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As filed with the Securities and Exchange Commission on May 23, 2000
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PINNACLE HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 65-0652634
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
-----------------------------
301 North Cattlemen Road, Suite 300
Sarasota, Florida 34232
(941) 364-8886
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Steven R. Day
Vice President, Chief Financial Officer and Secretary
Pinnacle Holdings Inc.
301 North Cattlemen Road, Suite 300
Sarasota, Florida 34232
(941) 364-8886
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Chester E. Bacheller, Esq.
Holland & Knight LLP
400 North Ashley Drive
Suite 2300
Tampa, Florida 33602
Phone: (813) 227-6431
Fax: (813) 229-0134
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==========================================================================================================================
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Amount of
to be Registered Registered(1) Offering Price Maximum Registration
per Unit Aggregate Fee(3)
Offering
Price(1)(2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(4)....................................
Preferred Stock, par value $0.001 per share(5)........
Common Stock, par value $0.001 per share(6)........... $900,000,000 (2) $900,000,000 $237,600
Depositary Shares(7)..................................
Warrants(8)...........................................
==========================================================================================================================
</TABLE>
(Footnotes appear on following page)
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 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
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(Footnotes from previous page)
(1) In no event will the aggregate maximum initial offering price of all
securities issued pursuant to this Registration Statement exceed
$900,000,000, or the equivalent thereof in foreign currencies or
currency units. Any securities registered hereunder may be sold
separately, together or as units with other securities registered
hereunder.
(2) The proposed maximum offering price per unit (a) has been omitted
pursuant to Instruction II.D of Form S-3 and (b) will be determined,
from time to time, by the Registrant in connection with the issuance by
the Registrant of the securities registered hereunder.
(3) Calculated pursuant to Rule 457(o) of the rules and regulations under
the Securities Act of 1933, as amended.
(4) Subject to footnote 1, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold, from
time to time, by the Company. Such amount shall be increased, if any
Debt Securities are issued at an original issue discount, by an amount
such that the net proceeds to be received by the Company shall be equal
to the above amount to be registered. Also, in addition to any Debt
Securities that may be issued directly under this Registration
Statement, there is being registered hereunder such indeterminate
amount of Debt Securities as may be issued upon conversion or exchange
of other Debt Securities, Preferred Stock or Depositary Shares of the
Company, for which no consideration will be received by the Company, or
upon exercise of Warrants registered hereby.
(5) Subject to footnote 1, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold, from
time to time, by the Company. There also is being registered hereunder
an indeterminate number of shares of Preferred Stock as shall be
issuable upon exercise of Warrants registered hereby. In addition,
there is being registered hereunder such indeterminate number of shares
of Preferred Stock, for which no consideration will be received by the
Company, as may be issued upon conversion or exchange of Debt
Securities of the Company.
(6) Subject to footnote 1, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from
time to time, by the Company. There also is being registered hereunder
an indeterminate number of shares of Common Stock as may be issuable
upon conversion of the Debt Securities or the Preferred Stock or upon
exercise of Warrants registered hereby. The aggregate amount of Common
Stock registered hereunder is limited, solely for purposes of any at
the market offerings, to that which is permissible under Rule 415(a)(4)
under the Securities Act of 1933, as amended.
(7) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts, representing a fractional interest of a share of
Preferred Stock.
(8) Subject to footnote 1, there is being registered hereunder an
indeterminate number of Warrants representing rights to purchase Debt
Securities, shares of Common Stock or Preferred Stock or Depositary
Shares of the Company registered hereby.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 23, 2000
PROSPECTUS
$900,000,000
PINNACLE HOLDINGS INC.
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK
DEPOSITARY SHARES AND WARRANTS
-------------------
When we offer securities, we will provide you with a prospectus supplement
describing the terms of the specific issue of securities, including the offering
price of the securities. The prospectus supplements may also add, update or
change information contained in this prospectus. You should read this prospectus
and any supplements carefully before you invest.
-------------------
Our common stock is traded on the Nasdaq National Market
under the symbol "BIGT."
-------------------
INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 9 OF THIS PROSPECTUS.
-------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2000.
