As filed with the Securities and Exchange Commission on October 2, 1998
Registration No. 333-50531
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
PRE-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
TFC ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 54-1306895
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5425 Robin Hood Road, Suite 101B
Norfolk, Virginia 23513
(757) 858-4054
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Robert S. Raley, Jr.
Chairman of the Board,
President and Chief Executive Officer
TFC Enterprises, Inc.
5425 Robin Hood Road
Norfolk, VA 23513
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
With Copies to:
John M. Paris, Jr., Esq. William L. Pitman, Esq.
Clark & Stant, P.C. Williams, Mullen, Christian & Dobbins, P.C.
One Columbus Center Two James Center
Virginia Beach, Virginia 23462 1021 East Cary Street
(757) 499-8800 Richmond, VA 23210
(804) 643-1991
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER , 1998
PROSPECTUS
1,135,280 Shares
TFC ENTERPRISES, INC.
Common Stock
---------------------
All of the 1,135,280 shares of common stock of TFC Enterprises, Inc., a
Delaware corporation (the "Company," "TFCE") offered hereby are being sold by
the Selling Stockholder. See "Selling Stockholder." The Company will not receive
any of the proceeds from the sale of shares by the Selling Stockholder. The
Company's Common Stock is traded on the Nasdaq National Market under the symbol
"TFCE." On September 23, 1998, the last reported sale price of the Common Stock
on the Nasdaq National Market was $2.00 per share.
The shares of Common Stock offered hereby may be sold from time to time
by the Selling Stockholder, or by agents, pledgees, donees, transferees or other
successors in interest of the Selling Stockholder. These sales may be made on
the Nasdaq National Market, or otherwise, at prices and on terms then prevailing
or at prices related to the then-current market prices, or in negotiated
transactions at negotiated prices. The shares may be sold utilizing
broker-dealers by one or a combination of the following: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the shares as agent,
but may position and resell a portion of the block as principal to facilitate
the transactions; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; and (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. Brokers or dealers will receive commissions or discounts from the
Selling Stockholder in amounts to be negotiated immediately prior to the sale.
The shares may also be sold pursuant to option, hedging, or other transactions
with broker-dealers. The Selling Stockholder will be responsible for any
discounts, concessions, commissions, or other compensation due to any broker or
dealer in connection with the sale of any of the shares offered hereby. All of
the other expenses of this offering, estimated at $25,000, will be paid by the
Company. See "Plan of Distribution."
---------------------
See "Risk Factors" beginning on page 6 for a discussion of certain
factors that should be considered by prospective purchasers of the Common Stock
offered hereby.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is October , 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
may be inspected and copies may be obtained at prescribed rates from the
Commission's Public Reference Section, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's Regional Offices, at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, Suite 1300, New York, New York
10048. In addition, such materials can also so be obtained from the Commission's
web site at http:\\www.sec.gov. Reports and other information concerning the
Company also may be inspected at the offices of the Nasdaq Stock Market, 1735 K
Street, N.W., Washington, D.C. 20006-1500.
This Prospectus constitutes part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement and
related exhibits for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in such instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K filed on March 31, 1998 for the
fiscal year ended December 31, 1997, as amended on April 10, 1998, April 22,
1998 and June 19, 1998 (the "Annual Report"); (2) the Company's Definitive Proxy
Statement dated April 10, 1998, used in connection with its Annual Meeting of
Stockholders held on May 12, 1998; (3) the Company's Quarterly Report on Form
10-Q filed on August 14, 1998 for the quarter ended June 30, 1998; (4) the
Company's Current Report on Form 8-K dated February 24, 1998; and (5) the
description of the Company's capital stock contained in its Form 8-A filed
December 1993.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering made hereby
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such reports and documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein (or in any other
subsequently filed document that also is incorporated or deemed to be
incorporated by reference into this Prospectus) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of the Registration Statement
or this Prospectus.
Any person to whom a copy of this Prospectus is delivered may obtain,
without charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than exhibits expressly incorporated by reference into such documents).
Requests for such documents should be addressed to the Chief Financial Officer
of the Company, 5425 Robin Hood Road, Suite 101B, Norfolk, Virginia 23513 or
directed to the Chief Financial Officer at (757) 858-4054.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information (including the financial statements and the notes thereto) included
elsewhere in this Prospectus or incorporated by reference herein, which should
be read in its entirety.
Cautionary statement under the "Safe-Harbor" provisions of the Private
Securities Litigation Reform Act of 1995: Included in this Prospectus and other
written and oral information presented by management from time to time,
including but not limited to, reports to stockholders, quarterly stockholder
letters, filings with the Commission, news releases, and investor presentations,
are forward-looking statements about business strategies, market potential,
potential for future point-of-sale and portfolio purchases, future financial
performance and other matters that reflect management's expectations as of the
date made. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," and similar expressions are intended to identify
forward-looking statements. Future events and the Company's actual results could
differ materially from the results reflected in these forward-looking
statements. There are a number of important factors that could cause the
Company's actual results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation: the
Company's dependence on its line of credit, the fluctuating interest rates
associated with its line of credit, and the impact of installment contract
defaults. Please refer to a discussion of these and other factors in this
Prospectus and the Company's other Commission filings. See "Risk Factors." The
Company disclaims any intent or obligation to update these forward-looking
statements, whether as a result of new information, future events or otherwise.
