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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 18, 2000
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CONVERGENT COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Colorado 333-53953 84-1337265
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
400 Inverness Drive South, Suite 400
Englewood, Colorado 80112
(303) 749-3000
(Address and telephone number of principal executive offices)
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Item 5. Other Events
1. In a press release dated April 19, 2000, Convergent
Communications Services, Inc., a Colorado corporation and wholly owned
subsidiary of Convergent Communications, Inc., announced the completion of a $50
million revolving senior secured credit facility with Foothill Capital
Corporation. A copy of the press release is attached.
2. In a press release dated April 19, 2000, Convergent
Communications, Inc., a Colorado corporation, announced the completion of a $175
million preferred stock investment by the Texas Pacific Group and Sandler
Capital Management. A copy of the press release is attached.
Item 7. Exhibits
(c) Exhibits
99.1 Foothill press release, dated April 19, 2000.
99.2 Preferred stock press release, dated April 19, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Convergent Communications, Inc.
Date: April 20, 2000 By: /s/ Martin E. Freidel
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Martin E. Freidel
Executive Vice President, General Counsel
and Secretary
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Exhibit 99.1
NEWS
FOR IMMEDIATE RELEASE
Convergent Communications Completes $50 Million Credit Facility
ENGLEWOOD, Colo., April 19, 2000 Convergent Communications Service Inc., a
wholly owned subsidiary of Convergent Communications Inc. (NASDAQ: CONV),
announced today that it has entered into a senior secured revolving line of
credit facility with Foothill Capital Corporation, a wholly owned subsidiary of
Wells Fargo & Company (NYSE: WFC - news). Foothill Capital is providing
Convergent Communications with an asset-based line of credit up to $50 million
for general working capital purposes.
"I am especially pleased with the completion of this working capital facility
and the establishment of what I believe will be a strong relationship with
Foothill Capital," said Brian Ervine, chief financial officer of Convergent
Communications.
The company's recently announced $175 million preferred stock investment led by
Texas Pacific Group (TPG) was closed and funded on April 18, 2000. TPG invested
$150 million, while affiliates of Sandler Capital, an early investor in the
company, invested the remainder.
"This credit facility, in concert with the capital investment led by Texas
Pacific Group, completes the funding initiatives needed to accelerate our
business plan," said Joe Zell, president and chief executive officer of
Convergent Communications.
About Foothill Capital Corporation
Foothill Capital Corporation is a leading provider of asset-based financing to
companies for growth/expansion, refinancings/recapitalizations, turnarounds,
debtor-in-possession financings and leveraged acquisitions.
About Convergent Communications
Convergent Communications Services, Inc., a wholly owned subsidiary of
Convergent Communications, Inc. (Nasdaq: CONV), is a leader in the development
of the next-generation Integrated Communications Provider (ICP) business model
focused on the small and medium enterprise (SME) marketplace. With operations in
35 markets, the company is uniquely positioned to provide complete turnkey
solutions for that marketplace that include Web services and application
hosting, managed services, complete local, long distance and Internet services,
and voice, data & video networking equipment.
For more information on Convergent Communications, visit the company's Web site
at http://www.converg.com.
-30-
The statements made by Convergent Communications in this press release may be
forward-looking in nature. Information in this press release is qualified by the
more detailed information contained in the company's 1999 annual report on Form
10-K filed with the Securities and Exchange Commission on March 30, 2000.
Forward-looking statements in this news release are expectations, not historical
facts. Such statements are subject to risks and uncertainties that could cause
actual results or outcomes to differ materially. Such risks and uncertainties
include, but are not limited to, the degree to which the company is leveraged
and the restrictions imposed on the company under its existing debt instruments
that may adversely affect the company's ability to finance its future
operations, to compete effectively against better-capitalized competitors and to
withstand downturns in its business or the economy generally; and other factors
discussed in the company's filings with the Securities and Exchange Commission.
