U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
Current Report pursuant to Section 13 of the Securities Exchange Act of 1934
Date of Report: October 27, 1999
TELEHUB COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 333-61441 36-413-6730
(Jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification Number)
CO-REGISTRANTS
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TeleHub Network Services Corporation
TeleHub Technologies Corporation
TeleHub Leasing Corporation
(Exact Name of Co-Registrants as Specified in their Charters)
Illinois 333-61441 36-406-6622
Nevada 333-61441 36-421-3797
Nevada 333-61441 36-335-3108
(Jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification Number)
John R. Lawson, Chief Financial Officer
TeleHub Communications Corporation
1175 Tri-State Parkway, Suite 250
Gurnee, Illinois 60031
1 (800) TELEHUB
(Address, including zip code, & telephone number,
of Registrants' principal executive offices)
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Item 2. Acquisition or Disposition of Assets
TeleHub Communications Corporation, a Nevada corporation (the
"Registrant"), has agreed to exchange the stock of its subsidiary, co-Registrant
TeleHub Network Services Corporation ("TNS"), for stock of FDN, Inc. ("FDN"). On
November 4, 1999, Registrant and FDN executed an Agreement and Plan of Share
Exchange ("Plan") to transfer all TNS capital stock to FDN, Inc. ("FDN") in
exchange for FDN capital stock. Upon completion of this transaction, Registrant
would own approximately 40% of FDN's capital stock, subject to adjustment.
Registrant decided to enter into the Plan because FDN has a complementary
business plan and FDN will provide substantial working capital for continued
operation of TNS's ATM network.
Pending closing, FDN intends to supervise TNS's operations pursuant to
a Management and Operating Agreement ("TNS Management Agreement"); this
arrangement requires approval from the court ("Bankruptcy Court") supervising
TNS's Bankruptcy Case (see Item 3 below). TNS has applied for the Bankruptcy
Court's approval of the TNS Management Agreement.
Closing of the Plan is subject to customary conditions, especially
obtaining all regulatory approvals, receiving the consent of the holders of
Registrant's 13.875 Senior Secured Notes due 2005 ("Bonds") and approval from
the Bankruptcy Court. The Bond Indenture would require Registrant to redeem the
Bonds if it sells TNS; since Registrant will not receive cash consideration in
the Plan, Registrant will request the Bondholders to waive the redemption
obligation. Closing would occur after the Bankruptcy Court approved the Plan.
Item 3. Bankruptcy or Receivership
On October 27, 1999 ("Petition Date"), co-Registrant TeleHub Network
Services Corporation ("TNS") filed a voluntary petition ("Petition") for
reorganization under the federal bankruptcy laws. In re TeleHub Network Services
Corporation, No. 99-B-33272 (N.D. Ill., filed October 27, 1999) (the "Bankruptcy
Case"). TNS is currently operating its business as debtor-in-possession pursuant
to Bankruptcy Code sections 1107 and 1108 but has not yet filed a reorganization
plan. The Bankruptcy Court approved a few preliminary matters but the Bankruptcy
Case is still in the initial stages. Neither a trustee, receiver or creditors
committee has been appointed. On November 5, 1999, TNS applied for Bankruptcy
Court approval of the TNS Management Agreement.
TNS's Petition constitutes a default under Section 6.1(8) of the Bond
Indenture. Indenture section 6.2 further provides that the Bonds automatically
became immediately due and payable when TNS filed the Petition. On the Petition
Date, the aggregate accreted value of the Bonds was approximately $98.8 million.
Registrant has not yet repaid the Bond's accreted value, which increases by
approximately $37,000 per day, and reached approximately $99.3 million by
November 10, 1999.
<PAGE>
Item 5. Other Events
New Officers & Directors. Effective September 30, 1999, the
following persons were appointed as the officers and directors for Registrant,
TNS, co-Registrant TeleHub Technologies Corporation ("TTC") and co-Registrant
TeleHub Leasing Corporation ("TLC"):
Registrant: William W. Becker Chairman, Director & Chief Executive Officer
Oz Pedde Director
Carl Alu President
John R. Lawson Chief Financial Officer, Treasurer & Secretary
TNS: Terry Didardichuk President & Director
John R. Lawson Chief Financial Officer, Treasurer & Secretary
TTC: William W. Becker Chairman, Director & Chief Executive Officer
Oz Pedde Director
Carl Alu President
John R. Lawson Chief Financial Officer, Treasurer & Secretary
TLC: William W. Becker Chairman, Director & Chief Executive Officer
Oz Pedde Director
Carl Alu President
John R. Lawson Chief Financial Officer, Treasurer & Secretary
The Registrant's and co-Registrants' former directors and officer orally
informed the Company that their resignations did not result from disagreement
over any matter relating to Registrant's or co-Registrant's operations, policies
or practices.
Termination of Network Operations. TNS's telecommunications network
leased capacity from MCIWorldcom. The average monthly charges of approximately
$3.5 million were purportedly secured by TNS's accounts receivables and related
collateral. Partly due to problems with the adequacy and timeliness of
MCIWorldcom's service, TNS could not provision sufficient customers onto its
network to generate the revenue necessary to pay the amounts billed by
MCIWorldcom. At September 30, 1999, the outstanding amounts billed by
MCIWorldcom had reached approximately $9.5 million, which TNS disputes. On
September 30, 1999, TNS terminated the agreement with MCIWorldcom for cause;
MCIWorldcom concurrently terminated service to TNS when TNS did not provide
adequate assurances of its ability to pay the disputed balance. TNS accordingly
ceased network operations on September 30, 1999.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired. None Required.
(b) Pro Forma Financial Information. Not Applicable.
(c) Exhibits. None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TELEHUB COMMUNICATIONS CORPORATION
TELEHUB NETWORK SERVICES CORPORATION
TELEHUB TECHNOLOGIES CORPORATION
TELEHUB LEASING CORPORATION
November 10, 1999 By: /s/ JOHN R. LAWSON
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John R. Lawson, Chief Financial Officer
of each Registrant
