
San Francisco, California 94111
CONSENT STATEMENT
FOR SHAREHOLDER ACTION BY WRITTEN CONSENT
This Consent Statement is furnished in connection with the solicitation by
the Board of Directors of Finet Holdings Corporation ("Finet" or the "Company")
of the written consent of shareholders to approve the issuance, offering and
sale by the Company of up to 30,000,000 shares of its Common Stock in a private
placement (the "Offering") at a price of $0.60 per share, which Offering, if
fully subscribed, would result in the issuance in excess of 20% of the Company's
outstanding Common Stock as of the date hereof. The Offering was previously
presented to and approved by shareholders of the Company at the 1998 Annual
Meeting. However, the description of the terms of the Offering set forth in the
November 1998 Proxy Statement did not firmly establish the price at which shares
would be sold in the Offering. In order to ensure that the Company has obtained
the informed consent of its shareholders to the Offering, this Consent Statement
clarifies the price at which the shares of Common Stock will be sold in the
Offering.
In addition, the Company may issue warrants to purchase up to 3,000,000
shares of its Common Stock (the "Warrants") to investment bankers as partial
consideration for their services as placement agent in connection with the
Offering. Subject to the receipt of shareholder approval, the Offering is
expected to close on or before December 21, 1998 (the "Closing Date") and the
Warrants shall become exercisable on or after the Closing Date. The Company
requests that all written consents be delivered to the Company on or before
December 21, 1998. This Notice and Consent Statement and the enclosed Consent
Card are first being mailed to shareholders of record at December 11, 1998 on or
about December 18, 1998.
Accompanying the Consent Statement is a Consent Card which provides for
adoption of the Consent Resolution (the "Consent Resolution") and approval of
the Offering. The procedure for indicating approval of the Consent Resolution is
described in detail in this Consent Statement.
The cost of preparing, printing, assembling and mailing this Consent
Statement and other material furnished to stockholders in connection with the
solicitation of consents will be borne by the Company. In addition to the
solicitation of consents by use of the mails, officers, Directors and employees
of the Company may solicit consents by written communications, by facsimile,
telephone, telegraph or personal call. These persons are to receive no special
compensation for any solicitation activities.
VOTING SECURITIES
The matter being submitted for shareholder approval is to be acted upon by
Written Consent, without a meeting, rather than by a vote held at a meeting. The
Company has only one class of voting security, its Common Stock, entitled to one
vote per share. As of the close of business on December 11, 1998, there were
36,405,386 shares of the Company's Common Stock issued and outstanding. Only
shareholders of record at the close of business on December 11, 1998 are
entitled to act upon this matter by Written Consent.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock at December 11, 1998: (1) by
each person known by the Company to own beneficially more than five percent of
the Company's outstanding shares of Common Stock; (2) by each Director and Named
Executive Officer of the Company; and (3) by all Directors and Named Executive
Officers as a group. Except as otherwise indicated in the notes to this table,
the holders listed below have sole voting and investment power with respect to
such shares. For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares as of a given date which such person has the right to
acquire within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person named below on a given date, any
security which such person has the right to acquire within 60 days after such
date is deemed to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
-----------------Beneficial Ownership---------------------
Name and Address of ----Common Stock----
Beneficial Owner # Owned % Owned
---------------- ------- -------
Beneficial Jose Maria Salema Garcao 12,263,900(1) 28.3%
Owners of Quinta Da Marinha, Lote
more than 5% CT-14, 2750 Cascais
of shares Portugal
outstanding
Fondation Pamalu 5,000,000(2) 13.3%
4536 Mozelos VFR
Portugal
James W. Noack 4,404,238(3) 12.1%
854 Clifton Court
Benicia, CA 95410
Cumberland Associates 2,685,344 7.4 %
1114 Avenue of Americas
New York, NY 10036
Americo Ferreira Amorim 2,000,000 5.5%
Estefania 163
Porto, Portugal
Directors Jan C. Hoeffel 1,564,075(4) 4.3%
And Named L. Daniel Rawitch 1,346,973(5) 3.7%
Executive Mark L. Korell 450,000(6) 1.2%
Officers Jose Philipe Guedes 385,000(7) 1.1%
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1 Reflects 5,373,900 shares beneficially owned, currently exercisable
warrants to acquire 6,850,000 shares and currently exercisable options to
acquire 40,000 shares.
