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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 31, 1999
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SMARTALK TELESERVICES, INC.
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(Exact Name of Registrant as Specified in Charter)
California 0-21579 95-4502740
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
5080 Tuttle Crossing Boulevard, Dublin, Ohio 43016-3566
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(Address of Principal Executive Offices) (Zip Code)
The Company's telephone number, including area code (614) 789-8600
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No change
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(Former Name or Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 31, 1999, pursuant to the terms of an asset purchase
agreement (the "Asset Purchase Agreement") among SmarTalk TeleServices, Inc.
("SmarTalk" or the "Company"), its subsidiaries and AT&T Corp. ("AT&T"), AT&T
purchased substantially all the assets of SmarTalk and its subsidiaries (the
"Transaction") for aggregate consideration of approximately $145 million
consisting of approximately $105 million in cash and repayment of indebtedness
and a $40 million promissory note issued by AT&T in favor of the Company. The
purchase price is subject to downward adjustments pursuant to a post-closing
purchase price adjustment formula and in the event of claims by AT&T.
ITEM 5. OTHER EVENTS
As a result of the consummation of the Transaction, SmarTalk's prepaid
calling card and cellular business will now be operated by AT&T. SmarTalk will
wind-up its affairs (as explained below) as "SMTK Expedite Co. Inc.". AT&T has
offered employment to nearly all of SmarTalk's approximately 215 employees, and
SmarTalk's assets now consist primarily of the consideration it received from
AT&T through the Transaction. Consequently, the efforts of SmarTalk's few
remaining employees are now devoted to resolving claims that have been or will
be asserted against it, liquidating the remaining assets of the bankruptcy
estate, preparing a plan of reorganization, and otherwise fulfilling its
obligations as a debtor in possession under chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code"). These tasks will be undertaken in
coordination with SmarTalk's Official Committee of Unsecured Creditors and will
be subject to the review and approval of the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court"). Upon confirmation by the
Bankruptcy Court of SmarTalk's plan of reorganization, the remaining proceeds
of the Transaction and the other assets of the bankruptcy estate will be
distributed in accordance with the provisions of the plan and the Bankruptcy
Code.
Although the resolution of various pending and anticipated litigation
matters and the liquidation of the remaining assets of the estate ultimately may
increase the amount of funds available to be distributed pursuant to SmarTalk's
plan of reorganization, based upon currently available information, SmarTalk
does not anticipate that such funds will be sufficient to fully satisfy the
claims of its creditors, and thus SmarTalk does not anticipate that there will
be funds available to permit any distribution to holders of SmarTalk's equity
securities.
As previously disclosed in a Current Report on Form 8-K, on January 19,
1999, SmarTalk and certain of its non-foreign subsidiaries filed a voluntary
petition under Chapter 11 of the Bankruptcy Code. In accordance with the
Bankruptcy Code, SmarTalk has engaged appropriate professionals to assist
SmarTalk with the orderly liquidation of its assets, and SmarTalk is seeking to
have these engagements approved by the Bankruptcy Court. In addition, SmarTalk
is required to and intends to file Monthly Operating Reports with the Bankruptcy
Court and the United States Trustee for the District of Delaware pursuant to
Bankruptcy Rule 2015 and the United States Trustee's Operating Guidelines and
Reporting Requirements for Chapter 11 cases. SmarTalk's first Monthly Operating
Report,
(Page 2 of 5 Pages)
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for the period January 19, 1999 through February 28, 1999, is due on April 15,
1999. Within 15 calendar days following the submission of each Monthly Operating
Report to the Bankruptcy Court, SmarTalk intends to file such report with the
Commission under cover of a Form 8-K. At the present time, SmarTalk is unable,
and consequently does not intend, to comply with its other reporting obligations
under the Securities Exchange Act of 1934, as amended.
In addition, on April 1, 1999, AT&T issued a press release announcing
the closing under the Asset Purchase Agreement, which press release is filed as
Exhibit 99.1 hereto. In addition, on April 2, 1999, the Company issued a press
release announcing the closing under the Asset Purchase Agreement, which press
release is filed as Exhibit 99.2 hereto.
The contents set forth under Item 2 above, are incorporated herein.
