UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
[_] Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED
[_] Definitive Additional Materials BY RULE 14a-6(e)(2))
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MFN FINANCIAL CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________________
(2) Form, Schedule or Registration Statement no.:
________________________________________________________________________________
(3) Filing Party:
________________________________________________________________________________
(4) Date Filed:
________________________________________________________________________________
The following presentation materials may be used by MFN Financial
Corporation from time to time in meetings with stockholders, analysts and
others:
NOVEMBER 28, 2001
--------------------------------------------------------------------------------
CONSUMER PORTFOLIO SERVICES, INC.
- ACQUISITION OF -
MFN FINANCIAL CORPORATION
FORWARD-LOOKING STATEMENTS
--------------------------------------------------------------------------------
This document contains forward-looking statements that involve risks,
uncertainties and assumptions. In particular, the statement that the acquisition
is expected to close in the first quarter of 2002 is a forward-looking
statement. Factors that could cause the transaction not to close at that time,
or at all, would include the possibility that CPS might not obtain necessary
external financing (although it has received commitments for such financing),
that CPS might not have sufficient internally generated cash, that MFN might not
have the requisite level of available cash, that the required consents of state
consumer finance regulators might not be obtained, and that MFN stockholders may
not approve the transaction. More generally, all statements herein other than
statements of historical fact are statements that could be deemed
forward-looking statements. For example, statements of the expected benefits of
combining CPS with MFN are all forward-looking statements. Risks, uncertainties
and assumptions include the possibility that the market for the services offered
by CPS and MFN may not develop as expected; that the merger transaction does not
close or that the companies may be required to modify aspects of the transaction
to achieve regulatory approval; or that prior to the closing of the proposed
merger, the businesses of the companies suffer due to uncertainty; that the
parties may be unable to successfully execute their integration strategies or to
achieve planned synergies; and other risks that may be described from time to
time in CPS's and MFN's Securities and Exchange Commission reports. If any of
these risks or uncertainties materializes or any of these assumptions proves
incorrect, CPS's or MFN's results could differ materially from their
expectations in these statements. CPS and MFN assume no obligation to update and
do not intend to update these forward-looking statements.
COMPANY PROFILES
--------------------------------------------------------------------------------
CONSUMER PORTFOLIO MFN FINANCIAL
(in '000s) SERVICES, INC. CORPORATION
--------------------------------------------------------------------------------
o HEADQUARTERS IRVINE, CA LAKE FOREST, IL
o STOCK SYMBOL CPSS MFNF
o MANAGED RECEIVABLES $318,127 $468,321
o LOAN ORIGINATIONS $545,048 $236,847
o DEALER MIX (FRANCHISED/INDEPENDENT) 90%/10% 35%/65%
o EMPLOYEES 488 652
All data is either at September 30, 2001, or for the nine months ended September
30, 2001
TRANSACTION SUMMARY
--------------------------------------------------------------------------------
o PRICE PER MFN SHARE $10.00
o CONSIDERATION CASH
o TRANSACTION VALUE $104 MILLION
o EXPECTED CLOSE Q102
o REGULATORY APPROVALS HART-SCOTT-RODINO
o SHAREHOLDER APPROVALS MFN SHAREHOLDERS
TRANSACTION SUMMARY
--------------------------------------------------------------------------------
o ACQUISITION FINANCING:
Levine Leichtman Capital Partners $35 million
o BRIDGE FINANCING:
Westdeutsche Landesbank Girozentrale $60 million
o OTHER
MFN Required Unrestricted Cash at Closing $74 million
TRANSACTION SUMMARY
--------------------------------------------------------------------------------
o BREAK-UP/TERMINATION:
Payer Fee Expenses
----- ----- --------
CPS Financing Fails CPS $750k + $1 mm
MFN Shareholder Approval Fails MFN $750k + $1 mm
MFN Superior Offer MFN $3 mm - $1 mm
TRANSACTION RATIONALE
--------------------------------------------------------------------------------
o Creates larger competitor
o Expands product offerings
o Doubles servicing capacity
o Unlocks value for MFN shareholders
o Provides portfolio income stream for CPS
TRANSACTION PRICING
--------------------------------------------------------------------------------
o PRICE-TO-TRAILING CORE EARNINGS PER SHARE 20.5x
o PRICE-TO-ANNUAL LOAN ORIGINATIONS 37%
o PRICE-TO-MANAGED RECEIVABLES 25%
o PRICE-TO-BOOK VALUE 75%
o PREMIUM-TO-MARKET 89%
Core Earnings: Fully-taxed net income excluding negative
goodwill amortization and non-recurring items
Source: Keefe, Bruyette & Woods, Inc.
PREVIOUS AUTO FINANCE DEALS
--------------------------------------------------------------------------------
Selected transactions, 1996 to present
o PRICE-TO TRAILING CORE EARNINGS PER SHARE 13.3x
o PRICE-TO-ANNUAL LOAN ORIGINATIONS 34%
o PRICE-TO-MANAGED RECEIVABLES 22%
o PRICE-TO-BOOK VALUE 158%
o PREMIUM-TO-MARKET 30%
Core Earnings: Fully-taxed net income excluding negative
goodwill amortization and non-recurring items
Source: Keefe, Bruyette & Woods, Inc.
AUTO FINANCE TRAILING P/E RATIO
--------------------------------------------------------------------------------
[GRAPH OMITTED]
AUTO FINANCE TRADING MULTIPLES
--------------------------------------------------------------------------------
COMPANY SYMBOL MKT. VAL. P/01E P/02E P/BOOK
------- ------ --------- ----- ----- ------
Consumer Portfolio Services CPSS 33 nm nm 47%
Union Acceptance UACA 161 5.1 7.5 91%
Onyx Acceptance ONYX 26 5.3 5.2 43%
First Investors FIFS 18 nm 10.0 57%
--------------------------------------------------------------------------------
MEDIAN OF SMALLER MARKET CAPITALIZATION 5.2 7.5 52%
AmeriCredit ACF 2,045 6.4 5.4 191%
WFS Financial WFSI 869 10.8 9.4 188%
Credit Acceptance CACC 358 12.5 10.9 127%
--------------------------------------------------------------------------------
MEDIAN OF LARGER MARKET CAPITALIZATION 10.8 9.4 188%
MEDIAN OF ALL 6.4 8.4 81%
Source: Keefe, Bruyette & Woods, Inc., I/B/E/S Estimates, Individual company
reports, closing prices as of November 12, 2001
STOCK PRICE HISTORY - MFNF
--------------------------------------------------------------------------------
[GRAPH OMITTED]
NOTE: THE FOLLOWING NOTICE IS INCLUDED TO MEET CERTAIN LEGAL REQUIREMENTS
MFN Financial Corporation will be sending a proxy statement to its
stockholders seeking their approval of the proposed transaction. Investors and
security holders are advised to read the proxy statement for further
information. When filed, the proxy statement, as well as other SEC filings, can
be obtained free of charge from the web site maintained by the SEC at
http://www.sec.gov.
MFN Financial Corporation and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from MFN Financial
Corporation stockholders to approve the merger. Information about these
participants is set forth in the Form 10-K filed with the SEC by MFN Financial
Corporation on March 7, 2001. Additional information regarding the interests of
these participants may be obtained by reading the proxy statement regarding the
proposed merger when it becomes available.