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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) July 21, 1999
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IXC Communications, Inc.
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(Exact name of registrant as specified in its charter)
California 0-20803 74-2644120
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1122 Capital of Texas Highway South, Austin, Texas 78746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 328-1112
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Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
Attached as Exhibits 99.1 and 99.2 are press releases issued by IXC
Communications, Inc. dated July 21, 1999 which are hereby incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
99.1 Press release dated July 21, 1999.
99.2 Press release dated July 21, 1999.
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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.
IXC Communications, Inc.
Dated: July 21, 1999 By: /s/ Jeffrey C. Smith
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Jeffrey C. Smith
Senior Vice President,
General Counsel and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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99.1 Press release dated July 21, 1999.
99.2 Press release dated July 21, 1999.
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Exhibit 99.1
CONTACTS:
CINCINNATI BELL IXC OAK HILL
Libby Korosec (media) Melissa Jackson (media) Hollis Rafkin-Sax
(513) 397-1589 (512) 231-5247 Chatsworth Group
ekorosec @ cinbell.com mjackson @ ixc-comm.com (914) 834-1821
rafsax @ chatsworthgrp.com
Hugh Anderson (investors) Greta Wiechman (investors)
(513) 397-7877 (512) 427-3751
handerson @ cinbell.com gwiechman @ ixc-comm.com
FOR IMMEDIATE RELEASE
IXC TO MERGE WITH CINCINNATI BELL
MERGER CREATES INTEGRATED COMMUNICATIONS POWERHOUSE
ROBERT M. BASS' OAK HILL MAKES STRATEGIC INVESTMENT
CINCINNATI, OHIO, and AUSTIN, TEXAS, July 21, 1999 - Cincinnati Bell Inc.
(NYSE:CSN), one of the nation's premier local communications providers,
announced today a merger agreement with IXC Communications, Inc. (NASDAQ:IIXC) a
leading nationwide next-generation fiber network carrier providing advanced
telecommunications services. This merger creates a powerful local/national
combination offering businesses throughout the country end-to-end broadband and
data solutions.
This combination creates an integrated data communications powerhouse with more
than 1 million customers, 5,000 employees in 35 locations, a leading-edge fiber
network of approximately 13,000 miles stretching from coast-to-coast, and a
combined capitalization of over $7.2 billion. "This merger unites the best
elements of Cincinnati Bell and IXC to form a world-class communications leader
with the capability to transform our industry," said Richard G. Ellenberger,
president and CEO of Cincinnati Bell.
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Cincinnati Bell/IXC, page
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Under the agreement, approved by directors of both companies yesterday, each
share of IXC Communications stock will be converted at a fixed exchange ratio of
2.0976 shares of Cincinnati Bell common stock. Based on yesterday's closing
price for CSN of $23.56, the transaction is valued at approximately $3.2 billion
(including assumed debt).
As part of the agreement, several significant shareholders of IXC have agreed to
vote in favor of the merger. In addition, Cincinnati Bell has agreed to purchase
from General Electric Pension Trust approximately 5 million shares of IXC common
stock for a cash price of $50 per share. Shareholders representing approximately
40% of the outstanding shares of IXC have committed to vote their shares in
favor of the transaction, including the 5 million shares to be purchased.
Concurrent with the announcement of this transaction, Oak Hill Capital Partners,
L.P., an investment partnership founded by Robert M. Bass, is purchasing $400
million of convertible subordinated debentures of Cincinnati Bell. The
debentures have a coupon of 6.75% and are convertible at a price of $29.89 per
share of Cincinnati Bell common stock. Cincinnati Bell's board of directors has
also authorized using up to $200 million of the proceeds from the Oak Hill
investment to repurchase stock in an open market share repurchase program.
"We believe that this transaction represents an opportunity to create a quantum
leap in shareholder value for the combined company which compelled the Robert M.
Bass group to make its largest single investment ever," commented J. Taylor
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Cincinnati Bell/IXC, page
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Crandall, managing partner of Oak Hill Capital Partners. "The value proposition
here is to merge IXC's state-of-the-art network with an innovative, experienced,
and proven management team from Cincinnati Bell to create an integrated
communications powerhouse."
Cincinnati Bell contributes extensive experience in the development and
marketing of bundled services, an industry-leading reputation for operational,
back-office and provisioning excellence, and leadership in the deployment of
high bandwidth solutions, as evidenced by its highly successful deployment of
digital subscriber line (DSL) services.
"Customers want providers that go beyond just offering connectivity," said
Ellenberger. "With IXC's next-generation fiber network, Cincinnati Bell will
provide end-to-end advanced high bandwidth applications and solutions. With this
move, we are now positioned to offer a bundle of local, long distance, ATM/Frame
Relay, xDSL, Internet, and other advanced services to businesses nationwide."
For IXC, this is an opportunity to realize more quickly the full potential of
its planned 18,000-mile next generation fiber network which provides a backbone
to many of the nation's largest telecommunications providers and internet
service providers. The company offers fast-packet and long distance switched and
dedicated services. The company has made a series of significant product
announcements culminating with last December's introduction of the Gemini2000
network - the first giga-speed Internet backbone. IXC also successfully built a
strong retail business through sales and branch offices across the country
targeting business customers and offering a full range of
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Cincinnati Bell/IXC, page
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voice, data, and Internet services, including integrated access.
