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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
June 21, 1999
Date of Report (Date of earliest event reported)
QWEST COMMUNICATIONS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
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Delaware 000-22609 84-1339282
(State of other jurisdiction (Commission (IRS employer
of incorporation) file no.) identification no.)
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
(Address of principal executive offices) (Zip code)
(303) 291-1400
Registrant's telephone number,
including area code
Not applicable
(Former name or address, if changed since last report)
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<PAGE>
Item 5. Other Events.
On June 21, 1999, Qwest Communications International Inc., a Delaware
corporation ("Qwest"), issued a press release in connection with separate
letters it delivered on June 21, 1999 to Mr. Solomon D. Trujillo, Chairman,
President and Chief Executive Officer of U S WEST, Inc., a Delaware corporation
("U S WEST"), and Mr. Joseph P. Clayton, Chief Executive Officer of Frontier
Corporation, a New York corporation ("Frontier"). A copy of the Qwest press
release, dated June 21, 1999, which includes the letters delivered to Messrs.
Trujillo and Clayton, is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
This Current Report on Form 8-K 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 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 and on budget,
financial risk management and future growth subject to risks, Qwest's ability to
achieve Year 2000 compliance, and adverse changes in the regulatory or
legislative environment. This release and the attachments include analysts'
estimates and other information prepared by third parties for which Qwest
assumes no responsibility. In addition, certain statements regarding synergies
and other projections and information contained in this release and the
attachments are based on publicly available information regarding U S WEST and
Frontier. Qwest undertakes no obligation to review or confirm analysts'
expectations or estimates or such publicly available information or to release
publicly any revisions to any forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 99.1 -- Press release of the Registrant, dated June 21, 1999.
2
<PAGE>
SIGNATURE
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.
By: /s/ Robert S. Woodruff
-----------------------------------
Name: Robert S. Woodruff
Title: Executive Vice President -
Finance and Chief Financial
Officer
June 21, 1999
3
<PAGE>
EXHIBIT INDEX
Exhibit 99.1 -- Press release of the Registrant, dated June 21, 1999.
4
<PAGE>
Exhibit 99.1
[QWEST LOGO] [GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
Contacts: Qwest Media: Qwest Investor:
Tyler Gronbach Lee Wolfe
303-992-2155 303-992-1609
QWEST COMMUNICATIONS RESTATES COMMITMENT
TO ACQUIRE U S WEST AND FRONTIER
DENVER, June 21, 1999 - Qwest Communications International Inc. (NASDAQ: QWST),
announced today it is encouraged by the responses of the Board of Directors of
US WEST and Frontier that both companies will continue to evaluate the offers
made to them by Qwest.
Joseph P. Nacchio, Chairman and CEO of Qwest, told U S West and Frontier that
Qwest remained committed to entering into a transaction with both companies.
Nacchio said that the superiority of the Qwest offer will become increasingly
evident as the industry and markets appreciate the value of the proposed
combinations, the quality of Qwest's network, management and business and the
synergies resulting from the combinations.
"The value and strength of our proposals are becoming more evident every day.
We expect the continuing review of our offers will convince the boards and
management of U S West and Frontier that our offers are truly superior to
Global Crossing's. We expect and intend to be successful in both transactions,"
Nacchio said.
Nacchio made his statements to U S West and Frontier in letters addressed to
their respective chief executive officers. Copies of the letters are attached
to this news release.
In the letters, Nacchio emphasized the following:
o Qwest offers a premium to the Global Crossing proposals.
o Qwest stock is stronger and more liquid than Global Crossing stock.
o Qwest offers greater realizable syngeries and upside potential than Global
Crossing.
o Qwest offers the benefits of a true merger. The tracking stock proposed by
Global Crossing does not.
Qwest also announced today that it had filed a registration statement relating
to the securities to be issued by it in its proposed transaction with US WEST
and Frontier. This registration statement relates only to the transactions
proposed to US WEST and Frontier and does not constitute or commence a tender
or exchange offer with respect to any securities of either US WEST or Frontier.
The registration statement also does not constitute a proxy solicitation for
any matter that may be submitted for the approval of the shareholders of U S
West or Frontier.
About Qwest
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable
and secure broadband Internet-based data, voice and image communications for
businesses and consumers. Headquartered in Denver, Qwest has more than 8,500
employees working in North America, Europe and Mexico. The Qwest Macro
Capacity(R) Fiber Network, designed with the newest optical networking, will
span more than 18,500 route miles in the United States when it is completed by
mid-1999, and an additional 315-mile network route that will be completed by
the end of the year. In addition, Qwest and KPN, the Dutch telecommunications
company, have formed a venture to build and operate a high-capacity European
fiber optic, Internet Protocol-based network that has 2,100 miles and will span
9,100 miles when it is completed in 2001. Qwest also has nearly completed a
1,400-mile network in Mexico.
