-----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, LKbZUwiyrs3bTfwoETqUbiSuENYh/okqIZHyscP1mTN0tc6LlH9H9j7Pmy43X3ut wua95Bh9TacFYhTBE9Wz6Q== 0001021408-99-001106.txt : 19990618 0001021408-99-001106.hdr.sgml : 19990618 ACCESSION NUMBER: 0001021408-99-001106 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990601 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990617 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCLEODUSA INC CENTRAL INDEX KEY: 0000919943 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 421407240 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20763 FILM NUMBER: 99648168 BUSINESS ADDRESS: STREET 1: 6400 C ST SW STREET 2: PO BOX 3177 CITY: CEDAR RAPIDS STATE: IA ZIP: 52406-3177 BUSINESS PHONE: 3193640000 MAIL ADDRESS: STREET 1: 6400 C ST SW STREET 2: PO BOX 3177 CITY: CEDAR RAPIDS STATE: IA ZIP: 52406-3177 FORMER COMPANY: FORMER CONFORMED NAME: MCLEOD INC DATE OF NAME CHANGE: 19960403 8-K 1 FORM 8-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 1, 1999 McLEODUSA INCORPORATED (Exact name of registrant as specified in its charter) Delaware 0-20763 42-1407240 (State or Other (Commission (IRS Employer Jurisdiction of Incorporation) File Number) Identification Number)
McLeodUSA Technology Park 6400 C Street S.W., P.O. Box 3177 Cedar Rapids, IA 52406-3177 (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (319) 364-0000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION TO BE INCLUDED IN THE REPORT Item 5. Other Events. Agreements to Acquire Access Communications Holdings, Inc. and S.J. Investments - ------------------------------------------------------------------------------- Holdings, Inc. - ---------------- On June 1, 1999, McLeodUSA Incorporated (the "Company") entered into an Agreement and Plan of Merger (the "ACHI Merger Agreement") with Access Communications Holdings, Inc., a Utah corporation ("ACHI") and certain of the stockholders of ACHI, pursuant to which ACHI will be merged with and into a newly-formed wholly owned subsidiary ("Mergeco") of the Company (the "ACHI Merger"). As a result of the ACHI Merger, the outstanding shares of common stock of ACHI will be converted in the aggregate into the right to receive approximately $23.3 million and 969,932 shares of the Company's Class A common stock, par value $.01 per share (the "Class A Common Stock"). The Company also will assume approximately $48.3 million in ACHI debt. In addition, under the terms of the ACHI Merger Agreement, the Company will grant to certain employees of ACHI who agree to become employees of the Company after the ACHI Merger options to purchase shares of Class A Common Stock with a value under the Black Scholes method of up to $50 million. Consummation of the ACHI Merger is subject to the satisfaction of certain conditions, including (i) approval of the ACHI Merger Agreement by the stockholders of ACHI, (ii) compliance with all applicable provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the expiration of all applicable waiting periods thereunder, (iii) receipt of regulatory approvals, (iv) consummation of the SJIH Merger (as defined below), and (v) certain other customary conditions. Certain stockholders of ACHI have entered into voting agreements with the Company pursuant to which, among other things, they have agreed to vote their shares of ACHI common stock in favor of the ACHI Merger. Both the Company and ACHI may terminate the ACHI Merger Agreement if the ACHI Merger has not been consummated by August 1, 1999. In a related transaction, on June 1, 1999, the Company entered into an Agreement and Plan of Merger (the "SJIH Merger Agreement") with an affiliated company of ACHI, S.J. Investments Holdings, Inc. ("SJIH"), a Utah corporation, and the stockholders of SJIH, pursuant to which SJIH will be merged with and into Mergeco (the "SJIH Merger"). As a result of the SJIH Merger, the outstanding shares of common stock of SJIH will be converted in the aggregate into the right to receive $25 million and 969,932 shares of the Class A Common Stock. The Company also will assume approximately $48.3 in SJIH debt. Consummation of the SJIH Merger is subject to the satisfaction of conditions similar to those of the ACHI Merger. Although two legally separate S-Corporations, ACHI and SJIH conduct business as Access Long Distance. Access Long Distance serves business and residential customers in the states of Arizona, California, Colorado, Florida, Idaho, Nevada, New Mexico, Oregon, Utah and