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HFDC is out of Chapter 11 and back in the game. In 1992, the Company filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. The Company emerged from bankruptcy in 1995 pursuant to a plan of reorganization (the "Plan"). Leucadia Financial Corporation ("LFC"), an indirect wholly-owned subsidiary of Leucadia National Corporation ("Leucadia"), principally funded the Plan by purchasing a $20,000,000 principal amount, 12% secured convertible note due 2003 (the "Convertible Note") and 2,700,000 shares of newly issued common stock, par value $.01 per share ("Common Stock") of the Company. In addition, LFC received 1,417,986 shares of Common Stock of the Company under the Plan. These shares, together with the shares LFC purchased, constituted 41.2% of the issued and outstanding Common Stock of the Company following the bankruptcy. In August 1998, in connection with the stock purchase agreements and development management agreement referred to below, the Company and LFC entered into an Amended and Restated Loan Agreement, pursuant to which the Company and LFC restructured the outstanding Convertible Note held by LFC. The Restructured Note has a principal amount of approximately $26,500,000 (reflecting the original $20,000,000 principal balance of the Convertible Note, together with additions to principal resulting from accrued and unpaid interest thereon to the date of the restructuring, as permitted under the terms of the Convertible Note), extends the maturity date from July 3, 2003 to December 31, 2004, reduces the interest rate from 12% to 6% and eliminates the convertibility feature of the Convertible Note. Interest only on the Restructured Note is paid quarterly and all unpaid principal is due on the maturity date. During the nine-month period ended September 30, 1999, interest of approximately $1,188,000 was paid to LFC. As a result of the restructuring of the Convertible Note, the Restructured Note was recorded at fair value and the approximately $7,015,000 difference between such amount and the carrying value of the Convertible Note was reflected as additional paid-in capital. The $7,015,000 difference between the fair value of the Restructured Note and the carrying value of the Convertible Note will be amortized as interest expense over the term of the Restructured Note using the interest method. Approximately $601,000 was amortized as interest expense during the nine-month period ended September 30, 1999. In August and October 1998, in connection with the execution of the development management agreement for San Elijo Hills (the "Development Agreement") and the restructuring of the Convertible Note, Leucadia entered into two agreements to purchase, on or after July 5, 1999, 46,557,826 shares of Common Stock for aggregate consideration of $8,380,000. In 1998, Leucadia irrevocably transferred all of the Common Stock that is beneficially owned, together with these stock purchase agreements, to a trust (the "Leucadia Trust") formed for the benefit of Leucadia shareholders of record as of August 25, 1998 (the "Trust Beneficiaries"). On July 8, 1999, the Company received approximately $1,670,000 from the Leucadia Trust as final payment of the stock purchase agreements and the Company issued 46,557,826 shares of HomeFed Common Stock to the Leucadia Trust. Upon consummation of the purchases under these stock purchase agreements, the Leucadia Trust beneficially owned 89.6% of all the issued and outstanding Common Stock of the Company. In October 1999, the Leucadia Trust distributed all of the Company's Common Stock that it owned to the Trust Beneficiaries and the Leucadia Trust was subsequently dissolved sanelijohills.com San Elijo Hills (http://www.sanelijohills.com) was acquired in 1994 by a subsidiary of Leucadia National Corporation (NYSE-LUK) and is managed by San Diego-based HomeFed Corporation. Leucadia has developed a number of real estate projects including Renaissance Plaza, a recently completed office tower and hotel in New York, Rosemary Beach, a resort community in Florida and The Harbor Club, 201 luxury condominiums in downtown San Diego as well as 4,800 acres in Otay Ranch. The project development team includes land development and marketing professionals with experience in a number of Southern California real estate projects. | ||||||||||||
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