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# # #
This release and the attachments 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 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
and on budget, financial risk management and future growth subject to risks,
Qwest's ability to achieve Year 2000 compliance, and adverse changes in the
regulatory or legislative environment. This release and the attachments include
analysts' estimates and other information prepared by third parties for which
Qwest assumes no responsibility. In addition, certain statements regarding
synergies and other projections and information contained in this release and
the attachments are based on publicly available information regarding U S WEST
and Frontier. Qwest undertakes no obligation to review or confirm analysts'
expectations or estimates or such publicly available information or to release
publicly any revisions to any forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
The Qwest logo is a registered trademark of Qwest Communications International
Inc. in the U.S. and certain other countries.
<PAGE>
[LETTERHEAD OF QWEST COMMUNICATIONS INTERNATIONAL INC.]
Mr. Joseph P. Clayton
Chief Executive Officer
Frontier Corporation
180 South Clinton Avenue
Rochester, New York 14646
June 21, 1999
Dear Joe:
We are pleased that your Board has decided to consider our offer. We
are confident that your Board will determine that our proposal is financially,
structurally and strategically superior to Global Crossing's offer and in the
best interests of your shareholders. We remain committed to entering into a
transaction with Frontier.
Our proposal is superior to the Global Crossing offer for the
following reasons, among others:
o Qwest offers a premium to the Global Crossing proposal. Our offer
provides more value to your shareholders. We will pay $20 in cash
and deliver 1.226 shares of Qwest common stock worth $66.51 in total
for each Frontier share, based upon Friday's closing price, if we
enter into an agreement with U S WEST. If we do not reach agreement
with U S WEST, we will pay $20 in cash and deliver 1.181 shares for
each Frontier share, having a value of $64.80. Both our offers are
greater than $63.00, which is the value of Global Crossing's offer.
As you may know, some analysts estimate that our offer is worth
$87.00 for each Frontier share, based upon the expected synergies of
a combined Qwest/Frontier/U S WEST, our anticipated growth rate and
the multiples accorded similarly situated companies. We attach a
recent DLJ research analysts' report which supports that conclusion.
o Qwest stock is stronger and more liquid than Global Crossing stock.
We offer a stronger, more valuable currency to your shareholders. We
have a well-established business and operations, a fully constructed
network and a proven management team with a record of significant
accomplishments. We have successfully managed Qwest's businesses and
consistently exceeded analysts' expectations. Additionally, our
management team has experience in successfully integrating large
acquisitions. By contrast, Global Crossing offers one undersea
cable, less than two hundred employees, few customers and a
management team without a track record at the company. Global
Crossing's main feature is its proposed business plan-- not its
network, customer base or management. Put simply, our stock is a
better currency because it is backed by better assets, real
operations and a strong, experienced management team.
In valuing the Global Crossing offer, you should also take into
account the fact that Global Crossing stock is relatively illiquid
and will remain so until well after your merger with Global Crossing
closes. The public float of Global Crossing stock after the tender
offer that closed Friday, June 18, is approximately 52 million
shares, representing approximately 14% of Global Crossing's
outstanding shares. We believe that this thin float has supported an
artificially high price for the stock, reflecting its temporary
scarcity, especially during the pendency of U S WEST's tender offer
for Global Crossing stock. This thin float may contribute to
substantial declines in the Global Crossing stock price upon the
closing of Global Crossing's mergers with Frontier and U S WEST if
Global Crossing insiders sell their shares after the closing of the
Frontier merger (when their lockups terminate) or if even a small
number of Frontier or U S WEST shareholders elect to sell the Global
Crossing shares they would receive in the mergers with Global
Crossing.
By contrast, the current public float of Qwest stock is
approximately 490 million shares, representing approximately 62% of
Qwest's outstanding shares (or 416 million shares, if we exclude
stock owned by BellSouth). If we were to close our proposed merger
with Frontier, at the higher exchange ratio we have offered in
combination with a merger with U S WEST, then our public float would
be approximately 714 million shares, representing approximately 70%
of Qwest's shares then outstanding (or 640 million shares, if we
exclude stock owned by BellSouth). The depth of our market
capitalization provides much greater liquidity to your shareholders
compared with the thin public float offered by Global Crossing.
o Qwest offers greater synergies and greater upside potential. Qwest
identified a number of specific, identifiable and quantifiable
synergies resulting from a combination with both Frontier and U S
WEST. As we have described before, we believe that the combination
will result in significant operating synergies, aggregating
approximately $4.1 billion to $4.45 billion through the year 2005
from the combination of Qwest and Frontier and $14 billion through
the year 2005 from a combination of Frontier, U S WEST and Qwest.
