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
October 9, 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 File (I.R.S. Employer
incorporation or organization) 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 1.01 Entry into a Material Definitive Agreement.
DBSP Receivables Loan and Security Agreement
On October 9, 2007, NovaStar Mortgage, Inc. ("NovaStar Mortgage"), NovaStar
Financial, Inc. ("NFI"), NovaStar Certificates Financing Corporation ("NCFC"),
NFI Holding Corporation ("NFI Holding"), NovaStar CDO Holdings, Inc. ("CDO
Holdings"), and DB Structured Products, Inc. ("DBSP") executed Amendment Number
Seven ("Amendment No. 7") to the Receivables Loan and Security Agreement (the
"Servicing Advance Facility"), and NovaStar Holding, NCFC, CDO Holdings and DBSP
executed Amendment Number One to a related guaranty (the "Guaranty Amendment").
Pursuant to Amendment No.7 and the Guaranty Amendment, NCFC and CDO Holdings
were added as guarantors of the Servicing Advance Facility and pledged certain
mortgage-backed securities to secure such guaranty.
In addition, on October 9, 2007, NovaStar Mortgage, NFI, NCFC, NFI Holding, CDO
Holdings, and DBSP executed a Forebearance Agreement and Amendment Number Eight
to the Receivables Loan and Security Agreement ("Amendment No. 8," and together
with Amendment No. 7, the "Amendments"). Among other things, Amendment No. 8
extended the Servicing Advance Facility the termination date to October 22,
2007, and terminated NovaStar Mortgage's right to borrow any additional amounts
under the Servicing Advance Facility. Amendment No. 8 also requires that all
amounts received as reimbursement of servicer advances funded under the
Servicing Advance Facility be applied to reduce the amount outstanding under the
Servicing Advance Facility. Amendment No. 8 also reduced the amount of
unrestricted cash that NFI was required to maintain from $15,000,000 to
$5,000,000, determined on a consolidated basis.
In connection with Amendment No. 8, NovaStar Mortgage paid DBSP a forbearance
fee and customary costs and expenses incurred by DBSP in connection with the
Amendments.
The Amendments and the Guaranty Amendment will, to the extent required by
federal securities laws and regulations, be filed as exhibits to the next
applicable periodic report of NFI.
In addition to the Servicing Advance Facility, DBSP and its affiliates routinely
engage in other ordinary course financial transactions with NFI and its
affiliates, including but not limited to acting as an underwriter for certain
securitizations sponsored by NFI.
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: October 12, 2007 /s/ Scott F. Hartman
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Scott F. Hartman
Chairman of the Board of Directors and
Chief Executive Officer