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): November 4, 1996
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REDWOOD FINANCIAL, INC.
(Exact name of Registrant as specified in its Charter)
Minnesota 0-25884 41-1807233
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
301 S. Washington Street, P.O. Box 317, Redwood Falls, Minnesota 56283
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 637-8730
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Not Applicable
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(Former name or former address, if changed since last Report)
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Item 5. Other Events
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The Registrant issued a joint press release on November 4, 1996,
announcing that it had entered into a letter of intent ("Letter") with Olivia
Bancorporation, Inc. ("Olivia") and American State Bank of Olivia (the "Bank")
dated November 1, 1996 and executed November 4, 1996 for the acquisition of
Olivia and the Bank by the Registrant. Pursuant to the terms of the Letter, the
Registrant will pay an aggregate cash payment of $4.375 million. It is
anticipated that the Letter will be replaced by a definitive merger agreement.
If the definitive merger agreement has not been executed within 45 days of the
date of the execution of the Letter (unless extended) the Letter will terminate.
Consummation of the acquisition is subject to several conditions,
including receipt of applicable regulatory approval and the completion of
satisfactory due diligence by the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits:
Exhibit 2 - Letter of Intent dated November 1, 1996
Exhibit 99 - Press Release dated November 4, 1996
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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, thereunto duly authorized.
REDWOOD FINANCIAL, INC.
Date: November 4, 1996 By: /s/ Paul W. Pryor
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Paul W. Pryor
President
EXHIBIT 2
Letter of Intent
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[Redwood Financial, Inc. Letterhead]
November 1, 1996
PERSONAL AND CONFIDENTIAL
Board of Directors
Olivia Bancorporation, Inc.
P.O. Box 10
Olivia, Minnesota 56277
Board of Directors
American State Bank of Olivia
815 E. DePue Avenue
Olivia, Minnesota 56277
Gentlemen:
This letter is to express the intention of Redwood Financial, Inc.
("Redwood") to extend an offer to purchase 100% of the issued and outstanding
common stock (the "Shares") of Olivia Bancorporation, Inc. ("Olivia"), which in
turn owns 97.6% of the outstanding common stock of American State Bank of
Olivia, Olivia, Minnesota (the "Bank"), and 100% of the issued and outstanding
common stock of the Bank, on the terms and conditions hereinafter set forth.
Collectively, Olivia and the Bank will be considered the "Sellers" for purposes
of this letter. It is understood by the parties hereto that this is a letter of
intent intended, subject to the satisfactory completion of the steps described
herein, to lead to a mutually agreeable definitive merger agreement to be
executed by all parties concerned. The terms and conditions of the sale and
purchase of the stock of Olivia and the Bank will include, among other things:
1. Structure of Transaction. The structure of the transaction will
be set forth in the definitive merger agreement and will
encompass the acquisition of 100% of the outstanding stock of
Olivia as well as 100% of the outstanding stock of the Bank. The
transaction will be structured in such a manner so as to qualify
as a tax free reorganization.
2. Consideration. The total consideration for the Shares shall be
equal to $4,375,000 in cash, including, by operation of the
transaction, the assumption of approximately $829,000 of debt
incurred by Olivia in connection with its acquisition of the
Bank. The total purchase price shall be paid in cash or other
immediately available funds at closing.
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3. No Payment of Dividend. It is our understanding that the net
after tax earnings of Olivia and the Bank for 1996 and 1997 will
not be dividended to their respective stockholders; provided,
however, that Olivia may dividend to its shareholders prior to
the closing all assets currently held by Olivia other than Bank
stock, and provided further that Bank may pay a dividend to
Olivia provided that the dividend proceeds received by Olivia are
paid to its bank stock lender and do not exceed the amount
necessary to make the then due regular installment payment on the
loan.
4. Employees. Redwood will attempt to retain qualified employees of
the Bank. To the extent a Bank employee's duties are duplicative
of an employee's duties at Redwood's present financial
institution subsidiary, the Bank employee will be treated fairly
and Redwood will attempt to secure an appropriate position for
the Bank employee given his or her qualifications.
5. Representations. The Sellers agree to provide Redwood with the
usual and ordinary warranties and representations regarding
Olivia and the Bank, which representations and warranties shall
terminate at the closing of the transaction. The Sellers shall
provide Redwood with the usual and ordinary covenants regarding
the operations of Olivia and the Bank prior to closing. In
addition, from the date hereof to and including the closing date,
Olivia and the Bank shall conduct their respective affairs in the
ordinary course of business consistent with their past practices.
6. Due Diligence Exam. Within 30 days of the execution of this
letter of intent, Redwood, or its representatives, will conduct a
due diligence examination of the books and records of Olivia and
the Bank. If, as a result of said examination, Redwood is not
satisfied with the financial condition of Olivia and/or the Bank,
then Redwood shall have the option of terminating this letter of
intent or revising the consideration offered. Redwood shall
coordinate with Sellers to conduct its due diligence at such a
time and in such a manner as to not interfere with the operations
of the Bank.
7. Merger Agreement. Within 45 days of the execution of this letter
of intent, Redwood's counsel shall prepare and the parties shall
execute a merger agreement reflecting the terms hereof and such
other terms, covenants, conditions, representations and
warranties as are customarily contained in such merger
agreements. If a merger agreement has not been executed within
such 45 day period and such date is not extended by mutual
agreement of the parties hereto, then this letter of intent shall
terminate and the parties shall have no further obligation with
respect to the transactions contemplated herein.