These synergies are much greater than the vague and unexplained
synergies that Global Crossing claims will result from its offer. In
addition, our management has successfully acquired five companies,
and is experienced at integrating companies, realizing synergies and
being measured by analysts and the investment community by their
success in achieving such synergies. Your shareholders will receive
the benefits of these additional synergies in the higher long-term
value of the combined company's stock.
o Qwest offers the benefits of a true merger. The Qwest proposal
offers a capital structure for the combination with Frontier and U S
WEST that is easier to understand and value than the capital
structure offered by Global Crossing. Frontier shareholders (who, if
the merger with Global Crossing closes, will be forced into the
tracking stock structure) will not be well-served by a structure
that confuses the marketplace and coerces certain shareholders of
Frontier to accept the tracking stock that they do not desire to
own.
We also think that a single class of stock best serves the strategic
rationale of combining telecommunications companies for the purpose
of offering customers a bundle of services (including local,
long-distance, Internet and data products) through an owned network
with end-to-end connectivity in a world-wide marketplace. Global
Crossing's tracking stock will separate management teams, divide
assets and operations and create long-term conflicts between the
strategies, objectives and management of the two entities reflected
in a tracking stock structure. Running two businesses separately,
with different objectives and management, will deprive your
shareholders of the synergies that they should expect from a merger.
In contrast, we propose a simple capital structure that will
increase synergies and earnings growth. We expect that our stock
would be supported by investment funds seeking superior performance
by the combined company.
The analyst for Global Crossing's financial advisor has written that
our proposal for a single class of stock "smashes" together Qwest,
Frontier and U S WEST. We think that his word choice is a little
melodramatic, but we agree with his fundamental point. We do propose
combining three companies in a real merger. Only in this way would
your shareholders and our shareholders benefit from a fully
integrated business. Without that integration, Frontier shareholders
could realize the benefits of merging with Global Crossing and U S
WEST, at less expense, simply by buying Global Crossing and U S WEST
stock in the market and stapling those certificates together with
their Frontier stock certificates. The Global Crossing offer does
not offer more than an expensive staple. We offer integration and
real synergies.
Finally, the dividend requirement for the L stock would result in a
significant and continuing cash outflow to the L tracking
shareholders. This will delay the redeployment of resources and
direct money away from reinvestment to grow the business. This will
slow the growth of the combined company and diminish shareholder
value.
For those and other reasons our offer is superior to the Global
Crossing proposal. We believe that the superiority of our offer will become
increasingly evident as the industry and the markets appreciate the value of
the proposed combinations, the quality of Qwest's network, management and
operations and the synergies resulting from the combinations.
We look forward to discussing our proposal with you.
Sincerely,
/s/ Joseph P. Nacchio
<PAGE>
[LETTERHEAD OF QWEST COMMUNICATIONS INTERNATIONAL INC.]
Mr. Solomon Trujillo
Chairman, President and Chief Executive Officer
U S WEST, Inc.
1801 California Street
Denver, Colorado 80202
June 21, 1999
Dear Sol:
We are pleased that your Board has decided to consider our offer. We
are confident that your Board will determine that our proposal is financially,
structurally and strategically superior to Global Crossing's offer and in the
best interests of your shareholders. We remain committed to entering into a
transaction with U S WEST.
Our proposal is superior to the Global Crossing offer for the
following reasons, among others:
o Qwest offers a premium to the Global Crossing proposal. Our offer
provides more value to your shareholders. We will deliver 1.783
shares of Qwest common stock worth $67.64 for each of their shares,
based upon Friday's closing price, if we enter into an agreement
with Frontier. If we do not reach agreement with Frontier, we will
deliver to your shareholders 1.738 shares for each U S WEST share,
having a value of $65.94. Both our offers are greater than $63.03,
which was the value of Global Crossing's offer at the end of the day
Friday.
As you may know, some analysts estimate that our offer is worth
$98.00 for each U S WEST share, based upon the expected synergies of
a combined Qwest/U S WEST/Frontier, our anticipated growth rate and
the multiples accorded similarly situated companies. We attach a
recent DLJ research analysts' report which supports that conclusion.
o Qwest stock is stronger and more liquid than Global Crossing stock.
We offer a stronger, more valuable currency to your shareholders. We
have a well-established business and operations, a fully constructed
network and a proven management team with a record of significant
accomplishments. We have successfully managed Qwest's businesses and
consistently exceeded analysts' expectations. Additionally, our
management team has experience in successfully integrating large
acquisitions. By contrast, Global Crossing offers one undersea
cable, less than two hundred employees, few customers and a
management team without a track record at the company. Global
Crossing's main feature is its proposed business plan-- not its
network, customer base or management. Put simply, our stock is a
better currency because it is backed by better assets, real
operations and a strong, experienced management team.
