UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Amendment No. 4
to
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
----------------
Global Crossing Ltd.
(Name of Subject Company)
U S WEST, Inc.
(Bidder)
Common Stock, $.01 Par Value
(Titles of Class of Securities)
CUSIP: G3921A100
(CUSIP Number of Class of Securities) (Common Stock)
U S WEST, Inc.
1801 California Street
Denver, CO 80202
(303) 672-2700
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of bidder)
Copies to:
Dennis J. Block, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
(212) 504-6000
Thomas O. McGimpsey, Esq.
U S WEST, Inc.
1801 California Street
Suite 5100
Denver, CO 80202
(303) 672-2712
<PAGE>
U S WEST, Inc. hereby amends and supplements its Schedule 14D-1 and 13D
originally filed on May 21, 1999 (the "Original Filing"), as amended by its
Schedule 14D-1 and 13D, Amendment No. 1, filed on May 24, 1999, Amendment No. 2,
filed on June 8, 1999 and Amendment No. 3, filed on June 11, 1999 (together with
the Original Filing, the "Statement") with respect to the Offer by U S WEST,
Inc. to purchase 39,259,305 shares of Common Stock of Global Crossing Ltd., as
set forth in the Statement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned such terms in the Statement.
Item 10. ADDITIONAL INFORMATION.
Item 10 of the Schedule 14D-1 is hereby amended by adding to Sections 15
and 16 of the Offer to Purchase the following paragraphs at the end of each such
Section:
"The waiting period under the HSR Act relating to the Offer expired
without any request by the Antitrust Division or the FTC for additional
information."
In addition, Section 12 of the Offer to Purchase is hereby amended by
adding the following statement:
"On June 13, 1999, Qwest Communications International Inc. ("Qwest")
publicly announced that it has made an offer to acquire through a
merger, all of the outstanding shares of Common Stock of the Offeror.
Qwest stated that it will exchange 1.738 shares of Qwest Common Stock
for each share of the Offeror's Common Stock. In addition, Qwest
concurrently publicly announced that it was offering to acquire all of
the outstanding shares of Common Stock of Frontier. In the event
Frontier enters into a definitive agreement with Qwest with respect to
the acquisition of Frontier by Qwest, Qwest has indicated that it will
increase the consideration it is offering to 1.783 shares of Qwest
Common Stock for each share of Offeror's Common Stock. Qwest's proposal
is subject to other terms and conditions. The Qwest proposal is not
subject to completion of, or termination of, the Offer. In addition,
Qwest sent a letter to Mr. Solomon D. Trujillo, the Chairman, President
and Chief Executive Officer of the Offeror, setting forth the foregoing
proposal.
Notwithstanding the Qwest proposal, pursuant to the Tender Offer and
Purchase Agreement, the Offeror is obligated to purchase the shares
pursuant to the Offer unless certain circumstances occur, including the
termination of the merger agreement between Frontier and Global as a
result of the Qwest proposed transactions or otherwise.
In addition, under the Merger Agreement, the Offeror is entitled
under certain circumstances to consider a Superior Proposal. Pursuant
to the Merger Agreement, a "Superior Proposal" is defined as a proposal
which the Board of Directors of Offeror determines in its good-faith
judgment, based on, among other matters, the advice of a nationally
recognized financial advisor, to be more favorable to its stockholders
than the transaction between the Offeror and Global, taking into
account all relevant factors. The Offeror has not, at this time, made a
determination that the Qwest proposal constitutes a Superior Proposal
as defined in the Merger Agreement. The Board of Directors of Offeror
will consider the Qwest proposal in due course. If the Board of
Directors of Offeror were to determine that Qwest's proposal
constituted a Superior Proposal for the stockholders of U S WEST, the
Offeror would have the right to terminate the Merger Agreement subject
to the payment of a break-up fee of $850 million of which $250 million
can be applied against the purchase of services from Global. No
determination has been made as of this time by the Board of Directors
of Offeror.
Furthermore, the information set forth in the press release dated June 17,
1999, which press release is attached hereto as Exhibit (a)(1), is incorporated
by reference herein:
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended by the addition of the following exhibits:
(a)(1) Press release issued by U S WEST, Inc., dated June 17, 1999.
99.1 Letter from Qwest, dated June 13, 1999, to Mr. Solomon D. Trujillo,
Chairman, President and Chief Executive Officer of U S WEST, Inc.
99.2 Press release of Qwest, dated June 13, 1999.
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: June 18, 1999
U S WEST, Inc.
By: /s/ Thomas O. McGimpsey
---------------------------------
Name: Thomas O. McGimpsey
Title: Assistant Secretary and
Senior Attorney
<PAGE>
EXHIBIT INDEX
(a)(1) Press release issued by U S WEST, Inc., dated June 17, 1999.
99.1 Letter from Qwest, dated June 13, 1999, to Mr. Solomon D. Trujillo,
Chairman, President and Chief Executive Officer of U S WEST, Inc.
