-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FqxNQ/1b43ESYL7QnpY3Y9aJfPX5DTDUaLlhdoStr7NRMMmmB1U4QMMTifzgF1ud fQqzZlbdSUN92L2rd1jhsA== 0001025953-07-000038.txt : 20070228 0001025953-07-000038.hdr.sgml : 20070228 20070228142504 ACCESSION NUMBER: 0001025953-07-000038 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070228 ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070228 DATE AS OF CHANGE: 20070228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVASTAR FINANCIAL INC CENTRAL INDEX KEY: 0001025953 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 742830661 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13533 FILM NUMBER: 07656936 BUSINESS ADDRESS: STREET 1: 8140 WARD PARKWAY STREET 2: STE 300 CITY: KANSAS CITY STATE: MO ZIP: 64114 BUSINESS PHONE: 8162377000 MAIL ADDRESS: STREET 1: 8140 WARD PARKWAY STREET 2: STE 300 CITY: KANSAS CITY STATE: MO ZIP: 64114 8-K 1 form8k.htm 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

 

February 28, 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

(State or other jurisdiction of incorporation or organization)

 

(Commission File Number)

 

(I.R.S. Employer Identification No.)

 

8140 Ward Parkway, Suite 300, Kansas City, MO 64114

(Address of principal executive offices)

(Zip Code)

 

(816) 237-7000

(Registrant’s telephone number, including area code)

 

Not Applicable

(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 (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

 

Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

 

On February 28, 2007, NovaStar Financial, Inc. (the “Company”) announced the completion of a $1.9 billion Asset Backed Securitization by its wholly-owned subsidiary, NovaStar Mortgage, Inc (“NMI”). A prospectus supplement was filed, pursuant to Rule 424(b)(5), with the Securities and Exchange Commission on February 28, 2007 by NovaStar Mortgage Funding Trust, Series 2007-1 (the “Trust”).

 

Lead managers Deutsche Bank Securities, RBS Greenwich Capital and Wachovia Securities underwrote NovaStar Mortgage Funding Trust, Series 2007-1, which closed February 28, 2007. The transaction offered 17 rated classes of notes with a face value of $1,845,384,000.

 

NovaStar Certificates Financing LLC, an affiliate of NMI, initially retained the M-6 through M-11 certificates, which collectively represent $106.7 million in principal. Class M-10 and M-11 were not covered by the prospectus supplement. Class M-6 is rated A-/A3 by S&P and Moody’s, respectively. Class M-7 is rated BBB+/Baa1 by S&P and Moody’s, respectively. Class M-8 is rated BBB/Baa2 by S&P and Moody’s, respectively. Class M-9 is rated BBB-/Baa3 by S&P and Moody’s, respectively. Class M-10 is rated BB+/Ba1 by S&P and Moody’s, respectively. Class M-11 is rated BB/Ba2 by S&P and Moody’s, respectively. The Company retained the Class C certificates, which were not covered by the prospectus supplement. Class C has a notional amount of $1,888,775,707, which entitles the Company to excess and prepayment penalty fee cash flow from the underlying loan collateral and serves as overcollateralization. Other than prepayment penalty fee cash flow, Class C is subordinated to the other classes, all of which were offered pursuant to the prospectus supplement. NMI retained the right to service the underlying mortgage loans.

 

The initial level of overcollateralization is approximately $43.4 million. On any distribution date after the closing date, the Trust is required to maintain or restore overcollateralization at the initial level. The overcollateralization is available for the benefit of all classes of the offered and class I certificates.

 

The 2007-1 notes are characterized as a financing for financial reporting purposes and as a sale for tax purposes and represent obligations of the Trust. The 2007-1 notes do not represent a direct financial obligation of the Company, but will be consolidated onto the Company’s consolidated financial statements under generally accepted accounting principles.

 

A copy of the press release announcing this securitization is included as Exhibit 99.1 and is incorporated herein by reference. References to the Company’s website in the press release 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 Statements and Exhibits

 

(d)

Exhibits

 

 

99.1

Press Release dated February 28, 2007, “NovaStar Closes $1.9 Billion Asset Backed Securitization.”

 

 

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 thereunto duly authorized.

 

 

NOVASTAR FINANCIAL, INC.