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TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
ABOUT THIS PROSPECTUS.............................................................................................3
PINNACLE HOLDINGS INC.............................................................................................3
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS...................................................................7
RISK FACTORS......................................................................................................9
USE OF PROCEEDS..................................................................................................22
RATIO OF EARNINGS TO FIXED CHARGES...............................................................................23
THE SECURITIES...................................................................................................24
DESCRIPTION OF DEBT SECURITIES...................................................................................24
DESCRIPTION OF CAPITAL STOCK.....................................................................................37
DESCRIPTION OF DEPOSITARY SHARES.................................................................................39
DESCRIPTION OF WARRANTS..........................................................................................42
PLAN OF DISTRIBUTION.............................................................................................43
LEGAL MATTERS....................................................................................................45
EXPERTS..........................................................................................................45
WHERE YOU CAN FIND MORE INFORMATION..............................................................................45
INCORPORATION BY REFERENCE.......................................................................................45
</TABLE>
You should rely only on the information contained in this prospectus or
any supplement. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information in this prospectus or any supplement is
accurate as of any date other than the date on the front of those documents. Our
business, financial condition, results of operations and prospects may have
changed since that date.
The information in this prospectus or any supplement may not contain
all of the information that may be important to you. You should read the entire
prospectus or any supplement, as well as the documents incorporated by reference
in the prospectus or any supplement, before making an investment decision.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may, from time to time, sell
any combination of securities described in this prospectus in one or more
offerings. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any applicable prospectus supplement together with additional information
described below under the heading "Where You Can Find More Information."
When used in this prospectus and any prospectus supplement, the terms
"Pinnacle", "we", "our", "us" and the "Company" refer to Pinnacle Holdings Inc.
and it subsidiaries. The following summary contains basic information about us.
It likely does not contain all the information that is important to you. We
encourage you to read this entire prospectus and the documents we have referred
you to.
PINNACLE HOLDINGS INC.
OUR BUSINESS
We are a leading independent provider of wireless communications site
space in the United States. We focus primarily on renting space on
communications sites to providers of wireless communications services such as
PCS, cellular, paging, SMR/ESMR, wireless data transmission and radio and
television broadcasting. We believe that focusing on the communications site
rental business allows us to achieve the highest cash flow margins with the
lowest level of risk on our invested capital in the communications site
business. Our growth strategy is focused on growing cash flow by increasing
tenancy on our existing sites and acquiring tall towers and other site
structures located in areas of high wireless rental site demand that can
accommodate multiple tenants. As a result of our extensive base of
communications sites and our acquisition strategy, we believe we are well
positioned to continue benefiting from the growth opportunities in the rapidly
consolidating tower industry and from the strong demand for communications site
rental space fueled by the growing demand for wireless services.
Since our formation in May 1995, we have focused on creating a
portfolio of communications site clusters in high growth markets such as
Atlanta, Birmingham, Boston, Chicago, Houston, Los Angeles, New Orleans, New
York, Orlando and Tampa. As of March 31, 2000, we have completed 411
acquisitions, acquiring 3,767 communications sites, including 1,930 owned sites,
979 "managed" sites and 858 "leased" sites, and we have constructed 103 towers.
As of March 31, 2000, we also have agreements or letters of intent to acquire
676 additional communications sites. Managed sites are tower or rooftop
communications sites owned by others where we have the exclusive right to market
antenna space. Leased sites are tower or rooftop communications sites owned by
others where we have a non-exclusive right to market antenna space.
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As of March 31, 2000, we had over 3,800 customers renting space on one
or more of our communications sites. Our tenants include all forms of wireless
communications providers, operators of private wireless networks and government
agencies, including Arch Communications, BellSouth Mobility, the Federal Bureau
of Investigation, the Bureau of Alcohol, Tobacco & Firearms, Motorola, Nextel,
Pagemart, PageNet, Skytel, Southern Communications, Sprint PCS and Teletouch.
Our customers are generally responsible for the installation of their own
equipment and the incremental utilities costs associated with that equipment. In
addition, adding customers on a communications site does not increase our
monitoring, maintenance or insurance costs. Therefore, when new customers or
additional equipment are added to a communications site, we are able to increase
revenue with limited incremental costs, thereby increasing cash flow margins.