99.2 Press release of Qwest, dated June 13, 1999.
Exhibit (a)(1)
FOR IMMEDIATE RELEASE
Per: U S WEST, Inc. Contact: Jeremy Story
(303) 965-3235
------------------------------
COLORADO, June 17, 1999 - U S WEST, Inc. announced today that on June 13,
1999, Qwest Communications International Inc. ("Qwest") publicly announced that
it has made an offer to acquire through a merger, all of the outstanding shares
of Common Stock of U S WEST, Inc. Qwest stated that it will exchange 1.738
shares of Qwest Common Stock for each share of U S WEST, Inc.'s Common Stock. In
addition, Qwest concurrently publicly announced that it was offering to acquire
all of the outstanding shares of Common Stock of Frontier Corporation. In the
event Frontier Corporation enters into a definitive agreement with Qwest with
respect to the acquisition of Frontier Corporation by Qwest, Qwest has indicated
that it will increase the consideration it is offering to 1.783 shares of Qwest
Common Stock for each share of U S WEST, Inc.'s Common Stock. Qwest's proposal
is subject to other terms and conditions. The Qwest proposal is not subject to
completion of, or termination of, the tender offer. In addition, Qwest sent a
letter to Mr. Solomon D. Trujillo, the Chairman, President and Chief Executive
Officer of U S WEST, Inc., setting forth the foregoing proposal.
Notwithstanding the Qwest proposal, pursuant to the Tender Offer and Purchase
Agreement between U S WEST, Inc. and Global Crossing Ltd., U S WEST, Inc. is
obligated to purchase the shares pursuant to the tender offer unless certain
circumstances occur, including the termination of the merger agreement between
Frontier Corporation and Global Crossing Ltd. as a result of the Qwest proposed
transactions or otherwise.
In addition, under the Merger Agreement between U S WEST, Inc. and Global
Crossing Ltd., U S WEST, Inc. is entitled under certain circumstances to
consider a Superior Proposal. Pursuant to the Merger Agreement, a "Superior
Proposal" is defined as a proposal which the Board of Directors of U S WEST,
Inc. determines in its good-faith judgment, based on, among other matters, the
advice of a nationally recognized financial advisor, to be more favorable to its
stockholders than the transaction between the U S WEST, Inc. and Global Crossing
Ltd., taking into account all relevant factors. U S WEST, Inc. has not, at this
time, made a determination that the Qwest proposal constitutes a Superior
Proposal as defined in the Merger Agreement. The Board of Directors of U S WEST,
Inc. will consider the Qwest proposal in due course. If the Board of Directors
of U S WEST, Inc. were to determine that Qwest's proposal constituted a Superior
Proposal for the stockholders of U S WEST, Inc., U S WEST, Inc. would have the
right to terminate the Merger Agreement subject to the payment of a break-up fee
of $850 million of which $250 million can be applied against the purchase of
services from Global Crossing Ltd. No determination has been made as of this
time by the Board of Directors of U S WEST, Inc.
In addition, the waiting period under the HSR Act relating to the tender
offer expired without any request by the Antitrust Division or the FTC for
additional information.
# # #
Exhibit 99.1
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
June 13, 1999
Mr. Solomon D. Trujillo
Chairman, President and Chief Executive Officer
U S WEST, Inc.
1801 California Street
Denver, Colorado 80202
Dear Sol:
Qwest Communications International Inc. is pleased to offer to acquire all of U
S WEST, Inc. for Qwest common stock. Qwest will pay 1.738 shares of Qwest common
stock for each share of U S WEST common stock. Based on Friday's closing price
for Qwest shares, our offer has a value of $78.00 per share. We are also
announcing our offer to acquire Frontier Corporation in a stock and cash
transaction valued at approximately $13.6 billion and, in the event that
Frontier accepts our proposal and we enter into a merger agreement with
Frontier, we will increase the consideration payable to U S WEST shareholders to
1.783 shares of Qwest common stock having a value of $80.00 per U S WEST share.
If Frontier agrees to a business combination with us, our offer would represent
a 25.4% premium to the value of U S WEST's proposed merger with Global Crossing
Ltd. based on the closing price of Global Crossing's shares on Friday, a 45.8%
premium to Friday's closing price of U S WEST and a 28.5% premium to the trading
price of U S WEST prior to the announcement of its merger agreement with Global
Crossing. If we do not conclude our business combination agreement with
Frontier, our proposal would still represent a 22.2% premium to the value of U S
WEST's proposed merger with Global Crossing, a 42.1% premium to Friday's closing
price of U S WEST and a 25.3% premium to the trading price of U S WEST prior to
the announcement of its merger agreement with Global Crossing.
Neither of our acquisition proposals is conditioned upon the success of the
other proposal and Qwest is prepared to enter into a binding agreement with U S
WEST whether or not we conclude our transaction with Frontier.
Upon consummation of the transaction, we will invite you to become Vice Chairman
of the Qwest Board and we would expect to invite up to four members of the
current U S WEST Board, including you, to join the Qwest Board.
The combination of our two companies will allow us to combine the management
talents of both organizations. We expect an extremely smooth transition given
the fact that we are--and will remain--headquartered in Denver.