The Company
The Company conducts its consumer finance operations through two
wholly-owned subsidiaries, The Finance Company ("TFC") and First Community
Finance, Inc. ("FCF"). Through TFC, the Company is engaged in purchasing and
servicing installment sales contracts originated by automobile and motorcycle
dealers in the sale of used automobiles, vans, light trucks, and new and used
motorcycles (collectively "vehicles"). Installment sales contracts are acquired
on either an individual basis after the Company has reviewed and approved the
vehicle purchaser's credit application (a "point-of-sale purchase"), or on a
group basis through the purchase of a dealer's portfolio of existing installment
sales contracts (a "portfolio purchase"). The Company focuses its point-of-sale
business on installment sales contracts originated by dealers with consumers who
are United States military enlisted personnel, primarily in the E-1 through E-5
grades. Portfolio purchases are primarily from dealers who finance their own
contracts with civilian customers and sell them after origination in bulk. To
achieve an acceptable rate of return and provide for credit risks, contracts are
purchased from dealers at a discount to the remaining principal balance. Most of
the discount is held in a nonrefundable reserve against which credit losses are
first applied. The amount of the discount reflects, among other things, a
contract's interest rate, remaining term, and perceived credit risk.
The Company has been engaged in consumer finance activities since its
founding in 1977. The Company's point-of-sale purchases provide TFC with the
ability to direct the credit underwriting process at the initiation of the
installment sales contract. Participating dealers benefit by having a source of
financing for a group of customers who typically find financing difficult to
obtain, thereby increasing the number of vehicles sold and improving dealer
profitability. Consumers also benefit because the financing provided by the
Company enables them to purchase a vehicle they otherwise would not be able to
buy. As of December 31, 1997, $75.2 million, or 59% of the Company's net
contract receivables represented point-of-sale purchases, compared to $80.7
million, or 64% at December 31, 1996, and $134.3 million, or 78% at December 31,
1995.
TFC's portfolio purchase business emphasizes acquisitions of portfolios
of seasoned installment sales contracts. These contracts normally have a payment
history of at least three months. While the typical portfolio purchase involves
fewer than 100 individual contracts, TFC has, at times, purchased portfolios
totaling more than 1,000 contracts. Portfolio purchases provide TFC with
demographic diversification, as the majority of customers are not military
enlisted personnel. They also provide a payment history on which to evaluate and
price the credit risk of the contracts and a relatively efficient mechanism for
establishing dealer relationships in new areas. TFC's portfolio purchases
benefit dealers by providing an immediate source of liquidity. As of December
31, 1997, $41.6 million, or 32% of the Company's portfolio of net contract
receivables was attributable to portfolio purchases, compared to $36.7 million,
or 29% at December 31, 1996, and $32.3 million, or 19% at December 31, 1995.
TFC operates two service centers: the Point-of-Sale Service Center in
Norfolk, Virginia, and the Portfolio Purchase Service Center in Jacksonville,
Florida. During 1996, TFC closed a third service center in Dallas, Texas. In
addition, TFC operates point-of-sale Loan Production Offices ("LPO" or
collectively, "LPOs") in Jacksonville, Florida; Killeen, Texas; San Diego,
California; Norfolk, Virginia; Tacoma, Washington; and a portfolio purchase LPO
in Norfolk, Virginia.
Historically, regional service centers were responsible for purchasing
and servicing contract receivables originated by dealers in their regions.
However, during 1996, TFC transferred the underwriting functions to the
point-of-sale and portfolio purchase LPOs to improve TFC's control over the
underwriting process. Additionally, during 1996, TFC moved the responsibility
for serving point-of-sale accounts to the Norfolk service center and all of its
portfolio purchase accounts to the Jacksonville service center to improve TFC's
collection results.
Through FCF, the Company is involved in the direct origination and
servicing of small consumer loans. FCF began operations in the first quarter of
1995 with the opening of two branches in Richmond, Virginia. Four additional
branches were opened in Virginia in 1995 and four branches were opened in North
Carolina during 1996. In 1997, one additional branch was opened in Virginia and
four branches were opened in North Carolina. The Company is evaluating
additional branch openings in 1998. Net contract receivables relating to FCF at
December 31, 1997, were $11.7 million, or 9% of the Company's net contract
receivables, compared to $8.8 million, or 7% at December 31, 1996, and $4.4
million or 3% of the net contract receivables at December 31, 1995.
The Company's operations began in 1977 in Alexandria, Virginia, with
the founding of TFC by Robert S. Raley, Jr., the Company's current Chairman of
the Board, President and Chief Executive Officer, whose career has been
exclusively within the consumer finance industry. The Company was founded
specifically for the purpose of providing direct financing for the credit needs
of individuals having limited access to traditional sources of credit,
particularly young United States military enlisted personnel. Mr. Raley
recognized that the financing needs of that market segment were being ignored by
the traditional providers of consumer credit.
With the significant increase in interest rates in the late 1970s and
early 1980s, the Company incurred operating losses as a result of the increased
costs of its funding. To offset those losses, the Company opened a used car
dealership near Fort Belvoir in northern Virginia. Within several months of
opening the northern Virginia dealership, the Company opened a second used car
dealership in Norfolk, Virginia, the home of the world's largest naval base. The
operation of these dealerships generated sufficient operating income to enable
the Company to survive and provided the Company expertise in used automobile
financing, particularly to United States military enlisted personnel. With the
reduction in interest rates that occurred in the mid-1980's, the Company sold
its used car dealerships. The Company's experience in owning and managing used
car dealerships identified the need that used automobile dealers have for a
reliable source of financing.