Furthermore, we experience minimal churn as our communications site locations
serve an essential function in our customers' wireless networks and cannot
easily be replaced.
We believe that "same site" revenue growth is a meaningful indicator of
the organic growth of our business. Same site revenue growth is measured by
comparing the annualized revenues of our communications sites at the end of a
period to the annualized revenues for the same sites at the end of a prior
period without considering revenues from the communications sites we acquired
during the period. Taking into consideration leases for new tenants, we
experienced same site revenue growth of approximately 21.0% for the 12 months
ended March 31, 2000 on our base of communications sites as of March 31, 1999.
OUR BUSINESS AND GROWTH STRATEGY
Our objective is to create value by rapidly growing cash flow. We
believe we can do this by aggressively marketing existing communications sites,
as well as new site inventory we obtain primarily through acquisition, and also
by selectively constructing new towers.
- - MARKETING AND DEVELOPMENT STRATEGy. We aggressively market space on
our communications sites to leverage our fixed costs over a broader base of
customers. The key elements of our marketing and development strategy
include:
- -- owning and assembling clusters of communications sites in high growth
regions to offer our customers the ability to rapidly and efficiently fulfill
their network expansion plans across a particular market or region;
- -- targeting a diversified customer base that uses differing types of
wireless technologies with different height requirements to maximize the
utilization of our communications sites;
- -- using our customer relationships and our established reputation as a
highly professional and reliable communications site space provider to lease
space on additional communications sites;
- -- using information obtained from our customers concerning their future
expansion plans to guide our acquisition and new construction programs; and
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- -- premarketing communications site rental space to new wireless
communications service providers based on the market intelligence we gain by
tracking Federal Communications Commission ("FCC") filings.
- - ACQUISITION STRATEGY. We are focused on acquiring clusters of
communications sites in high growth markets. We target tall towers that
have existing tenants with capacity for more. Our strategy allows us to
choose tower locations and avoid potentially speculative "build-to-suit"
mandates. The key elements of our acquisition strategy include:
- -- targeting population centers and key transportation corridors in high
growth wireless communications markets;
- -- acquiring tall communications site structures that can accommodate a
diversified customer base that uses different types of wireless technologies
with different height requirements;
- -- selecting communications sites that will allow us to create or enhance
a cluster of sites in a given area;
- -- employing a disciplined valuation process to acquire communications
sites that have existing cash flow and identified potential for significant
future cash flow growth from additional tenants; and
- -- committing significant personnel to identifying, negotiating and
closing communications site acquisitions.
- - NEW TOWER CONSTRUCTION STRATEGY. We also selectively construct new towers
in and around major markets where we already have a presence to enhance our
existing communications site clusters. Tower construction is only initiated
after at least one anchor tenant is identified and after we have
determined, based on market research, that the capital outlay for the
construction project would exceed our minimum required return on invested
capital. We do not pursue large build-to-suit mandates or engage in
speculative construction projects. During 1997, 1998, 1999 and the three
months ended March 31, 2000, we constructed 22, 47, 23 and 3 towers,
respectively.
OUR STRENGTHS
We believe the following to be the strengths of our business:
- - FOCUS ON COMMUNICATIONS SITE RENTAL BUSINESS. We focus on the rental of
communications site space as opposed to other lower margin segments of the
tower industry such as site acquisition services or tower construction
services. Furthermore, we do not engage in large scale "build-to-suit"
programs, preferring instead to focus on our core acquisition strategy and
complementary selective construction strategy designed to enhance coverage
in targeted markets.
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- - COMMUNICATIONS SITE PORTFOLIO. We believe that the location, size and
capacity of our site portfolio creates significant competitive advantages
by enabling us to provide our diverse wireless customers with sites in a
given area.
- - SUCCESSFUL ACQUISITION STRATEGY. Through our acquisition process we
identify communications sites that typically have existing cash flow and
enhance our existing portfolio. We have demonstrated the ability to
identify, successfully negotiate the purchase of and integrate what we
believe to be value enhancing acquisitions.