The combination of our two companies is truly a powerful opportunity for our
respective shareholders, employees and customers. The combination will
accelerate the delivery of Internet-based broadband communications services to a
large customer base and, by bringing together the network infrastructure,
applications and services as well as the customer distribution channels of our
companies, will create a truly worldwide internet communications powerhouse.
We believe that the combination will result in significant operating synergies,
aggregating approximately $9.1 billion to $10.1 billion through the year 2005
from our combination and $14 billion through the year 2005 from a combination of
U S WEST, Frontier and Qwest. These synergies are comprised of (i) incremental
revenues as the combined company expands its local, data, IP and long-distance
service; (ii) operating cost savings in areas such as network operations and
maintenance, sales and marketing, billing, customer and back office support as
well as in procurement efficiencies; and (iii) capital savings by eliminating
duplication of the companies' planned network buildouts and in other
infrastructure and back-office areas. We are prepared to meet with you to
discuss the analysis performed by us that underlies these synergies and
demonstrates their feasibility. Our analysis of synergies is based on our
analysis of information concerning you that is publicly available, and we would
expect that working with you we could identify significantly greater synergies
resulting from a combination of our two companies.
Our proposal is financially superior to your pending transaction with Global
Crossing. Not only will your shareholders receive a higher price for their U S
WEST shares in a simpler transaction structure, but they will also receive a
superior stock reflecting Qwest's premier assets, management's operating record,
strong growth prospects and the greater realizable synergies resulting from our
combination.
Qwest's principal shareholder has indicated its readiness to enter into a voting
agreement concerning its obligation to vote in favor of the merger at the
meeting of Qwest shareholders comparable to the agreement entered into by Global
Crossing's controlling shareholders.
We are confident of our ability to complete this transaction as quickly as the
proposed Global Crossing merger. Our legal advisors are confident of our ability
to obtain all necessary approvals in a timely manner and we are prepared to
commit to take steps, including disposition of certain operations, required to
obtain such consents. Our offer will be tax-free to U S WEST shareholders and we
can provide tax treatment and tax consequences of our proposed transaction
equivalent to those of the Global Crossing transaction.
We believe that our merger is fully consistent with the policy underlying the
Telecommunications Act of 1996 and is strongly in the public interest. While
obtaining regulatory approval under Section 271 of the Telecommunications Act is
not a condition of the closing of our transaction, we would ask you to make the
same commitments you have made in connection with the Global Crossing
transaction to accelerate the process of obtaining such approval.
Given the clear superiority of our offer to the proposed Global Crossing merger,
we would like to meet with you and your advisors as soon as possible to finalize
a definitive agreement between our companies. The offer is, of course, subject
to entering into such an agreement. In this regard, we are ready to enter into a
merger agreement substantially similar to the Global Crossing agreement. A copy
of the proposed merger agreement is attached to this letter. We are also ready
to exchange confidential information. Qwest is committed to bringing the
combination between our companies to a successful conclusion and we would be
delighted to discuss any aspect of our proposal.
We look forward to meeting at the earliest opportunity to conclude this mutually
beneficial transaction for both our companies. Please forward to us the form of
confidentiality agreement we are required to execute to further this matter. In
addition, we and our advisors will be happy to meet with U S WEST at the time of
your choosing to answer any questions about our proposal. A list of persons who
may be contacted at Qwest and at our financial and legal advisors is attached to
this letter.
Sincerely,
/s/ Joseph P. Nacchi
Exhibit 99.2
Letterhead of Qwest
FOR IMMEDIATE RELEASE Contacts: MEDIA CONTACT: INVESTOR CONTACT:
Tyler Gronbach Lee Wolfe
6/13 and 6/14 only: 800-567-7296
c/o Kekst and Company [email protected]
(212) 521-4800
After 6/14: (303) 992-2155
[email protected]
QWEST COMMUNICATIONS OFFERS TO ACQUIRE U S WEST
AND FRONTIER IN PLAN TO CREATE $87 BILLION WORLDWIDE COMMUNICATIONS COMPANY
-- U S WEST SHAREHOLDERS TO RECEIVE UP TO $80.00 PER SHARe
IN QWEST COMMON STOCK --
-- FRONTIER SHAREHOLDERS TO RECEIVE UP TO $75.00 PER SHARE, INCLUDINg
$20.00 IN CASH AND UP TO $55.00 PER SHARE IN QWEST COMMON STOCK --
-- TWO TRANSACTIONS VALUED AT $55 BILLION IN CASH AND EQUITy
AND $11.4 BILLION IN ASSUMED DEBT --
-- NEW COMPANY WILL DELIVER WIDE RANGE OF BROADBAND APPLICATIONs
AND SERVICES, BENEFIT 31 MILLION CUSTOMERS, SPUR LOCAL COMPETITION --
-- BOTH PROPOSALS ARE STRATEGICALLY AND FINANCIALLY SUPERIOr
TO PENDING U S WEST AND FRONTIER TRANSACTIONS --
DENVER, June 13, 1999 -- Qwest Communications International Inc. (Nasdaq: QWST)
today offered to acquire U S WEST, Inc. (NYSE: USW) and Frontier Corporation
(NYSE: FRO) in separate transactions for a total of $55 billion in cash and
equity and $11.4 billion in assumed debt. The proposed transactions will enable
Qwest to bring innovative Internet communication services and accelerate the
delivery of broadband connectivity to more than 31 million consumers and
businesses across the United States. The new company will have a combined equity
market capitalization of $87 billion, be headquartered in Denver and employ
approximately 71,000 people.
