SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MARCH 8, 2002
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CONSUMER PORTFOLIO SERVICES, INC.
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(Exact Name of Registrant as Specified in Charter)
CALIFORNIA 001-14116 33-0459135
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
16355 LAGUNA CANYON ROAD, IRVINE, CA 92618
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 753-6800
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
This Current Report on Form 8-K contains forward-looking statements that involve
risks and uncertainties. These statements relate to future events and therefore
are inherently uncertain. Actual performance and results may differ materially
from those projected or suggested due to certain risks and uncertainties,
including acquisition and transition challenges, assimilation issues in the
consolidation process, customer reaction to the acquisition, and operational and
other risks relating to the combination of separate businesses. Additional
information concerning certain other risks and uncertainties that could cause
actual results to differ materially from those projected or suggested, is
contained in Consumer Portfolio Services, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, which has been filed with the
Securities and Exchange Commission. The forward-looking statements contained
herein represent the judgment of Consumer Portfolio Services, Inc. as of the
date of this Current Report on Form 8-K and Consumer Portfolio Services, Inc.
cautions against the placement of undue reliance on such statements.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 8, 2002, the registrant Consumer Portfolio Services, Inc. ("CPS")
acquired MFN Financial Corporation, a Delaware corporation ("MFN") and its
subsidiaries, by the merger (the "Merger") of CPS Mergersub, Inc., a Delaware
corporation ("Mergersub") and a direct wholly-owned subsidiary of CPS, with and
into MFN. The Merger took place pursuant to an Agreement and Plan of Merger,
dated as of November 18, 2001 (the "Merger Agreement"), among CPS, Mergersub and
MFN. In the Merger MFN became a wholly-owned subsidiary of CPS. CPS thus
acquired the assets of MFN, consisting principally of interests in motor vehicle
installment sales finance contracts and the facilities for originating and
servicing such contracts.
MFN, through its primary operating subsidiary, Mercury Finance Company, LLC, is
in the business of purchasing motor vehicle installment sales finance contracts
from automobile dealers, and securitizing and servicing such contracts. CPS
intends to continue to use the assets acquired in the Merger in the automobile
finance business, but a portion of such assets will be disposed of, and the
level of activity may change. In particular, CPS will temporarily cease to use
such assets for the purchase of motor vehicle installment sales finance
contracts, and may or may not recommence such use. Attached as Exhibits 99.1,
99.2 and 99.3, respectively, are copies of press releases relating to the Merger
described in this Current Report on Form 8-K, which press releases are
incorporated herein by reference.
At the closing of the Merger, each share of common stock, $.01 par value per
share, of MFN, issued and outstanding immediately prior to the closing of the
Merger, was cancelled and extinguished and automatically converted into and
became a right to receive $10.00 per share in cash, pursuant to the Merger
Agreement, upon surrender of the certificates that evidenced such shares. The
total merger consideration payable to stockholders of MFN was approximately
$99.9 million. The amount of such consideration was agreed to as the result of
arms'-length negotiations between CPS and MFN. The recipients of the total
merger consideration had no material relationship with CPS, its directors, its
officers or any associates of such directors or officers, to the best of CPS's
knowledge. Acquisition financing was provided to CPS by Westdeutsche Landesbank
Girozentrale, New York Branch ("West LB"), and Levine Leichtman Capital
Partners, Inc. ("LLCP"). CPS obtained acquisition financing from an affiliate of
LLCP through its issuance and sale of certain senior secured notes to LLCP in
the aggregate principal amount of $35 million. Copies of the principal LLCP
financing agreements are filed as Exhibits 4.1 - 4.4 to this Current Report on
Form 8-K.
ITEM 5. OTHER EVENTS.
The ordinary business of both CPS and MFN includes purchasing motor vehicle
installment sales finance contracts from automobile dealers, servicing such
contracts, and disposing of such contracts or interests therein in
securitization transactions or otherwise.
On March 8, 2002, CPS (through a subsidiary) sold motor vehicle installment
sales finance contracts to CPS Auto Receivables Trust 2002-A in a securitization
transaction, retaining a residual interest therein. CPS Auto Receivables Trust
2002-A funded the acquisition by issuance of $45.65 million in notes backed by
automotive receivables.
On March 8, 2002, MFN (through a subsidiary) sold motor vehicle installment
sales finance contracts to MFN Auto Receivables Trust 2002-A in a securitization
transaction, retaining a residual interest therein. MFN Auto Receivables Trust
2002-A funded the acquisition by issuance of approximately $100 million in notes
backed by automotive receivables.
On March 7, 2002, CPS entered into a new warehouse credit facility. The new
warehouse facility is structured to allow CPS to fund a portion of the purchase
price of automotive receivables by drawing against a variable funding note
issued by CPS Warehouse Trust, in the maximum amount of $100 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The financial statements required by this Item 7(a) of Form 8-K and Rule 3-05(b)
of Regulation S-X will be filed by amendment to this initial report no later
than 60 days after the date this report is filed.
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(b) Pro Forma Financial Information.