The Company is incorporated under the laws of Delaware. The Company's
principal executive and administrative offices are located at 5425 Robin Hood
Road, Norfolk, Virginia 23513, and the Company's telephone number is (757)
858-4054. References to the Company include the Company's wholly-owned
subsidiaries.
<PAGE>
THE OFFERING
All of the 1,135,280 shares of Common Stock offered hereby will be sold
by the Selling Stockholder. The offered shares are available for purchase by the
Selling Stockholder pursuant to a Warrant to Purchase Common Stock dated
December 20, 1996 ("First Warrant") and a Warrant to Purchase Common Stock dated
April 4, 1997 ("Second Warrant") (the First Warrant and Second Warrant
collectively, the "Warrants"). The Warrants were issued to the Selling
Stockholder in two private placements. See "Selling Stockholder." Unless and
until the Selling Stockholder purchases shares of Common Stock from the Company
pursuant to the Warrants, no shares of the Common Stock offered hereby will be
available for sale. The Warrants are not being registered under this
Registration Statement. The Selling Stockholder is not obligated to exercise the
Warrants which expire on March 31, 2002.
The Selling Stockholder has served as the principal lender to the
Company since 1992. See "Risk Factors - Fluctuating Interest Rates and
Dependence on Line of Credit." In connection with negotiations regarding an
amended and restated credit facility made available to the Company by the
Selling Stockholder (the "Credit Facility"), the Company issued to the Selling
Stockholder the First Warrant, pursuant to which the Selling Stockholder had the
right to purchase 567,640 shares of Common Stock of the Company for $2.00 per
share. The Company also entered into a Registration Rights Agreement with the
Selling Stockholder dated December 20, 1996 (the "Registration Rights
Agreement") to provide certain registration rights to the Selling Stockholder to
facilitate the distribution of shares of Common Stock available for purchase
under the First Warrant. Subsequently, in connection with an additional
amendment to the Credit Facility, the Company issued the Second Warrant to the
Selling Stockholder. Pursuant to the Second Warrant, the Selling Stockholder has
the right to purchase an additional 567,640 shares of Common Stock for $1.00 per
share. As of September 23, 1998, the last reported sales price of the Common
Stock on the Nasdaq National Market was $2.00 per share.
At the time the Company issued the Second Warrant, it reduced the
purchase price for shares under the First Warrant to $1.00 per share. The
Company and the Selling Stockholder also amended the Registration Rights
Agreement to provide registration rights with respect to the Common Stock
available for purchase under both of the Warrants. Under the Registration Rights
Agreement, the Company is obligated to keep a Registration Statement in effect
until the earlier of (a) the date when all shares offered hereby have been sold,
subject to suspensions by the Company in certain events, or (b) March 31, 2002,
subject to certain extension rights. The number of shares of Common Stock
issuable pursuant to exercise of the Warrants is subject to adjustment under
certain conditions. See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholder. See "Use of Proceeds."
<PAGE>
RISK FACTORS
Prospective investors should consider carefully the specific factors
set forth below as well as the other information included in this Prospectus
before deciding to invest in the Common Stock offered hereby.
Fluctuating Interest Rates and Dependence on Line of Credit
The Company's operations require substantial borrowing to provide
funding for the installment contracts purchased by TFC and originated by FCF.
Consequently, profitability is affected by the difference between the rate of
interest paid on the funds it borrows and the rate of interest charged on the
installment contracts. The rate of interest charged on installment contracts is
limited in some states by law. Currently, the principal source of borrowing by
the Company is the Credit Facility with General Electric Capital Corporation,
the Selling Stockholder. The maximum amount of borrowings available under the
Credit Facility was $110 million at December 31, 1997. At December 31, 1997, TFC
had $89.6 million outstanding under the Credit Facility. The floating interest
rate for borrowings under the Credit Facility is equal to the average 30-day
London Interbank Offered Rate ("LIBOR") plus 4.00%. Thus, future increases in
the Libor could adversely affect the Company's profitability. In an effort to
reduce its exposure to an increase in interest rates, TFC has purchased an
interest rate cap which ensures that the interest rate on $75 million of the
borrowings under the Credit Facility will not exceed a LIBOR ceiling of 6.5%.
This interest rate cap expires September 30, 1998. In addition to the purchase
of interest rate caps, the Company believes it has certain flexibility to
increase the discount at which installment contracts are purchased, or to
increase the rate of interest charged on future installment contracts (to the
extent not limited by state law), in order to offset the adverse impact of any
interest rate increase on profitability.
TFC has maintained a line of credit with the Selling Stockholder since
1992. The current line of credit was executed in December 1996, amended in April
1997 and February 1998, and expires January 1, 1999. There is no assurance that
a new Credit Facility will be executed when the current line of credit expires.
