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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
PRIDE COMPANIES, L.P.
(Name of Issuer)
COMMON LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
741537302
(CUSIP Number)
GEORGE G. HICKS
VARDE PARTNERS, INC.
3600 WEST 80TH STREET
MINNEAPOLIS, MN 55431
TEL. NO.: (612) 893-1554
WITH A COPY TO:
KENNETH M. SCHNEIDER, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-6064
TEL. NO.: (212) 373-3000
(Name, Address and Telephone Number of
Persons Authorized to Receive Notices
and Communications)
JANUARY 30, 1998
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box [ ].
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Page 1 of 9 Pages
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CUSIP NO. 741537302 13D Page 2 of 9 Pages
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Varde Partners, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
7 SOLE VOTING POWER
NUMBER OF 2,273,308 Common Units, assuming
conversion of all Series B Preferred Units
SHARES and Series C Preferred Units.
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
2,273,308 Common Units, assuming
conversion of all Series B Preferred
WITH Units and Series C Preferred Units.
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,273,308 Common Units, assuming conversion of all Series B
Preferred Units and Series C Preferred Units.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 33.6%, based on information contained in the
Issuer's Current Report on Form 8-K filed with the Securities
and Exchange Commission on January 15, 1998.
14 TYPE OF REPORTING PERSON
CO
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CUSIP NO. 741537302 13D Page 3 of 9 Pages
Item 1. Security and Issuer.
This Statement on Schedule 13D (the "Statement") relates to
the Common Limited Partnership Units (the "Common Units") of Pride Companies,
L.P., a Delaware limited partnership (the "Issuer"). The principal executive
offices of the Issuer are located at 1209 North Fourth Street, Abilene, Texas
79601.
Item 2. Identity and Background.
This Statement is being filed by Varde Partners, Inc., a
Delaware corporation ("Varde").
Varde acts as the general partner of the general partner of
various investment funds. The address of the principal business and principal
office of Varde is 3600 West 80th Street, Minneapolis, MN 55431.
During the last five years, Varde has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
During the last five years, Varde has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
The name, business address, present principal occupation or
employment (and the name, principal business and address of any corporation or
other organization in which such employment is conducted) and the citizenship of
each director and executive officer of Varde is set forth on Exhibit 1 hereto
and is incorporated herein by reference.
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CUSIP NO. 741537302 13D Page 4 of 9 Pages
Item 3. Source and Amount of Funds or Other Consideration.
The Issuer issued, and Varde acquired from the Issuer, Series
B Preferred Units, stated value $1,000 per unit, in the total amount of
$9,321,851, and Series C Preferred Units, stated value $1,000 per unit, in the
total amount of $5,000,000, pursuant to and upon the terms and subject to the
conditions set forth in the Restructuring and Override Agreement (a copy of
which is attached hereto as Exhibit 2), dated as of December 31, 1997, by and
among Varde, the Issuer, the managing general partner of the Issuer and the
special general partner of the Issuer. The Series B Preferred Units and the
Series C Preferred Units (together, the "Preferred Units") were purchased with
the funds of (i) the various domestic investment funds for which Varde acts as
the general partner of the general partner thereof and (ii) an investment
account and an offshore investment fund managed by affiliates of Varde and with
respect to which Varde is serving as the nominee of the investment managers
thereof. Under the Restructuring and Override Agreement, Varde also acquired
certain other securities and made certain loans to the Company. The total amount
invested by Varde in the Issuer was $29,000,000. There was no allocation made
among the various securities acquired and loans made by Varde.
Each of the Certificates of Designations of the Series B
Preferred Units and the Series C Preferred Units (copies of which are attached
hereto as Exhibits 3 and 4) provide that on or after March 31,1998, the
Preferred Units may be converted into such number of Common Units equal to the
product of the number of Preferred Units being converted, multiplied by the
quotient of $1,000 divided by the "Conversion Price" (as defined below). The
initial Conversion Price for both the Series B Preferred Units and the Series C
Preferred Units is $6.30, which Conversion Price remains subject to
anti-dilution adjustments described in the Certificates of Designations.
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CUSIP NO. 741537302 13D Page 5 of 9 Pages
Item 4. Purpose of Transaction.
The Preferred Units (and the Common Units into which they may
be converted) (collectively, the "Units") were acquired for investment purposes.
Varde may consider making additional purchases of equity securities of the
Issuer in open-market or private transactions, the extent of which purchases
would depend upon prevailing market and other conditions. Alternatively, Varde
may sell all or a portion of its Units in open-market or private transactions,
depending upon prevailing market conditions and other factors.
Other than as described in the Restructuring and Override
Agreement, the Certificates of Designations, the Amended and Restated
Registration Rights Agreement and the Registration Rights Agreement (described
below in Item 6), Varde does not have any present plans or proposals which
relate to or would result in: (a) the acquisition by any person of additional
securities of the Issuer, or the disposition of securities of the Issuer; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Issuer or of any of its
subsidiaries; (d) any change in the present board of directors of the general
partner of or management of, the Issuer, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on the
board of the general partner of the Issuer; (e) any material change in the
present capitalization or dividend policy of the Issuer; (f) any other material
changes in the Issuer's business or partnership structure; (g) changes in the
Issuer's charter, bylaws or instruments corresponding thereto or other actions
that may impede the acquisition of control of the Issuer by any person; (h)
causing a class of securities of the Issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; (i) a class of
equity securities of the Issuer becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934; or (j) any action similar to any of those enumerated above.
