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): August 31, 1999
CS WIRELESS SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
333-3288
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(Commission File Number)
23-2751747
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(IRS Employer Identification No.)
1101 Summit Avenue, Plano, Texas 75074
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: 972-398-5300
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Item 1. Changes in Control of Registrant
On August 31, 1999, MCI WORLDCOM, Inc., a Georgia corporation ("MCI
WorldCom"), acquired CAI Wireless Systems, Inc., a Connecticut
corporation ("CAI"), which currently owns approximately 94% of CS
Wireless Systems, Inc., a Delaware corporation. The transaction was
consummated pursuant to the merger (the "CAI Merger") of Cardinal
Acquisition Subsidiary Inc. ("Acquisition Subsidiary"), a wholly owned
subsidiary of MCI WorldCom, with and into CAI. Upon consummation of
the CAI Merger, CAI became a wholly owned subsidiary of MCI WorldCom.
The CAI Merger was effected pursuant to an Agreement and Plan of
Merger dated as of April 26, 1999 by and among MCI WorldCom, CAI and
Acquisition Subsidiary (the "CAI Merger Agreement").
As a result of the CAI Merger, shareholders of CAI (other than MCI
WorldCom) will receive $28.00 in cash, without interest, in exchange
for their shares.
Additionally, upon consummation of the CAI Merger Agreement, all
holders of outstanding and unexercised options and warrants
exercisable for shares of CAI common stock became entitled to receive,
for each exercisable option, an amount in cash equal to the excess of
$28.00 per share over the exercise price per share of such option or
warrant. The aggregate amount to be paid for outstanding stock options
and warrants was approximately $45 million.
The basic terms of the CAI Merger, and the relationships between MCI
WorldCom and CAI were described in CAI's proxy statement dated July
30, 1999, which is incorporated by reference herein. The terms of the
CAI Merger were determined in accordance with the CAI Merger Agreement
and were established through arm's length negotiations between MCI
WorldCom and CAI.
Previously, MCI WorldCom had acquired 10,555,140 Shares of CAI common
stock pursuant to certain purchase and sale agreements, constituting
approximately 61.2% of the outstanding CAI common shares. The purchase
price for the shares under these agreements was less than the $28
price per share in the merger, described below.
MCI WorldCom obtained the funds for the purchase of the shares of CAI
described herein from its cash on hand and from borrowings under its
commercial paper program and a related credit facility. The credit
facility was not established specifically to fund the acquisition of
the shares. The facility is a $7 billion 364-Day Revolving Credit
Agreement and Term Loan Agreement originally dated as of August 6,
1998 and which was extended on August 5, 1999 for a successive 364-day
term (the "Facility C Loans") (the "Credit Facility"). There are no
unusual or material conditions to be satisfied prior to draw down
under the Credit Facility. The parties to the Credit Facility are MCI
WorldCom and Bank of America, N.A. (Administrative Agent), Bank of
America Securities, LLC (Sole Lead Arranger and Book Manager),
Barclays Bank PLC, The Chase Manhattan Bank, Citibank, N.A., Morgan
Guaranty Trust Company of New York, and Royal Bank of Canada
(Co-Syndication Agents) and the lenders named therein. The Credit
Facility provides liquidity support for MCI WorldCom's commercial
paper program and is used for other general corporate purposes. The
Facility C Loans have a 364-day term, which may be extended for a
second successive 364-day term thereafter to the extent of the
committed amounts from those lenders consenting thereto, with a
requirement that lenders holding at least 51% of the committed amounts
consent. Additionally, effective as of the end of such 364-day term,
MCI WorldCom may elect to convert up to $4 billion of the principal
debt outstanding under the Facility C Loans from revolving loans to
term loans with a maturity date no later than one year after the
conversion. The Credit Facility bears interest payable in varying
periods, depending on the interest period, not to exceed six months,
or, with respect to any Eurodollar Rate borrowing, 12 months if
available to all lenders, at rates selected by MCI WorldCom under the
terms of the Credit Facility, including a Base Rate or Eurodollar
Rate, plus the applicable margin. The applicable margin for the
1
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Eurodollar Rate borrowing varies from 0.225% to 0.450% as to Facility
C Loans based upon the better of certain debt ratings. The Credit
Facility is unsecured but includes a negative pledge of the assets of
MCI WorldCom and its subsidiaries (subject to certain exceptions). The
Credit Facility requires compliance with a financial covenant based on
the ratio of total debt to total capitalization, calculated on a
consolidated basis. The Credit Facility requires compliance with
certain operating covenants which limit, among other things, the
incurrence of additional indebtedness by MCI WorldCom and its
subsidiaries, sales of assets and mergers and dissolutions, which
covenants do not restrict distributions to shareholders, provided MCI
WorldCom is not in default under the Credit Facility. The Facility C
Loans are subject to annual commitment fees not to exceed 0.15% of any
unborrowed portion of the facility.
Item 2. Acquisition or Disposition of Assets
See Item 1.
Item 7. Financial Statements and Exhibits
(c) Exhibits
See Exhibit Index
2
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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 hereunto duly authorized.
Dated: September 14, 1999
CS Wireless Systems, Inc.
By: /s/ Scott D. Sullivan
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Scott D. Sullivan
Secretary, Treasurer and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Press Release dated September 1, 1999
99.2 Proxy Statement dated July 30, 1999 of CAI (incorporated
herein by reference to Exhibit 99.2 to CAI's Current Report
on Form 8-K dated August 2, 1999 (filed August 3, 1999)
(File No. 33-71662))
Exhibit 99.1
MCI WORLDCOM COMPLETES CAI WIRELESS ACQUISITION
CLINTON, MS, September 1, 1999 -- MCI WORLDCOM, Inc. (NASDAQ: WCOM) today
announced that it completed its acquisition of CAI Wireless Systems, Inc. MCI
WorldCom already owned a majority of CAI Wireless stock.
On August 31, 1999, CAI Wireless shareholders approved the merger of CAI
Wireless with a subsidiary of MCI WorldCom. The merger closed as of midnight,
August 31, 1999.
Shareholders of CAI Wireless (other than MCI WorldCom) will receive $28 in cash
in exchange for their shares.
MCI WorldCom also announced that CAI Wireless will redeem in full all of CAI
Wireless' outstanding 13% senior notes due 2004 (CUSIP Numbers 12476P AB 0 and
12476P AC 8) on October 15, 1999.
The aggregate outstanding principal amount at maturity of the CAI Wireless
senior notes is approximately $213 million. Holders who surrender their notes
for payment as described in the notice of redemption sent to record holders will
receive an amount equal to $532.91 per $1,000 principal amount at maturity of
the notes (the "Redemption Price"), which represents the "Accreted Value"
thereof through the redemption date. Unless CAI Wireless defaults in making the
redemption payment, the notes will cease to accrete in value on and after the
October 15, 1999 redemption date, and the only remaining right of the holders
will be to receive payment of the Redemption Price upon surrender to the
trustee, as paying agent, of the notes redeemed.
MCI WorldCom is a global leader in communications services with 1998 revenues of
more than $30 billion and established operations in over 65 countries
encompassing the Americas, Europe and the Asia-Pacific regions. MCI WorldCom is
a premier provider of facilities-based and fully integrated local, long
distance, international and Internet services. MCI WorldCom's global networks,
including its state-of-the-art pan-European network and transoceanic cable
systems, provide end-to-end high-capacity connectivity to more than 40,000
buildings worldwide. MCI WorldCom is traded on NASDAQ under WCOM. For more
information on MCI WorldCom, visit the World Wide Web at http://www.wcom.com.
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