SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): February 11, 1999
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Telegroup, Inc.
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(Exact name of registrant as specified in its charter)
Iowa 000-29284 42-1344121
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
2098 Nutmeg Avenue, Fairfield, Iowa 52556
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 472-5000
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(Former name and address, if changed since last report): N/A
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TABLE OF CONTENTS:
BANKRUPTCY RECEIVERSHIP..................................................3
OTHER EVENTS.............................................................4
FINANCIAL STATEMENTS EXHIBITS............................................4
2
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BANKRUPTCY RECEIVERSHIP
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Item 3:: Bankruptcy or Receivership.
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On February 11, 1999, Telegroup, Inc. (the Registrant) filed a Chapter 11
petition under the provisions of the Title 11 United States Code, as amended,
in the United States Bankruptcy Court for the Newark District of New Jersey
(The Bankruptcy Case). The Bankruptcy Case is currently pending as
Case 99-31527 (WFT).
Telegroup's subsidiaries did not file petitions under the Bankruptcy Code
with the following exceptions: (1) on February 16 and 18, 1999, Telegroup's
subsidiaries in Australia, with the exception of RediCall Pty Limited,
appointed an administrator to liquidate the estates of such Australian
affiliates; and (2) on February 22, 1999, Telegroup Network Services New
Zealand Limited, a New Zealand subsidiary, filed for liquidation.
OTHER EVENTS
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Item 5: Other Events.
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Telegroup also announced that it had been advised by The NASDAQ Stock Market,
Inc. that, based on its review, NASDAQ de-listed Telegroup on February 17,
1999, for failure to meet the conditions regarding market value of public
float and minimum bid price. As a result, quoted prices for Telegroup's
shares are no longer available through the NASDAQ National Market System.
The trading symbol was changed from TGRP to TGRPQ.
FINANCIAL STATEMENTS EXHIBITS
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Item 7: Financial Statements and Exhibits
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(3) Exhibits
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Item Exhibit Index
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1 Press Release, dated, February 11, 1999
3
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Telegroup, Inc.
Dated: March 31, 1999 By: /s/ Mark A. Velarde
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Mark A. Velarde
Chief Financial Officer
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INDEX TO EXHIBITS
FORM 8-K
Exhibit Page
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1 Press Release, dated February 11, 1999. 6
TELEGROUP INC. FILES CHAPTER 11 PETITION
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Foreign Subsidiaries Not Part of Filing
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FAIRFIELD, Iowa, Feb. 11, 1999 Telegroup, Inc. (Nasdaq: TGRP) today announced
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it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy
Code in order to facilitate a financial restructuring. The Company filed the
petition late yesterday in the United States Bankruptcy Court for the
District of New Jersey.
The Company also has hired a New York-based corporate turnaround specialist,
Alvarez & Marsal, to guide it through the restructuring process and develop
restructuring and other strategic alternatives including the possible sale of
the Company. David Walsh will serve as President and Chief Operating Officer
and Mark Valarde will serve as Chief Financial Officer during the
restructuring of the Company. Clifford Rees will remain as the Company's
chief executive officer.
Telegroup elected to pursue a Chapter 11 reorganization so that it can
provide comfort to its creditors, employees, agents, carriers and customers
that it will continue to operate in the normal course of business while it
completes its restructuring. The Company has sought and expects to receive
the Court's approval to pay for accrued and earned commissions to agents in
the ordinary course and to pay agent commissions, employee salaries, wages
and benefits without interruption.
The Company said its foreign subsidiaries are not part of the Chapter 11.
The Company expects that, subject to Bankruptcy Court Approval, it will
receive immediate access to its cash collateral, which is adequate to support
the ongoing operations of the Company and its foreign subsidiaries. In
addition, the Company expects to receive additional operating funds in the
form of Debtor in Possession (DIP) financing.
"Filing under Chapter 11 now is in the best interest of Telegroup and its
creditors," Rees said. "This allows the Company to develop a plan of
reorganization that puts it back on the right track with a reduced debt
burden and improved profitability."
Telegroup said a general downturn in the capital markets caused the Company
to begin looking for alternative sources of capital to refinance its maturing
loans and to fully fund its business plans. Since October, the Company has
been considering many financial restructuring alternatives including raising
funds through public or private equity, attracting a strategic business
partner, selling certain business assets or filing a petition for relief
under Chapter 11 of the U.S. Bankruptcy Code. In addition, Telegroup launched
a operational restructuring plan to scale back low margin wholesale business,
reduce its workforce, suspend its ATM network initiative and down-size senior
management.
Telegroup Inc.
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Telegroup provides national and international long distance
telecommunications services, serving residential and small and medium-sized
business customers in more than 200 countries worldwide. Telegroup operates a
global, digital, facilities-based network, the Telegroup Intelligent Global
Network (R), which consists of 25 Nortel GSP and Excel LNX voice switches in
12 countries, 23 Nortel Passport ATM switches, 6 enhanced services platforms,
26,000 miles of owned and leased capacity on digital fiber-optic cable links,
and leased parallel data transmission capacity.
This press release contains certain forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding Telegroup's
future operating performance and network expansion. Telegroup's actual
results might differ materially from those projected in forward-looking
statements as a result of numerous factors including without limitation, the
Company's success in developing its business plan and acquiring additional
financial needed to meet this plan, market competition, unforeseen operating
and technical problems, regulatory uncertainties, possible delays in the full
implementation of liberalization initiatives by foreign governments, foreign
currency fluctuations, and changes in the U.S. and foreign tax laws. Those
and other risks are described in the Company's filings with the Securities
and Exchange Commission.