2 Reflects 4,000,000 shares beneficially owned and currently exercisable
warrants to acquire 1,000,000 shares.
3 Reflects 4,301,237 shares beneficially owned by him, 28,000 beneficially
owned by his minor child and currently exercisable warrants to acquire
75,001 shares.
4 Reflects 1,263,158 shares beneficially owned by him, 917 shares
beneficially owned by his spouse, and currently exercisable warrants to
acquire 300,000 shares.
5 Reflects 946,973 shares beneficially owned by him
and currently exercisable warrants to acquire 400,000 shares.
6 Reflects 125,000 shares beneficially owned by him and currently exercisable
options to acquire 325,000 shares.
7 Reflects 320,000 shares beneficially owned.
<PAGE>
S. Lewis Meyer 365,000(8) 1.0%
Stephen J. Sogin 180,633(9) *
Thomas L. Porter 115,000(10) *
Michael G. Conway 90,000(11) *
Richard Wilkes 10,000 *
George P. Winkel 50 *
All Directors and Executive 4,506,731 11.8%
Officers as a group
The percent of class calculation is based on 36,405,386 shares of Common
Stock outstanding as of December 11, 1998.
SOLICITATION OF WRITTEN CONSENTS
Under Delaware law and the Company's Bylaws, any action which may be taken
at any annual or special meeting of Shareholders may be taken without a meeting
and without prior notice, if a consent writing, setting forth the action so
taken, is signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take that action
at a meeting at which all shares entitled to vote on that action were present
and voted. The matter being considered by the shareholders is being submitted
for action by written consent, rather than by votes cast at a meeting. Set forth
below under the caption "Proposal 1" is the text of the Consent Resolution being
submitted for shareholder adoption by written consent. The Consent Resolution
provides for the approval of the Offering which is more fully described under
the caption "APPROVAL OF THE SALE AND ISSUANCE OF UP TO 30,000,000 SHARES OF
COMMON STOCK IN A PRIVATE PLACEMENT AT A PRICE OF $0.60 PER SHARE" below. The
Consent Resolution will be effective on the date on which the unrevoked written
consents of a majority of the shares of Common Stock issued and outstanding
approving the Consent Resolution are received by the Company (the "Effective
Date"). The Company requests that all written consents be delivered to the
Company on or before December 21, 1998.
Shareholders are being requested to indicate approval of and consent to the
adoption of the Consent Resolution by exercising the enclosed Consent Card and
by checking the box which corresponds to the action the shareholder wishes to
take. FAILURE TO CHECK ANY OF THE BOXES WILL, IF THE CONSENT CARD HAS BEEN
SIGNED, CONSTITUTE APPROVAL OF AND CONSENT TO THE ADOPTION OF THE CONSENT
RESOLUTION. The text of the Consent Resolution has not been set out on the
Consent Card because of space limitations. Nevertheless, signing and indicating
approval on the Consent Card will be deemed to be written consent to the
adoption of the Consent Resolution.
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* Represents less than 1% of the outstanding Common Stock on December 11,
1998.
8 Reflects currently excercisable warrants to acquire 300,000 shares and
currently exercisable options to purchase 65,000 shares.
9 Reflects 50,000 shares beneficially owned by him and currently exercisable
options to purchase 130,633 shares.
10 Reflects 40,000 shares beneficially owned by him and currently exercisable
options to purchase 75,000 shares.
11 Reflects 15,000 shares beneficially owned by him and currently exercisable
options to purchase 75,000 shares.
<PAGE>
Execution of the Consent Resolution by execution of the Consent Card will
constitute your approval of the Offering as a shareholder of the Company. The
failure to execute and return a consent, and all abstentions and broker
non-votes, will have the same effect as a vote against the Consent Resolution.