If a new line of credit is not executed, TFC would be required to seek
alternative financing sources and repay its outstanding balance on or before the
expiration of the line of credit on January 1, 1999. No assurance can be given
that alternative financing sources would be available in such event. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" included in the TFC Enterprises,
Inc. periodic reports, which are incorporated herein by reference
Defaults on Installment Contracts
The Company is engaged primarily in purchasing installment contracts
entered into by dealers with consumers who have limited access to traditional
sources of consumer credit. The inability of these types of consumers to finance
a used automobile purchase by means of traditional credit sources is generally
due to such individual's past credit history or lack of sufficient cash to make
the required down payment on an automobile. As a result, installment contracts
purchased by the Company are generally with purchasers of automobiles who are
considered to have a higher risk of default on an installment contract than
certain other automobile purchasers. Accordingly, the consumer loan activities
engaged in by the Company typically have a higher risk of loss than those of
other consumer financings. While the Company believes that its expertise in used
automobile financing, particularly for automobiles purchased by United States
military enlisted personnel, enables it to evaluate and price accurately the
higher risk associated with the Company's business, a significant economic
downturn in the markets in which the Company operates could materially increase
the number of charged off and delinquent installment contracts experienced by
TFC as compared to its historical losses. Although the Company does not rely
upon customers from any specific military bases, a dramatic base closure
initiative could have a material adverse effect on the Company's business,
results of operations and financial condition. If TFC were to experience a
material increase in charge-offs or delinquencies, its profitability could be
materially and adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Credit Losses and Delinquency"
included in the TFC Enterprises, Inc. periodic reports, which are incorporated
herein by reference
Dependence Upon Key Executive
The Company's growth and development to date have been largely
dependent upon the services of Robert S. Raley, Jr., Chairman of the Board,
President and Chief Executive Officer. The loss of Mr. Raley's services could
have a material adverse effect on the Company. Mr. Raley has an agreement to
serve as Chairman of the Company until December 31, 2001.
Recent History of Losses; Possibility of Future Losses
Although the Company has generally been profitable since its inception
in 1977, during 1995 and 1996, due to a number of competitive and other factors,
the Company incurred significant losses primarily due to a deterioration in the
credit quality of its retail installment sales contracts. The Company's
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in the non-prime finance industry. There can
be no assurance the Company will be successful in addressing such risks and the
failure to do so could have a material adverse effect on the Company. Therefore,
it is possible that the Company could incur substantial operating losses in the
future. In view of the rapidly evolving nature of the Company's business and the
industry in which it competes, the Company believes that its quarterly
comparisons of operating results may not be indicative of future performance.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Competition
The markets in which the Company operates are extremely competitive.
There are numerous providers of financing for the purchase of used automobiles
either through the direct financing of such purchases or on an indirect basis
through a dealer. These financing sources include commercial banks, savings and
loan associations, consumer finance companies, credit unions, financing
divisions of automobile manufacturers or automobile retailers, small sales
contract companies, and other consumer lenders. Many of those providers of
automobile financing have significantly greater financial resources than TFC and
have relationships with established dealer networks. The Company has focused on
a segment of the market composed of consumers who typically do not meet the more
stringent credit requirements of the traditional consumer financing sources and
whose needs, as a result, have not been addressed consistently by such financing
sources. If, however, one or more of the other providers of consumer finance
were to penetrate TFC's targeted market segment, TFC could be materially and
adversely affected.
For example, from 1995 through 1997, there was a significant increase
in the number of competitors in the automobile non-prime finance industry
markets in which TFC operates and in the access to funds. The combination of
increased competition and the industry's improved access to funds resulted in a
general increase in prices offered to dealers for installment sales contracts.
Prices increased to the point at which anticipated credit losses relating to the
contracts were not adequately reflected in prices offered to dealers. As a
result, the Company found it increasingly difficult to purchase contracts at
what it considers to be reasonable prices. See "Risk Factors--Recent History of
Losses; Possibility of Future Losses."
Regulation
The Company's business is subject to regulation and licensing under
various federal, state and local statutes and regulations. The Company's
business operations are conducted in approximately 30 states and, accordingly,
the laws and regulations of such states govern the Company's operations
conducted in those states. Most states where the Company operates limit the
interest rate, fees and other charges that may be imposed by the Company,
prescribe certain other terms of the contracts that the Company purchases and
define the Company's rights to repossess and sell collateral. In addition, the
Company is required to be, and is, licensed to conduct its operations in certain
states. As the Company expands its operations into other states, it will be
required to comply with the laws of such states.
An adverse change in those laws or regulations could have a material
adverse effect on the Company's profitability by, among other things, limiting
the states in which the Company may operate or the interest rate that may be
charged on installment contracts or restricting the Company's ability to realize
the value of any collateral securing contracts.
Restrictions on the Payment of Dividends
The Company currently intends to retain its earnings to finance the
growth and development of its business and, therefore, does not anticipate
paying any cash dividends in the foreseeable future. Any future dividend
payments will depend upon the financial condition, funding requirements and
earnings as well as other factors that the Company's Board of Directors may deem
relevant. As the Company is a legal entity separate and distinct from TFC and as
its revenues depend on the payment of dividends by TFC, limitations on the
ability of TFC to pay dividends to the Company will in turn limit the ability of
the Company to pay dividends to its stockholders. Dividends of more than fifty
percent of the Company's current earnings cannot be paid to shareholders under
the terms of TFC's Credit Facility, and no dividends may be paid by the Company
if the Company were in default at any time under TFC's Credit Facility, the Note
Purchase Agreement relating to the Subordinated Non-Convertible Notes due
October 15, 1998, and the Note Purchase Agreement relating to the Senior
Subordinated Notes due June 30, 2002.
Effect of Certain Charter, Bylaw and Statutory Provisions
Certain provisions of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and Amended and Restated
Bylaws (the "Bylaws") could delay or frustrate the removal of incumbent
directors and could make more difficult a merger, tender offer or proxy contest
involving the Company, even if such events could be beneficial, in the short
term, to the interest of the stockholders. For example, the Certificate of
Incorporation provides for a classified Board of Directors and for certain
limitations on the calling of a special meeting of stockholders and the Bylaws
require advance notice of stockholder proposals and nominations of directors.
