<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRICE COMMUNICATIONS WIRELESS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4812 13-3956941
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of Classification Code Number) identification
incorporation or organization) number)
</TABLE>
SUBSIDIARY GUARANTOR REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY
EXACT NAME OF STANDARD I.R.S.
GUARANTOR REGISTRANTS STATE INDUSTRIAL EMPLOYER
AS SPECIFIED IN OF CLASSIFICATION IDENTIFICATION
THEIR RESPECTIVE CHARTERS FORMATION CODE NUMBER NUMBER
- ------------------------------------- ----------- --------------- ------------
<S> <C> <C> <C>
Panama City Communications, Inc. Florida 4812 59-2863688
Panama City Cellular Telephone Florida 4812 59-2881586
Company, Ltd.
Panhandle Cellular Partnership Florida 4812 65-0083886
Savannah Cellular Limited Partnership Delaware 4812 58-1896629
CEI Communications, Inc. Delaware 4812 94-3032437
Macon Cellular Telephone Systems, New 4812 02-0414924
L.P. Hampshire
Columbus Cellular Telephone Company Georgia 4812 58-1802141
Albany Cellular Partners Georgia 4812 22-2918690
Cellular Dynamics Telephone Company Georgia 4812 58-1761830
of Georgia
Montgomery Cellular Holding Co., Inc. Delaware 4812 42-1330618
Montgomery Cellular Telephone Alabama 4812 63-0972220
Company, Inc.
<CAPTION>
PRIMARY
EXACT NAME OF STANDARD I.R.S.
GUARANTOR REGISTRANTS STATE INDUSTRIAL EMPLOYER
AS SPECIFIED IN OF CLASSIFICATION IDENTIFICATION
THEIR RESPECTIVE CHARTERS FORMATION CODE NUMBER NUMBER
- ------------------------------------- ----------- --------------- ------------
<S> <C> <C> <C>
Cellular Systems of Southeast Delaware 4812 63-0964897
Alabama, Inc.
Dothan Cellular Telephone Company, Alabama 4812 63-0964898
Inc.
Palmer Wireless Holdings, Inc. Delaware 4812 65-0477815
Price Communications Wireless II, Delaware 4812 13-3966848
Inc.
Price Communications Wireless III, Delaware 4812 13-3970561
Inc.
Price Communications Wireless IV, Delaware 4812 13-3970562
Inc.
Price Communications Wireless V, Inc. Delaware 4812 13-3970564
Price Communications Wireless VI, Delaware 4812 13-3970565
Inc.
Price Communications Wireless VII, Delaware 4812 13-3970566
Inc.
Price Communications Wireless VIII, Delaware 4812 13-3970567
Inc.
Price Communications Wireless IX, Delaware 4812 13-3970569
Inc.
</TABLE>
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(212) 757-5600
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
ROBERT PRICE
PRICE COMMUNICATIONS WIRELESS, INC.
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(212) 757-5600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
RICHARD D. TRUESDELL, JR.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE(1) OFFERING PRICE(1)
<S> <C> <C> <C>
9 1/8% Senior Secured Guarantee Exchange Notes due 2006
(the "Notes")........................................... $525,000,000 100.000% $525,000,000
Guarantees of the Notes by subsidiaries of Price
Communications Wireless, Inc. (3).......................
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE(2)
<S> <C>
9 1/8% Senior Secured Guarantee Exchange Notes due 2006
(the "Notes")........................................... $154,875.00
Guarantees of the Notes by subsidiaries of Price
Communications Wireless, Inc. (3)....................... (3)
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Calculated pursuant to Rule 457(f).
(3) The following direct and indirect subsidiaries of Price Communications
Wireless, Inc. are Co-Registrants (the "Guarantors"), each of which was
formed in the state and has I.R.S. Employer Identification Number indicated:
Panama City Communications, Inc., Florida (59-2863688); Panama City Cellular
Telephone Company, Ltd., Florida (59-2881586); Panhandle Cellular
Partnership, Florida (65-0083886); Savannah Cellular Limited Partnership,
Delaware (58-1896629); CEI Communications, Inc., Delaware (94-3032437):
Macon Cellular Telephone Systems, L.P., New Hampshire (02-0414924); Columbus
Cellular Telephone Company, Georgia (58-1802141); Albany Cellular Partners,
Georgia (22-2918690); Cellular Dynamics Telephone Company of Georgia,
Georgia (58-1761830); Montgomery Cellular Holding Co., Inc., Delaware
(42-1330618); Montgomery Cellular Telephone Company, Inc., Alabama
(63-0972220); Cellular Systems of Southeast Alabama, Inc., Delaware
(63-0964897); Dothan Cellular Telephone Company, Inc., Alabama (63-0964898);
Palmer Wireless Holdings, Inc., Delaware (65-0477815); Price Communications
Wireless II, Inc., Delaware (13-3966848); Price Communications Wireless III,
Inc., Delaware (13-3970561); Price
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Communications Wireless IV, Inc., Delaware (13-3970562); Price
Communications Wireless V, Inc., Delaware (13-3970564); Price Communications
Wireless VI, Inc., Delaware (13-3970565); Price Communications Wireless VII,
Inc., Delaware (13-3970566); Price Communications Wireless VIII, Inc.,
Delaware (13-3970567); Price Communications Wireless IX, Inc., Delaware
(13-3970569). Pursuant to Rule 457(f), no separate consideration will be
paid in respect of these guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 30, 1998
PROSPECTUS
SEPTEMBER , 1998
$525,000,000
OFFER TO EXCHANGE
9 1/8% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
OF
PRICE COMMUNICATIONS WIRELESS, INC.
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on [ ], 1998 unless extended
----------------------------------
Price Communications Wireless, Inc. ("the Company" or "PCW") and the
Guarantors (as defined herein), hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange $1,000
principal amount at maturity of 9 1/8% Series B Senior Secured Notes due 2006
(the "New Notes") of the Company for each $1,000 principal amount at maturity of
the issued and outstanding 9 1/8% Series A Senior Secured Notes due 2006 (the
"Old Notes" and, together with the New Notes, the "Notes") of the Company. As of
the date of this Prospectus there were outstanding $525,000,000 principal amount
at maturity of Old Notes. The terms of the New Notes are identical in all
material respects to the Old Notes, except that the offer of the New Notes will
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and therefore, the New Notes will not be subject to certain
transfer restrictions, registration rights and related liquidated damage
provisions applicable to the Old Notes.
Interest on the Notes is payable semi-annually on June 15 and December 15 of
each year. The Notes will mature on December 15, 2006. The Notes will be
redeemable, in whole or in part, at the option of the Company, at any time on or
after June 15, 2002, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. In addition, at any time and
from time to time on or prior to the third anniversary of the Issue Date (as
defined), the Company may, subject to certain requirements, redeem up to 35% of
the originally issued aggregate principal amount of the Notes with the cash
proceeds received from one or more Equity Offerings (as defined) of the Company
or any Parent (as defined) at a redemption price equal to 109.125% of the
principal amount to be redeemed, together with accrued and unpaid interest, if
any, to the date of redemption, provided that at least 65% of the original
aggregate principal amount of the Notes remains outstanding thereafter. See
"Description of Notes."
The Notes are senior obligations of the Company guaranteed by each
Restricted Subsidiary (as defined) of the Company (other than any Non-Recourse
Restricted Subsidiary (as defined)) on the Issue Date (the "Guarantors"). The
obligations of the Company under the Notes and the Guarantors under the
Guarantees (as defined) are secured on the Issue Date by a first priority lien,
subject to certain Permitted Liens (as defined), on (i) the capital stock of
Restricted Subsidiaries (other than Non-Recourse Restricted Subsidiaries) owned
by the Company or any Guarantor and certain other assets of the Restricted
Subsidiaries (other than the Non-Recourse Restricted Subsidiaries) as can be
perfected by the filing of a UCC-1 financing statement and (ii) certain cash
collateral and Eligible Investments (as defined) from time to time pledged by
the Company or the Guarantors. See "Description of Notes-- Security and Ranking
of the Notes."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Guarantors under the Registration Rights
Agreement, dated June 9, 1998, among the Company, the Guarantors and the initial
purchasers (the "Registration Rights Agreement"). Based upon interpretations
contained in letters issued to third parties by the staff of the Securities and
Exchange Commissions (the "SEC"), including Exxon Capital Holdings Corporation,
SEC No-Action Letter (avail. May 13, 1988), Morgan Stanley & Co. Incorporated,
SEC No-Action Letter (avail. June 5, 1991) and Shearman & Sterling, SEC
No-Action Letter (avail. July 2, 1993) (collectively, the "Exchange Offer
No-Action Letters"), the Company believes that the New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by each Holder thereof (other than a broker-dealer, as
set forth below, and any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the Letter
of Transmittal that such conditions have been met. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange of
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company terminates the Exchange Offer and does
not accept for exchange any Old Notes, the Company will promptly return tendered
Old Notes to the Holders thereof. See "The Exchange Offer."
Prior to this Exchange Offer, there has been no public market for the Notes.
The Company does not currently intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active public market for the New Notes
will develop.
The Notes will not be subject to any sinking fund requirement. Upon the
occurrence of a Change of Control (as defined), (i) the Company will have the
option, prior to June 15, 2002 to redeem the Notes, in whole, at a redemption
price equal to 100% of the principal amount thereof, plus the Applicable Premium
(as defined), together with accrued and unpaid interest, if any, to the date of
redemption, and (ii) if the Company has not redeemed the Notes, the Company will
be required to make an offer to repurchase all outstanding Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, together with
accrued and unpaid interest, if any, to the Change of Control Purchase Date (as
defined). See "Description of Notes--Optional Redemption" and "--Certain
Covenants--Repurchase of Notes at the Option of the Holder upon a Change of
Control."
The Notes are expected to be designated for trading in the PORTAL Market.
----------------------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES IN THE EXCHANGE OFFER.
---------------------
THESE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus (this "Prospectus") in connection with the offer made hereby and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or any other person. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained or incorporated
by reference herein is correct as of any time subsequent to its date. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy the securities offered hereby by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation.
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus contains statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Those statements appear in a number of places in this Prospectus and
include statements regarding the intent, belief or current expectations of PCW,
its directors or officers primarily with respect to the future operating
performance of PCW. Holders considering participating in this Exchange Offer are
cautioned that any such forward-looking statements are not guarantees of future
performance and may involve risks and uncertainties, and that actual results may
differ from those in the forward-looking statements as a result of factors, many
of which are outside the control of PCW. The accompanying information contained
in this Prospectus, including, without limitation, the information set forth
below and the information under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations," identifies important
factors that could cause such differences.
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION (INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO) INCLUDED
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE INDICATED, ALL REFERENCES HEREIN TO
"PCW" OR THE "COMPANY" REFER TO PRICE COMMUNICATIONS WIRELESS, INC. AND ITS
SUBSIDIARIES AND PREDECESSORS. ALL REFERENCES TO "HOLDINGS" REFER TO PRICE
COMMUNICATIONS CELLULAR HOLDINGS, INC. ALL REFERENCES HEREIN TO "PCC" REFER TO
PRICE COMMUNICATIONS CORPORATION AND, UNLESS THE CONTEXT REQUIRES OTHERWISE, ITS
SUBSIDIARIES. REFERENCES HEREIN TO THE "ACQUISITION" REFER TO THE ACQUISITION BY
PCW, A WHOLLY OWNED DIRECT SUBSIDIARY OF HOLDINGS, OF PALMER WIRELESS, INC.
("PALMER") AND THE RELATED SALE OF THE FORT MYERS AND GEORGIA-1 SYSTEMS OF
PALMER, AS DESCRIBED BELOW UNDER "THE PALMER ACQUISITION." AS USED IN THIS
PROSPECTUS, THE TERM "PALMER" INCLUDES ITS SUBSIDIARIES AND PREDECESSORS. EXCEPT
FOR HISTORICAL FINANCIAL INFORMATION AND UNLESS OTHERWISE INDICATED, ALL
INFORMATION PRESENTED BELOW RELATING TO THE COMPANY, PCC AND HOLDINGS INCLUDING
POPS AND NET POPS (EACH AS DEFINED) AND THE SYSTEMS, GIVES EFFECT TO THE
CONSUMMATION OF THE ACQUISITION (INCLUDING THE SALE OF THE FORT MYERS AND
GEORGIA-1 SYSTEMS). ALL INFORMATION RELATING TO PCC SHARES (AS DEFINED) HAS BEEN
ADJUSTED TO GIVE EFFECT TO STOCK SPLITS.
THE COMPANY
The Company is currently engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. At June 30, 1998, the Company provided cellular telephone service
to 347,150 subscribers in Georgia, Alabama, Florida and South Carolina in a
total of 16 licensed service areas composed of eight Metropolitan Statistical
Areas ("MSAs") and eight Rural Service Areas ("RSAs"), with an aggregate
estimated population of 3.3 million. The Company sells its cellular telephone
service as well as a full line of cellular products and accessories, including
pagers, principally through its network of retail stores. The Company markets
all of its products and services under the nationally recognized service mark
CELLULARONE-Registered Trademark-.
OPERATIONS
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve certain economies of
scale, including centralized marketing and administrative functions as well as
multi-system capital expenditures. The Company devotes considerable attention to
engineering, maintenance and improvement of its cellular telephone systems in an
effort to deliver high-quality service to its subscribers and to implement new
technologies as soon as economically practicable. Through its participation in
the North American Cellular Network ("NACN"), the Company is able to offer
ten-digit dialing access to its subscribers when they travel outside the
Company's service areas, providing them with convenient roaming access
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants. By marketing its products and services under
the CELLULARONE-Registered Trademark- name, the Company also enjoys the benefits
of association with a nationally recognized service mark.
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth as of June
30, 1998, with respect to each service area in which the Company owns a cellular
telephone system, the estimated population, the Company's beneficial ownership
percentage, the Net Pops (as defined) and the date of initial operation of such
system by Palmer or a predecessor operator.
1
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
CELLULAR SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
- ------------------------------------------------------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
Albany, GA.................................................. 118,527 86.5% 102,526 4/88
Augusta, GA................................................. 439,116 100.0 439,116 4/87
Columbus, GA................................................ 254,150 85.2 216,518 11/88
Macon, GA................................................... 313,686 99.2 311,234 12/88
Savannah, GA................................................ 283,978 98.5 279,718 3/88
Georgia-6 RSA............................................... 199,516 96.3 192,134 4/93
Georgia-7 RSA............................................... 134,376 100.0 134,376 10/91
Georgia-8 RSA............................................... 157,451 100.0 157,451 10/91
Georgia-9 RSA............................................... 119,410 100.0 119,410 9/92
Georgia-10 RSA.............................................. 149,699 100.0 149,699 10/91
Georgia-12 RSA.............................................. 211,799 100.0 211,799 10/91
Georgia-13 RSA.............................................. 147,392 86.5 127,494 10/90
Dothan, AL.................................................. 136,160 94.6 128,807 2/89
Montgomery, AL.............................................. 318,371 92.8 295,430 8/88
Alabama-8, RSA.............................................. 171,993 100.0 171,993 7/93
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Subtotal.................................................... 3,155,624 3,037,705
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Panama City, FL............................................. 146,018 78.4 114,493 9/88
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Total....................................................... 3,301,642 3,152,198
<CAPTION>
------------ ----------
------------ ----------
</TABLE>
- ------------------------
(1) Does not include the Alabama-5 RSA and South Carolina-7 RSA where the
Company has interim operating authority ("IOA"). IOA is granted for an area
to a license holder in an adjacent area when there are no license holders in
such area. The Company has no subscribers in the South Carolina-7 RSA, but
instead provides roaming access to its own subscribers and others when they
travel in this service area, utilizing its existing cell sites. Construction
permits were granted to third parties ("Permittees") for the Alabama-5 RSA
and South Carolina-7 RSA. The Permittees are required to complete
construction of their respective RSA within 18 months. After completing
construction, a Permittee may give the Company thirty days prior written
notice, at which point the Company would be required to sell all of its
subscribers of its other systems who reside within the boundaries of the
markets to the Permittee at cost. The Company, along with others, is
currently in negotiations to purchase the South Carolina-7 RSA. No assurance
can be given, however, that the Company will be successful in consummating
such purchase.
(2) Based on population estimates for 1996 from the fall 1997 edition of The
Wireless Communication Industry published by Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") (the "DLJ Pop Book").
COMPANY STRATEGY
The Company's four strategic objectives are to: (1) expand its revenue base
by increasing penetration in existing service areas and encouraging greater
usage among its existing customers; (2) provide high-quality customer service to
create and maintain customer loyalty; (3) enhance performance by aggressively
pursuing opportunities to increase operating efficiencies; and (4) expand its
regional cellular communications presence by selectively acquiring additional
interests in cellular telephone systems (including minority interests).
Specifically, the Company strives to achieve these objectives through
implementation of the following:
AGGRESSIVE, DIRECT MARKETING. The Company employs a two-tier direct sales
force. A retail sales force handles walk-in traffic at the Company's 37 retail
outlets, and a targeted sales staff solicits certain industries and government
subscribers. The Company's management believes that its internal sales force is
far more likely than independent agents to successfully select and screen new
subscribers and select pricing plans that realistically match subscriber means
and needs and to personally keep in contact with new customers.
2
<PAGE>
FLEXIBLE, VALUE-ORIENTED PRICING PLANS. The Company provides a range of
pricing plans, each of which includes a monthly access fee and, in most cases, a
bundle of "free" minutes. Additional home rate minutes are charged at rates
ranging from $0.05 per minute to $1.25 per minute depending on the customer's
usage plan and the time of day. In addition, the Company offers wide area home
rate roaming in the Company's systems and low flat rate roaming in a six state
region in the southeastern United States.
The Company believes that its bundled minute offerings will encourage
greater customer usage. By bundling the number of minutes a customer can use for
one flat rate, subscribers perceive greater value in their cellular service and
become less usage sensitive, i.e., they can increase their cellular phone usage
without seeing large corresponding increases in their cellular bill.
CONTINUALLY ADOPTING STATE OF THE ART SYSTEM DESIGN. The Company's network
allows the delivery of full personal communication services ("PCS")
functionality to its digital cellular customers, including primarily caller ID,
short message paging and extended battery life. The Company's network provides
for "seamless handoff" between digital cellular and PCS operators that, like the
Company, employ Time Division Multiple Access ("TDMA") technology, one of three
industry standards and the one employed by AT&T, SBC and others; i.e, the
Company's customers may leave the Company's service area and enter an area
serviced by a PCS provider using TDMA technology without noticing the
difference, and vice versa. The Company believes this innovation will allow the
Company to be the roaming partner of choice for such PCS operators. The Company
has a favorable agreement with AT&T with respect to PCS roaming and expects that
other PCS operators may choose, like AT&T, to concentrate PCS buildout in urban
centers rather than the more rural areas in which the Company concentrates.
FOCUSING ON CUSTOMER SERVICE. Customer service is an essential element of
the Company's marketing and operating philosophy. The Company is committed to
attracting new subscribers and retaining existing subscribers by providing
consistently high-quality customer service. In each of its cellular service
areas, the Company maintains a local staff, including a market manager, customer
service representatives, technical and engineering staff, sales representatives
and installation and repair facilities. Each cellular service area handles its
own customer-related functions such as credit evaluations, customer evaluations,
account adjustments and rate plan changes. In addition, subscribers are able to
report cellular telephone service or account problems 24 hours a day. To ensure
high-quality service, Cellular One Group authorizes a third-party marketing
research firm to perform customer satisfaction surveys of each of its licensees.
Licensees must achieve a minimum satisfaction level in order to continue using
the CELLULARONE-Registered Trademark- service mark. The Company has repeatedly
ranked number one in certain customer satisfaction categories among all Cellular
One operators (#1 MSA in its category in 1997, 1996, 1995, 1993, and 1992; #1
RSA in its category in 1995).
AGGRESSIVE COST CONTROL EFFORTS. The Company believes that its monthly
operating costs per subscriber rank among the lowest in the industry. The
Company's management attributes this competitive advantage to a variety of
factors, including the efficiencies associated with its direct sales force,
extensive use of in-house technical and engineering staff, and maintenance of
aggressive fraud control procedures, as well as general efforts to reduce
corporate general and administrative expenses. The Company has also realized
substantial savings on its interconnection charges from landline carriers by
using its own microwave and fiber optic network to connect cellular switching
equipment to cell sites without the use of landline carriers.
The Company was incorporated in the State of Delaware in 1997. The address
of the Company is 45 Rockefeller Plaza, New York, New York 10020. The Company's
phone number is (212) 757-5600.
3
<PAGE>
THE PALMER ACQUISITION
Prior to the Merger described below, PCW had no assets, liabilities or
operations other than the proceeds from the issuance of the 11 3/4% PCW Notes
(as such term is defined below) and liabilities with respect thereto.
On May 23, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). On October 6, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase plans
for an aggregate price of $486.4 million. In addition, as a result of the
Merger, the Company assumed all outstanding indebtedness of Palmer of
approximately $378.0 million ("Palmer Existing Indebtedness"), making the
aggregate purchase price for Palmer (including transaction fees and expenses)
approximately $880.0 million. The Company refinanced all of the Palmer Existing
Indebtedness concurrently with the consummation of the Merger.
PCW entered into an agreement (the "Fort Myers Sale Agreement") to sell
Palmer's Fort Myers, Florida MSA covering approximately 382,000 Pops for $168.0
million (the "Fort Myers Sale"). On October 6, 1997, the Fort Myers Sale was
consummated, and generated proceeds to the Company of approximately $166.0
million. The proceeds of the Fort Myers Sale were used to fund a portion of the
acquisition of Palmer.
On October 21, 1997, PCC and PCW entered into an Asset Purchase Agreement
with MJ Cellular Company, L.L.C. (the "Georgia Sale Agreement") which provided
for the sale by PCW, for approximately $25.0 million, of substantially all of
the assets of the non-wireline cellular telephone system serving the Georgia-l
Whitfield RSA ("Georgia-1"), including the FCC licenses to operate Georgia-1
(the "Georgia-1 Sale"). The sale of the assets of Georgia-1 was consummated on
December 30, 1997 and generated proceeds to the Company of approximately $24.2
million. A portion of the proceeds from the Georgia Sale were used to retire a
portion of the debt used to fund the acquisition of Palmer. The Merger, the Fort
Myers Sale and the Georgia-1 Sale are collectively referred to as the
"Acquisition."
The Acquisition was also funded in part through a $44.0 million equity
contribution from PCC (the "PCC Equity Contribution") which was in the form of
cash and common stock of Palmer. An additional amount of the purchase price for
the Acquisition was raised out of the proceeds from the issuance and sale for
$80.0 million (the "Holdings Offering") by Holdings, the direct parent of the
Company, of units consisting of $153.4 million principal amount at maturity of
13 1/2% Senior Secured Discount Notes due 2007 of Holdings (the "13 1/2%
Holdings Notes") and warrants (the "Warrants") to purchase shares of PCC common
stock, par value $.01 per share (the "PCC Shares").
4
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........................... Up to $525,000,000 principal amount of 9 1/8%
Series B Senior Secured Notes due 2006. The
terms of the New Notes and the Old Notes are
identical in all material respects, except
that the offer of the New Notes will have
been registered under the Securities Act and
therefore, the New Notes will not be
subjected to certain transfer restrictions,
registration rights and related liquidated
damage provisions applicable to the Old
Notes.
The Exchange Offer........................... The Company is offering, upon the terms and
subject to the conditions of the Exchange
Offer, to exchange $1,000 principal amount at
maturity of New Notes for each $1,000
principal amount at maturity of Old Notes.
See "The Exchange Offer" for a description of
the procedures for tendering Old Notes. The
Exchange Offer is intended to satisfy
obligations of the Company under the
Registration Rights Agreement.
Tenders, Expiration Date; Withdrawal......... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on [ ], 1998,
or such later date and time to which it is
extended. The tender of Old Notes pursuant to
the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any Old
Notes not accepted for exchange for any
reason will be returned without expense to
the tendering Holder thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer.
Federal Income Tax Consequences.............. The exchange pursuant to the Exchange Offer
will not result in any income, gain or loss
to the Holders for federal income tax
purposes. See "United States Federal Income
Tax Consequences of the Exchange Offer."
Use of Proceeds.............................. There will be no proceeds to the Company from
the issuance of the New Notes pursuant to the
Exchange Offer.
Exchange Agent............................... Bank of Montreal Trust Company is serving as
Exchange Agent in connection with the
Exchange Offer.
</TABLE>
5
<PAGE>
CONSEQUENCE OF EXCHANGING OLD NOTES
PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, the
Company believes that, generally, any Holder of Old Notes (other than a
broker-dealer, as set forth below, and any Holder who is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) who exchanges
Old Notes for New Notes pursuant to the Exchange Offer may offer such New Notes
for resale, resell such New Notes, or otherwise transfer such New Notes without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided such New Notes are acquired in the ordinary course of
the Holder's business and such Holder has no arrangement or understanding with
any person to participate in a distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the Letter
of Transmittal that such conditions have been met and must represent, if such
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such Holder
nor the person receiving such New Notes, if other than the Holder, is engaged in
or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes must represent that the Old Notes tendered in exchange therefor were
acquired as a result of market-making activities or other trading activities and
must acknowledge that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution." To comply with the securities
laws of certain jurisdictions, it may be necessary to qualify for sale or
register the New Notes prior to offering or selling such New Notes. The Company
does not currently intend to take any action to register or qualify the New
Notes for resale in any such jurisdictions. If a Holder of Old Notes does not
exchange such Old Notes for New Notes pursuant to the Exchange Offer, such Old
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. Any Holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of New Notes
could not rely on the position of the staff of the SEC enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988) or similar no-action
letters and, in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Failure to comply with such
requirements in such instance may result in such Holder incurring liability
under the Securities Act for which the Holder is not indemnified by the Company.
See "The Exchange Offer-Consequences of Failure to Exchange" and "Description of
Notes-Registration Rights; Liquidated Damages."
6
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except that the offer of the New Notes will have been registered under
the Securities Act and, therefore, the New Notes will not be subject to certain
transfer restrictions, registration rights and related provisions applicable to
the Old Notes.
<TABLE>
<S> <C>
Notes Offered..................... $525,000,000 aggregate principal amount of 9 1/8% Series
B Senior Secured Notes due 2006.
Maturity Date..................... December 15, 2006.
Interest Payment Dates............ June 15 and December 15 of each year, commencing
December 15, 1998.
Sinking Fund...................... None.
Ranking........................... The Notes will rank (i) senior in right of payment to
all subordinated Indebtedness of the Company and (ii)
effectively senior in right of payment to all unsecured
Indebtedness of the Company to the extent of the value
of the Collateral (as defined) available for the payment
of the Notes.
Guarantees and Security........... The Notes will be unconditionally guaranteed on a joint
and several basis (each, a "Guarantee") by each
Restricted Subsidiary of the Company (other than any
Non-Recourse Restricted Subsidiary (as defined)) on the
Issue Date (the "Guarantors"). The obligations of the
Company under the Notes and the Guarantors under the
Guarantees will be secured on the Issue Date by a first
priority lien, subject to certain Permitted Liens, on
(a) the Capital Stock of Restricted Subsidiaries (other
than Non-Recourse Restricted Subsidiaries) owned by the
Company or any Guarantor and certain other assets of the
Restricted Subsidiaries (other than Non-Recourse
Restricted Subsidiaries) as can be perfected by the
filing of a UCC-1 financing statement with filing
offices in the relevant jurisdictions (the assets
subject to such security interests will not include,
without limitation, the FCC licenses, real property or
leases relating to transmitting towers or any cash or
Eligible Investments not deposited with the Trustee) and
(b) certain cash collateral and Eligible Investments
from time to time pledged by the Company or its
Restricted Subsidiaries to the Trustee or a collateral
agent for the Trustee (the property described in the
foregoing clauses (a) and (b), the "Collateral"). The
Collateral will be permitted to be released to the
Company (i) in the event of certain asset sales and (ii)
to the extent that the aggregate Secured Indebtedness
(as defined) does not exceed the Minimum Collateral
Value (as defined).
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Optional Redemption............... The Notes will be redeemable in whole or in part at the
option of the Company, at any time on or after June 15,
2002 at the redemption prices set forth herein, plus
accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time and from time to
time on or prior to the third anniversary of the Issue
Date (as defined), PCW may, subject to certain
requirements, redeem up to 35% of the originally issued
aggregate principal amount of the Notes with the cash
proceeds received from one or more Equity Offerings of
the Company or any Parent at a redemption price equal to
109.125% of the principal amount to be redeemed,
together with accrued and unpaid interest, if any, to
the date of redemption, provided that at least 65% of
the original aggregate principal amount of the Notes
remains outstanding thereafter. See "Description of
Notes--Optional Redemption."
Change of Control................. In the event of a Change of Control (as defined), (i)
the Company will have the option, prior to June 15,
2002, to redeem the Notes, in whole, at a redemption
price equal to 100% of the principal amount thereof,
plus the Applicable Premium (as defined), together with
accrued and unpaid interest, if any, to the date of
redemption, and (ii) if the Company has not redeemed the
Notes, the Company will be required to make an offer to
repurchase all outstanding Notes at a purchase price
equal to 101% of the aggregate principal amount thereof,
together with accrued and unpaid interest, if any to the
Change of Control Purchase Date. There can be no
assurance that the Company will have sufficient funds to
repurchase the Notes in the event of a Change of
Control. See "Risk Factors--Possible Inability to
Purchase Notes upon a Change of Control; Possible Effect
of a Change of Control," "Description of Notes--
Optional Redemption," "--Certain Covenants--Repurchase
of Notes at the Option of the Holder upon a Change of
Control."
Certain Covenants................. The Indenture (as defined below) will impose certain
limitations on the ability of the Company and its
subsidiaries to, among other things, incur Indebtedness
(as defined), make Restricted Payments (as defined),
effect certain Asset Sales (as defined), enter into
certain transactions with Related Persons (as defined),
merge or consolidate with any other person or transfer
all or substantially all of their properties and assets.
See "Description of Notes--Certain Covenants."
</TABLE>
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by Holders prior to tendering their Old Notes in the Exchange Offer.
8
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
FINANCIAL AND OPERATING DATA
The following table sets forth summary historical data for the Company and
its predecessor, Palmer and the unaudited pro forma and financial data for the
Company for the periods and as of the dates indicated. The unaudited pro forma
data is not designed to represent and does not represent what the Company's
financial position or results of operations actually would have been had the
transactions described herein under "Unaudited Pro Forma Condensed Consolidated
Financial Statements" been completed as of the date or at the beginning of the
periods indicated, or to project the Company's financial position or results of
operations at any future date or for any future period. The following data
should be read in conjunction with "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Unaudited Pro Forma Condensed Consolidated Financial Statements"
and the consolidated financial statements and notes thereto of the Company
included elsewhere herein.
The following table also sets forth certain summary operating data for
Palmer and the Company as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PALMER COMPANY PALMER
------------------------- --------- ---------------------------- -------------------------
PERIOD FROM
(UNAUDITED)
--------------------------------------------------- YEAR
MAY 29 ENDED
SIX MONTHS ENDED JUNE 30, PRO FORMA (INCEPTION) NINE MONTHS DECEMBER
------------------------------------ YEAR ENDED THROUGH ENDED 31,
PRO FORMA DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ---------
1998(1) 1998 1997 1997(1) 1997(2) 1997(3) 1996
-------------- --------- --------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
INCOME STATEMENT DATA:
Revenue:
Service.................... $ 86,421 $ 86,421 $ 88,140 $ 152,853 $ 41,365 $ 134,123 $ 151,119
Equipment sales and
installation............. 5,772 5,772 5,088 8,615 2,348 7,613 8,624
-------------- --------- --------- ------------- ------------- -------------- ---------
Total revenue............ 92,193 92,193 93,228 161,468 43,713 141,736 159,743
-------------- --------- --------- ------------- ------------- -------------- ---------
Engineering, technical and
other direct expenses...... 13,862 13,862 15,554 24,884 5,978 23,301 28,717
Cost of equipment............ 11,515 11,515 11,057 18,269 5,259 16,112 17,944
Selling, general and
administrative expenses.... 25,305 25,305 27,204 50,423 12,805 41,014 46,892
Depreciation and
amortization............... 22,553 22,553 16,586 42,962 11,055 25,498 25,013
-------------- --------- --------- ------------- ------------- -------------- ---------
Operating income............. 18,958 18,958 22,827 24,931 8,616 35,811 41,177
Other income (expense):
Interest, net(4)........... (43,059) (35,907) (16,113) (82,713) (22,198) (24,467) (31,462)
Other, net................. (43) (43) 162 222 15 208 (429)
-------------- --------- --------- ------------- ------------- -------------- ---------
Total other expense...... (43,102) (35,950) (15,951) (82,491) (22,183) (24,259) (31,891)
Minority interest share of
(income) loss.............. (1,002) (1,002) (782) (1,724) (414) (1,310) (1,880)
Income tax expense
(benefit).................. (9,141) (6,515) 2,394 (22,005) (5,129) 4,153 2,724
-------------- --------- --------- ------------- ------------- -------------- ---------
Net income (loss) before
extraordinary item......... $ (16,005) $ (11,479) $ 3,700 $ (37,279) $ (8,852) $ 6,089 $ 4,682
-------------- --------- --------- ------------- ------------- -------------- ---------
-------------- --------- --------- ------------- ------------- -------------- ---------
Extraordinary item--write-off
of deferred finance costs,
net of income tax benefit
of $3,935.................. -- (5,902) --
-------------- --------- ---------
Net income (loss)............ $ (16,005) $ (17,381) $ 3,700
-------------- --------- ---------
-------------- --------- ---------
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Service.................... $ 96,686 $ 61,021 $ 35,173
Equipment sales and
installation............. 8,220 7,958 6,285
--------- --------- ---------
Total revenue............ 104,906 68,979 41,458
--------- --------- ---------
Engineering, technical and
other direct expenses...... 18,184 12,776 7,343
Cost of equipment............ 14,146 11,546 7,379
Selling, general and
administrative expenses.... 30,990 19,757 13,886
Depreciation and
amortization............... 15,004 9,817 10,689
--------- --------- ---------
Operating income............. 26,582 15,083 2,161
Other income (expense):
Interest, net(4)........... (21,213) (12,715) (9,006)
Other, net................. (687) (70) (590)
--------- --------- ---------
Total other expense...... (21,900) (12,785) (9,596)
Minority interest share of
(income) loss.............. (1,078) (636) 83
Income tax expense
(benefit).................. 2,650 0 0
--------- --------- ---------
Net income (loss) before
extraordinary item......... $ 954 $ 1,662 $ (7,352)
--------- --------- ---------
--------- --------- ---------
Extraordinary item--write-off
of deferred finance costs,
net of income tax benefit
of $3,935..................
Net income (loss)............
</TABLE>
- ------------------------------
(1) Pro forma adjustments give effect to the following transactions as if each
had occurred on January 1, 1997: (i) the Acquisition (including the sale of
the Fort Myers and Georgia-1 systems) and related financings and (ii) the
issuance and sale of the Notes in the Offering and the applications of net
proceeds therefrom. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements" and "The Palmer Acquisition."
(2) Includes results of operations for the period October 1, 1997 through
December 31, 1997.
(3) Includes revenue of $24,720, total expenses of $16,354 (including
depreciation and amortization of $2,581) and operating income of $8,366 for
the Fort Myers and Georgia-1 markets sold during 1997.
(4) Net interest included in the pro forma and historical financial data of the
Company includes non-cash interest expense related to the 13 1/2% Holdings
Notes issued in August 1997 which are obligations of Holdings and are
included in the Company's consolidated financial statements solely pursuant
to "push down" accounting rules.
9
<PAGE>
<TABLE>
<CAPTION>
COMPANY PALMER COMPANY PALMER
------------------------ --------- ---------------------------- -------------------------
PERIOD
(UNAUDITED)
-------------------------------------------------- YEAR
FROM MAY 29 ENDED
SIX MONTHS ENDED JUNE 30, PRO FORMA (INCEPTION) NINE MONTHS DECEMBER
----------------------------------- YEAR ENDED THROUGH ENDED 31,
PRO FORMA DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ---------
1998(1) 1998 1997 1997(1) 1997(2) 1997(3) 1996
----------- ----------- --------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
OTHER DATA:
Capital expenditures......... $ 4,171 $ 4,171 $ 31,700 $ 55,256 $ 14,499 $ 40,757 $ 41,445
Operating income before
depreciation and
amortization
("EBITDA")(5).............. $ 41,511 $ 41,511 $ 39,413 $ 67,893 $ 19,671 $ 61,309 $ 66,190
EBITDA margin on service
revenue.................... 48.0% 48.0% 44.7% 44.4% 47.6% 45.7% 43.8%
Penetration(6)............... 10.50% 10.50% 8.32% 9.40% 9.40% 8.60% 7.45%
Subscribers at end of
period(7).................. 347,150 347,150 325,653 309,606 309,606 337,345 279,816
Cost to add a gross
subscriber(8).............. $ 221 $ 221 $ 234 $ 220 $ 188 $ 231 $ 216
Cost to add a net
subscriber(8).............. $ 433 $ 433 $ 480 $ 461 $ 370 $ 514 $ 407
Average monthly service
revenue per
subscriber(9).............. $ 43.86 $ 43.86 $ 48.06 $ 46.24 $ 47.47 $ 47.52 $ 52.20
Average monthly churn(10).... 1.82% 1.82% 1.79% 1.88% 1.84% 1.89% 1.84%
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash......................... $ 92,681 $ 92,681 $ 1,740 $ 27,926 $ 27,926 $ 3,581 $ 1,698
Working capital (deficit).... 85,342 85,342 2,290 3,080 3,080 7,011 296
Property, plant and
equipment, net............. 145,455 145,455 157,596 151,141 151,141 161,351 132,438
Licenses, other intangibles
and other assets, net...... 928,087 928,087 409,193 937,986 937,986 406,828 387,067
Total assets................. 1,201,054 1,201,054 597,202 1,144,479 1,144,479 599,815 549,942
Total debt................... 700,000 700,000 378,000 613,000 613,000 378,000 343,662
Stockholder's equity......... 21,674 17,782 168,630 35,163 35,163 172,018 164,930
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
OTHER DATA:
Capital expenditures......... $ 36,564 $ 22,541 $ 13,304
Operating income before
depreciation and
amortization
("EBITDA")(5).............. $ 41,586 $ 24,900 $ 12,850
EBITDA margin on service
revenue.................... 43.0% 40.8% 36.5%
Penetration(6)............... 6.41% 4.58% 3.48%
Subscribers at end of
period(7).................. 211,985 117,224 65,761
Cost to add a gross
subscriber(8).............. $ 183 $ 178 $ 156
Cost to add a net
subscriber(8).............. $ 276 $ 247 $ 203
Average monthly service
revenue per
subscriber(9).............. $ 56.68 $ 60.02 $ 62.69
Average monthly churn(10).... 1.55% 1.55% 1.37%
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash......................... $ 3,436 $ 2,998 $ 1,670
Working capital (deficit).... (1,435) 2,490 799
Property, plant and
equipment, net............. 100,936 51,884 23,918
Licenses, other intangibles
and other assets, net...... 332,850 199,265 114,955
Total assets................. 462,871 273,020 150,054
Total debt................... 350,441 245,609 131,361
Stockholder's equity......... 74,553 4,915 3,244
</TABLE>
- ------------------------------
(5) EBITDA should not be considered in isolation or as an alternative to net
income (loss), operating income (loss) or any other measure of performance
under generally accepted accounting principles ("GAAP"). The Company
believes that EBITDA is viewed as a relevant supplemental measure of
performance in the cellular telephone industry and in other
telecommunication and media companies.
(6) Determined by dividing the aggregate number of subscribers by the estimated
population.
(7) Each billable telephone number in service represents one subscriber. The
number of subscribers in the historical operating data of Palmer includes
subscribers in the Fort Myers and Georgia-1 markets which were sold in
connection with the Acquisition.
(8) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the gross or net
subscribers (as applicable) added during such period.
(9) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period.
(10) Determined for a period by dividing total subscribers discontinuing service
by the average number of subscribers for such period and dividing that
result by the number of months in such period.
10
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER MATTERS DESCRIBED IN THIS PROSPECTUS, HOLDERS OF
THE OLD NOTES SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE
ACCEPTING THE EXCHANGE OFFER.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, and any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Notes are acquired in the ordinary
course of such Holder's business and such Holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. Eligible Holders wishing to accept the Exchange Offer must represent to
the Company in the Letter of Transmittal that such conditions have been met and
must represent, if such Holder is not a broker-dealer, or is a broker-dealer but
will not receive New Notes for its own account in exchange for Old Notes, that
neither such Holder nor the person receiving such New Notes, if other than the
Holder, is engaged in or intends to participate in the distribution of such New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must represent that the Old Notes tendered in exchange
therefor were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with the resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date (as defined
herein), they will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution." However, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdiction or an exemption from registration or qualification
is available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdictions. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of the Old Notes outstanding, which may
have an adverse effect upon, and increase the volatility of, the market price of
the Old Notes due to a reduction in liquidity.
EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and avoid the restrictions on Old
Notes, each Holder of Old Notes must transmit a properly completed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to Bank of Montreal Trust Company (the "Exchange Agent") at the
address set forth below under "Exchange Agent" on or prior to the Expiration
Date. In addition, (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if
such procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry
11
<PAGE>
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date or
(iii) the Holder must comply with the guaranteed delivery procedures described
below. See "The Exchange Offer."
LEVERAGE, LIQUIDITY AND ABILITY TO MEET REQUIRED DEBT SERVICE
As of June 30, 1998 the Company's consolidated ratio of long-term debt to
stockholder's equity was 39.37 to 1.00 On a pro forma basis, after giving effect
to the Offering and the application of the net proceeds therefrom, its ratio of
EBITDA to cash interest expense (excluding non-cash interest related to the
13 1/2% Holdings Notes (as defined below) and amortization of deferred debt
financing costs) would have been 0.99 to 1.00 for the year ended December 31,
1997 and 1.21 to 1.00 for the six months ended June 30, 1998. The Company's high
degree of leverage could limit significantly its ability to make acquisitions,
withstand competitive pressures or adverse economic conditions, obtain necessary
financing or take advantage of business opportunities that may arise.
The Credit Facility has been retired. The Company currently does not intend
to enter into a new credit facility. In addition, borrowings under a new credit
facility may be subject to significant conditions, including compliance with
certain financial ratios and the absence of any material adverse change. The
Company intends to pursue opportunities to acquire additional cellular telephone
systems which, if successful, will require the Company to issue or obtain
additional equity or debt financing to fund such acquisitions. There can be no
assurances as to the availability or terms of any such financing or that the
terms of the Notes, the Holdings PIK Notes (as defined below), the 11 3/4% PCW
Notes (as defined below) or any credit facility will not restrict or prohibit
any such debt financing.
The Company's ability to meet its debt service requirements, including those
represented by the Notes, will require significant and sustained growth in the
Company's cash flow. In addition, the Company expects to fund its growth
strategy from cash from operations. There can be no assurance that the Company
will be successful in improving its cash flow by a sufficient magnitude or in a
timely manner or in raising additional equity or debt financing to enable the
Company to meet its debt service requirements or to sustain its growth strategy.
There can be no assurances that the Company would be successful in procuring any
such financing. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
POSSIBLE INABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL; POSSIBLE EFFECT
OF A CHANGE OF CONTROL
Upon a Change of Control, each holder of Notes will have the right to
require the Company to repurchase all outstanding Notes held by such holder.
However, there can be no assurance that sufficient funds will be available at
the time of any Change of Control to make any required repurchases of Notes
tendered, especially after giving effect to provisions of the 11 3/4% PCW
Indenture (as defined below) and the indenture governing the Holdings PIK Notes
which require repayment or repurchase, as the case may be, upon such a Change of
Control. In certain circumstances, it is possible that holders of the 11 3/4%
PCW Notes would have the right to require PCW to repurchase the 11 3/4% PCW
Notes while holders of the Notes would not have a similar right to require the
Company to repurchase the Notes. See "Description of Notes--Optional
Redemption."
GUARANTEES AND SECURITY FOR THE NOTES
The Company's obligations under the Notes will be unconditionally guaranteed
on a joint and several basis (each, a "Guarantee") by the Guarantors. The
Guarantees will rank PARI PASSU in right of payment with all other senior
indebtedness of each Guarantor and senior in right of payment to all
subordinated indebtedness of such Guarantor. The obligations of the Company
under the Notes and the obligations of the Guarantors under the Guarantees will
be secured by a first priority lien, subject to certain Permitted Liens, on and
security interest in the capital stock of the Restricted Subsidiaries owned by
the Company or
12
<PAGE>
any Guarantor and certain other assets of the Restricted Subsidiaries. No
appraisals of the assets of the Company or the Restricted Subsidiaries of the
Company have been prepared by or on behalf of the Company. There can be no
assurance that the proceeds of any sale of the Collateral pursuant to the
Indenture following an Event of Default would be sufficient to satisfy payments
due on the Notes. Further, any transfer of the power to vote the capital stock
of the Restricted Subsidiaries, including as a result of foreclosure on the
Collateral, will require FCC approval. In addition, the ability of the Holders
of Notes to realize upon the Collateral may be subject to FCC approval as
described above and certain bankruptcy law limitations in the event of a
bankruptcy. See "--Certain Other Bankruptcy Considerations." Absent an
acceleration of the Notes, the Company and Restricted Subsidiaries of the
Company will have the right to remain in possession and retain exclusive control
of their assets, to operate their assets and to collect, invest and dispose of
any income thereon.
NET LOSSES
On a pro forma basis after giving effect to the Offering and the Acquisition
and related financing, the Company would have incurred accounting net losses of
approximately $37.3 million for the year ended December 31, 1997 and $16.0
million for the six months ended June 30, 1998. There can be no assurance that
the Company's future operations will generate sufficient cash flow to pay its
obligations. The Company expects to incur accounting net losses for several
years. See "Selected Consolidated Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
COMPETITION
Although current policies of the FCC authorize only two licensees to operate
cellular telephone systems in each cellular market, there is, and the Company
expects there will continue to be, competition from various wireless technology
licensees authorized to serve each market in which the Company operates, as well
as from resellers of cellular service. Competition for subscribers between the
two cellular licensees in each market is based principally upon the services and
enhancements offered, the technical quality of the cellular telephone system,
customer service, system coverage and capacity and price. The Company competes
with a wireline licensee in each of its cellular markets, some of which are
larger and have access to more substantial capital resources than the Company.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, specialized mobile
radio ("SMR") and enhanced specialized mobile radio ("ESMR") systems, paging
services and, to a limited extent, satellite systems for mobile communications.
ESMR is a digital transmission system providing for "cellular-like"
communications service. The Company also faces limited competition from and may
in the future face increased competition from PCS. Broadband PCS involves a
network of small, low-powered transceivers placed throughout a neighborhood,
business complex, community or metropolitan area to provide customers with
mobile and portable voice and data communications. PCS may be capable of
offering, and PCS operators claim to offer additional services not offered by
cellular providers. PCS subscribers could have dedicated personal telephone
numbers and communicate using small digital radio handsets carried in a pocket
or purse. There can be no assurances that the Company will be able to provide
nor that it will choose to pursue, depending on the economics thereof, all such
services and features. The FCC has also completed or announced plans for
auctions in wireless services such as narrowband PCS, local multipoint
multichannel distribution service ("LMDS"), interactive video distribution
service ("IVDS"), wireless communications service ("WCS") and general wireless
communications service ("GWCS") spectrum. Some of this spectrum might be used
for services competitive in some manner with cellular service. The Company
cannot predict the effect of these proceedings and auctions on the Company's
business. However, the Company currently believes that traditional tested
cellular is economically proven unlike many of these other technologies and
therefore does not intend to pursue such other technologies.
13
<PAGE>
Although the Company believes that the technology, financing and engineering
of these other technologies is not as advanced as their publicity would suggest,
there can be no assurance that one or more of the technologies currently
utilized by the Company in its business will not become obsolete at some time in
the future. See "Business of the Company--Competition."
The Company also faces competition from "resellers." The FCC requires all
cellular licensees to provide service to resellers. A reseller provides wireless
service to customers but does not hold an FCC license or own facilities.
Instead, the reseller buys blocks of wireless telephone numbers and capacity
from a licensed carrier and resells service through its own distribution network
to the public.
POTENTIAL FOR REGULATORY CHANGES AND NEED FOR REGULATORY APPROVALS
The licensing, construction, operation, acquisition, assignment and transfer
of cellular telephone systems, as well as the number of licensees permitted in
each market, are regulated by the FCC. Changes in the regulation of cellular
activities could have a material adverse effect on the Company's operations. In
addition, all cellular licenses in the United States are granted for an initial
term of up to 10 years and are subject to renewal. The Company's cellular
licenses expire in the following years with respect to the following number of
service areas: 1998 (three); 2000 (two); 2001 (four); 2002 (two); 2006 (one);
and 2007 (four). While the Company believes that each of these licenses will be
renewed based upon FCC rules establishing a renewal expectancy in favor of
licensees that have complied with their regulatory obligations during the
relevant license period, there can be no assurance that all of the Company's
licenses will be renewed in due course. In the event that a license is not
renewed, the Company would no longer have the right to operate in the relevant
service area. The non-renewal of licenses could have a material adverse effect
on the Company's results of operations. See "Business of the
Company--Regulation."
FLUCTUATIONS IN MARKET VALUE OF LICENSES
A substantial portion of the Company's assets consists of its interests in
cellular licenses. The assignment of interests in such licenses is subject to
prior FCC approval and may also be subject to contractual restrictions, future
competition and the relative supply and demand for radio spectrum. The future
value of the Company's interests in its cellular licenses will depend
significantly upon the success of the Company's business. While there is a
current market for the Company's licenses, such a market may not exist in the
future or the values obtainable may be significantly lower than at present. As a
consequence, in the event of the liquidation or sale of the Company's assets,
there can be no assurance that the proceeds would be sufficient to pay the
Company's obligations, and a significant reduction in the value of the licenses
could require a charge to the Company's results of operations.
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
The Company currently uses the registered service mark
CELLULARONE-Registered Trademark- to market its services. The Company's use of
this service mark is, and has historically been, governed by separate five-year
contracts between the Company and Cellular One Group, the owner of the service
mark, for each of the markets in which the Company operates. Such contracts
currently in effect expire at different times, ranging from July 6, 1998 to
December 1, 2001. If for some reason beyond the Company's control, the name
CELLULARONE-Registered Trademark- were to suffer diminished marketing appeal,
the Company's ability both to attract new subscribers and retain existing
subscribers could be materially affected. AT&T Wireless Services, Inc., which
has been the single largest user of the CELLULARONE-Registered Trademark-
service mark, has significantly reduced its use of the service mark as a primary
service mark, as has Centennial Cellular. There can be no assurance that such
reduction in use by any of such parties will not have an adverse effect on the
marketing appeal of the brand name.
14
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company's affairs are managed by a small number of key management and
operating personnel, the loss of whom could have an adverse impact on the
Company. The success of the Company's operations and expansion strategy depends
on its ability to retain and to expand its staff of qualified personnel in the
future.
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones may be linked to certain types of cancer. In
addition, recently a limited number of lawsuits have been brought, not involving
the Company, alleging a connection between cellular telephone use and certain
types of cancer. Concerns over RF emissions and interference may have the effect
of discouraging the use of cellular telephones, which could have an adverse
effect upon the Company's business. As required by the Telecom Act, in August
1996, the FCC adopted new guidelines and methods for evaluating RF emissions
from radio equipment, including cellular telephones. While the new guidelines
impose more restrictive standards on RF emissions from low power devices such as
portable cellular telephones, the Company believes that all cellular telephones
currently marketed and in use comply with the new standards.
The Company carries $4.0 million in general liability insurance and $25.0
million in umbrella liability coverage. This insurance would cover (subject to
coverage limits) any liability suits with respect to human exposure to radio
frequency emissions.