Shareholders who do not approve and consent to the adoption of the Consent
Resolution by execution of the Consent Card will nonetheless be bound by the
Consent Resolution if sufficient written consents are received by the Company on
or before the Effective Date to approve the Consent Resolution.
The Board of Directors requests that each Shareholder execute, date and
mail or deliver the Consent Card to the Company at the following address:
Finet Holdings Corporation
505 Sansome Street, 14th Floor
San Francisco, California 94111
Any Consent Card executed and delivered by a Shareholder may be revoked by
delivering written notice of such revocation prior to the Effective Date to the
Company at the address set forth below. Consent Cards may not be revoked after
the Effective Date.
Finet Holdings Corporation
505 Sansome Street, 14th Floor
San Francisco, California 94111
PROPOSAL 1
APPROVAL OF THE SALE AND ISSUANCE OF UP TO 30,000,000 SHARES OF
COMMON STOCK IN A PRIVATE PLACEMENT
AT A PRICE OF $0.60 PER SHARE
At the Company's November 24, 1998 Annual Meeting of Shareholders, the
shareholders adopted, among other matters, a resolution to ratify the issuance
of Common Stock and convertible securities to new investors which could
potentially result in such investors owning approximately 50.3% of the Company's
Common Stock. One of the proposed transactions approved involved the issuance of
an additional 30,000,000 shares of Common Stock at $1.00 per share, or the five
day weighted average closing price for the Common Stock, whichever is less.
However, because the description of the terms of the Offering set forth in the
November 1998 Proxy Statement did not firmly establish the price at which shares
of Common Stock would be sold in the Offering, the Company has determined that
further shareholder ratification of the Offering is desirable in order to ensure
that the Company has obtained the informed consent of its shareholders to the
Offering. As described in this Consent Statement, 30,000,000 shares of Common
Stock are expected to be sold in the Offering at a price per share of $0.60.
The closing price of a share of the Company's Common Stock during the
period September 30, 1998 through December 11, 1998 has ranged from a low of
$0-1/2 to a high of $1-5/8. The closing price on December 11, 1998 was $1-3/32.
The Company believes that the terms agreed upon, including the price, are fair
and reasonable and in the best interests of the Company.
Based on the amount of Common Stock issued and outstanding as of December
11, 1998, the Offering, if fully subscribed, would result in the issuance in
excess of 20% of the Company's outstanding Common Stock. The rules promulgated
by the National Association of Securities Dealers, Inc. for issuers listing
securities on the Nasdaq Stock Market require shareholder approval of private
placements that equal or exceed 20% of the Common Stock outstanding. Therefore,
the shareholders are asked to consent to the following resolutions:
"RESOLVED, that the Board of Directors of this Company is hereby
authorized to issue, offer and sell up to 30,000,000 shares of the
Company's Common Stock in a private placement offering (the
"Offering") at a price of $0.60 per share, which Offering, if fully
subscribed, will result in the issuance in excess of 20% of the
Company's outstanding Common Stock as of the date hereof; and
RESOLVED FURTHER, that the Board of Directors is hereby authorized to
issue warrants to purchase up to 3,000,000 shares of the
Company's Common Stock (the "Warrants") to investment bankers as
partial consideration for their services as placement agent in
connection with the Offering, such Warrants to have a five year term
and a per share exercise price of $1.25, and which Warrants, as well
as the Common Stock to be issued in the Offering, will be registered
pursuant to a registration statement to be filed by the Company with
the Securities and Exchange Commission; and
RESOLVED FURTHER, that the officers of this Company are, and each
acting alone is, hereby authorized to do and perform any and all such
acts, including execution of any and all documents and certificates,
as said officers shall deem necessary or advisable, to carry out the
purposes of the foregoing resolutions; and
RESOLVED FURTHER, that any actions taken by such officers prior to the
date of the foregoing resolutions adopted hereby that are within the
authority conferred hereby are ratified, confirmed, and approved as
the acts and deeds of the Company."