In valuing the Global Crossing offer, you should also take into
account the fact that Global Crossing stock is relatively illiquid
and will remain so until well after the Frontier/Global Crossing
merger closes. The public float of Global Crossing stock after the
tender offer that closed Friday, June 18, is approximately 52
million shares, representing approximately 14% of Global Crossing's
outstanding shares. We believe that this thin float has supported an
artificially high price for the stock, reflecting its temporary
scarcity, especially during the pendency of your tender offer for
Global Crossing stock. If the Frontier exchange ratio were fixed at
the closing price of Global Crossing stock on June 18, or $49.75 per
share, the public float of Global Crossing stock after the closing
of the Frontier/Global Crossing merger would be approximately 283
million shares, representing approximately 47% of Global Crossing's
shares then outstanding. This thin public float may contribute to
substantial declines in the Global Crossing stock price if Global
Crossing insiders sell their shares after the closing of the
Frontier/Global Crossing (when their lockups terminate) or if even a
small number of Frontier or U S WEST shareholders elect to sell the
Global Crossing shares they would receive in the mergers with Global
Crossing.
By contrast, the current public float of Qwest stock is
approximately 490 million shares, representing approximately 62% of
Qwest's outstanding shares (or 416 million shares, if we exclude
stock owned by BellSouth). If we were to close our proposed merger
with Frontier, at the higher exchange ratio we have offered in
combination with a merger with U S WEST, then our public float would
be approximately 714 million shares, representing approximately 70%
of Qwest's shares then outstanding (or 640 million shares, if we
exclude stock owned by BellSouth). The depth of our market
capitalization provides much greater liquidity to your shareholders
compared with the thin public float offered by Global Crossing.
o Qwest offers greater synergies and greater upside potential. Qwest
identified a number of specific, identifiable and quantifiable
synergies resulting from a combination with both U S WEST and
Frontier. As we have described before, we believe that the
combination will result in significant operating synergies,
aggregating approximately $9.3 billion to $9.75 billion through the
year 2005 from the combination of U S WEST and Qwest and $14 billion
through the year 2005 from a combination of U S WEST, Frontier and
Qwest. These synergies are much greater than the vague and
unexplained synergies that Global Crossing claims will result from
its offer. In addition, our management has successfully acquired
five companies, and is experienced at integrating companies,
realizing synergies and being measured by analysts and the
investment community by their success in achieving such synergies.
Your shareholders will receive the benefits of these additional
synergies in the higher long-term value of the combined company's
stock.
o Qwest offers the benefits of a true merger. The Qwest proposal
offers a capital structure for the combined company that is easier
to understand and value than the capital structure offered by Global
Crossing. U S WEST shareholders will not be well-served by a
tracking stock structure that confuses the marketplace and coerces
certain shareholders of U S WEST to accept the tracking stock that
they do not desire to own.
We also think that a single class of stock best serves the strategic
rationale of combining telecommunications companies for the purpose
of offering customers a bundle of services (including local,
long-distance, Internet and data products) through an owned network
with end-to-end connectivity in a world-wide marketplace. Global
Crossing's tracking stock will separate management teams, divide
assets and operations and create long-term conflicts between the
strategies, objectives and management of the two entities reflected
in a tracking stock structure. Running two businesses separately,
with different objectives and management, will deprive your
shareholders of the synergies that they should expect from a merger.
In contrast, we propose a simple capital structure that will
increase synergies and earnings growth. We expect that our stock
would be supported by investment funds seeking superior performance
by the combined company.
The analyst for Global Crossing's financial advisor has written that
our proposal for a single class of stock "smashes" together Qwest, U
S WEST and Frontier. We think that his word choice is a little
melodramatic, but we agree with his fundamental point. We do propose
combining three companies in a real merger. Only in this way would
your shareholders and our shareholders benefit from a fully
integrated business. Without that integration, your shareholders
could realize the benefits of merging with Global Crossing and
Frontier, at less expense, by simply keeping their U S WEST shares,
buying Global Crossing and Frontier shares on the open market and
stapling the stock certificates together. The Global Crossing offer
does not offer more to your shareholders than an expensive staple.
We offer integration and real synergies.
Finally, the dividend requirement for the L stock would result in a
significant and continuing cash outflow to the L tracking
shareholders. This will delay the redeployment of resources and
direct money away from reinvestment to grow the business. This will
slow the growth of the combined company and diminish shareholder
value.
For those and other reasons our offer is superior to the Global
Crossing proposal. We believe that the superiority of our offer will become
increasingly evident as the industry and the markets appreciate the value of
the proposed combinations, the quality of Qwest's network, management and
operations and the synergies resulting from the combinations.
We look forward to discussing our proposal with you.
Sincerely,
/s/ Joseph P. Nacchio