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted for the protection of creditors may apply to the
Company's incurrence of indebtedness and other obligations in connection with
the Acquisition, including the issuance of the Notes and the provision of the
Guarantees by the Guarantors. If a court were to find in a lawsuit by an unpaid
creditor or representative of creditors of the Company or the Guarantors that
the Company or the Guarantors did not receive fair consideration or reasonably
equivalent value for incurring such indebtedness or obligation or providing the
Guarantees and, at the time of such incurrence, any of the Company or the
Guarantors (i) was insolvent; (ii) was rendered insolvent by reason of such
incurrence; (iii) was engaged in a business or transaction for which the assets
remaining in the Company or the Guarantors constituted unreasonably small
capital; or (iv) intended to incur or believed it would incur obligations beyond
its ability to pay such obligations as they mature, such court, subject to
applicable statutes of limitation, could determine to invalidate, in whole or in
part, such indebtedness and obligations as fraudulent conveyances or subordinate
such indebtedness and obligations to existing or future creditors of the Company
or the Guarantors.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, the
Company or the Guarantors would be considered insolvent at a particular time if
the sum of its debts was then greater than all of its property at a fair
valuation or if the present fair saleable value of its assets was then less than
the amount that would be required to pay its probable liabilities on its
existing debts as they became absolute and matured. On the basis of its
historical financial information, its recent operating history as discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other factors, the Company's management believes that, after
giving effect to the Offering and the application of net proceeds therefrom, the
Company will not be rendered insolvent, it will have sufficient capital for the
businesses in which it was engaged and it will be able to pay its debts as they
mature; however, management has not obtained any independent opinion regarding
such issues. There can be no assurance as to what standard a court would apply
in making such determinations.
15
<PAGE>
In addition, the Guarantees may be subject to review under relevant federal
and state fraudulent conveyance and similar statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of the Guarantors.
In such a case, the analysis set forth above would generally apply, except that
the Guarantees could also be subject to the claim that, since the Guarantee was
incurred for the benefit of the Company (and only indirectly for the benefit of
the Guarantors), the obligations of the Guarantors thereunder were incurred for
less than reasonably equivalent value or fair consideration. A court could avoid
the Guarantor's obligation under the Guarantees, subordinate the Guarantee to
other indebtedness of the Guarantors or take other action detrimental to the
holders of the Notes.
To the extent the Guarantees were avoided as a fraudulent conveyance,
limited as described above, or held unenforceable for any other reason, holders
of the Notes would, to such extent, cease to have a claim in respect of the
Guarantees and, to such extent, would be creditors solely of the Company. In
such event, the claims of the holders of the Notes against the Guarantors would
be subject to the prior payment of all liabilities of the Guarantors. There can
be no assurance that, after providing for all prior claims, there would be
sufficient assets to satisfy the claims of the holders of the Notes.
CERTAIN OTHER BANKRUPTCY CONSIDERATIONS
The right of the Trustee to repossess and dispose of the Collateral upon the
occurrence of an Event of Default (as defined) is likely to be significantly
impaired by applicable bankruptcy law if a bankruptcy proceeding were to be
commenced by or against the Company or any Guarantor prior to the Trustee's
having disposed of the Collateral. Under Title 11 of the United States Code (the
"Bankruptcy Code"), a secured creditor such as the Trustee is prohibited from
disposing of a security repossessed from a debtor in a bankruptcy case without
bankruptcy court approval. Moreover, the Bankruptcy Code prohibits a secured
creditor from disposing of collateral even though the debtor is in default under
the applicable debt instruments if the secured creditor is given "adequate
protection." The meaning of the term "adequate protection" may vary according to
circumstances, but it is intended in general to protect the value of the secured
creditor's interest in the collateral and may include cash payments or the
granting of additional security, if and at such times as the court in its
discretion determines, for any diminution in the value of the collateral as a
result of the stay of disposition during the pendency of the bankruptcy case. In
view of the lack of a precise definition of the term "adequate protection" and
the broad discretionary powers of a bankruptcy court, it is impossible to
predict how long payments under the Notes could be delayed following
commencement of a bankruptcy case, whether or when the Trustee could dispose of
the Collateral, or whether or to what extent Holders of the Notes would be
compensated for any delay in payment or loss of value of the Collateral through
the requirement of "adequate protection."
EQUIPMENT FAILURE; NATURAL DISASTER
Although the Company carries "business interruption" insurance, a major
equipment failure or a natural disaster affecting any one of the Company's
central switching offices or certain of its cell sites could have a significant
adverse effect on the Company's operations.
LACK OF PUBLIC MARKET
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were issued on June 16, 1998 to a limited number of investors. The New
Notes are new securities for which there currently is no market. The Company
does not intend to apply for listing of the Notes on any securities exchange or
for quotation through the National Association of Securities Dealers Automated
Quotation System. There can be no assurance that an active trading market for
the New Notes will develop. If a trading market develops for the New Notes,
future trading prices of such securities will depend on many factors, including
prevailing interest rates, the Company's results of operations and financial
condition and the market for similar securities.
16
<PAGE>
YEAR 2000
The Company has reviewed the possible effect of the Year 2000 on the
computer systems currently in use, including the software that is an integral
part of the Company's switches and the related billing information. Preliminary
estimates indicate that the costs for Year 2000 compliance will be less than $2
million; however, the Company is unable to predict whether its third-party
billing provider or its principal sources of purchased or leased cellular
equipment have made sufficient modifications to address the potential problems
of the Year 2000 software shortcomings on their computer systems. Any additional
costs of this nature, to the extent they are passed on to the Company or affect
or delay the Company's business, bill collection or cellular equipment
installation, could have a material adverse effect upon the Company's business
or results of operations.
17
<PAGE>
THE PALMER ACQUISITION
Prior to the Merger described below, PCW had no assets, liabilities or
operations other than the proceeds from the issuance of the 11 3/4% PCW Notes
and liabilities with respect thereto.
On May 23, 1997, PCC, PCW and Palmer entered into the Merger Agreement. The
Merger Agreement provided, among other things, for the Merger of PCW with and
into Palmer with Palmer as the surviving corporation. On October 6, 1997, the
Merger was consummated and Palmer changed its name to "Price Communications
Wireless, Inc." Pursuant to the Merger Agreement, PCC acquired each issued and
outstanding share of common stock of Palmer for a purchase price of $17.50 per
share in cash and purchased outstanding options and rights under employee and
director stock purchase plans for an aggregate price of $486.4 million. In
addition, as a result of the Merger, the Company assumed all outstanding
indebtedness of Palmer of approximately $378.0 million ("Palmer Existing
Indebtedness"), making the aggregate purchase price for Palmer (including
transaction fees and expenses) approximately $880.0 million. The Company
refinanced all of the Palmer Existing Indebtedness concurrently with the
consummation of the Merger.
PCW entered into the Fort Myers Sale Agreement to sell Palmer's Fort Myers,
Florida MSA covering approximately 382,000 Pops for $168.0 million. On October
6, 1997, the Fort Myers Sale was consummated, and generated proceeds to the
Company of approximately $166.0 million. The proceeds of the Fort Myers Sale
were used to fund a portion of the acquisition of Palmer.
On October 21, 1997, PCC and PCW entered into the Georgia Sale Agreement
which provided for the sale by PCW, for approximately $25.0 million, of
substantially all of the assets of the non-wireline cellular telephone system
serving Georgia-l, including the FCC licenses to operate Georgia-1. The sale of
the assets of Georgia-1 was consummated on December 30, 1997 and generated
proceeds to the Company of approximately $24.2 million. A portion of the
proceeds from the Georgia Sale were used to retire a portion of the debt used to
fund the acquisition of Palmer.
In order to fund the Acquisition and pay related fees and expenses, PCW
issued $175.0 million aggregate principal amount of 11 3/4% Senior Subordinated
Notes due 2007 (the "11 3/4% PCW Notes") and entered into a syndicated senior
loan facility providing for term loan borrowings in the aggregate principal
amount of $325.0 million and revolving loan borrowings of $200.0 million (the
"Credit Facility"). On October 6, 1997, PCW borrowed all term loans available
thereunder and approximately $120.0 million of revolving loans. The Company
intends to use the net proceeds from the Offering to retire amounts outstanding
under the Credit Facility and for accrued interest. As of March 31, 1998, there
was $425.9 million of borrowings outstanding under the Credit Facility. The
Credit Facility has since been retired. See "Use of Proceeds."
The Acquisition was also funded in part through a $44.0 million equity
contribution from PCC which was in the form of cash and common stock of Palmer.
An additional amount of approximately $76 million of the purchase price for the
Acquisition was raised out of the proceeds from the issuance and sale for $80.0
million of units consisting of $153.4 million aggregate principal amount at
maturity of the 13 1/2% Holdings Notes and Warrants to purchase the PCC Shares.
18
<PAGE>
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The net proceeds from the sale of the Notes, after
deducting the expenses of the Offering, were approximately $510.0 million. The
net proceeds from the sale of the Notes were used in their entirety to retire
outstanding indebtedness under the Credit Facility (including the payment of
accrued interest).
19
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statements of operations for
the year ended December 31, 1997 and the six month period ended June 30, 1998 of
PCW give effect to the following transactions as if they occurred at the
beginning of the relevant period:
(i) The Acquisition of Palmer. On October 6, 1997, Holdings acquired
Palmer, with Palmer as the surviving corporation. Pursuant to the Merger
Agreement, PCC acquired each issued and outstanding share of common stock of
Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase
plans for an aggregate price of $486.4 million. In addition, the Company
assumed the Palmer Existing Indebtedness. As a result, the aggregate
purchase price was approximately $880 million. See "The Palmer Acquisition."
The Acquisition was recorded pursuant to the purchase method of accounting.
The excess of cost over the fair value of Palmer's assets and liabilities
has been allocated to the FCC licenses. Certain of the acquired assets
related to the Fort Myers and Georgia operations were sold pursuant to the
Fort Myers and Georgia-1 Sales. See "The Palmer Acquisition." These assets
have been assigned values based on the net proceeds from such sales.
(ii) The Fort Myers Sale (the proceeds of which were used to pay a
portion of the Palmer Existing Indebtedness). On October 6, the Fort Myers
Sale was consummated and generated proceeds of approximately $166.0 million.
(iii) The Georgia-1 Sale. On December 30, 1997, the Company sold
substantially all of the assets used or useful in the operation of the
non-wireline cellular telephone system serving Georgia-1. A portion of the
$25.0 million in proceeds was used to retire a portion of the debt used to
fund the acquisition of Palmer.
(iv) The following transactions represent the proceeds raised for the
acquisition of Palmer:
1. The issuance and sale by PCW of the 11 3/4% PCW Notes.
2. The financing of PCW under the Credit Facility, which provides
for term loan borrowings in the aggregate principal amount of
approximately $325.0 million and revolving loan borrowings of $200.0
million. On October 6, 1997, PCW borrowed all term loans available
thereunder and approximately $120.0 million of revolving loans. The
Company applied the net proceeds of the Offering of the Old Notes to
retire amounts outstanding under the Credit Facility. See "Use of
Proceeds."
3. The issuance and sale by Holdings of 153,400 Units in the
Holdings Offering. The Units consisted of $153.4 million in aggregate
principal amount at maturity of the 13 1/2% Holdings Notes, together with
Warrants to purchase 1,030,656 shares of PCC Shares.
4. The PCC Equity Contribution, a $44.0 million contribution from
PCC in the form of cash and common stock of Palmer, was contributed by
PCC to fund a portion of the acquisition of Palmer.
(v) The sale of the Notes in the Offering, at an interest rate of
9.125%. The Offering of the Old Notes was consummated on June 16, 1998. In
connection with the Offering of the Old Notes on June 16, 1998, PCW
wrote-off deferred financing costs associated with the term loan borrowings
and credit facility. PCW recorded the nonrecurring charge as an
extraordinary item for approximately $5.9 million, net of an income tax
benefit of approximately $3.9 million. This nonrecurring charge is not
considered in the preparation of the pro forma financial statements.
(vi) The net proceeds from the sale of the Old Notes of approximately
$510.0 million were used to retire outstanding indebtedness under the Credit
Facility (including the payment of accrued interest) in June 1998.
The unaudited pro forma condensed consolidated financial statements have
been prepared by management of PCW. The unaudited pro forma data is not designed
to represent and does not represent what the results of operations or financial
position of PCW would have been had the above transactions been completed on or
as of the dates assumed, and are not intended to project results of operations
of PCW for any future period or as of any future date. The unaudited pro forma
condensed consolidated financial statements should be read in conjunction with
the audited and unaudited consolidated financial statements and notes of PCW,
included elsewhere in this Prospectus.
20
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE
FORT MYERS ACQUISITION
FORT MYERS SALE AND AND THE
SALE AND GEORGIA-1 RELATED PALMER AS
PALMER(1) GEORGIA-1 SALE(2) SALE FINANCING ADJUSTED
----------- ----------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues..................................... $141,736 $23,980 $ $ $117,756
Cost and expenses:
Cost of cellular service/operating
expenses................................... 23,301 4,395 18,906
Cost of equipment............................ 16,112 3,102 13,010
Selling, general and administrative.......... 41,014 5,836 2,440(a) 37,618
Depreciation and amortization................ 25,498 2,521 8,930(c) 31,907
----------- ------- ----------- ------------ -----------
Operating income (loss)...................... 35,811 8,126 (2,440) (8,930) 16,315
Other income (expense):
Interest income (expense) (net).............. (24,467) 332 (23,375)(d) (48,174)
Other, net................................... 208 1 207
----------- ------- ----------- ------------ -----------
Total other income (expense)................. (24,259) 333 (23,375) (47,967)
Minority interest share of income............ (1,310) (1,310)
----------- ------- ----------- ------------ -----------
Income (loss) before income tax expense...... 10,242 8,459 (2,440) (32,305) (32,962)
Income tax expense (benefit)(4).............. 4,153 3,430 (988) (b) (11,958)(e) (12,223)
----------- ------- ----------- ------------ -----------
Net income (loss)............................ $ 6,089 $ 5,029 $(1,452) $(20,347) $(20,739)
----------- ------- ----------- ------------ -----------
----------- ------- ----------- ------------ -----------
<CAPTION>
PRO FORMA
ADJUSTMENT
THE FOR THE PRO FORMA
COMPANY(3) OFFERING THE COMPANY
----------- ------------- ------------
<S> <C> <C> <C>
Revenues..................................... $ 43,713 $161,469
Cost and expenses:
Cost of cellular service/operating
expenses................................... 5,978 24,884
Cost of equipment............................ 5,259 18,269
Selling, general and administrative.......... 12,805 50,423
Depreciation and amortization................ 11,055 42,962
----------- ------------- ------------
Operating income (loss)...................... 8,616 24,931
Other income (expense):
Interest income (expense) (net).............. (22,198) (12,341)(f) (82,713)
Other, net................................... 15 222
----------- ------------- ------------
Total other income (expense)................. (22,183) (12,341) (82,491)
Minority interest share of income............ (414) (1,724)
----------- ------------- ------------
Income (loss) before income tax expense...... (13,981) (12,341) (59,284)
Income tax expense (benefit)(4).............. (5,129) (4,653)(g) (22,005)
----------- ------------- ------------
Net income (loss)............................ $ (8,852) $ (7,688) $(37,279)
----------- ------------- ------------
----------- ------------- ------------
</TABLE>
- ------------------------
(1) Includes the results and operations of Palmer for the nine months ended
September 30, 1997. The Company purchased Palmer on October 6, 1997.
(2) Includes the operating results of the Fort Myers and Georgia-1 operations
sold in the fourth quarter of 1997 net of operating results for one month of
the GA-13 RSA operations acquired by Palmer on January 31, 1997.
(3) Include the results of operations for the Company for the period October 1,
1997 through December 31, 1997.
(4) Calculated using an effective tax rate of approximately 38%.
21
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENT
FOR THE PRO FORMA
THE COMPANY OFFERING THE COMPANY
------------ ------------ ------------
<S> <C> <C> <C>
Revenues..................................... $ 92,193 $ $ 92,193
Cost and expenses:
Cost of cellular service/operating
expenses................................... 13,862 13,862
Cost of equipment............................ 11,515 11,515
Selling, general and administrative.......... 25,305 25,305
Depreciation and amortization................ 22,553 22,553
------------ ------------ ------------
Operating income (loss)...................... 18,958 18,958
Other income (expense):
Interest expense (net)....................... (35,907) (7,152)(f) (43,059)
Other, net................................... (43) (43)
------------ ------------ ------------
Total other income (expense)................. (35,950) (7,152) (43,102)
Minority interest share of income............ (1,002) (1,002)
------------ ------------ ------------
Income (loss) before income tax expense and
extraordinary item......................... (17,994) (7,152) (25,146)
Income tax expense (benefit)................. (6,515) (2,626)(g) (9,141)
------------ ------------ ------------
Net income (loss) before extraordinary
item....................................... $(11,479) $ (4,526) $(16,005)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
22
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described above on the condensed consolidated statements of operations of PCW
for the six months ended June 30, 1998 and the year ended December 31, 1997, the
following adjustments have been made:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C> <C>
(a) SELLING, GENERAL AND ADMINISTRATIVE
Represents a portion of the operating expenses charged to Fort Myers and
Georgia-1 operations by Palmer which might not be eliminated upon the
Fort Myers Sale and the Georgia-1 Sale................................. $ -- $ 2,440
------------- --------
------------- --------
(b) INCOME TAX BENEFIT
Represents the tax impact of the adjustment to selling general and
administrative expenses indicated above................................ $ -- $ 988
------------- --------
------------- --------
(c) DEPRECIATION AND AMORTIZATION
Represents the excess of the purchase price over the historical cost of
the assets acquired allocated to FCC licenses and amortized over 40
years for nine months.................................................. $ -- $ 8,930
------------- --------
------------- --------
(d) INTEREST EXPENSE, NET
Interest expense on $425 million of Indebtedness under the Credit
Facility at an assumed interest rate of 8.5% per annum................. $ -- $ 36,125
Interest expense on $175 million of the 11 3/4% PCW Notes at an interest
rate of 11.75% per annum............................................... -- 20,563
Interest expense on $80 million of the 13 1/2% Holdings Notes at an
interest rate of 13.50%................................................ -- 10,617
Interest expense related to the accretion of 13 1/2% Holdings Notes due
to Warrant value*...................................................... -- 579
Represents current amortization expense related to deferred debt
financing costs........................................................ -- 2,156
Elimination of previously recorded interest expense for Palmer (9
months)................................................................ -- (24,467)
Elimination of previously recorded interest expense for the Company
(3 months)............................................................. (22,198)
------------- --------
$ -- $ 23,375
------------- --------
------------- --------
(e) INCOME TAX EXPENSE (BENEFIT)
To record deferred tax benefit resulting from the amortization of the
acquired FCC licenses and the additional benefit arising from the pro
forma adjustments...................................................... $ -- $ (11,958)
------------- --------
------------- --------
(f) INTEREST EXPENSE, NET
To record interest for the Offering at an interest rate of 9.125%........ $ 23,953 $ 47,906
Less interest previously reflected as pro forma adjustment related for
the Credit Facility.................................................... (17,081) (36,125)
------------- --------
Net adjustment related to the Offering................................... 6,872 11,781
To record additional amortization of deferred financing costs associated
with the Offering...................................................... 280 560
------------- --------
$ 7,152 $ 12,341
------------- --------
------------- --------
(g) INCOME TAX EXPENSE (BENEFIT)
To record tax benefit arising from the pro forma adjustments regarding
the Offering........................................................... $ (2,626) $ (4,653)
------------- --------
------------- --------
</TABLE>
- ------------------------
* Represents the accretion over 10 years of the 13 1/2% Holdings Notes
resulting from the allocation of proceeds of the Holdings Offering between
the 13 1/2% Holdings Notes and the Warrants.
23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for the period May 29, 1997
(inception) through December 31, 1997 have been derived from the audited
consolidated financial statements of the Company and the selected consolidated
financial data for each of the four years ended December 31, 1996 and for the
nine months ended September 30, 1997 have been derived from the audited
consolidated financial statements of the Company's predecessor, Palmer. The
unaudited selected consolidated results of operations of Palmer and of the
Company for the six months ended June 30, 1997 and 1998, respectively, are
unaudited and not necessarily indicative of the Company's results of operations
for the full year. The unaudited condensed consolidated financial data reflects
all adjustments (consisting of normal, recurring adjustments) which are, in the
opinion of management, necessary for a fair summary of Palmer's or the Company's
financial position, results of operations and cash flows for and as of the end
of the periods presented.
The following data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
COMPANY PALMER PALMER
----------- --------- COMPANY ----------------------------------------------
-------------
PERIOD FROM
(UNAUDITED)
----------------------
MAY 29, 1997
SIX MONTHS ENDED JUNE (INCEPTION) NINE
30, THROUGH MONTHS ENDED YEAR ENDED DECEMBER 31,
---------------------- DECEMBER 31, SEPTEMBER 30, -------------------------------
1998 1997 1997(1) 1997(2) 1996 1995 1994
----------- --------- ------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
INCOME STATEMENT DATA:
Revenue:
Service..................................... $ 86,421 $ 88,140 $ 41,365 $ 134,123 $ 151,119 $ 96,686 $ 61,021
Equipment sales and installation............ 5,772 5,088 2,348 7,613 8,624 8,220 7,958
----------- --------- ------------- ------------- --------- --------- ---------
Total revenue........................... 92,193 93,228 43,713 141,736 159,743 104,906 68,979
Engineering, technical and other direct
expenses.................................. 13,862 15,554 5,978 23,301 28,717 18,184 12,776
Cost of equipment........................... 11,515 11,057 5,259 16,112 17,944 14,146 11,546
Selling, general and administrative
expenses.................................. 25,305 27,204 12,805 41,014 46,892 30,990 19,757
Depreciation and amortization............... 22,553 16,586 11,055 25,498 25,013 15,004 9,817
----------- --------- ------------- ------------- --------- --------- ---------
Operating income............................ 18,958 22,827 8,616 35,811 41,177 26,582 15,083
Other income (expense):
Interest, net(3)............................ (35,907) (16,113) (22,198) (24,467) (31,462) (21,213) (12,715)
Other, net.................................. (43) 162 15 208 (429) (687) (70)
----------- --------- ------------- ------------- --------- --------- ---------
Total other expense......................... (35,950) (15,951) (22,183) (24,259) (31,891) (21,900) (12,785)
Minority interest share of (income) loss.... (1,002) (782) (414) (1,310) (1,880) (1,078) (636)
Income tax expense (benefit)................ (6,515) 2,394 (5,129) 4,153 2,724 2,650 0
Net income (loss) before extraordinary
item...................................... (11,479) 3,700
Extraordinary item - write-off of deferred
finance costs, net of income tax benefit
of $3,935................................. (5,902) --
----------- --------- ------------- ------------- --------- --------- ---------
Net income (loss)........................... $ (17,381) $ 3,700 $ (8,852) $ 6,089 $ 4,682 $ 954 $ 1,662
----------- --------- ------------- ------------- --------- --------- ---------
----------- --------- ------------- ------------- --------- --------- ---------
OTHER DATA:
Capital expenditures........................ $ 4,171 $ 31,700 $ 14,449 $ 40,757 $ 41,445 $ 36,564 $ 22,541
EBITDA(4)................................... $ 41,511 $ 39,413 $ 19,671 $ 61,309 $ 66,190 $ 41,586 $ 24,900
EBITDA margin on service revenue............ 48.0% 44.7% 47.6% 45.7% 43.8% 43.0% 40.8%
Penetration(5).............................. 10.50% 8.32% 9.4% 8.60% 7.45% 6.51% 4.58%
Subscribers at end of period(6)............. 347,150 325,653 309,606 337,345 279,816 211,985 117,224
Cost to add a gross subscriber(7)........... $ 221 $ 234 $ 188 $ 231 $ 216 $ 183 $ 178
Cost to add a net subscriber(7)............. $ 433 $ 480 $ 370 $ 514 $ 407 $ 276 $ 247
Average monthly service revenue per
subscriber(8)............................. $ 43.86 $ 48.06 $ 47.47 $ 47.52 $ 52.20 $ 56.68 $ 60.02
Average monthly churn(9).................... 1.82% 1.79% 1.88% 1.89% 1.84% 1.55% 1.55%
Ratio of earnings to fixed charges(10)...... N/A 1.41x N/A 1.45x 1.28x 1.21x 1.17x
<CAPTION>
1993
---------
<S> <C>
INCOME STATEMENT DATA:
Revenue:
Service..................................... $ 35,173
Equipment sales and installation............ 6,285
---------
Total revenue........................... 41,458
Engineering, technical and other direct
expenses.................................. 7,343
Cost of equipment........................... 7,379
Selling, general and administrative
expenses.................................. 13,886
Depreciation and amortization............... 10,689
---------
Operating income............................ 2,161
Other income (expense):
Interest, net(3)............................ (9,006)
Other, net.................................. (590)
---------
Total other expense......................... (9,596)
Minority interest share of (income) loss.... 83
Income tax expense (benefit)................ 0
Net income (loss) before extraordinary
item......................................
Extraordinary item - write-off of deferred
finance costs, net of income tax benefit
of $3,935.................................
---------
Net income (loss)........................... $ (7,352)
---------
---------
OTHER DATA:
Capital expenditures........................ $ 13,304
EBITDA(4)................................... $ 12,850
EBITDA margin on service revenue............ 36.5%
Penetration(5).............................. 3.48%
Subscribers at end of period(6)............. 65,761
Cost to add a gross subscriber(7)........... $
Cost to add a net subscriber(7)............. $ 203
Average monthly service revenue per
subscriber(8)............................. $ 62.69
Average monthly churn(9).................... 1.37%
Ratio of earnings to fixed charges(10)...... N/A
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
COMPANY PALMER PALMER
----------- --------- COMPANY ----------------------------------------------
-------------
PERIOD FROM
(UNAUDITED)
----------------------
MAY 29, 1997
SIX MONTHS ENDED JUNE (INCEPTION) NINE
30, THROUGH MONTHS ENDED YEAR ENDED DECEMBER 31,
---------------------- DECEMBER 31, SEPTEMBER 30, -------------------------------
1998 1997 1997(1) 1997(2) 1996 1995 1994
----------- --------- ------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash................................. $ 92,681 $ 1,740 $ 27,926 $ 3,581 $ 1,698 $ 3,436 $ 2,998
Working capital (deficit)............ 85,342 2,290 3,080 7,011 296 (1,435) 2,490
Property, plant and equipment, net... 145,455 157,596 151,141 161,351 132,438 100,936 51,884
Licenses, other intangibles and other
assets, net........................ 928,087 409,193 937,986 406,828 387,067 332,850 199,265
Total assets......................... 1,201,054 597,202 1,144,479 599,815 549,942 462,871 273,020
Total debt........................... 700,000 378,000 613,000 378,000 343,662 350,441 245,609
Stockholder's equity................. 17,782 168,630 35,163 172,018 164,930 74,553 4,915
<CAPTION>
1993
---------
<S> <C>
BALANCE SHEET DATA:
Cash................................. $ 1,670
Working capital (deficit)............ 799
Property, plant and equipment, net... 23,918
Licenses, other intangibles and other
assets, net........................ 114,955
Total assets......................... 150,054
Total debt........................... 131,361
Stockholder's equity................. 3,244
</TABLE>
- ------------------------
(1) Includes results of operations for the period October 1, 1997 through
December 31, 1997.
(2) Includes revenue of $24,720, total expenses of $16,354 (including
depreciation and amortization of $2,581) and operating income of $8,366 for
the Fort Myers and Georgia-1 markets sold during 1997.
(3) Net interest included in the pro forma and historical financial data of the
Company includes non-cash interest expense related to the 13 1/2% Holdings
Notes issued in August 1997 which are obligations of Holdings and are
included in the Company's consolidated financial statements solely pursuant
to "push down" accounting rules.
(4) EBITDA should not be considered in isolation or as an alternative to net
income (loss), operating income (loss) or any other measure of performance
under GAAP. The Company believes that EBITDA is viewed as a relevant
supplemental measure of performance in the cellular telephone industry and
in other telecommunication and media companies.
(5) Determined by dividing the aggregate number of subscribers by the estimated
population.
(6) Each billable telephone number in service represents one subscriber. The
number of subscribers in the historical operating data of Palmer includes
subscribers in the Fort Myers and Georgia-1 markets which were sold in
connection with the Acquisition.
(7) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the gross or net
subscribers (as applicable) added during such period.
(8) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period.
(9) Determined for a period by dividing total subscribers discontinuing service
by the average number of subscribers for such period and dividing that
result by the number of months in such period.
(10) The ratio of earnings to fixed charges is determined by dividing the sum of
earnings before extraordinary items and accounting changes, interest
expense, taxes and a portion of rent expense representative of interest by
the sum of interest expense and a portion of rent expense representative of
interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit. For the period May 29, 1997 through
December 31, 1997 and the six months ended June 30, 1998, the deficit of
earnings to fixed charges was approximately $8,852 and $17,381,
respectively.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Consolidated Financial Statements and related
Notes thereto. References to the Company where appropriate also include PCW's
predecessor, Palmer.
Results for the Company for the years ended December 31, 1995 and December
31, 1996 are based solely on the historical operations of Palmer prior to the
Merger. The discussion for the year ended December 31, 1997 is based upon the
operating results of Palmer through September 30, 1997 and the operating results
of the Company from October 1, 1997 to December 31, 1997. The audited financial
statements of the Company do not include such combined financial statements as
this would not be in conformity with GAAP.
OVERVIEW
On May 23, 1997, PCC, PCW and Palmer entered the Merger Agreement. The
Merger Agreement provided, among other things, for the merger of PCW with and
into Palmer with Palmer as the surviving corporation. In October, 1997, the
Merger was consummated and Palmer changed its name to "Price Communications
Wireless, Inc." Pursuant to the Merger Agreement, PCC acquired each issued and
outstanding share of common stock of Palmer for a purchase price of $17.50 per
share in cash and purchased outstanding options and rights under employee and
direct stock purchase plans for an aggregate price of $486.4 million. In
addition, as a result of the Merger, PCW assumed all outstanding indebtedness of
Palmer of approximately $378.0 million. As a result, the aggregate purchase
price for Palmer (including transaction fees and expenses) was approximately
$880.0 million. PCW refinanced all of the Palmer Existing Indebtedness
concurrently with the consummation of the Merger.
In October 1997, the Fort Myers Sale, which covered approximately 382,000
Pops for $168.0 million was consummated, and generated proceeds to the Company
of approximately $166.0 million. The proceeds of the Fort Myers Sale were used
to fund a portion of the acquisition of Palmer. Accordingly, no gain or loss was
recognized on the Fort Myers Sale.
On October 21, 1997, PCC and PCW entered the "Georgia Sale Agreement" which
provided for the sale by PCW, for $25 million, of substantially all of the
assets of the non-wireline cellular telephone system serving Georgia-1,
including the FCC licenses to operate Georgia-1. The sale of the assets of
Georgia-1 was consummated on December 30, 1997 for $24.2 million. A portion of
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the acquisition of Palmer. Accordingly, no gain or loss was
recognized on the Georgia-1 Sale.
In order to fund the Acquisition and pay related fees and expenses, in July
1997, PCW issued $175.0 million aggregate principal amount of the 11 3/4% PCW
Notes and entered into a syndicated senior loan facility providing for term loan
borrowings in the aggregate principal amount of $325.0 million and revolving
loan borrowings of $200.0 million. On October 6, 1997, PCW borrowed all term
loans available thereunder and approximately $120.0 million of revolving loans.
The acquisition of Palmer was also funded in part through a $44.0 million
equity contribution from PCC which was in the form of cash and common stock of
Palmer. An additional amount of the purchase price for the Acquisition was
raised out of the proceeds from the issuance and sale for $80.0 million of units
consisting of $153.4 million principal amount at maturity of the 13 1/2%
Holdings Notes and Warrants.
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. As of
June 30, 1998, the Company provided cellular telephone service to 347,150
subscribers in Georgia, Alabama, Florida and South Carolina in a total of 16
26
<PAGE>
licensed service areas, composed of eight MSA's and eight RSA's with an
aggregate estimated population of 3.3 million. The Company sells its cellular
telephone service as well as a full line of cellular products and accessories
principally through its network of retail stores. The Company markets all of its
products and services under the nationally-recognized service mark
CELLULARONE-Registered Trademark-.
MARKET OWNERSHIP
The following is a summary of the Company's ownership interest in the
cellular telephone system in each licensed service area to which the Company
provided service at June 30, 1998 and December 31, 1997.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
CELLULAR SERVICE AREA 1998 1997
- ---------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Albany, GA.............................................................................. 86.5% 86.5%
Augusta, GA............................................................................. 100.0 100.0
Columbus, GA............................................................................ 85.2 85.2
Macon, GA............................................................................... 99.2 99.2
Savannah, GA............................................................................ 98.5 98.5
Georgia-1 RSA........................................................................... N/A 100.0
Georgia-6 RSA........................................................................... 96.3 96.3
Georgia-7 RSA........................................................................... 100.0 100.0
Georgia-8 RSA........................................................................... 100.0 100.0
Georgia-9 RSA........................................................................... 100.0 100.0
Georgia-10 RSA.......................................................................... 100.0 100.0
Georgia-12 RSA.......................................................................... 100.0 100.0
Georgia-13 RSA.......................................................................... 86.5 N/A
Alabama-8 RSA........................................................................... 100.0 100.0
Dothan, AL.............................................................................. 94.6 94.6
Montgomery, AL.......................................................................... 92.8 92.8
Fort Myers, FL.......................................................................... N/A 99.0
Panama City, FL......................................................................... 78.4 77.9
</TABLE>
On February 1, 1997, one of the Company's majority-owned subsidiaries
acquired the assets of and the license to operate the non-wireline cellular
telephone system serving Georgia RSA Market No. 383, otherwise known as
Georgia-13 RSA, for a total purchase price of $31.5 million, subject to certain
adjustments.
On October 6, 1997, as part of the Acquisition of Palmer by the Company, the
Fort Myers MSA was sold for approximately $168.0 million.
On December 30, 1997, the Company sold the assets of and license to operate
the non-wireline cellular telephone system serving Georgia RSA Market No. 371,
otherwise known as Georgia-1 RSA for a total price of $24.2 million, subject to
certain adjustments.
27
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the Company, for the periods indicated,
the percentage which certain amounts bear to total revenue.
<TABLE>
<CAPTION>
COMPANY PALMER COMPANY PALMER
----------- ----------- ----------- ----------- PALMER
--------------------------------
MAY 29, 1997
THREE MONTHS ENDED SIX MONTHS ENDED
(INCEPTION)
JUNE 30, JUNE 30, THROUGH NINE MONTHS
------------------------ ------------------------ DECEMBER 31, ENDED SEPTEMBER
1998 1997 1998 1997 1997 30, 1997
----------- ----------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Service........................... 93.5% 94.6% 93.8% 94.5% 94.6% 94.6%
Equipment sales and
installation.................... 6.5 5.4 6.2 5.5 5.4 5.4
----- ----- ----- ----- ----- -----
Total Revenue................... 100.0 100.0 100.0 100.0 100.0 100.0
OPERATING EXPENSES:
Engineering, technical and other
direct:
Engineering and technical(1)...... 7.2 8.5 7.7 8.2 7.2 8.0
Other direct costs of
services(2)..................... 7.3 8.2 7.3 8.5 6.5 8.4
Cost of equipment(3).............. 12.3 10.8 12.4 11.8 12.0 11.4
SELLING, GENERAL AND ADMINISTRATIVE:
Selling and marketing(4).......... 11.1 8.6 10.5 8.5 8.9 8.4
Customer service(5)............... 6.3 6.3 6.5 6.5 6.2 6.3
General and administrative(6)..... 10.4 13.7 10.5 14.2 14.2 14.2
Depreciation and amortization..... 22.8 17.1 24.5 17.8 25.3 18.0
----- ----- ----- ----- ----- -----
Total Operating Expenses:......... 77.4 73.2 79.4 75.5 80.3 74.7
----- ----- ----- ----- ----- -----
Operating income.................... 22.6% 26.8% 20.6% 24.5% 19.7% 25.3%
----- ----- ----- ----- ----- -----
EBITDA(7)........................... 45.4% 43.9% 45.1% 42.3% 45.0% 43.3%
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995
----------- -----
<S> <C> <C>
REVENUE:
Service........................... 94.6% 92.2%
Equipment sales and
installation.................... 5.4 7.8
----- -----
Total Revenue................... 100.0 100.0
OPERATING EXPENSES:
Engineering, technical and other
direct:
Engineering and technical(1)...... 7.9 7.6
Other direct costs of
services(2)..................... 10.1 9.7
Cost of equipment(3).............. 11.2 13.5
SELLING, GENERAL AND ADMINISTRATIVE:
Selling and marketing(4).......... 8.6 8.7
Customer service(5)............... 5.9 6.0
General and administrative(6)..... 14.9 14.9
Depreciation and amortization..... 15.7 14.3
----- -----
Total Operating Expenses:......... 74.3 74.7
----- -----
Operating income.................... 25.7% 25.3%
----- -----
EBITDA(7)........................... 41.4% 39.6%
</TABLE>
- ------------------------
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of subscriber roaming, costs of long distance, costs
of interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, employee and agent commissions, and advertising and promotional
expenses.
(5) Consists primarily of salaries and benefits of customer service personnel
and costs of printing and mailing billings generated in-house.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) EBITDA should not be considered in isolation or as an alternative to net
income, operating income or any other measure of performance under generally
accepted accounting principles. The Company believes that operating income
before depreciation and amortization is viewed as a relevant supplemental
measure of performance in the cellular telephone industry and in other
telecommunications and media companies.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
REVENUE. Service revenues totaled $45.7 million for the second quarter of
1998, a decrease of 0.4% from $45.9 million for the second quarter of 1997. The
decrease is primarily attributable to service revenues of the cellular telephone
systems sold in the Ft. Myers Sale and the Georgia Sale which totaled $7.3
million in the second quarter of 1997. This was substantially offset by an
increase in the average number of subscribers to 336,936 in the second quarter
of 1998 from 318,238 in 1997.
Average monthly revenue per subscriber decreased 6.5% to $45.25 for the
second quarter of 1998 from $48.41 for the second quarter of 1997. This is in
part due to the trend, common in the cellular
28
<PAGE>
telephone industry, where, on average, new subscribers are using less airtime
than existing subscribers. Therefore, service revenues generally do not increase
proportionately with the increase in subscribers. In addition, the decline
reflects more competitive rate plans introduced by the Company.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $3.2 million for the second
quarter of 1998 compared to $2.6 million for the second quarter of 1997. The
increase is primarily due to a 28.4% increase in gross subscriber activations in
the second quarter of 1998 compared to 1997. As a percentage of revenue,
equipment sales and installation revenue increased to 6.5% in the second quarter
of 1998 from 5.4% in the second quarter of 1997.
OPERATING EXPENSES. Engineering and technical expenses decreased by 15.2%
to $3.5 million for the second quarter of 1998 from $4.1 million in the second
quarter of 1997. As a percentage of revenue, engineering and technical expenses
decreased to 7.2% from 8.5% for the second quarter of 1998 and 1997,
respectively. Engineering and technical expenses attributable to the cellular
telephone systems sold in the Ft. Myers Sale and Georgia Sale totaled $.5
million for the second quarter of 1997.
Other direct costs of service decreased to $3.6 million for the second
quarter of 1998 from $4.0 million for the second quarter of 1997 reflecting the
decrease in interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the local exchange carriers ("LECs") in most of
the Company's markets. As a percentage of revenue, these costs of service
declined to 7.3% from 8.2%, reflecting improved interconnection agreements with
LECs, as well as efficiencies gained from the growing subscriber base. Other
direct costs of service attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $1.0 million for the second quarter
of 1997.
The cost of equipment increased 14.6% to $6.0 million for the second quarter
of 1998 from $5.3 million for the second quarter of 1997, primarily as a result
of an increase in gross subscriber activations for the same period. Equipment
sales resulted in losses of $2.8 million in 1998 versus $2.6 million in 1997.
The Company sells equipment below its costs in an effort to address market
competition and improve market share. Cost of equipment attributable to the
cellular telephone systems sold in the Ft. Myers Sale and Georgia Sale totaled
$.9 million for the second quarter of 1997.
Selling, general and administrative expenses decreased 1.8% to $13.6 million
in the second quarter of 1998 from $13.8 million in the second quarter of 1997.
These expenses are comprised of (i) sales and marketing costs, (ii) customer
service costs and (iii) general and administrative expenses.
Sales and marketing costs increased 31.8% to $5.4 million for the second
quarter of 1998 from $4.1 million for the same period in 1997. This increase is
primarily due to the 28.4% increase in gross subscriber activations and the
costs to acquire them, including advertising and commissions. As a percentage of
total revenue, sales and marketing costs increased to 11.1% for the second
quarter of 1998 compared to 8.6% for the second quarter of 1997. The Company's
cost to add a net subscriber, including loss on telephone sales, decreased to
$220 for the second quarter of 1998 from $233 for the second quarter of 1997.
This decrease in cost to add a net subscriber was caused primarily by decreased
losses from the Company's sales of cellular telephones. Sales and marketing
expenses attributable to the cellular telephone systems sold in the Ft. Myers
Sale and Georgia Sale totaled $.5 million for the second quarter of 1997.
Customer service costs remained flat at $3.1 million for the second quarter
of 1998 and the second quarter of 1997. As a percentage of revenue, customer
service costs remained at 6.3% for the second quarter of both 1998 and 1997.
Customer service expenses attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $.4 million for the second quarter
of 1997.
General and administrative expenditures decreased 23.4% to $5.1 million for
the second quarter of 1998 from $6.7 million for the second quarter of 1997, due
primarily to expense savings and reorganization efforts. General and
administrative expenses decreased as a percentage of revenue to 10.4% in the
second quarter of 1998 from 13.7% in the second quarter of 1997. As the Company
continues to add more subscribers, and generates associated revenue, general and
administrative expenses should decrease as a
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percentage of total revenues. There can be no assurance, however, that this
forward-looking statement will not differ materially from actual results due to
unforeseen general and administrative expenses and other factors. General and
administrative expenses attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $.5 million for the second quarter
of 1997.
Depreciation and amortization increased 34.4% to $11.2 million for the
second quarter of 1998 from $8.3 million for the second quarter of 1997. This
increase was primarily due to the depreciation and amortization associated with
the new carrying value of assets as a result of the "push down" of the purchase
price to the Company. As a percentage of revenue, depreciation and amortization
increased to 22.8% for the second quarter of 1998 compared to 17.1% for the
second quarter of 1997. Depreciation and amortization attributable to the
cellular telephone systems sold in the Ft. Myers Sale and Georgia Sale totaled
$.8 million for the second quarter of 1997.
Operating income decreased 15.3% to $11.0 million in the second quarter of
1998, from $13.0 million for the second quarter of 1997. This decrease in
operating results is attributable primarily to the increase in depreciation and
amortization expense.
NET INTEREST EXPENSE, INCOME TAXES AND NET INCOME. Net interest expense
increased 120.7% to $18.1 million for the second quarter of 1998 from $8.2
million in the second quarter of 1997 primarily due to rate increases and
additional borrowings incurred as a result of the recent merger.
Income tax benefit was $2.7 million in the second quarter of 1998
representing utilization of the net operating losses carried back against
previous earnings. Income tax expense was $1.9 million in the second quarter of
1997 based on earnings.
Net loss for the second quarter of 1998 was $10.8 million compared to net
income of $2.5 million for the second quarter of 1997. The decrease in net
income is primarily attributable to increases in interest expense, depreciation
and amortization expense and the $5.9 million net write-off of deferred finance
costs recorded as an extraordinary item.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
REVENUE. Service revenues totaled $86.4 million for the first half of 1998,
a decrease of 2.0% from $88.1 million for the first half of 1997. The decrease
is primarily attributable to service revenues of the cellular telephone systems
sold in the Ft. Myers Sale and the Georgia Sale which totaled $14.9 million in
the first half of 1997. This was substantially offset by an increase in the
average number of subscribers to 328,378 in the first half 1998 from 302,734 in
1997.
Average monthly revenue per subscriber decreased 8.7% to $43.86 for the
first half of 1998 from $48.06 for the first half of 1997. This is in part due
to the trend, common in the cellular telephone industry, where, on average, new
subscribers are using less airtime than existing subscribers. Therefore, service
revenues generally do not increase proportionately with the increase in
subscribers. In addition, the decline reflects more competitive rate plans
introduced into the Company's markets.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $5.8 million for the first
half of 1998 compared to $5.1 million for the first half of 1997. The increase
is primarily due to a 15.6% increase in gross subscriber activations in the
first half of 1998 compared to 1997. As a percentage of revenue, equipment sales
and installation revenue increased to 6.2% in the first half of 1998 from 5.5%
in the first half of 1997.
OPERATING EXPENSES. Engineering and technical expenses decreased by 6.8% to
$7.1 million for the first half of 1998 from $7.7 million in the first half of
1997. As a percentage of revenue, engineering and technical expenses decreased
to 7.7% from 8.2% for the first half of 1998 and 1997, respectively. Engineering
and technical expenses attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $.9 million for the first half of
1997.
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Other direct costs of service decreased to $6.7 million for the first half
of 1998 from $7.9 million for the first half of 1997. reflecting the decrease in
interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the local exchange carriers ("LECs") in most of
the Company's markets. As a percentage of revenue, these costs of service
declined to 7.3% from 8.5%, reflecting improved interconnection agreements with
LECs, as well as efficiencies gained from the growing subscriber base. Other
direct costs of service attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $2.2 million for the first half of
1997.
The cost of equipment increased 4.1% to $11.5 million for the first half of
1998 from $11.1 million for the first half of 1997, primarily as a result of
gross subscriber activations for the same period. Equipment sales resulted in
losses of $5.7 million in 1998 versus $6.0 million in 1997. The Company sells
equipment below its costs in an effort to address market competition and improve
market share. Cost of equipment attributable to the cellular telephone systems
sold in the Ft. Myers Sale and Georgia Sale totaled $1.8 million for the first
half of 1997.
Selling, general and administrative expenses decreased 6.9% to $25.3 million
in the first half of 1998 from $27.2 million in the first half of 1997. These
expenses are comprised of (i) sales and marketing costs, (ii) customer service
costs and (iii) general and administrative expenses.
Sales and marketing costs increased 21.5% to $9.7 million for the first half
of 1998 from $8.0 million for the same period in 1997. This increase is
primarily due to the 15.6% increase in gross subscriber activations and the
costs to acquire them, including advertising and commissions. As a percentage of
total revenue, sales and marketing costs increased to 10.5% for the first half
of 1998 compared to 8.5% for the first half of 1997. The Company's cost to add a
net subscriber, including loss on telephone sales, decreased to $221 for the
first half of 1998 from $234 for the first half of 1997. This decrease in cost
to add a net subscriber was caused primarily by decreased losses from the
Company's sales of cellular telephones. Sales and marketing expenses
attributable to the cellular telephone systems sold in the Ft. Myers Sale and
Georgia Sale totaled $.9 million for the first half of 1997.
Customer service costs remained flat at $6.0 million for the first half of
1998 and the first half of 1997. As a percentage of revenue, customer service
costs remained at 6.5% for the first half of both 1998 and 1997. Customer
service expenses attributable to the cellular telephone systems sold in the Ft.
Myers Sale and Georgia Sale totaled $.7 million for the first half of 1997.
General and administrative expenditures decreased 26.8% to $9.7 million for
the first half of 1998 from $13.2 million for the first half of 1997, due
primarily to expense savings and reorganization efforts. General and
administrative expenses decreased as a percentage of revenue to 10.5% in the
first half of 1998 from 14.2% in the first half of 1997. As the Company
continues to add more subscribers, and generates associated revenue, general and
administrative expenses should decrease as a percentage of total revenues. There
can be no assurance, however, that this forward-looking statement will not
differ materially from actual results due to unforeseen general and
administrative expenses and other factors. General and administrative expenses
attributable to the cellular telephone systems sold in the Ft. Myers Sale and
Georgia Sale totaled $1.2 million for the first half of 1997.
Depreciation and amortization increased 35.9% to $22.6 million for the first
half of 1998 from $16.6 million for the first half of 1997. This increase was
primarily due to the depreciation and amortization associated with the new
carrying value of assets as a result of the "push down" of the purchase price to
the Company. As a percentage of revenue, depreciation and amortization increased
to 24.5% for the first half of 1998 compared to 17.8% for the first half of
1997. Depreciation and amortization attributable to the cellular telephone
systems sold in the Ft. Myers Sale and Georgia Sale totaled $1.5 million for the
first half of 1997.
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Operating income decreased 16.9% to $19.0 million in the first half of 1998,
from $22.8 million for the first half of 1997. This decrease in operating
results is attributable primarily to the increase in depreciation and
amortization expense.
NET INTEREST EXPENSE, INCOME TAXES AND NET INCOME. Net interest expense
increased 123.0% to $35.9 million for the first half of 1998 from $16.1 million
in the first half of 1997 primarily due to rate increases and additional
borrowings incurred as a result of the recent merger.
Income tax benefit was $6.5 million in the first half of 1998 representing
utilization of the net operating losses carried back against previous earnings.
Income tax expense was $2.4 million in the first half of 1997 based on earnings.
Net loss for the first half of 1998 was $17.4 million compared to net income
of $3.7 million for the first half of 1997. The decrease in net income is
primarily attributable to increases in interest expense, depreciation and
amortization expense and the $5.9 million net write-off of deferred finance
costs recorded as an extraordinary item.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
REVENUE. Service revenues totaled $175.5 million for 1997, an increase of
16.1% over $151.1 million for 1996. This increase was due to a 29.8% increase in
the average number of subscribers to 313,042 for 1997 versus 241,255 for 1996.
The increase in subscribers is the result of internal growth, which the Company
attributes primarily to its strong sales and marketing efforts, and the recent
acquisitions. In addition to the subscriber base growth, service revenues also
increased because of a 35.3% increase in outcollect roaming revenues.
Average monthly revenue per subscriber decreased 10.5% to $46.72 for 1997
from $52.20 for 1996. This is due to a common trend in the cellular telephone
industry, where on average, new customers use less airtime than existing
subscribers. Therefore, service revenues generally do not increase
proportionately with the increase in subscribers. In addition, the decline
reflects more competitive rate plans introduced into the Company's markets.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $10.0 million for 1997 from
$8.6 million for 1996. As a percentage of total cellular revenue, equipment
sales and installation revenue remained flat at 5.4% for both 1997 and 1996,
reflecting the increased recurring revenue base as well as lower cellular
equipment prices charged to customers.
OPERATING EXPENSES. Engineering and technical expenses increased by 16.0%
to $14.6 million for 1997 from $12.6 million in 1996, due primarily to the
increase in subscribers and in cell site locations. As a percentage of revenue,
engineering and technical expenses remained flat at 7.9% for both 1997 and 1996.
This reflects the increased fixed costs associated with additional cell sites
constructed. As revenue grows the Company expects engineering and technical
expenses to decrease as a percentage of revenue due to its large component of
fixed costs. There can be no assurance, however, that this forward-looking
statement will not differ materially from actual results due to unforeseen
engineering and technical expenses.
Other direct costs of services declined to $14.7 million for 1997 from $16.1
million in 1996. As a percentage of revenue, other direct costs of service
decreased to 7.9% in 1997 from 10.1% in 1996, reflecting the decrease in
interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the LECs in most of the Company's markets,
offset somewhat by more competitive roaming rates for Company's customer roaming
in adjacent areas.
The cost of equipment increased 19.1% to $21.4 million for 1997 from $17.9
million for 1996, due primarily to the increase in gross subscriber activations.
Equipment sales resulted in losses of $11.4 million in 1997 versus $9.3 million
in 1996. The Company sells equipment below its costs in an effort to address
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market competition and improve market share. The Company sold more telephones
below cost in 1997 than in 1996.