The Company also is subject to provisions of Delaware corporation law that
prohibit a publicly-held Delaware corporation from engaging in a broad range of
business combinations with a person who, together with affiliates and
associates, owns 15% or more of the corporation's common stock (an "interested
stockholder") for three years after the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. Those
provisions could discourage or make more difficult a merger, tender offer, or
similar transaction, even if favorable to the Company's stockholders.
Authorized Preferred and Common Stock
Pursuant to the Certificate of Incorporation, shares of preferred stock
and Common Stock may be issued in the future without further stockholder
approval and upon such terms and conditions, and having such rights, privileges
and preferences, as the Board of Directors may determine. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
any preferred stock that may be issued in the future. The issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions and other corporation transactions, could have the effect of making
it more difficult for a third party to acquire, or effectively preventing a
third party from acquiring, a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue any shares of preferred
stock.
Anti-Takeover Effect of Certain Provisions of the Company's Articles of
Incorporation and Bylaws
Certain provisions of the Company's Certificate of Incorporation and
Bylaws may be deemed to have anti-takeover effects and may discourage, delay or
prevent a takeover attempt that a stockholder might consider in its best
interest. These provisions, among other things, (i) classify the Company's Board
of Directors into three classes, each of which will serve for different
three-year periods, (ii) provide that only the Board of Directors, chairman or
president may call special meetings of the stockholders, (iii) establish certain
advance notice procedures for nominations of candidates for election as
directors and for stockholders proposals to be considered at stockholders'
meetings, and (iv) require a vote of the holders of more than two-thirds of the
shares entitled to vote in order to remove a director or amend the foregoing and
certain other provisions of the Certificate of Incorporation and Bylaws. In
addition, the Board of Directors, without further action of the stockholders, is
permitted to issue and fix the terms of preferred stock which may have rights
senior to those of the Common Stock.
Possible Volatility of Stock Price
The market price of the Company's Common Stock, which is quoted on the
Nasdaq National Market, may be subject to significant fluctuations in response
to operating results, announcements by competitors and other factors. In
addition, the stock market in recent years has experienced extreme price and
volume fluctuations that often have been unrelated or disproportionate to the
operating performance of individual companies. These market fluctuations, as
well as general economic conditions, may adversely affect the market price of
the Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
Common Stock by the Selling Stockholder, nor will any such proceeds be available
for use by the Company or otherwise for the Company's benefit. Notwithstanding
the foregoing, the Company will receive $1,135,280 from the Selling Stockholder
in the event of the exercise of the Warrants. See "Selling Stockholder."
SELLING STOCKHOLDER
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by the Selling Stockholder as
of September 15, 1998 and as adjusted to reflect the sale of the shares of
Common Stock offered hereby. The Selling Stockholder possesses sole voting and
investment power with respect to the shares.
<TABLE>
<CAPTION>
Shares to be Beneficially
Selling Shares Beneficially Number of Shares Owned After
Stockholder Owned Prior to Offering Being Offered Offering if All Shares Sold
- ----------- ----------------------- ------------- ---------------------------
<S> <C>
Name Number Percent Number Percent
- ---- ------ ------- ------ -------
General Electric Capital 1,135,280(2) 9.1% 1,135,280 -- --
Corporation (1)
- -------------------------------
(1) The address of the Selling Stockholder is General Electric Capital
Corporation, ABF Operations - Auto Financial Services,
540 Northwest Highway, Barrington, Illinois 60010.
(2) Represents shares of Common Stock available for purchase under the
Warrants.
</TABLE>
PLAN OF DISTRIBUTION
The Registration Statement of which this Prospectus is a part was filed
pursuant to Rule 415 promulgated by the Commission under the Securities Act.
Pursuant to the Registration Rights Agreement, the Company is obligated to keep
the Registration Statement effective until the earlier of (a) the date when all
of the shares offered hereby have been sold, subject to suspension by the
Company in certain events, or (b) March 31, 2002, subject to certain extension
rights.
The shares offered hereby may be offered for sale, distributed or sold
from time to time by the Selling Stockholder, or by agents, pledgees, donees,
transferees, or other successors in interest of the Selling Stockholder (a) in
transactions executed on the Nasdaq National Market, or any securities exchange
on which the shares may be traded through registered broker-dealers (who may act
as principals, pledgees or agents), (b) in privately negotiated transactions, or
(c) through other means. Sales of shares may also be made pursuant to Rule 144
under the Securities Act, where applicable. Such sales may be made at prices and
on terms then prevailing or at prices related to the then-current market prices,
or in negotiated transactions at negotiated prices. The shares may be sold
utilizing broker-dealers by one or a combination of the following: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the shares
as agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; and
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by the
Selling Stockholder may arrange for other brokers or dealers to participate.
In connection with distribution of the shares, the Selling Stockholder
may enter into hedging or other option transactions with broker-dealers in
connection with which, among other things, such broker-dealers may engage in
short sales of the shares pursuant to this Prospectus in the course of hedging
the positions they may assume with the Selling Stockholder. The Selling
Stockholder may also sell shares short pursuant to this Prospectus and deliver
the shares to close out such short positions. The Selling Stockholder may also
enter into option or other transactions with broker-dealers which may result in
the delivery of shares to such broker-dealers who may sell such shares pursuant
to this Prospectus. The Selling Stockholder may also pledge the shares to a
broker-dealer or financial institution and upon default the broker-dealer or
financial institution may effect the sales of the pledged shares pursuant to
this Prospectus.