Washington. As of March 31, 1999, Access Long Distance served approximately 17,500 commercial customers and approximately 11,600 residential customers, generating 1998 revenues of $87 million. As of March 31, 1999, Access Long Distance had approximately 320 employees. Access Long Distance is a switch-based provider of commercial and residential telecommunications services, including long distance, toll-free and prepaid calling cards. In addition, Access Long Distance also sells enhanced toll-free services. A copy of the press release, dated June 1, 1999, issued by the Company regarding the above-described transactions, is attached as Exhibit 99.1 hereto and incorporated herein by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits. 99.1 Press Release, dated June 1, 1999, announcing the Company's execution of definitive agreements to acquire ACHI and SJIH. 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. Date: June 15, 1999 McLeodUSA Incorporated By: /s/ Randall Rings ------------------- Randall Rings Vice President, Secretary and General Counsel EXHIBIT INDEX 99.1 Press Release, dated June 1, 1999, announcing the Company's execution of definitive agreements to acquire ACHI and SJIH. EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 Press Release McLeodUSA Incorporated Access Communications, Inc. McLeodUSA Technology Park 215 South State Street 6400 C Street SW PO Box 3177 PO Box 510830 Cedar Rapids, IA 52406-3177 Salt Lake City, UT 84151-0830 Press and Investor Contact: Bryce E. Nemitz Press Contact: Robert Hatch Phone: 319-790-7800 Phone: 801-363-9600 Fax: 319-298-7767 Fax: 801-333-3606 bnemitz@mcleodusa.com roberth@accessld.com Web Site: www.mcleodusa.com Web Site: www.accessld.com McLeodUSA to Expand West Addressable Market to Increase by 23 Percent Planned acquisition of Access Long Distance seeds westward expansion; McLeodUSA to receive proprietary routing technology Cedar Rapids, Iowa and Salt Lake City, Utah June 1, 1999 Rapidly growing Integrated Communications Provider (ICP) McLeodUSA Incorporated (Nasdaq NMS:MCLD) announced today that it agreed to acquire Access Communications, Inc. and SJ Investments, Inc. of Salt Lake City, Utah, which operate as Access Long Distance. The combined company will be known as McLeodUSA Incorporated. The owners of Access will receive approximately 1.9 million shares of 144(a) unregistered McLeodUSA stock and about $50 million in cash. McLeodUSA will also assume roughly $97 million in Access debt. Access has 323 employees and operates in nine western states serving approximately 30,000 customers. Market Area Expansion - ---------------------- As a result of this agreement, McLeodUSA will add four new states to its current 16-state Midwest and Rocky Mountain ICP market area: Arizona, New Mexico, Oregon and Washington, and provide total coverage of the US West geography. It will increase the McLeodUSA addressable voice and data market by 23% and raise the ten-year estimated market potential from $65 billion to over $80 billion. The expansion accelerates the Company's total collocation plan to nearly 500 by year-end 2000. A Great Fit - ------------ "Access is a perfect fit with the McLeodUSA acquisition strategy," said Steve Gray, McLeodUSA President and COO. "First, the company aligns strategically and operationally with McLeodUSA. The contiguous geography of Access and their high penetration approach is aligned with ours. Second, team fit. Access will bring to McLeodUSA over 300 people, highly competitive and well managed. And third, a going, growing concern. Access will act as a seed for our western expansion and provides leverage in two ways: leveraging the current customer base as we add local and data products, and leveraging the current Access team to continue to grow the entire operation." Proprietary Routing Technology - ------------------------------- In addition to providing traditional long distance service, Access developed and markets a proprietary Enhanced 800 Service to local and national accounts. Simply stated, this technology allows the programming of incoming toll free numbers to "behave" differently depending on where the call originates, the time of day, caller entered digits, and other variables. Call routing also incorporates voice messaging and database look-ups to allow the caller's interaction to influence the specific routing outcome. The capabilities of the software are unique and have already attracted a number of nationally recognized companies to choose