- - ABILITY TO INCREASE RENTAL REVENUE. Because of our aggressive marketing
efforts to all major wireless communication providers we have signed a
significant number of new tenants over the last four years. Additional
tenants increase the operating leverage of our communications site
portfolio and generally increase our overall cash flow margins. Taking into
consideration leases for new tenants, we experienced same site revenue
growth of approximately 21.0% for the 12 months ended March 31, 2000 on our
base of communications sites as of March 31, 1999.
Our headquarters are located at 301 North Cattlemen Road, Suite 300,
Sarasota, Florida 34232, and our telephone number is (941) 364-8886. Our website
is www.pinnacletowers.com. The information provided on our website is not
incorporated into this prospectus.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We make "forward-looking statements" throughout this prospectus,
supplements to this prospectus and in the documents we incorporate by reference
into this prospectus. Whenever you read a statement that is not simply a
statement of historical fact (such as when we describe what we "believe,"
"expect" or "anticipate" will occur, and other similar statements), you must
remember that our expectations may not be correct, even though we believe they
are reasonable. We do not guarantee that the transactions and events described
in this prospectus or in any supplements to this prospectus will happen as
described (or that they will happen at all). You should read this prospectus,
supplements to this prospectus and documents that we incorporate by reference
into this prospectus completely and with the understanding that actual future
results may be materially different from what we expect. We will not update
these forward-looking statements, even though our situation may change in the
future. Whether actual results will conform with our expectations and
predictions is subject to a number of risks and uncertainties, including:
- the significant considerations discussed in this prospectus
and any supplements to this prospectus;
- our history of operating losses;
- our outstanding indebtedness and our ability to pay interest
and principal on our debt;
- restrictions imposed by the terms of our indebtedness;
- subordination of the debt securities;
- Pinnacle Holdings Inc.'s only source of cash is from
distributions from its subsidiaries;
- our ability to effect our business plan if we do not have the
required cash;
- our ability to successfully identify, complete and integrate
acquisitions;
- our ability to protect our rights in our property and to
insure against losses from damage to our communications sites;
- risks associated with retaining our significant customers;
- risks associated with construction of new towers;
- the impact of competition;
- our dependence on the wireless communications industry;
- the impact of legislation and regulation;
- the loss of key employees;
- the effect of competing technologies on the demand for our
services;
- environmental regulation;
- the effect on our business if we sustain damage to our
communications sites in excess of our insurance coverage;
- our ability to repurchase the Convertible Notes or the Senior
Notes if a change of control occurs;
- risks concerning potential negative health effects of radio
frequency emissions;
- our ability to maintain our status as a Real Estate Investment
Trust (a "REIT");
- volatility in our stock price;
- our ability to manage our growth;
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- the absence of a public market for the debt securities; and
- anti-takeover provisions that could affect the sale of
Pinnacle Holdings Inc.
You should read carefully the section of this prospectus under the
heading "Risk Factors" beginning on page 9. We assume no responsibility for
updating forward-looking information contained in this prospectus, any
supplements to this prospectus, and in any documents that we incorporate by
reference into this prospectus.
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RISK FACTORS
Before you invest in our securities, you should be aware that the
occurrence of any of the events described in this Risk Factors section and
elsewhere in this prospectus or in a supplement to this prospectus could have a
material adverse effect on our business, financial condition and results of
operations. You should carefully consider these risk factors and the specific
risks set forth under the caption "Risk Factors" in any supplement to this
prospectus, together with all of the other information included in this
prospectus or in a supplement to this prospectus and in documents we incorporate
by reference before you decide to purchase our securities. This prospectus
contains forward-looking statements that involve risks and uncertainties.
WE HAVE A HISTORY OF OPERATING LOSSES. WE HAVE GENERATED LOSSES FROM OPERATIONS
AND NEGATIVE CASH FLOW, AND WE MAY CONTINUE TO DO SO.
