Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 29, 2007
Date of Report (Date of earliest event reported)
NOVASTAR FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Maryland 001-13533 74-2830661
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
8140 Ward Parkway, Suite 300, Kansas City, MO 64114
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(Address of principal executive offices)
(Zip Code)
(816) 237-7000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)
Item 2.05 Costs Associated with Exit or Disposal Activities
On August 29, 2007, the Audit Committee of the Board of Directors of NovaStar
Financial, Inc. (the "Company") committed the Company to a workforce reduction
pursuant to a plan of termination (the "Plan") as described in paragraph 8 of
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 146 Accounting for Costs Associated with Exit or Disposal Activities (SFAS
No. 146), under which material charges will be incurred under generally accepted
accounting principles applicable to the Company.
The Company is undertaking the Plan in connection with its decision to sharply
reduce its retail mortgage activity. The Plan will result in the elimination of
approximately 275 positions. The Company expects to have approximately 600
employees, overall, after this reduction in workforce. Subject to completion of
the necessary legal notices and requirements, implementation of the Plan will
begin immediately and is expected to conclude during the fourth quarter of 2007.
The actions focus on the Company's retail loan origination group and related
functions. The Company's servicing organization was not affected by the
reduction.
The Company estimates that the total pre-tax charge to earnings associated with
the Plan will range between $5 million and $7 million, consisting of $2 million
to $2.5 million in cash expenditures relating to severance costs, $2 million to
$3 million in cash expenditures relating to contract termination costs, and $1
million to $1.5 million in one-time non-cash charges primarily related to
property, plant and equipment. The Company anticipates that substantially all of
the pre-tax charges to earnings and cash expenditures will be incurred in the
third quarter of 2007; however, some may be incurred in the fourth quarter of
2007.
A copy of the Company's press release announcing the Plan is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
Item 3.03 Material Modification to Rights of Security Holders
The Company announced that it was canceling its previously announced rights
offering that would have allowed holders of its common stock and 9.00% Series
D-1 Mandatory Convertible Preferred Stock to purchase $101,175,000 in shares of
its 9.00% Series D-2 Mandatory Convertible Preferred Stock. Accordingly, the
previously announced September 7, 2007 record date for distribution of the
rights is cancelled. A copy of the press release announcing this cancellation is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 8.01 Other Events
The Company announced that it was canceling its previously announced rights
offering that would have allowed holders of its common stock and 9.00% Series
D-1 Mandatory Convertible Preferred Stock to purchase $101,175,000 in shares of
its 9.00% Series D-2 Mandatory Convertible Preferred Stock and announced steps
the Company is taking to
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restructure its overall operations. A copy of the press release announcing these
matters is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
References to the Company's website do not incorporate by reference the
information on the Company's website into this Current Report, and the Company
disclaims any such incorporation by reference.
Item 9.01 Financial Statement and Exhibits
(d) Exhibits.
Exhibit No. Document
99.1 Press Release dated September 4, 2007 "NovaStar Financial,
Inc. Cancels Shareholder Rights Offering."
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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.
NOVASTAR FINANCIAL, INC.
DATE: September 5, 2007 /s/ GREGORY S. METZ
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Gregory S. Metz
Chief Financial Officer
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Index to Exhibits
Exhibit No. Document
99.1 Press Release dated September 4, 2007 "NovaStar Financial,
Inc. Cancels Shareholder Rights Offering."
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