"With the proposed acquisitions of U S WEST and Frontier, we take the next
logical step in accelerating our delivery of Internet-based, broadband
communications services to customers," said Qwest Chairman and CEO Joseph P.
Nacchio. "The Internet communications powerhouse we intend to create will bring
together the three companies' network infrastructure, applications and services,
as well as their customer distribution channels, to further strengthen Qwest's
worldwide, first-to-market leadership position and fuel our continued growth."
Qwest said the proposed Qwest/U S WEST/Frontier combination will generate many
strategic and customer benefits. These include:
- -- creation of a combined enterprise with $22 billion of pro forma year-2000
revenue and $8 billion of pro forma year-2000 EBITDA (earnings before
interest, taxes, depreciation and amortization);
- -- accelerated implementation of Qwest's growth strategy, including deployment
of its industry-leading Internet platform and local broadband connectivity
services;
- -- enhanced Qwest leadership in value-added services through 19 combined
CyberCenters, strategic alliances and network facilities; and
- -- financial and operational scale and scope through lower unit costs achieved
by serving an expanding base of more than 31 million customers, including
multinational corporations.
Qwest expects the combined enterprise to realize:
- -- total synergies of approximately $14 billion through the year 2005;
- -- annual revenue growth of between 15% and 17% after Qwest receives approval
to provide interLATA long-distance service throughout the U S WEST region;
and
- -- annual growth in EBITDA of approximately 20% after Qwest receives approval
to provide interLATA long-distance service throughout the U S WEST region.
Qwest expects the combination to increase Qwest's earnings per share in the
first year following completion of the U S WEST transaction, and to be
increasingly accretive thereafter. Qwest said it expects to complete the
Frontier and U S WEST transactions by December 1999 and mid-year 2000,
respectively, dates which are consistent with the closings projected for the
pending transactions involving Frontier and U S WEST.
"Because of our proven ability to adapt rapidly to shifts in the marketplace and
effectively implement our strategic business plan, Qwest is uniquely positioned
to capitalize immediately on the skills and resources of the combined enterprise
for the benefit of shareholders, customers, employees and the communities we
serve," said Mr. Nacchio, who will be chairman and chief executive officer of
the combined company.
The two acquisition proposals were communicated in separate letters sent today
by Mr. Nacchio to U S WEST Chairman, President and CEO Solomon D. Trujillo and
to Frontier CEO Joseph P. Clayton. Neither proposal is conditioned upon
acceptance of the other proposal. The full texts of the two letters are attached
to this press release.
QWEST/U S WEST COMBINATION
- --------------------------
Qwest has offered to acquire U S WEST, a Denver-based provider of communications
services to more than 25 million customers in 14 states, for 1.738 shares of
Qwest common stock for each share of U S WEST common stock. If Frontier agrees
to a business combination with Qwest, the consideration payable to U S WEST
shareholders will be increased to 1.783 shares of Qwest common stock for each
share of U S WEST common stock. In either case, the transaction will be
accounted for as a purchase and will be tax-free to U S WEST shareholders.
Based on the closing price of Qwest's shares on Friday, June 11, 1999, the value
of Qwest's offer for U S WEST common stock is $80.00 per share if Frontier
agrees to a business combination with Qwest and $78.00 per share if Frontier and
Qwest do not agree to a business combination. The total equity market value of
the Qwest/U S WEST transaction is $41.3 billion ($40.2 billion if Frontier does
not agree to a business combination with Qwest). In addition, Qwest will assume
$10 billion of U S WEST net debt.
Assuming Frontier agrees to a business combination with Qwest, Qwest's offer for
U S WEST represents a 45.8% premium to U S WEST's closing share price of $54.875
on Friday, June 11 and a 28.5% premium to the closing price of U S WEST on May
14, 1999, the last trading day prior to the announcement of U S WEST's merger
agreement with Global Crossing. The offer also represents a premium of 25.4%
over the value to U S WEST shareholders of the pending transaction with Global
Crossing on June 11. If Frontier does not agree to a business combination with
Qwest, the Qwest offer for U S WEST represents premiums of 42.1% and 25.3% to
the corresponding closing prices of U S WEST common stock on June 11 and May 14,
respectively. This offer also represents a premium of 22.2% over the value to U
S WEST shareholders of the pending Global Crossing transaction on June 11.
Qwest expects to invite Mr. Trujillo of U S WEST to become Vice Chairman of
Qwest after the completion of the Qwest/U S WEST transaction, and to invite Mr.