General
Management considers the proceeds from the Offering and the other recent
securities offerings described below under the caption "Recent Transactions"
that were ratified by the shareholders at the 1998 Annual Meeting (the "Recent
Offerings") to be critical to the Company's continued viability. The Board of
Directors has separately analyzed each of the offerings and, as disclosed below,
consulted with three investment banking firms to help it analyze all available
alternative sources of financing. Based on the Company's financial condition,
the price of its Common Stock, the need for additional capital, and the limited
availability of other sources of financing, the Board believes that the Offering
and the terms thereof are the best available alternatives, commercially
reasonable, and in the best interests of the Company and its shareholders.
Recent Transactions
On March 18, 1998, the Company entered into a stock purchase agreement with
certain investors for the sale of $7,000,000 principal amount of the Company's
3% Subordinated Convertible Debentures (the "Debentures"), and warrants to
purchase 175,000 shares of Common Stock. The offering was held in three
tranches. The first tranch closed on March 18, 1998 and resulted in the sale of
$4,000,000 of Debentures and the issuance of 3-year warrants to purchase up to
100,000 shares of Common Stock at an exercise price of $5.71 per share. An
additional $1,500,000 face amount of Debentures were sold in a second tranch to
the same investors on April 20, 1998, with the investors further receiving
37,500 3-year warrants to purchase shares of the Company's Common Stock at an
exercise price of $4.88. On May 26, 1998, the third and final tranch of the
Debenture offering was closed, for an additional $1,500,000 principal amount of
Debentures, and an additional 37,500 3-year warrants to purchase shares of
Common Stock at an exercise price of $5.25 per share.
The terms of the Debentures provide that the number of shares of Common
Stock issuable upon conversion of the Debentures is determined by dividing the
aggregate principal amount, plus any accrued interest at 3% per annum and
certain other possible obligations, by the lesser of (i) $5.00 per share, or
(ii) 78% of the average of the closing bid price for the Company's Common Stock
for the ten consecutive trading days ending on the trading day immediately
preceding such conversion date.
The terms of the Debentures are currently the subject of renegotiation. The
terms agreed to in principle with the Debenture holders provide that the number
of shares of the Company's Common Stock issuable to the Debenture holders upon
conversion would be restructured as follows: (i) $1,100,000 worth of the
$7,000,000 principal amount of Debentures, plus accrued interest, would be
immediately convertible into Common Stock at $0.50 per share; (ii) $4,400,000
worth of Debentures will convert into 7,333,333 shares of Common Stock, at a
conversion price of $0.60 per share; and (iii) the remaining $1,500,000 worth of
Debentures will be redeemed by the Company at 100% of the face amount.
On September 29, 1998, the Company raised $2,500,000 through issuance of
250 shares of its Series A Preferred Stock (the "Preferred Stock"), and a
warrant exercisable for 250,000 shares of Common Stock, to certain investors and
consultants. The Company has agreed to file a registration statement with the
Securities and Exchange Commission (the "Commission") to register the Common
Stock issuable upon conversion of the Preferred Stock. Each share of Preferred
Stock is convertible into Common Stock at any time on or after the earlier of
February 15, 1999 or the date the closing bid price of the Company's Common
Stock is above $1.50 per share. The conversion price floats pursuant to a
formula incorporating the length of time shares of Preferred Stock have been
held and the market price of the Common Stock at the time of conversion, and
assumes a base price per share of Preferred Stock of $10,000 plus 6% interest,
and a 78% discount from market price at the time of conversion, subject to
adjustment under certain circumstances. If a share of Preferred Stock were
converted on February 15, 1999 and the price of the Company's Common Stock on
that date were the same as the price of the Company's Common Stock on the date
of issuance, each share of Preferred Stock would be convertible into
approximately 17,482 shares of Common Stock. If any Preferred Stock remains
outstanding on September 29, 2000, then all such shares will be converted
pursuant to the floating conversion formula.
The terms of the Preferred Stock are currently the subject of
renegotiation. The terms agreed to in principle with the Preferred Stock holders
provide that all 250 outstanding shares will be redeemed by the Company at
$10,000 per share. As consideration for the holders of the Debentures and the
Preferred Stock agreeing to the renegotiated terms of such securities, the
Company will issue to such holders warrants to purchase an aggregate of 840,000
shares of Common Stock. Such warrants will have a five-year term and an exercise
price of $1.50 per share.