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CUSIP NO. 741537302 13D Page 6 of 9 Pages
Item 5. Interest in Securities of the Issuer.
(a) As of March 31, 1998, Varde will have the right to acquire
up to 2,273,308 Common Units (representing, based on the information contained
in the Issuer's Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 15, 1998, approximately 33.6% of the outstanding
Common Units). Accordingly, Varde may be deemed to be the beneficial owner of
the up to 2,273,308 Common Units (representing approximately 33.6% of the
outstanding Common Units).
Except as set forth in this Item 5(a), Varde does not
beneficially own any Common Units.
(b) Varde has sole voting and dispositive power with respect
to all the Common Units it acquires.
Except as set forth in the preceding sentence, Varde does not
have any power to vote or dispose of any Common Units that may be deemed to be
beneficially owned by it.
(c) Except as described in Item 4 of this Statement, Varde has
not effected any transactions relating to the Common Units which are
beneficially owned by it in the past sixty days.
(d) To the best knowledge of Varde, no person other than
Varde, the investment managers for the investment account and the offshore
investment funds (each a Delaware corporation), and the Management of the Issuer
(as described in Item 6) has the right to receive or the power to direct the
receipt of dividends from, and the proceeds from the sale of, the Common Units
owned by it.
(e) Not applicable.
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CUSIP NO. 741537302 13D Page 7 of 9 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Pursuant to the Restructuring and Override Agreement and the
Assignment Agreements (a form of which is attached hereto as Exhibit 5), certain
designated members of the Issuer's management (the "Management") acquired a
one-third economic interest in the Preferred Units held by Varde (and the Common
Units into which they may be converted). Payment therefor was made by the
issuance of promissory notes (the "Notes") in favor of Varde, and subject to the
terms and conditions of the Assignment Agreements and until such time the Notes
are paid in full, the Management has no voting, disposition or other rights with
respect to the securities held by it other than the right to receive
distributions and other payments thereon (which must be applied to the repayment
of principal and interest on the Notes).
The Restructuring and Override Agreement further provides
that, subject to the receipt of required consents, the Preferred Units will be
exchanged for new preferred units (the "New Preferreds"), which would give Varde
the right to receive a total of up to 52% of the Issuer's Common Units, in which
the Management would continue to hold a one-third economic interest. Under
certain circumstances, Varde may acquire the right to receive an additional 8%
of the Issuer's Common Units upon the conversion of its New Preferreds, in which
Management would not hold any interest.
In addition, Varde has entered into the Amended and Restated
Registration Rights Agreement and the Registration Rights Agreement, each dated
as of December 31, 1998, with the Issuer (copies of which are attached hereto as
Exhibits 6 and 7), giving Varde, among other things, the right, on the terms and
conditions set forth therein, to require the Issuer to register for sale to the
public the Common Units acquired by Varde upon conversion or exchange of the
Preferred Units and the New Preferreds.
Other than as set forth in this Statement, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
between Varde and any person with respect
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CUSIP NO. 741537302 13D Page 8 of 9 Pages
to any securities of the Issuer, including, but not limited to, the transfer or
voting of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
1. Information with respect to executive officers and
directors of Varde.
2. Restructuring and Override Agreement, dated as of
December 31, 1997, by and among Varde, the Issuer,
the managing general partner of the Issuer and the
special general partner of the Issuer.
3. Certificate of Designations relating to the Series B
Preferred Units of the Issuer.
4. Certificate of Designations relating to the Series C
Preferred Units of the Issuer.
5. Form of Assignment Agreement, by and between Varde
and certain designated members of the Issuer's
management.
6. Amended and Restated Registration Rights Agreement,
dated as of December 31, 1997, by and between Varde
and the Issuer.
7. Restated Registration Rights Agreement, dated as of
December 31, 1997, by and between Varde and the
Issuer.
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SIGNATURES
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Dated: February 9, 1998
VARDE PARTNERS, INC.
By: /s/ George G. Hicks
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Name: George G. Hicks
Title: Vice President
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EXHIBIT INDEX
Exhibit Page
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1. Information with respect to executive officers and directors of
Varde.
2. Restructuring and Override Agreement, dated as of December 31,
1997, by and among Varde, the Issuer, the managing general
partner of the Issuer and the special general partner of the
Issuer.
3. Certificates of Designations relating to the Series B Preferred
Units of the Issuer.
4. Certificates of Designations relating to the Series C Preferred
Units of the Issuer.
5. Form of Assignment Agreement, by and between Varde and certain
designated members of the Issuer's management.
6. Amended and Restated Registration Rights Agreement, dated as
of December 31, 1997, by and between Varde and the Issuer.
7. Restated Registration Rights Agreement, dated as of December
31, 1997, by and between Varde and the Issuer.
IN ACCORDANCE WITH RULE 201 OF REGULATION S-T, THESE EXHIBITS TO SCHEDULE 13D
ARE BEING FILED IN PAPER PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION. An
electronic format copy of the paper filing shall be submitted to the Commission
within six business days of filing the paper format copy.