We have incurred losses from continuing operations in each of the
fiscal years since our inception. As a result, for the years ended December 31,
1997, 1998 and 1999 and the three months ended March 31, 2000, our earnings were
insufficient to cover combined fixed charges by approximately $8.5 million,
$39.7 million, $63.8 million and $22.2 million, respectively. We expect to
continue to experience net losses in the future, principally due to interest
charges on outstanding indebtedness and substantial charges relating to
depreciation of our existing and future assets. These net losses may be greater
than the net losses we have experienced in the past.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION; WE
MAY INCUR SUBSTANTIALLY MORE DEBT.
We have a high level of indebtedness. As of March 31, 2000, we had
approximately $830.4 million of indebtedness outstanding.
Our high level of indebtedness could have important consequences to
you. For example, it could:
- - make it more difficult for us to satisfy our obligations with respect
to our indebtedness;
- - increase our vulnerability to general adverse economic and industry
conditions;
- - limit our ability to obtain additional financing;
- - require the dedication of a substantial portion of our cash flow from
operations to the payment of principal of, and interest on, our
indebtedness thereby, reducing the availability of such cash flow to
fund our growth strategy, working capital, capital expenditures or
other general corporate purposes;
- - limit our flexibility in planning for, or reacting to, changes in our
business and the industry; and
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- - place us at a competitive disadvantage relative to our competitors with
less debt.
We may incur substantial additional debt in the future. The terms of
our outstanding debt do not fully prohibit us from doing so. If new debt is
added to our current levels, the related risks described above could intensify.
WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR INDEBTEDNESS AND
MEET OUR OTHER LIQUIDITY NEEDS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY
FACTORS BEYOND OUR CONTROL.
Our ability to meet our debt service and other obligations will depend
on our future performance, which is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are, to a large
extent, beyond our control. We anticipate the need for substantial capital
expenditures in connection with our future expansion plans.
If we are unable to generate sufficient cash flow from operations to
service our indebtedness and fund our other liquidity needs, we will be forced
to adopt an alternative strategy that may include reducing, delaying or
eliminating acquisitions, tower construction and other capital expenditures,
selling assets, restructuring or refinancing our indebtedness or seeking
additional equity capital. We cannot assure you that any of these alternative
strategies could be effected on satisfactory terms, if at all, and the
implementation of any of these alternative strategies could have a negative
impact on our business. We may also need to refinance all or a portion of our
debt on or before maturity. We cannot assure you that we will be able to
refinance any of our debt on commercially reasonable terms or at all.
THE TERMS OF OUR INDEBTEDNESS IMPOSE SIGNIFICANT RESTRICTIONS ON US.
Certain provisions of the indenture governing the 5.5% convertible
subordinated notes due 2007 (the "Convertible Notes") by and between us and The
Bank of New York, as trustee (the "Convertible Indenture"), and the indenture
governing the 10% senior discount notes due 2008 (the "Senior Notes") by and
between us and The Bank of New York, as trustee (the "Senior Indenture"),
contain covenants that restrict our ability to:
- - incur additional indebtedness;
- - incur liens;
- - make investments;
- - pay dividends or make certain other restricted payments;
- - consummate certain asset sales;
- - consolidate with any other person; and
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- - sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our assets.
In addition, our credit facility requires us to comply with certain
financial ratios and tests, under which we are required to achieve certain
financial and operating results. Our ability to meet these financial ratios and
tests may be affected by events beyond our control, and we cannot assure you
that they will be met. In the event of a default under our credit facility, the
lenders may declare the indebtedness immediately due and payable, which would
result in a default under both the Convertible Indenture and the Senior
Indenture. We cannot assure you that we will have sufficient assets to pay
indebtedness outstanding under our credit facility, the Senior Notes and the
Convertible Notes. Any refinancing of our credit facility is likely to contain
similar restrictive covenants.
THE DEBT SECURITIES WILL BE EFFECTIVELY JUNIOR TO ALL OF OUR SECURED
OBLIGATIONS.
The debt securities will be unsecured obligations of Pinnacle Holdings
Inc. The debt securities will be effectively junior in right of payment to all
secured indebtedness of Pinnacle. Upon any distribution of assets pursuant to
any liquidation, insolvency, dissolution, reorganization or similar proceeding,
the holders of secured indebtedness will be entitled to receive payment in full
from the proceeds of the collateral securing such secured indebtedness before
the holders of the debt securities will be entitled to receive any payment with
respect thereto. As a result, the holders of the debt securities may recover
proportionally less than holders of secured indebtedness of Pinnacle. As of
March 31, 2000, Pinnacle had approximately $335.5 million of secured
indebtedness outstanding and the capacity to borrow approximately an additional
$184.5 million of secured indebtedness under our credit facility.