Access as their provider. Gray: "We believe this is just the beginning for this exciting technology. Under the McLeodUSA brand, we plan to continue pursuing this aspect of the national business market. Within our market area, we will enhance our current product capabilities allowing us to deepen the penetration in our markets. From a futuristic perspective, the same logic built into the enhanced 800 routing platform can be adapted to direct e-commerce applications. We believe this will become essential as voice and data traffic converge." Sales Strength - --------------- Prior to this announcement, McLeodUSA projected doubling its sales force in 1999 from approximately 350 to 700. Access adds an additional 110 customer-focused sales people to that total. Access President Scott Cate stated, "Our long-term strategy has been to add local service and a more diverse product line to our portfolio. This transaction allows us to carry out that strategy. Our sales people will learn the McLeodUSA local service business yet this year, and be ready to sell and support a full array of integrated products in 2000." Cate added: "The entrepreneurial spirit that has guided Access since its founding in 1985 parallels the spirit we see at McLeodUSA. The opportunity to be the cornerstone for the westward expansion of McLeodUSA will create dramatic opportunities for our employees, and our customers will benefit from an expanded product offering." "McLeodUSA management is recognized by telecom experts as one of the strongest forces in our industry," added Clark McLeod, Chairman and CEO of McLeodUSA. "Today, with the addition of Scott and his team, we will become even stronger. The Access team is native to its market areas in western states and has built enduring customer relationships in their communities. The combined team will focus on providing superior service to maintain low attrition, offering an integrated product for the best value proposition, and serving as a single source providing simple, complete solutions for our customers." Anticipated Closing Date - ------------------------- The parties expect to complete the transaction within 90 days, subject to Hart- Scott-Rodino clearance and approval of regulatory authorities. The deal does not require approval by McLeodUSA stockholders. Company Descriptions - --------------------- A publicly traded firm headquartered in Cedar Rapids, Iowa, McLeodUSA is a provider of integrated telecommunications services to business and residential customers. Current customers are located in an eleven-state area that includes Colorado, Iowa, Illinois, Indiana, Michigan, Minnesota, Missouri, North Dakota, South Dakota, Wisconsin and Wyoming. Telecommunications products include local and long distance service, Internet access, voice mail, paging, teleconferencing and calling card services. McLeodUSA is a facilities-oriented communications provider with 15 switches, 7,650 route miles of fiber optics network, 495,000 local lines, and 6,100 employees. McLeodUSA Publishing Company is one of the largest independent publishers of yellow and white page telephone directories in the country. In the next 12 months, McLeodUSA Publishing will distribute nearly 21 million copies of competitive directories in 22 states expected to reach 36 million people. Access is a privately owned, facilities-based nationwide carrier headquartered in Salt Lake City. Access was founded in 1985 by James R. Greenbaum, Jr., the Company's chairman and CEO. Access provides voice and data long distance services to 30,000 customers in 9 states. The statements contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to revision of expansion plans, availability of financing and regulatory approvals, the number of potential customers in a target market, the existence of strategic alliances or relationships, technological, regulatory or other developments in the Company's business, changes in the competitive climate in which the Company operates and the emergence of future opportunities, all of which could cause actual results and experiences of McLeodUSA Incorporated to differ materially from anticipated results and expectations expressed in the forward-looking statements contained herein. These and other applicable risks are summarized under the caption "Business-Risk Factors" and elsewhere in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1998, which is filed with the Securities and Exchange Commission. # # # -----END PRIVACY-ENHANCED MESSAGE-----