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) March 17, 1997
HYPERION TELECOMMUNICATIONS, INC.
(Exact name of registrant as specified in charter)
Delaware 333-06957 25-1669404
(State or other (Commission File Number) (IRS Employer
jurisdiction of incorporation) Identification No.)
Main at Water Street - Coudersport, PA 16915
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (814) 274-9830
Item 5. Other Events
(a) On March 17, 1997, the Company issued a press release announcing the signing
of a letter of intent with MCI pursuant to which, among other things, the
Company would become MCI's preferred provider, in virtually all of the Company's
markets, for new end user dedicated access circuits and for conversions of end
user dedicated access circuits from incumbent local exchange carriers. Attached
hereto as Exhibit 99.01 and incorporated by reference herein is a copy of the
press release related to such announcement.
(b) On February 18, 1997, the Company and Entergy Corporation ("Entergy")
announced they had reached an agreement in principle to form a 50%/50% joint
venture to offer competitive telecommunications services primarily to commercial
customers in the Little Rock, Arkansas, Jackson, Mississippi and Baton Rouge,
Louisiana metropolitan areas (the "Entergy Networks"). The Entergy-Hyperion
joint venture intends to offer a full range of local exchange services as well
as access to long distance carriers. The Company expects that the networks for
these three cities will total approximately 350 route miles of fiber optic
cable. Consummation of this transaction will be subject to the negotiation and
execution of definitive documentation and obtaining necessary approvals.
Attached hereto as Exhibit 99.01 and incorporated by reference herein is a copy
of the press release related to such announcement.
(c) On February 20, 1997, the Company entered into several agreements regarding
the leasing of dark fiber in New York state in furtherance of its strategy to
interconnect its networks in the northeastern U.S.. Pursuant to these agreements
and in consideration of a payment of $20 million, the Company received (i) a $20
million senior secured note due February 2002, from Telergy, Inc. ("Telergy")
and (ii) a fully prepaid lease from a Telergy affiliate for at least 25 years
(with two additional ten-year extensions), as a preferred customer for 24
strands of dark fiber installed or to be installed in a New York fiber optic
telecommunications backbone network. The note purchased agreement requires
Telergy to use its best efforts to refinance the five year senior secured note
as soon as practicable and also provides financial incentives to Telergy for
prepayment during the first year. The fiber optic backbone network will cover
approximately 500 miles from Buffalo to Syracuse to Albany to New York City and
will provide the Company interconnection capabilities necessary to provide a
full range of telecommunication services to its customers in the northeast
cluster. Construction of the New York fiber optic backbone network has commenced
and is scheduled to be completed in stages, with completion of Buffalo to
Syracuse expected by mid-1997, completion of Syracuse to Albany expected by the
end of 1997 and final completion to New York City by the end of 1999.
(d) Pursuant to a nonbinding letter of intent dated as of February 12, 1997, the
Company has agreed to purchase the 50% partnership interest in its Harrisburg,
Pennsylvania network held by a subsidiary of Lenfest Communications, Inc. in
exchange for shares of Class A Common Stock of the Company. This transaction is
subject to the negotiation and execution of definitive documation and the
receipt of state regulatory approval. If completed, the Company would own 100%
of this partnership.
Item 7. Financial Statements and Exhibits
(c) The following exhibit is filed as part of this report on Form 8-K:
Exhibit 99.01 - Press Release issued March 17, 1997.
Exhibit 99.02 - Press Release issued February 18, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Security Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 17, 1997 HYPERION TELECOMMUNICATIONS, INC.
(Registrant)
By: /s/Timothy J. Rigas
Timothy J. Rigas
Vice Chairman, Treasurer and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
Exhibit 99.01 Press Release issued March 17, 1997
Exhibit 99.02 Press Release issued February 18, 1997
<PAGE>
Exhibit 99.01
PRESS RELEASE
For Release: Immediate
Contact: Randy Fowler, Senior Vice President
Hyperion Telecommunications, Inc.
(412) 221-1888
HYPERION ANNOUNCES LETTER OF INTENT WITH MCI TO BECOME PREFERRED
PROVIDER OF DEDICATED ACCESS CIRCUITS
Coudersport, PA - March 17, 1997
John J. Rigas, chairman of Adelphia Communications Corporation and Hyperion
Telecommunications, Inc. announced today that Hyperion has entered into a
nonbinding letter of intent with MCImetro Access Transmission Services, Inc.
("MCI"). The parties anticipate that under the final agreement, Hyperion would
become MCI's preferred provider for new end user dedicated access circuits and
for conversion of existing end user dedicated access circuits from incumbent
local exchange carriers ("ILECs"). In addition, Hyperion would have a right of
first refusal to provide MCI all new dedicated local network access circuits
such as POP-to-POP or POP-to-LSO connections. These arrangements would apply to
virtually all of Hyperion's current markets for a five year term with MCI having
a five year renewal option.
Under the final agreement, MCI would also have the option to purchase local loop
transport services from Hyperion where Hyperion is collocated with an ILEC.
Also, the parties are to negotiate the terms for the utilization of Hyperion's
local switches and operating support systems to provide MCI branded service.
In connection with the transaction, MCI would be issued warrants to purchase
2.5% of Hyperion's Class A Common Stock and could be issued warrants to purchase
up to an additional 6% of the Class A Common Stock at fair market value at time
of issuance if MCI meets certain agreed upon purchase volume revenue thresholds.