"For us, this is the best of both worlds," said IXC Communications CEO, John
Zrno. "With the financial strength, management depth, service bundling and
back-office and provisioning expertise of Cincinnati Bell, we now have the
resources, knowledge and depth to fully realize the potential of the
industry-leading IP data services we have built. I am very excited about the
potential that our two companies together represent to the major users of
advanced communications services in the U.S. and abroad."
Two of IXC's directors, John Zrno and Richard Irwin, as well as J. Taylor
Crandall from Oak Hill, will join the Cincinnati Bell board. Cincinnati Bell's
Board of Directors also announced that Richard Ellenberger will become president
and CEO of the new, combined company, which will be headquartered in Cincinnati,
Ohio.
Rick Pontin, president and chief operating officer of Cincinnati Bell Telephone,
will direct the efforts between Cincinnati Bell and IXC to merge the two
companies. "Both companies will quickly focus on maximizing synergies in revenue
generation, product development, and customer service. We plan to swiftly
execute on opportunities for integration," said Pontin.
The merger is expected to be consummated late in the fourth quarter of 1999, or
early in 2000. The merger is subject to certain regulatory approvals and other
customary conditions, including the approval of majority of the shareholders of
the outstanding shares of both companies.
Consistent with maximizing the expanded growth opportunities available to the
combined company, Cincinnati Bell also announced that following its August 3rd
payment date it will discontinue paying dividends. IXC does not pay a
common-share dividend.
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Cincinnati Bell/IXC, page
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Salomon Smith Barney Inc. served as financial advisor to Cincinnati Bell.
Merrill Lynch & Co. and Morgan Stanley, Dean Witter served as financial advisors
to IXC.
Separately, Cincinnati Bell announced financial results for the second quarter
ended June 30. Revenues increased 16 percent to $253.6 million, compared with
$219.5 million in the second quarter of 1998. Income from continuing operations
increased 76 percent to $28.3 million, or 20 cents per share, compared with
$16.1 million or 12 cents per share in the second quarter last year.
Growth in wireless and data revenues were principal factors in the revenue
increase. Substantial margin improvement in Cincinnati Bell's core local
telephone business drove earnings growth.
Income from continuing operations excludes results from Convergys Corporation,
which Cincinnati Bell spun off at the end of 1998.
ABOUT CINCINNATI BELL
Cincinnati Bell is a full service, integrated communications company that
provides competitive local communications as well as data, Internet, wireless,
entertainment, directory, long distance and data networking services to
customers in the Cincinnati, Ohio, metropolitan area and in many other
Midwestern cities. Cincinnati Bell is on the World Wide Web at
cincinnatibell.com.
ABOUT IXC
IXC's network-based delivery solutions are designed to address the speed and
capacity requirements of the global communications market. IXC offerings include
private line, fast packet (ATM and frame relay), Internet and long distance
switched and dedicated services. IXC is at the forefront of the industry's
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Cincinnati Bell/IXC, page
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new class of emerging domestic and international carriers. IXC is a publicly
traded company listed on Nasdaq under the symbol IIXC.
ABOUT OAK HILL CAPITAL PARTNERS, L.P.
Oak Hill Capital Partners, L.P. is a newly formed private equity partnership
founded by Robert M. Bass and his team of investment professionals. Oak Hill
Capital makes significant investments through acquisitions, build-ups,
recapitalizations, restructurings, strategic joint ventures and the purchase of
minority stakes across a wide range of industries. The Oak Hill Securities Fund,
LP, also participating in the Cincinnati Bell Inc. investment, is a $1.75
billion partnership specializing in bank loans, high yield securities and
special situation investments.
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Exhibit 99.2
IXC COMMUNICATIONS NEWS RELEASE
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IXC SECOND QUARTER RESULTS TO FALL SHORT OF EXPECTATIONS
Austin, TX -- July 21, 1999 -- IXC Communications, Inc. (Nasdaq:IIXC) announced
today that it expected revenue and EBITDA results to fall short of analyst
expectations for the quarter ended June 30, 1999 as well as for the full fiscal
year. The company, which is in the midst of an operational restructuring,
reached this conclusion as a result of new management's detailed review of the
overall business.
Today's announcement will have no impact on IXC's ability or timing to proceed
with its definitive merger agreement with Cincinnati Bell. The company noted
that Cincinnati Bell has been kept fully informed regarding IXC's performance
and progress.
About The Company
IXC's network-based delivery solutions are designed to address the speed and
capacity requirements of the global communications market. Its offerings include
private line, fast packet (ATM and frame relay), Internet and long distance
switched and dedicated services. IXC is at the forefront of the industry's new
class of emerging domestic and international carriers. IXC is a publicly traded
company listed on Nasdaq under the symbol "IIXC." For more information, visit
IXC's Web site at www.ixc-comm.com.
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Except for the historical information contained herein, this press release
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and are subject to the safe harbors created thereby.
The Company's future actual results could differ materially from the
forward-looking statements discussed herein. In particular, no assurance can be
made that the restructuring of the Company's switched wholesale business will
have the results expected by the Company or that certain parts of the network
will be completed as scheduled. A list of the factors that could cause actual
results to differ materially can be found in the documents the Company files
with the SEC, including those contained in the Company's prospectus, and the
Form 10-K for the year ended December 31, 1998.
IXC Contacts:
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Media Contact: Investor Contact:
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Melissa Jackson Greta Wiechman
Senior Manager, Public Relations Director, Investor Relations
(512) 231-5247 (888) 267-9478
[email protected] [email protected]