The distribution of the shares by the Selling Stockholder is not
subject to any underwriting agreement. Any dealers, brokers or agents
participating in the distribution of the shares may receive compensation in the
form of discounts, concessions, commissions or fees from the Selling Stockholder
and/or purchasers of shares, for whom they may act. Such discounts, concessions,
commissions or fees will not exceed those customary for the type of transactions
involved. In addition, the Selling Stockholder and any such dealers, brokers, or
agents that participate in the distribution of shares may be deemed to be
"underwriters" under the Securities Act, and any profits on the sales of shares
by them and any discounts, concessions, or commissions or fees received by any
of such persons may be deemed to be underwriting discounts and commissions under
the Securities Act. Those who act as broker, dealer, or agent in connection with
the sale of the shares will be selected by the Selling Stockholder and may have
other business relationships with the Company and its subsidiaries or affiliates
in the ordinary course of business.
Upon the Company being notified by the Selling Stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution, or
secondary distribution or a purchase by a broker or dealer, a supplemented
prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, setting forth (i) the name of each of the participating
broker-dealers, (ii) the number of shares involved, (iii) the price at which
such shares were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealers, where applicable, (v) a statement to the effect
that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this Prospectus, and (vi)
other facts material to the transaction.
The aggregate proceeds to the Selling Stockholder from the sale of the
shares offered hereby will be the purchase price of such shares less any
broker's discounts, concessions, commissions or fees to dealers, brokers or
agents.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdiction only through registered
or licensed brokers or dealers. In addition, in certain states the shares may
not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirements is available and all requirements for such exemption have been met.
Brokers, dealers, and others effecting transactions in the shares should confirm
the registration or qualification of the shares under the securities laws of the
states in which such transactions occur or the existence of any exemption from
such registration.
There is no assurance that the Selling Stockholder will sell any or all
of the shares described herein and may transfer, devise, or gift such securities
by other means not described herein. The Company is permitted to suspend the use
of this Prospectus by the Selling Stockholder during certain periods of time
under certain circumstances relating to pending corporate developments and
public filings with the Commission and similar events. Expenses of preparing and
filing the registration statement and all post-effective amendments will be
borne by the Company.
The Company has agreed to indemnify the Selling Stockholder against
certain liabilities, including liabilities under the Securities Act. The Selling
Stockholder has agreed to indemnify the Company and certain related persons
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock and certain other legal matters in
connection with this offering will be passed upon for the Company by Clark &
Stant, P.C., Virginia Beach, Virginia.
EXPERTS
The consolidated financial statements including Schedule 1 of TFC
Enterprises, Inc. appearing or incorporated by reference in TFC Enterprises,
Inc.'s Annual Report (Form 10K and as amended on Forms 10K/A dated April 10,
1998, April 22, 1998 and June 19, 1998) for the year ended December 31, 1997
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon included or incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
<PAGE>
No broker, dealer or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Selling Stockholder. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
the shares of Common Stock to which it relates or an offer to, or a solicitation
of, any person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that information
contained herein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
Page
Available Information....................... 2
Information Incorporated by Reference....... 2
Prospectus Summary.......................... 3
The Offering................................ 5
Risk Factors................................ 6
Use of Proceeds............................. 9
Selling Stockholder......................... 9
Plan of Distribution ....................... 10
Legal Matters............................... 11
Experts..................................... 11
1,135,280 Shares
TFC Enterprises, Inc.
Common Stock
------------------
Prospectus
------------------
October 6, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuances and Distribution
The following table sets forth the various fees and expenses to be paid
by the Company in connection with the issuance and distribution of the shares of
Common Stock being registered. All amounts shown are estimates except for the
Commission registration fee. The Company will pay all expenses in connection
with the distribution of the shares of Common Stock being sold by the Selling
Stockholder (including fees and expenses of counsel for the Company and one-half
of the reasonable fees and expenses of counsel to the Selling Stockholder),
except for any discounts, concessions, commissions or other compensation due to
any broker or dealer in connection with the sale of any of the shares offered
hereby.
Securities and Exchange Commission registration fee. $ 576.04
Blue Sky fees and expenses.......................... 0.00
Printing expense.................................... 1,000.00
Accounting fees and expenses........................ 5,000.00
Legal fees and expenses............................. 15,000.00
Miscellaneous....................................... 3,423.96
------------
Total............................................... $25,000.00
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law grants to the
Company the power to indemnify any person against liabilities and expenses
incurred by reason of the fact that he or she is or was a director, officer,
employee or agent of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, subject, however, to
certain conditions and limitations as stated therein.
Section 145 also empowers the Company to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Company and any person who is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against liability
asserted against or incurred by him or her in any such capacity or arising out
of his or her status as such whether or not the Company would have the power to
indemnify such person against such liability under Section 145.
Article VII of the Company's Amended and Restated Certificate of
Incorporation provides that a director of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except: (i) for any breach of the director's duty
of loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Company shall be eliminated
or limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
Article VIII of the Company's Bylaws provides that each person who was
or is made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer of the Company
or is or was serving at the request of the Company as a director, officer,
trustee, employee or agent of another corporation or of a partnership, trust or
other enterprise, including service with respect to an employee benefit plan,
whether the basis of such Proceeding is alleged action in an official capacity
as a director, officer, trustee, employee or agent or in any other capacity
while serving as a director, officer, trustee, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the Delaware General Corporation Law against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) ("Losses") reasonably incurred or
suffered by such person in connection therewith; provided, however, that the
Company shall indemnify any such person seeking indemnity in connection with a
Proceeding (or part thereof) initiated by such person only if such Proceeding
(or part thereof) was authorized by the Board of Directors of the Company.
