ROFLMAO. No BK for FP Mr. Pink. So sorry/ SHould have covered at $2
FIRSTPLUS Announces Strategic Alliance With Coast-TO-Coast Financial Corporation
Business Wire - October 15, 1998 10:13
DALLAS--(BUSINESS WIRE)--Oct. 15, 1998--FIRSTPLUS FINANCIAL GROUP, INC. ("FIRSTPLUS" or the "Company", NYSE:FP) today announced that it has executed an agreement to enter into a Strategic Alliance with Coast-To- Coast Financial Corporation and certain of its affiliates, including Superior Bank FSB ("CCFC"), designed to provide FIRSTPLUS with a significant infusion of liquidity resulting in the resumption of loan sales and securitization transactions.
The implementation of this strategic alliance, combined with other significant changes in its operations as described below, including the sale of non-core business units, will enable FIRSTPLUS to accelerate its plan to operate on a positive cash flow basis. The total liquidity produced will be in excess of $130 million at conclusion, excluding the value associated with subordination accounts and cost savings associated with curtailed business operations.
The agreement, which has been executed, is comprised of a number of components, as follows: - Superior Bank FSB, will acquire the entire FIRSTPLUS servicing operation and the majority of its servicing related cash flow for approximately $75 million. In addition to providing a substantial cash infusion, this transaction will enhance investor confidence through the placement of its consumer loan servicing with Superior Bank FSB, a well recognized industry leader and servicer. Servicing of the existing FIRSTPLUS loan portfolio will continue to be conducted at the present FIRSTPLUS location in Dallas, under Superior's management, to ensure no disruption in service. - A joint venture will be formed by CCFC and FIRSTPLUS and used to facilitate securitization of FIRSTPLUS' consumer loan originations, including the establishment of subordination accounts, by CCFC or its affiliates, as may be necessary. The initial term of the joint venture is three years. Loans serviced by the joint venture will be serviced by Superior Bank FSB. - FIRSTPLUS will also enter into an advisory agreement whereby CCFC will advise the Company regarding the evaluation and development of its ongoing business plan and securitization and loan sale activities.
- In consideration of implementing the Strategic Alliance, CCFC will receive warrants to purchase 20,000,000 FIRSTPLUS shares with a strike price of $4 5/8.
Concurrent with its announcement of the Strategic Alliance with CCFC and the sale of its consumer loan servicing operations, FIRSTPLUS announced that it will sell certain non-core business units and expects to achieve positive cash flow from operations without reliance on further residual borrowings or other debt or equity financings.
Specifically, the Company announced today that:
- it has received an offer for the purchase of its conforming loan business; - it has received and accepted an offer for the purchase of its U.K. operations to close during the fourth quarter; and - it has received a letter of interest for the purchase of its consumer finance business and intends to continue to seek additional offers during a 90 day marketing period. Additionally, the Company announced it has:
- Eliminated all HLTV wholesale loan origination activities and their related cash purchase premiums; - consolidated its Laguna Hills direct mail operations with its Dallas retail operations; - consolidated its Texas B/C operations; - eliminated its B/C broker originations and their related cash premiums; and - eliminated a substantial number of corporate overhead positions.
These curtailments and consolidations will result in the elimination of approximately 3,000 jobs within the Company, saving in excess of $85 million in annual employment related costs.
Daniel T. Phillips, Chairman and Chief Executive Officer said, " We are very pleased with the transaction with CFCC, as it enhances our ability to increase market share in this less competitive environment. Our alliance and non-core business unit sales will provide FIRSTPLUS with a significant infusion of liquidity, provide our investors with stability in the loan servicing operations conducted by Superior FSB, and provide a mechanism for FIRSTPLUS to resume loan sale and securitization activities. FIRSTPLUS' focus will be to accelerate high quality, high margin retail HLTV and B/C first lien originations while continuing to build brand value."
Nelson Stephenson, President of Coast-To-Coast Financial Corporation said, "Coast-To-Coast is very pleased with the FIRSTPLUS Strategic Alliance. The new relationship allows us to contribute to the continuing development of FIRSTPLUS' high loan-to-value loan product and its brand name. Working together, CCFC and FIRSTPLUS will accomplish more than each would have accomplished without the Strategic Alliance."
Monty Kars, President of the Consumer Finance Division of Superior FSB, commented that "Superior is excited by the opportunity to expand the consumer loan servicing operations of Superior Bank FSB by purchasing the sophisticated high quality consumer loan servicing operation developed by FIRSTPLUS. This purchase will further our intention of becoming one of the preeminent consumer loan servicing operations in the United States."
The Company plans to release earnings for the September period and more fully discuss this transaction and its business plan in a detailed press release followed by a conference call during the week ending October 30, 1998.
The above statements contained in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements in this press release could differ materially from those stated in such forward- looking statements. Among the factors that could cause actual results to differ materially are: the ultimate outcome of any negotiations and the execution of definitive documentation, short-term interest rate fluctuations, level of defaults and prepayments, general economic conditions, competition, government regulation and possible future litigation, as well as the risks and uncertainties discussed in the Company's Current Report on Form 8-K, dated December 19, 1996, including without limitation, the uncertainties set forth from time to time in the Company's other public reports and filings and public statements.
FIRSTPLUS Financial Group, Inc. is a diversified consumer finance company that, through its subsidiaries, originates, purchases, services, securitizes and sells consumer finance receivables. FIRSTPLUS, headquartered in Dallas, Texas, has regional offices in Mission Viejo and Tustin, California; Denver, Colorado; Holly Springs, Mississippi; Columbus, Ohio, Greenville and Columbia, South Carolina; Salt Lake City, Utah; a network of origination branches domestically; and international operations based in Cardiff, Wales, the United Kingdom.
CONTACT: FIRSTPLUS Financial Group, Inc., Dallas
Daniel T. Phillips, Chairman/CEO
Eric C. Green, President
William P. Benac, CFO
John R. Hauge, Group Executive
(214) 599-6400
or
Morgen-Walke Associates, New York
Michele Katz, Ian Hirsch
Press: Brian Maddox, Estelle Bieber
(212) 850-5600
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