PINNACLE HOLDINGS INC. IS A HOLDING COMPANY. ITS ONLY SOURCE OF CASH IS FROM
DISTRIBUTIONS FROM ITS SUBSIDIARIES.
Pinnacle Holdings Inc. is a holding company with no operations of its
own and conducts all of its business through its subsidiaries. Pinnacle Holdings
Inc.'s only significant asset is the outstanding capital stock of its
subsidiaries. Pinnacle Holdings Inc. is wholly dependent on the cash flow of its
subsidiaries and dividends and distributions to it from its subsidiaries in
order to service its current indebtedness, including payment of principal,
premium, if any, and interest on any indebtedness of Pinnacle Holdings Inc.,
and any of its future obligations. Pinnacle Holdings Inc.'s subsidiaries are
separate and distinct legal entities and will have no obligation contingent or
otherwise, to pay any amounts due pursuant to any indebtedness of Pinnacle
Holdings Inc. or to make any funds available therefor. The ability of Pinnacle
Holdings Inc.'s subsidiaries to pay such dividends and distributions will be
subject to, among other things, the terms of any debt instruments of its
subsidiaries then in effect and applicable law. Pinnacle Holdings Inc. will
need sufficient funds available to pay cash interest on the Convertible
Notes beginning on September 15, 2000 and on the Senior Notes beginning on
March 15, 2003 and to repay the Convertible Notes and the Senior Notes when
required. We cannot assure you that Pinnacle Holdings Inc.'s subsidiaries will
generate cash flow sufficient to pay dividends or distributions to Pinnacle
Holdings Inc. in order to pay interest or other payments on the Convertible
Notes and the Senior Notes.
Pinnacle Holdings Inc.'s rights, and the rights of its creditors, to
participate in the distribution of assets of any of its subsidiaries upon such
subsidiary's liquidation or reorganization will by subject to the prior claims
of such subsidiary's creditors, except to the extent that Pinnacle Holdings Inc.
is itself reorganized as a creditor of such subsidiary in which case our claims
would still be subject to the claims of any secured creditor of such subsidiary.
As of March 31, 2000, the aggregate amount of debt and other obligations of
Pinnacle Holdings Inc.'s subsidiaries (including long-term debt, guarantees of
Pinnacle Holdings Inc.'s debt, current liabilities and other liabilities) was
approximately $586.1 million.
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WE WILL NOT BE ABLE TO EFFECT OUR BUSINESS PLAN IF WE DO NOT HAVE THE REQUIRED
CASH.
Our business plan is materially dependent upon the acquisition of
additional suitable communications sites and the construction of new towers at
prices we consider reasonable in light of the revenue we believe we will be able
to generate from such sites when acquired or constructed. We will need
significant additional capital to finance future acquisitions as well as our
tower construction plan and other capital expenditures. During 1997, 1998, 1999
and the three months ended March 31, 2000, we made capital investments
aggregating approximately $89.5 million, $373.6 million, $551.7 million and
$176.2 million, respectively, in communications site acquisitions, site upgrades
and new tower construction. We currently estimate that they will be at least
$500 million in 2000. To the extent that we commit to additional significant
acquisition opportunities beyond those we have identified and currently believe
it is probable that we will complete, that amount may materially increase.
Accordingly, we cannot assure you that our actual cash requirements will not
materially exceed our estimated capital requirements and available capital. We
historically have financed our capital expenditures through a combination of
borrowings under bank credit facilities, a debt offering, bridge financings,
equity issuances, seller financing and cash flow from operations. Significant
additional acquisition or tower construction opportunities will create a need
for additional capital financing. If our revenue and cash flow are not as
expected, or if our borrowing base is reduced as a result of operating
performance, we may have limited ability to access necessary capital. We cannot
assure you that adequate funding will be available as needed or, if available,
on terms acceptable to us or permitted under the terms of our existing
indebtedness. The terms of additional debt financing could have important
consequences to you. See "--The terms of our indebtedness impose significant
restrictions on us." In addition, to qualify and remain qualified as a REIT, we
must distribute to our stockholders 95% of our taxable income computed without
regard to net capital gains and deductions for distributions to our stockholders
and 95% of certain foreclosure income. If made, such distributions could reduce
the amount of cash available to us to effect our business plan. Insufficient
available funds may require us to scale back or eliminate some or all of our
planned expansion.