On October 30, 1998, the Company sold 2,500,000 shares of Common Stock in a
private placement to Fondation Pamalu, a current shareholder of the Company, at
$0.80 per share, for a total consideration of $2,000,000. In connection with the
sale the Company agreed to reduce the exercise price of warrants held by
Fondation Pamalu to purchase 1,000,000 shares of Common Stock from $5.00 to
$1.00 per share, and agreed to provide the purchaser certain anti-dilution
rights.
The Offering
The Company currently contemplates making a private placement of up to an
additional 30,000,000 shares of Common Stock at $0.60 per share. The Offering is
expected to close in December, 1998. If all of the shares offered in the
Offering are sold, 3,000,000 warrants will be issued to investment bankers for
services in connection with the offering. The warrants will have a five year
term and a per share exercise price of $1.25. The Company intends to file a
registration statement with the Commission to register the Common Stock issued
to investors and the Common Stock issuable to the warrant holders. Proceeds from
the Offering are expected to be allocated for operational and financial needs,
infrastructure investment, e-commerce business development, and repayment of
outstanding Debentures and redemption of outstanding Debentures and Preferred
Stock.
Potential Dilution to Current Shareholders
The following chart sets forth the potential dilutive effect which could
result from the Offering and the Recent Offerings (collectively, the "Financing
Transactions"):
Potential Dilution
Number of Shares Percent of Beneficial
---------------- ---------------------
Ownership After Financing
-------------------------
Transactions
------------
Common Stock issued and 36,405,386 35.9%
outstanding as of December
11, 1998
Shares reserved as of 18,573,967 18.3%
December 11, 1998 for
issuance to existing
shareholders under
convertible securities,
excluding the Financing
Transactions
Common shares issuable 46,438,333 45.8%
pursuant to the ---------- ------
Financing Transactions(13)
Total 101,417,686 100%
The foregoing table assumes the conversion of all currently outstanding
convertible securities and the exercise of all currently outstanding stock
options. If none of such convertible securities are converted and none of such
stock options are exercised, and all of the offerings pursuant to the Financing
Transactions are fully subscribed, the percentage beneficial ownership of the
investors participating in the Financing Transactions would be approximately
56.1%.
Reasons for the Transactions
The proceeds from the Financing Transactions are critical to the Company's
continued viability. The primary business purposes of the offerings are to fund
strategic acquisitions and to finance continuing operations. The Company has
incurred, and expects to continue to incur, substantial expenses as the result
of the various costs associated with the acquisitions of Coastal Federal
Mortgage Company on April 30, 1998 and MICAL Mortgage, Inc. on May 19, 1998. The
proceeds from the Financing Transactions are also critical in maintaining the
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13 Of such 46,438,333 shares: 2,200,000 are issuable upon conversion of $1.1
million of Debentures as renegotiated; 7,333,333 are issuable upon
conversion of $4.4 million of Debentures as renegotiated; 2,500,000 are
reserved for sale pursuant to an agreement with Fondation Pamalu dated
October 30, 1998; 565,000 are currently exercisable under warrants issued
in connection with the Financing Transactions; 840,000 are reserved for
conversion of warrants to be issued in connection with the renegotiated
Debentures and Preferred Stock; and 30,000,000 are Common shares currently
contemplated to be issued in the Offering, with 3,000,000 warrants issuable
to the Company's investment bankers if all such 30,000,000 shares are
sold.
<PAGE>
Company's net worth at a level required by its warehouse line of credit, which
is the principal source of funds for newly originated loans to its borrowing
customers. External factors also led the Company to seek additional financing,
including the recent volatility in the market for small capitalization stocks.
Primarily as a result of the one-time costs associated with funding of
start up operations, the write off of intangibles, the costs associated with the
Coastal, MICAL, and other acquisitions, and real estate foreclosures, the
Company's expenses increased 65% from $13.0 million in 1997 to $21.7 million in
1998. During fiscal years 1997 and 1998 additional revenue sources were
developed; however, to date the cash consumed from the commencement of these
activities exceeded total cash generated. Cash from the Recent Offerings has
been used to offset the operating cash shortfall.