Selling, general and administrative expenses increased 14.8% to $53.8
million in 1997 from $46.9 million in 1996. These expenses are comprised of (i)
sales and marketing costs, (ii) customer service costs and (iii) general and
administrative expenses.
Sales and marketing costs increased 15.5% to $15.8 million for 1997 from
$13.7 million for 1996. This increase is primarily due to a 13.5% increase in
gross subscriber activations and the costs to acquire them and higher
advertising costs in response to market competition. As a percentage of total
revenue, sales and marketing costs decreased to 8.5% for 1997 compared to 8.6%
for 1996. The Company's cost to add a net subscriber, including loss on
telephone sales, increased to $469 for 1997 from $407 for 1996 due primarily to
increased losses from the Company's sales of cellular telephones and an increase
in commissions
Customer service costs increased 23.6% to $11.7 million for 1997 from $9.4
million for 1996. As a percentage of revenue, customer service costs increased
to 6.3% for 1997 from 5.9% for 1996. The increase was due primarily to an
increase in license and maintenance costs for the Company's billing systems.
General and administrative expenditures increased 10.8% to $26.3 million for
1997 from $23.8 million for 1996. General and administrative expenses decreased
as a percentage of total revenue to 14.2% in 1997 from 14.9% in 1996. As the
Company continues to add more subscribers, and generates associated revenue,
general and administrative expenses should continue to decrease as a percentage
of total revenues. There can be no assurance, however, that this forward-looking
statement will not differ materially from actual results due to unforeseen
general and administrative expenses and other factors.
Depreciation and amortization increased 46.1% to $36.6 million for 1997 from
$25.0 million for 1996. This increase was primarily due to the depreciation and
amortization associated with the new carrying value of assets as a result of the
"push down" of the purchase price of the Acquisition to the Company, recent
acquisitions and additional capital expenditures. As a percentage of revenue,
depreciation and amortization increased to 19.7% from 15.7% for 1997 compared to
1996.
Operating income increased 7.9% to $44.4 million in 1997, from $41.2 million
for 1996. This improvement in operating results is attributable primarily to
increases in revenue which exceeded increases in operating expenses.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
REVENUE. Service revenues totaled $151.1 million for 1996, an increase of
$54.4 million or 56.3% over $96.7 million for 1995. This increase was primarily
due to a 69.7% increase in the average number of subscribers to 241,255 in 1996
from 142,147 in 1995. The increase in subscribers is the result of internal
growth, which the Company attributes primarily to its strong sales and marketing
efforts, and recent acquisitions. The GTE Acquisition accounted for 41,163
subscribers at December 31, 1996. Service revenue attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $24.6 million for 1996
as compared to $2.0 million for the one month ended December 31, 1995.
Average monthly revenue per subscriber decreased to $52.20 for 1996 from
$56.68 for 1995. This decrease occurred because, on average, new subscribers use
less airtime and generate less revenue per subscriber than existing subscribers
as is customary in the cellular telephone industry. Therefore, airtime usage and
service revenue did not increase in proportion to the increase in subscribers.
In addition, the Company entered into revised roaming agreements with certain of
its neighboring carriers. These agreements provide for reciprocal lower roaming
rates per minute of use, resulting in lower roaming revenue for the Company, but
offset by lower direct costs of services when the Company's subscribers were
roaming on these neighboring systems.
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Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.6 million for 1996 from
$8.2 million for 1995, a 4.9% increase, primarily due to the increase in gross
subscriber activations, partially offset by lower cellular phone prices. While
equipment sales and installation revenue increased slightly for 1996 from 1995,
it decreased as a percentage of total cellular revenue to 5.4% for 1996 from
7.8% for 1995, reflecting the increased recurring annual revenue base as well as
lower cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $1.0 million for 1996 as compared to $0.1 million
for the one month ended December 31. 1995.
OPERATING EXPENSES. Engineering and technical expenses increased by 57.5%
to $12.6 million for 1996 from $8.0 million for 1995, due primarily to the 32.0%
increase in the number of subscribers. As a percentage of revenue, engineering
and technical expenses increased to 7.9% 1996 from 7.6% for 1995 due to
additional costs incurred for the recent acquisitions and recurring costs
associated with the Company's system development and expansion. Such development
is done for the purpose of increasing capacity and improving coverage.
Engineering and technical expenses attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $2.8 million for 1996 as
compared to $0.2 million for the one month ended December 31, 1995.
Other direct costs of services increased 58.3% to $16.1 million for 1996
from $10.2 million for 1995. As a percentage of revenue, other direct costs of
services increased to 10.1% for 1996 from 9.7% for 1995. This increase in other
direct costs of services as a percentage of revenue was due primarily to the
Company subsidizing more roaming costs for competitive reasons. Other direct
costs of service attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $1.6 million for 1996 as compared to $0.2 million for
the one month ended December 31, 1995.
Cost of equipment increased 26.8% to $17.9 million for 1996 from $14.1
million for 1995, due primarily to the increase in gross subscriber activations
for the same period. Equipment sales resulted in losses of $9.3 million in 1996
versus $5.9 million in 1995. The Company sells equipment below its costs in an
effort to address market competition and improve market share. The Company sold
more telephones below cost in 1996 than in 1995. The cost of equipment
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $3.1 million for 1996 as compared to $0.2 million for the one month
ended December 31, 1995.
Selling, general and administrative expenses increased 51.3% to $46.9
million in 1996 from $31.0 million in 1995. These expenses are comprised of (i)
sales and marketing costs, (ii) customer service costs and (iii) general and
administrative expenses.
Sales and marketing costs increased 50.2% to $13.7 million for 1996 from
$9.1 million for 1995. This increase is primarily due to the 28.1% increase in
gross subscriber activations and the resulting increase in costs to acquire
them. As a percentage of total revenue, sales and marketing costs remained
relatively flat at 8.6% for 1996 and 8.7% for 1995. The Company's cost to add a
net subscriber, including losses on telephone sales, increased to $407 in 1996
from $276 in 1995. This increase in cost to add a net subscriber was caused
primarily by additional advertising and fixed marketing overhead associated with
the systems acquired in the GTE Acquisition, which are not yet generating the
offsetting gains in net subscribers. In addition, there were increased losses
from the Company's sales of cellular telephones. Sales and marketing costs
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $2.8 million in 1996 as compared to $0.2 million for the one month ended
December 31, 1995.
Customer service costs increased 49.9% to $9.4 million for 1996 from $6.3
million for 1995. As a percentage of revenue, customer service costs remained
relatively flat at 5.9% and 6.0% for 1996 and 1995, respectively. Customer
service costs attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $1.9 million in 1996 as compared to $0.2 million in for the
one month ended December 31, 1995.
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General and administrative expenses increased 52.5% to $23.8 million for
1996 from $15.6 million for 1995 and remained flat as a percentage of revenue at
14.9% for 1996 and 1995. As the Company continues to add more subscribers and
generate associated revenue, general and administrative expenses should decrease
as a percentage of total revenues. There can be no assurance, however, that this
forward-looking statement will not differ materially from actual results due to
unforeseen general and administrative expenses and other factors. The general
and administrative costs attributable to the cellular telephone systems acquired
in the GTE Acquisition totaled $3.4 million for 1996 as compared to $0.4 million
for the one month ended December 31, 1995.
Depreciation and amortization increased 66.7% to $25.0 million for 1996 from
$15.0 million for 1995. This increase is primarily due to the depreciation and
amortization associated with recent acquisitions and additional capital
expenditures. Depreciation and amortization attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $6.2 million for 1996
as compared to $0.5 million for the one month ended December 31, 1995.
Operating income for 1996 increased 54.9% to $41.2 million, an increase of
$14.6 million over operating income for 1995. This improvement in operating
results is attributable primarily to increases in revenue which exceeded
increases in operating expenses. Operating income attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $3.8 million for 1996
as compared to $0.2 million for the one month ended December 31, 1995.
NET INTEREST EXPENSE, INCOME TAXES, AND NET INCOME
Net interest expense increased 48.3% to $46.7 million for 1997 from $31.5
million for 1996 primarily due to rate increases and additional borrowings
incurred as a result of the recent Merger. For 1996, net interest expense
increased 48.3% to $31.5 million from $21.2 million for 1995 due primarily to
debt incurred for acquisitions and amortization of deferred financing fees
related to the Predecessor credit agreement.
Income tax benefit was $976,000 in 1997 compared to income tax expense of
$2.7 million in 1996 and 1995. The $2.7 million income tax expense in 1995 was a
non-recurring deferred income tax charge related to the difference between the
financial statement and income tax return based on certain assets and
liabilities of Palmer Cellular Partnership. See Note 6 to the Company's
Consolidated Financial Statements.
Net loss for 1997 was $2.8 million compared to net income in 1996 of $4.7
million. The loss was due to increased interest and amortization incurred as a
result of the Merger. Net income for 1996 was $4.7 million, compared to net
income of $1.0 million for 1995. The increase in net income is primarily
attributable to increases in revenue which exceeded increases in operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank debt, and,
to a lesser extent, operating cash flow.
In the year ended December 31, 1997 the Company spent approximately $55.3
million on capital expenditures of which $3.5 million related to properties
which were sold and approximately $6 million in capital expenditures related to
purchases of equipment for cell sites to be completed in 1998. The Company
expects to spend approximately $16 million and $18 million for capital
expenditures for the years ended December 31, 1998 and 1999, respectively. The
Company expects to use net cash provided by operating activities to fund such
capital expenditures.
In September 1997, PCW entered into the Credit Facility with a syndicate of
banks, financial institutions and other "accredited investors" providing for
loans of up to $525 million. The Credit Facility
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included a $325 million term loan facility and a $200 million revolving credit
facility. As of March 31, 1998 there was $425.9 million outstanding under the
Credit Facility.
The Company used the net proceeds of the Offering to retire outstanding
indebtedness under the Credit Facility, including accrued interest. As a result,
the Company has no ability to borrow funds under the Credit Facility. The
Company currently does not intend to enter into a new credit facility and if it
does, there can be no assurance that it will have the ability to borrow under
any such credit facility.
In July 1997, PCW issued $175 million of the 11 3/4% PCW Notes with interest
payable semi-annually commencing January 15, 1998. The 11 3/4% PCW Notes contain
covenants that restrict the payment of dividends, incurrence of debt and sale of
assets.
In August 1997 Holdings issued 153,400 units, consisting of Notes and
Warrants, in exchange for $80 million. The 13 1/2% Holdings Notes, which were
not guaranteed by the Company, are secured by a pledge of the stock of Holdings
and do not represent indebtedness of the Company. The 13 1/2% Holdings Notes
have been reflected as an "Obligation of Parent Company" in the Company's
accompanying consolidated financial statements in accordance with the
"push-down" basis accounting. The 13 1/2% Holdings Notes accreted at a rate of
13.5% compounded semi-annually, to an aggregate principal amount of
approximately $153.4 million by August 1, 2002. Cash interest was not due to
commence accruing on the 13 1/2% Holdings Notes prior to August 2, 2002.
Commencing on February 1, 2003, cash interest on the 13 1/2% Holdings Notes was
to be payable at a rate of 13.5% per annum, payable semi-annually.
In July 1998, Holdings called for redemption all of the outstanding 13 1/2%
Holdings Notes. The notes were redeemed in August 1998 at the redemption price
per $1,000 aggregate principal amount of $711.61. The accreted value of the
notes approximated $91.0 million. In addition, Holdings was required to pay a
premium of approximately 20% of the outstanding balance or approximately $18.2
million. Holdings financed the redemption out of the net proceeds of an offering
of Holdings PIK Notes.
As of June 30, 1998, the Company's consolidated ratio of long-term debt to
stockholder's equity was 39.37 to 1.00. On a pro forma basis, after giving
effect to the Offering and the application of the net proceeds therefrom, its
ratio of EBITDA to cash interest expense (excluding non-cash interest related to
the 13 1/2% Holdings Notes and amortization of deferred debt financing costs)
would have been 0.99 to 1.00 for the year ended December 31, 1997 and 1.21 to
1.00 for the three months ended June 30, 1998.
ACCOUNTING POLICIES
For financial reporting purposes, the Company reports 100% of revenues and
expenses for the markets for which it provides cellular telephone service.
However, in several of its markets, the Company holds less than 100% of the
equity ownership. The minority stockholders' and partners' share of income or
losses in those markets are reflected in the consolidated financial statements
as "minority interest share of (income) loss", except for losses in excess of
their capital accounts and cash call provisions which are not eliminated in
consolidation. For financial reporting purposes, the Company consolidates each
subsidiary and partnership in which it has a controlling interest (greater than
50%). From 1992 through June 30, 1998, the Company had controlling interests in
each of its subsidiaries and partnerships.
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YEAR 2000 IMPACT
The Company has studied the impact of the year 2000 on its operational and
financial systems, and has developed estimates of costs of implementing changes
or upgrades where necessary. Preliminary estimates indicate that these costs
will be less than $2 million. However, the Company is unable to predict all of
the implications of the year 2000 issue as it relates to its suppliers and other
entities. It is anticipated that a substantial portion of the costs will be
incurred in the next two years and will be expensed as incurred.
INFLATION
The Company believes that inflation affects its business no more than it
generally affects other similar businesses.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on [ ], 1998; provided, however, that if the Company,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $525,000,000 aggregate principal amount
at maturity of the Old Notes was outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about the date set forth on the
cover page to all Holders of Old Notes at the addresses set forth in the
security register with respect to Old Notes maintained by the Trustee. The
Company's obligations to accept Old Notes for exchange pursuant to the Exchange
Offer is subject to certain conditions as set forth under "Certain Conditions to
the Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old Notes, by giving oral or written notice of
such extension to the Exchange Agent and notice of such extension to the Holders
as described below. During any such extension, all Old Notes previously tendered
will remain subject to the Exchange Offer and may be accepted for exchange by
the Company. Any Old Notes not accepted for exchange for any reason will be
returned without expense to the tendering Holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the Holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to [Bank of Montreal Trust Company] (the
"Exchange Agent") at one of the addresses set forth below under "Exchange Agent"
on or prior to the Expiration Date. In addition, (i) certificates for such Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's
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<PAGE>
account at The Depository Trust Company (The "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date or (iii) the Holder
must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered Holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than
the person signing the Letter of Transmittal, the Old Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered Holder with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its reasonable discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right in its
sole discretion to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any Holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer as to any particular Old Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with the tenders of
Old Notes for exchange must be cured within such reasonable period of time as
the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall any
of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered Holder or Holders that appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of its authority to so act
must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, (ii) neither the Holder nor
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<PAGE>
any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the Holder nor any such other person
is engaged in or intends to participate in the distribution of such New Notes
and (iv) neither the Holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company. If the tendering
Holder is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "Certain Conditions to the Exchange Offer" below. For purposes of
the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Notes are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if
certificates representing Old Notes are submitted for a greater principal amount
than the Holder desires to exchange, such unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering Holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from June 16, 1998, payable semiannually on
June 15 and December 15 of each year, commencing on December 15, 1998, at the
rate of 9 1/8% per annum. Holders of Old Notes whose Old Notes are accepted for
exchange will be deemed to have waived the right to receive any payment in
respect of interest on the Old Notes accrued from June 16, 1998 until the date
of the issuance of the New Notes. Consequently, holders who exchange their Old
Notes for New Notes will receive the same interest payment on December 15, 1998
(the first interest payment date with respect to the Old Notes and the New
Notes) that they would have received had they not accepted the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account in
accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program ("ATOP") procedures for transfer. However, the exchange for the Old
Notes so tendered will only be made after timely confirmation of such book-entry
transfer of Old Notes into the Exchange Agent's account, and timely receipt by
the Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term
40
<PAGE>
"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that the Book-Entry Transfer Facility has received an
express acknowledgement from a participant tendering Old Notes that are the
subject of such Book-Entry Confirmation that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and that the
Company may enforce such agreement against such participant.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the Holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates of all physically tendered Old Notes,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn
(including the principal amount of such Old Notes), and (where certificates for
Old Notes have been transmitted) specify the name in which such Old Notes are
registered, if different from that of the withdrawing Holder. If certificates
for Old Notes have been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing Holder must
also submit the serial numbers of the particular certificates to be withdrawn
and a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such Holder is an Eligible Institution. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer described above,
any note of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the Holder thereof without cost to such Holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may
41
<PAGE>
be retendered by following one of the procedures described under "Procedures for
Tendering Old Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the Expiration Date, such acceptance or issuance would violate applicable
law or any interpretation of the staff of the SEC. The foregoing condition is
for the sole benefit of the Company and may be asserted by the Company
regardless of the circumstances giving rise to such condition or may be waived
by the Company in whole or in part at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA").
EXCHANGE AGENT
Bank of Montreal Trust Company has been appointed as the Exchange Agent for
the Exchange Offer. All executed Letters of Transmittal should be directed to
the Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent, addressed as follows:
Deliver To:
Bank of Montreal Trust Company, Exchange Agent
By Mail, by Overnight Courier or By Hand:
Wall Street Plaza
88 Pine Street, 19th floor
New York, New York 10005
Attention:
Corporate Trust Department
By Facsimile:
Confirm by Telephone:
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Company and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders. The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
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<PAGE>
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$[ ].
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that Holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer to be returned to, a person other
than the registered tendering Holder will be responsible for the payment of any
applicable transfer tax thereon and if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer tax (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, and any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Notes are acquired in the ordinary
course of such Holder's business and such Holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. If any Holder has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) could not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes must acknowledge that it will deliver a prospectus in connection with
any resale of such New Notes. See "Plan of Distribution." In addition, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdiction.
BUSINESS OF THE COMPANY
GENERAL
The Company is currently engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. At June 30, 1998, the Company provided cellular telephone service
to 347,150 subscribers in Georgia, Alabama, Florida and South Carolina in a
total of 16 licensed service areas composed of eight MSAs and eight RSAs, with
an aggregate estimated population of 3.3 million. The Company sells its cellular
telephone service as well as a full line of cellular products and accessories,
including pagers, principally through its network of retail stores. The Company
markets all of its products and services under the nationally recognized service
mark CELLULARONE-Registered Trademark-.
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve
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certain economies of scale, including centralized marketing and administrative
functions as well as multi-system capital expenditures. The Company devotes
considerable attention to engineering, maintenance and improvement of its
cellular telephone systems in an effort to deliver high-quality service to its
subscribers and to implement new technologies as soon as economically
practicable. Through its participation in the NACN, the Company is able to offer
ten-digit dialing access to its subscribers when they travel outside the
Company's service areas, providing them with convenient roaming access
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants. By marketing its products and services under
the CELLULARONE-Registered Trademark- name, the Company also enjoys the benefits
of association with a nationally recognized service mark.
MARKETS AND SYSTEMS
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth as of June
30, 1998, with respect to each service area in which the Company owns a cellular
telephone system, the estimated population, the Company's beneficial ownership
percentage, the Net Pops and the date of initial operation of such system by
Palmer or a predecessor operator.
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
CELLULAR SERVICE AREA (1) POPULATION (2) PERCENTAGE NET POPS OPERATIONAL
- ------------------------------------------------ ----------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Albany, GA...................................... 118,527 86.5% 102,526 4/88
Augusta, GA..................................... 439,116 100.0 439,116 4/87
Columbus, GA.................................... 254,150 85.2 216,518 11/88
Macon, GA....................................... 313,686 99.2 311,234 12/88
Savannah, GA.................................... 283,978 98.5 279,718 3/88
Georgia-6 RSA................................... 199,516 96.3 192,134 4/93
Georgia-7 RSA................................... 134,376 100.0 134,376 10/91
Georgia-8 RSA................................... 157,451 100.0 157,451 10/91
Georgia-9 RSA................................... 119,410 100.0 119,410 9/92
Georgia-10 RSA.................................. 149,699 100.0 149,699 10/91
Georgia-12 RSA.................................. 211,799 100.0 211,799 10/91
Georgia-13 RSA.................................. 147,392 86.5 127,494 10/90
Dothan, AL...................................... 136,160 94.6 128,807 2/89
Montgomery, AL.................................. 318,371 92.8 295,430 8/88
Alabama-8, RSA.................................. 171,993 100.0 171,993 7/93
----------------- ----------
Subtotal........................................ 3,155,624 3,037,705
----------------- ----------
Panama City, FL................................. 146,018 78.4 114,493 9/88
----------------- ----------
Total........................................... 3,301,642 3,152,198
----------------- ----------
----------------- ----------
</TABLE>
- ------------------------
(1) Does not include the Alabama-5 RSA and South Carolina-7 RSA where the
Company has IOA. IOA is granted for an area to a license holder in an
adjacent area when there are no license holders in such area. The Company
has no subscribers in the South Carolina-7 RSA, but instead provides roaming
access to its own subscribers and others when they travel in this service
area, utilizing its existing cell sites. Construction permits were granted
to Permittees for the Alabama-5 RSA and South Carolina-7 RSA. The Permittees
are required to complete construction of their respective RSA within 18
months. After completing construction, a Permittee may give the Company
thirty days prior written notice, at which point the Company would be
required to sell all of its subscribers of its other systems who reside
within the boundaries of the markets to the Permittee at cost. The Company,
along with others, is currently in negotiations to purchase the South
Carolina-7 RSA. No assurance can be given, however, that the Company will be
successful in consummating such purchase.
(2) Based on population estimates for 1996 from the Fall 1997 edition of the DLJ
Pop Book.
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<PAGE>
GEORGIA/ALABAMA
In 1988, the Company acquired controlling interests in the licenses to
operate cellular telephone systems in the four MSAs (Montgomery and Dothan,
Alabama and Columbus and Albany, Georgia) that make up the core of its
Georgia/Alabama cluster. Since 1989, the Company has continued to increase its
presence in this market by acquiring additional cellular service areas. The
Augusta, Georgia MSA includes Aiken County in South Carolina. In the aggregate,
these markets (excluding the Alabama-5 RSA and South Carolina-7 RSA where the
Company has only an IOA) now cover a contiguous service area of approximately
38,000 square miles that includes Montgomery, the state capital of Alabama,
prominent resort destinations in Jekyll Island, St. Simons Island and Sea
Island, Georgia, and over 710 miles of interstate highway, including most of
I-95 from Savannah, Georgia to Jacksonville, Florida. The Company collects
substantial roaming revenue from cellular telephone subscribers from other
systems traveling in these markets from nearby population centers such as
Atlanta and Birmingham, as well as from vacation and business traffic in the
southeastern United States. Due in part to the favorable labor environment,
moderate weather and relatively low cost of land, during the last several years
there has been an influx of new manufacturing plants in this market. As of June
30, 1998 the Company utilized 212 cell sites in this cluster (including three
cell sites in Alabama-5 RSA).
PANAMA CITY
The Company acquired control of the non-wireline cellular license for the
Panama City, Florida market in 1991. The Company collects substantial roaming
revenue in this market from subscribers from other systems who visit Panama
City, a popular spring and summer vacation destination. As of June 30, 1998, the
Company utilized 13 cell sites in this market.
OPERATIONS
GENERAL
The Company has concentrated its efforts on creating an integrated network
of cellular telephone systems in the southeastern United States, principally to
date in Georgia, Alabama, Florida and South Carolina. At June 30, 1998, the
Company provided cellular telephone service to 347,150 subscribers in a total of
16 licensed service areas composed of eight MSAs and eight RSAs. The Company
also participates in the NACN, a nationwide consortium of nonwireline cellular
telephone companies, with the goal of providing seamless regional and national
cellular telephone service to its subscribers. Participation in the NACN allows
ten-digit dialing access to the Company's subscribers when they travel outside
the Company's service areas, providing them with convenient call delivery
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants.
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<PAGE>
The following table sets forth information, at the dates indicated after
giving effect to the Acquisition, regarding the Company's subscribers,
penetration rate, cost to add a net subscriber, cost to add a gross subscriber,
average monthly churn rate and average monthly service revenue per subscriber.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Subscribers at end of period(1)............ 347,150 309,606 243,204 187,870 99,626 54,382
Penetration at end of period(2)............ 10.50% 9.40% 7.73% 6.41% 4.54% 3.57%
Cost to add a gross subscriber(3).......... $ 221 $ 220 $ 216 $ 183 $ 178 $ 156
Cost to add a net subscriber(3)............ $ 443 $ 461 $ 436 $ 275 $ 247 $ 198
Average monthly churn(4)................... 1.82% 1.88% 1.89% 1.51% 1.54% 1.32%
Average monthly service revenue per
subscriber(5)............................ $ 43.86 $ 46.24 $ 50.23 $ 53.80 $ 56.54 $ 56.70
</TABLE>
- ------------------------
(1) Each billable telephone number in service represents one subscriber. Amounts
at December 31, 1993 include 2,576 subscribers in the Alabama-7 RSA where
the Company had interim operating authority through July 1994.
(2) Determined by dividing the aggregate number of subscribers by the estimated
population.
(3) Determined for the periods, by dividing (i) all costs of sales and
marketing, including salaries, commissions and employee benefits and all
expenses incurred by sales and marketing personnel, agent commissions,
credit reference expenses, losses on cellular telephone sales, rental
expenses allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges for such period including fees
paid for use of the CELLULARONE-Registered Trademark- service mark, by (ii)
the gross or net, as applicable, subscribers added during such period.
(4) Determined for the periods by dividing total subscribers discontinuing
service by the average number of subscribers for such period, and divided by
the number of months in the relevant period.
(5) Determined for the periods by dividing the (i) sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in the relevant period.
SUBSCRIBERS AND SYSTEM USAGE
The Company's subscribers have increased from 17,148 at January 1, 1992 to
347,150 at June 30, 1998. Reductions in the cost of cellular telephone services
and equipment at the retail level have led to an increase in cellular telephone
usage by general consumers for non-business purposes. As a result, the Company
believes that there is an opportunity for significant growth in each of its
existing service areas. The Company will continue to broaden its subscriber base
for basic cellular telephone services as well as to increase its offering of
customized services. The sale of custom calling features typically results in
increased usage of cellular telephones by subscribers, thereby further enhancing
revenues. In 1997, cellular telephone service revenues represented 94.6% of the
Company's total revenues, with equipment sales and installation representing the
balance. For the quarter ended June 30, 1998, cellular telephone service
revenues represented 94.0% of the Company's total revenues.
MARKETING
The Company's marketing strategy is designed to generate continued net
subscriber growth by focusing on subscribers who are likely to generate lower
than average deactivations and delinquent accounts, while simultaneously
maintaining a low cost of adding net subscribers. Management has implemented its
marketing strategy by training and compensating its sales force in a manner
designed to
46
<PAGE>
stress the importance of high penetration levels and minimum costs per net
subscriber addition. The Company's sales staff has a two-tier structure. A
retail sales force handles walk-in traffic, and a targeted sales staff solicits
certain industries and government subscribers. The Company believes its use of
an internal sales force keeps marketing costs low, both because commissions are
lower and because subscriber retention is higher than if it used independent
agents. The Company believes its cost to add a net subscriber will continue to
be among the lowest in the cellular telephone industry, principally because of
its in-house direct sales and marketing staff.
The Company also maintains an after-sale telemarketing program implemented
through its sales force and a telemarketing service specializing in cellular
customer services. This program not only enhances customer loyalty, but also
increases add-on sales and customer referrals. The telemarketing program allows
the sales staff to check customer satisfaction as well as to offer additional
calling features, such as voicemail, call waiting and call forwarding.
The Company's sales force works principally out of retail stores in which
the Company offers its cellular products and services. As of June 30, 1998, the
Company maintained 35 retail stores and 4 offices. Retail stores, which range in
size up to 11,000 square feet are fully equipped to handle customer service and
the sale of cellular services, telephones and accessories. Eight of the newer
and larger stores are promoted by the Company as "Superstores," seven of which
are located in the Company's Georgia/ Alabama service areas, and one in the
Panama City, Florida service area. Each Superstore has an authorized warranty
repair center and provides cellular telephone installation and maintenance
services. Most of the Company's larger markets currently have at least one
Superstore. In addition, to enhance convenience for its customers, the Company
has begun to open smaller stores in locations such as shopping malls. The
Company's stores provide subscriber-friendly retail environments--extended
hours, a large selection of phones and accessories, an expert sales staff, and
convenient locations--which make the sales process quick and easy for the
subscriber.
The Company markets all of its products and services under the name
CELLULARONE-Registered Trademark-. The national advertising campaign conducted
by Cellular One Group enhances the Company's advertising exposure at a fraction
of what could be achieved by the Company alone. The Company also obtains
substantial marketing benefits from the name recognition associated with this
widely used service mark, both with existing subscribers traveling outside the
Company's service areas and with potential new subscribers moving into the
Company's service areas. In addition, travelers who subscribe to
CELLULARONE-Registered Trademark- service in other markets may be more likely to
use the Company's service when they travel in the Company's service areas.
Cellular telephones of non-wireline subscribers are either programmed to select
the non-wireline carrier (such as the Company) when roaming, unless the
non-wireline carrier in the roaming area is not yet operational, or the
subscriber dials a special code or has a cellular telephone equipped with an
"A/B" (non-wireline/wireline) switch and selects the wireline carrier.
Through its membership in NACN and other special networking arrangements,
the Company provides extended regional and national service to its subscribers,
thereby allowing them to make and receive calls while in other cellular service
areas without dialing special access codes. This service distinguishes the
Company's call delivery features from those of many of its competitors.
PRODUCTS AND SERVICES
In addition to providing high-quality cellular telephone service in each of
its markets, the Company also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer and busy transfer. Several rate plans are presented to prospective
subscribers so that they may choose the plan that will best fit their expected
calling needs. Generally, these rate plans include a high user plan, a medium
user plan, a basic plan and an economy plan. Most rate plans combine a fixed
monthly access fee, per minute usage charges and additional charges for
custom-calling
47
<PAGE>
features in a package that offers value to the subscriber while enhancing
airtime use and revenues for the Company. In general, rate plans which include a
higher monthly access fee typically include a lower usage rate per minute. An
ongoing review of equipment and service pricing is maintained to ensure the
Company's competitiveness. As appropriate, revisions to pricing of service plans
and equipment are made to meet the demands of the local marketplace. In
addition, the Company has recently added paging as an accessory to its offered
services.
The following table sets forth a breakdown of the Company's revenues after
giving effect to the Fort Myers and Georgia-1 Sales from the sale of its
services and equipment for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PALMER
-------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS OCTOBER 1, NINE MONTHS
ENDED 1997 THROUGH ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, DECEMBER 31, SEPTEMBER 30, -------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ------------- ------------- ---------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Service revenue:
Access and usage(1)............... $ 66,572 $ 31,786 $ 89,339 $ 105,006 $ 61,607 $ 37,063 $ 20,324
Roaming(2)........................ 12,107 5,691 14,447 13,099 11,157 5,844 3,075
Long distance(3).................. 5,464 2,014 5,949 6,632 3,634 2,218 1,309
Other(4).......................... 2,278 891 2,061 2,596 2,585 2,745 1,230
----------- ------------- ------------- ---------- --------- --------- ---------
Total service revenue......... 86,421 40,382 111,796 127,333 78,983 47,870 25,938
Equipment sales and
installation(5)................... 5,772 2,308 6,242 7,027 6,830 6,381 5,238
----------- ------------- ------------- ---------- --------- --------- ---------
Total......................... $ 92,193 $ 42,690 $ 118,038 $ 134,360 $ 85,813 $ 54,251 $ 31,176
----------- ------------- ------------- ---------- --------- --------- ---------
----------- ------------- ------------- ---------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Access and usage revenues include monthly access fees for providing service
and usage fees based on per minute usage rates.
(2) Roaming revenues are fees charged for providing services to subscribers of
other systems when such subscribers or "roamers" place or receive a
telephone call within one of the Company's service areas.
(3) Long distance revenue is derived from long distance telephone calls placed
by the Company's subscribers.
(4) Other revenue includes, among other things, connect fees charged to
subscribers for initial activation on the cellular telephone system and fees
for feature services such as voicemail, call forwarding and call waiting.
(5) Equipment sales and installation revenue includes revenue derived from the
sale of cellular telephones and fees for the installation of such
telephones.
Reciprocal roaming agreements between each of the Company's cellular
telephone systems and the cellular telephone systems of other operators allow
their respective subscribers to place calls in most cellular service areas
throughout the country. Roamers are charged usage fees which are generally
higher than a given cellular telephone system's regular usage fees, thereby
resulting in a higher profit margin on roaming revenue. Roaming revenue is a
substantial source of incremental revenue for the Company. For 1997, roaming
revenues accounted for 13.2% of the Company's service revenues and 12.5% of the
Company's total revenue. For the quarter ended June 30, 1998, roaming revenues
accounted for 14.0% of the Company's service revenues and 13.1% of the Company's
total revenue. This level of roaming revenue is due in part to the fact that the
Company's market in Panama City, Florida is a regional shopping and vacation
destination and a number of the Company's cellular telephone systems in the
Georgia and Alabama market are located along major interstate travel corridors.
48
<PAGE>
In order to develop the market for cellular telephone service, the Company
provides retail distribution of cellular telephones and maintains inventories of
cellular telephones. The Company negotiates volume discounts for the purchase of
cellular telephones and, in many cases, passes such discounts on to its
customers. The Company believes that earning an operating profit on the sale of
cellular telephones is of secondary importance to offering cellular telephones
at competitive prices to potential subscribers. To respond to competition and to
enhance subscriber growth, Palmer has historically sold cellular telephones
below cost.
The Company is currently developing several new services which it believes
will provide additional revenue sources. Packet-switching technology uses the
intervals between voice traffic on cellular channels to send packets of data
instead of tying up dedicated cellular channels, allowing data to be transmitted
more quickly and efficiently. The packets of information, which may be
transmitted using several different channels, are subsequently reassembled and
directed to the correct party at the receiving end. It is expected that the
development of this technology will make it possible for cellular carriers to
offer a broad range of cost-effective wireless data services, including
facsimile and electronic mail transmissions, point-of-sale credit
authorizations, package tracking, remote meter reading, alarm monitoring and
communications between laptop computer units and local area computer networks or
other computer databases. During 1997 Palmer began the use of microcells.
Microcells are low powered transmitters, typically constructed on a pole or the
roof of a building, which provide reduced radius service within a specific area,
such as large office buildings, underground facilities or areas shielded by
topographical obstructions. Microcell service could be used, for instance, to
provide wireless service within an office environment that was also integrated
with wireless service to the home.
CUSTOMER SERVICE
The Company is committed to attracting new subscribers and retaining
existing subscribers by providing consistently high-quality customer service. In
each of its cellular service areas, the Company maintains a local staff,
including a market manager, customer service representatives, technical and
engineering staff, sales representatives and installation and repair facilities.
Each cellular service area handles its own customer-related functions such as
customer activations, account adjustments and rate plan changes. Local offices
and installation and repair facilities enable the Company to better service
customers, schedule installations and repairs and monitor the technical quality
of the cellular service areas.
In addition, subscribers are able to report cellular telephone service or
account problems to the Company 24 hours a day. Through the use of sophisticated
monitoring equipment, technicians at the Company's headquarters are able to
monitor the technical performance of its service areas.
To ensure high-quality customer service, the Cellular One Group authorizes a
third-party marketing research firm to perform customer satisfaction surveys of
each of its licensees. Licensees must achieve a minimum customer satisfaction
level in order to be permitted to continue using the
CELLULARONE-Registered Trademark- service mark. In 1997, the Company was awarded
the #1 MSA in certain categories in CELLULARONE-Registered Trademark-'s National
Customer Satisfaction Survey. The Company has held number one rankings in
certain categories in five out of the last six years. The Company believes it
has achieved this first place ranking through effective implementation of its
direct sales and customer service support strategy.
The Company has implemented a new software package to combat cellular
telephone service fraud. This new software system can detect counterfeit
cellular telephones while they are being operated and enables the Company to
terminate service to the fraudulent user of the counterfeit cellular telephone.
The Company also helps protect itself from fraud with pre-call customer
validation and subscriber profiles specifically designed to combat the
fraudulent use of subscriber accounts.
49
<PAGE>
NETWORKS
The Company strives to provide its subscribers with virtually seamless
coverage throughout its cellular service market areas, thereby permitting
subscribers to travel freely within this region and have their calls and custom
calling features, such as voicemail, call waiting and call forwarding, follow
them automatically without having to notify callers of their location or to rely
on special access codes. The Company has been able to offer virtually seamless
coverage by implementing a switch interconnection plan to mobile telephone
switching offices ("MTSO") located in adjoining markets. The Company's equipment
is built by NORTEL, formerly Northern Telecom, Inc. ("NTI"), and interconnection
between MTSOs has been achieved using NTI's internal software and hardware.
Through its participation in NACN since 1992 and other special networking
arrangements, the Company has pursued its goal of offering seamless regional and
national cellular service to its subscribers. NACN is the largest wireless
telephone network system in the world--linking non-wireline cellular operators
throughout the United States and Canada. Membership in NACN has aided the
Company in integrating its cellular telephone systems within its region and has
permitted the Company to offer cellular telephone service to its subscribers
throughout a large portion of the United States, Canada, Mexico and Puerto Rico.
NACN has provided the Company with a number of distinct advantages: (i) lower
costs for roaming verification; (ii) increased roaming revenue; (iii) more
efficient roaming service; and (iv) integration of Palmer's markets with over
4,600 cities in more than 40 states in the United States, Canada, Mexico and
Puerto Rico.
SYSTEM DEVELOPMENT AND EXPANSION
The Company develops its service areas by adding channels to existing cell
sites and by building new cell sites. Such development is done for the purpose
of increasing capacity and improving coverage in direct response to projected
subscriber demand. Projected subscriber demand is calculated for each cellular
service area on a cell by cell basis. These projections involve a traffic
analysis of usage by existing subscribers and an estimation of the number of
additional subscribers in each such area. In calculating projected subscriber
demand, the Company builds into its design assumptions a maximum call "blockage"
rate of 2.0% (percentage of calls that are not connected on first attempt at
peak usage time during the day).
The following table sets forth, by market, at the dates indicated, the
number of the Company's operational cell sites (including cell sites where the
Company has interim operating authority).
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, -------------------------------------
1998 1997 1996 1995
------------- ----- ----- -----
<S> <C> <C> <C> <C>
Georgia/Alabama.................................................... 212 207 181 121
Panama City, FL.................................................... 13 12 11 9
--- --- --- ---
Total.............................................................. 225 219 192 130
--- --- --- ---
--- --- --- ---
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Georgia/Alabama.................................................... 70 39
Panama City, FL.................................................... 7 7
-- --
Total.............................................................. 77 46
-- --
-- --
</TABLE>
The Company estimates that in 1997 the capacity of its existing cellular
telephone systems increased 30%. During 1997, the Company spent $55.3 million of
which $3.5 million related to properties which were sold and approximately $6.0
million related to purchases of equipment for cell sites to be completed in 1998
and, based on projected growth in subscriber demand, expects to spend
approximately $16 million in 1998 in order to build out its cellular service
areas, install an additional microwave network and implement certain digital
radio technology. The Company constructed 27 new cell sites in 1997 and
increased capacity in many of its other systems and plans to construct 30
additional cell sites with respect to its existing cellular systems during 1998
to meet projected subscriber demand and improve the quality of service. Cell
site expansion is expected to enable the Company to continue to add subscribers,
enhance use of its
50
<PAGE>
cellular telephone systems by existing subscribers, increase services used by
subscribers of other cellular telephone systems due to the larger geographic
area covered by the cellular telephone network and further enhance the overall
efficiency of the network. The Company believes that the increased cellular
telephone coverage will have a positive effect on market penetration and
subscriber usage.
Microwave networks enable the Company to connect switching equipment and
cell sites without making use of local landline telephone carriers, thereby
reducing or eliminating fees paid to landline carriers. During 1996, the Company
spent $1.0 million to build additional microwave connections. In addition, in
1996 the Company spent $2.6 million to build a fiber optic network between
Dothan, Alabama and Panama City, Florida. The installation of this network
resulted in savings to the Company from a reduction in fees paid to telephone
companies for landline charges, as well as giving the Company the ability to
lease out a significant portion of capacity.
DIGITAL CELLULAR TECHNOLOGY
Over the next decade, it is expected that cellular telephones will gradually
convert from analog to digital technology. This conversion is due in part to
capacity constraints in many of the largest cellular markets, such as Los
Angeles, New York and Chicago. As carriers reach limited capacity levels,
certain calls may be unable to be completed, especially during peak hours.
Digital technology increases system capacity and offers other advantages over
analog technology, including improved overall average signal quality, improved
call security, potentially lower incremental costs for additional subscribers
and the ability to provide data transmission services. The exact timing and
overall costs of such conversion from analog to digital are not yet known.
The Company began offering TDMA standard digital service, one of three
standards for digital service, during 1997. This digital network allows the
Company to offer advanced cellular features and services such as caller-ID,
short message paging and extended battery life. The Company is adding digital
channels to the network incrementally based on the relative demand for digital
and analog channels. Where cell sites are at full capacity, analog channels are
being removed and redeployed to expand capacity elsewhere within the network and
replaced in such cell sites by digital channels. The implementation of digital
cellular technology over a period of several years will involve modest
incremental expenditures for switch software and possible significant cost
reductions as a result of reduced purchases of radio channels and a reduced
requirement to split existing cells. However, the extent of any implementation
of digital radio channels and the amount of any cost savings ultimately to be
derived therefrom will depend primarily on subscriber demand. In the ordinary
course of business, equipment upgrades at the cell sites have involved
purchasing dual mode radios capable of using both analog and digital technology.
The benefits of digital radio channels can only be achieved if subscribers
purchase cellular telephones that are capable of transmitting and receiving
digital signals. Currently, such telephones are more costly than analog
telephones. The widespread use of digital cellular telephones is likely to occur
only over a substantial period of time and there can be no assurance that this
technology will replace analog cellular telephones. In addition, since most of
the Company's existing subscribers currently have cellular telephones that
exclusively utilize analog technology, it will be necessary to continue to
support, and if necessary increase, the number of analog radio channels within
the network for many years.
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<PAGE>
ACQUISITIONS
The Company will continue to evaluate expansion through acquisitions of both
(i) contiguous cellular properties and other strategically located RSAs and
small to mid-sized MSAs and (ii) minority interests in its existing cellular
properties. In evaluating acquisition targets, the Company considers, among
other things, demographic factors, including population size and density,
geographic proximity to existing service areas, traffic patterns, cell site
coverage and required capital expenditures.
Palmer entered the cellular telephone business in 1987, when it constructed
a cellular telephone system for the Fort Myers, Florida MSA. Palmer acquired
control of this system in March 1988 and rapidly expanded its cellular telephone
holdings, acquiring control of the non-wireline cellular licenses for the
Columbus and Albany, Georgia and Dothan and Montgomery, Alabama MSAs in 1988.
In 1991, Palmer acquired control of the non-wireline cellular license for
the Panama City, Florida MSA. In 1992 and 1993, Palmer acquired two non-wireline
cellular licenses for RSAs contiguous to Palmer's MSAs in Georgia and Alabama:
the Georgia-9 RSA in June 1992 and the Alabama-8 RSA in April 1993. The
Georgia-9 RSA acquisition added the geographic territory between the Columbus,
Macon and Albany, Georgia MSAs to Palmer's service area coverage. The Alabama-8
RSA expanded Palmer's service areas around three MSAs served by Palmer, covering
a substantial portion of the geographic territory between the Montgomery,
Alabama, Columbus, Georgia and Dothan, Alabama MSAs and the Georgia-9 RSA. In
1993, Palmer also increased its majority position in its MSAs in Albany, Georgia
and in Dothan and Montgomery, Alabama, through the purchase of certain minority
interests for an aggregate purchase price of $2.9 million.
During 1994, Palmer continued to acquire minority interests in six of its
MSAs for an aggregate purchase price of $3.1 million. Also, on October 31, 1994,
Palmer acquired the cellular telephone systems of Southeast Georgia Cellular
Limited Partnership ("SGC") and Georgia 12 Cellular Limited Partnership
("Georgia 12" and together with SGC, the "Georgia Partnerships") for an
aggregate purchase price of $91.7 million (the "Georgia Acquisition"). The
assets acquired by Palmer from SGC included the non-wireline cellular telephone
systems for the Georgia-7 RSA, Georgia-8 RSA and Georgia-10 RSA. The assets
acquired by Palmer from Georgia 12 included the non-wireline cellular telephone
system located in the Georgia-12 RSA. The cellular telephone systems in the
acquired RSAs serve a geographic territory in southeast Georgia that is adjacent
to Palmer's Georgia-9 RSA and Macon, Georgia MSA.
In December 1995, Palmer acquired interests in cellular telephone systems by
purchasing Georgia Metronet, Inc. ("GMI") and Augusta Metronet, Inc. ("AMI" and
together with GMI, the "GTE Companies") for an aggregate purchase price of
$158.4 million (the "GTE Acquisition"). The assets acquired by Palmer in the GTE
Acquisition included the non-wireline cellular telephone system located in the
Savannah MSA and Augusta MSA, respectively. The cellular telephone systems in
the newly-acquired MSAs serve a geographic territory in eastern Georgia and a
portion of South Carolina that is adjacent to Palmer's existing markets in the
Georgia-8 RSA and Georgia-12 RSA. In addition, Palmer also acquired the interim
operating authority to provide cellular service to the southern portions of the
South Carolina-7 RSA, which serves a geographic territory that is adjacent to
Palmer's existing markets in the Georgia-8 RSA as well as the Savannah, and
Augusta, Georgia MSAs. In addition, during 1995, Palmer acquired additional
minority interests in six of its MSAs for an aggregate purchase price of $2.0
million.
On June 20, 1996, Palmer acquired the cellular telephone system of Georgia-1
for an aggregate purchase price of $31.6 million. The cellular telephone system
in the acquired RSA serves a geographic territory of northwest Georgia between
Chattanooga and Atlanta. Georgia-1 was sold in October 1997 in connection with
the Acquisition.
On July 5, 1996, two of Palmer's majority-owned subsidiaries acquired the
cellular telephone system of Horizon Cellular Telephone Company of Spalding,
L.P. ("Horizon") for an aggregate purchase price of $36.0 million. The assets
acquired by Palmer from Horizon include the cellular telephone system in the
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Georgia-6 RSA. The cellular telephone system in the acquired RSA serves a
geographic territory of west central Georgia adjacent to Palmer's Macon and
Columbus, Georgia MSAs.
On January 31, 1997, a majority-owned subsidiary of Palmer acquired the
cellular telephone system serving the Georgia-13 RSA from Mobile Communications
Systems L.P. for a total purchase price of $31.5 million. The cellular telephone
system in the acquired RSA serves a geographic territory of southwest Georgia
adjacent to Palmer's Albany, Georgia and Dothan, Alabama MSAs.
COMPETITION
The cellular telephone service industry in the United States is highly
competitive. Cellular telephone systems compete principally on the basis of
services and enhancements offered, the technical quality of the cellular system,
customer service, coverage capacity and price of service and equipment.
Currently, the Company's primary competition in each of its service areas is the
other cellular licensee--the wireline carrier. The table below lists the
wireline competitor in each of the Company's existing service areas:
<TABLE>
<CAPTION>
MARKET WIRELINE COMPETITOR
- ----------------------------------------------- ---------------------------------------------
<S> <C>
Albany, GA..................................... ALLTEL
Augusta, GA.................................... ALLTEL
Columbus, GA................................... Public Service Cellular
Macon, GA...................................... BellSouth
Savannah, GA................................... ALLTEL
Georgia-6 RSA.................................. BellSouth and Intercel (1)
Georgia-7 RSA.................................. Cellular Plus (2) and BellSouth (1)
Georgia-8 RSA.................................. ALLTEL
Georgia-9 RSA.................................. ALLTEL and Public Service Cellular (1)
Georgia-10 RSA................................. Cellular Plus (2) and ALLTEL (1)
Georgia-12 RSA................................. ALLTEL
Georgia-13 RSA................................. ALLTEL
Dothan, AL..................................... BellSouth
Montgomery, AL................................. ALLTEL
Alabama-8 RSA.................................. ALLTEL
Panama City, FL................................ 360 DEG. Communications Company (2)
</TABLE>
- ------------------------
(1) The wireline service area has been subdivided into two service areas by the
purchasers of the authorization for the RSA.
(2) Currently under contract to be acquired by ALLTEL.
The Company also faces limited competition from and may in the future face
increased competition from broadband PCS. Broadband PCS involves a network of
small, low-powered transceivers placed throughout a neighborhood, business
complex, community or metropolitan area to provide customers with mobile and
portable voice and data communications. PCS subscribers communicate using
digital radio handsets.
The FCC allocated 120 MHZ of spectrum for licensed broadband PCS. The
allocations for licensed PCS services are split into six blocks of frequencies--
blocks "A" and "B" being two 30 MHZ allocations for each of the 51 Major Trading
Areas ("MTAs") throughout the United States; block "C" being one 30 MHZ
allocation in each of 493 Basic Trading Areas ("BTAs") in the United States; and
blocks "D," "E" and "F" being three 10 MHZ allocations in each of the BTAs. The
FCC has concluded the auction of all broadband PCS frequency blocks.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, SMR and ESMR systems
and paging services.
In addition, the FCC has licensed operators to provide mobile satellite
service in which transmissions from mobile units to satellites would augment or
replace transmissions to land-based stations. Although such a system is designed
primarily to serve remote areas and is subject to transmission delays inherent
in satellite communications, a mobile satellite system could augment or replace
communications with
53
<PAGE>
segments of land-based cellular systems. Based on current technologies, however,
satellite transmission services are not expected to be competitively priced with
cellular telephone services.
In order to grow and compete effectively in the wireless market, the Company
plans to follow a strategy of increasing its bundled minute offerings. By
increasing the number of minutes a customer can use for one flat rate,
subscribers perceive greater value in their cellular service and become less
usage sensitive, i.e., they can increase their cellular phone usage without
seeing large corresponding increases in their cellular bill. These factors
translate into more satisfied customers, greater customer usage and lower churn
among existing subscribers. The perceived greater value also increases the
number of potential customers in the marketplace. The Company believes that this
strategy will enable it to increase its share of the wireless market.
SERVICE MARKS
CELLULARONE-Registered Trademark- is a registered service mark with the U.S.
Patent and Trademark Office. The service mark is owned by Cellular One Group, a
Delaware general partnership of Cellular One Marketing, Inc., a subsidiary of
Southwestern Bell Mobile Systems, Inc., together with Cellular One Development,
Inc., a subsidiary of AT&T and Vanguard Cellular Systems, Inc. The Company uses
the CELLULARONE-Registered Trademark- service mark to identify and promote its
cellular telephone service pursuant to licensing agreements with Cellular One
Group. In 1997, the Company paid $303,000 in licensing and advertising fees
under these agreements. See "Risk Factors--Reliance on Use of Third-Party
Service Mark."
DESCRIPTION OF CELLULAR ONE AGREEMENTS
The Company is currently party to sixteen license agreements with Cellular
One Group, which cover separate cellular telephone system areas. The terms of
each agreement (each, a "Cellular One Agreement" and collectively, the "Cellular
One Agreements") are substantially identical. Pursuant to each Cellular One
Agreement, Cellular One Group has granted a license to use the
"CELLULARONE-Registered Trademark-" mark (the "Mark") in its FCC-licensed
territory (the "Licensed Territory") to promote its cellular telephone service.
Cellular One Group has agreed not to license such Mark in connection with
cellular telephone service to any other cellular telephone service provider in
such territory during the term of the agreement. Cellular One Group may,
however, license the Mark to other persons in such territory in connection with
cellular telephone equipment and other products and services other than the type
licensed by the Company.
In connection with each Cellular One Agreement, the Company has agreed to
pay an annual licensing fee equal to $0.02 per person in the Licensed Territory
based on the total population of the market, subject to a minimum payment of
$3,000, and, in certain circumstances, will pay an annual advertising fee not in
excess of $0.05 per person in the Licensed Territory.
Each Cellular One Agreement has a term of five years and is renewable,
subject to the conditions described herein, at the option of the Company for
three additional five-year terms subject to provision of advanced written notice
by the Company. In connection with any renewal, the Company must execute
Cellular One Group's then-current form of license renewal agreement, which form
may contain provisions materially different than those in the Cellular One
Agreement.