The financial statements required by this Item 7(b) of Form 8-K and Rule 3-05(b)
of Regulation S-X will be filed by amendment to this initial report no later
than 60 days after the date this report is filed.
(c) Exhibits.
NO. DESCRIPTION
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Exhibit 2.1 Agreement and Plan of Merger, dated as of November 18,
2001, by and among the Registrant, CPS Mergersub, Inc. and
MFN Financial Corporation. (Incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K of MFN
Financial Corporation filed on November 19, 2001).
Exhibit 4.1 Second Amended and Restated Securities Purchase
Agreement, dated as of March 8, 2002, by and between Levine
Leichtman Capital Partners II, L.P. and the Registrant.
Exhibit 4.2 Secured Senior Note due February 28, 2003 issued by the
Registrant to Levine Leichtman Capital Partners II, L.P.
Exhibit 4.3 Second Amended and Restated Secured Senior Note due November
30, 2003 issued by the Registrant to Levine Leichtman
Capital Partners II, L.P.
Exhibit 4.4 12.00% Secured Senior Note due 2008 issued by the Registrant
to Levine Leichtman Capital Partners II, L.P.
Exhibit 4.5 Sale and Servicing Agreement, dated as of March 1, 2002,
among the Registrant, CPS Auto Receivables Trust 2002-A, CPS
Receivables Corp., Systems & Services Technologies, Inc.
and Bank One Trust Company, N.A
Exhibit 4.6 Indenture, dated as of March 1, 2002, between CPS Auto
Receivables Trust 2002-A and Bank One Trust Company, N.A.
Exhibit 4.7 Sale and Servicing Agreement among MFN Auto Receivables
Trust 2002-A, MFN Securitization LLC, Mercury Finance
Company LLC, MFN Financial Corporation, Bank One Trust
Company, N.A., and Systems & Services Technologies, Inc.,
dated as of March 1, 2002 (to be filed by amendment).
Exhibit 4.8 Indenture, dated as of March 1, 2002, between MFN Auto
Receivables Trust 2002-A and Bank One Trust Company, N.A.
Exhibit 99.1 Press Release dated November 19, 2001. (incorporated by
reference to Exhibit 99.1 to the report on Form 8-K of MFN
Financial Corporation dated as of and filed on November 19,
2001.)
Exhibit 99.2 Press Release dated November 19, 2001. (incorporated by
reference to Exhibit 99.2 to the report on Form 8-K of MFN
Financial Corporation dated as of and filed on November 19,
2001.)
Exhibit 99.3 Press Release dated March 12, 2002.
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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 hereunto duly authorized.
CONSUMER PORTFOLIO SERVICES, INC.
By: /s/ CHARLES E. BRADLEY, JR.
Charles E. Bradley, Jr., President
Dated: March 25, 2002
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EXHIBIT INDEX
NO. DESCRIPTION
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Exhibit 2.1 Agreement and Plan of Merger, dated as of November 18,
2001, by and among the Registrant, CPS Mergersub, Inc. and
MFN Financial Corporation. (Incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K of MFN
Financial Corporation filed on November 19, 2001).
Exhibit 4.1 Second Amended and Restated Securities Purchase
Agreement, dated as of March 8, 2002, by and between Levine
Leichtman Capital Partners II, L.P. and the Registrant.
Exhibit 4.2 Secured Senior Note due February 28, 2003 issued by the
Registrant to Levine Leichtman Capital Partners II, L.P.
Exhibit 4.3 Second Amended and Restated Secured Senior Note due November
30, 2003 issued by the Registrant to Levine Leichtman
Capital Partners II, L.P.
Exhibit 4.4 12.00% Secured Senior Note due 2008 issued by the Registrant
to Levine Leichtman Capital Partners II, L.P.
Exhibit 4.5 Sale and Servicing Agreement, dated as of March 1, 2002,
among the Registrant, CPS Auto Receivables Trust 2002-A, CPS
Receivables Corp., Systems & Services Technologies, Inc.
and Bank One Trust Company, N.A
Exhibit 4.6 Indenture, dated as of March 1, 2002, between CPS Auto
Receivables Trust 2002-A and Bank One Trust Company, N.A.
Exhibit 4.7 Sale and Servicing Agreement among MFN Auto Receivables
Trust 2002-A, MFN Securitization LLC, Mercury Finance
Company LLC, MFN Financial Corporation, Bank One Trust
Company, N.A., and Systems & Services Technologies, Inc.,
dated as oF March 1, 2002 (to be filed by amendment).
Exhibit 4.8 Indenture, dated as of March 1, 2002, between MFN Auto
Receivables Trust 2002-A and Bank One Trust Company, N.A.
Exhibit 99.1 Press Release dated November 19, 2001. (incorporated by
reference to Exhibit 99.1 to the report on Form 8-K of MFN
Financial Corporation dated as of and filed on November 19,
2001.)
Exhibit 99.2 Press Release dated November 19, 2001. (incorporated by
reference to Exhibit 99.2 to the report on Form 8-K of MFN
Financial Corporation dated as of and filed on November 19,
2001.)
Exhibit 99.3 Press Release dated March 12, 2002.
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