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) December 15, 1997
Champion Financial Corporation
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(Exact name of registrant as specified in its charter)
UTAH 0-19499 88-0169547
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9495 East San Salvador Drive, Scottsdale, Arizona 85258
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 614-4270
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19 Hillsyde Court, Cockeysville, Maryland 21030
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On December 15, 1997, Champion Financial Corporation, a Utah
corporation ("Champion"), completed its acquisition of 100% of the common stock
of HealthStar, Inc., an Illinois corporation ("HealthStar"), in an arm's length
transaction conducted pursuant to the terms of the Stock Purchase Agreement (the
"Agreement") dated December 8, 1997 by and among Champion, HealthStar and Thomas
H. Stateman, sole shareholder of HealthStar (the "Seller").
HealthStar owns and operates healthcare provider networks and other
managed care products designed to meet the needs of a constantly changing health
marketplace. HealthStar provides nationwide healthcare access through wholly
owned and affiliate networks. Currently, HealthStar owns and operates statewide
networks in: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa,
Kentucky, Louisiana, Michigan, Mississippi, Nebraska, Nevada, New Jersey, North
Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas,
Virginia, West Virginia and Wisconsin. These networks represent more than 1,385
hospitals, 65,773 physicians and 1,500,000 covered lives. HealthStar markets its
services and products to insurance companies, self-insured businesses which
maintain employee medical plans, and third parties who administer employee
medical plans for such employees.
Under terms of the Agreement, Champion (i) paid to the Seller
$6,000,000 in cash, (ii) issued to the Seller a promissory note in the original
principal amount of approximately $166,000, and (iii) issued to the Seller
382,500 shares of Champion Common Stock, par value $.001 per share. The
principal balance of the promissory note will be increased from time to time by
the amount of payments received by Champion Financial Corporation from the
"self-bill/self-pay" clients of HealthStar, Inc. on the closing date with
respect to payments received during the 120 days following the date of the
Closing of the transactions contemplated by the Agreement, as set forth more
fully in Section 3.9 of the Agreement. The summary of terms of the Agreement
contained herein is qualified in its entirety by reference to the Agreement.
The cash portion of the funds used for the acquisition was obtained
from a combination of (i) the sale of U.S. $4,000,000 aggregate principal amount
of Champion's 8% Series A Senior Subordinated Convertible Redeemable Debentures
due December 31, 1999, as previously disclosed in Champion's Current Report on
Form 8-K dated December 1, 1997, and (ii) a $2,500,000 term loan (the "Loan")
and a $1,500,000 revolving line of credit (the "Line of Credit") extended to
Champion by Harris Trust and Savings Bank ("Harris"), pursuant to that certain
Credit Agreement dated December 15, 1997 by and between Champion and Harris. The
Loan and the Line of Credit are secured by substantially all of the assets of
Champion and its subsidiaries, including HealthStar. Champion's obligations
under the Credit Agreement are guaranteed by and secured by the assets of
Champion.
The principles involved in determining the valuation of HealthStar
included an assessment of the present value of the assets of HealthStar,
including HealthStar's current accounts receivable, and an assessment of
HealthStar's historical annual sales as a result of research and inquiry by
Champion.
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Item 7. Financial Statements and Exhibits.
Champion will furnish by amendment the financial statements required by
this Item within 60 days after the date this report is required to be filed.
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EXHIBITS
Exhibit No.
2.1 Stock Purchase Agreement by and among Champion Financial
Corporation, HealthStar, Inc., and Thomas H. Stateman, dated
December 8, 1997 (To be filed by amendment).
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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.
CHAMPION FINANCIAL CORPORATION, a
Utah corporation
Date: December 29, 1997 By: /s/ Stephen J. Carder
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Stephen J. Carder
Its: Executive Vice President and Chief Financial
Officer
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