The Company's day-to-day financing activities involve the use of cash to
fund its lending activities. The Company must advance cash on a daily basis to
fund newly originated loans to its borrower customers. The majority of these
funds are provided through a conventional mortgage warehouse line of credit from
Residential Funding Corporation ("RFC"). The Company maintains a $79 million
committed warehouse facility and a $25 million uncommitted gestation facility
with RFC. The borrowing agreements for these lines of credit contain various
financial covenants, among them a requirement that the Company maintain a
certain net worth. Due in large part to operating losses carried forward for the
past two years, as of April 30, 1998 the Company was in breach of the tangible
net worth requirement of its debt covenants. Subsequent to April 30, 1998, RFC
issued a formal waiver of the breach. The Financing Transactions are an
essential component of increasing the Company's net worth so that it can
increase its mortgage funding levels necessitated by business development and
the Coastal and MICAL acquisitions.
During 1998 the Company retained three investment banking firms to advise
it in connection with its financing activities: Piper Jaffray Inc., Rochon
Capital Group, Ltd., and J.P. Carey Securities, Inc. Due to the factors
discussed above, the offerings were effected on a very accelerated timetable.
The Company does not expect that the Financing Transactions will result,
individually or in the aggregate, in a change in control of the Company,
although there can be no assurances in any such regard.
In accordance with the requirements of NASDAQ listing maintenance rules,
the shareholders of the Company are being asked to approve the Offering, which
is an integral part of the Financing Transactions. The unrevoked consents of a
majority of the issued and outstanding shares of Common Stock is required to
approve Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SALE AND
ISSUANCE OF UP TO 30,000,000 SHARES OF COMMON STOCK IN A PRIVATE PLACEMENT AT A
PRICE OF $0.60 PER SHARE
SHAREHOLDER PROPOSALS
The next Annual Meeting of Shareholders is expected to take place on or
about November 19, 1999. In order to be considered for inclusion in the
Company's proxy materials for the 1999 Annual Meeting, shareholder proposals
must be received by the Company at its headquarters office no later than July
15, 1999 and must satisfy the conditions established by the Commission under
Rule 14a-8 for shareholder proposals to be included in the Company's proxy
materials for that meeting. In order for a shareholder proposal made outside of
Rule 14a-8 to be considered "timely" within the meaning of Rule 14a-4(c), such
proposal must be received by the Company at its headquarters office no later
than September 30, 1999.
<PAGE>
ANNUAL REPORT ON FORM 10-KSB INCORPORATED BY REFERENCE
A copy of the Company's Annual Report on Securities and Exchange
Commission Form 10-KSB for the fiscal year ended April 30, 1998 including the
financial statements and financial statement schedules, is incorporated by
reference into this Consent Statement. A copy of the 1998 Form 10-KSB is being
furnished to each Shareholder to whom this Consent Statement is delivered.
San Francisco, California
December 18, 1998
By Order of the Board of Directors
FINET HOLDINGS CORPORATION
/s/ Jan C. Hoeffel
------------------------------------------
Jan C. Hoeffel
Secretary
<PAGE>
FINET HOLDINGS CORPORATION
CONSENT CARD
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF FINET HOLDINGS CORPORATION
The undersigned shareholder by checking the box below takes the following
identified action with respect to the Consent Resolution:
(1) Approval of the Consent Resolution Authorizing the Sale and Issuance of
up to 30,000,000 Shares of the Company's Common Stock in a Private Placement
at a price of $0.60 per share:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
all as set forth in the Notice and Consent Statement dated December 18, 1998,
the receipt of which is hereby acknowledged.
Where no specification is made, the shares will be deemed to have consented
to the approval of the Consent Resolution.
PLEASE DATE AND SIGN THE CONSENT CARD BELOW. IF STOCK IS REGISTERED IN THE NAME
OF TWO OR MORE PERSONS, EACH MUST SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY THE PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN
AUTHORIZED PERSON.
YOUR VOTE IS IMPORTANT, PLEASE FILL IN AND RETURN PROMPTLY.
Dated: , 1998
Signature:
Signature:
