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): March 26, 1998
QWEST COMMUNICATIONS INTERNATIONAL 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)
000-22609 84-1339282
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(Commission File Number) (IRS Employer Identification No.)
555 SEVENTEENTH STREET, SUITE 1000 DENVER, COLORADO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-291-1400
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On March 26, 1998, the Registrant and certain stockholders of EUnet
International Limited, a company organized under the laws of England ("EUnet"),
a leading, Amsterdam-based, European Internet service provider with business
units operating in 13 European countries, entered into a definitive Transaction
Agreement (the "EUnet Transaction Agreement"), to acquire EUnet for
approximately $154 million in cash and Qwest Common Stock (as defined below).
Pursuant to the EUnet Transaction Agreement, the holders of all of the
preference shares, "A" ordinary shares and options of EUnet and of more than 92%
of the ordinary shares of EUnet have agreed to sell their shares or options to
the Registrant. At the closing, EUnet stockholders and optionholders will
receive 3,621,590 newly issued shares of common stock, par value $.01 per share,
of the Registrant ("Qwest Common Stock"), having a deemed value of approximately
$135.5 million (based upon a deemed value of approximately $37.42 per share),
and approximately $4.5 million in cash. In addition, they will receive
approximately $14.4 million in cash (plus interest to the date of payment), or
(at the Registrant's option) additional shares of Qwest Common Stock having that
value (based upon an average of the closing prices for a specified 15-day
period), in connection with the registration under the Securities Act of 1933,
as amended (the "Securities Act"), of the resale of the shares of Qwest Common
Stock issued at the closing. Shares of Qwest Common Stock (included in the $154
million referred to above) having a deemed value of $23 million will be placed
in escrow for two years, and may be recovered by the Registrant, to satisfy any
indemnification claims. The closing of the transactions contemplated by the
EUnet Transaction Agreement is conditioned on the satisfaction of certain
customary conditions, including the receipt of certain regulatory approvals. The
parties expect the closing to occur in April 1998. Promptly thereafter, the
Registrant will acquire any remaining ordinary shares of EUnet by means of a
compulsory purchase under applicable law. The acquisition will be accounted for
as a purchase.
The shares of Qwest Common Stock will be issued to EUnet stockholders
in a private placement exempt from registration under the Securities Act. The
Registrant has agreed to undertake the registration of the resale of the shares
of Qwest Common Stock under the Securities Act not later than, and such shares
will not be freely tradeable until, the earlier of (i) three weeks after the
closing of the Merger or (ii) September 30, 1998 (or, under certain
circumstances, a later date, but no later than October 31, 1998).
The joint press release dated March 26, 1998 of the Registrant and
EUnet announcing the execution of the Transaction Agreement is filed with the
Securities and Exchange Commission as Exhibit 99.1 to this Current Report on
Form 8-K.
The Registrant cautions that the press release contains forward-looking
statements that include, among others, statements concerning the Registrant's
plans to complete an approximately 16,250 route mile coast-to-coast,
technologically advanced, fiber optic telecommunications network (the "Qwest
Network"), expectations as to funding its capital requirements, anticipated
expansion of carrier and commercial services and other statements of
expectations, beliefs, future plans and strategies, anticipated developments and
other matters that are not historical facts. The Registrant cautions that these
forward-looking statements
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are subject to risks and uncertainties that could cause actual events or results
to differ materially from those expressed or implied by the statements.
Important factors that could prevent the Registrant from achieving its stated
goals include, but are not limited to; (i) failure by the Registrant to manage
effectively, cost efficiently and on a timely basis the construction of the
Qwest Network route segments; (ii) failure by the Registrant to enter into
additional customer contracts to sell dark fiber or provide high-volume capacity
and otherwise expand its telecommunications customer base; (iii) failure by the
Registrant to obtain and maintain all necessary rights-of-way; (iv) intense
competition in the Registrant's carrier services and commercial services
markets; (v) the potential for rapid and significant changes in technology and
their effect on the Company's operations; (vi) operating and financial risks
related to managing rapid growth and integrating acquired businesses; (vii)
adverse changes in the regulatory environment; (viii) failure by the Registrant
to consummate the previously announced merger with LCI International Inc. timely
or at all; and (ix) risks of being highly leveraged and sustaining operating
cash deficits.
The shares of Qwest Common Stock to be issued in the transaction have
not been registered under the Securities Act and, unless so registered or an
exemption from registration is available, may not be offered or sold in the
United States or its territories and possessions or to any "U.S. Person" (within
the meaning of the Securities Act) and hedging transactions involving such
shares may not be conducted unless in compliance with the Securities Act.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit 99.1 Press release of the Registrant and EUnet International
Limited dated March 26, 1998.
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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 thereunto duly authorized.
QWEST COMMUNICATIONS INTERNATIONAL INC.
DATE: March 27, 1998 By: /s/ ROBERT S. WOODRUFF
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Robert S. Woodruff
Executive Vice President - Finance,
Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
Exhibit 99.1 Press release of the Registrant and EUnet International
Limited dated March 26, 1998.
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QWEST CORPORATE CONTACT: QWEST INVESTOR CONTACT: QWEST MEDIA CONTACT:
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Qwest Qwest Communications Alexander Communications
Communications Lee Wolfe Erin McKelvey
Diane Reberger (800) 567-7296 (303) 615-5070 x108
Pgr: (800)800-9456 [email protected] [email protected]
[email protected] HTTP://WWW.QWEST.NET HTTP://WWW.ALEXANDER-PR.COM
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HTTP//WWW.QWEST.NET
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EUNET CORPORATE CONTACT: EUNET MEDIA CONTACT:
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EUnet International The Weber Group
Helen Miller Jeremy Morgan
+31 20 530 5333 +44 171 240 6189
[email protected] [email protected]
HTTP://WWW.EU.NET
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QWEST ENTERS EUROPEAN DATA MARKET IN 13 COUNTRIES THROUGH
ACQUISITION OF EUNET INTERNATIONAL LTD.
DENVER - AMSTERDAM, NETHERLANDS - MARCH 26, 1998 - Qwest Communications
International Inc. today announced it has agreed to acquire Amsterdam-based
EUnet International in a cash and stock transaction valued at approximately $154
million. EUnet is a leading European Internet service provider (ISP) with
business units operating in 13 countries - Austria, Belgium, Finland, France,
Spain, Portugal, Norway, Sweden, Luxembourg, Czech Republic, Switzerland,
Romania and Estonia. EUnet had revenues in 1997 of approximately $55 million,
and 1998 revenues are expected to reach $16 million in the first quarter and
over $75 million for the entire year. EUnet has over 400 employees and serves
approximately 60,000, primarily business, customers throughout Europe. In
addition, Qwest will fund EUnet's recent acquisition of a 50 percent interest in
X-Link, a leading German Internet service provider.
The board of directors of each company has approved the acquisition and the
requisite number of EUnet shareholders has agreed to the transaction. EUnet
shareholders will receive approximately $135.5 million in newly issued shares of
Qwest common stock, approximately $4.5 million in cash, and approximately $14.4
million in cash or additional Qwest shares at Qwest's option. The acquisition
will be accounted for as a purchase. The closing is subject to the satisfaction
of certain customary conditions, including the receipt of applicable securities
law approval. The parties expect to consummate the acquisition within 30 days.
"The European data market is exploding to an estimated $55 billion by the year
2000. The Internet is the driving force behind this trend," said Joseph P.
Nacchio, president and CEO
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at Qwest. "EUnet has extensive Internet expertise and an understanding of
Europe's diverse national markets and regulatory issues. The liberalization of
the European telecommunications market and our recently acquired transatlantic
capacity, combined with the EUnet acquisition, allow Qwest to provide business
customers with high performance and cost effective end-to-end data and Internet
services between Norm America and Europe."