Trujillo and three other U S WEST directors to become Qwest directors at that
time.
Qwest stated that in order to ensure completion of the U S WEST transaction, it
is prepared to take all actions necessary to comply with current restrictions on
the provision of long-distance service in the U S WEST region. Qwest noted that
U S WEST recently announced plans to take steps to accelerate its efforts to
achieve compliance with the requirements that would permit U S WEST to offer
long-distance service in its region, and that Qwest strongly supported that
decision.
QWEST/FRONTIER COMBINATION
- --------------------------
Qwest has also offered to acquire Frontier Corporation, a Rochester, New
York-based provider of facilities-based, integrated communications and Internet
services with about two million customers in 35 states, for cash and Qwest
common stock. Qwest will pay $20.00 in cash and 1.181 shares of Qwest common
stock for each share of Frontier common stock. If U S WEST agrees to a business
combination with Qwest, the common stock component of the consideration to be
paid to Frontier shareholders will be increased to 1.226 shares of Qwest common
stock for each share of Frontier common stock.
Based on the closing price of Qwest common stock on Friday, June 11, the Qwest
cash and stock offer has a value of $75.00 per Frontier share if U S WEST also
agrees to a business combination with Qwest and $73.00 per share if U S WEST
does not agree to a business combination with Qwest. The total market value of
the Qwest/Frontier transaction is $13.6 billion if U S WEST agrees to a business
combination with Qwest and $13.2 billion if U S WEST does not agree to a
business combination with Qwest. In addition, Qwest will assume $1.4 billion of
Frontier net debt. The transaction will also be accounted for as a purchase and
the stock portion of Qwest's offer will be tax-free for Frontier shareholders.
Assuming U S WEST agrees to a business combination with Qwest, the Qwest offer
for Frontier represents a 35.3% premium to Frontier's closing share price of
$55.44 on Friday, June 11, and a 68.1% premium to the closing price of Frontier
on March 16, 1999, the day prior to the announcement of Frontier's merger
agreement with Global Crossing. This offer also represents a 19.0% premium over
the value to Frontier's shareholders of the pending transaction with Global
Crossing on June 11. If U S WEST does not agree to a business combination with
Qwest, the Qwest offer for Frontier represents premiums of 31.7% and 63.6% to
the corresponding closing prices of Frontier's common stock on June 11 and March
16, respectively. This offer also represents a premium of 15.9% over the value
to Frontier's shareholders of the pending Global Crossing transaction on June
11.
Qwest has received financing commitments from DLJ Capital Funding, Inc. and Bank
of America, NT & SA to supplement its existing cash reserves for the purpose of
funding the cash portion of the consideration to be paid to Frontier
shareholders and to pay transaction fees and expenses.
Qwest expects to invite two directors of Frontier, including Mr. Clayton, to
become Qwest directors after the completion of the Qwest/Frontier transaction.
THE COMBINED QWEST/U S WEST/FRONTIER - STRATEGIC FIT
- ----------------------------------------------------
The combined Qwest/U S WEST/Frontier enterprise will leverage and further
strengthen Qwest's industry-leading assets, including its Internet backbone and
value-added Internet Protocol (IP) platform, and accelerate broadband
connectivity for millions of customers.
Among the many strategic assets of the new company will be:
- -- Qwest Macro Capacity Fiber Network, spanning 18,500 miles in the United
States, combined with U S WEST's 40,400-mile network and Frontier's
18,000-mile network;
- -- Frontier's eleven GlobalCenters for Internet web hosting and data center
business;
- -- Qwest's seven CyberCenters;
- -- Qwest's venture with KPN, the Dutch telecommunications company, to build
and operate a high-capacity European fiber optic, IP-based network that has
2,100 miles and will span 8,100 miles when it is completed in 2001;
- -- U S WEST's 35,000 broadband local digital subscriber lines (DSL) and
220,000 PCS subscribers; and
- -- U S WEST's !NTERPRISE data networking business, with 200,000 Internet
access customers.
THE COMBINED QWEST/U S WEST/FRONTIER - FINANCIAL ASPECTS
- --------------------------------------------------------
Qwest anticipates that the two transactions will result in total operating
synergies of approximately $14 billion over the first five post-completion
years, including the following:
- -- Incremental revenues (net of costs) of $2.9 billion to $3.1 billion as the
combined enterprise expands its local, data, IP and long-distance services.
- -- Operating cost savings of between $6.7 billion and $7.1 billion in such
areas as network operations and maintenance, sales and marketing, billing,
customer and back-office support and by capturing efficiencies in
procurement and other areas.
- -- Capital expenditure savings of between $3.8 billion and $4.0 billion by
eliminating duplication in the three companies' planned network buildouts
and in other infrastructure and back-office areas.
FINANCIAL AND STRATEGIC SUPERIORITY OF QWEST'S PROPOSALS
- --------------------------------------------------------
Qwest stated that its proposals for U S WEST and Frontier are financially and
strategically superior to Global Crossing's pending transactions.