Cellular One Group may terminate the Cellular One Agreements at any time
without written notice to the Company upon certain events, including bankruptcy,
insolvency and dissolution of the Company.
In addition, Cellular One Group may terminate the Cellular One Agreements at
any time, without giving the Company an opportunity to cure the event giving
rise to Cellular One Group's right of termination subject to delivery of written
notice (i) if the Company, while on probation pursuant to a Cellular One
Agreement, fails to achieve 85% customer satisfaction (or such higher percentage
established by Cellular One Group) for a prescribed amount of time, (ii) if the
Company fails to achieve 65% customer satisfaction in any survey other than an
initial customer satisfaction survey by Cellular One Group, (iii) if any
principal stockholder or officer of the Company is convicted of a felony, fraud
or other
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<PAGE>
crime that Cellular One Group believes is reasonably likely to have an adverse
effect on the Mark, (iv) if a threat or danger to public health or safety
results from the operation of the Company's cellular telephone business, (v) if
the Company violates certain undertakings in the Cellular One Agreement,
including limitations on assignment and confidentiality restrictions, (vi) if
the Company knowingly submits false reports or information to Cellular One Group
or any other entity conducting a customer satisfaction survey or (vii) if the
Company contests in any proceeding the validity or registration of, or Cellular
One Group's ownership of, the Mark. The Company's customer satisfaction ratings
have consistently far exceeded the minimum requirements of such Agreements.
Finally, after notice of a default to the Company, Cellular One Group may
terminate the Cellular One Agreements if the Company does not cure the default
within a specified period of time because it (i) fails to pay any amounts
thereunder when due or fails to submit information required to be provided
pursuant to the Cellular One Agreement when due or makes a false statement in
connection therewith, (ii) fails to operate its business in conformity with FCC
directives, technical industry standards and other standards specified from time
to time by Cellular One Group, (iii) misuses, makes unauthorized use of, or
materially impairs the goodwill of, the Mark, (iv) engages in any business under
a name that is confusingly similar to the Mark, or (v) permits a continued
violation of any law or regulation applicable to it, in each case subject to a
thirty-day cure period.
The Cellular One Agreements are terminable by the Company at any time
subject to 120 days' written notice.
The Company has agreed to indemnify Cellular One Group and its employees and
affiliates, including its constituent partners, against all claims arising from
the operation of its cellular phone business and the costs, including attorneys
fees, of defending against them.
REGULATION
As a provider of cellular telephone services, the Company is subject to
extensive regulation by the federal government.
The licensing, construction, operation, acquisition and transfer of cellular
telephone systems in the United States are regulated by the FCC pursuant to the
Communications Act of 1934, as amended (the "Communications Act"). The FCC has
promulgated rules governing the construction and operation of cellular telephone
systems and licensing and technical standards for the provision of cellular
telephone service ("FCC Rules"). For cellular licensing purposes, the United
States is divided into MSAs and RSAs. In each market, the frequencies allocated
for cellular telephone use are divided into two equal blocks designated as Block
A and Block B. Block A licenses were initially reserved for non-wireline
companies, such as the Company, while Block B licenses were initially reserved
for entities affiliated with a local wireline telephone company. Under current
FCC Rules, a Block A or Block B license may be transferred with FCC approval
without restriction as to wireline affiliation, but generally, no entity may own
any substantial interest in both systems in any one MSA or RSA. The FCC may
prohibit or impose conditions on sales or transfers of licenses.
Initial operating licenses are generally granted for terms of up to 10
years, renewable upon application to the FCC. Licenses may be revoked and
license renewal applications denied for cause after appropriate notice and
hearing. The Company's cellular licenses expire in the following years with
respect to the following number of service areas: 1998 (three); 2000 (two); 2001
(four); 2002 (two); 2006 (one); and 2007 (four). The FCC has issued a decision
confirming that current licensees will be granted a renewal expectancy if they
have complied with their obligations under the Communications Act during their
license terms and provided substantial public service. A potential challenger
will bear a heavy burden to demonstrate that a license should not be renewed if
the licensee's performance merits a renewal expectancy. The Company believes
that the licenses controlled by the Company will be renewed in a timely manner.
However, in the event that a license is not renewed, the Company would no longer
have the right to operate in the relevant service area. A non-renewal of
licenses that are currently pending would have a material adverse effect on the
Company's result of operations.
55
<PAGE>
Under FCC rules, each cellular licensee was given the exclusive right to
construct one of two cellular telephone systems within the licensee's MSA or RSA
during the initial five-year period of its authorization. At the end of such
five-year period, other persons are permitted to apply to serve areas within the
licensed market that are not served by the licensee and current FCC Rules
provide that competing applications for these "unserved areas" are to be
resolved through the auction process. The Company has no material unserved areas
in any of its cellular telephone systems that have been licensed for more than
five years.
The Company also regularly applies for FCC authority to use additional
frequencies, to modify the technical parameters of existing licenses, to expand
its service territory and to provide new services. The Communications Act
requires prior FCC approval for acquisitions by the Company of other cellular
telephone systems licensed by the FCC and transfers by the Company of a
controlling interest in any of its licenses or construction permits, or any
rights thereunder. Although there can be no assurance that any future requests
for approval or applications filed by the Company will be approved or acted upon
in a timely manner by the FCC, based upon its experience to date, the Company
has no reason to believe such requests or applications would not be approved or
granted in due course.
The Communications Act prohibits the holding of a common carrier license
(such as the Company's cellular licenses) by a corporation of which more than
20% of the capital stock is owned directly or beneficially by aliens. Where a
corporation such as the Company controls another entity that holds an FCC
license, such corporation may not have more than 25% of its capital stock owned
directly or beneficially by aliens, in each case, if the FCC finds that the
public interest would be served by such prohibitions. Failure to comply with
these requirements may result in the FCC issuing an order to the Company
requiring divestiture of alien ownership to bring the Company into compliance
with the Communications Act. In addition, fines or a denial of renewal, or
revocation of the license are possible.
From time to time, legislation which could potentially affect the Company,
either beneficially or adversely, may be proposed by federal and state
legislators. On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecom Act") was signed into law, revising the Communications Act to eliminate
unnecessary regulation and to increase competition among providers of
communications services. The Company cannot predict the future impact of this or
other legislation on its operations.
The major provisions of the Telecom Act potentially affecting the Company
are as follows:
INTERCONNECTION. The Telecom Act requires state public utilities
commissions and/or the FCC to implement policies that mandate cost-based
reciprocal compensation between cellular carriers and LECs for interconnection
services.
On August 8, 1996, the FCC released its First Report and Order in the matter
of Implementation of the Local Competition Provisions in the Telecommunications
Act of 1996 ("FCC Order") establishing the rules for the costing and
provisioning of interconnection services and the offering of unbundled network
elements by incumbent local exchange carriers. The FCC Order established
procedures for the Company's renegotiation of interconnection agreements with
the incumbent local exchange carrier in each of the Company's markets. LECs and
state regulators filed appeals of the FCC Order, which were consolidated in the
U.S. Court of Appeals for the Eighth Circuit (the "Eighth Circuit"). The Eighth
Circuit in 1996 and 1997 vacated and stayed the effective date of pricing and
other portions of the rules established in the FCC Order. In 1998, the United
States Supreme Court agreed to hear an appeal of the Eighth Circuit's decisions
and a decision of the Court is expected later this year.
The Company has renegotiated certain interconnection agreements with LECs in
most of the Company's markets. These negotiations have resulted in a substantial
decrease in interconnection expenses incurred by the Company.
FACILITIES SITING FOR PERSONAL WIRELESS SERVICES. The siting and
construction of cellular transmitter towers, antennas and equipment shelters are
often subject to state or local zoning, land use and other regulation. Such
regulation may require zoning, environmental and building permit approvals or
other state or local certification.
56
<PAGE>
The Telecom Act provides that state and local authority over the placement,
construction and modification of personal wireless services (including cellular
and other commercial mobile radio services and unlicensed wireless services)
shall not prohibit or have the effect of prohibiting personal wireless services
or unreasonably discriminate among providers of functionally equivalent
services. In addition, local authorities must act on requests made for siting in
a reasonable period of time and any decision to deny must be in writing and
supported by substantial evidence. Appeals of zoning decisions that fail to
comply with the provisions of the Telecom Act can be made on an expedited basis
to a court of competent jurisdiction, which can be either federal district or
state court. The Company anticipates that, as a result of the Telecom Act, it
will more readily receive local zoning approval for proposed cellular base
stations. In addition, the Telecom Act codified the Presidential memorandum on
the use of federal lands for siting wireless facilities by requiring the
President or his designee to establish procedures whereby federal agencies will
make available their properties, rights of ways and other easements at a fair
and reasonable price for service dependent upon federal spectrum.
ENVIRONMENTAL EFFECT OF RADIO FREQUENCY EMISSIONS. The Telecom Act provides
that state and local authorities cannot regulate personal wireless facilities
based on the environmental effects of radio frequency emissions if those
facilities comply with the federal standard.
UNIVERSAL SERVICE. The Telecom Act also provides that all communications
carriers providing interstate communications services, including cellular
carriers, must contribute to the federal universal service support mechanisms
being established by the FCC. Carrier payments to the universal service fund are
based on end-user interstate telecommunications revenues multiplied by a
universal service contribution percentage proposed by the fund administrator and
adopted by the FCC. Certain of the universal service costs may be passed through
to customers. The FCC first implemented this provision of the Telecom Act in a
"Report and Order" released May 8, 1997 in the matter of "Federal-State Joint
Board on Universal Service," which also provides that any cellular carrier is
potentially eligible to receive universal service support.
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of cellular service.
EMPLOYEES
At June 30, 1998, the Company had 550 full-time employees, none of whom is
represented by a labor organization. Management considers its relations with
employees to be good.
PROPERTIES
For each market served by the Company's operations, the Company maintains at
least one sales or administrative office and operates a number of cell
transmitter and antenna sites. As of June 30, 1998, the Company had
approximately 34 leases for retail stores used in conjunction with its
operations and 3 leases for administrative offices and owned one retail store.
The Company also had approximately 145 leases to accommodate cell transmitters
and antennas as of June 30, 1998.
LEGAL PROCEEDINGS
The Company is not currently involved in any pending legal proceedings
likely to have a material adverse impact on the Company.
In May 1998, a complaint in respect of a class action lawsuit was filed in
Lee County, Florida against the Company and Cellular One, Inc. alleging certain
causes of action in connection with the Company's practice of "rounding up" its
billing to the nearest minute. The Company believes that such practice is
customary among cellular service providers. Although the Company believes that
its position will prevail, it does not believe that such lawsuit, if determined
adversely to the Company, would have a material adverse effect on its business,
financial condition or results of operations.
57
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
director and executive officers of PCW and of PCC.
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert Price......................................... 65 Director, President, Chief Executive Officer and
Treasurer of PCC, Director of PCW
Kim I. Pressman...................................... 41 Executive Vice President, Secretary and Chief
Financial Officer of PCC
Brian Edwards (1).................................... 36 President and Chief Executive Officer
Jeffrey L. Green..................................... 36 Vice President--Finance and Chief Financial Officer
Victor M. Landau..................................... 58 Vice President--Technical Operations (1)
</TABLE>
- ------------------------
(1) The position of Mr. Landau was effective April 1, 1998. Prior to his
promotion. Mr. Landau served as Director of Property Management/Site
Acquisitions of PCW. The position of Brian Edwards was effective August 8,
1998. Prior to his promotion, Mr. Edwards served as Executive Vice
President, Sales and Marketing.
EXECUTIVE OFFICERS
The following is a biographical summary of the experience of the executive
officers and directors of PCC, and the executive officers of PCW named above
(each of whom served as an executive officer and director of Palmer prior to its
acquisition by PCW).
ROBERT PRICE has served concurrently as a Director and the Chief Executive
Officer, President and Treasurer of PCC since 1979, and has been a Director of
Holdings and PCW since 1997. Mr. Price has been a Director of PriCellular since
1990. Mr. Price was the President and Assistant Treasurer of PriCellular from
1990 until May 1997 and has served as Chairman of PriCellular since May 1997.
Mr. Price, an attorney, is a former General Partner of Lazard Freres & Co. He
has served as an Assistant United States Attorney, practiced law in New York and
served as Deputy Mayor of New York City. In the early sixties, Mr. Price served
as President and Director of Atlantic States Industries, a corporation owning
weekly newspapers and four radio stations. After leaving public office, Mr.
Price became Executive Vice President of The Dreyfus Corporation and an
Investment Officer of The Dreyfus Fund. In 1972 he joined Lazard Freres & Co.
Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States
Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant,
Inc., and is currently a member of The Council on Foreign Relations. Mr. Price
serves as the Representative of the Majority Leader and President Pro Tem of the
New York Senate and as a member of the Board of Directors of the Municipal
Assistance Corporation for the City of New York and as a Member of the Board of
Trustees of the City University of New York. Mr. Price is also a Director and
President of TLM Corporation.
KIM I. PRESSMAN, a certified public accountant, is a graduate of Indiana
University and holds an M.B.A. from New York University. Before assuming her
present office as Executive Vice President and Secretary of PCC in October 1994
(in which she served until August 1997 and again from December 1997 to the
present), and as Chief Financial Officer of PCC in May 1998, Ms. Pressman was
Vice President and Treasurer of PCC from November 1987 to December 1989, and
Senior Vice President of PCC from January 1990 to September 1994. She was also
Secretary of PCC from July 1989 to February 1990. Ms. Pressman was Vice
President--Broadcasting and Vice President, Controller, and Assistant Treasurer
of PCC from 1984 to October 1987. Prior to joining PCC in 1984, Ms. Pressman was
employed for three
58
<PAGE>
years by Peat, Marwick, Mitchell & Co., a national certified public accounting
firm, and for more than three years thereafter was Supervisor, Accounting
Policies for International Paper Company and then Manager, Accounting Operations
for Corinthian Broadcasting of Dun & Bradstreet Company, a large group owner of
broadcasting stations. Ms. Pressman is a Director, Executive Vice President and
Secretary of PriCellular Corporation. Ms. Pressman has served as Executive Vice
President, Secretary and Chief Financial Officer of Holdings since May 4, 1998.
BRIAN EDWARDS has been employed by the Company and its predecessor, Palmer,
since 1988. Before his appointment as President and Chief Executive Officer in
August 1998, Mr. Edwards served as Executive Vice President, Sales and
Marketing. In that capacity, he was responsible for all the Company's sales
efforts as well as advertising and marketing. Prior to joining the Company, Mr.
Edwards was southeastern Regional Manager for SAV-A-STOP Inc., a former division
of Hanes. A graduate of Georgia College, Mr. Edwards has been acknowledged as an
innovator in the cellular industry, serving on the Board of the National
Cellular One Group and guest speaking at the Paul Kagan Conference and CTIA
Annual Conventions.
JEFFREY L. GREEN has been with PCW and its predecessor, Palmer since 1995.
Before assuming his current office as Vice President--Finance, and Chief
Financial Officer in March 1998, Mr. Green served as the Director of Corporate
Planning. While at the Company he has been extensively involved in strategic
planning, investor relations and company acquisitions. Prior to joining PCW, Mr.
Green spent five years with Forsch/Evanite Fiber Corporation, a leveraged buyout
firm, and six years at Arthur Andersen & Company, a national public accounting
firm. Mr. Green is a Certified Public Accountant and is a graduate of Miami
University.
VICTOR M. LANDAU has been with PCW and its predecessor, Palmer since 1984.
Before assuming his current role as Vice President--Technical Operations in
April 1998, Mr. Landau was the Director of Property Management/Site Acquisitions
from 1993 to 1998. From 1987 to 1993, Mr. Landau worked as the Technical
Operations Broadcast Division. Prior to joining the Company, Mr. Landau worked
as the Chief Engineer for the Collins Radio division of Rockwell International
from 1973-1975, and as a radio engineering consultant for E.H. Munn from
1977-1984. Mr. Landau attended Jacksonville University and the Milwaukee School
of Engineering.
DIRECTOR COMPENSATION
Directors of PCW are not paid fees.
59
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the executive officers of PCW for the three years ended
December 31, 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES
----------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTION (3) COMPENSATION($)
- ---------------------------------------------- --------- ----------- ----------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
William J. Ryan, Chairman of the Board 1997 370,769 212,500 195,313 30,991(4)
(1)(12).....................................
1996 339,731 34,000 0 31,422
1995 331,651 119,880 130,000(9) 55,356
M. Wayne Wisehart, President and Chief
Executive Officer of PCW(2)(12)............. 1997 186,635 57,000 146,406 18,873(5)
1996 152,211 15,250 0 23,559
1995 145,256 34,800 75,000(9) 33,417
Jeffrey L. Green, Vice President--Finance and
Chief Financial Officer..................... 1997 91,692 55,750 39,063 7,490(6)
1996 78,848 11,250 0 8,381
1995 64,327 0 10,000(9) 51,019
Victor M. Landau, Vice President--Technical
Operations.................................. 1997 77,033 41,120 19,531 7,931(7)
1996 73,365 8,400 0 8,220
1995 69,824 11,375 0 7,919
K. Patrick Meehan, Vice President--General
Counsel and Secretary(12)................... 1997 147,115 54,500 58,594 9,237(8)
1996 124,423 12,500 0 19,386
1995 109,936 26,400 65,000(9) 15,108
Jim Fredrickson, Vice
President--Engineering(12).................. 1997 113,462 91,125 97,656 6,092(10)
1996 99,438 10,248 0 7,200
1995 85,115 14,400 50,000(9) 7,173
Steve Carlson, Vice
President--Operations(12)................... 1997 112,788 104,812 78,125 7,966(11)
1996 94,615 18,910 0 7,930
1995 82,105 21,780 40,000(9) 8,038
</TABLE>
- ------------------------
(1) Prior to his promotion to such position effective April 1, 1998 Mr. Ryan
served as President and Chief Executive Officer of PCW.
(2) Prior to his promotion to such position effective April 1, 1998, Mr.
Wisehart served as Executive Vice President, Treasurer and Chief Financial
Officer of PCW.
(3) Gives effect to five-for-four stock splits of the Company's Common Stock in
the form of stock dividends, paid on December 23, 1997, April 1, 1998 and
April 30, 1998.
(4) Includes the following: auto allowance of $6,943 (including insurance and
license), financial services of $3,755, tax services of $1,975 and club dues
of $5,291.
(5) Includes the following: auto allowance of $6,774 (including insurance and
license), financial services of $1,375, club dues of $6,106 and medical
reimbursements of $4,619.
(6) Includes the following: auto allowance of $6,404 (including insurance and
license) and medical re-imbursements of $1,086.
(7) Includes the following: auto allowance of $7,931 (including insurance and
license).
(8) Includes the following: auto allowance of $7,042 (including insurance and
license), tax services of $275, medical re-imbursements of $1,283 and club
dues of $637.
(9) These options were granted by Palmer.
(10) Includes the following: auto allowance of $6,092.
(11) Includes the following: auto allowance of $7,966 (including insurance).
(12) Mr. Ryan and Mr. Carlson ceased to be employed by PCW in April 1998. Mr.
Fredrickson left the Company in May 1998. Mr. Wisehart left in July 1998 and
Mr. Meehan left in September 1998.
STOCK OPTIONS
The following table reflects the number of options for shares of the PCC's
Common Stock subject to options granted under the PCC's 1992 Long Term Incentive
Plan (the "LTIP") during the year ended December 31, 1997 to the named executive
officers of PCW.
60
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATED FOR OPTION
UNDERLYING GRANTED TO TERM(3)
OPTIONS EMPLOYEES IN EXERCISE ------------------------------
NAME GRANTED(1)(2) FISCAL YEAR PRICE(2) EXPIRATION DATE 5% 10%
- --------------------------------- ------------- --------------- ----------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan (4)(5)........... 195,313 12.7% $4.67 10/09 $573,622 $1,453,671
M. Wayne Wisehart(5)............. 146,406 9.5% 4.67 10/09 429,985 1,089,667
Jeffrey L. Green................. 39,063 2.5% 4.67 10/09 114,725 290,737
Victor M. Landau................. 19,531 1.3% 5.37 12/09 66,959 167,154
K. Patrick Meehan(5)............. 58,594 3.8% 4.67 10/09 172,087 436,102
Jim Fredrickson(5)............... 97,656 6.4% 4.67 10/09 286,810 726,832
Steve Carlson(5)................. 78,125 5.1% 4.67 10/09 229,448 581,467
</TABLE>
- ------------------------------
(1) Upon the occurrence of a "change in control" of the PCC, as defined in the
LTIP, the PCC's Stock Option and Compensation Committee may, in its
discretion, provide for the purchase of any then outstanding options by the
PCC or a designated subsidiary for an amount of cash equal to the excess of
(i) the product of the "change in control price" (as defined below) and the
number of shares of the PCC's Common Stock subject to the options over (ii)
the aggregate exercise price of such options. The change in control price
means the higher of (i) the higher price per share of the PCC's Common Stock
paid in any transaction related to a change in control of PCC and (ii) the
highest "fair market value" as defined in the LTIP, of the PCC's Common
Stock at any time during the 60-day period preceding the change in control.
(2) Number of options and exercise price give effect to five-for-four stock
splits, in the form of stock dividends, paid on December 23, 1997, April 1,
1998 and April 30, 1998.
(3) In order to realize these potential values, the closing price of the PCC's
Common Stock on October 7, 2009 would have to be $7.61 and $12.11 per share
and on December 4, 2009 would have to be $8.80 and $13.93 per share,
respectively.
(4) Mr. Ryan's options terminated unexercised on April 1, 1998. See
"--Employment Agreements."
(5) Mr. Ryan and Mr. Carlson ceased to be employed by PCW in April 1998. Mr.
Fredrickson left the Company in May 1998. Mr. Wisehart left in July 1998 and
Mr. Meehan left in September 1998.
The following table reflects the number of stock options held by the named
executive officers of PCW on December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
SHARES OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE- MONEY OPTIONS AT
SHARES END(1) FISCAL YEAR END
ACQUIRED ON VALUE -------------------------- --------------------------
EXERCISE(1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan (2)(3)......... -- -- -- 195,313 -- $154,204
M. Wayne Wisehart(3)........... -- -- -- 146,406 -- 118,589
Jeffrey L. Green............... -- -- -- 39,065 -- 31,641
Victor M. Landau............... -- -- -- 19,531 -- 2,148
K. Patrick Meehan(3)........... 58,596 47,461
Jim Fredrickson(3)............. -- -- -- 97,656 -- 79,097
Steve Carlson(3)............... -- -- -- 78,125 -- 63,278
</TABLE>
- ------------------------------
(1) Numbers of shares gives effect to five-for-four stock splits, in the form of
stock dividends, paid on December 23, 1997, April 1, 1998 and April 30,
1998.
(2) Mr. Ryan's options terminated unexercised on April 1, 1998. See
"--Employment Agreements."
(3) Mr. Ryan and Mr. Carlson ceased to be employed by PCW in April 1998. Mr.
Fredrickson left the Company in May 1998. Mr. Wisehart left in July 1998 and
Mr. Meehan left in September 1998.
61
<PAGE>
EMPLOYMENT AGREEMENTS
In 1997, PCW entered into an employment agreement with Mr. Ryan (the "Ryan
Agreement") for a term ending on December 31, 1999. The base salary rate per
annum under the Ryan Agreement for 1997 was $500,000, plus an annual bonus based
upon PCW's financial performance commencing in 1998. In connection with Mr.
Ryan's desire to serve as Chairman of the Board of the Company commencing
effective April 1, 1998, Mr. Ryan and PCW agreed that (i) Mr. Ryan will serve as
Chairman of the Board until December 31, 1998; (ii) in lieu of the other
compensation and benefits under the Ryan Agreement, Mr. Ryan received on April
1, 1998 a single lump sum payment of $875,000 and will participate in the
Company's Bonus Plan for 1998; and (iii) all options for the Company's Common
Stock held by Mr. Ryan be terminated.
In 1997, PCW entered into an employment agreement with Mr. Wisehart (the
"Wisehart Agreement") for an initial term ending on December 31, 1999. The
Wisehart Agreement has an automatic one-year renewal on each anniversary date
thereof. The base salary rate per annum under the Wisehart Agreement for 1997
was $300,000, plus an annual bonus based upon PCW's financial performance.
Pursuant to the Wisehart Agreement, when William J. Ryan ceased to be President
of PCW upon his promotion to Chairman of the Board of PCW, Mr. Wisehart assumed
the position of President for an annual base salary of $500,000, plus an annual
bonus based on PCW's financial performance. The Wisehart Agreement specifies
that if Mr. Wisehart is terminated by PCW other than for Cause (as defined
therein), disability or death or if Mr. Wisehart terminates the agreement for
Good Reason (as defined therein), PCW will pay to Mr. Wisehart the full base
salary and benefits which would otherwise have been paid to Mr. Wisehart, as
well as a pro-rated bonus, for two years after the date of termination (to be
paid at the time such payments are due).
In 1997, PCW entered into an employment agreement with Mr. Green (the "Green
Agreement") for an initial term ending on December 31, 1998. The Green Agreement
has an automatic one-year renewal on each anniversary date thereof. The base
salary rate per annum under the Green Agreement for 1997 was $113,000. A
separate agreement also provides for an annual bonus based on PCW's financial
performance. The Green Agreement specifies that if Mr. Green is terminated by
PCW other than for Cause (as defined therein), disability or death or if Mr.
Green terminates the agreement for Good Reason (as defined therein), PCW will
pay to Mr. Green the full base salary and benefits which would otherwise have
been paid to Mr. Green, as well as pro-rated bonus, through the first
anniversary of the date of termination (to be paid at the time such payments are
due).
William Ryan and Jim Fredrickson were terminated as of May 1998 and Steve
Carlson was terminated as of April 1998. Wayne Wisehart was terminated as of
July 1998 and Patrick Meehan was terminated as of September 1998. Pursuant to
their employment agreements, each of the foregoing is entitled to severance
payments, including regular salary for between twelve and twenty-four months
subsequent to their respective terminations.
PRINCIPAL STOCKHOLDER
All of PCW's issued and outstanding capital stock is owned by Holdings.
62
<PAGE>
DESCRIPTION OF THE 11 3/4% PCW NOTES
PCW issued the 11 3/4% PCW Notes on July 10, 1997 pursuant to an indenture
(the "11 3/4% PCW Indenture"). The 11 3/4% PCW Notes are general unsecured
obligations of PCW and subordinated in right of payment to all existing and
future senior Indebtedness of PCW and rank PARI PASSU in right of payment to all
future senior subordinated Indebtedness of PCW and rank senior to all
subordinated indebtedness of PCW.
Commencing on January 15, 1997, cash interest on the 11 3/4% PCW Notes will
be payable, at a rate of 11 3/4% per annum, semi-annually in arrears on each
January 15 and July 15. The 11 3/4% PCW Notes are redeemable at the option of
Holdings, in whole or in part, at any time on or after July 15, 2002 in cash at
the redemption prices set forth below, plus accrued and unpaid interest, if any,
thereon to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
<S> <C>
YEAR PRICE
- ------------------------------------------------------------- -----------
2002......................................................... 105.875%
2003......................................................... 104.406%
2004......................................................... 102.938%
2005......................................................... 101.469%
2006 and thereafter.......................................... 100.000%
</TABLE>
The 11 3/4% PCW Indenture contains covenants which are substantially similar
to those in the Indenture relating to the Notes and which impose certain
limitations on the ability of PCW and its subsidiaries to, among other things,
incur Indebtedness (as defined), make Restricted Payments (as defined), effect
certain Asset Sales (as defined), enter into certain transactions with Related
Persons (as defined), merge or consolidate with any other person or transfer all
or substantially all of their properties and assets.
On November 14, 1997, in order to satisfy certain obligations of the Company
under the Registration Rights Agreement dated July 10, 1997, among the Company
and other signatories thereto, the Company offered to exchange registered $1,000
principal amount of 11 3/4% Series B Senior Subordinated Notes due 2007 (the
"Series B 11 3/4% PCW Notes") for each $1,000 principal amount of the issued and
outstanding 11 3/4% PCW Notes. The terms of the Series B 11 3/4% PCW Notes are
identical in all respect to the original 11 3/4% PCW Notes, except that the
offer of the Series B 11 3/4% PCW Notes were registered under the Securities Act
of 1933, as amended.
63
<PAGE>
DESCRIPTION OF THE HOLDINGS PIK NOTES
In July 1998, Holdings issued $200.0 million aggregate principal amount of
Senior Exchangeable Payable-in-Kind Notes due 2008 (the "Holdings PIK Notes") in
an offering registered under the Securities Act (the "Holdings Offering"). The
Holdings PIK Notes will initially bear interest at a rate of 11 1/4% per annum.
Such interest rate will be permanently reduced by 0.50% once cash interest
begins to accrue on the Holdings PIK Notes. Cash interest will begin to accrue
on the Holdings PIK Notes on February 15, 2003; provided that at any time prior
to February 15, 2003, Holdings may make an election on any interest payment date
to commence the accrual of cash interest from and after such interest payment
date. The impact of the issuance of the Holdings PIK Notes on PCC's consolidated
financial position is reflected in the pro forma financial statements included
elsewhere in the Prospectus. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements."
The Holdings PIK Notes rank senior to all subordinated indebtedness of
Holdings. In the event that the daily high price of PCC Common Stock equals or
exceeds 115% of the exchange price (initially $40) for ten out of 15 consecutive
trading days, then each outstanding $1,000 aggregate principal amount of
Holdings PIK Notes will be mandatorily exchanged into 25 shares of PCC Common
Stock, subject to adjustment for certain events.
The proceeds of the Holdings Offering was used by Holdings to redeem all of
the outstanding 13 1/2% Senior Secured Discount Notes due 2007 (the "13 1/2%
Holdings Notes") and for general corporate purposes.
64
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued under an Indenture, dated as of June 16, 1998,
(the "Indenture") by and among the Company, each of the Guarantors and Bank of
Montreal Trust Company, as trustee (the "Trustee"). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the TIA. The following summaries of certain provisions of the
Indenture are summaries only, do not purport to be complete and are qualified in
their entirety by reference to all of the provisions of the Indenture.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Indenture. Wherever particular provisions of the
Indenture are referred to in this summary, such provisions are incorporated by
reference as a part of the statements made, and such statements are qualified in
their entirety by such reference. For purposes of this "Description of Notes,"
references to the "Company" are to Price Communications Wireless, Inc. and any
successor corporation thereto and do not include the subsidiaries of Price
Communications Wireless, Inc. or their respective successors.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except for certain transfer restrictions and
registration rights relating to the Old Notes and except that, if the Exchange
Offer is not consummated by December 12, 1998, Holders that have complied with
their obligations under the Registration Rights Agreement will be entitled,
subject to certain exceptions, to liquidated damages in an amount equal to $0.05
per week per $1,000 principal amount at maturity of Old Notes held by such
Holder until March 12, 1999 and up to $0.25 per week per $1,000 principal amount
at maturity of Old Notes thereafter until the consummation of the Exchange
Offer.
The aggregate principal amount of Notes issued under the Indenture shall not
exceed $1 billion from time to time outstanding, except as set forth in the
Indenture. An aggregate principal amount of $525 million of Notes will be issued
in the Offering, and the Indenture will provide for (i) the issuance of the $525
million aggregate principal amount of Notes offered hereby, and (ii) subject to
the limitations set forth under "-- Certain Covenants -- Limitation on
Incurrence of Additional Indebtedness" below, the issuance from time to time of
one or more additional series of notes (which may, but need not, be identical in
all respects to the Notes originally issued (or in all respects except for the
payment of interest (i) scheduled and paid prior to the date of issuance of the
additional series or (ii) payable on the first interest payment date following
such date of issuance)), in an aggregate principal amount, when aggregated with
the Notes issued on the Issue Date, not to exceed $1 billion from time to time
outstanding. The Notes offered hereby and any such additional Notes shall be
treated as a single class for all purposes under the Indenture. The Notes will
mature on December 15, 2006. The Notes issued on the Issue Date will bear
interest at the rate of 9 1/8% per annum from June 16, 1998 or from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semiannually on December 15 and June 15 of each year, commencing
December 15, 1998, to the Persons in whose names such Notes are registered at
the close of business on the December 1 or June 1 preceding such Interest
Payment Date. The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
Principal of, premium, liquidated damages, if any, and interest on the Notes
will be payable, and, subject to the following provisions, the Notes may be
presented for registration of transfer or exchange, at the office or agency of
the Company maintained for such purpose, which office or agency shall be
maintained in the Borough of Manhattan of The City of New York. At the option of
the Company, payment of interest may be made by check mailed to the Holders of
the Notes at the addresses set forth upon the registry books of the Company. No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. Until otherwise
designated by the Company, the
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Company's office or agency will be the corporate trust office of the Trustee
presently located at 77 Water Street, 4th Floor, New York, New York 10005, c/o
Corporate Trust Department.
SECURITY AND RANKING OF THE NOTES
The Notes will be senior obligations of the Company, secured on the Issue
Date by a first priority Lien, subject to certain Permitted Liens, on (i) the
Capital Stock of Restricted Subsidiaries (other than Non-Recourse Restricted
Subsidiaries) owned by the Company or any Guarantor and such other assets of the
Restricted Subsidiaries (other than Non-Recourse Restricted Subsidiaries) as can
be perfected by the filing of a UCC-1 financing statement with the filing office
of any applicable jurisdiction (PROVIDED, HOWEVER, that the assets subject to
such Lien will not include, without limitation, any FCC licenses, real property
or leases of real property relating to transmitting towers that require the
consent of the landlord thereto for the grant of such Lien or any cash or
Eligible Investments not deposited with the Trustee or any collateral agent as
bailee of the Trustee) and (ii) certain cash collateral and Eligible Investments
from time to time pledged by the Company or the Guarantors to the Trustee (the
property described in the foregoing clauses (i) and (ii), (the "Collateral"). To
the extent that any additional Collateral may be pledged by the Company or the
Guarantors, the Lien on such Collateral will be perfected to the same extent,
subject to Permitted Liens, as the Liens securing the Collateral pledged on the
Issue Date. Subject to the terms of the Indenture and the Security Documents,
the Collateral securing the Notes may be released and thereafter secure other
Indebtedness of the Company or its Restricted Subsidiaries. See "-- Releases of
Collateral". The Lien will rank pari passu with the Liens in favor of the
trustees for the benefit of the noteholders under certain Permitted Pari Passu
Secured Indebtedness permitted to be issued on a secured basis under the
Indenture.
The Notes will rank (i) senior in right of payment to all subordinated
indebtedness of the Company and (ii) effectively senior in right of payment to
all future senior unsecured Indebtedness of the Company to the extent of the
value of the Collateral available for the payment of the Notes. As of March 31,
1998, on a pro forma basis after giving effect to the Offering and the
application of the estimated net proceeds therefrom, the Company would have had
$700 million aggregate principal amount of Indebtedness outstanding. In
addition, the Company conducts significant operations through its subsidiaries
and, therefore, the Notes will be effectively subordinated to all liabilities
(including trade payables) of the Company's subsidiaries that are not
Guarantors.
The Indenture will not contain provisions that would afford Holders of the
Notes protection in the event of a decline in the Company's credit quality
resulting from highly leveraged or other similar transactions involving the
Company.
OPTIONAL REDEMPTION
Except as set forth below, the Company will not have the right to redeem any
Notes prior to June 15, 2002. On or after June 15, 2002, the Company will have
the right to redeem all or any part of the Notes in cash at the redemption
prices (expressed as a percentage of the aggregate principal amount thereof) set
forth below, in each case including accrued and unpaid interest, if any, to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the Redemption Date) if redeemed during the 12-month
period beginning June 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- --------------------------- -----------
<S> <C>
2002....................... 104.56250%
2003....................... 102.28125%
2004 and thereafter 100.00000%
</TABLE>
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In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis or in such other manner as
it deems appropriate and fair. The Notes may be redeemed in part in multiples of
$1,000 only.
The Notes will not have the benefit of a sinking fund.
Notwithstanding the Optional Redemption provisions described above, prior to
June 15, 2002, in the event that the Company or any Parent consummates one or
more Equity Offerings, other than in any circumstances resulting in, or as part
of a series of transactions that result in, directly or indirectly, a Change of
Control, on or before the third anniversary of the Issue Date, the Company may
at its option, use all or a portion of the cash received by it or contributed to
it from such Equity Offerings to redeem up to 35% of the originally issued
aggregate principal amount of the Notes at a cash redemption price equal to
109.125% of the principal amount of the Notes so redeemed, plus accrued and
unpaid interest thereon, if any, to the Redemption Date; PROVIDED, HOWEVER, that
(x) at least 65% of the original aggregate principal amount of the Notes remains
outstanding thereafter (excluding any Notes owned by the Company or any of its
Affiliates), and (y) any such net cash proceeds of such Equity Offering by any
Parent to be used for such a redemption shall be contributed to the Company in
an amount in cash sufficient to redeem the Notes to be redeemed at the then
current redemption price. Notice of any such redemption must be given within 60
days after the date of the last Equity Offering the proceeds of which are to be
so contributed.
In addition, notwithstanding the optional redemption provisions described
above, at any time on or prior to June 15, 2002, the Notes may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control (but in no event more than 90 days after the occurrence of such Change
of Control) at a redemption price equal to 100% of the principal amount thereof,
plus the Applicable Premium as of, and accrued but unpaid interest, if any, to,
the Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
Subject to the following, notice of any redemption will be sent, by
first-class mail, at least 30 days and not more than 60 days prior to the date
fixed for redemption to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the books of the Registrar. Any notice which
relates to a Note to be redeemed in part only must state the portion of the
principal amount to be redeemed and must state that on and after the date fixed
for redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date fixed for redemption, interest will cease to accrue on the portions of the
Notes called for redemption.
GUARANTEES
The Company's obligations under the Notes will be unconditionally guaranteed
on a joint and several basis (each, a "Guarantee") by the Guarantors. The
Guarantees will rank PARI PASSU in right of payment with all other senior
indebtedness of each Guarantor and senior in right of payment to all
subordinated indebtedness of such Guarantor.
The Indenture will provide by its terms that each Guarantee shall be
automatically and unconditionally released and discharged upon any sale,
exchange or other transfer to any Person that is not an Affiliate of the Company
of all of the outstanding Capital Stock of such Guarantor owned by the Company
or any other Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or of all or substantially all of the assets of, such Guarantor
(which sale, exchange or transfer is not prohibited by the Indenture).
SECURITY
The obligations of the Company with respect to the Notes and the obligations
of the Guarantors under their Guarantees will be secured by a first priority
Lien on the Collateral, subject to certain Permitted Liens applicable to such
Collateral. The Collateral will be pledged by the Company and the
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Guarantors to the Trustee, for its benefit and the benefit of the Holders,
pursuant to a security agreement (the "Security Agreement").
The Lien in favor of the Trustee with respect to substantially all of the
Collateral will be perfected to the extent contemplated by the Security
Agreement on the Issue Date or the date of acquisition thereof by the Company or
the applicable Guarantor.
Unless an Event of Default shall have occurred and be continuing, the
Company and the Guarantors will have the right to remain in possession and
retain use of the Collateral (other than cash collateral and Eligible
Investments), to operate the Collateral and to collect, invest and dispose of
any income thereon (subject to applicable limitations under the Indenture and
the Security Agreement). Furthermore, any transfer of the power to vote the
Capital Stock of a Restricted Subsidiary that, directly or indirectly, possesses
a license from the FCC to operate a Cellular System, including as a result of
foreclosure on the Collateral, will require FCC approval.
The Lien on the Collateral in favor of the Trustee will be PARI PASSU with
the Lien in favor of the Trustee on behalf of the holders of the Permitted Pari
Passu Secured Indebtedness, if any. Each such lienholder shall execute and
deliver the Intercreditor Agreement relating to the Collateral, and the
Indenture and the Security Agreement shall be subject to the terms and
provisions thereof.
To the extent that any of the Collateral is subject to any Permitted Liens,
the exercise of the rights and remedies associated therewith could adversely
affect the value of the Collateral.
No appraisals of the Collateral have been prepared by or on behalf of the
Company. There can be no assurance that the proceeds of any sale of the
Collateral pursuant to the Indenture following an Event of Default would be
sufficient to satisfy payments due on the Notes. See "Risk Factors--Guarantee
and Security for the Notes" above. In addition, the ability of the Holders of
Notes to realize upon the Collateral may be subject to FCC approval as described
above and certain bankruptcy law limitations in the event of a bankruptcy. See
"Risk Factors--Certain Other Bankruptcy Considerations" above.
If an Event of Default occurs under the Indenture, the Trustee, on behalf of
the Holders of the Notes, in addition to any rights or remedies available to it
under the Indenture, may take such action as it deems advisable to protect and
enforce its rights in the Collateral, including the institution of foreclosure
proceedings, subject, however, to the terms of the Intercreditor Agreement. The
proceeds received by the Trustee from any foreclosure will be applied by the
Trustee first to pay the expenses of such foreclosure and fees and other amounts
then payable to the Trustee under the Indenture and, thereafter, to pay the
principal of and interest on and other amounts due with respect to the Notes.
PERMITTED PARI PASSU SECURED INDEBTEDNESS
Subject to the terms of the Indenture, the Company will be permitted to
Incur Indebtedness by the issuance of notes, which may (but need not) be issued
under the Indenture (subject to the limitations therein) as one or more series
of additional Notes (any such notes, the "Permitted Pari Passu Secured
Indebtedness"). The Permitted Pari Passu Secured Indebtedness shall not mature
or have any mandatory redemption or required prepayment dates (other than a
mandatory offer to repurchase upon the occurrence of a change of control or
asset sale) prior to the final stated maturity date of the Notes and may be
fixed rate or floating rate obligations. The Permitted Pari Passu Secured
Indebtedness will constitute senior Indebtedness of the Company PARI PASSU with
the Notes. The Permitted Pari Passu Secured Indebtedness may be secured by a
first priority Lien on the Collateral PARI PASSU with the Lien for the benefit
of the Holders if (i) the Secured Indebtedness as of the date of issuance of
such series of Permitted Pari Passu Secured Indebtedness on a PRO FORMA basis is
less than or equal to the Minimum Collateral Value, (ii) the indenture and the
related documents for each such series of Permitted Pari Passu Secured
Indebtedness contains provisions with respect to releases of Collateral that are
substantially similar to and no more restrictive on the Company than the
provisions of the Indenture and the Security Agreement and
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(iii) the trustee for the holders of each series of Permitted Pari Passu Secured
Indebtedness executes and delivers a joinder supplement to the Intercreditor
Agreement.
Except for certain Permitted Liens, the Company and its Restricted
Subsidiaries will not be permitted to issue or Incur any other Indebtedness
secured by all or any portion of the Collateral without the consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding.
INTERCREDITOR AGREEMENT
Prior to the first Incurrence of any Permitted Pari Passu Secured
Indebtedness that is secured by the Collateral, the Trustee will enter into an
intercreditor agreement (the "Intercreditor Agreement") or a joinder supplement
thereto with the Company and the trustee for the holders of such series of
Permitted Pari Passu Secured Indebtedness. The Intercreditor Agreement will
provide, among other things, (i) the relative priorities of the parties thereto
in and to the Collateral, (ii) the conditions under which the parties thereto
will consent to the release of or granting of any Lien in any Collateral and
(iii) the conditions under which the parties thereto will enforce their rights
with respect to the Collateral and the Indebtedness secured thereby.
RELEASES OF COLLATERAL
The collateral release provisions of the Indenture and the Security
Documents will permit the release of items of Collateral that are the subject of
an Asset Sale and in other circumstances upon compliance with certain
conditions. At the request of the Company, the Trustee shall release its Lien
without the consent of the Holders with respect to any Collateral (x) that is
the subject of an Asset Sale that complies with "--Certain Covenants--Limitation
on Asset Sales and Sales of Subsidiary Stock" below and "-- Certain
Covenants--Minimum Coverage Ratio" below or (y) if after giving PRO FORMA effect
thereto, the Company would be in compliance with "--Certain Covenants--Minimum
Coverage Ratio" below so long as in each of case (x) and (y) (i) no Event of
Default shall have occurred and be continuing after giving effect to, on a PRO
FORMA basis, such release, unless, in the case of an Asset Sale, such Asset Sale
is in consideration solely of cash or Cash Equivalents and such consideration is
applied immediately to the permanent reduction of Senior Indebtedness of the
Company or any Restricted Subsidiary and (ii) the other conditions, if any, to
such Asset Sale or release under the Indenture have been satisfied. With respect
to any other partial release of Collateral that would result in the Minimum
Collateral Value being less than the amount of Secured Indebtedness, the consent
of Holders of a majority of the aggregate principal amount of Notes then
outstanding will be required under the Indenture; PROVIDED, HOWEVER, that with
respect to any such release that relates to more than 25% of the fair market
value (as determined in good faith by the Company's Board of Directors) of the
Collateral at the date of release, such proportion of the Notes shall be 66
2/3%. The Company and the Guarantors may not effect a release of all or
substantially all of the Collateral (except as set forth above) or any amendment
of or modification to the Indenture or the Security Documents that has the
substantial effect thereof without the consent of Holders of 75% of the
aggregate principal amount of Notes then outstanding.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL.
The Indenture will provide that in the event that a Change of Control has
occurred, unless the Company has elected to redeem all of the Notes upon the
occurrence of a Change of Control as set forth above under "--Optional
Redemption," each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by the Company (the "Change
of Control Offer"), to require the Company to repurchase all or any part (equal
to $1,000 principal amount or an integral multiple thereof) of such Holder's
Notes, on a date (the "Change of Control Purchase Date") that is no later than
45 Business Days after the occurrence of such Change of Control at a cash price
(the "Change of
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Control Purchase Price") equal to 101% of the aggregate principal amount
thereof, together with any accrued and unpaid interest to the Change of Control
Purchase Date. The Change of Control Offer shall be made within 20 Business Days
following a Change of Control and shall remain open for 20 Business Days
following its commencement (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, the Company shall purchase all
Notes properly tendered in response to the Change of Control Offer.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest) of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent promptly will deliver
to the Holders of Notes so accepted payment in an amount equal to the Change of
Control Purchase Price (together with any accrued and unpaid interest), and the
Trustee will promptly authenticate and mail or deliver to such Holders a new
Note equal in principal amount to any unpurchased portion of the Note
surrendered. Any Notes not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof. The Company will announce publicly the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company or its Parent, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between the company, its Parent and the Initial Purchasers and is
not the result of any intention on the part of the Company or its Parent or
their management to discourage the acquisition of the Company or its Parent.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws, and the Company may modify a Change of Control Offer to the
extent necessary to effect such compliance.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, issue, create, incur, assume, guarantee or otherwise directly or
indirectly become liable for (including as a result of an acquisition), or
otherwise become responsible for, contingently or otherwise (individually or
collectively, to "Incur" or, as appropriate, an "Incurrence"), any Indebtedness.
Neither the accrual of interest (including the issuance of "pay in kind"
securities or similar instruments in respect of such accrued interest) pursuant
to the terms of Indebtedness Incurred in compliance with this covenant, nor the
accretion of original issue discount, nor the mere extension of the maturity of
any Indebtedness shall be deemed to be an Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may Incur
Indebtedness if, after giving effect to the Incurrence of such Indebtedness, the
Company's Annualized Operating Cash Flow Ratio would have been less than 8 to 1.
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of:
(i) Indebtedness by the Company or any of its Restricted Subsidiaries
constituting Existing Indebtedness, reduced by repayments of and permanent
reductions in commitments in satisfaction of the Net Cash Proceeds
application requirement under "--Limitation on Asset Sales and Sales of
Subsidiary Stock" below and by repayments and permanent reductions in
amounts outstanding pursuant to scheduled amortization and mandatory
prepayments in accordance with the terms thereof;
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(ii) unsecured Indebtedness Incurred by the Company or any Guarantor in
an aggregate principal amount outstanding at any time not to exceed
$100,000,000 reduced by amounts Incurred pursuant to clause (x) below, so
long as such amounts Incurred pursuant to clause (x) remain outstanding;
(iii) Indebtedness Incurred by the Company evidenced by the Notes (but
not any Permitted Pari Passu Secured Indebtedness) and the guarantees
thereof by Restricted Subsidiaries;
(iv) (a) Permitted Acquisition Indebtedness by the Company that
satisfies the provisions of clause (x) of the definition thereof or (b)
Permitted Acquisition Indebtedness by any Restricted Subsidiary that
satisfies the provisions of clause (y) of the definition thereof;
(v) Indebtedness between the Company and any Restricted Subsidiary of
the Company or between Restricted Subsidiaries of the Company; PROVIDED,
HOWEVER, that, in the case of Indebtedness of the Company, such obligations
shall be unsecured and subordinated in all respects to the Holders' rights
pursuant to the Notes, and the date of any event that causes a Restricted
Subsidiary no longer to be a Restricted Subsidiary shall be an Incurrence
Date with respect to such Indebtedness;
(vi) Capitalized Lease Obligations and Purchase Money Indebtedness in an
aggregate amount or aggregate principal amount, as the case may be,
outstanding at any time not to exceed in the aggregate $15,000,000;
PROVIDED, HOWEVER, that in the case of Purchase Money Indebtedness, such
Indebtedness shall not constitute less than 75% nor more than 100% of the
cost (determined in accordance with GAAP) to the Company or such Restricted
Subsidiary of the property purchased or leased with the proceeds thereof;
(vii) Indebtedness of the Company or any Restricted Subsidiary arising
from agreements providing for indemnification, adjustment of purchase price
or similar obligations, or from guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the Company or its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary of the Company to the extent none of the foregoing results in the
obligation to repay an obligation for money borrowed by any Person and are
limited in aggregate amount to no greater than 10% of the fair market value
of such business, assets or Restricted Subsidiary so disposed of;
(viii) any guarantee by any Restricted Subsidiary of any Indebtedness
Incurred in compliance with "-- Limitation on Subsidiary Guarantees" below;
(ix) Indebtedness of the Company or any Restricted Subsidiary under
standby letters of credit or reimbursement obligations with respect thereto
issued in the ordinary course of business and consistent with industry
practices limited in aggregate amount to $5,000,000 at any one time
outstanding; and
(x) Refinancing Indebtedness Incurred to extend, renew, replace or
refund Indebtedness permitted under clauses (i) (as so reduced in amount),
(ii) (as so reduced in amount), (iii), (iv) and (x) of this paragraph.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
described above or is entitled to be incurred pursuant to the second paragraph
of the covenant described above, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with the covenant
described above and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the second
paragraph above. In addition, the Company may, at any time, change the
classification of an item of Indebtedness (or any portion thereof) to any other
clause or to the second paragraph hereof, provided that the Company would be
permitted to incur such item of Indebtedness (or such portion
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thereof) pursuant to such other clause or the second paragraph hereof, as the
case may be, at such time of reclassification.
Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
LIMITATION ON SUBSIDIARY GUARANTEES.
The Indenture will provide that the Company will not permit any of its
Restricted Subsidiaries that is not a Guarantor to guarantee the payment of any
Indebtedness of the Company unless such Restricted Subsidiary (i) executes and
delivers a supplemental indenture in a form reasonably satisfactory to the
Trustee pursuant to which such Restricted Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Notes and the Indenture on
the terms set forth in the Indenture and (ii) delivers to the Trustee an opinion
of counsel that such supplemental indenture has been duly authorized, executed
and delivered by such Restricted Subsidiary and constitutes a legal, valid,
binding and enforceable obligation of such Restricted Subsidiary subject to
customary exceptions. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of the Indenture unless and until its Guarantee is
released in accordance with the Indenture.
LIMITATION ON RESTRICTED PAYMENTS.
