US HOME SYSTEMS INC 8-K 2007
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2007
U.S. HOME SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code: (214) 488-6300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
On October 2, 2007, U.S. Home Systems, Inc. (the Company) and First Consumer Credit, Inc. (FCC), the consumer finance subsidiary of the Company, entered into an Asset Purchase Agreement with FCC Finance, LLC (FCC-Finance) whereby FCC sold substantially all of its assets to FCC-Finance for approximately $2.6 million in a buyout led by management of the consumer finance unit. The sold assets included FCCs portfolio of retail installment contracts (RIOs), furniture, fixtures, equipment, and certain intellectual property.
The purchaser, FCC-Finance, is a limited liability company controlled by James D. Borschow, who prior to the sale served as an officer and director of FCC. As a result of this transaction, Mr. Borschows employment agreement with FCC was terminated.
The Company also entered into a Transition Services Agreement with FCC-Finance to provide certain services to assist the purchaser with the transition of the business operations. These services primarily include administrative and information systems support, and sourcing RIOs for the benefit of the purchaser. The Company will employ such personnel as necessary to complete the transition. The Companys costs to provide these services are reimbursable by the purchaser at the Companys cost. The transition is expected to be completed within 90 days.
The Asset Purchase Agreement and Transition Services Agreement contain various representations, warranties, covenants and indemnification provisions as is customary in a commercial transaction of this nature.
Concurrent with the transaction, FCC terminated its rights under the master participation agreement, dated as of November 2, 2006 (the Participation Agreement) between FCC and FCC Investment Trust I (the Trust), an unaffiliated financial institution. The Participation Agreement provided FCC with a preferred rate of return on its non-owner participation interest investment in a RIO portfolio owned by the Trust. Upon termination of the Participation Agreement, FCC received a return of its remaining investment principal balance of approximately $1.6 million. The participation investment asset was not sold to FCC-Finance in the transaction.
As a result of the Asset Purchase Agreement, FCC-Finance entered into a Sourcing and Servicing Agreement with the Trust which replaced the Amended and Restated Sourcing and Servicing Agreement dated as of April 19, 2007 between FCC and the Trust (Original Sourcing Agreement) except for certain provisions which will remain effective during the transition period. Upon completion of the transition, the Original Sourcing Agreement will be terminated in its entirety.
On October 2, 2007, the Company completed the sale of substantially all of the assets of its consumer finance subsidiary, FCC, to FCC-Finance for approximately $2.6 million as reported in Item 1.01 herein. As additional consideration, the Asset Purchase Agreement provided that the purchaser will reimburse FCC for a certain amount for its pre-tax operating loss incurred from July 1, 2007 through September 30, 2007.
In connection with the sale of assets of its consumer finance subsidiary, the Company will recognize a one time pre-tax loss of approximately $1.5 million which includes the write down of goodwill associated with the finance business unit.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on the 9th day of October, 2007 on its behalf by the undersigned hereunto duly authorized.
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