- -- Frontier's and U S WEST's shareholders will receive a higher premium for
their shares;
- -- Frontier's and U S WEST's shareholders will receive a better stock
currency, backed by premier assets and a strong management team with a
proven track record of performance and growth;
- -- Frontier's and U S WEST's shareholders will benefit from value through
greater realizable synergies;
- -- Qwest's transaction structures are simple; and
- -- integration of the three companies has a higher probability of success
because of Qwest's successful experience in integrating operations.
Each of the transactions is subject to regulatory and shareholder approvals and
other customary closing conditions, including expiration of the applicable
Hart-Scott-Rodino waiting periods.
Qwest's financial and legal advisers on the transaction are Donaldson, Lufkin &
Jenrette and Davis Polk & Wardwell, respectively.
ABOUT QWEST
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable
and secure broadband Internet-based data, voice and image communications for
businesses and consumers. Headquartered in Denver, Qwest has more than 8,500
employees working in North America, Europe and Mexico. The Qwest Macro
Capacity(R) Fiber Network, designed with the newest optical networking, will
span more than 18,500 route miles in the United States when it is completed by
mid-1999, and an additional 315-mile network route that will be completed by the
end of the year. In addition, Qwest and KPN, the Dutch telecommunications
company, have formed a venture to build and operate a high-capacity European
fiber optic, Internet Protocol-based network that has 2,100 miles and will span
9,100 miles when it is completed in 2001. Qwest also has nearly completed a
1,400-mile network in Mexico. For more information, please visit the Qwest web
site at www.qwestcom.
Figures reflecting the combined companies' equity market capitalization were
computed using the Treasury stock method and based on figures reported in their
most recent public filings.
NOTE TO EDITORS AND PRODUCERS
- -----------------------------
B-Roll footage is available through the following satellite feeds:
- ------------------------------------------------------------------
June 13: 4:30 PM - 5:00 PM, C Band, Telstar 5, Transponder 24
June 13: 7:30 PM - 8:00 PM, C Band, Telstar 5, Transponder 24
June 14: 5:00 AM - 5:30 PM, C Band, Telstar 5, Transponder 24
June 14: 9:30 AM - 10:00 AM, C Band, Telstar 4, Transponder 9
Audio: 6.2/6.8
###
This release contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by Qwest with the SEC,
specifically the most recent reports which identify important risk factors that
could cause actual results to differ from those contained in the forward-looking
statements, including potential fluctuations in quarterly results, dependence on
new product development, rapid technological and market change, failure to
complete the network on schedule and on budget, financial risk management and
future growth subject to risks, Qwest's ability to achieve Year 2000 compliance,
and adverse changes in the regulatory or legislative environment. This release
includes analysts' estimates and other information prepared by third parties for
which Qwest assumes no responsibility. In addition, certain statements regarding
synergies and other projections and information contained in this release are
based on publicly available information regarding U S WEST and Frontier. Qwest
undertakes no obligation to review or confirm analysts' expectations or
estimates or such publicly available information or to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events. The
Qwest logo is a registered trademark of Qwest Communications International Inc.
in the U.S. and certain other countries.
The following is the letter sent today by Mr. Nacchio of Qwest to Mr. Trujillo
of U S WEST:
<PAGE>
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
June 13, 1999
Mr. Solomon D. Trujillo
Chairman, President and Chief Executive Officer
U S WEST, Inc.
1801 California Street
Denver, Colorado 80202
Dear Sol:
Qwest Communications International Inc. is pleased to offer to acquire all of U
S WEST, Inc. for Qwest common stock. Qwest will pay 1.738 shares of Qwest common
stock for each share of U S WEST common stock. Based on Friday's closing price
for Qwest shares, our offer has a value of $78.00 per share. We are also
announcing our offer to acquire Frontier Corporation in a stock and cash
transaction valued at approximately $13.6 billion and, in the event that
Frontier accepts our proposal and we enter into a merger agreement with
Frontier, we will increase the consideration payable to U S WEST shareholders to
1.783 shares of Qwest common stock having a value of $80.00 per U S WEST share.
If Frontier agrees to a business combination with us, our offer would represent
a 25.4% premium to the value of U S WEST's proposed merger with Global Crossing
Ltd. based on the closing price of Global Crossing's shares on Friday, a 45.8%
premium to Friday's closing price of U S WEST and a 28.5% premium to the trading
price of U S WEST prior to the announcement of its merger agreement with Global
Crossing. If we do not conclude our business combination agreement with
Frontier, our proposal would still represent a 22.2% premium to the value of U S
WEST's proposed merger with Global Crossing, a 42.1% premium to Friday's closing
price of U S WEST and a 25.3% premium to the trading price of U S WEST prior to
the announcement of its merger agreement with Global Crossing.
Neither of our acquisition proposals is conditioned upon the success of the
other proposal and Qwest is prepared to enter into a binding agreement with U S
WEST whether or not we conclude our transaction with Frontier.
Upon consummation of the transaction, we will invite you to become Vice Chairman
of the Qwest Board and we would expect to invite up to four members of the
current U S WEST Board, including you, to join the Qwest Board.