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment, if, immediately prior or after giving
effect thereto:
(a) a Default or an Event of Default would exist;
(b) the Company's Annualized Operating Cash Flow Ratio for the Reference
Period would exceed 8.5 to 1; or
(c) the aggregate amount of all Restricted Payments made by the Company
and its Restricted Subsidiaries, including such proposed Restricted Payment
(if not made in cash, then the fair market value of any property used
therefor, as determined in good faith by the Board of Directors of the
Company) from and after the Issue Date and on or prior to the date of such
Restricted Payment, shall exceed the sum of (i) the amount determined by
subtracting (x) 2.0 times the aggregate Consolidated Interest Expense of the
Company for the period (taken as one accounting period) from the Issue Date
to the last day of the last full fiscal quarter prior to the date of the
proposed Restricted Payment (the "Computation Period") from (y) Operating
Cash Flow of the Company for the Computation Period, PLUS (ii) the aggregate
Net Proceeds received by the Company from (x) Equity Offerings (other than
to a Subsidiary of the Company) after the Issue Date and on or prior to the
date of such Restricted Payment or (y) capital contributions to the Company
after the Issue Date, PLUS (iii) to the extent not otherwise included in
clauses (i) or (ii), above, an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from payments of
dividends, repayment of loans or advances, or other transfers of assets, in
each case to the Company or any Wholly Owned Restricted Subsidiary of the
Company from Unrestricted Subsidiaries, or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed, in the case of
any Unrestricted Subsidiary, the amount of Investments previously made by
the Company and any Restricted Subsidiary in such Unrestricted Subsidiary.
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Notwithstanding the foregoing paragraph, the provisions set forth in clauses
(b) and (c) thereof will not prohibit (i) the use of an aggregate of $10,000,000
to be used for Restricted Payments not otherwise permitted by this "Limitation
on Restricted Payments" covenant, (ii) the distribution of amounts to Holdings
sufficient to pay the scheduled interest or dividends, as applicable, owed by
Holdings on the Permitted Parent Securities as such interest or dividends become
due and payable so long as Holdings (or any other direct or indirect Wholly
Owned Subsidiary of PCC) is the direct Parent of the Company owning 100% of the
Capital Stock of the Company and (iii) any dividend, distribution or other
payment by any Restricted Subsidiary on shares of its Capital Stock that is paid
PRO RATA to all holders of such Capital Stock, and notwithstanding the foregoing
paragraph, the provisions set forth in clause (a), (b) and (c) thereof will not
prohibit (x) the payment of any dividend within 60 days after the date of its
declaration if such dividend could have been made on the date of its declaration
in compliance with the foregoing provisions, or (y) the redemption, defeasance,
repurchase or other acquisition or retirement of any Indebtedness or Capital
Stock of the Company or its Restricted Subsidiaries either in exchange for or
out of the Net Proceeds of any substantially concurrent Equity Offering (in the
case of any redemption, defeasance, repurchase or other acquisition or
retirement of any Junior Indebtedness or Capital Stock of the Company or its
Restricted Subsidiaries and other than to a Subsidiary of the Company) or sale
of Junior Indebtedness (in the case of any redemption, defeasance, repurchase or
other acquisition or retirement of any Indebtedness of the Company or its
Restricted Subsidiaries) of the Company.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the first paragraph of this description of the
"Limitations on Restricted Payments" covenant, 100% of the amounts expended
under clauses (i) through (iii) and (x) and (y) of the immediately preceding
paragraph shall be included as Restricted Payments from and after the Issue
Date.
LIMITATION ON RESTRICTING SUBSIDIARY DIVIDENDS.
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, with respect to securities issued
directly thereby or with respect to which they are obligors, directly or
indirectly, create, assume or suffer to exist any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to pay
dividends or make other distributions on the Capital Stock of any Restricted
Subsidiary of the Company or pay or satisfy any obligation to the Company or any
of its Restricted Subsidiaries or otherwise transfer assets or make or pay loans
or advances to the Company or any of its Restricted Subsidiaries, except
encumbrances and restrictions existing under
(i) the Indenture, the Notes and any Permitted Pari Passu Secured
Indebtedness;
(ii) any Existing Indebtedness;
(iii) any applicable law or any governmental or administrative regulation
or order;
(iv) Refinancing Indebtedness permitted under the Indenture; PROVIDED,
HOWEVER, that the restrictions contained in the instruments governing such
Refinancing Indebtedness are no more restrictive in the aggregate than those
contained in the instruments governing the Indebtedness (in the good faith
judgment of the Company's Board of Directors) being refinanced immediately
prior to such refinancing;
(v) restrictions with respect solely to a Restricted Subsidiary of the
Company imposed pursuant to a binding agreement which has been entered into
for the sale or disposition of all or substantially all of the Capital Stock
or assets of such Restricted Subsidiary; PROVIDED, HOWEVER, that such
restrictions apply solely to the Capital Stock or assets (in the good faith
judgment of the Company's Board of Directors) being sold of such Restricted
Subsidiary;
(vi) restrictions contained in any agreement relating to the financing
of the acquisition of a Person or property, business or assets, after the
Issue Date which are not applicable to any Person or property, business or
assets, other than the Person or property so acquired and which either (a)
were
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not put in place in anticipation of or in connection with such acquisition
or (b) constituted Permitted Acquisition Indebtedness of a Person satisfying
the provisions of clause (y) of the definition thereof; or
(vii) any agreement (other than those referred to in clause (vi)) of a
Person acquired by the Company or a Restricted Subsidiary of the Company,
which restrictions existed at the time of acquisition and were not put in
place in anticipation of or in connection with such acquisition.
Notwithstanding the foregoing, neither (A) customary provisions restricting
subletting or assignment of any lease entered into the ordinary course of
business, consistent with past practices nor (B) Permitted Liens shall in and of
themselves be considered a restriction on the ability of the applicable
Restricted Subsidiary to transfer such agreement or assets, as the case may be.
LIMITATION ON TRANSACTIONS WITH RELATED PERSONS.
The Indenture will provide that, after the Issue Date, the Company will not,
and will not permit any of its Restricted Subsidiaries to, enter into any
contract, agreement, arrangement or transaction with any Related Person (each a
"Related Person Transaction"), or any series of Related Person Transactions,
except for transactions made in good faith, the terms of which are (i) fair and
reasonable to the Company or such Subsidiary, as the case may be, and (ii) at
least as favorable as the terms that could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or series
of Related Person Transactions with an aggregate value in excess of $1,000,000
must first be approved by a majority of the Board of Directors of the Company
who are disinterested in the subject matter of the transaction pursuant to a
Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute Related
Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or Incurred by such Persons, as
directors, officers or employees, (ii) any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment not prohibited by the "--Limitation on Restricted
Payments" above, (iv) any loan or advance by the Company or a Restricted
Subsidiary to employees of the Company or a Restricted Subsidiary in the
ordinary course of business, in an aggregate amount at any one time outstanding
not to exceed $500,000, and (v) any payment pursuant to a tax-sharing agreement
between the Company and any other Person with which the Company is required or
permitted to file a consolidated tax return or with which the Company is or
could be part of a consolidated group for tax purposes, which payments are not
in excess of the tax liabilities attributable solely to the Company and its
Restricted Subsidiaries (as a consolidated group).
LIMITATION ON ASSET SALES AND SALES OF SUBSIDIARY STOCK.
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, in one or a series of
related transactions, convey, sell, transfer, assign or otherwise dispose of,
directly or indirectly, any of its property, businesses or assets, including by
merger or consolidation, and including any sale or other transfer or issuance of
any Capital Stock of any Restricted Subsidiary of the Company, whether by the
Company or a Restricted Subsidiary (any such transaction an "Asset Sale"),
unless
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(1) (a) within 360 days after the date of such Asset Sale, an amount equal to
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") is applied
to the optional redemption of the Notes in accordance with the terms of the
Indenture and other Senior Indebtedness of the Company (including any
Permitted Pari Passu Secured Indebtedness) from time to time outstanding
with similar provisions requiring the Company to make an offer to purchase
or to redeem such Indebtedness with the proceeds from asset sales, PRO RATA
in proportion to the respective principal amounts (or accreted values in the
case of Indebtedness issued with an original issue discount) of the Notes
and such other Indebtedness then outstanding or to the repurchase of the
Notes and such other Indebtedness pursuant to an irrevocable, unconditional
offer (PRO RATA in proportion to the respective principal amounts (or
accreted values in the case of Indebtedness issued with an original issue
discount) of the Notes and such other Indebtedness then outstanding) (the
"Asset Sale Offer") to repurchase such Indebtedness at a purchase price (the
"Asset Sale Offer Price") of 100% of the principal amount of Notes to be
repurchased or redeemed in the case of the Notes or 100% of the principal
amount of such other Indebtedness to be repurchased or redeemed (or accreted
value in the case of Indebtedness issued with an original issue discount)
plus, in each case, accrued interest to the date of payment, made within 330
days of such Asset Sale, or (b) within 330 days of such Asset Sale, the
Asset Sale Offer Amount is (i) invested (or committed, pursuant to a binding
commitment subject only to reasonable, customary closing conditions, to be
invested, and in fact is so invested, within an additional 90 days) in
assets and property (other than notes, obligations or securities), which in
the good faith reasonable judgment of the Board of Directors of the Company
are of a type used in a Related Business, or Capital Stock of a Person
(which, if such Person becomes a Subsidiary of the Company by virtue of such
Asset Sale, shall initially be designated a Restricted Subsidiary) all or
substantially all of whose assets and property (in the good faith reasonable
judgment of the Board of Directors of the Company) are of a type used in a
Related Business (PROVIDED, HOWEVER, that, with respect to such Capital
Stock, all of the requirements of the last proviso of clause (v) of the
following paragraph shall have been satisfied), or (ii) used to retire
permanently any Senior Indebtedness of the Company or any Restricted
Subsidiary (other than a Non-Recourse Restricted Subsidiary);
(2) with respect to any transaction or related series of transactions of
securities, property or assets with an aggregate fair market value in excess
of $1,000,000, at least 75% of the value of consideration for the assets
disposed of in such Asset Sale (excluding (a) Indebtedness (other than
Indebtedness which by its terms is subordinated to the Notes) (and any
Refinancing Indebtedness issued to refinance any such Indebtedness) or the
Indebtedness of any Restricted Subsidiary assumed by a transferee which
assumption permanently reduces the amount of Indebtedness outstanding on the
Issue Date and permitted to have been Incurred pursuant to "--Limitation on
Incurrence of Additional Indebtedness" above (including that in the case of
a revolver or similar arrangement that makes credit available, such
commitment is permanently reduced by such amount), (b) Purchase Money
Indebtedness secured exclusively by the assets subject to such Asset Sale
which is assumed by a transferee and (c) marketable securities that are
promptly converted into cash or Cash Equivalents) consists of cash or Cash
Equivalents; PROVIDED, HOWEVER, that any cash or Cash Equivalents received
within 12 months following any such Asset Sale upon conversion of any
property or assets (other than in the form of cash or Cash Equivalents)
received in consideration of such Asset Sale shall be applied promptly in
the manner required of Net Cash Proceeds of any such Asset Sale as set forth
above, and the other conditions to such release of Collateral, if
applicable, are satisfied;
(3) no Default or Event of Default shall occur or be continuing after giving
effect to, on a PRO FORMA basis, such Asset Sale, unless such Asset Sale is
in consideration solely of cash or Cash Equivalents and such consideration
is applied immediately to the permanent reduction of the principal amount of
Indebtedness outstanding pursuant to other Senior Indebtedness of the
Company or any Restricted Subsidiary;
(4) the Board of Directors of the Company determines in good faith that the
Company or such Restricted Subsidiary, as applicable, would receive fair
market value in consideration of such Asset Sale; and
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(5) immediately after giving PRO FORMA effect to such Asset Sale, the Company
would be in compliance with the provisions of "--Minimum Coverage Ratio"
below.
The Indenture will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set
forth in (1) (b) above exceeds $5,000,000 and that each Asset Sale Offer shall
remain open for 20 Business Days following its commencement and no longer,
except as otherwise required by applicable law (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, the Company shall apply the
Asset Sale Offer Amount, plus an amount equal to accrued interest, to the
purchase of all Indebtedness properly tendered (on a PRO RATA basis as described
above if the Asset Sale Offer Amount is insufficient to purchase all
Indebtedness so tendered) at the Asset Sale Offer Price (together with accrued
interest).
Notwithstanding the foregoing provisions of the second preceding paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with "--Limitation on Merger, Sale or Consolidation" below;
(iii) the Company and its Restricted Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Restricted Subsidiary, as
applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets (other than FCC
licenses) to the Company or any of its Restricted Subsidiaries other than to
any Non-Recourse Restricted Subsidiary if, with respect to any such
conveyance, sale, lease, transfer, assignment or other disposition to any
Restricted Subsidiary that is not a Guarantor or the stock of which has not
been pledged pursuant to the Security Agreement, immediately after giving
PRO FORMA effect thereto the Company would be in compliance with the
provisions of "--Minimum Coverage Ratio" below; and
(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a financial
point of view to the Company or such Restricted Subsidiary of the proposed
transaction), exchange all or a portion of its property, businesses or
assets for property, businesses or assets which are, or Capital Stock of a
Person all or substantially all of whose assets are, of a type used in a
Related Business (provided that such Person shall initially be designated a
Restricted Subsidiary if such Person becomes a Subsidiary of the Company by
virtue of such Asset Sale), or a combination of any such property,
businesses or assets, or Capital Stock of such a Person and cash or Cash
Equivalents; PROVIDED, HOWEVER, that (a) there shall not exist immediately
prior or subsequent thereto a Default or an Event of Default; (b) a majority
of the independent directors of the Board of Directors of the Company shall
have approved a Board Resolution that such exchange is fair to the Company
or such Restricted Subsidiary, as the case may be; (c) any cash or Cash
Equivalents received pursuant to any such exchange shall be applied in the
manner applicable to Net Cash Proceeds from an Asset Sale as set forth
pursuant to the provisions of the immediately preceding paragraph of this
covenant; (d) immediately after giving PRO FORMA effect thereto, the Company
would be in compliance with the provisions of "--Minimum Coverage Ratio"
below; and (e) any Capital Stock of a Person received in an Asset Sale
pursuant to this clause (v) shall be owned directly by the Company or a
Restricted Subsidiary, and, when combined with the Capital Stock of such
Person already owned by the Company and its Restricted
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Subsidiaries, shall constitute a majority of the voting power and Capital
Stock of such Person, unless (A) (I) the Company has received a binding
commitment from such Person (or the direct or indirect parent of such
Person) that such Person (or the direct or indirect parent of such Person)
will distribute to the Company in cash an amount equal to the Company's
Annualized Operating Cash Flow (determined as of the date of such Asset
Sale) attributable to the property, business or assets of the Company and
its Restricted Subsidiaries exchanged in connection with such Asset Sale
during each consecutive 12-month period subsequent to such Asset Sale
(unless and until the Company shall have sold all of such Capital Stock,
provided that the provisions of clause (B) below, if applicable, shall have
been satisfied), (II) immediately after such Asset Sale the aggregate number
of Net Pops of the Cellular Systems in which the Company or any of its
Restricted Subsidiaries has ownership interests ("Company Systems") that are
owned directly by a Person or Persons a majority of whose voting power and
Capital Stock is owned directly or indirectly by the Company is no less than
80% of the aggregate number of Net Pops of Company Systems immediately prior
to such Asset Sale and (III) upon consummation of such Asset Sale, on a PRO
FORMA basis, the ratio of such Person's Annualized Operating Cash Flow to
the product of Consolidated Interest Expense for the Reference Period
multiplied by four (but excluding from Consolidated Interest Expense all
amounts that are not required to be paid in cash on a current basis) shall
be at least 1.0 to 1, or (B) in the case of Capital Stock of a Person that
is not a Subsidiary of the Company owned by the Company or a Restricted
Subsidiary that is exchanged (the "Exchanged Capital Stock") for Capital
Stock of another Person all or substantially all of whose assets are of a
type used in a Related Business, either (i) the Exchanged Capital Stock
shall not have been acquired prior to such Asset Sale in reliance upon
clause (A) of this proviso or (ii) the requirements of subclauses (A) (I)
(based on the original guaranteed cash flow) and (A) (III) shall be
satisfied with respect to any Capital Stock acquired in consideration of the
Exchanged Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of "--Limitation on Restricted Payments" above, without giving effect to
clause (i) of the second paragraph thereof, shall not be deemed to be Asset
Sales.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
MINIMUM COVERAGE RATIO.
So long as any of the Notes remain outstanding, neither the Company nor any
of its Restricted Subsidiaries may make any Asset Sale (other than any Asset
Sale described in clauses (i), (ii) or (iii) of the second paragraph of "--
Limitation on Asset Sales and Sales of Subsidiary Stock" above), or issue any
Permitted Pari Passu Secured Indebtedness that is secured by the Collateral
unless immediately after giving effect to any such Asset Sale or issuance, on a
PRO FORMA basis, the sum of the aggregate principal amount of the Notes plus the
aggregate principal amount (or the aggregate accreted amount in the case of
Permitted Pari Passu Secured Indebtedness, if any, with an original issue
discount) of any Permitted Pari Passu Secured Indebtedness that is secured by
the Collateral then outstanding (such sum, the "Secured Indebtedness") shall be
less than or equal to the sum of (i) the aggregate amount of cash collateral and
Eligible Investments held in the Collateral Account and (ii) the product of (a)
the aggregate number of Net Pops of the MSAs and RSAs in the Collateral Pool and
(b) $175 (the sum of the items described in clauses (i) and (ii), the "Minimum
Collateral Value").
The term "Collateral Pool" shall mean as of any date each MSA or RSA for
which the Company or any Guarantor (other than a Non-Recourse Restricted
Subsidiary) has obtained a license from the FCC to operate a domestic public
cellular mobile radio telecommunications system (each, a "Cellular System");
PROVIDED, HOWEVER, that (a) to the extent that a Lien thereon can be perfected
solely by filing a financing statement in the applicable jurisdictions, the
Company has granted to the Trustee pursuant to the Security
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Agreement as of the Issue Date and not released a perfected Lien (subject to any
Permitted Liens) on all of its property located in such MSA or RSA and (b) in
the event that such license has been granted to a Guarantor (other than a
Non-Recourse Restricted Subsidiary), (1) the Company and such Guarantor, as
applicable, have granted to the Trustee pursuant to the Security Agreement and
not released a perfected Lien (subject to any Permitted Liens) on all of the
issued and outstanding shares of Capital Stock of such Guarantor owned by the
Company or any of the Restricted Subsidiaries, and (2) to the extent that a Lien
thereon can be perfected solely by filing a financing statement in the
applicable jurisdictions, such Guarantor has granted to the Trustee pursuant to
the Security Agreement and not released a perfected Lien (subject to any
Permitted Liens) on all of its property and assets located in such MSA or RSA in
each case to the extent contemplated by the Security Agreement; provided that
there shall be excluded from the Collateral Pool any MSA or RSA for which the
FCC license to operate a Cellular System was acquired by the Company or a
Guarantor after the Issue Date and for which the average annual per capita
income was less than $15,000 at the time of such acquisition (as most recently
reported at the time of acquisition by the applicable source cited in the
definition of "Pops").
LIMITATION ON LIENS.
The Indenture will provide that the Company will not and will not permit any
Restricted Subsidiary, directly or indirectly, to Incur or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Permitted Liens.
LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Indenture will prohibit the Company and its Restricted Subsidiaries from
becoming "investment companies" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.
LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Indenture will provide that the Company will not consolidate with or
merge with or into another Person, or sell, lease, convey, transfer or otherwise
dispose of all or substantially all of its and its Restricted Subsidiaries'
assets (computed on a consolidated basis), whether in a single transaction or a
series of related transactions, to another Person or group of affiliated
Persons, unless (i) either (a) the Company is the continuing entity or (b) the
resulting surviving or transferee entity is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of the
Company in connection with the Notes, the Indenture and the Security Documents;
PROVIDED, HOWEVER, that in the case of a sale, lease, conveyance, transfer or
other disposition of all or substantially all of the Company's and its
Restricted Subsidiaries' assets, the provisions of this clause (i)(b) need not
be met if all of the consideration in respect of such transaction is received by
the Company and its Restricted Subsidiaries (other than any Non-Recourse
Restricted Subsidiary); (ii) no Default or Event of Default shall exist or shall
occur immediately after giving effect on a PRO FORMA basis to such transaction;
(iii) (a) immediately after giving effect to such transaction on a PRO FORMA
basis, the consolidated resulting surviving or transferee entity (or, in the
case contemplated by the proviso to clause (i)(b), the Company) would
immediately thereafter be permitted to Incur at least $1.00 of additional
Indebtedness pursuant to the Annualized Operating Cash Flow Ratio provision set
forth in the second paragraph of "--Limitation on Incurrence of Additional
Indebtedness" above or (b), if the requirement of clause (a) is not satisfied,
(x) any Indebtedness of the resulting surviving or transferee entity (or, in the
case contemplated by the proviso to clause (i)(b), the Company) in excess of the
amount of the Company's Indebtedness immediately prior to such transaction is
Permitted Acquisition Indebtedness and (y) the requirement of clause (a) is not
satisfied solely due to the Incurrence of such Permitted Acquisition
Indebtedness; (iv) immediately after giving PRO FORMA effect thereto the Secured
Indebtedness of the consolidated resulting surviving or transferee entity (or,
in the case contemplated by the proviso to
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clause (i)(b), of the Company) would either (x) not exceed the Minimum
Collateral Value of the consolidated resulting surviving or transferee entity
(or, in the case contemplated by the proviso to clause (i)(b), of the Company)
or (y) not exceed such Minimum Collateral Value by an amount greater than the
Secured Indebtedness of the Company exceeded the Minimum Collateral Value of the
Company and its Restricted Subsidiaries immediately prior to such transaction;
and (v) the Company shall have delivered to the Trustee an Officers' Certificate
and an opinion of counsel, if applicable, confirming compliance with the
requirements of this covenant.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall (other than as provided in the proviso to
clause (i)(b) of the preceding paragraph) succeed to, and be substituted for,
and may exercise every right and power of, the Company under the Indenture with
the same effect as if such successor corporation had been named therein as the
Company, and the Company shall be released from the obligations under the Notes
and the Indenture.
LIMITATION ON LINES OF BUSINESS.
The Indenture will provide that neither the Company nor any of its
Restricted Subsidiaries shall directly or indirectly engage in any line or lines
of business activity other than that which, in the reasonable, good faith
judgment of the Board of Directors of the Company, is a Related Business.
RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK.
The Indenture will provide that the Company will not sell, and will not
permit any of its Restricted Subsidiaries to issue or sell, any shares of
Capital Stock of any Restricted Subsidiary of the Company to any Person other
than the Company or a Wholly Owned Restricted Subsidiary of the Company, except
for shares of common stock with no preferences or special rights or privileges
and with no redemption or prepayment provisions ("Special Rights"); PROVIDED,
HOWEVER, that, in the case of a Restricted Subsidiary that is a partnership or
joint venture partnership (a "Restricted Partnership") the Company or any of its
Restricted Subsidiaries may sell or such Restricted Partnership may issue or
sell Capital Stock of such Restricted Partnership with Special Rights no more
favorable than those held by the Company or such Restricted Subsidiary in such
Restricted Partnership.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction; PROVIDED, HOWEVER, that the
Company may enter into a Sale and Leaseback Transaction if (i) the Company could
have (a) Incurred Indebtedness (other than Indebtedness described in the third
paragraph (other than clause (vi) thereof) of "-- Limitation on Incurrence of
Additional Indebtedness" above) in an amount equal to the Attributable Debt
relating to such Sale and Leaseback Transaction in compliance with "--Limitation
on Incurrence of Additional Indebtedness" above and (b) Incurred a Lien to
secure such Indebtedness in compliance with the "--Limitation on Liens" above,
(ii) the gross cash proceeds of such Sale and Leaseback Transaction are at least
equal to the fair market value (as determined in good faith by the Board of
Directors of the Company and set forth in an Officers' Certificate delivered to
the Trustee) of the property that is the subject of such Sale and Leaseback
Transaction and (iii) the transfer of assets in such Sale and Leaseback
Transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the provisions of "--Limitation on Asset Sales
and Sales of Subsidiary Stock" above.
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SEPARATE ACCOUNT
The Indenture will provide that on the Issue Date, the Company will deposit
$80,000,000 of cash into a separate account (which may but need not be the
Collateral Account), which amount may only be used by the Company (i) for
acquisitions or (ii) to purchase, redeem or otherwise acquire or retire for
value or make any payment of principal, interest or premium in respect to the
Notes or any Permitted Pari Passu Secured Indebtedness.
REPORTS
The Indenture will provide that whether or not the Company is subject to the
reporting requirements of Section 13 or 15 (d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder, within 15 days after it is or
would have been required to file such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if the Company was
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the Commission, and in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required. In addition, for so long as any Notes remain outstanding,
the Company will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial holder of the Notes, if not obtainable from the Commission,
information of the type that would be filed with the Commission pursuant to the
foregoing provisions, upon the request of any such holder.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when the same
becomes due and payable and the continuance of any such failure for 30 days;
(ii) the failure by the Company to pay all or any part of the principal, or
premium, if any, on the Notes when and as the same become due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, payment of the Change of Control Purchase Price or the Asset Sale
Offer Price; (iii) the failure by the Company or any Guarantor to observe or
perform any other covenant or agreement contained in the Notes or the Indenture
and, subject to certain exceptions, the continuance of such failure for a period
of 30 days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding; (iv) certain events of bankruptcy, insolvency
or reorganization in respect of the Company or any of the Company's Significant
Restricted Subsidiaries; (v) the failure to pay at final stated maturity (giving
effect to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary of the
Company or the acceleration of the final stated maturity of any Indebtedness if
the aggregate principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal at
final maturity or which has been accelerated, aggregates $15,000,000 or more at
any time, except that such dollar amount shall not apply to any Permitted Pari
Passu Secured Indebtedness that is secured by the Collateral; (vi) final
unsatisfied judgments not covered by insurance aggregating in excess of
$5,000,000, at any one time rendered against the Company or any of the Company's
Restricted Subsidiaries and not stayed, bonded or discharged within 60 days;
(vii) the failure of any Guarantee to be in full force and effect or declaration
of any Guarantee to be null and void and unenforceable or finding of any
Guarantee to be invalid or denial by any Guarantor of its liability under its
Guarantee (other than by reason of release of such Guarantor in accordance with
the terms of the Indenture); and (viii) the failure of any of the Security
Documents to be in full force and effect or to give the Trustee the Liens,
rights, powers and privileges purported to be created thereby. The Indenture
will provide that if a default occurs and is continuing, the
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Trustee must, within 90 days after the occurrence of such default, give to the
Holders notice of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) above relating to the Company or any
Significant Restricted Subsidiary), then in every such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of 25% in aggregate principal amount of the Notes
then outstanding, by notice in writing to the Company (and to the Trustee if
given by Holders) may declare all principal and accrued interest thereon to be
due and payable and the same shall become immediately due and payable. If an
Event of Default specified in clause (iv) above, relating to the Company or any
Significant Restricted Subsidiary occurs, all principal and accrued interest
thereon will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of Trustee or the Holders. The Holders of a
majority in aggregate principal amount of Notes generally are authorized to
rescind such acceleration if all existing Events of Default, other than the
non-payment of the principal of, premium, if any, and interest on the Notes
which have become due solely by such acceleration, have been cured or waived.
The Indenture will provide that in the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (v) of the first paragraph under "--Events of Default and Remedies," the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of all Indebtedness described in clause (v) (without any payment to any
holders of any such Indebtedness) have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Notes would not conflict
with any judgment or decree of a court of competent jurisdiction and (ii) all
Events of Default, except nonpayment of principal interest on the Notes that
became due solely because of the acceleration of the Notes, have been cured or
waived.
The Holders of a majority in aggregate principal amount of the Notes at the
time outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of or interest on any Note not yet cured, or
a default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holders of a greater specified percentage of
the aggregate principal amount of the Notes then outstanding without the consent
of such greater percentage. Subject to the provisions of the Indenture relating
to the duties of the Trustee, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that the Company may, at its option and at any
time, elect to have its obligations and the obligations of the Guarantors
discharged with respect to the outstanding Notes, Guarantees and Security
Documents ("Legal Defeasance"). Such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented,
and the Indenture, Guarantees and Security Documents shall cease to be of
further effect, except as to (i) rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due from the trust funds; (ii) the Company's obligations with
respect to such Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or
agency for payment and money for security payments held in trust; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and the Company's
obligations in connection therewith; and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with
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respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including nonpayment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"--Events of Default and Remedies " above will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, U.S. Legal Tender, non-callable
government securities or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on such Notes on the stated date for payment thereof or on the applicable
Redemption Date of such principal or installment of principal of, premium,
if any, or interest on such Notes, and the Holders of Notes must have a
valid, perfected, exclusive security interest in such trust;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (a) the Company has received from,
or there has been published by the Internal Revenue Service, a ruling or (b)
since the date of the Indenture, there has been a change in the applicable
Federal income tax law, in each case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of such Notes will
not recognize income, gain or loss for Federal income tax purposes as a
result of such Legal Defeasance, and will be subject to Federal income tax
in the same amount, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of such
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(iv) no Default or Event of Default (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit
or such deposit) shall have occurred and be continuing on the date of such
deposit or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the
date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of such Notes over any other creditors of
the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating
to the Legal Defeasance or the Covenant Defeasance have been complied with.
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AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting the Company, the Guarantors
and the Trustee to enter into a supplemental indenture for certain limited
purposes without the consent of the Holders. With the consent of the Holders of
not less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, the Guarantors and the Trustee are permitted to amend
or supplement the Indenture or any supplemental indenture or modify the rights
of the Holders; provided, however, that no such modification may, without the
consent of each Holder affected thereby: (i) change the Stated Maturity of any
Note, or reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any Note
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or reduce the Change of Control Purchase Price or the Asset Sale Offer
Price or alter redemption provisions or the provisions (or the definitions
related thereto) of "--Certain Covenants--Repurchase of Notes at the Option of
the Holder Upon a Change of Control" above in a manner adverse to the Holders,
or (ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture, or (iii) modify any of the
waiver provisions, except to increase any required percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Note affected thereby. With the
consent of Holders of two-thirds of the aggregate principal amount of the Notes
at the time outstanding, the Company and the Trustee are permitted to change the
Change of Control Purchase Date or the Asset Sale Offer Period.
In addition, no waiver or amendment may permit (x) a release of Collateral
(not otherwise permitted under the Security Documents) that relates to more than
25% of the fair market value of the Collateral (as determined in good faith by
the Company's Board of Directors) without the consent of the Holders of 66 2/3%
of the aggregate principal amount of Notes then outstanding or (y) the release
(not otherwise permitted under the Security Documents) of all or substantially
all of the Collateral or any amendment of or modification to the Indenture or
the Security Documents that has the substantial effect thereof without the
consent of Holders of 75% of the aggregate principal amount of Notes then
outstanding.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company or any
Guarantor or any successor entity shall have any personal liability in respect
of the obligations of the Company or any Guarantor or any successor entity under
the Indenture, the Notes or any Guarantee by reason of his or its status as such
stockholder, employee, officer or director.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms contained in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"AFFILIATE" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the
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voting common equity of such Person (on a fully diluted basis) or of warrants or
other rights to acquire such equity (whether or not presently exercisable).
"ANNUALIZED OPERATING CASH FLOW" on any date, means with respect to any
Person the Operating Cash Flow for the Reference Period multiplied by four.
"ANNUALIZED OPERATING CASH FLOW RATIO" on any date (the "Transaction Date")
means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving PRO FORMA effect to the Incurrence of any Indebtedness on
such Transaction Date) divided by (ii) the aggregate amount of Annualized
Operating Cash Flow of such Person (determined on a PRO FORMA basis after giving
effect to all acquisitions or dispositions of businesses made by such Person and
its Subsidiaries from the beginning of the Reference Period through the
Transaction Date as if such acquisition or disposition had occurred at the
beginning of such Reference Period); PROVIDED that for purposes of such
computation, in calculating Annualized Operating Cash Flow and consolidated
Indebtedness, (a) the transaction giving rise to the need to calculate the
Annualized Operating Cash Flow Ratio will be assumed to have occurred (on a PRO
FORMA basis) on the first day of the Reference Period; (b) the Incurrence of any
Indebtedness during the Reference Period or subsequent thereto and on or prior
to the Transaction Date (and the application of the proceeds therefrom to the
extent used to retire Indebtedness or to acquire businesses) will be assumed to
have occurred (on a PRO FORMA basis) on the first day of such Reference Period;
(c) Consolidated Interest Expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be computed
as if the rate in effect on the Transaction Date had been the applicable rate
for the entire period; (d) all members of the consolidated group of such Person
on the Transaction Date that were acquired during the Reference Period or
thereafter and on or prior to the Transaction Date shall be deemed to be members
of the consolidated group of such Person for the entire Reference Period; and
(e) consolidated Indebtedness shall include any Indebtedness constituting
Permitted Parent Securities to the extent that the aggregate outstanding amount
thereof exceeds $153.4 million; PROVIDED, HOWEVER, that with respect to any such
Indebtedness, the amount thereof included pursuant to this clause (e) as of any
date shall be limited to the proportion of such Indebtedness, if any, that is
equal to the proportion of the interest on such Indebtedness that as of the most
recent interest payment date in respect thereof was paid with cash distributed
by the Company pursuant to clause (ii) of the second paragraph of "--Certain
Covenants -- Limitation on Restricted Payments" above. When the foregoing
definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at June 15, 2002 (such redemption price being described under "--Optional
Redemption") above, PLUS (2) all remaining required interest payments (excluding
accrued but unpaid interest) due on such Note through June 15, 2002, computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (B)
the then outstanding principal amount of such Note.
"ASSET SALE" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER PERIOD" has the meaning set forth under "--Certain
Covenants -- Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER PRICE" has the meaning set forth under "--Certain
Covenants -- Limitation on Asset Sales and Sales of Subsidiary Stock" above.
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"ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback Transaction means, as
of the time of determination, the present value (discounted at the interest rate
borne by the Notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended).
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITAL STOCK" means, with respect to any Person, any capital stock of such
Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"CAPITALIZED LEASE OBLIGATIONS" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's
and in each case maturing within one year after the date of acquisition and
(iii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) and (ii) above.
"CELLULAR SYSTEM" has the meaning set forth in "--Certain Covenants --
Minimum Coverage Ratio" above.
"CHANGE OF CONTROL" means (i) other than any transaction in which the
resulting transferee Person need not assume the Notes as provided in the proviso
to clause (i)(b) of "--Certain Covenants-- Limitation on Merger, Sale or
Consolidation" above, any sale, transfer or other conveyance, whether direct or
indirect, of a majority of the fair market value of the assets of the Company or
Parent, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable), other than an Excluded
Person or Excluded Group, is or becomes the "beneficial owner" (as such term is
used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly or
indirectly, of more than 50% of the equity of the transferee, (ii) any person or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable), other than an Excluded Person or
Excluded Group, is or becomes the "beneficial owner" (as such term is used in
Rule 13d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of
more than 50% of the equity of the Company or Parent then outstanding normally
entitled to vote in elections of directors, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company or Parent
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company or Parent was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute at
least a majority of the Board of Directors of the Company or Parent then in
office.
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"CHANGE OF CONTROL OFFER" has the meaning set forth under "--Certain
Covenants -- Repurchase of Notes at the Option of the Holder upon a Change of
Control" above.
"CHANGE OF CONTROL OFFER PERIOD" has the meaning set forth under "--Certain
Covenants -- Repurchase of Notes at the Option of the Holder upon a Change in
Control" above.
"CHANGE OF CONTROL PURCHASE PRICE" has the meaning set forth under
"--Certain Covenants -- Repurchase of Notes at the Option of the Holder upon a
Change in Control" above.
"CHANGE OF CONTROL PUT DATE" means the earlier of (a) the third Business Day
prior to the Change of Control Purchase Date and (b) the third Business Day
following the expiration of the Change of Control Offer.
"COLLATERAL" has the meaning set forth under "--Security and Ranking of the
Notes" above.
"COLLATERAL ACCOUNT" means an account maintained with the Trustee or with
any financial institution into which cash collateral and Eligible Investments
securing the Notes are deposited pursuant to the terms of the Security
Agreement.
"COLLATERAL POOL" has the meaning set forth under "--Certain Covenants --
Minimum Coverage Ratio" above.
"COMPANY SYSTEMS" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"COMPUTATION PERIOD" has the meaning set forth under "--Certain Covenants --
Limitation on Restricted Payments" above.
"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (i) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to the Capitalized Lease Obligations) of such Person and
its consolidated Subsidiaries during such period, including (a) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (b) the
interest portion of all deferred payment obligations, and (c) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptances
and letters of credit financings and currency and Interest Swap and Hedging
Obligations, in each case to the extent attributable to such period, and (ii)
the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"CONSOLIDATED NET INCOME" of any Person for any period means the net income
(or loss) of such Person and its consolidated Subsidiaries for such period,
determined (on a consolidated basis) in accordance with GAAP, adjusted to
exclude (only to the extent included in computing such net income (or loss) and
without duplication) (i) all extraordinary gains and losses and gains and losses
that are nonrecurring (including as a result of Asset Sales outside the ordinary
course of business), (ii) the net income, if positive, of any Person that is not
a Subsidiary in which such Person or any of its Subsidiaries has an interest,
except to the extent of the amount of dividends or distributions actually paid
to such Person or a Subsidiary of such Person that both (a) are actually paid in
cash to such Person or a Subsidiary of such
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Person during such period and (b) when taken together with all other dividends
and distributions paid during such period in cash to such Person or a Subsidiary
of such Person, are not in excess of such Person's PRO RATA share of such other
Person's aggregate net income earned during such period, (iii), except as
provided in the definition of "Annualized Operating Cash Flow Ratio" above the
net income (or loss) of any Subsidiary acquired in a pooling of interests
transaction for any period prior to the date of such acquisition and (iv) the
net income, if positive, of any Subsidiary of such Person (other than a Non-
Recourse Restricted Subsidiary) to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or any agreement or instrument applicable to such
Subsidiary. When the foregoing definition is used in connection with the Company
and its Restricted Subsidiaries, references to a Person and its Subsidiaries in
the foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"COVENANT DEFEASANCE" has the meaning set forth under "--Legal Defeasance
and Covenant Defeasance" above.
"DEFAULT" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"DISQUALIFIED CAPITAL STOCK" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity; PROVIDED, HOWEVER, that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of the Company or Parent.
"DLJ POP BOOK" means The Wireless Communications Industry survey published
by Donaldson, Lufkin & Jenrette Securities Corporation.
"ELIGIBLE INVESTMENTS" means (a) direct obligations of the United States of
America, or of any agency thereof, or obligations guaranteed as to principal and
interest by the United States of America, or by any agency thereof, in either
case maturing not more than one year from the date of acquisition thereof by
such Person; (b) time deposits, certificates of deposit or bankers' acceptances
(including eurodollar deposits) issued by any bank or trust company organized
under the laws of the United States of America or any state thereof and having
capital, surplus and undivided profits of at least $500 million and a deposit
rating of investment grade; (c) commercial paper rated A-1 or better by S&P or
P-1 or better by Moody's, respectively, maturing not more than 180 days from the
date of acquisition thereof by such Person; (d) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (a) above entered into with a bank meeting the qualifications
described in clause (b) above; (e) securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least A by S&P or A by
Moody's; or (f) money market mutual funds that invest primarily in the foregoing
items.
"EQUITY OFFERING" means with respect to any Person, the sale or offering of
any Capital Stock of such Person that is not Disqualified Capital Stock.
"EXCHANGE CAPITAL STOCK" has the meaning set forth under "--Certain
Covenants -- Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"EXCLUDED GROUP" means a "group" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) that includes one or more Excluded Persons; PROVIDED,
HOWEVER, that the voting power of the Capital Stock of the Company or Parent
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Capital
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Stock "beneficially owned" (as such term is used in Rule 13d-3 promulgated under
the Exchange Act) by such group.
"EXCLUDED PERSON" means Robert Price, Parent (so long as not controlled by
anyone other than Robert Price) and any Affiliate of any of the foregoing that
is wholly owned by any of the foregoing.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; PROVIDED, HOWEVER, that for purposes of determining
compliance with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles as in effect as of the Issue Date.
"GUARANTEE" has the meaning set forth under "--Guarantees" above.
"GUARANTORS" means each Restricted Subsidiary of the Company (other than a
Non-Recourse Restricted Subsidiary) that has executed and delivered the
Indenture or a supplement thereto to become a Guarantor, and "Guarantor" means
any of them.
"HOLDER" means a Person in whose name a Note is registered. The Holder of a
Note will be treated as the owner of such Note for all purposes.
"HOLDINGS" means Price Communications Cellular Holdings, Inc., a Delaware
corporation, and its successors and assigns.
"INCUR" has the meaning set forth under "--Certain Covenants --Limitation on
Incurrence of Additional Indebtedness" above.
"INDEBTEDNESS" of any Person means, without duplication, (i) all liabilities
and obligations, contingent or otherwise, of such Person, (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (b) evidenced by bonds,
notes, debentures or similar instruments, (c) representing the balance deferred
and unpaid of the purchase price of any property or services, except (other than
accounts payable or other obligations to trade creditors which have remained
unpaid for more than 90 days past their original due date or to financial
institutions, which obligations are not being contested in good faith and for
which appropriate reserves have not been established) those Incurred in the
ordinary course of its business that would constitute ordinarily a trade payable
to trade creditors, (d) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks, (e) for the payment of money relating to a
Capitalized Lease Obligation, or (f) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(ii) all obligations of such Person under Interest Swap and Hedging Obligations;
(iii) all liabilities of others of the kind described in the preceding clauses
(i) or (ii) that such Person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such Person and all
obligations to purchase, redeem or acquire any Capital Stock; (iv) all
Disqualified Capital Stock of such Person and all Preferred Stock of such
Person's Subsidiaries; and (v) any and all deferrals, renewals, extensions,
refinancing and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (i), (ii), (iii), or (iv) or this clause (v), whether or
not between or among the same parties; provided that the outstanding principal
amount at any date of any Indebtedness issued with original issue discount is
the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such date.
"INTERCREDITOR AGREEMENT" has the meaning set forth under "--Intercreditor
Agreement" above.
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"INTEREST SWAP AND HEDGING OBLIGATIONS" means any obligations of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of the
Indenture, the amount of such obligations shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such obligation had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement
relating to such obligation provides for the netting of amounts payable by and
to such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligations shall be the net amount so determined, plus any premium due
upon default by such Person.
"INVESTMENT" by any Person in any other Person means (without duplication)
(i) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
Capital Stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of such other Person or any agreement to make any
such acquisition; (ii) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (iii) the
entering into by such Person of any guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of such other Person; (iv) the
making of any capital contribution by such Person to such other Person; and (v)
the designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of "-- Certain Covenants--Limitation on
Restricted Payments" above, (x) "Investment" shall include and be valued at the
fair market value of the net assets of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary and (y) the amount of any Investment shall be the fair
market value of such Investment plus the fair market value of all additional
Investments by the Company or any of its Restricted Subsidiaries at the time any
such Investment is made; PROVIDED, HOWEVER that, for purposes of this sentence,
the fair market value of net assets in excess of $5,000,000 shall be as
determined by an independent appraiser of national reputation.
"ISSUE DATE" means the time and date of the first issuance of the Notes
under the Indenture.
"JUNIOR INDEBTEDNESS" means Indebtedness of the Company that (i) requires no
payment of principal prior to or on the date on which all principal of and
interest on the Notes is paid in full and (ii) is subordinate and junior in
right of payment to the Notes in all respects.
"LEGAL DEFEASANCE" has the meaning set forth under "--Legal Defeasance and
Covenant Defeasance" above.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
"LIEN" means any mortgage, lien, pledge, charge, security interest, or other
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest).
"MATURITY DATE" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of the Indenture regarding acceleration of
Indebtedness or any Change of Control Offer, Proceeds Purchase Offer or Asset
Sale Offer).
"MINIMUM COLLATERAL VALUE" has the meaning set forth under "--Certain
Covenants--Minimum Coverage Ratio" above.
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"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means the aggregate amount of cash and Cash Equivalents
received by the Company and its Restricted Subsidiaries in respect of an Asset
Sale (including upon the conversion to cash and Cash Equivalents of (A) any note
or installment receivable at any time, or (B) any other property as and when any
cash and Cash Equivalents are received in respect of any property received in an
Asset Sale but only to the extent such cash and Cash Equivalents are received
within one year after such Asset Sale), less the sum of (i) all reasonable
out-of-pocket fees, commissions and other expenses Incurred in connection with
such Asset Sale, including the amount (estimated in good faith by the Board of
Directors of the Company) of income, franchise, sales and other applicable taxes
required to be paid by the Company or any Restricted Subsidiary of the Company
in connection with such Asset Sale and (ii) the aggregate amount of cash so
received which is used to retire any existing Senior Indebtedness of the Company
or Indebtedness of its Restricted Subsidiaries, as the case may be, which is
required to be repaid in connection with such Asset Sale or is secured by a Lien
on the property or assets of the Company or any of its Restricted Subsidiaries,
as the case may be; PROVIDED, HOWEVER, that the provisions of this clause (ii)
shall not permit any non-pro rata application of the proceeds of any Asset Sale
to Permitted Pari Passu Secured Indebtedness to the disadvantage of the Notes.
"NET POPS" of any Person with respect to any Cellular System means the Pops
of the MSA or RSA served by such Cellular System multiplied by the direct and/or
indirect percentage interest of such Person in the entity licensed or designated
to receive an authorization by the Federal Communications Commission to
construct or operate a Cellular System in that MSA or RSA.
"NET PROCEEDS" means the aggregate net proceeds (including the fair market
value of non-cash proceeds constituting equipment or other assets of a type
generally used in a Related Business, in an amount reasonably determined by the
Board of Directors of the Company for amounts less than or equal to $5,000,000
and by a financial advisor or appraiser of national reputation for greater
amounts) received by a Person from any Equity Offering (other than to a
Subsidiary of such Person) after payment of out-of-pocket expenses, commissions
and discounts Incurred in connection therewith.
"NON-RECOURSE RESTRICTED SUBSIDIARY" has the meaning specified in the
definition of "Permitted Acqusition Indebtedness."
"OBLIGATION" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"OPERATING CASH FLOW" of any Person means (i) with respect to any period,
the Consolidated Net Income of such Person for such period, plus (ii) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (a) the provisions for
income taxes for such period for such Person and its consolidated Subsidiaries,
(b) depreciation, amortization and other non-cash charges of such Person and its
consolidated Subsidiaries and (c) Consolidated Interest Expense of such Person
for such period, determined, in each case, on a consolidated basis for such
Person and its consolidated Subsidiaries in accordance with GAAP, less (iii) the
amount of all cash payments made during such period by such Person and its
Subsidiaries to the extent such payments relate to non-cash charges that were
added back in determining Operating Cash Flow for such period or for any prior
period. When the foregoing definition is used in connection with the Company and
its Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"PARENT" means PCC or any direct or indirect Wholly Owned Subsidiary of PCC
that directly or indirectly wholly owns the Company.
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"PARENT INDENTURE" means the indenture dated as of August 7, 1997, by and
between Holdings and Bank of Montreal Trust Company, as trustee, under which the
Parent Notes were issued.
"PARENT NOTES" means the 13-1/2% Senior Secured Discount Notes due 2007 of
Holdings.
"PCC" means Price Communications Corporation, a New York corporation, and
its successors and assigns.
"PERMITTED ACQUISITION INDEBTEDNESS" means, with respect to any Person,
Indebtedness Incurred in connection with the acquisition of property, businesses
or assets which, or Capital Stock of a Person all or substantially all of whose
assets, are of a type generally used in a Related Business; PROVIDED, HOWEVER,
that, in the case of the Company or its Restricted Subsidiaries, as applicable,
(x) (i) the Company's Annualized Operating Cash Flow Ratio, after giving effect
to such acquisition and such Incurrence on a PRO FORMA basis, is no greater than
such ratio prior to giving PRO FORMA effect to such acquisition and such
Incurrence; (ii) the Company's consolidated Indebtedness, divided by the Net
Pops of the Company and its Restricted Subsidiaries, in each case giving PRO
FORMA effect to the acquisition and such Incurrence, does not exceed $175; (iii)
after giving effect to such acquisition and such Incurrence the acquired
property, businesses or assets or such Capital Stock is owned directly by the
Company or a Wholly Owned Restricted Subsidiary of the Company or (y) (i) under
the terms of such Indebtedness and pursuant to applicable law, no recourse could
be had for the payment of principal, interest or premium with respect to such
Indebtedness or for any claim based thereon against the Company or any
Restricted Subsidiary of the Company other than the obligor of such Indebtedness
and its Subsidiaries or any of their property or assets other than the Capital
Stock of such obligor or its Subsidiaries, (ii) the obligor of such Indebtedness
shall have, immediately after giving effect to such acquisition and such
Incurrence on a PRO FORMA basis, a ratio of Annualized Operating Cash Flow as of
the date of such acquisition and Incurrence to the product of Consolidated
Interest Expense for the Reference Period multiplied by four (but excluding from
Consolidated Interest Expense all amounts that are not required to be paid in
cash on a current basis) of at least 1.0 to 1, (iii) since the Issue Date no
Permitted Investment (other than as permitted by clause (viii) of the definition
of "Permitted Investment" below) shall have been made in such obligor or its
Subsidiaries and (iv) immediately subsequent to the Incurrence of such
Indebtedness, the obligor thereof shall be a Restricted Subsidiary and shall
have been designated by the Company (as evidenced by an Officers' Certificate
delivered promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary."
"PERMITTED INVESTMENT" means (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "Acquired Person")
if, as a result of such Investments, (a) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or (b) the Acquired Person immediately thereupon either (1) is
merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
"--Certain Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock"
above; (vi) any guarantee issued by a Restricted Subsidiary Incurred in
compliance with the Indenture; (vii) advances and prepayments for asset
purchases in the ordinary course of business in a Related Business of the
Company or a Restricted Subsidiary; (viii) Investments in Non-Recourse
Restricted Subsidiaries with the proceeds of contributions irrevocably and
unconditionally received without restriction by the Company from any Parent; and
(ix) customary loans or advances made
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in the ordinary course of business to officers, directors or employees of the
Company or any of its Restricted Subsidiaries for travel, entertainment, and
moving and other relocation expenses.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business;
PROVIDED, HOWEVER, that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature Incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (f) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under the Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not Incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary or is merged with or into the Company or
a Restricted Subsidiary; PROVIDED, HOWEVER, that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
Incurred in anticipation thereof, and do not extend to any other assets; (k)
Liens arising from Purchase Money Indebtedness permitted under the Indenture;
(l) Liens securing Refinancing Indebtedness Incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders than the terms of the Liens securing such refinanced Indebtedness; (m)
Liens in favor of the Company or a Wholly Owned Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary); (n) Liens securing any Permitted
Pari Passu Secured Indebtedness Incurred in accordance with the provisions of
"-- Certain Covenants--Limitation on Incurrence of Additional Indebtedness"
above; PROVIDED, HOWEVER, that (A) the aggregate principal amount of the Secured
Indebtedness as of the date of issuance of such series of Permitted Pari Passu
Secured Indebtedness on a PRO FORMA basis is less than or equal to the Minimum
Collateral Value, (B) the indenture and the related documents for each such
series of Permitted Pari Passu Secured Indebtedness contains provisions with
respect to releases of Collateral that are substantially similar to and no more
restrictive on the Company than the provisions of the Indenture and the Security
Agreement and (C) the trustee for the holders of each series of Permitted Pari
Passu Secured Indebtedness executes and delivers a joinder supplement to the
Intercreditor Agreement; and (o) Liens on assets other than the Collateral
securing Indebtedness (other than Junior Indebtedness) permitted to be incurred
under "--Certain Covenants -- Limitation on Incurrence of Additional
Indebtedness" above.
