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
Date of Report (Date of earliest event reported) June 30, 2005
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CROWN NORTHCORP, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-22936 22-3172740
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
P.O. Box 613, Cheyenne, Wyoming 82001
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 614/488-1169
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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 (see General Instruction A.2. below):
[ ] 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 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 2005, Crown European Holding Limited ("CEH"), a subsidiary of Crown,
sold all of the stock of Crown Fastigheter AB (formerly Crown Properties Holding
AB)("CFAB"). At the time of the sale, CFAB held a portfolio of 59 real estate
assets in Sweden. Crown managed the assets in the portfolio. Pursuant to the
terms of agreements governing this management relationship, Crown received
incentive compensation of $3,439,389 net of payment of expenses.
While Crown nominally held the equity of CEH, financing arrangements entered
into in 2003 placed 73.13% of the beneficial ownership of CEH in the hands of
Kenmore Scandinavian Limited ("Kenmore") and 26.87% of the beneficial ownership
with Royal Investments, L.L.C. ("Royal LLC"). Ronald E. Roark, Crown's vice
chairman and chief executive officer, is the managing member of Royal LLC.
In conjunction with the sale of CFAB, Crown has entered into a new asset
management agreement with the buyer to continue managing the acquired portfolio.
Also in conjunction with the sale of CFAB and its receipt of the incentive
compensation noted above, Crown purchased from two holders promissory notes
payable by Royal LLC for an aggregate purchase price of approximately $3.5
million. Royal LLC then repaid the promissory notes in full from its proceeds of
sale.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
Pursuant to the terms of the share transfer agreement governing the sale of
CFAB, the buyer, until June 30, 2006, may make claims against CEH for breaches
of the representations and warranties CEH has made in the agreement. CEH's
aggregate liability for claims shall not exceed 72,500,000 Swedish Krona, or
approximately $10 million. Crown has guaranteed CEH's liability to pay claims.
The representations and warranties CEH has made in the share transfer agreement
with respect to CFAB are usual and customary for a stock sale transaction and
encompass matters relating to: corporate existence, power, authority,
capitalization and title; the preparation of financial statements in accordance
with governing standards; the accuracy and completeness of corporate records;
and the operation of properties in the real estate portfolio. Crown has been
involved in the governance and administration of CFAB and the management of its
real estate assets and is on the opinion that there is minimal likelihood of
successful claims for breaches of representations and warranties.
In conjunction with guaranteeing CEH's liability for claims under the share
transfer agreement, Crown has obtained agreements from Kenmore and Royal LLC to
timely fund any liability Crown may have for a breach of a representation or
warranty made by CEH. Additionally, Crown has received a fee of approximately
$92,011 from CEH for making the guarantee.
SIGNATURES
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.
CROWN NORTHCORP, INC.
July 7, 2005 By: /s/Stephen W. Brown
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Stephen W. Brown
Secretary