Section 8.06 of Article VIII of the Company's Bylaws provides that the
Company may maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Company or another corporation,
partnership, trust or other enterprise against losses, whether or not the
Company would have the power to indemnify such person against losses under the
Delaware General Corporation Law.
Item 16. Exhibits and Financial Statement Schedule
(a) Exhibits
*3.1 Amended and Restated Certificate of Incorporation of TFC
Enterprises, Inc. (Incorporated by reference to the
Registrant's Registration Statement on Form S-1, Commission
File No. 33-70638, previously filed with the Commission on
October 21, 1993.)
*3.2 Amended and Restated Bylaws of TFC Enterprises, Inc.
(Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Commission File No. 33-70638,
previously filed with the Commission on October 21, 1993.)
*3.3 Second Amendment to Amended and Restated Bylaws of TFC
Enterprises, Inc. regarding the number of directors comprising
the Board of TFC Enterprises, Inc. (Incorporated by reference
to the Registrant's Form 10-K for the fiscal year ended
December 31, 1995, Commission File No. 0-22910, previously
filed with the Commission.)
*4 Form of Common Stock Certificate of the TFC Enterprises, Inc.
(Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Commission File No. 33-70638,
previously filed with the Commission on October 21, 1993.)
*4.1 TFC Enterprises, Inc. Warrant to Purchase Common Stock dated
December 20, 1996. (Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended December 31,
1996, Commission File No. 0-22910, previously filed with the
Commission.)
*4.2 TFC Enterprises, Inc. Warrant to Purchase Common Stock dated
April 4, 1997. (Incorporated by reference to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996,
Commission File No. 0-22910, previously filed with the
Commission.)
*4.3 Amended and Restated Registration Rights dated April 4, 1997
between TFC Enterprises, Inc. and General Electric Capital
Corporation. (Incorporated by reference to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996,
Commission File No. 0-22910, previously filed with the
Commission.)
**5 Opinion of Clark & Stant, P.C.
**23.1 Consent of Ernst & Young LLP, Independent Auditors
**23.2 Consent of Clark & Stant, P.C. (included in Exhibit 5)
*24 Power of Attorney relating to TFC Enterprises, Inc.
**27 Financial Data Schedule
* Previously filed
** Filed herewith.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required to Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs 1.(i) and (ii) above do not apply if
the information required to be in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration, by means of a post-effective
amendment, any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference to the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Norfolk, Commonwealth of Virginia, on the 1st day of
October, 1998.
TFC ENTERPRISES, INC.
By: /s/ ROBERT S. RALEY, JR.
------------------------------
Robert S. Raley, Jr.,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
---------- ------ ------
<S> <C>
/s/ ROBERT S. RALEY* Chairman of the Board; Director,
----------------------- President and Chief
Robert S. Raley Officer October 1, 1998
/s/ DOUGLAS E. BYWATER*
----------------------
Douglas E. Bywater Director October 1, 1998
/s/ WALTER S. BOONE, JR.*
----------------------
Walter S. Boone, Jr. Director October 1, 1998
/s/ PHILIP S. SMILEY*
----------------------
Philip S. Smiley Director October 1, 1998
/s/ ANDREW M. OCKERSHAUSEN*
-----------------------
Andrew M. Ockershausen Director October 1, 1998
/s/ LINWOOD R. WATSON*
-----------------------
Linwood R. Watson Director October 1, 1998
/s/ CRAIG D. POPPEN Vice President, Chief Financial
----------------- Officer, Treasurer and [Chief October 1, 1998
Craig D. Poppen Accounting Officer]
- -----------------------------
*Craig D. Poppen as attorney-in-fact pursuant to the Power of Attorney included
in the Registration Statement filed on April 20, 1998.
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of TFC *
Enterprises, Inc. Incorporated by reference to the
Registrant's Registration Statement on Form S-1,
Commission File No. 33-70638, previously filed with the
Commission on October 21, 1993.)
3.2 Amended and Restated Bylaws of TFC Enterprises, Inc. *
(Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Commission File No. 33-70638, previously
filed with the Commission on October 21, 1993.)
3.3 Second Amendment to Amended and Restated Bylaws of TFC *
Enterprises, Inc. regarding the number of directors comprising
the Board of TFC Enterprises, Inc. (Incorporated by reference to
the Registrant's Form 10-K for the fiscal year ended December
31, 1995, Commission File No. 0-22910, previously filed with the
Commission.)
4 Form of Common Stock Certificate of the TFC Enterprises, Inc. *
(Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Commission File No. 33-70638, previously
filed with the Commission on October 21, 1993.)
4.1 TFC Enterprises, Inc. Warrant to Purchase Common Stock dated *
December 20, 1996. Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended December 31,
1996, Commission File No. 0-22910, previously filed with the
Commission.)
4.2 TFC Enterprises, Inc. Warrant to Purchase Common Stock dated *
April 4, 1997. (Incorporated by reference to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996,
Commission File No. 0-22910, previously filed with the
Commission.)
4.3 Amended and Restated Registration Rights dated April 4, 1997 *
4.3 Amended and Restated Registration Rights dated April 4, 1997 *
between TFC Enterprises, Inc. and General Electric Capital
Corporation. (Incorporated by reference to the Registrant's Form
10-K for the fiscal year ended December 31, 1996, Commission
File No. 0-22910, previously filed with the Commission.)