"PERMITTED PARENT SECURITIES" means (i) the Parent Notes, (ii) any
refinancing of the Parent Notes that has a first scheduled cash interest payment
due and payable no earlier than the due date of the first scheduled cash
interest payment of the Indebtedness being refinanced as of the Issue Date and
(iii) any other Indebtedness of Holdings or Parent Incurred after the Issue
Date; PROVIDED, HOWEVER, that (a) the gross proceeds of such Indebtedness do not
exceed $100 million in the aggregate, (b) such Indebtedness has a first
scheduled cash interest payment due and payable no earlier that the due date of
the first scheduled cash interest payment of the Indebtedness described in
clauses (i) or (ii) above and (c) the net proceeds of such Indebtedness are
contributed to the Company or its Restricted Subsidiaries and applied
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in a manner permitted by the Indenture. For purposes of this definition, the
term "first scheduled cash interest payment" shall not include any payment date
on which the issuer (i) may elect to pay interest in cash or (ii) is required to
pay interest in cash as a result of such election.
"PERMITTED PARI PASSU SECURED INDEBTEDNESS" has the meaning set forth under
"--Permitted Pari Passu Secured Indebtedness" above.
"PERSON" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory entity
country, state or political subdivision thereof, trust, municipal or other
entity.
"POPS" means, as of any date of determination, the greater of the estimate
of the population of a Metropolitan Statistical Area ("MSA") or Rural Service
Area ("RSA") derived from (i) the most recent Donnelly Market Service and (ii)
the most recent DLJ Pop Book; PROVIDED, HOWEVER, that (x) if such statistics are
no longer printed in either the Donnelly Market Service or the DLJ Pop Book, or
either such source is no longer published, the then currently published source
of the two containing such information shall be used; (y) if such statistics are
no longer printed in either such source, or both sources are no longer
published, the statistics in the most recent Rand McNally Commercial Atlas shall
be used; and (z) if such statistics are no longer printed in the Rand McNally
Commercial Atlas or the Rand McNally Commerical Atlas is no longer published,
another nationally recognized source of such information shall be used.
"PREFERRED STOCK" means Capital Stock, other than common stock of an issuer
having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries, provided
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
the Company or any of its Restricted Subsidiaries.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"RECORD DATE" means the Record Date specified on the Notes whether or not
such Record Date is a Business Day.
"REDEMPTION DATE" when used with respect to any Note to be redeemed means
the date fixed for such redemption pursuant to the Indenture and the Note.
"REDEMPTION PRICE" when used with respect to any Note to be redeemed, means
the redemption price for such redemption pursuant to Article 3 of the Indenture
and Paragraph 5 in the form of Note, which shall include, without duplication,
in each case, any accrued and unpaid interest to the Redemption Date.
"REFERENCE PERIOD" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which the Company shall
use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing") any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
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lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably Incurred in connection with such
refinancing; PROVIDED, HOWEVER that (A) Refinancing Indebtedness issued by any
Restricted Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to be so refinanced at the time
of such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of Holders than was the Indebtedness or
Disqualified Capital Stock to be refinanced and (C) such Refinancing
Indebtedness shall have no installments of principal (or redemption payment)
scheduled to come due earlier than the scheduled maturity of any installment of
principal (or redemption payment) of the Indebtedness or Disqualified Capital
Stock to be so refinanced which was scheduled to come due prior to the Stated
Maturity.
"REGISTRAR" means the office or agency in the Borough of Manhattan, The City
of New York, where the Notes may be presented for registration of transfer or
for exchange.
"RELATED BUSINESS" means any business directly related to the ownership,
development, operation, and acquisition of wireless cellular communications
systems.
"RELATED PERSON" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person describe in clause (i) above has a beneficial interest.
"RELATED PERSON TRANSACTION" has the meaning set forth under "--Certain
Covenants -- Limitation on Transactions with Related Persons" above.
"RESTRICTED PARTNERSHIP" has the meaning set forth under "--Certain
Covenants -- Restriction on Sale and Issuance of Subsidiary Stock" above.
"RESTRICTED PAYMENT" means, with respect to any Person, (i) any dividend or
other distribution on shares of Capital Stock of such Person, its Parent, or any
Subsidiary of such Person, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any shares of
Capital Stock of such Person, its Parent, or any Subsidiary of such Person held
by Persons other than such Person or any of its Restricted Subsidiaries (other
than any Non-Recourse Restricted Subsidiary), (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any Indebtedness
of the Company (other than the scheduled repayment thereof at maturity and any
mandatory redemption or mandatory repurchase thereof pursuant to the terms
thereof) by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks PARI PASSU (other than the Notes) with, the Notes
(other than in exchange for Refinancing Indebtedness permitted to be Incurred
under the Indenture and except for any such defeasance, redemption, repurchase,
other acquisition or payment in respect of Indebtedness held by any Restricted
Subsidiary) and (iv) any Investment (other than a Permitted Investment);
PROVIDED, HOWEVER, that the term "Restricted Payment" does not include (i) any
dividend, distribution or other payment on shares of Capital Stock of the
Company or any Restricted Subsidiary solely in shares of Qualified Capital
Stock, (ii) any dividend, distribution or other payment to the Company, or any
dividend to any of its Restricted Subsidiaries (other than any Non-Recourse
Restricted Subsidiary), by any of its Subsidiaries, and (iii) the purchase,
redemption or other acquisition or retirement for value of shares of
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Capital Stock of any Restricted Subsidiary (other than Non-Recourse Restricted
Subsidiaries) held by Persons other than the Company or any of its Restricted
Subsidiaries.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary. The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if, immediately before and after giving effect to such
designation, there would exist no Default or Event of Default and the Company
could Incur at least $1.00 of Indebtedness pursuant to the Annualized Operating
Cash Flow Ratio test of "--Certain Covenants-- Limitation on Incurrence of
Additional Indebtedness" above, on a PRO FORMA basis taking into account such
designation.
"S&P" means Standard & Poor's Corporation.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement
with any Person or to which any such person is a party providing for the leasing
to the Company or a Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Issue Date or later acquired, which
has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such property.
"SECURED INDEBTEDNESS" shall have the meaning set forth under "--Certain
Covenants -- Minimum Coverage Ratio" above.
"SECURITY AGREEMENT" has the meaning set forth under "--Security" above.
"SECURITY DOCUMENTS" means the Security Agreement, the Intercreditor
Agreement and any other document from time to time entered into by the Company
or any Guarantor to pledge Collateral to the Trustee for its benefit and the
benefit of the Holders.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company or any
Restricted Subsidiary, including the Notes, other than Indebtedness of the
Company or any Restricted Subsidiary as to which the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, provides that
such Indebtedness shall be subordinated or junior in right of payment to the
Notes or the Guarantees, as applicable.
"SENIOR SUBORDINATED NOTES" means the Company's 11-3/4% Senior Subordinated
Notes due 2007.
"SENIOR SUBORDINATED NOTES INDENTURE" means the indenture dated as of July
10, 1997, by and between the Company and Bank of Montreal Trust Company, as
trustee, under which the Senior Subordinated Notes were issued.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of the
net book value of the assets of the Company and its Restricted Subsidiaries on a
consolidated basis.
"SPECIAL RIGHTS" has the meaning set forth under "--Certain Covenants --
Restriction on Sale and Issuance of Subsidiary Stock" above.
"STATED MATURITY" means the date fixed for the payment of any principal or
premium pursuant to the Indenture and the Notes, including the Maturity Date,
upon redemption, acceleration, Asset Sale Offer, Change of Control Offer or
otherwise.
"SUBSIDIARY" with respect to any Person, means (i) a corporation at least
fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more
95
<PAGE>
Subsidiaries of such Person, or such Person and one or more Subsidiaries of such
Person, directly or indirectly, at the date of determination thereof has (x) at
least a fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended from time to time.
"TREASURY RATE" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from
the Redemption Date to June 15, 2002; PROVIDED, HOWEVER, that if the period from
the Redemption Date to June 15, 2002 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the period
from the Redemption Date to June 15, 2002 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"TRUSTEE" means Bank of Montreal Trust Company or any successor appointed
pursuant to the terms of the Indenture.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Company that, at
the time of determination, shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary at or prior to the time it is so
formed or acquired) to be an Unrestricted Subsidiary so long as (i) no Default
or Event of Default is existing or will occur as a consequence thereof, (ii)
such Subsidiary does not own any Capital Stock of, or own or hold any Lien on
any property or asset of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated, (iii) such Subsidiary and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee, or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any property or assets of the Company or any of its Restricted
Subsidiaries (except that such Subsidiary and its Subsidiaries may guarantee the
Notes) and (iv) such Subsidiary is at the time of designation also designated as
an unrestricted subsidiary pursuant to the Senior Subordinated Notes Indenture
and the Parent Indenture; PROVIDED, HOWEVER, that either (A) the Subsidiary to
be so designated has total assets of $1,000 or less or (B) if such Subsidiary
has assets greater than $1,000, that such designation would be permitted under
"--Certain Covenants--Limitation on Restricted Payments" above. Any Subsidiary
of the Company that is designated on the Issue Date as an unrestricted
subsidiary pursuant to the Senior Subordinated Notes Indenture and the Parent
Indenture shall be designated to be an Unrestricted Subsidiary. Each such
designation shall be evidenced by filing with the Trustee a certified copy of
the resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"WEIGHTED AVERAGE LIFE" means, as of the date of determination, with respect
to any debt instrument, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such debt instrument multiplied
by the amount of each such respective principal payment by (ii) the sum of all
such principal payments.
"WHOLLY OWNED" means, with respect to a Subsidiary of the Company, (i) a
Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned
96
<PAGE>
directly by such Person or through one or more other Wholly Owned Subsidiaries
of such Person, or (ii) any entity other than a corporation in which such
Person, directly or indirectly, owns not less than 99% of the Capital Stock of
such entity.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. Holders of Old Notes are entitled to certain
registration rights pursuant to the Registration Rights Agreement. Pursuant to
the Registration Rights Agreement, the Company has agreed to file with the SEC
and have declared effective on or prior to November 12, 1998 a registration
statement (the "Exchange Offer Registration Statement") under the Securities Act
with respect with the Exchange Offer. The Company also agreed that, after the
effectiveness of the Exchange Offer Registration Statement, it would, subject to
certain conditions, offer to the Holders of Old Notes who are able to make
certain representations the opportunity to exchange their Old Notes for New
Notes. In the event that applicable interpretations of the staff of the SEC do
not permit the Company to effect the Exchange Offer ("SEC Blockage") or do not
permit any Holder of Old Notes, subject to certain limitations, to participate
in such Exchange Offer, the Company has agreed to file with the SEC a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
the applicable Old Notes. The Registration Statement of which this Prospectus is
a part constitutes the Exchange Offer Registration Statement.
The Registration Rights Agreement provides that the Company will use its
reasonable best efforts to have the Exchange Offer Registration Statement (and,
if applicable, a Shelf Registration Statement) declared effective by the SEC on
or prior to November 12, 1998. If the Exchange Offer has not been consummated by
December 12, 1998 (unless there exists a SEC Blockage) (such event, a
"Registration Default"), the Company will pay liquidated damages to each Holder
of Old Notes, during the first 90-day period immediately following the
occurrence of such Registration Default in an amount equal to $0.05 per week per
$1,000 principal amount at maturity of Notes constituting Old Notes held by such
Holder. The amount of the liquidated damages will increase by an additional
$0.05 per week per $1,000 of Accreted Value constituting Old Notes for each
subsequent 90-day period until the Exchange Offer is consummated, up to a
maximum amount of liquidated damages of $0.25 per week per $1,000 principal
amount at maturity of Notes constituting Old Notes. All accrued liquidated
damages shall be paid to Holders in the same manner as interest payments on the
Notes and on interest payment dates for the Notes.
The Registration Rights Agreement provides that the Company (i) shall make
available for a period of 90 days after the consummation of the Exchange Offer a
prospectus meeting the requirements of the Securities Act to any broker-dealer
for use in connection with any resale of any such New Notes and (ii) shall pay
all expenses incident to the Exchange Offer (including the expenses of one
counsel to the Holders of the Notes) and will indemnify certain Holders of the
Notes (including any broker-dealer) against certain liabilities, including
liabilities under the Securities Act.
Holders of Old Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
liquidated damages set forth in the preceding sentence. In addition, for so long
as the Notes are outstanding, the Company will continue to provide to Holders of
Notes and to prospective purchasers of the Notes the information required by
Rule 144A(d)(4). The Company will provide a copy of the Registration Rights
Agreement to prospective investors upon request.
97
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any federal income tax consequences to Holders. When a Holder
exchanges an Old Note for a New Note pursuant to the Exchange Offer, the Holder
will have the same adjusted basis and holding period in the New Note as in the
Old Note immediately before the exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a Prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any such broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker-dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal.
The Company has agreed in the Registration Rights Agreement to indemnify
each broker-dealer reselling New Notes pursuant to this Prospectus, and their
officers, directors and controlling persons, against certain liabilities in
connection with the offer and sale of the New Notes, including liabilities under
the Securities Act, or to contribute to payments that such broker-dealers may be
required to make in respect thereof.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements of Price Communications Wireless,
Inc., as of December 31, 1997 and for the period May 29, 1997 through December
31, 1997 and the consolidated statements of operations, stockholders' equity and
cash flows of Palmer Wireless, Inc. for the nine months ended September 30,
1997, included in this Prospectus and elsewhere in this Registration Statement,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect
98
<PAGE>
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
The consolidated balance sheet of Palmer Wireless, Inc. and subsidiaries as
of December 31, 1996 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the two year period
ended December 31, 1996 appearing in this Prospectus and Registration Statement
have been audited by KPMG Peat Marwick LLP, independent auditors, as set forth
in their report thereon appearing elsewhere herein and in the Registration
Statement, and have been included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
This Prospectus constitutes a part of the Registration Statement on Form S-4
under the Securities Act filed by the Company with the SEC under the Securities
Act. As permitted by the rules and regulations of the SEC, this Prospectus does
not contain all of the information contained in the Registration Statement and
the exhibits and schedules thereto and reference is hereby made to the
Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the Notes offered hereby. Statements
contained herein concerning the provisions of any documents filed as an exhibit
to the Registration Statement or otherwise filed with the SEC are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
CERTAIN TERMS
Interests in cellular markets that are licensed by the FCC are commonly
measured on the basis of the population of the market served, with each person
in the market area referred to as a "Pop." The number of Pops or Net Pops owned
is not necessarily indicative of the number of subscribers or potential
subscribers. As used in this Offering Memorandum, unless otherwise indicated,
the term "Pops" means the estimate of the population of a MSA or RSA as derived
from the most recent DLJ Pop Book or if such statistics are no longer printed in
the DLJ Pop Book or the DLJ Pop Book is no longer published, the most recent
Rand McNally Commercial Atlas or if such statistics are no longer printed in the
Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no longer
published, such other nationally recognized source of such information. The term
"Net Pops" means the Pops of the MSA or RSA served by such System multiplied by
the direct and/or indirect percentage interest of such Person in the entity
licensed or designated to receive an authorization by the Federal Communications
Commission to construct or operate a System in that MSA or RSA. MSAs and RSAs
are also referred to as "markets." The term "wireline" license refers to the
license for any market initially awarded to a company or group that was
affiliated with a local landline telephone carrier in the market, and the term
"non-wireline" license refers to the license for any market that was initially
awarded to a company, individual or group not affiliated with any landline
carrier. The term "System" means an FCC-licensed cellular telephone system. The
term "CTIA" means the Cellular Telecommunications Industry Association.
99
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Auditors' Reports.................................................................... F-2
Consolidated Balance Sheets at December 31, 1997 and 1996............................ F-4
Consolidated Statements of Operations for Years ended December 31, 1997, 1996 and
1995............................................................................... F-5
Consolidated Statements of Cash Flows for Years ended December 31, 1997, 1996 and
1995............................................................................... F-6
Consolidated Statements of Stockholder's Equity for Years ended December 31, 1997,
1996 and 1995...................................................................... F-8
Notes to Consolidated Financial Statements........................................... F-9
Condensed Consolidated Balance Sheets--June 30, 1998 and December 31, 1997........... F-25
Condensed Consolidated Statements of Operations--Three months ended June 30, 1998 and
1997 and six months ended June 30, 1998 and 1997................................... F-26
Condensed Consolidated Statements of Stockholder's Equity............................ F-27
Condensed Consolidated Statements of Cash Flows--Six months ended June 30, 1998 and
1997............................................................................... F-28
Notes to Condensed Consolidated Financial Statements................................. F-29
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Price Communications Wireless, Inc.:
We have audited the accompanying consolidated balance sheet of Price
Communications Wireless, Inc. (a Delaware corporation, formerly Palmer Wireless,
Inc.) and subsidiaries as of December 31, 1997, and the related consolidated
statements of operations, stockholders' equity and cash flows for the period May
29, 1997 through December 31, 1997 (post acquisition basis). We have also
audited the accompanying consolidated statements of operations, stockholder's
equity, and cash flows for the nine month period ended September 30, 1997
(pre-acquisition basis). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless, Inc. and subsidiaries as of December 31, 1997 and the results of their
operations and their cash flows for the periods May 29, 1997 to December 31,
1997 (post-acquisition basis) and January 1, 1997 to September 30, 1997
(pre-acquisition basis) in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
New York, New York
March 17, 1998
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Price Communications Wireless, Inc.:
We have audited the accompanying consolidated balance sheet of Price
Communications Wireless, Inc. and subsidiaries (formerly Palmer Wireless, Inc.)
as of December 31, 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the two-year period
ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Price
Communications Wireless, Inc. and subsidiaries as of December 31, 1996 and the
results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1996 in conformity with generally accepted
accounting principles.
/S/ KPMG PEAT MARWICK LLP
-------------------------------------------------------------------
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-3
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (NOTE 1)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
DECEMBER 31, DECEMBER 31,
1996 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 1,698 $ 27,926
Trade accounts receivable, net of allowance for doubtful accounts of $1,791 in 1996
and $818 in 1997................................................................. 18,784 15,940
Receivable from other cellular carriers............................................ 1,706 3,902
Prepaid expenses and deposits...................................................... 2,313 902
Inventory.......................................................................... 5,106 1,280
Deferred income taxes.............................................................. 830 5,402
------------- ------------
Total current assets............................................................. 30,437 55,352
Property and equipment:
Land and improvements.............................................................. 5,238 6,438
Buildings and improvements......................................................... 7,685 8,561
Equipment, communication systems, and furnishings.................................. 166,735 140,381
------------- ------------
179,658 155,380
Less accumulated depreciation and amortization..................................... 47,220 4,239
------------- ------------
Net property and equipment....................................................... 132,438 151,141
Licenses and goodwill, net of accumulated amortization of $30,188 in 1996 and $6,016
in 1997............................................................................ 375,808 918,488
Other intangible assets and other assets, at cost less accumulated amortization of
$7,311 in 1996 and $818 in 1997.................................................... 11,259 19,498
------------- ------------
Total assets..................................................................... $ 549,942 $1,144,479
------------- ------------
------------- ------------
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt............................................. $ 5,296 $ 2,812
Notes payable...................................................................... 1,366 --
Payable to Price Communications Corporation........................................ -- 2,328
Accounts payable................................................................... 10,394 13,059
Accrued interest payable........................................................... 2,341 11,361
Accrued salaries and employee benefits............................................. 2,432 2,324
Other accrued liabilities.......................................................... 3,626 16,031
Deferred revenue................................................................... 3,929 3,755
Customer deposits.................................................................. 757 602
------------- ------------
Total current liabilities........................................................ 30,141 52,272
Long-term debt, excluding current installments....................................... 337,000 610,188
Obligation of parent company......................................................... -- 80,112
Accrued income taxes-long term....................................................... -- 50,491
Deferred income taxes................................................................ 11,500 308,901
Minority interests................................................................... 6,371 7,352
Commitments and contingencies........................................................ -- --
Stockholders' equity
Preferred stock par value $.01 per share; 10,000,000 shares authorized; none
issued........................................................................... -- --
Class A Common Stock par value $.01 per share; 73,000,000 shares authorized in
1996; 11,119,681 shares issued in 1996 including shares in treasury and Class B
Common Stock par value $.01 per share; 18,000,000 shares authorized in 1996;
17,293,578 shares issued in 1996................................................. 284 --
Class A Common Stock par value $.01 per share; 3,000 shares authorized in 1997;
1,500 shares issued in 1997...................................................... -- --
Additional paid-in capital......................................................... 166,975 44,015
Retained earnings (accumulated deficit)............................................ 6,535 (8,852)
------------- ------------
173,794 35,163
Less Class A Common stock in treasury at cost-600,000 shares in 1996............... 8,864 --
------------- ------------
Total stockholders' equity....................................................... 164,930 35,163
------------- ------------
Total liabilities and stockholders' equity....................................... $ 549,942 $1,144,479
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------------- COMPANY
--------------------
FOR THE YEAR ENDED FOR THE PERIOD
DECEMBER 31, FOR THE NINE MAY 29, 1997 THROUGH
--------------------- MONTHS ENDED DECEMBER 31, 1997
1995 1996 SEPTEMBER 30, 1997 (A)
--------- ---------- ------------------ --------------------
<S> <C> <C> <C> <C>
Revenue:
Service....................................... $ 96,686 $ 151,119 $ 134,123 $ 41,365
Equipment sales and installation.............. 8,220 8,624 7,613 2,348
--------- ---------- -------- -------
Total revenue............................... 104,906 159,743 141,736 43,713
--------- ---------- -------- -------
Operating expenses:
Engineering, technical and other direct....... 18,184 28,717 23,301 5,978
Cost of equipment............................. 14,146 17,944 16,112 5,259
Selling, general and administrative........... 30,990 46,892 41,014 12,805
Depreciation and amortization................. 15,004 25,013 25,498 11,055
--------- ---------- -------- -------
Total operating expenses.................... 78,324 118,566 105,925 35,097
Operating income............................ 26,582 41,177 35,811 8,616
--------- ---------- -------- -------
Other income (expense):
Interest income............................... 211 62 30 2,195
Interest expense.............................. (21,424) (31,524) (24,497) (24,393)
--------- ---------- -------- -------
Interest expense, net....................... (21,213) (31,462) (24,467) (22,198)
Other (expense) income, net................... (687) (429) 208 15
--------- ---------- -------- -------
Total other expense......................... (21,900) (31,891) (24,259) (22,183)
--------- ---------- -------- -------
Income (loss) before minority interest share
of income and income taxes................ 4,682 9,286 11,552 (13,567)
Minority interest share of income............. 1,078 1,880 1,310 414
--------- ---------- -------- -------
Income (loss) before income tax expense
(benefit)................................. 3,604 7,406 10,242 (13,981)
Income tax expense (benefit).................... 2,650 2,724 4,153 (5,129)
--------- ---------- -------- -------
Net income (loss)........................... $ 954 $ 4,682 $ 6,089 $ (8,852)
--------- ---------- -------- -------
--------- ---------- -------- -------
</TABLE>
- ------------------------
(a) Includes results of operations only for the period October 1, 1997 through
December 31, 1997 (see Note 1).
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------ ---------------------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED FOR THE NINE FOR THE PERIOD
DECEMBER 31, MONTHS ENDED MAY 29, 1997 THROUGH
---------------------------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
------------- ------------ ------------- ---------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ 954 $ 4,682 $ 6,089 $ (8,852)
------------- ------------ ------------- ----------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.................. 15,004 25,013 25,498 11,055
Minority interest share of income.............. 1,078 1,880 1,310 414
Deferred income taxes.......................... 2,650 1,855 3,939 (2,454)
Interest deferred and added to long-term
debt......................................... 607 355 -- 4,400
Payment of deferred interest................... -- (1,080) (1,514) --
Changes in current assets and liabilities:
(Increase) decrease in trade accounts
receivable................................... (2,741) (1,561) 473 124
Decrease (increase) in inventory............... 4,076 (2,595) 2,800 458
Increase (decrease) in accounts payable........ 2,623 (841) (1,390) 3,598
(Decrease) increase in accrued interest
payable...................................... (14) (167) (374) 9,394
Increase (decrease) in accrued salaries and
employee benefits............................ 241 165 251 (341)
Increase (decrease) in other accrued
liabilities.................................. 583 (507) 2,049 (4,529)
Increase (decrease) in deferred revenue........ 658 912 4 (1,046)
(Decrease) increase in customer deposits....... (53) 134 (94) 15
(Decrease) increase in accrued income tax long
term......................................... -- -- -- (2,675)
Other........................................ 1,994 1,885 (250) 1,752
------------- ------------ ------------- ----------
Total adjustments............................ 26,706 25,448 32,702 20,165
------------- ------------ ------------- ----------
Net cash provided by operating activities.... 27,660 30,130 38,791 11,313
------------- ------------ ------------- ----------
Cash flows from investing activities:
Capital expenditures........................... (36,564) (41,445) (40,757) (14,499)
Increase in other intangible assets and other
assets....................................... (310) (2,180) (778) --
Proceeds from sales of property and
equipment.................................... 38 5 201 --
Acquisition of Predecessor net assets.......... -- -- -- (497,856)
Purchase of cellular systems................... (158,397) (67,588) (31,469) --
Proceeds from sales of cellular systems........ -- -- -- 193,799
Collection of purchase price adjustment........ -- 2,452 -- --
Purchases of minority interests................ (1,543) (1,854) (956) (794)
Distributions to minority interests............ -- -- -- (1,680)
------------- ------------ ------------- ----------
Net cash used in investing activities.......... (196,776) (110,610) (73,759) (321,030)
Cash flows from financing activities:
Advance from Price Communications
Corporation.................................. -- -- -- 2,328
Payment on advances from Palmer Communications
Incorporated................................. (1,650) -- -- --
Increase (decrease) in short term notes
payable...................................... -- 1,366 (1,366) --
Repayment of long-term debt.................... (65,125) (108,319) (3,782) (385,000)
Proceeds from long-term debt................... 171,000 100,000 41,000 615,712
Payment of debt issuance costs................. (4,803) -- -- (19,412)
Public offering proceeds, net.................. 71,144 95,000 -- --
Funding provided by parent company............. -- -- -- 80,000
Issuance of common stock....................... -- -- -- 44,015
Proceeds from stock options exercised.......... 285 95 999 --
Payment of deferred offering costs............. (1,297) (826) -- --
Purchase of treasury stock..................... -- (8,864) -- --
Proceeds from sales under stock purchase
plans........................................ -- 290 -- --
------------- ------------ ------------- ----------
Net cash provided by financing activities.... 169,554 78,742 36,851 337,643
------------- ------------ ------------- ----------
Net (decrease) increase in cash and cash
equivalents................................ 438 (1,738) 1,883 27,926
Cash and cash equivalents at the beginning of
period........................................... 2,998 3,436 1,698 --
------------- ------------ ------------- ----------
Cash and cash equivalents at the end of period..... $ 3,436 $ 1,698 $ 3,581 $ 27,926
------------- ------------ ------------- ----------
------------- ------------ ------------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
($ IN THOUSANDS)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
During 1995, the Predecessor committed to purchase certain minority
interests in 1996. This commitment totaling $451 was accrued in 1995 and paid in
1996.
During 1996, the Predecessor increased the purchase obligations related to
the final purchase price adjustment for the controlling interest in a
non-wireline cellular telephone system purchased in 1991. This increase amounted
to $899 and resulted in an increase in licenses.
Acquisitions of non-wireline cellular telephone systems in 1995, 1996 and
1997:
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------------
<S> <C> <C> <C>
FOR THE YEAR ENDED FOR THE NINE
DECEMBER 31, MONTHS ENDED
------------------------
<CAPTION>
SEPTEMBER 30,
1996 1995 1997
------------- --------- --------------
<S> <C> <C> <C>
Cash payment........................................................... $ 158,397 $ 67,588 $ 31,469
------------- --------- -------
------------- --------- -------
Allocated to:
Fixed assets......................................................... $ 22,846 $ 5,678 $ 3,197
Licenses and goodwill................................................ 136,940 61,433 27,738
Deferred income taxes................................................ (6,165) -- --
Current assets and liabilities, net.................................. 4,776 477 534
------------- --------- -------
$ 158,397 $ 67,588 $ 31,469
------------- --------- -------
------------- --------- -------
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------ -------------------
<S> <C> <C> <C> <C>
FOR THE PERIOD
FOR THE YEAR ENDED FOR THE NINE MAY 29, 1997
DECEMBER 31, MONTHS ENDED THROUGH
--------------------------- SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
------------- ------------ ------------- -------------------
Income taxes paid (received), net............... $ -- $ 1,591 $ (736) $ (40)
------------- ------------ ------------- -------
------------- ------------ ------------- -------
Interest paid................................... $ 18,435 $ 29,733 $ 25,102 $ 9,924
------------- ------------ ------------- -------
------------- ------------ ------------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------------------------------------------------------
COMMON STOCK CLASS A COMMON STOCK CLASS B TREASURY
ADDITIONAL STOCK
---------------------- ---------------------- PAID-IN RETAINED ---------
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES
--------- ----------- --------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994.......... 706,422 $ 7 17,293,578 $ 173 $ 4,902 $ (167) --
Partnership loss before business
combination.......................... -- -- -- -- (1,066) -- --
Public offering, net of issuance costs
of $8,114............................ 5,369,350 54 -- -- 68,345 -- --
Exercise of stock options.............. 20,000 -- -- -- 285 -- --
Net income............................. -- -- -- -- -- 2,020 --
--------- ----- --------- ----- ----------- ----------- ---------
Balances at December 31, 1995.......... 6,095,772 61 17,293,578 173 $ 72,466 1,853 --
Public offering, net of issuance costs
of $5,826............................ 5,000,000 50 -- -- 94,124 -- --
Exercise of stock options.............. 6,666 -- -- -- 95 -- --
Employee and non-employee director
stock purchase plans................. 17,243 -- -- -- 290 -- --
Treasury shares purchased.............. -- -- -- -- -- -- 600,000
Net income............................. -- -- -- -- -- 4,682 --
--------- ----- --------- ----- ----------- ----------- ---------
Balances at December 31, 1996.......... 11,119,681 111 17,293,578 173 166,975 6,535 600,000
Exercise of stock options.............. 70,000 1 -- -- 998 -- --
Net income............................. -- -- -- -- -- 6,089 --
--------- ----- --------- ----- ----------- ----------- ---------
Balances at September 30, 1997......... 11,189,681 $ 112 17,293,578 $ 173 $ 167,973 $ 12,624 600,000
--------- ----- --------- ----- ----------- ----------- ---------
--------- ----- --------- ----- ----------- ----------- ---------
<CAPTION>
TOTAL
STOCKHOLDER'S
AMOUNT EQUITY
----------- -------------
<S> <C> <C>
Balances at December 31, 1994.......... $ -- $ 4,915
Partnership loss before business
combination.......................... -- (1,066)
Public offering, net of issuance costs
of $8,114............................ -- 68,399
Exercise of stock options.............. -- 285
Net income............................. -- 2,020
----------- -------------
Balances at December 31, 1995.......... -- 74,553
Public offering, net of issuance costs
of $5,826............................ -- 94,174
Exercise of stock options.............. -- 95
Employee and non-employee director
stock purchase plans................. -- 290
Treasury shares purchased.............. (8,864) (8,864)
Net income............................. -- 4,682
----------- -------------
Balances at December 31, 1996.......... (8,864) 164,930
Exercise of stock options.............. -- 999
Net income............................. -- 6,089
----------- -------------
Balances at September 30, 1997......... $ (8,864) $ 172,018
----------- -------------
----------- -------------
</TABLE>
<TABLE>
<CAPTION>
COMPANY
----------------------------------------------------
COMMON STOCK
CLASS A ADDITIONAL
------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Balances at May 29, 1997.................................................. -- $ -- $ -- $ --
Capital contribution...................................................... 1,500 -- 44,015 --
Net loss.................................................................. -- -- -- (8,852)
----- ----- ----------- -------------
Balances at December 31, 1997............................................. 1,500 $ -- $ 44,015 $ (8,852)
----- ----- ----------- -------------
----- ----- ----------- -------------
<CAPTION>
TOTAL
STOCKHOLDER'S
EQUITY
-------------
<S> <C>
Balances at May 29, 1997.................................................. $ --
Capital contribution...................................................... 44,015
Net loss.................................................................. (8,852)
-------------
Balances at December 31, 1997............................................. $ 35,163
-------------
-------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Price Communications Wireless, Inc. ("PCW" or the "Company"), a wholly-owned
subsidiary of Price Communications Cellular Holdings, Inc. ("Holdings"), a
wholly-owned subsidiary of Price Communications Cellular, Inc., a wholly-owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer" or the "Predecessor").
In May, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and direct stock purchase plans
for an aggregate price of approximately $486,400. In addition, as a result of
the Merger, PCW assumed all outstanding indebtedness of Palmer of approximately
$378,000. Therefore, the aggregate purchase price for Palmer (including
transaction fees and expenses) was approximately $880,000. PCW refinanced all of
the Palmer Existing Indebtedness concurrently with the consummation of the
Merger.
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the Merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the Merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the Palmer acquisition. Accordingly, no gain or loss was recognized
on the Georgia Sale.
In order to fund the Merger and pay related fees and expenses, in July,
1997, PCW issued $175,000 aggregate principal amount of 11 3/4% Senior
Subordinated Notes due 2007 and entered into a syndicated senior loan facility
providing for term loan borrowings in the aggregate principal amount of
approximately $325,000 and revolving loan borrowings of $200,000. In October,
1997, PCW borrowed all term loans available thereunder and approximately
$120,000 of revolving loans. DLJ Capital Funding, Inc. provided and syndicated
the Credit Facility. See Notes 5(a) and 5(b).
The remaining acquisition price of Palmer was funded through a $44,015
equity contribution of PCC and $75,712 of borrowings of Holdings (See Note 5
(c)).
BASIS OF PRESENTATION
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as
F-9
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
"push down" accounting. The consolidated financial statements as of December 31,
1997 and for the period May 29, 1997 through December 31, 1997 reflect a
preliminary allocation of the purchase price to the assets acquired and
liabilities assumed. Additional purchase liabilities recorded include
approximately $6,464 for severance and related costs and $4,051 for costs
associated with the shutdown of certain acquired facilities. See Note 3, Other
Accrued Liabilities, for amounts outstanding as of December 31, 1997. The
preliminary allocation of the purchase price resulted in licenses of
approximately $924,504 on the balance sheet, which are being amortized on a
straight-line basis over a period of 40 years.
In August, 1997 Holdings issued 153,400 units, consisting of Notes and
warrants of PCC (the "Warrants"), in exchange for $80,000. Such notes, which are
not guaranteed by the Company or secured by its stock, do not represent
indebtedness of the Company. Holdings' notes have been reflected as an
"Obligation of Parent Company" in the accompanying consolidated financial
statements in accordance with the "push-down" basis of accounting discussed
above. The Notes accrete at a rate of 13.5%, compounded semi-annually, to an
aggregate principal amount of approximately $153,400 by August 1, 2002. Cash
interest will not commence to accrue on the Notes prior to August 2, 2002.
Commencing on February 1, 2003, cash interest on the Notes will be payable at a
rate of 13.5% per annum, payable semi-annually. The Notes will be redeemable at
the option of Holdings, in whole or in part, at any time after August 1, 1998 in
cash at the redemption price as defined, plus accrued and unpaid interest, if
any, thereon to the redemption date; provided that the trading price of the
common stock of PCC shall equal or exceed certain levels. The Notes mature on
August 1, 2007 and contain covenants that restrict payments of dividends,
incurrence of debt and sale of assets. The Warrants have been assigned a value
of $4,288, which amount is accounted for as original issue discount, resulting
in an effective interest rate of approximately 14.13% per annum. The fair value
of the Notes was estimated as $80,112 as of December 31, 1997.
The consolidated financial statements through September 30, 1997 reflect the
historical cost of its assets and liabilities and results of operations and are
referred to as the "Predecessor" consolidated financial statements. Accordingly,
the accompanying financial statements of the Predecessor and the Company are not
comparable in all material respects since those financial statements report
financial position, results of operations, and cash flows of these two separate
entities.
PRO FORMA INFORMATION
The following unaudited pro forma condensed consolidated financial
information was prepared assuming (i) the Predecessor was acquired on January 1,
1996, (ii) the acquisitions of the licenses had occurred on January 1, 1996 (See
Note 4) and (iii) the Ft. Myers Sale and Georgia Sale occurred on January 1,
1996.
F-10
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Proforma information is presented for comparative purposes only and does not
purport to be indicative of the results which would have been achieved had this
acquisition occurred as of January 1, 1996, nor does it purport to be indicative
of results that may be achieved in the future.
<TABLE>
<CAPTION>
UNAUDITED
----------------------
<S> <C> <C>
YEAR ENDED DECEMBER 31
----------------------
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Total Revenue...................................................... $ 145,643 $ 161,468
---------- ----------
---------- ----------
Loss Before Income Taxes........................................... $ (54,529) $ (51,532)
---------- ----------
---------- ----------
Net Loss........................................................... $ (48,895) $ (43,911)
---------- ----------
---------- ----------
</TABLE>
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries after the elimination of significant
intercompany accounts and transactions. The financial statements also include
the debt of Holdings, which funded a portion of the acquisition of Palmer and is
indirectly guaranteed by the assets of the Company.
The Predecessor was a Delaware corporation and was incorporated on December
15, 1993 to effect an initial public offering of its Class A Common Stock. At
December 31, 1996, Palmer Communications Incorporated ("PCI") owned 61 percent
of the Predecessor's outstanding stock and had 75 percent of its voting rights
and therefore the Predecessor was a subsidiary of PCI.
On March 21, 1995 and April 18, 1995, the Predecessor issued 5,000,000 and
369,350 shares respectively, of Class A Common Stock in an initial public
offering (the "Offering") for net proceeds of $68,399. In connection with the
Offering, on March 21, 1995, the Predecessor issued 704,755 shares of Class A
Common Stock and 17,288,578 shares of Class B Common Stock in exchange for 100
percent of the Partnership interests of Palmer Cellular Partnership (the
"Exchange"). The assets and liabilities received in the Exchange were recorded
at their historical cost to Palmer Cellular Partnership and not revalued at fair
value on the date of transfer. Since the Exchange was between related parties it
was accounted for in a manner similar to a pooling of interests.
Losses in subsidiaries, attributable to minority stockholders and partners,
in excess of their capital accounts and cash capital call provisions are not
eliminated in consolidation.
OPERATIONS
The Company has majority ownership in corporations and partnerships which
operate the non-wireline cellular telephone systems in eight Metropolitan
Statistical Areas ("MSA") in three states: Florida (one), Georgia (five) and
Alabama (two). The Company's ownership percentages in these entities range from
approximately 78 percent to 100 percent. The Company owns directly and operates
eight non-wireline cellular telephone systems in Rural Service Areas in Georgia
(seven) and Alabama (one).
The Predecessor had majority ownership in corporations and partnerships
which operated the non-wireline cellular telephone systems in nine MSA's in
three states: Florida (two), Georgia (five) and Alabama (two). The Predecessor's
ownership percentages in these entities ranged from approximately 78
F-11
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
percent to 100 percent. The Predecessor owned directly and operated eight
non-wireline cellular telephone systems in RSA's in Georgia (seven) and Alabama
(one).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows the Company and the Predecessor
consider cash and repurchase agreements with a maturity of three months or less
to be cash equivalents.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The cost of additions and
improvements are capitalized while maintenance and repairs are charged to
expense when incurred. Depreciation is provided principally by the straight-line
method over the estimated useful lives, ranging from 5 to 20 years for buildings
and improvements and 5 to 10 years for equipment, communications systems and
furnishings.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses, based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period.
Subsequent to the acquisition of the licenses, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of licenses may warrant revision or that the
remaining balance of the license rights may not be recoverable. The Company
utilizes projected undiscounted cash flows over the remaining life of the
licenses and sales of comparable businesses to evaluate the recorded value of
licenses. The assessment of the recoverability of the remaining balance of the
license rights will be impacted if projected cash flows are not achieved.
OTHER INTANGIBLE ASSETS
Other intangibles consist principally of deferred financing costs and other
items. These costs are being amortized by the interest or straight-line method
over their respective useful lives, which range from 5 to 10 years.
INCOME TAXES
The Company and the Predecessor account for income taxes under the asset and
liability method of accounting for deferred income taxes. Under the asset and
liability method, deferred tax assets and
F-12
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
INTEREST RATE SWAP AGREEMENTS
The differential to be paid or received in connection with interest rate
swap agreements is accrued as interest rates change and is recognized over the
life of the agreements.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and outcollect roaming
revenue.
Local subscriber revenue is earned by providing access to the cellular
network ("access revenue") or, as applicable, for usage of the cellular network
("airtime revenue"). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Outcollect roaming revenue represents revenue earned for usage of its
cellular network by subscribers of other cellular carriers. Outcollect roaming
revenue is recognized when the services are rendered.
Equipment sales and installation revenues are recognized upon delivery to
the customer or installation of the equipment.
OPERATING EXPENSES-ENGINEERING, TECHNICAL AND OTHER DIRECT
Engineering, technical and other direct operating expenses represent certain
costs of providing cellular telephone service to customers. These costs include
incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
STOCK OPTION PLANS
Prior to January 1, 1996, the Predecessor accounted for its stock option
plans in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. On January 1, 1996, the Predecessor adopted Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Predecessor elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
F-13
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, methods and assumptions used to estimate the fair
value of financial instruments are set forth below:
For cash and cash equivalents, trade accounts receivable, receivable from
other cellular carriers, notes payable, accounts payable and accrued expenses,
the carrying amount approximates the estimated fair value due to the short-term
nature of those instruments.
Rates currently available for long-term debt with similar terms and
remaining maturities are used to discount the future cash flows to estimate the
fair value for long-term debt. Note 5 presents the fair value for long-term debt
and the related interest rate cap and swap agreements.
Fair value estimates are made as of a specific point in time, based upon the
relevant market information about the financial instruments. Because no market
exists for a majority of the financial instruments, fair value estimates are
based on judgments regarding current economic conditions and other factors.
These estimates are subjective in nature and involve uncertainties and matters
of judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
F-14
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(2) TRADE ACCOUNTS RECEIVABLE
The Company and the Predecessor grant credit to its customers. Substantially
all of the customers are residents of the local areas served. Generally, service
is discontinued to customers whose accounts are 60 days past due.
The activity in the Predecessor's and the Company's allowance for doubtful
accounts for the years ended December 31, 1995, and 1996, the nine months ended
September 30, 1997 and the period from October 1, 1997 through December 31, 1997
consisted of the following:
<TABLE>
<CAPTION>
ALLOWANCE AT
BALANCE AT CHARGED DATES OF DEDUCTIONS,
BEGINNING TO ACQUISITIONS NET OF BALANCE AT
OF PERIOD EXPENSES (DISPOSITIONS) RECOVERIES END OF PERIOD
----------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
PREDECESSOR
Year ended December 31, 1995................. $ 1,567 $ 2,078 $ 432 $ (2,197) $ 1,880
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
PREDECESSOR
Year ended December 31, 1996................. $ 1,880 $ 3,946 $ 1,270 $ (5,305) $ 1,791
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
PREDECESSOR
Nine months ended
September 30, 1997......................... $ 1,791 $ 3,614 $ 147 $ (4,212) $ 1,340
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
COMPANY
Period from May 29, 1997 through through
December 31, 1997.......................... $ 1,340 $ 1,202 $ (206) $ (1,518) $ 818
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
</TABLE>
(3) OTHER ACCRUED LIABILITIES
Other accrued liabilities at December 31, 1996 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Accrued telecommunications expenses...................................... $ 892 $ 2,176
Accrued local taxes...................................................... 913 888
Accrued severance payments............................................... -- 6,155
Accrued shutdown costs of certain facilities............................. -- 3,818
Miscellaneous accruals................................................... 1,821 2,994
--------- ---------
$ 3,626 $ 16,031
--------- ---------
--------- ---------
</TABLE>
(4) ACQUISITIONS AND PURCHASE OF LICENSES
On December 1, 1995, the Predecessor purchased all of the outstanding stock
of Augusta Metronet, Inc. and Georgia Metronet, Inc., which own either directly
(or in the case of Georgia Metronet, Inc., through its 97.9 percent interest in
the Savannah Cellular Limited Partnership) the licenses to operate the
non-wireline cellular telephone systems in the Savannah and Augusta, Georgia
MSAs, respectively, for an aggregate purchase price of $158,397. The acquisition
was accounted for by the purchase method of
F-15
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(4) ACQUISITIONS AND PURCHASE OF LICENSES (CONTINUED)
accounting. In connection with this acquisition, $136,940 of the purchase price
was allocated to licenses and goodwill.
On June 20, 1996, the Predecessor acquired the assets of and the license to
operate the non-wireline cellular telephone system serving the Georgia-1 RSA for
an aggregate purchase price of $31,616. The acquisition was accounted for by the
purchase method of accounting. In connection with the acquisition, $27,942 of
the purchase price was allocated to licenses.
On July 5, 1996, two of the Predecessor's majority-owned subsidiaries
acquired the assets of and the license to operate the non-wireline cellular
telephone system serving the Georgia-6 RSA for an aggregate purchase price of
$35,972. The acquisition was accounted for by the purchase method of accounting.
In connection with the acquisition, $33,491 of the purchase price was allocated
to licenses.
On January 31, 1997, a majority-owned subsidiary of the Predecessor acquired
the assets of and the license to operate the non-wireline cellular telephone
system serving the Georgia-13 RSA for an aggregate purchase price of $31,486.
The acquisition was accounted for by the purchase method of accounting. In
connection with the acquisition, $27,650 of the purchase price was allocated to
licenses.
See Note 1 for presentation of pro forma information.
(5) NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- ----------
<S> <C> <C>
DECEMBER 31
-----------------------
<CAPTION>
1996 1997
----------- ----------
<S> <C> <C>
Credit agreement...................................................................... $ 337,000(c) $ 438,000(a)
11.75% Senior Subordinated Notes...................................................... -- 175,000(b)
Purchase obligations.................................................................. 5,296(d) --
----------- ----------
342,296 613,000
Less current installments............................................................. 5,296 2,812
----------- ----------
Long-term debt, excluding current installments........................................ $ 337,000 $ 610,188
----------- ----------
----------- ----------
</TABLE>
- ------------------------
(a) In October 1997, the Company entered into a credit agreement ("Credit
Agreement") with a syndicate of banks, financial institutions and other
"accredited investors" providing for loans of up to $525,000. The Credit
Agreement includes a $325,000 term loan facility and a $200,000 revolving
credit facility. The term loan facility is comprised of tranche A loans of
up to $100,000, which will mature on September 30, 2005, and tranche B term
loans of up to $225,000, which will mature on September 30, 2006. The
revolving credit facility will terminate on September 30, 2006. The Credit
Agreement bears interest at the alternate base rate, as defined in the
Credit Agreement, as the reserve adjusted Euro-Dollar rate plus, in each
case, applicable margins of (i) in the case of tranche A term loans and
revolving loans (x) 2.5% for Euro-Dollar rate loans and (y) 1.5% for base
rate loans and (ii) in the case of tranche B term loans (x) 2.75 for
Euro-Dollar rate loans and (y) 1.75% for base rate loans. As of December 31,
1997, the Credit Agreement was bearing interest at 8.5% for the tranche A
loan and
F-16
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
revolving credit facility and 8.7% for the tranche B loan. The Credit
Agreement contains restrictions on the subsidiary's ability to engage in
certain activities, including limitations on incurring additional
indebtedness, liens and investments, payment of dividends and the sale of
assets. Holdings is a guarantor of the Credit Agreement. As of December 31,
1997 $87,000 of the revolving credit facility was unused and available for
borrowings.
(b) In July 1997, the Company issued $175,000 of 11.75% Senior Subordinated
Notes ("11.75% Notes") due July 15, 2007 with interest payable semi-annually
commencing January 15, 1998. The 11.75% Notes contain covenants that
restrict the payment of dividends, incurrence of debt and sale of assets.
The carrying value of the 11.75% Notes approximates fair value as of
December 31, 1997.
(c) On December 1, 1995, the Predecessor entered into an amended and restated
credit agreement with 21 banks which provided for a revolving line of credit
of up to $500,000, subject to certain limitations through June 30, 2004.
Interest was payable at variable rates and under various interest rate
options. The interest rate at December 31, 1996 ranged from 7.42 to 8.88
percent before the affect of the interest rate swap and cap agreements
outlined below. The credit agreement also provided for a commitment fee of
.5 percent per year on any unused amounts of the credit agreement. Amounts
outstanding were secured by the assets of the Predecessor.
The credit agreement provided for various compliance covenants and
restrictions, including items related to mergers or acquisition
transactions, the declaration or payment of dividends or other payments to
stockholders, capital expenditures and maintenance of certain financial
ratios. At December 31, 1996 the Predecessor was in compliance with all but
one financial ratio covenant. This covenant was based on operating results
for the year ended December 31, 1996. The Predecessor obtained a waiver of
the noncompliance with this 1996 financial ratio covenant. In connection
with the acquisition of the Predecessor (see Note 1), the Predecessor credit
agreement was refinanced.
(d) In connection with the purchase of controlling interest in a non-wireline
cellular telephone system in 1991, the Predecessor incurred certain purchase
obligations. The obligations were retired in July 1996 and January 1997.
The Company has entered into interest rate swap and cap agreements to reduce
the impact of changes in interest rates on its floating rate debt and thus were
entered into for purposes other than trading. At December 31,1997, the Company
had outstanding seven interest rate swap agreements and one interest rate cap
agreement having a total notional value of $370,000. These interest rate swap
and cap agreements
F-17
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
effectively change the Company's interest rate exposure on a quarterly basis on
$370,000 of outstanding debt. The cap and swap agreements are summarized as
follows:
<TABLE>
<CAPTION>
MAXIMUM NOTIONAL
TYPE OF AGREEMENT MATURITY LIBOR VALUE
- ------------------------------------------------------------------------ --------------- ------------- ----------
<S> <C> <C> <C>
Pay Later Cap (1)....................................................... Jan. 12, 1998 8.5% $ 20,000
Participating Swap (2).................................................. Aug. 10, 1998 5.98% 15,000
Swap.................................................................... Aug. 6, 1999 6.36% 25,000
Swap.................................................................... Oct. 21, 1999 5.92% 185,000
Swap.................................................................... Aug. 7, 2000 6.09% 50,000
Swap.................................................................... Aug. 21, 2000 6.11% 25,000
Swap.................................................................... Oct. 10, 2000 6.10% 25,000
Swap.................................................................... Oct. 11, 2000 5.99% 25,000
----------
$ 370,000
----------
----------
</TABLE>
- ------------------------
(1) When the three-month LIBOR rate is 8.5 percent or higher the Company
receives a quarterly payment of $98.
(2) When the six-month LIBOR is less than 5.98 percent the Company participates
in 45 percent of the difference.
F-18
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
The market value of the swap and cap agreements above, which has not been
reflected in the consolidated financial statements as of December 31, 1997, is a
loss of $1,076.
The Company is exposed to interest rate risk in the event of nonperformance
by the other party to the interest rate swap and cap agreements. However, the
Company does not anticipate nonperformance by any of the banks.
The aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1998.............................................................................. $ 2,812
1999.............................................................................. 4,750
2000.............................................................................. 12,875
2001.............................................................................. 15,375
2002.............................................................................. 17,875
Thereafter........................................................................ 559,313
----------
$ 613,000
----------
----------
</TABLE>
(6) INCOME TAXES
Components of income tax expense (benefit) consist of the following:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Predecessor:
Year ended December 31, 1995:
Current..................................................... $ -- $ -- $ --
Deferred.................................................... 2,550 100 2,650
--------- --------- ---------
$ 2,550 $ 100 $ 2,650
--------- --------- ---------
--------- --------- ---------
Predecessor:
Year ended December 31, 1996:
Current..................................................... $ -- $ 869 $ 869
Deferred.................................................... 1,795 60 1,855
--------- --------- ---------
$ 1,795 $ 929 $ 2,724
--------- --------- ---------
--------- --------- ---------
Predecessor:
Period ended September 30, 1997
Current..................................................... $ -- $ 214 $ 214
Deferred.................................................... 3,553 386 3,939
--------- --------- ---------
$ 3,553 $ 600 $ 4,153
--------- --------- ---------
--------- --------- ---------
Company:
Period ended December 31, 1997
Current..................................................... $ (2,244) $ (432) $ (2,676)
Deferred.................................................... (2,116) (337) (2,453)
--------- --------- ---------
$ (4,360) $ (769) $ (5,129)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-19
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
The consolidated effective tax rate differs from the statutory United States
federal tax rate for the following reasons and by the following percentages:
<TABLE>
<CAPTION>
PREDECESSOR
---------------------------------------
COMPANY
YEAR ENDED NINE MONTHS ---------------
DECEMBER 31, ENDED PERIOD ENDED
-------------------- SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
--------- --------- ----------------- ---------------
<S> <C> <C> <C> <C>
Statutory United States federal tax rate.................. 34.0% 34.0% 34.0% (34.0)%
Partnership loss prior to corporate status................ 10.1 -- -- --
License amortization not deductible for tax............... 7.7 32.5 -- --
Net operating loss carryforwards.......................... (59.0) (42.8) -- --
State taxes............................................... -- 8.3 6.0 (3.6)
Recognition of deferred taxes related to the difference
between financial statement and income tax bases of
certain assets and liabilities in connection with the
Exchange................................................ 73.5 -- -- --
Non deductible interest expense........................... -- -- -- 1.1
Other..................................................... 7.2 4.8 1.0 (0.2)
--------- --------- --- -----
Consolidated effective tax rate........................... 73.5% 36.8% 41.0% (36.7)%
--------- --------- --- -----
--------- --------- --- -----
</TABLE>
In 1997, the Predecessor recorded additional deferred tax liability and a
corresponding increase in licenses for timing differences attributable to
pre-1997 acquisitions. The components of the deferred income tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- -----------
<S> <C> <C>
1996 1997
----------- -----------
Deferred tax assets:
Allowance for doubtful accounts......................................................... $ 609 $ 327
Inventory reserve....................................................................... -- 144
Deferred revenue........................................................................ -- 400
Nondeductible accruals.................................................................. 221 6,495
Net operating loss carryforwards........................................................ 4,100 3,560
Valuation allowance..................................................................... -- (3,560)
----------- -----------
Total deferred tax assets............................................................... 4,930 7,366
----------- -----------
Deferred tax liabilities:
Accumulated depreciation................................................................ (7,415) (8,559)
Licenses................................................................................ (8,185) (302,306)
----------- -----------
Total deferred tax liabilities.......................................................... (15,600) (310,865)
----------- -----------
Deferred tax liability, net............................................................. $ (10,670) $ (303,499)
----------- -----------
----------- -----------
</TABLE>
The net operating loss carryforwards totaled approximately $8,900 at
December 31, 1997 and expire in amounts ranging from approximately $300 to
$1,100 through 2012. For these carryforwards utilization is limited to the
subsidiary that generated the carryforwards, unless the Company utilizes
alternative tax planning strategies.
F-20
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) COMMON STOCK AND STOCK PLANS
During 1994, the Predecessor amended its certificate of incorporation to
increase the number of authorized shares of common stock from 60,000,000 to
91,000,000 and to provide for Class A Common and Class B Common Stock. The Class
A Common Stock has one vote per share. The Class B Common Stock, which may be
owned only by PCI or certain successors of PCI and of which no shares may be
issued subsequent to the Offering, has five votes per share, provided, however,
that, so long as any Class A Common Stock is issued and outstanding, at no time
will the total outstanding Class B Common Stock have the right to cast votes
having more than 75 percent of the total voting power of the common stock in the
aggregate. Shares of Class B Common Stock shall be converted into Class A Common
Stock on a share-for share basis: (i) at any time at the option of the holder;
(ii) immediately upon the transfer of shares of Class B Common Stock to any
holder other than a successor of PCI; (iii) immediately if the shares of Class B
Common Stock held by PCI or its successors constitute 33 percent or less of the
outstanding shares of the Predecessor; (iv) at the end of 20 years from original
issuance of those shares of Class B Common Stock; or (v) if more than 50 percent
of the equity interests in PCI become beneficially owned by persons other than:
(i) beneficial owners of PCI as of December 29, 1994 ("Current PCI Beneficial
Owners"); (ii) affiliates of Current PCI Beneficial Owners; (iii) heirs or
devisees of any individual Current PCI Beneficial Owners, successors of any
corporation or partnership which is a Current PCI Beneficial Owner and
beneficiaries of any trust which is a Current PCI Beneficial Owner; and (iv) any
relative, spouse or relative of a spouse of any Current PCI Beneficial Owner.
The Predecessor adopted a Stock Option Plan in connection with the Offering,
under which options for an aggregate of 1,600,000 shares of Class A Common Stock
are available for grants to key employees. The Predecessor also adopted a
Director's Stock Option Plan in connection with the Offering, under which
options for an aggregate of 300,000 shares of Class A Common Stock are available
for grants to directors who are not officers or employees of the Predecessor.
Stock options under both plans are granted with an exercise price equal to the
stock's fair value at the date of grant. The stock options granted under the
Stock Option Plan have 10-year terms and vest and become exercisable ratably
over three years from the date of grant. The stock options granted under the
Director's Stock Option Plan are vested and become fully exercisable upon the
date of the grant. At December 31, 1996, there were options with respect to
693,334 and 45,000 shares of Class A Common Stock outstanding under the Stock
Option Plan and the Director's Stock Option Plan, respectively. At December 31,
1996, there were 880,000 and 255,000 additional shares available for grant under
the Stock Option Plan and the Director's Stock Option Plan, respectively.
The Predecessor applies APB Opinion No. 25 in accounting for its Stock
Option Plan and Director's Stock Option Plan ("the Plans") and accordingly, no
compensation cost has been recognized for its stock options in the consolidated
financial statements. Had the Predecessor determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Predecessor's net income (loss) and net income would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------- NINE MONTHS ENDED
1995 1996 SEPTEMBER 30, 1997
--------- --------- -------------------
<S> <C> <C> <C>
Net income-as reported...................................................... $ 954 $ 4,682 $ 6,089
Net (loss) income-pro forma................................................. $ (777) $ 2,850 $ 4,753
</TABLE>
F-21
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) COMMON STOCK AND STOCK PLANS (CONTINUED)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the weighted-average assumptions as
follows: dividend yield of 0.0%; expected volatility of 101%; risk-free interest
rate of 5.5%; and expected lives of five years.
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
($'S NOT IN
THOUSANDS)
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
----------- ---------------------
<S> <C> <C>
Balance December 31, 1994....................................................... -- --
Granted......................................................................... 692,500 $ 14.25
Exercised....................................................................... (20,000) 14.25
-----------
Balance December 31, 1995....................................................... 672,500 14.25
Granted......................................................................... 72,500 17.25
Exercised....................................................................... (6,666) 14.25
-----------
Balance December 31, 1996....................................................... 738,334 14.54
Exercised....................................................................... (70,000) 14.25
-----------
Balance September 30, 1997...................................................... 668,334 14.60
-----------
-----------
</TABLE>
At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $14.25-$17.25 ($'s not in
thousands) and 8.3 years, respectively.
At December 31, 1996, the number of options exercisable was 250,000, and the
weighted average exercise price of those options was $14.34 ($'s not in
thousands).
The Predecessor adopted a stock purchase plan for employees (the "Employee
Stock Purchase Plan") and a stock purchase plan for non-employee directors (the
"Non-Employee Director Stock Purchase Plan"). Under the Employee Stock Purchase
Plan, 160,000 shares of Class A Common Stock are available for purchase by
eligible employees of the Predecessor or any of its subsidiaries. Under the
Non-Employee Director Stock Purchase Plan, 25,000 shares of Class A Common Stock
are available for purchase by non-employee directors of the Predecessor. The
purchase price of each share of Class A Common Stock purchased under the
Employee Stock Purchase Plan or the Non-Employee Director Stock Purchase Plan
will be the lesser of 90 percent of the fair market value of the Class A Common
Stock on the first trading day of the plan year or on the last day of such plan
year; provided, however, that in no event shall the purchase price be less than
the par value of the stock. Both plans will terminate in 2005, unless terminated
at an earlier date by the board of directors. During the year ended December 31,
1996, 15,541 shares were issued under the Employee Stock Purchase Plan and 1,702
shares were issued under the Non-Employee Director Stock Purchase Plan at a
purchase price of $16.85 ($'s not in thousands). Compensation cost computed
under the provisions of SFAS No. 123 related to the shares issued under the
Employee Stock Purchase Plan and the Non-Employee Director Stock Purchase Plan
is immaterial to the consolidated financial statements.
In connection with the acquisition of Palmer, the Company retired all of the
options of Palmer that were outstanding.
F-22
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(8) RELATED PARTY TRANSACTIONS
On January 1, 1997 the Predecessor purchased a building and certain towers
from PCI for $6,243. These assets were previously leased from PCI.
Concurrently with the Offering and the Exchange, the Predecessor and PCI
entered into both a transitional management and administrative services
agreement and a computer services agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees from these arrangements amounted to a total of $492, $534 and $88 for
the years ended December 31, 1995 and 1996 and the nine months ended September
30, 1997, respectively, and are included as a reduction of selling, general and
administrative expenses.
Concurrently with the Offering and the Exchange, the Predecessor and PCI
entered into a tax consulting agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees for tax consulting services amounted to a total of $84, $120 and $97
for the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1997, respectively, and are included in selling, general and
administrative expenses.
PCI has a 401(k) plan with a noncontributory retirement feature and a
matching provision for employees who meet length of service and other
requirements. The Predecessor participated in this plan and was allocated 401(k)
retirement and matching expense of $493, $696, and $544 for the years ended
December 31, 1995, and 1996 and the nine months ended September 30, 1997,
respectively.
(9) COMMITMENTS AND CONTINGENCIES
LEASES
The Company occupies certain buildings and uses certain tower sites, cell
sites and equipment under noncancelable operating leases which expire through
2013.
Future minimum lease payments under noncancelable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<S> <C>
Year ending December 31:
1998............................................................... $ 2,950
1999............................................................... 2,535
2000............................................................... 1,981
2001............................................................... 1,305
2002............................................................... 843
Later years through 2013........................................... 1,491
---------
Total minimum lease payments....................................... $ 11,105
---------
---------
</TABLE>
Rental expense for the Predecessor was $2,487, $3,551, and $3,123 for the
years ended December 31, 1995, 1996 and the nine months ended September 30,
1997, respectively of which $269 and $278 was paid to related parties for 1995
and 1996, respectively. Rental expense for the Company was $806 for the period
from May 29, 1997 to December 31, 1997.
F-23
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial statements.
(10) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH
YEAR ENDED DECEMBER 31, 1996 QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ----------- ----------- --------- ----------
Total Revenue...................................... $ 36,950(a) $ 40,031(a) $ 41,171(a) $ 41,591 $ 159,743
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
Operating Income................................... $ 8,514 $ 11,281 $ 11,977 $ 9,405 $ 41,177
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
Net Income (Loss).................................. $ 76 $ 1,684 $ 2,976 $ (54) $ 4,682
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
COMPANY
-------------
FOR THE
PERIOD
PREDECESSOR MAY 29, 1997
------------------------------- THROUGH
FIRST SECOND THIRD DECEMBER 31,
YEAR ENDED DECEMBER 31, 1997 QUARTER QUARTER QUARTER 1997 (B)
--------- --------- --------- -------------
<S> <C> <C> <C> <C>
Total Revenue..................................................... $ 44,683 $ 48,545 $ 48,508 $ 43,713
--------- --------- --------- -------------
--------- --------- --------- -------------
Operating Income.................................................. $ 9,805 $ 13,022 $ 12,984 $ 8,616
--------- --------- --------- -------------
--------- --------- --------- -------------
Net Income (Loss)................................................. $ 1,177 $ 2,523 $ 2,389 $ (8,852)
--------- --------- --------- -------------
--------- --------- --------- -------------
</TABLE>
- ------------------------
(a) Certain reclassifications were made to conform to the fourth quarter
presentation.
(b) The decrease in revenue and operating income in the fourth quarter is a
result of customer acquisition costs, including advertising, commissions and
phone discounts, related to Holiday sales (consistent with prior years), the
Fort Myers Sale, and amortization of the additional license recorded in the
merger. The net loss is due to these reasons as well as the interest expense
on debt incurred to fund the Acquisition (see Note 1).
F-24
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 92,681 $ 27,926
Trade accounts receivable, net of allowance for doubtful accounts.................. 18,682 15,940
Receivable from other cellular carriers............................................ 2,231 3,902
Deferred income taxes.............................................................. 3,257 5,402
Prepaid expenses and deposits...................................................... 8,054 902
Inventory.......................................................................... 2,607 1,280
------------ ------------
Total current assets............................................................. $ 127,512 $ 55,352
Net property and equipment........................................................... 145,455 151,141
Licenses, net of amortization........................................................ 905,912 918,488
Other intangible assets and other assets, at cost less accumulated amortization...... 22,175 19,498
------------ ------------
$ 1,201,054 $1,144,479
------------ ------------
------------ ------------
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt............................................. $ -- $ 2,812
Payable to Price Communications Corporation........................................ 1,400 2,328
Accounts payable................................................................... 7,912 13,059
Accrued interest payable........................................................... 13,001 11,361
Accrued salaries and employee benefits............................................. 2,760 2,324
Other accrued liabilities.......................................................... 12,193 16,031
Deferred revenue................................................................... 4,094 3,755
Customer deposits.................................................................. 810 602
------------ ------------
Total current liabilities........................................................ $ 42,170 $ 52,272
Long-term debt, excluding current installments....................................... 700,000 610,188
Obligation of Parent Company......................................................... 85,989 80,112
Accrued income taxes--long term...................................................... 43,219 50,491
Deferred income taxes................................................................ 303,539 308,901
Minority interests................................................................... 8,355 7,352
Total liabilities................................................................ $ 1,183,272 $1,109,316
------------ ------------
Commitments and contingencies........................................................ -- --
Stockholder's equity................................................................. 17,782 35,163
------------ ------------
$ 1,201,054 $1,144,479
------------ ------------
------------ ------------
</TABLE>
Note: The balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
F-25
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
---------- -----------
COMPANY PREDECESSOR
---------- -----------
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- -----------------------
1998 1997 1998 1997
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenue:
Service....................................................... $ 45,737 $ 45,920 $ 86,421 $ 88,140
Equipment sales and installation.............................. 3,181 2,625 5,772 5,088
---------- ----------- ---------- -----------
Total revenue............................................... $ 48,918 $ 48,545 $ 92,193 $ 93,228
---------- ----------- ---------- -----------
Operating expenses:
Engineering, technical and other direct....................... 7,111 8,124 13,862 15,554
Cost of equipment............................................. 6,019 5,250 11,515 11,057
Selling, general and administrative........................... 13,588 13,844 25,305 27,204
Depreciation and amortization................................. 11,165 8,305 22,553 16,586
---------- ----------- ---------- -----------
Total operating expenses.................................... $ 37,883 $ 35,523 $ 73,235 $ 70,401
---------- ----------- ---------- -----------
Operating income............................................ $ 11,035 $ 13,022 $ 18,958 $ 22,827
---------- ----------- ---------- -----------
Other income (expense):
Interest expense, net......................................... $ (18,082) $ (8,241) $ (35,907) $ (16,113)
Other income (expense), net................................... (6) 91 (43) 162
---------- ----------- ---------- -----------
Total other expense......................................... $ (18,088) $ (8,150) $ (35,950) $ (15,951)
---------- ----------- ---------- -----------
Income (loss) before minority interest share of income,
income taxes and extraordinary item....................... $ (7,053) $ 4,872 $ (16,992) $ 6,876
Minority interest share of income............................... (542) (451) (1,002) (782)
---------- ----------- ---------- -----------
Income (loss) before income taxes and extraordinary item.... $ (7,595) $ 4,421 $ (17,994) $ 6,094
Income tax (expense) benefit.................................... 2,687 (1,898) 6,515 (2,394)
---------- ----------- ---------- -----------
Income (loss) before extraordinary item..................... $ (4,908) $ 2,523 $ (11,479) $ 3,700
Extraordinary item--write-off of deferred finance costs, net of
income tax benefit of $3,935.................................. (5,902) -- (5,902) --
---------- ----------- ---------- -----------
Net income (loss)........................................... $ (10,810) $ 2,523 $ (17,381) $ 3,700
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-26
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
($ IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
CLASS A ADDITIONAL TOTAL
------------------------ PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS EQUITY
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balances at May 29, 1997................................. -- $ -- $ -- $ -- $ --
Capital contribution..................................... 100 -- 44,015 -- 44,015
Net loss................................................. -- -- -- (8,852) (8,852)
--- ----- ----------- ---------- ------------
Balances at December 31, 1997............................ 100 $ -- $ 44,015 $ (8,852) $ 35,163
Net loss................................................. -- -- -- (17,381) (17,381)
--- ----- ----------- ---------- ------------
Balances at June 30, 1998 (unaudited).................... 100 $ -- $ 44,015 $ (26,233) $ 17,782
--- ----- ----------- ---------- ------------
--- ----- ----------- ---------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-27
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
----------- -----------
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)..................................................................... $ (17,381) $ 3,700
----------- -----------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization....................................................... 22,553 16,586
Minority interest share of income................................................... 1,003 782
Deferred income taxes............................................................... (3,217) 2,219
(Gain) loss on disposal of property................................................. 37 (9)
Interest deferred and added to obligation of Parent Company......................... 5,876 --
Payment of deferred interest........................................................ -- (1,514)
Decrease (increase) in trade accounts receivable.................................... (2,742) 500
Decrease (increase) in inventory.................................................... (1,327) 2,085
Increase (decrease) in accounts payable and accrued expenses........................ (8,549) 1,799
Decrease in accrued income taxes--long term......................................... (7,272) --
Increase in accrued interest payable................................................ 1,640 --
Write-off of deferred finance costs................................................. 9,837 --
Change in other accounts............................................................ 2,893 (576)
----------- -----------
Total adjustments................................................................. $ 20,732 $ 21,872
----------- -----------
Net cash provided by operating activities....................................... $ 3,351 $ 25,572
----------- -----------
Cash flows from investing activities:
Capital expenditures.................................................................. (4,171) (31,700)
Proceeds from sales of property and equipment......................................... -- 201
Purchase of cellular systems.......................................................... -- (31,260)
Purchases of minority interests....................................................... -- (794)
Increase in other intangible assets and other assets.................................. -- (150)
----------- -----------
Net cash used in investing activities........................................... $ (4,171) $ (63,703)
----------- -----------
Cash flows from financing activities:
Increase in short-term notes payable.................................................. -- 955
Repayment of long-term debt........................................................... (437,999) (3,782)
Repayment of advances from Price Communications Corporation........................... (928)
Proceeds from long-term debt.......................................................... 525,000 41,000
Cash pledged for outstanding interest rate swap contracts............................. (6,738)
Payment of debt issuance costs........................................................ (13,760)
----------- -----------
Net cash provided by financing activities....................................... $ 65,575 $ 38,173
----------- -----------
Net increase in cash and cash equivalents........................................... $ 64,755 $ 42
Cash and cash equivalents at the beginning of period.................................... 27,926 1,698
----------- -----------
Cash and cash equivalents at the end of period.......................................... $ 92,681 $ 1,740
----------- -----------
----------- -----------
Supplemental disclosure of cash flow information:
Income taxes (received) paid, net..................................................... $ 134 $ (617)
----------- -----------
----------- -----------
Interest paid......................................................................... $ 29,177 $ 16,328
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-28
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Price Communications Wireless, Inc. ("PCW" or the "Company"), a wholly-owned
subsidiary of Price Communications Cellular Holdings, Inc. ("Holdings"), a
wholly-owned subsidiary of Price Communications Cellular, Inc., a wholly owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer" or the "Predecessor").
In May, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the Palmer acquisition. Accordingly, no gain or loss was recognized
on the Georgia Sale.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Price
Communications Wireless, Inc. and subsidiaries (the "Company") have been
prepared without audit pursuant to Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financials. In the opinion of management, all adjustments (none of
which were other than normal recurring items) considered necessary for a fair
presentation have been included. The results of operations for the interim
periods reported are not necessarily indicative of results to be expected for
the year.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as "push down" accounting.
The Company's condensed consolidated Statement of Operations for the second
quarter of 1997 and for the six months ended June 30, 1997 and Statement of Cash
Flows for the six months ended June 30, 1997 reflect its historical results of
operations and cash flows and are referred to as the "Predecessor" condensed
consolidated financial statements. Accordingly, the accompanying financial
statements of the
F-29
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Predecessor and the Company are not comparable in all material respects since
those financial statements report results of operations and cash flows of these
two separate entities
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 Statement of Operations
and Statement of Cash Flows to conform to the 1998 presentation.
(2) The company's condensed consolidated Balance Sheets includes $85,989 at
June 30, 1998 and $80,112 at December 31, 1997 of 13 1/2% Holdings Notes which
are obligations of Holdings but are included in the Balance Sheets solely
pursuant to "push down" accounting rules.
(3) LONG-TERM DEBT
In June 1998, PCW issued $525 million of 9.125% Senior Secured Notes
("9.125% Notes") due June 15, 2002 with interest payable semi-annually
commencing December 15, 1998. The 9.125% Notes contain covenants that restrict
the payment of dividends, incurrence of debt and sale of assets. The net
proceeds from the issuance of the 9.125% Notes were used to retire outstanding
indebtedness under the Credit Facility, including interest.
(4) SUBSEQUENT EVENT
In July 1998, Holdings called for redemption all of its outstanding 13 1/2%
Senior Secured Discount Notes due 2007. These notes are included on the
Company's balance sheet as "Obligation of Parent Company," pursuant to
"push-down" accounting rules. The notes were redeemed in August 1998 at the
redemption price per $1000 aggregate principal amount of $711.61. The accreted
value of the notes approximated $91.0 million. In addition, the Company was
required to pay a premium of approximately 20% of the outstanding balance or
approximately $18.2 million. The Company financed the redemption out of the net
proceeds of a new offering of 11 1/4% Senior Exchangeable Payable-in-Kind notes
due 2008.
F-30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
OFFERING MEMORANDUM, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. NEITHER THE DELIVERY
OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS OFFERING MEMORANDUM DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH, SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.............................. 1
Risk Factors.................................... 11
The Palmer Acquisition.......................... 18
Use of Proceeds................................. 19
Capitalization..................................
Unaudited Pro Forma Condensed Consolidated
Financial Statements.......................... 20
Selected Consolidated Financial Data............ 24
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 26
The Exchange Offer.............................. 38
Business of the Company......................... 43
Management...................................... 58
Principal Stockholder........................... 62
Description of the 11 3/4% PCW Notes............ 63
Description of the Holdings PIK Notes........... 64
Description of Notes............................ 65
United States Federal Income Tax Consequences of
the Exchange Offer............................ 98
Plan of Distribution............................ 100
Legal Matters................................... 100
Independent Accountants......................... 100
Available Information........................... 101
Certain Terms................................... 101
Index to Financial Statements................... F-1
</TABLE>
$525,000,000
PRICE COMMUNICATIONS
WIRELESS, INC.
9 1/8% SERIES B SENIOR
SECURED NOTES DUE 2006
--------------
PROSPECTUS
--------------
GLEACHER NATWEST INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NESBITT BURNS SECURITIES INC.
WASSERSTEIN PERELLA SECURITIES, INC.
OCTOBER , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
<TABLE>
<CAPTION>
Securities and Exchange Commission Registration Fee........... $154,875.00
<S> <C>
Printing and Engraving Expenses............................... $ *
Legal Fees and Expenses....................................... $ *
Accounting Fees and Expenses.................................. $ *
Miscellaneous................................................. $ *
----------
Total......................................................... $ *
----------
----------
</TABLE>
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for the unlawful payment
of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit.
Section 145 of the DGCL empowers the Company to indemnify, subject to the
standards set forth therein, any person in connection with any action, suit or
proceeding brought before or threatened by reason of the fact that the person
was a director, officer, employee or agent of such company, or is or was serving
as such with respect to another entity at the request of such company. The DGCL
also provides that the Company may purchase insurance on behalf of any such
director, officer, employee or agent.
The Certificate of Incorporation and By-laws of PCW exonerate directors of
PCW from personal liability to PCW and their respective stockholders, for
monetary damages for breach of the fiduciary duty of care as a director, but it
does not eliminate or limit liability for any breach of the directors' duty of
loyalty for acts or omissions not in good faith or which involve intentional
misconduct or knowing violations of law, for any improper declaration of
dividends or for any transaction from which the directors derived an improper
personal benefit. The Certificate of Incorporation does not eliminate a
stockholder's right to seek nonmonetary, equitable remedies, such as an
injunction or rescission, to redress an action taken by the directors. However,
as a practical matter, equitable remedies may not be available in all
situations, and there may be instances in which no effective remedy is
available.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On June 9, 1998, the Company issued notes consisting of $525 million
principal amount at maturity of 9 1/8% Senior Secured Notes due 2006 in an
unregistered offering in reliance on Section 4(2) of the Securities Act of 1933,
as amended. These notes are the object of this registered exchange offer for
registered, but otherwise identical, notes.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (see index to exhibits at E-1)
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER
AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
/s/ ROBERT PRICE Executive Officer and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Executive Officer)
Chief Financial Officer
/s/ JEFFREY L. GREEN (Principal Financial
- ------------------------------ Officer and Accounting September 30, 1998
Jeffrey L. Green Officer)
</TABLE>
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PANAMA CITY COMMUNICATIONS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PANAMA CITY CELLULAR TELEPHONE COMPANY LTD.
By: Panama City Communications, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PANHANDLE CELLULAR PARTNERSHIP
By: Palmer Wireless Holdlings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
By: Palmer Wireless Holdings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
CEI COMMUNICATIONS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
MACON CELLULAR TELEPHONE SYSTEMS, L.P.
By: CEI Communications, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
COLUMBUS CELLULAR TELEPHONE COMPANY
By: Palmer Wireless Holdings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
ALBANY CELLULAR PARTNERS
By: Palmer Wireless Holdings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
MONTGOMERY CELLULAR HOLDING CO., INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
/s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PALMER WIRELESS HOLDINGS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS II, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNIATIONS WIRELESS III, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS IV, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS V, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS VI, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS VII, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on September 30, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS IX, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert Price, his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-4 including any amendment increasing or decreasing the
amount of the securities for which registration is being sought or any
registration statement for the same offering filed in accordance with Rule
462(b) under the Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting upon said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal September 30, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer September 30, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-25
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
1.1 Purchase Agreement
2.1 The Merger Agreement+
3.1 Certificate of Incorporation, as amended, of PCW (1)
3.2 By-laws of PCW (1)
3.3 Articles of Incorporation, as amended, of Panama City Communications, Inc. (formerly Milky
Way Communications, Inc.) (1)
3.4 Bylaws of Panama City Communications, Inc. (formerly Milky Way Communications, Inc.) (1)
3.5 Certificate of Limited Partnership of Panama City Cellular Telephone Company, Ltd. (formerly
Cellular One of Panama City, Florida, Limited) (1)
3.6 Limited Partnership Agreement of Panama City Cellular Telephone Company, Ltd. (formerly
Cellular One of Panama City, Florida, Limited) (1)
3.7 Partnership Agreement of Panhandle Cellular Partnership (1)
3.8 Certificate of Limited Partnership, as amended, of Savannah Cellular Limited Partnership (1)
3.9 Limited Partnership Agreement of Savannah Cellular Limited Partnership (1)
3.10 Certificate of Incorporation of CEI Communications, Inc. (1)
3.11 Bylaws of CEI Communications, Inc. (1)
3.12 Agreement and Certificate of Limited Partnership, as amended, of Macon Cellular Telephone
Systems, L.P. (formerly Portsmouth Cellular Limited Partnership) (1)
3.13 Certificate of Incorporation of Columbus Cellular Telephone Company (1)
3.14 Partnership Agreement of Columbus Cellular Telephone Company (1)
3.15 General Partnership Agreement, as amended and restated, of Albany Cellular Partners (1)
3.16 Articles of Incorporation, as amended, of Cellular Dynamics Telephone Company of Georgia
(formerly Cellcom Telephone Company of Georgia) (1)
3.17 Bylaws of Cellular Dynamics Telephone Company of Georgia (formerly Cellcom Telephone Company
of Georgia) (1)
3.18 Certificate of Incorporation of Montgomery Cellular Holding Co., Inc. (1)
3.19 Bylaws of Montgomery Cellular Holding Co., Inc. (1)
3.20 Certificate of Incorporation of Montgomery Cellular Telephone Company, Inc. (1)
3.21 Bylaws of Montgomery Cellular Telephone Company, Inc. (1)
3.22 Certificate of Incorporation of Cellular Systems of Southeast Alabama, Inc. (1)
3.23 Bylaws of Cellular Systems of Southeast Alabama, Inc. (1)
3.24 Articles of Incorporation, as amended, of Dothan Cellular Telephone Company, Inc. (formerly
Cellular One of Southeast Alabama, Inc. and Cosa II, Inc.) (1)
3.25 Bylaws of Dothan Cellular Telephone Company, Inc. (formerly Cellular One of Southeast
Alabama, Inc.) (1)
3.26 Certificate of Incorporation, as restated, of Palmer Wireless Holdings, Inc. (1)
3.27 Bylaws of Palmer Wireless Holdings, Inc. (1)
3.28 Certificate of Incorporation of Price Communications Wireless II, Inc. (1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
3.29 Bylaws of Price Communications Wireless II, Inc. (1)
3.30 Certificate of Incorporation of Price Communications Wireless III, Inc. (1)
3.31 Bylaws of Price Communications Wireless III, Inc. (1)
3.32 Certificate of Incorporation of Price Communications Wireless IV, Inc. (1)
3.33 Bylaws of Price Communications Wireless IV, Inc. (1)
3.34 Certificate of Incorporation of Price Communications Wireless V, Inc. (1)
3.35 Bylaws of Price Communications Wireless V, Inc. (1)
3.36 Certificate of Incorporation of Price Communications Wireless VI, Inc. (1)
3.37 Bylaws of Price Communications Wireless VI, Inc. (1)
3.38 Certificate of Incorporation of Price Communications Wireless VII, Inc. (1)
3.39 Bylaws of Price Communications Wireless VII, Inc. (1)
3.40 Certificate of Incorporation of Price Communications Wireless VIII, Inc. (1)
3.41 Bylaws of Price Communications Wireless VIII, Inc. (1)
3.42 Certificate of Incorporation of Price Communications Wireless IX, Inc. (1)
3.43 Bylaws of Price Communications Wireless IX, Inc. (1)
4.1 Indenture to 9 1/8% Senior Secured Notes due 2006 among PCW, each of the Guarantors and Bank
of Montreal Trust Company, as Trustee (including form of note) (1)
4.2 Indenture to 11 3/4% Senior Subordinated Notes due 2007 between PCW and Bank of Montreal
Trust Company, as Trustee (including form of note)+
5.1 Opinion of Davis Polk & Wardwell regarding the validity of the Notes (1)
10.1 Fort Myers Sale Agreement*
10.2 Georgia Sale Agreement*
10.3 Wisehart Employment Agreement*
10.4 Meehan Employment Agreement*
10.5 Green Employment Agreement+
10.6 Ryan Employment Agreement+
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges (1)
15.1 Letter re: unaudited interim financial information (1)
21.1 Subsidiaries of the Company
23.1 Consent of KPMG Peat Marwick LLP relating to the financial statements of Palmer
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Davis Polk & Wardwell (see exhibit 5.1)
24.1 Power of Attorney for the Company (2)
24.2 Power of Attorney for Panama City Communications, Inc. (2)
24.3 Power of Attorney for Panama City Cellular Telephone Company, Ltd. (2)
24.4 Power of Attorney for Panhandle Cellular Partnership (2)
24.5 Power of Attorney for Savannah Cellular Limited Partnership (2)
24.6 Power of Attorney for CEI Communications, Inc. (2)
24.7 Power of Attorney for Macon Cellular Telephone Systems, L.P. (2)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
24.8 Power of Attorney for Columbus Celular Telephone Company (2)
24.9 Power of Attorney for Albany Cellular Partners (2)
24.10 Power of Attorney for Cellular Dynamics Telephone Company of Georgia (2)
24.11 Power of Attorney for Montgomery Cellular Holding Co., Inc. (2)
24.12 Power of Attorney for Montgomery Cellular Telephone Company, Inc. (2)
24.13 Power of Attorney for Cellular Systems of Southeast Alabama, Inc. (2)
24.14 Power of Attorney for Dothan Cellular Telephone Company, Inc. (2)
24.15 Power of Attorney for Palmer Wireless Holdings, Inc. (2)
24.16 Power of Attorney for Price Communications Wireless II, Inc. (2)
24.17 Power of Attorney for Price Communications Wireless III, Inc. (2)
24.18 Power of Attorney for Price Communications Wireless IV, Inc. (2)
24.19 Power of Attorney for Price Communications Wireless V, Inc. (2)
24.20 Power of Attorney for Price Communications Wireless VI, Inc. (2)
24.21 Power of Attorney for Price Communications Wireless VII, Inc. (2)
24.22 Power of Attorney for Price Communications Wireless VIII, Inc. (2)
24.23 Power of Attorney for Price Communications Wireless IX, Inc. (2)
25.1 Statement of Eligibility of Trustee with respect to the 9 1/8% Senior Secured Notes due 2006
of PCW (1)
99.1 Form of Letter of Transmittal to 9 1/8% Senior Secured Notes due 2006 of the Company (1)
99.2 Form of Notice of Guaranteed Delivery to 9 1/8% Senior Secured Notes due 2006 of the Company
(1)
99.3 Form of Instruction to Registered Holder and/or Book-Entry Transfer of Participant from Owner
of the Company (1)
99.4 Form of Letter to Clients (1)
99.5 Form of Letter to Registered Holders and Depository Trust Company
Participants (1)
</TABLE>
- ------------------------
* Incorporated by reference to Registration No. 333-41227 filed by Price
Communications Cellular Holdings Inc. ("Holdings") with the Commission
+ Incorporated by reference to Registration No. 333-57363 filed by Holdings
and Price Communications Corporation with the Commission.
+ Incorporated by reference to Registration No. 333-36253 filed by the Company
with the Commission.
(1) To be filed by amendment.
(2) Included in the signature pages in Part II
<PAGE>
$525,000,000
9-1/8% Senior Secured Notes due 2006
of
PRICE COMMUNICATIONS WIRELESS, INC.
------------------
------------------
PURCHASE AGREEMENT
------------------
------------------
June 8, 1998
NATWEST CAPITAL MARKETS LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
NESBITT BURNS SECURITIES INC.
WASSERSTEIN PERELLA SECURITIES, INC.
c/o NatWest Capital Markets Limited,
As Representative of the Purchasers,
660 Madison Avenue
New York, New York 10021
Ladies & Gentlemen:
Price Communications Wireless, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to NatWest Capital Markets Limited,
Donaldson, Lufkin & Jenrette Securities Corporation, Nesbitt Burns Securities
Inc., and Wasserstein Perella Securities, Inc. (each, a "Purchaser") an
aggregate of $525,000,000 principal amount of 9-1/8% Senior Secured Notes due
2006 (the "Notes") subject to the terms and conditions set forth herein. The
Notes will be unconditionally and jointly and severally guaranteed, on a senior
secured basis (each, a "Guarantee," collectively, the "Guarantees," and together
with the Notes, the "Securities"), by each of the guarantors listed on Schedule
A hereto (each, a "Guarantor," collectively, the "Guarantors," and together with
the Company, the "Issuers"). The Securities are to be issued pursuant to the
provisions of an indenture (the "Indenture") to be dated as of June 16, 1998
(the "Closing Date") by and between the Issuers and Bank of Montreal Trust
Company, as trustee (the "Trustee"). The Securities will be secured by a first
priority Lien on the Collateral (as defined in the Security Agreement) pursuant
to a security agreement
<PAGE>
2
(the "Security Agreement") to be dated the Closing Date
by and between the Issuers and the Trustee.
1. Offering Memorandum. The Notes will be offered and sold to you pursuant
to an exemption from the registration requirements of the Securities Act of
1933, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder (the "Act"). The Company has prepared a preliminary
offering memorandum, dated May 22, 1998 (including the documents incorporated
therein by reference, the "Preliminary Offering Memorandum"), and a final
offering memorandum, dated June 9, 1998 (including the documents incorporated
therein by reference, the "Offering Memorandum"), relating to the Issuers and
the Securities.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Offering Memorandum. All references herein to
"subsidiaries" or "Subsidiaries" of the Company, except where specifically
indicated otherwise, refer solely to subsidiaries of the Company as of the date
of this agreement.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Notes (and all
securities issued in exchange therefor or in substitution thereof) shall bear
the following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING
<PAGE>
3
TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER MAY BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO
ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR
PURCHASING PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION, "UNITED STATES" AND "U.S
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER A TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
You have advised the Company that you will make offers (the "Exempt
Resales") of the Notes purchased hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented by the Company, if applicable,
solely to (i) persons whom you reasonably believe to be "qualified institutional
buyers," as defined in Rule 144A under the Act ("QIBs") and (ii) to persons
permitted to purchase Notes in offshore transactions in reliance upon Regulation
S under the Act (each, a "Regulation S Purchaser"). The QIBs and Regulation S
Purchasers who purchase Notes from the Purchasers in the initial placement
thereof are referred to herein as the "Eligible Purchasers." You have advised
the Company that you will offer the Notes to such Eligible Purchasers initially
at the price set forth on the cover of the Offering Memorandum, and that such
price may be changed at any time without notice.
<PAGE>
4
The Issuers and the Purchasers intend to enter into a registration rights
agreement (the "Registration Rights Agreement"), to be dated the Closing Date.
Pursuant to the Registration Rights Agreement, the Issuers will agree to file
with the Securities and Exchange Commission (the "Commission"), under the
circumstances set forth therein, (i) a registration statement under the Act (the
"Exchange Offer Registration Statement") relating to the 9-1/8% Senior Secured
Notes, Series B, due 2006 (the "Exchange Notes") to be offered in exchange for
the Notes (the "Exchange Offer"), or (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement") relating
to the resale by certain holders of the Notes, and to use their reasonable best
efforts to cause such Registration Statements to be declared effective. This
Agreement, the Notes, the Guarantees, the Security Agreement, the Indenture and
the Registration Rights Agreement are hereinafter sometimes referred to
collectively as the "Operative Documents."
2. Agreements to Sell and Purchase. On the basis of the representations and
warranties contained in this purchase agreement, hereinafter referred to as the
"Agreement," and subject to its terms and conditions, the Company agrees to
issue and sell to you, and each of the Purchasers, severally but not jointly,
agrees to purchase from the Company, the Notes in the respective principal
amount set forth opposite its name on Schedule I hereto. The aggregate purchase
price for the Notes shall be $511,875,000 (the "Purchase Price").
3. Delivery and Payment. Delivery to the Purchasers of and payment for the
Securities shall be made at 10:00 A.M., New York City time, on the Closing Date,
at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005-1702. The Closing Date and the location of delivery of and the form of
payment for the Securities may be varied by agreement between you and the
Company.
One or more of the Notes in definitive form, registered in the name of Cede
& Co., as nominee of The Depository Trust Company ("DTC"), having an aggregate
principal amount equal to $525,000,000, shall be delivered by the Company to you
(or as you may direct), against payment by you of the Purchase Price therefor by
wire transfer in immediately available funds to such accounts with such
financial institutions as the Company may direct.
4. Agreements of the Issuers. The Issuers agree, jointly and severally,
with each of you as follows:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of the issuance by any state securities commission
of any stop order suspending the qualification or exemption from
qualification of any of the Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any
state securities commission or other regulatory authority, and (ii) of the
happening of any event which makes any statement of a material fact made in
the Offering
<PAGE>
5
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum in order to make the statements therein
not misleading; provided, however, that the Issuers shall have no
obligation with respect to any such event occurring after the Closing Date
unless one or more of the Purchasers notifies the Issuers in writing at the
Closing Date that it has not completed the initial placement of the
Securities, in which case the Issuers shall have such obligation until such
Purchaser notifies the Issuers of the completion of such initial placement,
which such Purchaser shall do promptly upon such completion.
(b) To furnish to you, without charge, such number of copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Issuers consent to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto prepared by
the Issuers, by you in connection with offers or sales of the Notes.
(c) Not to make any amendment or supplement to the Preliminary
Offering Memorandum or the Offering Memorandum of which you shall not
previously have been advised or to which you shall reasonably object; and
to prepare and make any amendment or supplement to the Preliminary Offering
Memorandum or the Offering Memorandum which may be necessary or advisable
in connection with the distribution of the Securities by you.
(d) If, after the date hereof, any event shall occur as a result of
which, in the reasonable judgment of the Issuers or in your reasonable
judgment, it becomes necessary to amend or supplement the Offering
Memorandum in order to make the statements therein, in light of the
circumstances under which the Offering Memorandum is delivered to an
Eligible Purchaser which is a prospective purchaser, not misleading, or, if
it is necessary to amend or supplement the Offering Memorandum to comply
with any applicable law, forthwith to prepare an appropriate amendment or
supplement to the Offering Memorandum so that the statements in the
Offering Memorandum, as so amended or supplemented, will not, in light of
the circumstances when it is so delivered, be misleading, or so that the
Offering Memorandum will comply with such applicable law; provided,
however, that the Issuers shall have no such obligation with respect to any
event occurring after the Closing Date unless one or more of the Purchasers
notifies the Issuers in writing at the Closing Date that it has not
completed the initial placement of the Securities, in which case the
Issuers shall have such obligation until such Purchaser notifies the
Issuers of the completion of such initial placement, which such Purchaser
shall do promptly upon such completion.
<PAGE>
6
(e) To cooperate with you and your counsel in connection with the
registration or qualification of the Securities for offer and sale by the
Purchasers and by dealers under the securities or Blue Sky laws of such
jurisdictions as you may request, to continue such qualification in effect
so long as required for the completion of the initial placement of the
Securities and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Issuers shall not be required in
connection therewith to register or qualify as a foreign corporation where
they are not now so qualified or to take any action that would subject them
to service of process in suits or taxation, other than as to matters and
transactions relating to the Exempt Resales, in any jurisdiction where they
are not now so subject.
(f) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to and in connection with: (i)
the printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including financial statements and
exhibits) and all amendments and supplements thereto, (ii) the preparation
(including, without limitation, word processing and duplication costs) and
delivery of all preliminary and final Blue Sky memoranda, (iii) the
issuance and delivery by the Issuers of the Securities, (iv) the
qualification of the Securities for offer and sale under the securities or
Blue Sky laws of the several states (including, without limitation, the
reasonable fees and disbursements of your counsel relating to such
registration or qualification), (v) furnishing such copies of the
Preliminary Offering Memorandum and the Offering Memorandum and all
amendments and supplements thereto as may be reasonably requested for use
in connection with offers and sales of the Securities, (vi) the preparation
of certificates for the Securities (including, without limitation, printing
and engraving thereof), (vii) the fees, disbursements and expenses of the
Issuers' counsel and accountants and the Trustee for the Securities, (viii)
the rating of the Notes by investment rating agencies, and (ix) the
performance by the Issuers of their other obligations under this Agreement.
(g) To use their best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Issuers
prior to the Closing Date.
(h) To use the proceeds from the sale of the Securities in the manner
described in the Offering Memorandum under the caption "Use of Proceeds"
and consistent with that described therein under the caption "Description
of Notes -- Security."
(i) Not to claim voluntarily, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Securities.
<PAGE>
7
(j) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined by the Act) other than the
Securities, in a manner that would require the registration under the Act
of the sale to you or Eligible Purchasers of the Securities.
(k) For so long as any of the Notes remain outstanding and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder and any prospective purchaser of such Notes from
such holder the information specified by Rule 144A(d)(4) under the Act.
(l) Except following the effectiveness of the Exchange Offer
Registration Statement, not to, and not to authorize or knowingly permit
any person acting on its behalf to, solicit any offer to buy or offer to
sell the Securities by means of any form of general solicitation or general
advertising (as such terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act.
(m) To cause the Exchange Offer to be made on the appropriate form to
permit registration of the Exchange Notes to be offered in exchange for the
Notes and to comply with all applicable federal and state securities laws
in connection with the Exchange Offer.
(n) To comply with all of the agreements set forth in the Registration
Rights Agreement and all agreements set forth in the representation letter
of the Company to DTC relating to the approval of the Securities by DTC for
"book-entry" transfer.
(o) To use its best efforts to effect the inclusion of the Securities
in PORTAL.
5. Representations and Warranties. (a) The Issuers represent and warrant
jointly and severally to each of you that:
(i) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared in connection with the Exempt Resales. The Offering
Memorandum does not contain and, as amended or supplemented, if applicable,
will not contain, any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (i) do not apply
to statements in, or omissions from, the Offering Memorandum
<PAGE>
8
based upon information relating to the Purchasers furnished to the Company
in writing by the Purchasers expressly for use therein. The Issuers
acknowledge for all purposes under this Agreement that the statements set
forth in the paragraph appearing at the bottom of the front cover page and
in the table and the third, fourth, fifth, seventh, eighth, tenth and
eleventh paragraphs (to the extent such statements relate to the
Purchasers) appearing under the caption "Plan of Distribution" in the
Preliminary Offering Memorandum and Offering Memorandum constitute the only
written information furnished to the Company by the Purchasers expressly
for use in the Preliminary Offering Memorandum or the Offering Memorandum,
respectively, and that you shall not be deemed to have provided any
information (and therefore are not responsible for any statement or
omission) pertaining to any arrangement or agreement with respect to any
party other than the Purchasers. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act or the applicable laws of any other jurisdiction,
has been issued. The Offering Memorandum, as of its date, contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4)
under the Act.
(ii) When the Notes are issued and delivered pursuant to this
Agreement, none of the Notes will be of the same class (within the meaning
of Rule 144A under the Act) as securities of any of the Issuers that are
listed on a national securities exchange registered pursuant to the
Exchange Act or that are quoted in a U.S. automated interdealer quotation
system.
(iii) The Company, the Guarantors and each of their subsidiaries (A)
have been duly organized, (B) are validly existing as a corporation or
limited or general partnership in good standing under the laws of its
respective jurisdiction of organization, (C) have all requisite corporate
or partnership power and authority (x) to carry on their business as is
currently being conducted and as described in the Offering Memorandum and
(y) to own, lease and operate its properties, and (D) are duly qualified
and in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of their business or their ownership
or leasing of property requires such qualification, except where the
failure to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect (as defined below).
(iv) The entities listed on Schedule B hereto are the only
subsidiaries, direct or indirect, of the Company (other than subsidiaries
with immaterial amounts of assets). The Company owns, and as of the Closing
Date, the Company will own, directly or indirectly through other
subsidiaries, the percentages of the outstanding capital stock or other
securities evidencing equity ownership of such subsidiaries indicated
<PAGE>
9
on Schedule B hereto, and all of such securities have been duly authorized,
validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; and as of the Closing Date
the Company will own, directly or indirectly, the assets, properties and
interests disclosed in the Offering Memorandum as owned by the Company free
and clear of any security interest, claim, lien, limitation on voting
rights or encumbrance other than as is set forth in the Offering
Memorandum. There are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of such subsidiaries, except as disclosed in the
Offering Memorandum..
(v) Each of the Issuers, as applicable, has all requisite corporate
power and authority to execute, deliver and perform its obligations under
each Operative Document to which it is a party, and each of the Issuers and
its subsidiaries, as applicable, has all, requisite corporate or
partnership power and authority to execute, deliver and perform its
obligations under each Operative Document to which it is a party and, in
each case, to consummate the transactions contemplated hereby and thereby,
including, without limitation, the corporate power and authority to issue,
sell and deliver the Securities as provided herein and therein.
(vi) This Agreement has been duly and validly authorized, executed and
delivered by each of the Issuers and is a valid and binding agreement of
each of the Issuers.
(vii) The Indenture has been duly and validly authorized by each of
the Issuers. The Indenture meets the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and when duly executed and delivered by the parties thereto, will be a
valid and binding obligation of each of the Issuers, enforceable against
each of the Issuers in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights and remedies
generally and (ii) as to general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity. The
Indenture, when executed and delivered, will conform to the description
thereof in the Offering Memorandum.
(viii) The Notes have been duly and validly authorized for issuance
and sale to you by the Company pursuant to this Agreement and, when issued
and authenticated in accordance with the terms of the Indenture and
delivered against payment therefor in accordance with the terms hereof,
will be valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to the benefits of
the Indenture, except (i) as such enforcement may be limited by bankruptcy,
<PAGE>
10
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally and (ii) as to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in
equity. The Notes, when issued, authenticated and delivered, will conform
to the description thereof in the Offering Memorandum.
(ix) The Guarantees have been duly and validly authorized by each of
the Guarantors and upon endorsement on the Notes (or the Exchange Notes, as
the case may be) in accordance with the terms of the Indenture, execution,
authentication and delivery of the Notes against payment therefor in
accordance with the terms hereof, will be valid and binding obligations of
each of the Guarantors, enforceable against each of the Guarantors in
accordance with its terms, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and (ii) as to general
principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity. The Guarantees, when executed and
delivered, will conform to the description thereof in the Offering
Memorandum.
(x) The Exchange Notes have been duly and validly authorized for
issuance by the Company, and when issued and authenticated in accordance
with the terms of the Indenture, the Registration Rights Agreement and the
Exchange Offer, will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled
to the benefits of the Indenture, except (i) as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights and remedies generally and (ii) as to
general principles of equity, regardless of whether enforcement is sought
in a proceeding at law or in equity.
(xi) The Security Agreement and each of the transactions contemplated
thereby has been duly and validly authorized by each of the Issuers and,
when duly executed and delivered by the Issuers, will be a valid and
binding obligation of each of them, enforceable in accordance with its
terms, except (i) as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally and (ii) as to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or
equity. The Security Agreement conforms to the description thereof in the
Offering Memorandum.
(xii) The Security Agreement, when duly executed and delivered by the
Issuers, will create and constitute a valid and enforceable security
interest in, lien upon or pledge of all of the Collateral, subject to no
other security interest, claim, lien, encumbrance or adverse interest of
any nature and no right or option to acquire the same
<PAGE>
11
in favor of any other person or entity, except as permitted by the Security
Agreement. Upon the filing of UCC-1 financing statements in appropriate
form in the requisite filing offices, the security interest, lien or pledge
created by the Security Agreement will be a perfected security interest
with respect to that portion of the Collateral in which a security interest
can be perfected by the filing of a financing statement, prior to all other
claims or security interests therein except as permitted by the Security
Agreement. Upon the delivery to the Trustee of certificates representing
the Pledged Securities (as defined in the Security Agreement), together
with stock powers duly executed by the applicable pledgor in blank, the
lien of the Security Agreement on such Pledged Securities shall constitute
a perfected security interest, free of any adverse claim thereto except as
permitted by the Security Agreement.
(xiii) The Registration Rights Agreement has been duly and validly
authorized by each of the Issuers and, when duly executed and delivered by
each of the Issuers, will be the valid and binding obligation of each of
the Issuers, enforceable in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights and remedies
generally, (ii) as to general principles of equity, regardless of whether
enforcement is sought in a proceeding at law or in equity and (iii) that
the enforceability of the indemnification and contribution provisions
contained therein may be limited by federal and state securities laws and
the policies underlying such laws. The Registration Rights Agreement
conforms to the description thereof in the Offering Memorandum.
(xiv) None of the Company or any of its subsidiaries is in violation
of its respective charter, bylaws or other organizational document or is in
default in the performance of any bond, debenture, note, indenture,
mortgage, deed of trust, license or other agreement or instrument to which
it is a party or by which it is bound or to which any of its properties is
subject, or is in violation of any law, statute, rule, regulation, judgment
or court decree applicable to them or their assets or properties, except
for any such defaults or violations, which singly or in the aggregate,
would not have a Material Adverse Effect (as defined below). There exists
no condition that, with notice, the passage of time or otherwise, would
constitute a default under any such document or instrument, except for any
such defaults or violations, which singly or in the aggregate, would not
have a Material Adverse Effect.
