| Novastar Financial, Inc. | |||
| Ticker: | NFI | 1900 West 47th Place, Suite 205 | |
| Exchange: | American Stock Exchange | Westwood, KS 66205 | |
| Industry: | Financial (SIC Code 6798) | (913) 362-1090 | |
| # of Employees: | 11 | ||
| Type of Shares: | Common Shares | Filing Date: | 7/29/97 | |
| U.S. Shares: | 3,750,000 | Offer Date: | 10/30/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $16.00 - $18.00 | |
| Primary Shares: | 3,750,000 | Offer Price: | $18.00 | |
| Secondary Shares: | 0 | Gross Spread: | $1.26 | |
| Offering Amount: | $63,750,000 | Selling: | $0.63 | |
| Expenses: | $500,000 | Reallowance: | $0.10 | |
| Shares Out After: | 6,766,665 |
| Manager | Tier | Phone |
| Stifel, Nicolaus & Company, Incorporated | Lead Manager | (314) 342-2130 |
| Montgomery Securities | Co-manager | (415) 627-2100 |
| Issuer's Law Firm: | Tobin & Tobin |
| Bank's Law Firm: | O'Melveny & Meyers |
| Auditor: | KPMG Peat Marwick |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 6/30/97 | 6/30/97 | |||
| Revenue: | $0.16 | $9.53 | Assets: | $601.74 | |
| Net Income: | -$0.30 | -$0.88 | Curr Assets: | $285.22 | |
| EPS: | -$0.07 | -$0.21 | Liabilities: | $555.40 | |
| Prior EPS: | -$5.86 | Curr Liabilities: | |||
| Cash Flow/Oper: | -$0.26 | $553.41 | Equity: | $46.34 | |
| Cash Flow/Fin: | $0.05 | -$593.12 | Cash: | $0.87 | |
| Cash Flow/Inv: | $0.00 | -$593.12 | |||
| Business Description |
| The company is a specialty finance company which originates, acquires and services family residential subprime mortgage loans. The company also: (I) leverages its assets using bank warehouse lines and repurchase agreements; (ii) will issue collateralized debt obligations to finance its subprime mortgage loans in the long-term; (iii) purchases high quality mortgage securities in the secondary mortgage market; and (iv) manages the resulting combined portfolio of Mortgage Assets in a tax-advantaged REIT structure. The company was incoroporated and initially capitalized on September 13, 1996. As a result of a private placement offering on December 9, 1996, the company received net proceeds of $47 million. |
| Competition |
| As an originator and purchaser of subprime mortgage loans, the company will face intense competition, primarily from commercial banks, savings and loans, other independent mortgage lenders, and certain other mortgage REITs. As the company expands into the national market and particular geographic markets, it will face competition from lenders with established positions in these locations. Competition can take place on various levels, including convenience in obtaining a loan, service marketing, origination channels and pricing. The subprime market is currently undergoing substantial changes. There are new entrants into the market creating a changing competitive environment. Furthermore, certain large national finance companies and prime mortgage originators have begun to implement plans to adapt their prime mortgage origination programs and locate resources to the origination of subprime mortgage loans. Certain of these larger mortgage companies and commercial banks have begun to offer products similar to those which are offered by the company and to target customers similar to those targeted by the company. The entrance of these competitors into the company's market could have a material adverse effect upon the company's results of operations and financial condition. In particular, the increasing level of capital resources being devoted to subprime mortgage lending may increase the competition among lenders to originate or purchase subprime loans and result in either reduced interest margin on such mortgage loans compared to present levels or revised underwriting standards permitting higher loan-to-value ratios on properties securing subprime mortgage loans. There can be no assurance that the company will be able to compete successfully in this market environment and any failure in this regard could have a material adverse effect on the company's results of operations and financial condition. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to repay certain short term borrowings, to fund the company's origination of and investment in mortgage assets and for working capital. |
| Name of Shareholder | % Owned Before | % Owned After |
| Wellington Management Company | 31.62% | 18.48% |
| Lindner Dividend Fund | 31.62% | 18.48% |
| General Electric Capital Corporation | 31.62% | 18.48% |
| First Financial Fund, Inc. | 23.24% | 13.30% |
| Wallace R. Weitz & Company | 17.17% | 9.69% |
| Weitz Series Fund, Inc. | 10.92% | 6.07% |
| Bay Pond Partners, L.P. | 10.67% | 5.93% |
| First Fidelity, Inc. | 9.99% | 5.54% |
| Officer Name | Title | Age |
| Scott F. Hartman | Chairman of the Board, Secretary and Chief Executive Officer | |
| W. Lane Anderson | Director, President and Chief Operating Officer | |
| Mark J. Kohlrus | Senior Vice President, Treasurer and Chief Financial Officer and Director |