8. No Negotiations. Until such time as a merger agreement is
executed by the parties hereto or this letter of intent is
terminated, whichever occurs first, Sellers
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agree not to enter into any discussions or negotiations with any
third parties regarding the sale of Olivia and/or the Bank or any
of their assets. It is the understanding of the parties hereto
that such merger agreement would contain provisions restricting
discussions and negotiations with third parties regarding the
sale of Olivia, the Bank or any of their assets, as well as a
provision for a termination fee in the event of such an
acquisition by a third party.
9. Regulatory Approval. Promptly after execution of the merger
agreement, Redwood will prepare and file applications with the
proper banking regulatory agencies for approval of the
transaction, and Redwood and Sellers shall cooperate to the end
that the same shall be expeditiously processed by such regulatory
agencies. It is the understanding of the parties hereto that the
receipt of regulatory approvals without the imposition of any
conditions which would not be satisfactory to Redwood shall be a
condition to the consummation of the merger.
10. Earnest Money. Upon execution of a definitive merger agreement,
Redwood shall place earnest money in the sum of $200,000
("Earnest Money") into an escrow fund. In the event that Redwood
is unable to consummate the proposed transaction due to its fault
on or before a date six months from the date of the definitive
merger agreement, Sellers shall be entitled to retain the Earnest
Money; however, if the transaction does not close within such
time frame because of an event outside the control of Redwood,
Sellers shall be entitled to retain $50,000 of the Earnest Money
and the remainder plus accrued interest thereon shall be returned
to Redwood. If the transaction does not close within such time
frame because of a violation of the definitive merger agreement
by the Sellers or any other reason attributable to the Sellers,
then the Earnest Money plus accrued interest thereon shall be
returned to Redwood. Upon closing, the Earnest Money plus accrued
interest shall be applied towards the aforementioned total
consideration.
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By executing this letter of intent and returning it to Redwood on or
before November 1, 1996, the Sellers are expressing their intention to proceed
with the sale of Olivia to Redwood pursuant to the terms and conditions
described herein and agree to act in good faith to obtain all corporate and
shareholder actions as may be necessary to complete the contemplated
transaction. Sellers are advised that Redwood shall prepare a public
announcement containing the terms of this letter of intent and such announcement
shall be released upon the signing of this letter of intent. Although each of
the parties hereto represents that they intend in good faith to carry out the
transaction described in this letter of intent, no binding legal agreement will
arise until the merger agreement has been prepared and executed by the parties
hereto.
Very truly yours,
REDWOOD FINANCIAL, INC.
/s/ James P. Tersteeg
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James P. Tersteeg
Chairman of the Board of Directors
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WE HAVE READ THE FOREGOING AND UNDERSTAND AND AGREE WITH THE TERMS AND
CONDITIONS SET FORTH HEREIN, DATED THIS 4TH DAY OF NOVEMBER, 1996.
OLIVIA BANCORPORATION, INC. AMERICAN STATE BANK OF OLIVIA
By:/s/ George R. Tesch By:/s/ Richard F. Solarz
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Name: George R. Tesch Name: Richard F. Solarz
Title: Title: President
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EXHIBIT 99
Press Release
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PRESS RELEASE
Contact: Paul W. Pryor, Chief Executive Officer
Redwood Financial, Inc.
(507) 637-8730
George Tesch
Olivia Bancorporation, Inc.
(320) 523-5120
For Immediate Release
November 4, 1996
OLIVIA BANCORPORATION, INC. AND SUBSIDIARY SIGN LETTER OF INTENT
TO BE ACQUIRED BY REDWOOD FINANCIAL, INC.
Redwood Falls, Minnesota -- November 4, 1996 -- Redwood Financial, Inc.
("Redwood"), Redwood Falls, Minnesota, the holding company of Redwood Falls
Federal Savings and Loan Association (the "Association") and Olivia
Bancorporation, Inc. ("Olivia") which owns 97.6% of the outstanding stock of
American State Bank of Olivia (the "Bank") announced today the signing of a
letter of intent ("Letter") providing for the acquisition of Olivia and the Bank
by Redwood.
Under the terms of the Letter, Redwood will pay an aggregate of $4.375
million in cash. The transaction will be accounted for as a purchase.
Olivia, the Bank and Redwood approved the Letter which is anticipated to
be replaced by a definitive merger agreement. If the definitive merger agreement
has not been executed within 45 days of the date of the execution of the Letter
(unless extended) the Letter will terminate. The transaction is subject to
certain contingencies including satisfaction of applicable federal and state
regulatory requirements and completion of a due diligence examination by
Redwood. Olivia and the Bank have agreed not to enter into any discussions or
negotiations with any third parties regarding the sale of Olivia and/or the Bank
or any of their assets.
The Bank is a Minnesota chartered commercial bank headquartered in
Olivia, Minnesota. The Bank has two full service offices located in Renville
County, Minnesota. The Bank's deposits are federally insured by the Federal
Deposit Insurance Corporation ("FDIC"). At September 30, 1996, the Bank had
total assets and stockholders' equity of $28.9 million and $2.8 million,
respectively.
The Association is a federally chartered stock savings and loan
association headquartered in Redwood Falls, Minnesota. The Association has two
full service offices located in Redwood
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and Renville Counties, Minnesota. The Association's deposits are federally
insured by the FDIC. The Association is a community oriented, full service
retail savings and loan association offering traditional mortgage loan products.
At September 30, 1996, Redwood, on a consolidated basis, had total assets and
stockholders' equity of $51.0 million and $13.2 million, respectively.
The common stock of Redwood (trading symbol "REDW") is listed on the OTC
Bulletin Board of Nasdaq.