"EUnet recognizes that the future of Internet usage rides on the ability to move
large amounts of data and images quickly and without error. Partnering with
Qwest allows the two companies to capitalize on their expertise in IP data
networking products and to leverage the superior Qwest network infrastructure to
deliver a leading edge American-European data strategy," said Jim Omand,
Chairman of the Board at EUnet International. "Joining Qwest will allow us to
further expand our presence in Europe and to continue to deliver to our
customers the data network services that have made EUnet a market leader."
The Qwest shares will be issued in a private placement exempt from registration
under the Securities Act of 1933. Qwest has agreed to register the shares for
resale under the Securities Act within three weeks after the closing of the
previously announced merger between Qwest and LCI International, Inc. or by
September 30, 1998, if earlier (or under certain circumstances as late as
October 31, 1998).
THE QWEST MACRO CAPACITY(SM) FIBER NETWORK
Qwest's planned domestic 16,250 mile network will serve more than 125 cities,
which represent approximately 80 percent of the data and voice traffic
originating in the United States, upon its scheduled completion in the second
quarter of 1999. Currently, nearly 3,750 miles are activated from Los Angeles to
Cleveland; and from Dallas to Houston. Qwest is also extending its network 1,400
miles into Mexico with completion slates for late third quarter 1998.
The Qwest Macro Capacity Fiber network is designed with a highly reliable and
secure bi-directional, line switching OC-192 SONET ring architecture. Upon
completion, the network will offer a self-healing system that provides the
ultimate security and reliability by allowing instantaneous rerouting in the
event of a fiber cut.
ABOUT EUNET
Established in 1982 and the first European provider of Internet services for
business use, EUnet was instrumental in creating Europe's Internet
infrastructure. Today, EUnet International provides, via subsidiaries,
affiliated companies and business partners, one-stop shopping for corporate
Internet access in Europe with a network spanning over 42 countries and more
than 400 PoPs (Points of Presence). Via its transit-free backbone, EUnet
International offers the business community a wide range of turnkey solutions
from full-service, centrally-managed connectivity and Intranets to mobile
access, Webcasting, Web Storefront and Electronic Commerce solutions. For more
information, please visit EUnet's website at WWW.EU.NET.
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ABOUT QWEST
Qwest Communications International Inc. (NASDAQ:QWST) is a multimedia
communications company building a high-capacity, fiber optic network for the
21st century. With its cutting-edge technology, Qwest will deliver high-quality
data, video and voice connectivity securely and reliably to businesses,
consumers and over communications service providers. Further information is
available at WWW.QWEST.NET
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This release may contain forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by Qwest with the SEC,
specifically the most recent reports filed under the Securities Exchange Act of
1934, which identify important risk factors that could cause actual results to
differ from those contained in the forward-looking statements, including
potential fluctuations in quarterly results, dependence on new product
development, rapid technological and market change, failure to complete the
network on schedule, failure to consummate the proposed merger with LCI
International timely or at all, volatility of stock price, financial risk
management and future growth subject to risks.
Information regarding EUnet (including forecasts of results of operation for
1998 or portions thereof) have been provided by EUnet and have not been verified
by Qwest or its representatives. No assurance can be given with respect to such
information or that such forecasts will be realized.
This announcement is not an offer to sell or a solicitation to buy any
securities of Qwest. Any offering securities will be made only pursuant to a
prospectus prepared by Qwest.
The Qwest shares to be issued in the transaction have not been registered under
the Securities Act and, unless so registered or an exemption from registration
is available, may not be offered or sold in the United States or its territories
and possessions or to any "U.S. Person" (within the meaning of the Securities
Act) and hedging transactions involving such shares may not be conducted unless
in compliance with the Securities Act.
The Qwest logo is a registered trademark of Qwest Communications International
Inc. in the U.S. and certain other countries.
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