SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 1999
RECKSON SERVICE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OF INCORPORATION)
1-14183 11-3383642
(COMMISSION FILE NUMBER) (IRS EMPLOYER ID. NUMBER)
225 Broadhollow Road 11747
Melville, New York (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(516) 719-7400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 5. OTHER EVENTS
On April 16, 1999, Reckson Service Industries, Inc. ("RSI") announced that
it will increase its existing investment in OnSite Access as part of a
definitive equity financing agreement in the amount of $60 million. This equity
raise consists of RSI and a private equity investor group which includes
Spectrum Equity Investors, AT&T Ventures, Crosspoint Venture Partners and JP
Morgan Investment Corporation.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(C) EXHIBITS
99 Press Release, dated April 16, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RECKSON SERVICE INDUSTRIES, INC.
By:/s/ Michael Maturo
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Michael Maturo
Executive Vice President, Chief Financial
Officer and Treasurer
Date: April 16, 1999
FOR IMMEDIATE RELEASE Exhibit 99
Reckson Service Industries Increases Investment In OnSite Access With High
Caliber Private Equity Investor Group To Expand OnSite Into National
DSL-Based Integrated Communications Provider
$60 Million Equity Infusion
(MELVILLE, NEW YORK, April XX, 1999) - Reckson Service Industries, Inc. ("RSI")
(OTC: RSII) today announced that the Company will increase its existing
investment in OnSite Access, a DSL-based Integrated Communications Provider, as
part of a definitive equity financing agreement in the amount of $60 million.
This equity raise, which is intended to fund the national expansion of OnSite's
broadband Internet, data and voice network, consists of RSI and a private equity
investor group which includes Spectrum Equity Investors, Crosspoint Venture
Partners, J.P. Morgan Capital, AT&T Ventures and Veritech Ventures. Upon
completion of this investment, RSI will be the largest shareholder of OnSite
Access with an approximate 33% interest on a diluted basis.
OnSite Access provides high band-width, high-availability digital
telecommunications, high-speed Internet and data network services to the small
and medium size business community, utilizing broadband DSL as a transport
technology. OnSite's unique Building-Centric model focuses on forming long-term
preferred provider agreements with landlords of multi-tenanted office buildings.
Under the terms of these agreements, OnSite builds a proprietary high-speed
communications network within the buildings, thereby eliminating the bandwidth
bottlenecks in the "last foot" of the communications infrastructure. By
aggregating the traffic of several tenants within a building, OnSite achieves
significant economies of scale, allowing it to offer the tenants a bundled
package of enhanced communications services at highly competitive prices. The
building owners benefit from the addition of a no-cost, value-added amenity
which also serves as a technology upgrade to their buildings, thereby attracting
and retaining tenants.
Scott Rechler, RSI's President and Chief Executive Officer, stated, "We are very
excited about this transaction - it not only represents a significant increase
in valuation from our original investment, but by partnering with such
experienced, high caliber private equity telecom investors OnSite is well
positioned to execute its aggressive national expansion. Additionally, we look
forward to continuing to work closely with OnSite's talented management team to
facilitate the company's growth and development." Mr. Rechler added, "Strategic
investments in innovate companies such as OnSite, that provide small to medium
size businesses with the resources they need to be competitive, are central to
establishing RSI as a leading provider of a wide range of value-added outsourced
business services."
OnSite's President and Chief Operating Officer, Scott Jarus, said, "We are
pleased to gain the financial and strategic support of this investor group.
Their collective experience and expertise in the telecommunications and real
estate sectors will greatly bolster our ability to achieve our strategic goals
as we build a national network of broadband Internet, data and voice services."
Mr. Jarus continued, "This is a tremendous opportunity for OnSite. The market
already recognizes the potential of this industry, as evidenced by the
valuations placed on companies providing broadband DSL services, such as Covad
Communications (Nasdaq: COVD) and Rhythms Net Connections Inc. (Nasdaq: RTHM)."
OnSite Access, a premier DSL-based Building-Centric Communications Provider, has
contracts to supply advanced telecommunications, high-speed Internet and data
services over a convergent platform to tenants in over 36 million square feet of
commercial real estate properties in the New York Tri-State area. OnSite Access'
high-bandwidth, high-availability, "last foot" network provides cost-effective
and feature-rich communications services to its customers, who are the tenants
of these buildings. OnSite Access is headquartered in New York City. For more
information, visit the Company's Web site at www.onsiteaccess.com.
Reckson Service Industries, Inc. is a provider of a complementary set of
outsourced business services. RSI will continue to expand its services through
acquisitions, and strategic investments and alliances. The Company provides
these services primarily to small and medium size businesses and the mobile
workforce of larger corporations.
Spectrum Equity Investors is a leading private equity firm focused on the
communications industry. Founded in 1993, Spectrum currently manages three
equity funds totaling $1 billion in capital. The firm's limited partners include
prominent university endowments, foundations, pension funds, and corporations.
Many of Spectrum's ventures pioneered the development and growth of highly
successful industries, such as cellular telephone, wireless bypass, and
competitive local and long distance voice and data services.
Crosspoint Venture Partners is an early stage equity investor with focused
expertise in two strategic areas-the Net and Health Care. The partnership has a
capital base of greater than $500 million, and is sponsored by well respected
institutions, pension funds, university endowments, foundations and individuals.
Crosspoint has offices in Northern and Southern California.
J.P. Morgan Capital, J.P. Morgan's private equity investment subsidiary, has
committed over $2.5 billion of its own capital in private equity over the past
fifteen years. Its portfolio includes investments in 16 countries and a number
of industries including numerous investments in the Telecommunications, Media
and Technology sectors. J.P. Morgan is a leading global financial firm that
meets critical financial needs for business enterprises, governments and
individuals.
AT&T Ventures was founded in 1992 as a venture capital partnership, to invest in
information technology and service enabling companies in emerging growth
markets. Drawing from three funds totaling $350 million, the firm provides
capital to start-up and later stage companies in the following markets: wireless
communications, Internet, value-added networking services, content and local
service.
Veritech Ventures is an investment firm controlled by Jon Halpern who holds
interests in technology, real estate and service sector industries. Veritech
Ventures is based in Westchester, NY.
Certain matters discussed within this press release are forward-looking
statements within the meaning of the federal securities laws, and the
transactions contemplated herein are subject to certain closing conditions.
Although Reckson Service Industries (RSI) believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be achieved.
Factors that could cause actual results to differ materially from RSI
expectations include changes in the business services industry, failure to
consummate anticipated transactions, finding acquisition opportunities which
meet its investment strategy, general economic conditions, competition, interest
rates, available capital, conflicts of interests of management, and other risks
detailed from time to time in the RSI reports filed with the Securities and
Exchange Commission, including annual reports on Form 10-K, quarterly reports on
Form 10-Q and reports on Form 8-K.
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