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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-14198
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 5, 1999
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DIGITAL TRANSMISSION SYSTEMS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-2037949
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3000 NORTHWOODS PARKWAY, SUITE 330, NORCROSS, GEORGIA 30071
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (770) 798-1300
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NOT APPLICABLE
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(FORMER NAME, FORMER ADDRESS AND FORMAL FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Amended and Restated Stock Purchase Agreement,
effective February 5, 1999, Digital Transmission Systems, Inc. (the "Company")
sold all of the issued and outstanding stock of its wholly-owned subsidiary,
SouthTech, Inc., a Georgia corporation ("SouthTech"), to Chapala
Communications, Inc., a Georgia corporation and an affiliate of Mixbaal, S.A.
de C.V. ("Chapala") in exchange for 1,000,000 shares of Chapala's Series A
Preferred Stock (the "Sale"). The Company's international business was operated
by SouthTech prior to the Sale. As a result of the Sale of SouthTech, the
Company will own 19.5% of Chapala.
In connection with the Sale, the Company's $4 Million Principal Amount
Senior Subordinated Debentures (the "Debentures") issued to Sirrom Capital
Corporation were restructured (the "Restructuring"). The Restructuring
included: (i) the transfer of $1 Million principal amount of the Debentures to
Chapala; (ii) the cancellation of $1 Million principal amount of Debentures in
exchange for 1,314,333 shares of the Company's Series A Convertible Preferred
Stock and the issuance of a warrant to purchase 10% of Common Stock of the
Company on a fully-diluted basis; (iii) the extension of the term of the
Debentures until February 5, 2004; and (iv) the deferral of interest payments
due under the Debentures until February 5, 2000.
The press release announcing the sale of SouthTech is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) and (b) Not Applicable.
(c) Exhibits.
2.1 Stock Purchase Agreement. (Previously filed.)
99.1 Press Release of Digital Transmission Systems, Inc.
dated February 22, 1999.
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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 thereunto duly authorized.
Date: February 22, 1999 By: /s/ Andres C. Salazar
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Andres C. Salazar
President
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MEDIA CONTACT:
Clive Marsh
Controller
(770) 798-1300 ext. 226
[email protected]
DTS AND TANDEM AGREE TO RESTRUCTURE DEBENTURES
Sale of SouthTech, Inc. Subsidiary a Factor in Agreement
ATLANTA, Ga. - February 22, 1999 -- Digital Transmission Systems, Inc., DTS,
(DTSX) (OTC: BB), a leading telecommunications equipment manufacturer, today
announced that it closed the restructuring of $4 million of Convertible
Subordinated Debentures issued by DTS to Tandem Capital Corporation, a business
unit of Sirrom Capital Corporation, under Rule 144A of the Securities Act of
1933. DTS added that the recent sale of its subsidiary, SouthTech, Inc., was a
significant factor in restructuring the debentures issued on September 25,
1997. The restructuring has enabled DTS to regain compliance with all covenants
set forth in the Debentures.
The restructuring of the Debentures transferred $1 million of the original
notes to SouthTech, Inc, DTS' international business subsidiary, which was
simultaneously sold to Chapala Communications, Inc, a Georgia company, in
connection with the restructuring. An additional $1 million principal amount of
Debentures was converted into DTS Series A Preferred Stock which is convertible
into DTS common stock at a dollar per share. The remaining $2 million principal
amount of Debentures, previously due on September 24, 2002 , has been amended
to realize payments over five years and with deferred interest until February
5, 2000 and is also convertible into DTS common stock at a dollar per share. As
consideration for the restructuring, Tandem received a warrant to purchase DTS
common stock at a strike price of $1 per share. The warrant has a three year
term and represents 10% of the outstanding shares of DTS, on a fully-diluted
basis, on the closing date. The Debentures will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the
United States without registration or an exemption from registration
requirements.
"We are pleased at the commitment of Tandem Capital and its support through the
recent tough times for DTS," commented Andy Salazar, President and CEO of DTS.
"This restructuring is a win for both companies since it improves DTS' balance
sheet, relieves pressure on cash flow with the deferred interest payment
feature and creates a new equity partner for DTS in Tandem."
Sirrom Capital, a public company which recently entered into a definitive
agreement to be acquired by the Finova Group, Inc., provides growth capital to
private companies and through Tandem, to small cap public companies. Tandem's
investments range between $2 million and $10 million and are usually structured
as convertible debt, convertible preferred stock, or subordinated debentures
with warrants.
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"It is important to support our portfolio companies during times of need," said
Don Barrickman, Vice President of Sirrom Capital, who negotiated the debt
restructuring. "Our belief in DTS was confirmed by the recent investment made
by Microtel in purchasing approximately 40% of DTS common stock from an
existing shareholder. Despite the losses DTS has incurred in fiscal 1998 and in
the last two quarters as it sized down its operations to preserve cash,
Microtel saw the same value in DTS that Tandem believes is still there,
especially now after the sale of SouthTech, Inc. DTS can now focus on what it
does best - service rapidly growing wireless carriers with its broad line of
network access equipment."
Founded in 1990 and headquartered near Atlanta, Ga., DTS designs, manufactures
and markets components to build, access and monitor high-speed
telecommunications networks worldwide. The Company's primary customers include
domestic and international wireless service providers, telephone service
providers and private wireless network users. The Company's products include
the FlexT1(R) (domestic) and FlexE1(TM) (international) integrated network
access product lines, and the microFlex cross connect systems.
For more information about DTS and its products, call 1-800-FLEX-DTS
(1-800-353-9387) or visit the corporate Web site at http://www.dtsx.com.
For more information on Tandem Capital, based in Nashville, TN, visit the
corporate Web site at http://www.tandemcapital.com.
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