Form8-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
May 9, 2008
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 1.02 Termination of a Material Definitive Agreement.
On May 9, 2007, NovaStar Financial, Inc. and certain of its affiliates (the
"Company") repaid all outstanding amounts owed by the Company to Wachovia Bank
N.A. and its affiliates ("Wachovia") under all master repurchase agreements
between the Company and Wachovia, as listed in items 1-7 below (the "Repurchase
Agreements"). The amount paid consisted of approximately $4.4 million in
short-term borrowings and accrued interest, and approximately $60,000 is
associated expenses.
Simultaneously, NovaStar Mortgage, Inc. ("NMI") paid to Wachovia the amount of
$275,000 in full settlement of certain claims asserted by Wachovia, and disputed
by NMI, relating to certain prior sales of mortgage loans by NMI to Wachovia
under certain master mortgage loan purchase and interim servicing agreements, as
listed in items 8-9 below (the "Loan Purchase Agreements").
In connection with the foregoing, the Company and Wachovia entered into a
Facility Termination, Claim Settlement and Release, dated May 9, 2008 (the
"Termination Agreement"), which terminated the Repurchase Agreements and the
Loan Purchase Agreements (collectively, the "Agreements"), and all rights and
obligations thereunder, except for any obligations that survive termination of
the Agreements pursuant to the terms thereof and the Termination Agreement.
Pursuant to the Termination Agreement and upon payment of the amounts described
above and remittance of certain servicing-related funds due to Wachovia for
loans sold to Wachovia in 2007, Wachovia released its interests in, and agreed
to return to the Company, all assets held under the Repurchase Agreements,
consisting principally of mortgage securities previously financed under the
Repurchase Agreements. As a result of the termination of the Repurchase
Agreements, the Company no longer has any outstanding short-term borrowing
facilities.
The Agreements affected by the Termination Agreement are the following:
1. Master Repurchase Agreement (2007 Whole Loan) dated as of May 9,
2007, among Wachovia Bank, National Association, NFI Repurchase Corporation, NMI
Repurchase Corporation, NMI Property Financing, Inc., HomeView Lending, Inc.,
NovaStar Financial Inc., NFI Holding Corporation and NovaStar Mortgage, Inc.
2. Master Repurchase Agreement (2007 Non-investment Grade) dated as of
May 31, 2007, among Wachovia Investment Holdings, LLC, Wachovia Capital Markets
LLC, NovaStar Mortgage, Inc., NovaStar Certificates Financing LLC, and NovaStar
Certificates Financing Corp.
3. Master Repurchase Agreement (2007 Investment Grade) dated as of May
31, 2007, among Wachovia Bank, National Association, Wachovia Capital Markets
LLC, NovaStar Mortgage, Inc., NovaStar Certificates Financing LLC, and NovaStar
Certificates Financing Corp.
4. Master Repurchase Agreement (New York) dated as of July 6, 2007,
between Wachovia Bank, National Association and NovaStar Mortgage, Inc.
5. Guaranty and Pledge Agreement dated as of April 25, 2007 among
NovaStar Financial, Inc., NovaStar Mortgage, Inc., NFI Holding Corporation,
HomeView Lending Inc. and Wachovia Bank, National Association.
6. Guaranty and Pledge Agreement dated as of May 31, 2007 among
NovaStar Financial, Inc., NFI Holding Corporation, and Wachovia Bank, National
Association.
7. Guaranty and Pledge Agreement dated as of May 31, 2007 among
NovaStar Financial, Inc., NFI Holding Corporation, and Wachovia Investment
Holdings, LLC.
8. Master Mortgage Loan Purchase and Interim Servicing Agreement, as
amended and restated as of June 1, 2005, between NovaStar Mortgage, Inc. and
Wachovia Bank, National Association.
9. Master Mortgage Loan Purchase and Interim Servicing Agreement, as
amended and restated as of December 1, 2005, between NovaStar Mortgage, Inc. and
Wachovia Bank, National Association.
The foregoing is a summary of the terms of the Termination Agreement. This
summary is qualified in its entirety by reference to the full text of the
Termination Agreement, which is attached hereto as Exhibit 10.1 and is
incorporated herein by reference.
In addition to the financing agreements listed above, Wachovia in the past has
routinely engaged in other ordinary course financial transactions with the
Company, including but not limited to financial derivative transactions, and has
acted as an underwriter for certain securitizations sponsored by the Company.
Item 9.01 Financial Statement and Exhibits
(d) Exhibits.
Exhibit No. Document
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10.1 Facility Termination, Claim Settlement and Release, dated May 9,
2008, by and among NovaStar Mortgage, Inc., NovaStar Certificates
Financing LLC, NovaStar Certificates Financing Corporation, NFI
Repurchase Corporation, NMI Repurchase Corporation, NMI Property
Financing, Inc., HomeView Lending, Inc., NovaStar Financial,
Inc., NFI Holding Corporation, Wachovia Bank, N.A., Wachovia
Capital Markets, LLC, and Wachovia Investment Holdings, LLC
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: May 13, 2008 /s/ Rodney Schwatken
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Rodney Schwatken
Chief Financial Officer
Index to Exhibits
Exhibit No. Document
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10.1 Facility Termination, Claim Settlement and Release, dated May 9,
2008, by and among NovaStar Mortgage, Inc., NovaStar Certificates
Financing LLC, NovaStar Certificates Financing Corporation, NFI
Repurchase Corporation, NMI Repurchase Corporation, NMI Property
Financing, Inc., HomeView Lending, Inc., NovaStar Financial,
Inc., NFI Holding Corporation, Wachovia Bank, N.A., Wachovia
Capital Markets, LLC, and Wachovia Investment Holdings, LLC