Investor Contacts: Media Contact:
Steven Smith or Tom Kennedy Jil Hicks
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2
(303) 749-2900 (303) 749-2970
[email protected] [email protected]
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Exhibit 99.2
NEWS
FOR IMMEDIATE RELEASE
Convergent Communications Completes $175 Million Financing
ENGLEWOOD, Colo., April 19, 2000 - Convergent Communications Inc. (NASDAQ:
CONV), announced today that its previously announced $175 million preferred
stock investment led by Texas Pacific Group (TPG) was closed and funded on April
18, 2000, under the terms originally announced. TPG has invested $150 million,
with affiliates of Sandler Capital Management investing the remainder.
Under the terms, investors subscribed to $175 million of newly issued 8 percent
preferred stock convertible into common stock at a conversion price of $13 per
share. The investors also received 700,000 warrants exercisable at $20 per share
and 1.17 million warrants exercisable at $25 per share.
Warburg Dillon Read, LLC, advised Convergent Communications and acted as the
placement agent for the preferred stock and the warrants.
About Texas Pacific Group
Texas Pacific Group, founded in 1993, is an international private investment
partnership with capital in excess of $7 billion, and with offices in Fort
Worth, TX, San Francisco, CA, Washington, D.C., and London. An early private
equity investor in technology and telecommunications, TPG's telecommunications
investments include: FirstWorld Communications, Inc., a growing provider of
Internet and data center solutions for small-to-medium sized businesses; Star
One, a German provider of Point-to-Multipoint wireless broadband
telecommunications; Advanced TelCom Group, a next generation Integrated
Communications Provider targeting third- and fourth-tier cities; Paradyne
Networks, a broadband access device manufacturer; GlobeSpan Inc., the leading
DSL chip set developer; Zhone Technologies, a producer of data networking
equipment; Landis & Gyr Communications, the world's largest public telephony
equipment and systems provider; and GT Com, a telecom service provider. Other
technology investments include Gemplus S.A., Interlink Group, DoveBid, Inc., ON
Semiconductor, and Zilog, Inc. The partnership has made significant investments
in a broad range of other industries, including consumer products, healthcare,
airlines, food and beverage, and oil and gas.
About Sandler Capital
Sandler Capital Management is a leading investment management firm specializing
in media, entertainment, telecommunications, information services, publishing,
Internet and online services. Sandler has previously invested in the company and
Michael J. Marocco, managing director, is on the board of directors.
-more-
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Page 2
About Convergent Communications
Convergent Communications Services, Inc., a wholly owned subsidiary of
Convergent Communications, Inc. (Nasdaq: CONV), is a leader in the development
of the next-generation Integrated Communications Provider (ICP) business model
focused on the small and medium enterprise (SME) marketplace. With operations in
35 markets, the company is uniquely positioned to provide complete turnkey
solutions for that marketplace that include Web services and application
hosting, managed services, complete network and Internet services, and voice,
data & video networking equipment.
For more information on Convergent Communications, visit the company's Web site
at http://www.converg.com.
-30-
The statements made by Convergent Communications in this press release may be
forward-looking in nature. Information in this press release is qualified by the
more detailed information contained in the company's 1999 annual report on Form
10-K filed with the Securities and Exchange Commission on March 30, 2000.
Forward-looking statements in this news release are expectations, not historical
facts. Such statements are subject to risks and uncertainties that could cause
actual results or outcomes to differ materially. Such risks and uncertainties
include, but are not limited to, the degree to which the company is leveraged
and the restrictions imposed on the company under its existing debt instruments
that may adversely affect the company's ability to finance its future
operations, to compete effectively against better-capitalized competitors and to
withstand downturns in its business or the economy generally; and other factors
discussed in the company's filings with the Securities and Exchange Commission.
Investor Contacts: Media Contact:
Steven Smith or Tom Kennedy Jil Hicks
(303) 749-2900 (303) 749-2970
[email protected] [email protected]