(xv) The execution, delivery and performance by the Issuers of this
Agreement and by each of the Issuers and their subsidiaries, as applicable,
of the other Operative Documents (except as set forth in the Offering
Memorandum) to which they are parties, the issuance and sale of the Notes
and Guarantees as contemplated by this Agreement and the Offering
Memorandum and the consummation of the transactions
<PAGE>
12
contemplated hereby and thereby will not violate, conflict with or
constitute a breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or both, would
constitute a default), or require consent under, or result in the
imposition of a lien or encumbrance on any properties of the Company or any
of its subsidiaries or an acceleration of indebtedness pursuant to (i) the
charter or bylaws of the Company or any of its subsidiaries, (ii) any bond,
debenture, note, indenture, mortgage, deed of trust, license or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them or their property is or may be bound, (iii)
any statute, rule or regulation applicable to the Company or any of its
subsidiaries, or (iv) any judgment, order or decree of any court or
governmental agency or authority having jurisdiction over the Company or
any of its subsidiaries. Except as required by the Federal Communications
Commission ("FCC") as disclosed in the Offering Memorandum, no consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or governmental
agency, body or administrative agency is required for the execution,
delivery and performance of this Agreement and the other Operative
Documents (except as set forth in the Offering Memorandum) by the Company
or, as applicable, any of its subsidiaries and the consummation of the
transactions contemplated hereby and thereby, except such as have been
obtained and made (or, in the case of the Registration Rights Agreement,
will be obtained and made) under the Act, the Trust Indenture Act, and
state securities or Blue Sky laws and regulations or such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD"). No consents or waivers from any other person are required for the
execution, delivery and performance of this Agreement and the other
Operative Documents (except as set forth in the Offering Memorandum) by the
Company or, as applicable, any of its subsidiaries and the consummation of
the transactions contemplated hereby and thereby, other than such consents
and waivers as have been obtained (or, in the case of the Registration
Rights Agreement, will be obtained).
(xvi) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Issuers, threatened
or contemplated to which the Company or any of its subsidiaries is a party
or to which the business or property of the Company or any of its
subsidiaries is subject, (ii) no statute, rule, regulation or order that
has been enacted, adopted or issued by any governmental agency or that has
been proposed by any governmental body, (iii) no injunction, restraining
order or order of any nature by a federal or state court or foreign court
of competent jurisdiction to which the Company or any of its subsidiaries
is subject issued that, in the case of clauses (i), (ii) and (iii) above,
(x) might, singly or in the aggregate, result in a material adverse effect
on the properties, business, results of operations, condition (financial or
<PAGE>
13
otherwise), or prospects of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect"), (y) would interfere with or adversely
affect the issuance of the Notes and Guarantees or (z) in any manner draw
into question the validity of any Operative Document.
(xvii) To the best knowledge of the Issuers, no action has been taken
and no statute, rule or regulation or order has been enacted, adopted or
issued by any governmental agency that prevents the issuance of the Notes
or Guarantees; to the best knowledge of the Issuers, no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the issuance of the
Notes or Guarantees or suspends the sale of the Notes in any jurisdiction
referred to in Section 4(e) hereof; and to the best knowledge of the
Issuers, no action, suit or proceeding is pending against the Company or
any of its subsidiaries before any court or arbitrator or any governmental
body, agency or official which, if adversely determined, would prohibit the
issuance of the Notes or Guarantees or invalidate any Operative Document;
and every request of the Issuers by any securities authority or agency of
any jurisdiction for additional information has been complied with in all
material respects.
(xviii) To the best of their knowledge, none of the Company, the
Guarantors or any of their subsidiaries has violated any federal, state or
local law relating to discrimination in hiring, promotion or pay of
employees.
(xix) To the best of their knowledge, none of the Company, the
Guarantors or any of their subsidiaries has violated any environmental,
safety or similar law or regulation applicable to it or its business or
property relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permit, license or other
approval required of them under applicable Environmental Laws or is
violating any term or condition of such permit, license or approval which
might result in a Material Adverse Effect.
(xx) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the Offering
Memorandum or as would not have a Material Adverse Effect, (ii) peaceful
and undisturbed possession under all leases to which it is party as lessee,
(iii) all licenses, certificates, permits, authorizations, approvals,
franchises and other rights from, and has made all declarations and filings
with, all federal, state and local authorities (including the FCC), all
self-regulatory authorities and all courts and other tribunals necessary to
engage in the business currently conducted by it
<PAGE>
14
in the manner described in the Offering Memorandum (each an
"Authorization"), except where failure to hold such Authorizations would
not have a Material Adverse Effect and (iv) no reason to believe that any
governmental body or agency is considering limiting, suspending or revoking
any such Authorization, except as described in the Offering Memorandum. All
such Authorizations are valid and in full force and effect and the Company
and its subsidiaries are in compliance in all respects with the terms and
conditions of all such Authorizations and with the rules and regulations of
the regulatory authorities having jurisdiction with respect thereto, except
as would not have a Material Adverse Effect. All leases to which the
Company or any of its subsidiaries is a party are valid and binding and no
default by the Company or any of its subsidiaries has occurred and is
continuing thereunder, except such as are described in the Offering
Memorandum or as would not have a Material Adverse Effect, and no material
defaults by the landlord are existing under any such lease. None of the
Issuers has any reason to believe that the FCC licenses with respect to the
cellular systems identified in the Offering Memorandum as owned and
operated by the Company (the "Systems") will not be renewed for a full term
when such FCC licenses are due for renewal. To the Issuers' knowledge, none
of such FCC licenses are subject to any conditions outside of the ordinary
course.
(xxi) Except as otherwise disclosed in the Offering Memorandum, each
of the Company, the Guarantors and their subsidiaries owns or possesses all
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names, in each case to the extent
disclosed in the Offering Memorandum as being material to the business of
the Company (collectively, the "Intellectual Property"), presently employed
by it in connection with the businesses now operated by them, and neither
the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing. The use of such intellectual Property in connection
with the business and operations of the Company and its subsidiaries does
not infringe on the rights of any person.
(xxii) All tax returns required to be filed by the Company, the
Guarantors or any of their subsidiaries, in all jurisdictions, have been so
filed. All taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities or that are due and payable have been paid, other than those being
contested in good faith and for which adequate reserves have been provided
in accordance with generally accepted accounting principles or those
currently payable without penalty or interest. None of the Company or any
of its subsidiaries knows of any material proposed additional tax
assessments against it.
<PAGE>
15
(xxiii) Neither the Company, the Guarantors nor any of their
subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(xxiv) There are no holders of securities of the Issuers who, by
reason of the execution by the Issuers of any Operative Document to which
it is a party or the consummation of the transactions contemplated hereby
and thereby, have the right (that has not been waived) to request or demand
that any of the Issuers register securities held by them under the Act or
analogous foreign laws and regulations.
(xxv) The authorized, issued and outstanding capital stock of each of
the Company and its subsidiaries has been duly and validly authorized and
issued, is fully paid and nonassessable and was not issued in violation of
any preemptive or similar rights. The Company and its subsidiaries had, at
March 31, 1998, an authorized and outstanding capitalization as set forth
in the section entitled "Capitalization" in the Offering Memorandum.
(xxvi) Each certificate signed by any officer of the Company or any of
the Guarantors and delivered to the Purchasers or counsel for the
Purchasers shall be deemed to be a representation and warranty by the
Company or the Guarantors, as applicable, to each Purchaser as to the
matters covered thereby.
(xxvii) Each of the Issuers and their subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(xxviii) Except as would not be unlawful, none of the Company, the
Guarantors or any of their subsidiaries has (i) taken, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company, the Guarantors or any of their respective
subsidiaries to facilitate the sale or resale of the Notes or (ii) since
the date of the Preliminary Offering Memorandum (A) sold, bid for,
purchased or paid any person any compensation for soliciting purchases of
the Notes or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, the
Guarantors or any of their respective subsidiaries.
<PAGE>
16
(xxix) No registration under the Act of the Securities is required for
the sale of the Securities to the Purchasers as contemplated hereby or for
Exempt Resales to the Eligible Purchasers, assuming (i) that the purchasers
who buy the Securities in the Exempt Resales are QIBs or Regulation S
Purchasers and (ii) the accuracy of the Purchasers' representations
regarding the absence of general solicitation in connection with the sale
of Securities to the Purchasers and the Exempt Resales contained herein. No
form of general solicitation or general advertising was used by the Issuers
or any of their representatives (assuming, for purposes of the Purchasers,
the accuracy of the Purchasers representations in Section 5(b) hereof) in
connection with the offer and sale of any of the Securities or in
connection with Exempt Resales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Securities have
been issued and sold by the Issuers within the six-month period immediately
prior to the date hereof.
(xxx) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of
its date, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act.
(xxxi) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as set
forth in the Offering Memorandum, (A) neither the Company, the Guarantors
nor any of their subsidiaries has (x) incurred any liabilities or
obligations, direct or contingent, which are material to the Company, the
Guarantors and their subsidiaries, taken as a whole, or (y) entered into
any transaction not in the ordinary course of business, (B) there has not
been, singly or in the aggregate, any material adverse change, or any
development which may reasonably be expected to involve a material adverse
change, in the properties, business, results of operations, condition
(financial or otherwise), or prospects of the Company, the Guarantors and
their subsidiaries, taken as a whole (a "Material Adverse Change"), and (C)
there have not been dividends or distributions of any kind declared, paid
or made by the Company, the Guarantors or any of their subsidiaries on any
class of their capital stock.
(xxxii) Neither the Company, nor any Guarantor, nor any agent thereof
acting on the behalf of any of the Issuers (other than the Purchasers, to
the extent applicable) has taken, and none of them will take, any action
that might cause this Agreement or the issuance or sale of the Securities
to violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part
221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
<PAGE>
17
(xxxiii) Each firm of accountants that has certified or shall certify
the financial statements and supporting schedules included or to be
included as part of the Preliminary Offering Memorandum and the Offering
Memorandum are, to the best of the Company's and the Guarantors' knowledge,
independent public accountants with respect to the Issuers and their
subsidiaries as required by the Act for financial statements included in a
registration statement on Form S-1. The consolidated historical statements
fairly present the consolidated financial conditions and results of
operations of the Company and its subsidiaries at the respective dates and
for the respective periods indicated, in accordance with generally accepted
accounting principles consistently applied throughout such periods. The pro
forma financial statements have been prepared on a basis consistent with
such historical statements, except for the pro forma adjustments specified
therein, and give effect to assumptions made on a reasonable basis and
present fairly the historical and proposed transactions contemplated by the
Preliminary Offering Memorandum, the Offering Memorandum, this Agreement
and the other Operative Documents. Other financial and statistical
information and data included in the Offering Memorandum, historical and
pro forma, are accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company and its
subsidiaries.
(xxxiv) Immediately prior to and after the Closing Date, the present
fair saleable value of the assets of the Issuers and their subsidiaries,
taken as a whole, will exceed the amount that will be required to be paid
on or in respect of the existing debts and other liabilities (including
contingent liabilities) of each such person as they become absolute and
matured. The assets of the Issuers, immediately after the Issue Date, will
not constitute unreasonably small capital to permit them to carry out their
business as conducted or as proposed to be conducted. None of the Issuers
intend to, nor do any of the Issuers believe that they will, incur debts
beyond their ability to pay such debts as they mature. Upon the issuance of
the Notes, the present fair saleable value of the assets of the Company
will not exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of the Company as they become absolute and matured. The assets
of the Company, upon the issuance of the Notes, will not constitute
unreasonably small capital to carry out its business as now conducted,
including the capital needs of the Company, taking into account the
projected capital requirements and the capital availability of the Company.
(xxxv) There are no contracts, agreements or understandings between
the Company, the Guarantors or any of their subsidiaries and any person
that would give rise to a valid claim against the Company, the Guarantors,
any of their subsidiaries or
<PAGE>
18
any Purchaser for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Securities.
(xxxvi) The Issuers and their respective affiliates and all persons
acting on their behalf (other than the Purchasers, as to whom no
representation is made) have complied with and will comply with the
offering restrictions of Regulation S in connection with the offering of
the Securities outside the United States of America.
(xxxvii) The Issuers acknowledge that the Purchasers and, for purposes
of the opinions to be delivered to the Purchasers pursuant to Section 7
hereof, counsel to the Issuers and counsel to the Purchasers will rely upon
the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
(b) Each Purchaser represents and warrants to the Issuers and the other
Purchasers and agrees that:
(i) Such Purchaser is a QIB with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the
merits and risks of an investment in the Securities.
(ii) Such Purchaser (A) is not acquiring the Securities with a view to
any distribution thereof that would violate the Act or the securities laws
of any state of the United States or any other applicable jurisdiction and
(B) will be reoffering and resetting the Securities only to (x) QIBs in
reliance on the exemption from the registration requirements of the Act
provided by Rule 144A and (y) in offshore transactions in reliance upon
Regulation S under the Act.
(iii) No form of general solicitation or general advertising has been
or will be used by such Purchaser or any of its representatives in
connection with the offer and sale of any of the Securities, which would
render unavailable to the Company reliance upon the exemption from the
registration requirements of the Act afforded by Section 4(2) thereof,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
(iv) Such Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Securities only from, and will
offer to sell the Securities only to, Eligible Purchasers. Such Purchaser
further agrees (A) that it will offer to sell the Securities only to, and
will solicit offers to buy the Securities only from, (1) QIBs who, in
purchasing such Securities, will be deemed to have represented and agreed
that
<PAGE>
19
they are purchasing such Securities for their own accounts or accounts with
respect to which they exercise sole investment discretion and that they or
such accounts are QIBs, that they are aware that the sale to them is being
made in reliance on Rule 144A, and that they are acquiring such Securities
for investment and not with a view to, or for offer or sale in connection
with, any distribution (within the meaning of the Act) or fractionalization
thereof or with any intention of reselling the Securities or any part
thereof, subject to any requirement of law that the disposition of their
property or the property of such investor account or accounts be at all
times within their control and subject to their ability to resell such
Securities pursuant to Rule 144, 144A, Regulation S or other exemption from
registration available under the Act and (2) Regulation S Purchasers who in
purchasing the Securities will be deemed to have represented and agreed
that their purchase of Securities pursuant to Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act, (B) that,
in the case of such Eligible Purchasers, such Eligible Purchasers will be
deemed to have acknowledged that the Securities have not been registered
under the Act and may not be sold except as permitted below, (C) that,
unless so registered, in the case of such Eligible Purchasers, such
Eligible Purchasers will be deemed to have agreed that if they should sell,
pledge or otherwise transfer the Securities prior to the second anniversary
of the later of the original issuance of the Securities or the sale thereof
by any affiliate (within the meaning of Rule 144 under the Act or any
successor rule thereto, an "Affiliate") of any of the Issuers (computed in
accordance with paragraph (d) of Rule 144 under the Act) or if they were at
the date of such transfer or during the three months preceding such date of
transfer an Affiliate of any of the Issuers, they would do so in compliance
with any applicable state securities or "Blue Sky" laws and only (v) to the
Company, as applicable, (w) in accordance with Rule 144A (as indicated by
the box checked by the transferor on the form of assignment on the reverse
of the Note), (x) pursuant to any exemption from registration in accordance
with Regulation S under the Act (as indicated by the box checked by the
transferor on the form of assignment on the reverse of the Note), (y) to an
Institutional Accredited Investor which delivers a certificate in the form
of Exhibit B to the Indenture to the Trustee, or (z) any other applicable
exemption under the securities laws and (D) that, in the case of such
Eligible Purchasers, such Eligible Purchasers will be deemed to have
acknowledged that they have received the information, if any, requested by
them pursuant to Rule 144A, have had full opportunity to review such
information and have received all additional information necessary to
verify such information and that they (i) are able to fend for themselves
in the transactions contemplated by the Offering Memorandum, (ii) have such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of their prospective investment in the
Securities and (iii) have the ability to bear the economic risks of their
prospective investment and can afford the complete loss of such investment.
<PAGE>
20
(v) Such Purchaser also understands that the Issuers and, for purposes
of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Issuers and counsel to the Purchasers will rely upon the
accuracy and truth of the foregoing representations and hereby consents to
such reliance.
(vi) No such Purchaser nor any of its affiliates, nor any person
acting on their behalf, has engaged in any directed selling efforts within
the meaning of Regulation S with respect to the Notes.
(vii) Such Purchasers agree that, at or prior to confirmation of a
sale of Notes by them to any distributor, dealer or person receiving a
selling concession, fee or other remuneration during the 40-day restricted
period referred to in Rule 903(c)(3) under the Act, they will have sent to
such distributor, dealer or person receiving a selling concession, fee or
other remuneration a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of your distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S (or Rule 144A in transactions
that are exempt from the registration requirements of the Securities
Act) under the Securities Act, and in connection with any subsequent
sale by you of the Notes covered hereby in reliance on Regulation S
during the period referred to above to any distributor, dealer or
person receiving a setting concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect. Terms
used above have the meanings assigned to them in Regulation S."
<PAGE>
21
6. Indemnification. (a) The Issuers agree, jointly and severally, to
indemnify and hold harmless (i) each of the Purchasers and (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) any of the Purchasers (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling person"), and (iii)
the respective officers, directors, partners, employees, representatives and
agents of any of the Purchasers or any controlling person (any person referred
to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Person"), from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Purchaser furnished in writing to the Company by or
on behalf of any Purchaser expressly for use therein; provided that the
foregoing indemnity with respect to any Preliminary Offering Memorandum shall
not inure to the benefit of any Indemnified Person from whom the person
asserting such losses, claims, damages, liabilities and judgments purchased
securities if such untrue statement or omission or alleged untrue statement or
omission made in such Preliminary Offering Memorandum is eliminated or remedied
in the Offering Memorandum and a copy of the Offering Memorandum shall not have
been furnished to such person in a timely manner due to the wrongful action or
wrongful inaction of any Purchaser.
(b) In case any action shall be brought against any Indemnified Person,
based upon the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto and with respect to which indemnity may be
sought against any of the Issuers, such Indemnified Person shall promptly notify
the Company in writing and the Issuers shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person and payment of all fees and expenses. Any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless (i) the employment of such counsel
shall have been specifically authorized in writing by any of the Issuers, (ii)
the Issuers shall have failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both such Indemnified Person and any of the Issuers and such Indemnified Person
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Issuers (in which case the Issuers shall not have the right to assume the
defense of such action on behalf of such Indemnified Person, it being
understood, however, that the Issuers shall not, in connection
<PAGE>
22
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all such
Indemnified Persons, which firm shall be designated in writing by NatWest
Capital Markets Limited, and that all such fees and expenses shall be reimbursed
as they are incurred. The Issuers shall not be liable for any settlement of any
such action effected without their written consent but if settled with the
written consent of the Issuers, the Issuers agree to indemnify and hold harmless
any Indemnified Person from and against any loss or liability by reason of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(c) Each Purchaser agrees, severally and not jointly, to indemnify and hold
harmless each of the Issuers, their directors, their officers and any person
controlling any of the Issuers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Issuers to each Indemnified Person but only with reference to
information relating to such Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum. In case any action shall be brought against
any of the Issuers, any of their directors, any such officer or any person
controlling any of the Issuers based on the Preliminary Offering Memorandum or
Offering Memorandum and in respect of which indemnity may be sought against any
of the Purchasers, such Purchaser shall have the rights and duties given to the
Company (except that if the Issuers shall have assumed the defense thereof, such
Purchaser shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Purchaser), and the Issuers, their
directors, any such officer and any person controlling any of the Issuers shall
have the rights and duties given to the Purchasers by Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
judgments referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to reflect
the relative benefits received by the Issuers on the one hand and each Purchaser
on the other hand from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
<PAGE>
23
benefits referred to in clause (i) above but also the relative fault of the
Issuers and each Purchaser in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Issuers on the one hand and each Purchaser on the other shall be deemed to
be in the same proportion as the total net proceeds from the Offering (before
deducting expenses) received by the Issuers, and the total discounts received by
each Purchaser, bear to the total price to investors of the Notes, in each case
as set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Issuers on the one hand and each Purchaser on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Issuers or such Purchaser and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Issuers and the Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Purchaser shall be required
to contribute any amount in excess of the amount by which the total discounts
received by it in connection with the sale of the Notes pursuant to this
Agreement exceeds the amount of any damages which such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective amount of Notes
purchased by each of the Purchasers hereunder and not joint.
7. Conditions of the Purchasers' Obligations. The several obligations of
the Purchasers under this Agreement are subject to the satisfaction of each of
the following conditions:
(a) All of the representations and warranties of the Issuers contained
in this Agreement shall be true and correct on the date hereof and on the
Closing Date with the same force and effect as if made on and as of the
date hereof and the Closing Date, respectively. The Issuers shall have
performed or complied with all of the agreements
<PAGE>
24
herein contained and required to be performed or complied with by it at or
prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Purchasers not later than the date immediately following
the date of this Agreement or at such later date and time as you may
approve in writing, and, at the Closing Date, no stop order suspending the
qualification or exemption from qualification of any of the Notes in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance or sale of
any of the Notes; no action, suit or proceeding shall be pending against
or, to the knowledge of the Issuers, threatened against, the Company, the
Guarantors or any of their subsidiaries before any court or arbitrator or
any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision that would prohibit, interfere with or
adversely affect the issuance or sale of the Notes or would have a Material
Adverse Effect, in any manner draw into question the validity of any
Operative Document; and no stop order, injunction, restraining order, or
order of any nature preventing the use of the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material change, or any
development that is reasonably likely to result in a material change, in
the capital stock or the long-term debt, or material increase in the
short-term debt, of the Issuers or their subsidiaries, taken as a whole,
from that set forth in the Offering Memorandum, (ii) no dividend or
distribution of any kind shall have been declared, paid or made by any of
the Issuers on any class of its capital stock, and (iii) neither the
Issuers nor any of their subsidiaries shall have incurred any liabilities
or obligations, direct or contingent, that are material, individually or in
the aggregate, to the Issuers and their subsidiaries, taken as a whole, and
that are required to be disclosed on a balance sheet in accordance with
generally accepted accounting principles and are not disclosed on the
latest balance sheet included in the Offering Memorandum. Since the date
hereof and since the dates as of which information is given in the Offering
Memorandum, there shall not have been any Material Adverse Change.
<PAGE>
25
(e) You shall have received certificates, dated the Closing Date,
signed by (i) the President or any Vice President of the Company and each
Guarantor and (ii) a principal financial or accounting officer of the
Company and each Guarantor confirming, as of the Closing Date, the matters
set forth in paragraphs (a), (b), (c), (d), (n), (o) and (p), and the first
and third sentences of paragraph (q) of this Section 7.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Davis
Polk & Wardwell, outside counsel to the Issuers, to the effect that:
(i) The Company has duly and validly authorized, executed and
delivered this Agreement.
(ii) The Company has duly and validly authorized, executed and
delivered the Indenture, and (assuming the due authorization,
execution and delivery thereof by the Trustee) the Indenture is the
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except (i) as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting creditors' rights and
remedies generally, (ii) as to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or
in equity, and (iii) to the extent that a waiver of rights under any
usury law may be unenforceable. In rendering such opinion, such
counsel may state that it expresses no opinion as to the applicability
(and, if applicable, the effect) of Section 548 of the United States
Bankruptcy Code or any comparable provision of state law to the
questions addressed therein or on the conclusions with respect
thereto.
(iii) The Notes have been duly and validly authorized for
issuance and sale to you by the Company pursuant to this Agreement
and, when issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with
the terms hereof, will be the valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms and entitled to the benefits of the Indenture, except (i) as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights and remedies generally, (ii) as to general
principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity, and (iii) to the extent that a waiver
of rights under any usury laws may be unenforceable.
<PAGE>
26
(iv) The Exchange Notes have been duty and validly authorized for
issuance by the Company and, when issued and authenticated in
accordance with the terms of the Indenture, the Registration Rights
Agreement and the Exchange Offer, will be valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the
Indenture, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights and remedies
generally, (ii) as to general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity, and
(iii) to the extent that a waiver of rights under any usury laws may
be unenforceable.
(v) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the valid and binding obligation of the Company,
enforceable in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors'
rights and remedies generally, (ii) as to general principles of
equity, regardless of whether enforcement is sought in a proceeding at
law or in equity and (iii) that the enforceability of the
indemnification and contribution provisions contained therein may be
limited by federal and state securities laws and the policies
underlying such laws.
(vi) The Security Agreement has been duly and validly authorized,
executed and delivered by the Company, and (assuming the due
authorization, execution and delivery by the Guarantors) is a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except (i) as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting creditors' rights and
remedies generally and (ii) as to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or
in equity. In rendering such opinion, such counsel may state that it
expresses no opinion as to the applicability (and, if applicable, the
effect) of Section 548 of the United States Bankruptcy Code or any
comparable provision of state law to the questions addressed therein
or on the conclusions with respect thereto.
(vii) Each of this Agreement, the Registration Rights Agreement
the Notes, the Guarantees, the Security Agreement and the Indenture
conforms as to legal matters in all material respects to the
description thereof in the Offering Memorandum.
<PAGE>
27
(viii) When the Notes are issued and delivered pursuant to this
Agreement, none of the Notes will be of the same class (within the
meaning of Rule 144A under the Act) as securities of the Company that
are listed on a national securities exchange registered pursuant to
the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(ix) Registration of the Securities under the Act or
qualification of the Indenture under the Trust Indenture Act is not
required in connection with the offer, sale and delivery of the
Securities to the Purchasers or the initial placement of the
Securities by the Purchasers in the manner contemplated by the
Offering Memorandum to QIBs and Regulation S Purchasers, it being
understood that in rendering this opinion such counsel may assume the
accuracy of the representations of the Purchasers and the Issuers
contained herein and that the offer, sale and delivery of the
Securities have been made as contemplated by this Agreement and the
Offering Memorandum and such counsel may state that no opinion is
given with respect to any other offer or resale of the Securities.
(x) The execution, delivery and performance by the Issuers of
this Agreement, the Indenture, the Guarantees, the Security Agreement
and the Registration Rights Agreement and the issuance and sale of the
Securities as contemplated by the Offering Memorandum and this
Agreement, will not violate, conflict with or constitute a breach of
any of the terms or provisions of, or a default under (or an event
that with notice or the lapse of time, or both, would constitute a
default), or require consent under, or result in the imposition of a
lien or encumbrance on any properties of the Issuers or any of their
respective material subsidiaries, or an acceleration of indebtedness
pursuant to, (i) the charter or bylaws of the Company, except any such
violation, conflict, breach or default that has been waived or consent
that has been obtained, (ii) any bond, debenture, note, indenture,
mortgage, deed of trust, license or other agreement or instrument to
which the Issuers or any of their respective material subsidiaries is
a party or by which any of them or their property is or may be bound,
which is set forth in Schedule II hereto, (iii) to such counsel's
knowledge, any statute, rule or regulation applicable to the Issuers
any of their respective material subsidiaries or any of their assets
or properties, except such as may be required under the Act, the Trust
Indenture Act and state securities or Blue Sky laws and regulations or
by the NASD, or (iv) to such counsel's knowledge, any judgment, order
or decree of any court or governmental agency or authority having
jurisdiction over the Issuers any of their respective material
subsidiaries or their assets or properties. No consent, approval,
authorization or order of, or
<PAGE>
28
filing, registration, qualification, license or permit of or with, any
court or governmental agency, body or administrative agency is
required for the execution, delivery and performance of this
Agreement, the Indenture, the Notes, the Guarantees, the Security
Agreement or the Registration Rights Agreement by the Guarantors,
except such as have been obtained (subject to clause (ix), above, and
assuming reliance by such counsel on the accuracy of the
representations referred to therein), such as may be required under
the Act, the Trust Indenture Act and state securities or Blue Sky laws
and regulations or such as may be required by the NASD.
(xi) To the best knowledge of such counsel, no action has been
taken and no statute, rule or regulation or order has been enacted,
adopted or issued by any governmental agency that prevents the
issuance of the Securities; no injunction, restraining order or order
of any nature by a federal or state court of competent jurisdiction
has been issued that prevents the issuance of the Securities; and no
action, suit or proceeding is pending against or affecting or, to the
best knowledge of such counsel, threatened against, the Company and
the Guarantors or any of their respective subsidiaries before any
court or arbitrator or any governmental body, agency or official
which, if adversely determined, would prohibit the issuance of the
Securities.
(xii) The Offering Memorandum, as of its date, and each amendment
or supplement prepared by the Issuers, if any, thereto, as of its date
(except for the financial statements, including the notes thereto, and
supporting schedules and other financial, statistical, and accounting
data included therein or omitted therefrom, as to which no opinion
need be expressed), comply as to form in all material respects with
the requirements of Rule 144A(d)(4) under the Act.
(xiii) The Security Agreement creates in favor of the Collateral
Agent (as defined in the Security Agreement) for the benefit of the
Secured Parties (as defined in the Security Agreement) a valid
security interest in each Issuer's right, title and interest, if any,
in the Collateral (as defined in the Security Agreement) in each case
to the extent that the Uniform Commercial Code of the State of New
York (the "New York UCC") is applicable thereto and governs the
creation of security interest therein.
(xiv) Assuming that the Pledged Securities (as defined in the
Security Agreement), endorsed in blank or accompanied by an instrument
of transfer or assignment in blank, are delivered to the Collateral
Agent, and are continuously held by the Collateral Agent thereafter,
in each case in the State of New York, and the good faith of, and the
absence of notice of any adverse claim thereto on
<PAGE>
29
the part of, the Collateral Agent and each of the other Secured
Parties, such delivery, together with the Security Agreement, are
effective to create, in favor of the Collateral Agent for the benefit
of the Secured Parties, a valid and perfected security interest in all
right, title and interest of the Issuers in the Pledged Securities
securing the Secured Obligations, which security interest will have
priority over all other security interests created under the New York
UCC in the Pledged Securities.
In rendering the foregoing opinions, Davis Polk & Wardwell may state that
they are not expressing any opinions as to (i) any laws relating specifically to
the communications industry; (ii) the right, title or interest of any Person to
any Collateral or the value given therefor; (iii) except as expressly set forth
in paragraph (xiii) or (xiv) above, the creation, perfection or priority of any
security interest or lien; (iv) the effect of Section 552 of Title 11 of the
United States Code (the "Bankruptcy Code") on the creation or perfection of
security interests in collateral acquired by any person subsequent to the
commencement of a case by or against such person under the Bankruptcy Code; and
(v) transactions excluded from the UCC by Section 9-104 thereof.
In addition, such counsel may note (i) the possible unenforceability of
certain waivers and remedial provisions contained in the Security Agreement;
however, none of such provisions renders the Security Agreement invalid and the
Security Agreement contains, in such counsel's judgment, adequate remedial
provisions for the practical realization of the rights and benefits afforded
thereby; and (ii) that the security interest of the Holders in proceeds is
limited to the extent set forth in Section 9-306 of the New York UCC and to
property of a type subject to the New York UCC.
In addition, Davis Polk & Wardwell shall state that it has generally
reviewed and discussed with certain officers and other representatives of the
Issuers, representatives of the independent public accountants for the Issuers,
your representatives and your counsel in connection with the preparation of the
Preliminary Offering Memorandum and the Offering Memorandum and the statements
contained therein and, although such counsel has not independently verified the
accuracy, completeness or fairness of such statements (except as indicated
above), such counsel advises you that, on the basis of the foregoing, no facts
came to its attention that caused it to believe that the Offering Memorandum (as
amended or supplemented, if applicable) as of its date or at the Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements, in light of
the circumstances under which they were made, not misleading. Without limiting
the foregoing, such counsel may further state that they assume no responsibility
for, and have not independently verified, the accuracy, completeness or fairness
of the
<PAGE>
30
financial statements, notes and schedules and other financial data included in
the Preliminary Offering Memorandum or the Offering Memorandum.
The opinions of such counsel described in this subsection shall be rendered
to you at the request of the Company and shall so state therein.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of K.
Patrick Meehan, general counsel to the Issuers, to the effect that:
(i) Each of the Guarantors has duly and validly authorized,
executed and delivered this Agreement.
(ii) The Guarantors have duly and validly authorized, executed
and delivered the Indenture, and (assuming the due authorization,
execution and delivery thereof by the Trustee) the Indenture is the
valid and binding obligation of each of the Guarantors, enforceable
against each of the Guarantors in accordance with its terms, except
(i) as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights and remedies generally, (ii) as to general
principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity, and (iii) to the extent that a waiver
of rights under any usury law may be unenforceable. In rendering such
opinion, such counsel may state that it expresses no opinion as to the
applicability (and, if applicable, the effect) of Section 548 of the
United States Bankruptcy Code or any comparable provision of state law
to the questions addressed therein or on the conclusions with respect
thereto.
(iii) The Registration Rights Agreement has been duly and validly
authorized by each of the Guarantors and, when duly executed and
delivered by each of the Guarantors, will be the valid and binding
obligation of the Guarantors, enforceable in accordance with its
terms, except (i) as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights and remedies generally, (ii)
as to general principles of equity, regardless of whether enforcement
is sought in a proceeding at law or in equity and (iii) that the
enforceability of the indemnification and contribution provisions
contained therein may be limited by federal and state securities laws
and the policies underlying such laws.
<PAGE>
31
(iv) The Security Agreement has been duly and validly authorized,
executed and delivered by each of the Guarantors, and is a valid and
binding obligation of each of the Guarantors, enforceable against each
of the Guarantors in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors'
rights and remedies generally and (ii) as to general principles of
equity, regardless of whether enforcement is sought in a proceeding at
law or in equity. In rendering such opinion, such counsel may state
that it expresses no opinion as to the applicability (and, if
applicable, the effect) of Section 548 of the United States Bankruptcy
Code or any comparable provision of state law to the questions
addressed therein or on the conclusions with respect thereto.
(v) The Guarantees have been duly and validly authorized for
issuance by the Guarantors and, when issued in accordance with the
terms of the Indenture and the Guarantees, will be the valid and
binding obligation of the Guarantors, enforceable against each of the
Guarantors in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance or similar laws
affecting creditors' rights and remedies generally, (ii) as to general
principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity, and (iii) to the extent that a waiver
of rights under any usury laws may be unenforceable. In rendering such
opinion, such counsel may state that it expresses no opinion as to the
applicability (and, if applicable, the effect) of Section 548 of the
United States Bankruptcy Code or any comparable provision of state law
to the questions addressed therein or on the conclusions with respect
thereto.
(vi) The execution, delivery and performance by each of the
Guarantors of this Agreement, the Indenture, the Guarantees, the
Security Agreement and the Registration Rights Agreement and the
issuance and sale of the Securities as contemplated by the Offering
Memorandum and this Agreement, will not violate, conflict with or
constitute a breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent under, or result in
the imposition of a lien or encumbrance on any properties of the
Guarantors or any of their respective material subsidiaries, or an
acceleration of indebtedness pursuant to, the charter or bylaws of the
Guarantors, or any of their respective material subsidiaries, except
any such violation, conflict, breach or default that has been waived
or consent that has been obtained.
<PAGE>
32
The opinions of such counsel described in this subsection shall be rendered
to you at the request of the Company and shall so state therein.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date of Davis
Wright Tremaine LLP, counsel for the Company with respect to FCC and
related matters to the effect that:
(i) Those statements in the offering Memorandum that describe
provisions of the Communications Act of 1934, as amended (the
"Communications Act"), and the rules, regulations and published
orders, policies and decisions of the FCC ("FCC Rules") are accurate
descriptions in all material respects.
(ii) The execution, delivery and performance of the obligations
by the Company under the Operative Documents are not and will not be
contrary to the Communications Act, or to the terms of any System
license, will not result in any violation of the FCC Rules, will not
cause any forfeiture or impairment of any FCC license of any of the
Systems, and will not require any consent, approval or authorization
of the FCC.
(iii) To such counsel's knowledge, after such counsel's inquiry,
the Company and each of its subsidiaries validly holds all FCC
licenses necessary for the operation of the Systems (and any
associated microwave links) in the manner in which they are described
as being conducted in the Offering Memorandum (for purposes of this
opinion only, the "FCC Licenses"). The FCC Licenses are in full force
and effect, and are not subject to any conditions outside the ordinary
course (except as set forth in an exhibit to such opinion).
(iv) Except as may be disclosed in an exhibit to such opinion,
all applicable administrative and judicial appeal, review and
reconsideration periods relating to the grant of the FCC Licenses have
expired without our being served with any timely filing of any such
appeal, review, request or reconsideration petition, and without the
FCC having instituted review or reconsideration of the grant of any of
the FCC Licenses on its own motion.
(v) To such counsel's knowledge, after such counsel's inquiry,
each of the Company and its subsidiaries has filed with the FCC all
necessary and material reports, documents, instruments, information
and applications required to be filed pursuant to the FCC's rules,
regulations and requests, other than those the failure of which to so
file could reasonably be expected to, singly or in the aggregate, have
a Material Adverse Effect. To such counsel's knowledge,
<PAGE>
33
after such counsel's inquiry, no notice has been issued by the FCC
which could permit, or after notice or lapse of time or both could
permit, revocation or termination of any of the FCC Licenses prior to
the expiration dates thereof or which could result in any other
material impairment of any of Palmer's and each of its subsidiaries'
rights thereunder.
(vi) To such counsel's knowledge, after such counsel's inquiry
but without field investigation, each of the Systems is operating in
compliance in all material respects with the Communications Act and
the FCC Rules. To such counsel's knowledge, after such counsel's
inquiry, there is not issued, outstanding or pending any notice of
violation, notice of apparent liability, order to show cause, material
complaint or investigation by or before the FCC which could reasonably
be expected to, singly or in the aggregate, have a Material Adverse
Effect, nor does such counsel have reason to believe, subject to the
Company's and its subsidiaries' continued regulatory compliance, that
the FCC Licenses will not be renewed for a full term when they are due
for renewal.
The opinions of such counsel described in this subsection shall be rendered
to you at the request of the Company and shall so state therein.
(i) You shall have received on the Closing Date an opinion of each of
Parker, Hudson, Rainer & Dobbs LLP; Wainwright & Pope, P.C.; Holland &
Knight; Nelson Mullins Riley & Scarborough, L.L.P., in each case
substantially in the respective forms attached hereto as Exhibit A.
(j) You shall have received an opinion, dated the Closing Date, of
Cahill Gordon & Reindel, your counsel, in form and substance reasonably
satisfactory to you, covering such matters as are customarily covered in
such opinions. In rendering the foregoing opinion, Cahill Gordon & Reindel
may state that they are not expressing any opinions as to any laws relating
specifically to the communications industry.
(k) At the time this Agreement is executed and delivered by the
Issuers and on the Closing Date, you shall have received letters,
substantially in the form previously approved by you, from Arthur Andersen
LLP and KPMG Peat Marwick LLP with respect to the financial statements and
certain financial information contained in the Offering Memorandum.
(l) Cahill shall have been furnished with such documents and opinions,
in addition to those set forth above, as they may reasonably require for
the purpose of enabling them to review or pass upon the matters referred to
in this Section 7 and in
<PAGE>
34
order to evidence the accuracy, completeness or satisfaction in all
material respects of any of the representations, warranties or conditions
herein contained.
(m) Prior to the Closing Date, the Issuers shall have furnished to you
such further information, certificates and documents as you may reasonably
request.
(n) The Issuers and the Trustee shall have entered into the Indenture
and you shall have received counterparts, conformed as executed, thereof.
(o) The rights, property and assets disclosed in the Offering
Memorandum as being owned or exercisable, directly or indirectly, by the
Issuers shall be so owned and exercisable by the Issuers on the Closing
Date.
(p) The Issuers shall have entered into the Registration Rights
Agreement and you shall have received counterparts, conformed as executed,
thereof.
(q) The Issuers and the Collateral Agent shall have entered into the
Security Agreement and you shall have received counterparts, conformed as
executed, thereof. The Trustee and the Purchasers shall have received all
financing statements, stock certificates and other documents and
instruments requested by Trustee for the creation, filing, priority and
perfection of the security interests created pursuant to the Security
Agreement. All filing fees and taxes incurred on or prior to the Closing
Date in connection with such filings shall have been paid. The Purchasers
shall have received evidence satisfactory to them of such payments.
All opinions, certificates, letters and other documents required by this
Section 7 to be delivered by the Issuers will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to you. The Issuers will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and other documents as they shall
reasonably request.
8. Defaults. If, on the Closing Date, any of the Purchasers shall fail or
refuse to purchase Notes that it has agreed to purchase hereunder on such date
and the aggregate principal amount of such Notes that such defaulting Purchaser
agreed but failed or refused to purchase does not exceed 10% of the total
principal amount of such Notes that all of the Purchasers are obligated to
purchase on such Closing Date, the non-defaulting Purchasers shall be obligated
to purchase the amount of such Notes that such defaulting Purchaser agreed but
failed or refused to purchase. If, on the Closing Date, any of the Purchasers
shall fail or refuse to purchase Notes in an aggregate principal amount that
exceeds 10% of such total principal amount and arrangements satisfactory to the
other Purchasers and the Company for the purchase of such Notes are not made
within 48 hours after such default, this Agreement shall
<PAGE>
35
terminate without liability on the part of the non-defaulting Purchasers or the
Company, except as otherwise provided in Section 9. In any such case that does
not result in termination of this Agreement, the Purchasers or the Company may
postpone the Closing Date for not longer than seven (7) days, in order that the
required changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Purchaser from liability in respect of any default by any
such Purchaser under this Agreement.
9. Effective Date of Agreement and Termination. This Agreement shall become
effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by notice to the Company if any of the following has occurred: (i)
subsequent to the date information is provided in the Offering Memorandum, any
Material Adverse Change which, in your judgment, materially impairs the
investment quality of the Notes, (ii) any outbreak or escalation of hostilities
or other national or international calamity or crisis or material adverse change
in the financial markets of the United States or elsewhere, or any other
substantial national or international calamity or emergency if the effect of
such outbreak, escalation, calamity, crisis, material adverse change or
emergency would, in your judgment, make it impracticable or inadvisable to
market the Notes or to enforce contracts for the sale of the Notes, (iii) any
suspension or limitation of trading generally in securities on the New York
Stock Exchange or in the over-the-counter markets or any setting of minimum
prices for trading on such exchange or markets, (iv) any declaration of a
general banking moratorium by either federal or New York authorities, (v) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs that in your judgment has a material
adverse effect on the financial markets in the United States, and would, in your
judgment, make it impracticable or inadvisable to market the Notes or to enforce
contracts for the sale of any of the Notes, (vi) the enactment, publication,
decree, or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which, in your judgment,
would have a Material Adverse Effect, or (vii) any securities of any Parent, the
Issuers or any of their subsidiaries shall have been downgraded or placed on any
"watch list" for possible downgrading by any nationally recognized statistical
rating organization.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Issuers, their respective officers and
directors and of the Purchasers set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Notes, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of any of the Purchasers or by
or on behalf of the Issuers, the officers or directors of any of the Issuers or
any
<PAGE>
36
controlling person of any of the Issuers, (ii) acceptance of the Notes and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Purchasers pursuant to clause
(i) or (vii) of the second paragraph of this Section 9 or because of the failure
or refusal on the part of the Issuers to comply with the terms or to fulfill any
of the conditions of this Agreement, the Issuers agree to reimburse you for all
reasonable out-of-pocket expenses (including the fees and disbursements of
counsel) incurred by you. Notwithstanding any termination of this Agreement, the
Issuers shall be liable for all expenses which it has agreed to pay pursuant to
Section 4(f) hereof.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Guarantors, the
Purchasers, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Notes from any of the Purchasers merely because of such purchase.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, Price
Communications Wireless, Inc., 45 Rockefeller Plaza, Suite 3201, New York, New
York 10020, Attention: President, with a copy to Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, Attention: Richard D. Truesdell,
Jr., Esq., and (b) if to the Purchasers, c/o Gleacher NatWest International, 660
Madison Avenue, New York, New York 10021, Attention: David W. Mills, with copies
to Donaldson, Lufkin & Jenrette Securities Corporation, 600 California Street,
Suite 1800, San Francisco, California 94108-2704, Attention: Thomas M.
Benninger; Wasserstein Perella Securities, Inc., 31 West 52nd Street, New York,
New York 10019, Attention: Frederic M. Seegal; and Nesbitt Burns Securities
Inc., Attention: High Yield Department, and with a copy to Cahill Gordon &
Reindel, 80 Pine Street, 17th Floor, New York, New York 10005, Attention:
Michael E. Michetti, Esq., or in any case to such other address as the person to
be notified may have requested in writing.
This Agreement shall be governed and construed in accordance with the
internal laws of the State of New York as applied to contracts made and
performed in such state, without regard to principles of conflicts of law. This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument.
[Signature Pages Follow]
<PAGE>
37
Please confirm that the foregoing correctly sets forth the Agreement among
the Company, the Guarantors and the Purchasers.
Very truly yours,
PRICE COMMUNICATIONS WIRELESS, INC.
By:
-------------------------------------
Name:
Title:
ALBANY CELLULAR PARTNERS
By: Palmer Wireless Holdings, Inc., its
managing partner
By:
-------------------------------------
Name:
Title:
COLUMBUS CELLULAR TELEPHONE COMPANY
By: Palmer Wireless Holdings, Inc., its
managing partner
By:
-------------------------------------
Name:
Title:
<PAGE>
38
MACON CELLULAR TELEPHONE SYSTEMS
LIMITED PARTNERSHIP
By: CEI Communications, Inc., its
general partner
By:
-------------------------------------
Name:
Title:
SAVANNAH CELLULAR LIMITED
PARTNERSHIP
By: Palmer Wireless Holdings, Inc., its
general partner
By:
-------------------------------------
Name:
Title:
PANAMA CITY CELLULAR TELEPHONE
COMPANY, LTD.
By: Panama City Communications, Inc.,
its general partner
By:
-------------------------------------
Name:
Title:
<PAGE>
39
PANHANDLE CELLULAR PARTNERSHIP
By: Palmer Wireless Holdings, Inc., its
managing partner
By:
-------------------------------------
Name:
Title:
PALMER COMMUNICATIONS, INC.
PALMER WIRELESS HOLDINGS, INC.
PRICE COMMUNICATIONS WIRELESS II, INC.
PRICE COMMUNICATIONS WIRELESS III, INC.
PRICE COMMUNICATIONS WIRELESS IV, INC.
PRICE COMMUNICATIONS WIRELESS V, INC.
PRICE COMMUNICATIONS WIRELESS VI, INC.
PRICE COMMUNICATIONS WIRELESS VII, INC.
PRICE COMMUNICATIONS WIRELESS VIII, INC.
PRICE COMMUNICATIONS WIRELESS IX, INC.
CEI COMMUNICATIONS, INC.
CELLULAR DYNAMICS TELEPHONE COMPANY
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
MONTGOMERY CELLULAR HOLDING CO., INC.
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
PANAMA CITY COMMUNICATIONS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
40
Accepted and agreed to as of the date first
above written:
NATWEST CAPITAL MARKETS
LIMITED, on behalf of and as Representative
of the Purchasers
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
Guarantors
ALBANY CELLULAR PARTNERS
COLUMBUS CELLULAR TELEPHONE COMPANY
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
SAVANNAH CELLULAR LIMITED
PARTNERSHIP
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
PANHANDLE CELLULAR PARTNERSHIP
PALMER COMMUNICATIONS, INC.
PALMER WIRELESS HOLDINGS, INC.
PRICE COMMUNICATIONS WIRELESS II, INC.
PRICE COMMUNICATIONS WIRELESS III, INC.
PRICE COMMUNICATIONS WIRELESS IV, INC.
PRICE COMMUNICATIONS WIRELESS V, INC.
PRICE COMMUNICATIONS WIRELESS VI, INC.
PRICE COMMUNICATIONS WIRELESS VII, INC.
PRICE COMMUNICATIONS WIRELESS VIII, INC.
PRICE COMMUNICATIONS WIRELESS IX, INC.
CEI COMMUNICATIONS, INC.
CELLULAR DYNAMICS TELEPHONE COMPANY
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
MONTGOMERY CELLULAR HOLDING CO., INC.
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
PANAMA CITY COMMUNICATIONS, INC.
<PAGE>
SCHEDULE B
Subsidiaries Equity Ownership
- ------------ ----------------
ALBANY CELLULAR PARTNERS
COLUMBUS CELLULAR TELEPHONE COMPANY
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
SAVANNAH CELLULAR LIMITED
PARTNERSHIP
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
PANHANDLE CELLULAR PARTNERSHIP
PALMER COMMUNICATIONS, INC.
PALMER WIRELESS HOLDINGS, INC.
PRICE COMMUNICATIONS WIRELESS II, INC.
PRICE COMMUNICATIONS WIRELESS III, INC.
PRICE COMMUNICATIONS WIRELESS IV, INC.
PRICE COMMUNICATIONS WIRELESS V, INC.
PRICE COMMUNICATIONS WIRELESS VI, INC.
PRICE COMMUNICATIONS WIRELESS VII, INC.
PRICE COMMUNICATIONS WIRELESS VIII, INC.
PRICE COMMUNICATIONS WIRELESS IX, INC.
CEI COMMUNICATIONS, INC.
CELLULAR DYNAMICS TELEPHONE COMPANY
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
MONTGOMERY CELLULAR HOLDING CO., INC.
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
PANAMA CITY COMMUNICATIONS, INC.
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
NatWest Capital Markets Limited ........................... $262,500,000
Donaldson, Lufkin & Jenrette Securities Corporation ....... 210,000,000
Nesbitt Burns Securities Inc. ............................. 26,250,000
Wasserstein Perella Securities, Inc. ...................... 26,250,000
----------
TOTAL ................. $525,000,000
</TABLE>
<PAGE>
SCHEDULE II
Any bond, debenture, note, indenture, mortgage, deed of trust, license or
other agreement or instrument to which the Company or any of their material
subsidiaries is a party or by which any of them or their property is or may be
bound, which is effective and which is included or incorporated by reference as
an exhibit to the Company's annual report on Form 10K for the year ended
December 31, 1997, or quarterly report on Form 10Q for the quarter ended March
31, 1998.
<PAGE>
EXHIBIT 21.1
DIRECT AND INDIRECT SUBSIDIARIES OF PRICE COMMUNICATIONS WIRELESS, INC.
Palmer Wireless Holdings, Inc.
Panama City Communications, Inc.
Panama City Cellular Telephone Company, Ltd
Panhandle Cellular Partnership
Savannah Cellular Limited Partnership
CEI Communications, Inc.
Macon Cellular Telephone Systems, L.P.
Columbus Cellular Telephone Company
Albany Cellular Partners
Cellular Dynamics Telephone Company of Georgia
Montgomery Cellular Holding Co., Inc.
Montgomery Cellular Telephone Company, Inc.
Cellular Systems of Southeast Alabama, Inc.
Dothan Cellular Telephone Company, Inc.
Price Communications Wireless II, Inc.
Price Communications Wireless III, Inc.
Price Communications Wireless IV, Inc.
Price Communications Wireless V, Inc.
Price Communications Wireless VI, Inc.
Price Communications Wireless VII, Inc.
Price Communications Wireless VIII, Inc.
Price Communications Wireless IX, Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Price Communications Wireless, Inc.
(formerly Palmer Wireless, Inc.):
We consent to the inclusion of our report dated January 31, 1997, with respect
to the consolidated balance sheet of Palmer Wireless, Inc. and subsidiaries, as
of December 31, 1996 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1996, which report appears in the Form S-4 of Price
Communications Wireless, Inc. and to the reference to our firm under the heading
"Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
September 18, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accounts, we hereby consent to the use of our reports
on Price Communications Wireless, Inc. and to all reference to our firm included
in or made a part of this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
New York, New York
September 25, 1998