ITEM 7. EXHIBITS
Exhibit No. Description
99.1 Press Release: AT&T Completes the Purchase of SmarTalk's
Assets, dated April 1, 1999
99.2 Press Release: SmarTalk Completes Sale of its Assets to AT&T,
dated April 2, 1999
This Report contains forward-looking statements. The words, "believe,"
"expect," and "anticipate" and similar expressions identify such
forward-looking statements. These forward-looking statements reflect the
Company's views with respect to future events and financial performance. Such
statements are subject to risks and uncertainties that could cause the
Company's actual results and financial position to differ materially from those
projected in the forward-looking statements. In particular, SmarTalk has not
prepared any formal liquidation analysis based on the assets of the bankruptcy
estate, and any such analysis would be premature at this time. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of their dates. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
(Page 3 of 5 Pages)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SMARTALK TELESERVICES, INC.
Date: April 2, 1999 By: /s/ Thaddeus Bereday
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Name: Thaddeus Bereday
Title: Vice President and General Counsel
(Page 4 of 5 Pages)
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release: AT&T Completes the Purchase of SmarTalk's Assets,
dated April 1, 1999
[99.2 Press Release: SmarTalk Completes Sale of its Assets to AT&T, dated
April 2, 1999
(Page 5 of 5 Pages)
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SMARTALK;
PR News Wire via Dow Jones
NEW YORK, April 1 /PRNewswire/ -- AT&T today announced that it has
completed the bankruptcy-court approved purchase of substantially all of the
assets of SmarTalk TeleServices, Inc. for approximately $145 million. As
previously reported, SmarTalk filed for a Chapter 11 reorganization in the
bankruptcy court, district of Delaware in January.
"The addition of SmarTalk's well-established retail channels and its
state-of-the-art platform technology gives AT&T the ability to accelerate the
growth and scope of our PrePaid Card business," said Howard McNally, president
of AT&T Transaction Services. "As the prepaid card industry continues to grow
rapidly, we've been expanding our retail distribution of AT&T PrePaid cards to
keep pace with the demand."
AT&T said that nearly all of SmarTalk's approximately 170 employees will be
offered employment. SmarTalk, a leading provider of prepaid cards and prepaid
wireless services, has distribution agreements with the U.S. Postal Service and
leading mass merchandisers, consumer electronics retailers, supermarkets,
hotels, home office superstores and convenience stores throughout North America
and the U.K.
Separately, AT&T today also announced it has completed the sale of its
Language Line Services over-the-phone interpretation business to an affiliate of
Providence Equity Partners, Inc. Terms of the transaction were not disclosed.
/CONTACT: Eileen M. Connolly of AT&T, 908-221-6731, 888-602-5417 - pager, or
[email protected]/ 14:49 EST
0151 04/01/99 14:49 EST HT
Byline2: NEW YORK, April 1 /PRNewswire/ -- AT&T today announced that it has
completed the Copyright (c) 1999 PR Newswire
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FOR IMMEDIATE RELEASE
SmarTalk Completes the Sale of its Assets to AT&T
DUBLIN, OHIO, April 2, 1999 -- SmarTalk TeleServices, Inc.
(OTC:SMTKQ) today announced that the acquisition by AT&T Corp. of
substantially all of SmarTalk's assets was consummated as of March 31,
1999. Attached is a Current Report on Form 8-K filed by SmarTalk with
the SEC containing additional information regarding the transaction.
Among other things, the Form 8-K indicates that, based upon currently
available information, SmarTalk does not anticipate that the proceeds
of SmarTalk's bankruptcy estate will be sufficient to fully satisfy the
claims of its creditors, and thus SmarTalk does not anticipate that
there will be funds available to permit any distribution to holders of
SmarTalk's equity securities.
Note: This press release contains forward-looking statements. The
words, "believe," "expect," and "anticipate" and similar expressions
identify such forward-looking statements. These forward-looking
statements reflect the Company's views with respect to future events
and financial performance. Such statements are subject to risks and
uncertainties that could cause the Company's actual results and
financial position to differ materially from those projected in the
forward-looking statements. In particular, SmarTalk has not prepared
any formal liquidation analysis based on the assets of the bankruptcy
estate, and any such analysis would be premature at this time. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. The Company undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
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