DATE: February 28, 2007

/s/ Gregory S. Metz

 

Gregory S. Metz

 

Chief Financial Officer

 

 

Exhibit Index

 

Exhibit

Number

 

99.1

Press Release dated February 28, 2007, “NovaStar Closes $1.9 Billion Asset Backed Securitization.”

 

 

 

 

 

 EX-99 2 ex99.htm EXHIBIT 99.1

NovaStar Closes $1.9 billion Asset Backed Securitization

 

KANSAS CITY, MO., February 28, 2007– NovaStar Financial, Inc. (NYSE: NFI), a residential mortgage lender and portfolio investor, announced today that its subsidiary, NovaStar Mortgage, Inc., securitized $1.9 billion of non-conforming mortgage assets. The transaction will be treated as a financing for GAAP reporting purposes and as a sale for tax purposes. The assets and accompanying debt will remain on the balance sheet of NovaStar Financial’s taxable REIT subsidiary.

 

Lead managers Deutsche Bank Securities, RBS Greenwich Capital and Wachovia Securities underwrote NovaStar Mortgage Funding Trust, Series 2007-1, which closed February 28, 2007. The transaction was structured into 17 rated classes of certificates with a face value of $1,845,384,000.

 

NovaStar will initially retain the M-6 through M-11 certificates, which represent $106.7 million in principal. The M-10 and M-11 certificates were not covered by the prospectus. Ratings for the certificates retained by NovaStar are as follows:

 

Class

S&P / Moody’s

M-6

A- / A3

M-7

BBB+ / Baa1

M-8

BBB / Baa2

M-9

BBB- / Baa3

M-10

BB+ / Ba1

M-11

BB / Ba2

 

NovaStar also retained the class C certificates. Class C has a notional amount of $1,888,775,707, entitles NovaStar to excess interest and prepayment penalty fee cash flow from the underlying loan collateral and serves as overcollateralization. Other than prepayment penalty fee cash flow, Class C is subordinated to the other classes.

 

About NovaStar

 

NovaStar Financial, Inc. (NYSE:NFI) is a specialty finance company that originates, purchases, securitizes, sells and invests in nonconforming loans and mortgage-backed securities. The company also services a large portfolio of residential nonconforming loans. NovaStar specializes in single-family mortgages, involving borrowers whose loan size, credit details or other circumstances fall outside conventional mortgage agency guidelines. A Real Estate Investment Trust (REIT) founded in 1996, NovaStar efficiently brings together the capital markets, a nationwide network of mortgage brokers and American families financing their homes. NovaStar is headquartered in Kansas City, Missouri, and has lending operations nationwide.

 

For more information, please reference our website at www.novastarmortgage.com.

 

This Press Release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, and assumptions with respect to, among other things, our future operations, business plans and strategies, as well as industry and market conditions, all of which are subject to change at any time without notice. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Some important factors that could cause actual results to differ materially from those anticipated include: our ability to successfully integrate acquired businesses or assets with our existing business; our ability to generate sufficient liquidity on favorable terms; the size, frequency and structure of our securitizations; impairments on our mortgage assets; interest rate fluctuations on our assets that differ from our liabilities; increases in prepayment or default rates on our mortgage assets; changes in assumptions regarding estimated loan losses and fair value amounts; our continued status as a REIT; changes in origination and resale pricing of mortgage loans; our compliance with applicable local, state and federal laws and regulations or opinions of counsel relating thereto and the impact of new local, state or federal legislation or regulations or opinions of counsel relating thereto or court decisions on our operations; the initiation of margin calls under our credit facilities; the ability of our servicing operations to maintain high performance standards and maintain appropriate ratings from rating agencies; our ability to expand origination volume while maintaining an acceptable level of overhead; our ability to adapt to and implement technological changes; the stability of residential property values; the outcome of litigation or regulatory actions pending against us or other legal contingencies; compliance with new accounting pronouncements; the impact of general economic conditions; and the risks that are from time to time included in our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2005 and our quarterly report on form 10-Q for the period ending September 30, 2006. Other factors not presently identified may also cause actual results to differ. Words such as “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. This document speaks only as of its date and we expressly disclaim any duty to update the information herein.

 

Investor Relations Contact

Jeffrey A. Gentle

816.237.7424

 

 

 

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