The combination of our two companies will allow us to combine the management
talents of both organizations. We expect an extremely smooth transition given
the fact that we are -- and will remain -- headquartered in Denver.
The combination of our two companies is truly a powerful opportunity for our
respective shareholders, employees and customers. The combination will
accelerate the delivery of Internet-based broadband communications services to a
large customer base and, by bringing together the network infrastructure,
applications and services as well as the customer distribution channels of our
companies, will create a truly worldwide internet communications powerhouse.
We believe that the combination will result in significant operating synergies,
aggregating approximately $9.1 billion to $10.1 billion through the year 2005
from our combination and $14 billion through the year 2005 from a combination of
U S WEST, Frontier and Qwest. These synergies are comprised of (i) incremental
revenues as the combined company expands its local, data, IP and long-distance
service; (ii) operating cost savings in areas such as network operations and
maintenance, sales and marketing, billing, customer and back office support as
well as in procurement efficiencies; and (iii) capital savings by eliminating
duplication of the companies' planned network buildouts and in other
infrastructure and back-office areas. We are prepared to meet with you to
discuss the analysis performed by us that underlies these synergies and
demonstrates their feasibility. Our analysis of synergies is based on our
analysis of information concerning you that is publicly available, and we would
expect that working with you we could identify significantly greater synergies
resulting from a combination of our two companies.
Our proposal is financially superior to your pending transaction with Global
Crossing. Not only will your shareholders receive a higher price for their U S
WEST shares in a simpler transaction structure, but they will also receive a
superior stock reflecting Qwest's premier assets, management's operating record,
strong growth prospects and the greater realizable synergies resulting from our
combination.
Qwest's principal shareholder has indicated its readiness to enter into a voting
agreement concerning its obligation to vote in favor of the merger at the
meeting of Qwest shareholders comparable to the agreement entered into by Global
Crossing's controlling shareholders.
We are confident of our ability to complete this transaction as quickly as the
proposed Global Crossing merger. Our legal advisors are confident of our ability
to obtain all necessary approvals in a timely manner and we are prepared to
commit to take steps, including disposition of certain operations, required to
obtain such consents. Our offer will be tax-free to U S WEST shareholders and we
can provide tax treatment and tax consequences of our proposed transaction
equivalent to those of the Global Crossing transaction.
We believe that our merger is fully consistent with the policy underlying the
Telecommunications Act of 1996 and is strongly in the public interest. While
obtaining regulatory approval under Section 271 of the Telecommunications Act is
not a condition of the closing of our transaction, we would ask you to make the
same commitments you have made in connection with the Global Crossing
transaction to accelerate the process of obtaining such approval.
Given the clear superiority of our offer to the proposed Global Crossing merger,
we would like to meet with you and your advisors as soon as possible to finalize
a definitive agreement between our companies. The offer is, of course, subject
to entering into such an agreement. In this regard, we are ready to enter into a
merger agreement substantially similar to the Global Crossing agreement. A copy
of the proposed merger agreement is attached to this letter. We are also ready
to exchange confidential information. Qwest is committed to bringing the
combination between our companies to a successful conclusion and we would be
delighted to discuss any aspect of our proposal.
We look forward to meeting at the earliest opportunity to conclude this mutually
beneficial transaction for both our companies. Please forward to us the form of
confidentiality agreement we are required to execute to further this matter. In
addition, we and our advisors will be happy to meet with U S WEST at the time of
your choosing to answer any questions about our proposal. A list of persons who
may be contacted at Qwest and at our financial and legal advisors is attached to
this letter.
Sincerely,
Joseph P. Nacchio
# # #
The following is the letter sent today by Mr. Nacchio of Qwest to Mr. Clayton
of Frontier:
<PAGE>
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
June 13, 1999
Mr. Joseph P. Clayton
Chief Executive Officer
Frontier Corporation
180 South Clinton Avenue
Rochester, New York 14646
Dear Joe:
Qwest Communications International Inc. is pleased to offer to acquire all of
Frontier Corporation for cash and Qwest common stock. Qwest will pay $20 in cash
and 1.181 shares of Qwest common stock for each share of Frontier common stock.
Based on Friday's closing price for Qwest shares, our cash and stock offer has a
value of $73.00 per Frontier share. We are also announcing our offer to acquire
U S WEST, Inc. in a stock-for-stock transaction having total equity market value
of approximately $41.3 billion and, in the event that U S WEST accepts our
proposal and we enter into a merger agreement with U S WEST, we will increase
the consideration payable to Frontier shareholders to $20 in cash and 1.226
shares of Qwest common stock having a total value of $75.00 per Frontier share.