According to Dan Milliard, President and COO of Hyperion Telecommunications,
Inc., "This agreement with MCI is strategically important to Hyperion for a
number of reasons. First, it further solidifies our strategic relationship with
MCI in the markets we serve. The agreement provides an excellent source of
network traffic for our base dedicated access business and further stimulates
network revenue growth for these markets.
"Additionally, this agreement provides the framework for Hyperion to negotiate
an MCI branded wholesale local switched services product, whereby Hyperion's
switched network would be utilized in the local markets to complement the MCI
long distance networks. An agreement of this nature would be a very significant
step forward into the wholesale local dial tone market, and provide an anchor
that would complement our existing retail strategy of offering local dial tone
in all of our networks by mid-1997. We continue to see local switched services
for business customers as our most strategic product offering.
"Finally, we are excited about the prospect of MCI becoming a Hyperion
shareholder. The warrants extended to MCI are exercisable at fair market value,
which provides liquidity to Hyperion if exercised, and further diversifies our
shareholder base. Also, the performance warrants are targeted to revenue targets
which, when met, will enhance our growth over the next several years. In
summary, we feel this agreement, and the definitive agreements to follow,
further position Hyperion as a leading CLEC and provide an important cornerstone
to building shareholder value."
Donald Lynch, Senior Vice President of Financial Operations for MCI, stated,
"This letter of intent with Hyperion supports our growing relationship with and
confidence in Hyperion and our stated local strategy of expanding MCI's local
capabilities through four vehicles: building our own networks, leasing
facilities, reselling local service and entering into arrangements with the new
local service providers."
Hyperion is a leading Competitive Local Exchange Carrier that designs,
constructs, operates and manages state-of-the-art fiber optic networks and
facilities in 21 markets through joint ventures and subsidiary operating
companies primarily in the eastern half of the U.S. The outstanding common stock
of Hyperion is 83% owned by Adelphia, the seventh largest cable television
operator in the U.S., which currently serves approximately 1.9 million
subscribers in 15 states.
Exhibit 99.02
Press Release
Entergy Joint Venture with Hyperion Will Offer Local Telecom Service
in Little Rock, Jackson, and Baton Rouge
LITTLE ROCK, Ark., Feb. 18 /PRNewswire/ -- Entergy Corporation (NYSE:
ETR), today announced an agreement to form a joint venture with Hyperion
Telecommunications of Coudersport, Pennsylvania. The proposed joint venture
will, by year-end, offer competitive telephone services to primarily commercial
customers in the Little Rock, Jackson, and Baton Rouge metropolitan areas.
Entergy Hyperion Telecommunications will offer a full range of local exchange
services as well as access to long distance carriers.
In announcing the joint venture, Entergy's Chairman and President Ed
Lupberger said, "This is an exciting opportunity for Entergy. We look forward to
delivering state-of-the-art telecommunications services in partnership with
Hyperion." Lupberger emphasized that commercial customers will be Entergy
Hyperion's primary market. "We are going to be committed to helping customers'
businesses become more successful by offering advanced services at a lower cost.
Entergy is pleased to partner with a company like Hyperion, which has an
unequaled industry reputation for quality and reliability."
Entergy Hyperion will deploy sophisticated digital switching
platforms that will provide customers with enhanced local exchange services. The
joint venture will also provide high capacity dedicated telecommunications
services between business and commercial locations, and between business
locations and long distance carriers. These services will be provided via
state-of-the-art fiber optic cable that will feature SONET (Synchronous Optical
Network) equipment. SONET technology offers a host of superior performance,
reliability, and cost advantages over conventional copper technologies that
remain the backbone of many incumbent telephone company networks.
Entergy Hyperion's networks in the three state capitals will total
over 350 miles of fiber optic cable. According to Dan Milliard, President of
Hyperion, "We are committed to building large networks that will cover downtown
business districts, as well as suburban office parks and other areas where there
are concentrations of telecommunications traffic. This joint venture," Milliard
said, "not only offers significant potential for both Hyperion and Entergy, but
more importantly benefits businesses in Baton Rouge, Jackson, and Little Rock."
Milliard said consumers will be offered better services, lower costs, and the
highest level of attention and service from Entergy Hyperion. Milliard added
that the existence of such a large and robust telecommunications infrastructure
would stimulate economic development in Baton Rouge, Jackson and Little Rock.
Construction is scheduled to be completed in the fourth quarter of 1997.
Entergy Corporation headquarted in New Orleans, Louisiana, is an
energy company with worldwide power production and diversified electric service
operations. Its regulated subsidiaries deliver electricity and related services
to 2.4 million retail customers in Arkansas, Louisiana, Mississippi, and Texas.
Other subsidiaries provide wholesale electricity to other utilities, own and
operate domestic and overseas power systems, and sell energy management,
security monitoring, and telecommunications systems and services.
<PAGE>
Hyperion Telecommunications is the third largest competitive local
exchange carrier in the country in terms of route miles and buildings connected.
Hyperion presently operates 15 telecommunications networks throughout the
country with over 3,000 route miles of fiber connecting 1200 buildings. Hyperion
is a subsidiary of Adelphia Communications Corporation of Coudersport,
Pennsylvania, the nation's seventh largest cable TV company with over 1.6
million subscribers in 13 eastern states.
Entergy Corporation's on-line address is http://www.entergy.com.
SOURCE Entergy Corporation
- 0 - 02/18/97
/ CONTACT: Media: Patrick Sweeney, 504-576-4160;
Internet: [email protected]; Investor Relations, Stuart Ball,
504-576-4817; Internet: [email protected], both of Entergy Corporation
or Randy Fowler, Hyperion Telecommunications, 412-221-1888/
(ETR)
