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 8, 1998
GreenPoint Financial Corp.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22516 06-1379001
(State or other (Commission File (IRS Employer Identification
jurisdiction of Number) Number)
incorporation)
90 Park Avenue, New York, New York 10016
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(Address of principal executive offices) (zip code)
(212) 834-1000
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(Registrant's telephone number, including area code)
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Item 5. Other Events
On December 8, 1998, GreenPoint Financial Corp. (the
"Company"), GF Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of the Company ("Merger Sub"), and Headlands Mortgage Company, a
California corporation ("Headlands"), entered into an Agreement and Plan of
Merger dated as of such date (the "Plan"). The Plan provides for the merger
of Merger Sub with and into Headlands (the "Merger"), with Headlands
surviving the Merger and becoming a wholly-owned subsidiary of the Company.
Following the Merger, the Company intends to contribute its interest in the
surviving company to GreenPoint Bank (a wholly-owned subsidiary of the
Company), which intends to hold Headlands as an operating subsidiary. The
Boards of Directors of both the Company and Headlands approved the Plan and
the transactions contemplated thereby at their respective meetings held on
December 8, 1998.
Under the Plan, each share of Headlands common stock, without par
value ("Headlands Common Stock"), outstanding immediately prior to the
effective time of the Merger (the "Effective Time") will be converted into
the right to receive 0.620 shares (the "Exchange Ratio") of Company common
stock, par value $0.01 per share ("Company Common Stock"). In addition, at
the Effective Time, all rights with respect to options to purchase Headlands
Common Stock outstanding at the Effective Time will be converted into rights
with respect to options to purchase Company Common Stock. The number of
shares covered by such options and the exercise price thereof will be
adjusted to reflect the Exchange Ratio. The Merger is intended to constitute
a tax-free reorganization under the Internal Revenue Code of 1986, as
amended, and to be accounted for as a pooling of interests.
The Plan provides for Peter T. Paul, Chairman, Chief Executive
Officer and President of Headlands, to join the Company as vice chairman and
to become a member of the Board of Directors of the Company as of the
Effective Time.
Consummation of the Merger is subject to various conditions,
including: (i) approval of the Plan and the Merger by the stockholders of
Headlands; (ii) receipt of all requisite regulatory approvals and the
expiration of any regulatory waiting periods; (iii) receipt by each of the
Company and Headlands of an opinion of its counsel as to the tax treatment of
certain aspects of the Merger and receipt by each of an opinion of its
independent public accountants to the effect that the Merger will qualify for
pooling of interests accounting treatment; (iv) registration under the
Securities Act of 1933, as amended, of the issuance of the Company Common
Stock in the Merger; and (v) satisfaction of certain other conditions.
In connection with the Plan, certain members of the Board of
Directors of Headlands and certain of their affiliates, who in the aggregate
have voting power over more than a majority of the shares of Headlands Common
Stock outstanding as of the date of the Plan, have agreed with the Company
pursuant to separate support agreements to vote all such shares of Headlands
Common Stock in favor of the Plan and the Merger.
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In connection with the Plan, the Company and Headlands
entered into a Stock Option Agreement dated as of December 8, 1998 (the
"Option Agreement"). Pursuant to the Option Agreement, Headlands granted to
the Company an irrevocable option to purchase, under certain circumstances,
up to 19.9% of the Headlands Common Stock outstanding as of December 8, 1998
at a price, subject to certain adjustments, of $16.125 per share (the
"Company Option"). Under certain circumstances, Headlands could be required
to repurchase the Company Option or the shares acquired pursuant to the
exercise of the Company Option.
A copy of the Company's press release announcing the execution of
the Plan and related agreements is filed herewith as Exhibit 99.1 and is
hereby incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
- Not Applicable
(b) Pro forma financial information.
- Not Applicable
(c) Exhibits.
99.1 Press release
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SIGNATURE
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 hereunder duly authorized.
Dated: December 11, 1998
GREENPOINT FINANCIAL CORP.
By: /s/ Howard C. Bluver
Name: Howard C. Bluver
Title: Senior Vice President,
General Counsel and Secretary
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EXHIBIT INDEX
99.1 Press release
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Exhibit 99.1
GREENPOINT FINANCIAL TO ACQUIRE HEADLANDS MORTGAGE
$473 Million Purchase Gives GreenPoint a Leadership Position
in a Third Niche of Specialty Home Finance
New York, December 9 - GreenPoint Financial Corp. (NYSE: GPT) today announced a
definitive agreement to acquire Headlands Mortgage Company (NASDAQ: HDLD),
Larkspur, California, in a stock transaction valued at approximately $473
million.
Headlands is one of the largest independent mortgage banking companies in the
country, offering a wide range of products originated primarily through mortgage
brokers. The company specializes in "Alt A" mortgages, a niche estimated at
approximately $80 billion in originations in 1998. "Alt A" borrowers have strong
credit histories, but do not meet agency lending guidelines for one or more
reasons. Headlands originated $3.7 billion in 1997, $6.8 billion through October
31, 1998, and has a servicing portfolio of $4.4 billion.
"This acquisition will more than double GreenPoint's loan origination volume,
add significant revenue growth, and give GreenPoint a leadership position in a
third niche of the specialty home finance business," said Thomas S. Johnson,
Chairman and Chief Executive Office of GreenPoint Financial. "Headlands is a
leading lender in the 'Alt A' segment of the mortgage market, and we are excited
to have its founder and CEO, Peter T. Paul, join the GreenPoint family.
