SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): July 1, 1999
AAMES FINANCIAL CORPORATION
(Exact name of Registrant as Specified in Its Charter)
DELAWARE 0-19604 95-340340
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
350 South Grand Avenue, 52nd Floor
Los Angeles, California 90071
(Address of Principal Executive Offices)
(323) 210-5000
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(Registrant's Telephone Number, Including Area Code)
NA
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
Reference is made to the press release of Registrant issued on July 1,
1999 which contains information meeting the requirements of this Item 5 and is
incorporated herein by this reference. A copy of the press release is attached
to this Form 8-K as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
99 Press release issued July 1, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Current Report on Form 8-K to be
signed on its behalf by the undersigned hereunto duly authorized.
AAMES FINANCIAL CORPORATION
Dated: July 8, 1999 By: /s/ BARBARA S. POLSKY
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Barbara S. Polsky
Executive Vice President,
General Counsel and Secretary
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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99 Press release issued July 1, 1999
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EXHIBIT 99
CONTACT FOR AAMES FINANCIAL CORP:
David Sklar
Aames Financial Corporation
(213) 210-5311
Jeffrey Lloyd/Steve Hawkins
Sitrick And Company
(310) 788-2850
Aames Announces Completion of Actions
To Strengthen Liquidity & Cash Flow
INNOVATIVE STRUCTURE TO MONETIZE SERVICING RECEIVABLES AND REDUCE FUTURE
SERVICING ADVANCES ON LOANS IN SERVICING PORTFOLIO PROVIDES APPROXIMATELY $50
MILLION
LOS ANGELES, CA, JULY 1, 1999 -- AAMES FINANCIAL CORPORATION (NYSE:AAM),
a leader in subprime home equity lending, today announced the successful
completion of actions to improve its liquidity and cash flow position, and
strengthen its capital base.
The Company finalized a new structure in June to monetize its servicing
receivable, as well as substantially reduce the burden of making future
servicing advances on the loans in the Company's servicing portfolio. In
connection with this structure, the Company received approximately $50 million
for certain of the advances carried on its books. Additionally, the Company
received the necessary approvals of the rating agencies, the trustee and the
monoline insurers on the Company's securitization trusts to engage a third party
to make a significant portion of future servicing advances on those pools, as
part of the new servicing advance structure.
Aames also announced that it signed a new forward loan sale commitment
with a highly-rated counterparty for up to $1.5 billion in production through
May 2000. The forward agreement will provide a substantial source of liquidity
for the Company's projected loan production.
Aames announced that it is planning on completing its first 1999
securitization in the next quarter. In the June quarter, the Company decided to
delay a securitization offering because of volatile conditions in credit markets
caused by interest rate uncertainty and excess supply in the
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asset-backed security market. In anticipation of the upcoming securitization,
the Company will carry over a larger loan inventory position into next quarter.
David Sklar, Aames' chief financial officer, noted, "We decided that it was
better from a shareholder value perspective to await improved market conditions.
As a result, we will report a net loss for the June quarter."
To further bolster its capital base, the Company expects to raise $25
million in new equity from the rights offering, underwritten with a standby
commitment from the Company's largest shareholder, Capital Z Financial Services
Fund II. Capital Z's commitment is subject to receipt of shareholder approval of
an increase in the Company's common stock and preferred stock and a 1,000 to 1
stock split of the outstanding preferred stock held by Capital Z and certain of
its designated purchasers. The Company expects to hold its shareholders' meeting
in August. Because of administrative delays involving the preparation of
documents and filings, Aames currently expects the offering to occur in August
or September. Capital Z has amended its agreement with the Company to provide
that the rights offering must occur prior to September 30, 1999 rather than June
30, 1999. Under the original agreement with Capital Z, if the recapitalization
had not occurred prior to June 30, the dividend rate on the preferred stock
previously issued to Capital Z would have increased from 6.5% to 15% and a
warrant issued to a Capital Z affiliate to purchase up to 3 million shares of
the Company's common stock would have become exercisable. The Company said that
each of its warehouse lenders has agreed to amendments to avoid defaults due to
the delay in the rights offering and expected financial results for the June 30,
1999 quarter.
Mani Sadeghi, Aames' chief executive officer, stated, "These actions will
position Aames for a return to growth and profitability by improving our
liquidity and cash flow position. The servicing advance funding structure is an
innovative way to improve current and future cash flow and reduce mid-month
volatility. The new forward contract provides a significant degree of liquidity
and flexibility for large portions of Aames' future production, and we are
prepared to execute our new core funding strategy of 50% securitization
beginning next quarter. We are already seeing stronger results from our
origination and servicing operations as we ramp up our business. Finally, the
support from our largest shareholders and lenders gives us confidence that we
will have the needed capital to grow our business and clearly position Aames as
a prudent, profitable, and innovative leader in the home equity market."
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Aames Financial Corporation is a leading home equity lender, and currently
operates 101 retail Aames Home Loan offices serving 32 states, including the
District of Columbia. Its broker division operates 44 branches serving 46
states, including the District of Columbia.
From time to time the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance and results of the Company's business include the
following: negative cash flows and capital needs; delinquencies and losses in
securitization trusts; negative impact on cash flow, right to terminate mortgage
servicing; changes in interest rate environment; year 2000 compliance and
technological enhancement; prepayment risk; basis risk; credit risk; risk of
adverse changes in the secondary market for mortgage loans; dependence on
funding sources; dependence on broker network; risks involved in commercial
mortgage lending; strategic alternatives; competition; concentration of
operations in California; timing of loan sales; economic conditions; contingent
risks; and government regulation. For a more complete discussion of these risks
and uncertainties, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Risk Factors" in the Company's
form 10-K for the fiscal year ended June 30, 1998 and "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Risk
Factors" in form 10-Q for the quarters ended September 30, 1998, December 31,
1998 and March 31, 1999.
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