5 Opinion of Clark & Stant, P.C. re: Legality **
23.1 Consent of Ernst & Young LLP **
23.2 Consent of Clark & Stant, P.C. (included in Exhibit 5) **
24 Power of Attorney
27 Financial Data Schedule **
</TABLE>
* (Not filed herewith. In accordance with Rule 12b-32 of the General
Rules and Regulations under the Securities Exchange Act of 1934, the
exhibit is incorporated by reference).
** Filed herewith.
<PAGE>
Exhibit 5
<TABLE>
<S> <C>
CLARK & STANT, P.C.
BRADFORD D. BIMSON ATTORNEYS AND COUNSELORS AT LAW CRAIG L. MYTELKA
JO ANN BLAIR-DAVIS JOHN M. PARIS, JR.
LAWRENCE H. BRYANT ONE COLUMBUS CENTER BRIAN C. PURCELL
STEPHEN W. BURKE ROBERT M. REED
MEGAN E. BURNS VIRGINIA BEACH, VIRGINIA 23462-6762 FRANCES W. RUSSELL
DAVID A. CARDON _____ ROBERT L. SAMUEL, JR.*
JOHN F. CARROLL, IV C. GRIGSBY SCIFRES
DONALD H. CLARK TELEPHONE: (757) 499-8800 LAWRENCE R. SIEGEL
CLIFFORD A. COPPOLA THOMAS E. SNYDER
JOSEPH A. DI JULIO FACSIMILE: (757) 473-0395 FREDERICK T. STANT, III
TIMOTHY W. DORSEY STEPHEN C. SWAIN*
THOMAS R. FRANTZ www.clarkandstant.com STEPHEN G. TEST
TASOS A. GALIOTOS A.W. VANDERMEER, JR.
MICHAEL J. GARDNER* DIRECT DIAL NUMBER JACK L. YOUNG
S. GEOFFREY GLICK*
ERIC A. HAUSER (757) 473-5308
MICHELLE A. HUGHES [email protected] *ALSO ADMITTED IN NC
SAMUEL M. KROLL
October 1, 1998 FREDERICK T. STANT, JR.
OF COUNSEL
OUR FILE NUMBER
90366.006
</TABLE>
TFC Enterprises, Inc.
5425 Robin Hood Road, Suite 101B
Norfolk, Virginia 23513
Re: Registration Statement on Form S-3
Registration No. 333-50531
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3
filed with the Securities and Exchange Commission (the "Commission") on April
20, 1998, as amended (the "Registration Statement"), under the Securities Act of
1933, as amended (the "Act"), and the rules and regulations under the Act (the
"Rules"), we have been requested by TFC Enterprises, Inc., a Delaware
corporation (the "Company"), to provide our opinion as to the legality of the
1,135,280 shares (the "Stockholder Shares") of the Company's Common Stock, par
value $.01 (the "Common Stock") offered by General Electric Capital Corporation
(the "Selling Stockholder") that are registered for sale by the Registration
Statement on a delayed or continuous basis pursuant to Rule 415 under the Act.
We have examined and relied on (i) signed copies of the
Registration Statement and all exhibits thereto, all as filed with the
Commission, (ii) copies of the Certificate of Incorporation and Bylaws of the
Company and all amendments thereto, and (iii) originals or copies of such
records of meetings of the board of directors and shareholders of the Company,
documents and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below.
In our examination, we have assumed: (i) the genuineness of
all signatures, (ii) the authenticity of all documents submitted to us as
originals, (iii) the conformity with original documents of all documents
submitted to us as copies, (iv) the legal capacity of all natural persons, (v)
that no consent, approval or authorization other than by the Company's director,
shareholders and officers is required under applicable laws, rules or
regulations for the due authorization and performance of the documents by the
Company, (vi) the Company has complied with all provisions of law to which it is
subject, and (vii) all statements, representations and warranties made in such
documents are true, accurate and correct. With respect to matters of good
standing of the Company, we have relied solely on certificates of public
officials and such opinions are given as of the date of such certificates.
Based on and subject to the foregoing, and subject to the
additional limitations, qualifications and exclusions described below, we are of
the opinion that the Stockholder Shares have been duly authorized and, upon
their issuance, will be validly issued, fully paid and nonassessable.
The opinion expressed above is limited to the General
Corporation Law of the State of Delaware. Please be advised that no member of
this firm is admitted to practice in the State of Delaware. Our opinion is based
on, and is limited to, the law and facts in effect on the date of this letter.
We express no opinion as to any future changes in such laws or facts or the
effect thereof on the opinions expressed in this letter.
We consent to use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" contained in the Prospectus included in the Registration Statement. In
giving this consent, we do not admit that we come within the category of persons
whose consent is required by the Act or the Rules.
This opinion applies only to the Registration Statement to
which the Company is a party. We undertake no duty to supplement or update this
opinion based on any facts, circumstances or changes in the law that arise
after the date hereof.
Very truly yours,
CLARK & STANT, P.C.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
the Pre-effective Amendment No. 2 to the Registration Statement (Form S-3) and
related Prospectus of TFC Enterprises, Inc. for the registration of 1,135,280
shares of its common stock and to the incorporation by reference therein of our
reports dated February 12, 1998, with respect to the consolidated financial
statements and schedule of TFC Enterprises, Inc. included in its Annual Report
(Form 10K and as amended on Forms 10K/A dated April 10, 1998, April 22, 1998 and
June 19, 1998) for the year ended December 31, 1997, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
Washington, D.C.
October 1, 1998