"Strategically the 'Alt A' niche is very complementary to our existing mortgage
and manufactured housing businesses," Mr. Johnson continued. "The ability of the
Headlands and GreenPoint Mortgage sales forces to offer each other's products
will provide tremendous opportunities."
"Merging with GreenPoint," said Peter T. Paul, Chairman, President and Chief
Executive Officer of Headlands, "will allow us to accomplish our two most
important goals: building a much stronger capital and funding base and
establishing a strong broker distribution channel in the eastern half of the
United States. These two goals represent the key to our future growth and
profitability, and the merger with GreenPoint represents an ideal opportunity to
accomplish both in one step."
Strategic Compatibility
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Headlands' "Alt A" mortgage specialization is very compatible with GreenPoint's
existing mortgage and manufactured housing finance businesses. Each is national
in scope with a leading market position and solid growth prospects. Each targets
borrowers who are under-served by the conventional mortgage market. As a result,
each business provides higher asset values through premium pricing and
prepayment speeds slower than conventional mortgages.
In addition, the sales organizations of Headlands and GreenPoint are very
complementary. Headlands' sales major strength is in the western half of the
United States, while GreenPoint Mortgage's sales strength is primarily in the
eastern half of the country.
Further, the product sets of the two companies are very complementary. Headlands
has tremendous strength in its product diversity and ability to develop new
products quickly, while GreenPoint Mortgage has tremendous strength in its
expertise in no-documentation lending and in its position as the largest lender
in that segment.
An Exceptional Non-Conforming Lender
Founded by Chief Executive Officer Peter T. Paul in 1986, Headlands became a
public company in February 1998. Headlands is a full service mortgage banking
company that originates, services, and sells whole loans. As a result of its
focus on whole loan sales rather than securizations, Headlands has positive cash
flow and a clean balance sheet.
The Company's focus is on "Alt A" loans, but its total product set is broad,
including home equity lines of credit, second mortgages, jumbo and agency loans.
In total, Headlands offers more than 100 variations of these products, and is
known for its ability to create and introduce new credit-based mortgage products
very quickly.
Organizational Structure
Headlands will operate as a separate subsidiary of GreenPoint Bank. Mr. Paul
will become Vice Chairman and a member of the Board of Directors of GreenPoint
Financial Corp. He will report to Bharat B. Bhatt, President and Chief Operating
Officer. Employment agreements have been reached with the key senior managers of
Headlands.
The Transaction
The acquisition will be accounted for as a tax-free pooling of interests, with
0.62 shares of GreenPoint stock being exchanged for each share of Headlands
stock. The deal is valued at approximately $473 million as of the close of
business December 8, 1998. The merger has been approved by both GreenPoint's and
Headlands' Boards of Directors, and is subject to regulatory approvals and
approval by Headlands' shareholders. Mr. Paul owns or has a beneficial interest
in approximately 42% of Headlands' outstanding shares. The acquisition is
expected to be completed by the end of the first quarter of 1999.
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The merger is expected to be slightly dilutive to cash earnings, and accretive
to GAAP earnings. Specifically, it is expected to be 1.7% dilutive to cash
earnings per share in 1999, and 0.3% accretive in 2000. On a GAAP basis, it is
expected to be 5.2% accretive to earnings per share in 1999 and 8.8% accretive
in 2000. Additionally, the merger is expected to be accretive to tangible book
value per share by 12.3% in 1999 and 16.8% in 2000.
History of Successful Acquisitions
The Headlands transaction is GreenPoint's sixth acquisition in four years, and
is the second major acquisition this year, bringing GreenPoint a third
housing-related specialty finance niche.
In September 1998, GreenPoint completed the acquisition of BankAmerica Housing
Services, now named GreenPoint Credit, providing GreenPoint with its second
strategically compatible asset generation niche with a high market share. To
date, GreenPoint has achieved all its key financial goals for the acquisition,
is hitting its loan origination targets, and successfully completed its first
securitization on November 30.
GreenPoint Financial Corp.
GreenPoint Financial Corp. (NYSE: GPT) is a leading national specialty home
finance company with three principal subsidiaries. GreenPoint Mortgage, a
national mortgage banking company headquartered in Charlotte, is the leading
national lender in no-documentation residential mortgages. GreenPoint Credit,
headquartered in San Diego, is the second largest lender nationally in the
manufactured housing finance industry. GreenPoint Bank, a New York State
chartered savings bank, has $10.8 billion in deposits in 73 branches serving
more than 400,000 households in the Greater New York City area.
This release contains certain forward-looking statements regarding each of
GreenPoint Financial Corp., Headlands Mortgage Company, and the combined company
following the acquisition. These forward-looking statements include information
concerning possible or assumed future results of operations and business plans,
including estimates and projections relating to accretion to earnings that may
be realized from the acquisition, enhanced revenue growth, cost savings,
transaction charges, and other opportunities following the acquisition.
Forward-looking statements involve inherent risks and uncertainties. We caution
you that a number of important factors could cause actual results to differ
materially from those contained in any forward-looking statement. Such factors
include, but are not limited to: risks and uncertainties related to execution of
the acquisition, including integration activities and the ability of GreenPoint
Financial Corp. to retain senior management from Headlands; prevailing economic
conditions; changes in interest rates, loan demand, real estate values, and
competition; the level of defaults and prepayments on loans made by the combined
company; changes in accounting principles, policies, and guidelines; adverse
changes or conditions in capital or financial markets; changes in
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any applicable law, rule, regulation or practice with respect to tax or legal
issues; and other economic, competitive, governmental, regulatory, and
technological factors affecting the combined company's operations, pricing,
products, and services. The forward-looking statements are made as of the date
of this release, and the Company assumes no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
