SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K/A
AMENDMENT NO. 1 TO
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 Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002, 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 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'
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knowledge. Most of the 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. In addition, WestLB made available to CPS $60
million in cash pursuant to an escrow arrangement for use on the day of the
Merger. On the closing date and upon the filing of the merger certificate and
satisfaction of certain other conditions specified in the escrow arrangement,
West LB was repaid with the existing cash from the combined company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The audited consolidated balance sheets of MFN Financial Corporation and its
subsidiaries ("MFN") as of December 31, 2001 and 2000, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the years ended December 31, 2001 and 2000 (Reorganized Company) and
the nine-month period from April 1, 1999 through December 31, 1999, and of
Mercury Finance Company (Predecessor Company) for the three-month period ended
March 31, 1999, together with notes thereto and the report of Grant Thornton
LLP, independent auditors, attached hereto as Exhibit 99.4, are incorporated
herein by reference.
(b) Pro Forma Financial Information.
The pro forma combined financial data attached hereto as Exhibit 99.5 are
incorporated herein by reference.
(c) Exhibits.
The following are filed as exhibits to this current report:
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.
(previously filed as an exhibit to this current report on
Form 8-K.)
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NO. DESCRIPTION
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Exhibit 4.2 Secured Senior Note due February 28, 2003 issued by the
Registrant to Levine Leichtman Capital Partners II, L.P.
(previously filed as an exhibit to this current report on
Form 8-K.)
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. (previously filed as an
exhibit to this current report on Form 8-K.)
Exhibit 4.4 12.00% Secured Senior Note due 2008 issued by the
Registrant to Levine Leichtman Capital Partners II, L.P.
(previously filed as an exhibit to this current report on
Form 8-K.)
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. (previously filed as an exhibit
to this current report on Form 8-K.)
Exhibit 4.6 Indenture, dated as of March 1, 2002, between CPS Auto
Receivables Trust 2002-A and Bank One Trust Company, N.A.
(previously filed as an exhibit to this current report on
Form 8-K.)
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.
Exhibit 23.1 Consent of Grant Thornton LLP
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. (previously filed as an
exhibit to this current report on Form 8-K.)
Exhibit 99.4 Financial statements of MFN Financial Corporation and its
subsidiaries
Exhibit 99.5 Pro forma combined financial data of Consumer Portfolio
Services, Inc. and its subsidiaries
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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/ DAVID N. KENNEALLY
David N. Kenneally
Sr. Vice President & Chief Financial Officer
Dated: May 22, 2002
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