The stock portion of our offer will be tax-free to Frontier shareholders. If U S
WEST agrees to a business combination with us, our offer would represent a 19%
premium to the value of Frontier's proposed merger with Global Crossing Ltd.
based on the closing price of Global Crossing's shares on Friday, a 35.3%
premium to Friday's closing price of Frontier and a 68.1% premium to the trading
price of Frontier prior to the announcement of its merger agreement with Global
Crossing. If we do not conclude our business combination agreement with U S
WEST, our proposal would still represent a 15.9% premium to the value of
Frontiers proposed merger with Global Crossing, a 31.7% premium to Friday's
closing price of Frontier and a 63.6% premium to the trading price of Frontier
prior to the announcement of its merger agreement with Global Crossing.
Neither of our acquisition proposals is conditioned upon the success of the
other proposal and Qwest is prepared to enter into a binding agreement with
Frontier whether or not we conclude our transaction with U S WEST.
Upon consummation of the transaction, we will invite up to two of Frontier's
current directors, including you, to join the Qwest Board.
The combination of our two companies is truly a powerful opportunity for our
respective shareholders, employees and customers. The combination will
accelerate the delivery of Internet-based broadband communications services to a
large customer base and, by bringing together the network infrastructure,
applications and services as well as the customer distribution channels of our
companies, will create a truly worldwide internet communications powerhouse.
We believe that the combination will result in significant operating synergies,
aggregating approximately $4 billion to $4.5 billion through the year 2005 from
our combination and $14 billion through the year 2005 from a combination of U S
WEST, Frontier and Qwest. These synergies are comprised of (i) incremental
revenues as the combined company expands its local, data, IP and long-distance
service; (ii) operating cost savings in areas such as network operations and
maintenance, sales and marketing, billing, customer and back office support as
well as in procurement efficiencies; and (iii) capital savings by eliminating
duplication of the companies' planned network buildouts and in other
infrastructure and back-office areas. We are prepared to meet with you to
discuss the analysis performed by us that underlies these synergies and
demonstrates their feasibility. Our analysis of synergies is based on our
analysis of information concerning you that is publicly available, and we would
expect that working with you we could identify significantly greater synergies
resulting from a combination of our two companies.
Our proposal is financially superior to your pending transaction with Global
Crossing. Not only will your shareholders receive a higher price for their
Frontier shares in a simpler transaction structure, but they will also receive a
superior stock reflecting Qwest's premier assets, management's operating record,
strong growth prospects and the greater realizable synergies resulting from our
combination.
Qwest's principal stockholder has indicated its readiness to enter into a voting
agreement concerning its obligation to vote in favor of the merger at the
meeting of Qwest shareholders comparable to the agreement entered into by Global
Crossing's controlling shareholders.
We are confident of our ability to complete this transaction as quickly as the
proposed Global Crossing merger. Our offer contains no financing contingencies.
Qwest has received financing commitments from Donaldson, Lufkin & Jenrette
Capital Funding, Inc. and from Bank of America, NT & SA to supplement its
existing cash reserves for the purpose of funding the cash portion of the
consideration to be paid to Frontier shareholders and to pay the transaction
fees and expenses.
We believe that our merger is fully consistent with the policy underlying the
Telecommunications Act of 1996 and is strongly in the public interest. Our legal
advisors are confident of our ability to obtain all necessary approvals in a
timely manner.
Given the clear superiority of our offer to the proposed Global Crossing merger,
we would like to meet with you and your advisors as soon as possible to finalize
a definitive agreement between our companies. The offer is, of course, subject
to entering into such an agreement. In this regard, we are ready to enter into a
merger agreement substantially similar to the Global Crossing agreement. A copy
of the proposed merger agreement is attached to this letter. We are also ready
to exchange confidential information immediately. Qwest is committed to bringing
the combination between our companies to a successful conclusion and we would be
delighted to discuss any aspect of our proposal.
We look forward to meeting at the earliest opportunity to conclude this mutually
beneficial transaction for both our companies. Please forward to us the form of
confidentiality agreement we are required to execute to further this matter. In
addition, we and our advisors will be happy to meet with Frontier at any time to
answer any questions about our proposal. A list of persons who may be contacted
at Qwest and at our financial and legal advisors is attached to this letter.
Sincerely,
Joseph P. Nacchio
# # #
QWEST'S OFFERS ARE SUPERIOR
More Shareholder Value, Real Synergies, Strong Strategic Fit, Simple Structure
o For USWEST:
-- 25% premium over current offer
-- Stronger currency
-- Greater realizable synergies
-- Better fit with Qwest assets and strategic direction
o For Frontier
19% premium over current offer Stronger stock plus cash component Leading
combined internet/hosting assets Simple deal structure
Better fit with Qwest's assets and strategic direction
o Qwest has demonstrated abilities to execute
(more)
<PAGE>
QWEST AT A GLANCE
QWEST COMBINED
STANDALONE COMPANIES
Revenue (2000) $4.65 billion $22 billion
EBITDA (2000) $1.1 billion $8 billion
Customers 4 million 31 million
Employees 8,500 71,000
U.S. Route Miles 18,815 79,200
U.S. Fiber Miles 900,000 2.9 million
Global Fiber Miles 1.3 million 3.35 million
Cyber Centers 7 23
Local Broadband Markets 40 75
DSL Lines -- 35,000
PCS subscribers -- 220,000
(end of document)