WE DEPEND ON ACQUISITIONS AND THE INTEGRATION OF THOSE ACQUISITIONS INTO OUR
BUSINESS.
Our business plan is materially dependent upon the acquisition of
additional suitable communications sites at prices we consider reasonable in
light of the revenue we believe we will be able to generate from these sites
when acquired. Since our inception, however, the prices of acquisitions within
the industry have generally increased over time. Additionally, we compete with
certain wireless communications providers, site developers and other independent
communications site owners and operators for acquisitions of communications
sites, some of which have greater financial and other resources than we have.
Increased demand for acquisitions may result in fewer acquisition opportunities
for us as well as higher acquisition prices. Our inability to grow by
acquisition or to accurately estimate the amount of revenue that will be
generated from such acquisitions may affect us adversely. Although we believe
that opportunities may exist for us to grow through acquisitions, we cannot
assure you that we will be able to identify and consummate acquisitions on terms
we find acceptable. Certain provisions of our credit facility, the Senior Notes
and the Convertible Notes may limit our ability to effect acquisitions. See
"--Our substantial indebtedness could adversely affect our financial condition;
we may incur substantially more debt." Further, we cannot assure you that we
will be able to profitably manage and market the space on additional
communications sites acquired or successfully integrate acquired sites with our
operations and sales and marketing efforts without
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<PAGE> 15
substantial costs or delays. Acquisitions involve a number of potential risks,
including the potential loss of customers, increased leverage and debt service
requirements, combining disparate company cultures and facilities and operating
sites in geographically diverse markets. Accordingly, we cannot assure you that
one or more of our past or future acquisitions may not have a material adverse
effect on our financial condition and results of operations.
IF WE FAIL TO PROTECT OUR RIGHTS AGAINST PERSONS CLAIMING SUPERIOR RIGHTS IN OUR
COMMUNICATIONS SITES, OUR BUSINESS MAY BE ADVERSELY AFFECTED.
Our real property interests relating to our communications sites
consist of fee interests, leasehold interests, private easements and licenses,
easements and rights-of-way. For various reasons, we may not always have the
ability to access, analyze and verify all information regarding title and other
issues prior to completing an acquisition of communications sites. We generally
obtain title insurance on fee properties we acquire and rely on title warranties
from sellers. Our ability to protect our rights against persons claiming
superior rights in communications sites depends on our ability to:
- - recover under title policies, the policy limits of which may be less
than the purchase price of the particular site;
- - in the absence of insurance coverage, realize on title warranties given
by the sellers, which warranties often terminate after the expiration
of a specific period, typically one to three years; and
- - realize on title covenants from landlords contained in leases.
THE LOSS OF ANY SIGNIFICANT CUSTOMER COULD ADVERSELY AFFECT OUR BUSINESS.
We have certain customers that account for a significant portion of our
revenue. As of March 31, 2000, Arch Communications (which acquired MobileMedia
Communications in 1999), Nextel and Motorola represented 7.6%, 14.4% and 4.2%,
respectively, of our revenue, on a run rate basis. The loss of one or more of
these major customers, or a reduction in their utilization of our communications
site rental space due to their insolvency or other inability or unwillingness to
pay, could have a material adverse effect on our business, results of operations
and financial condition.
THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH CONSTRUCTION OF NEW TOWERS.
The success of our growth strategy is dependent in part on our ability
to construct new towers. Such construction can be delayed by factors beyond our
control, including zoning and local permitting requirements, availability of
erection equipment and skilled construction personnel and weather conditions.
Certain communities have placed restrictions on new tower construction or have
delayed granting permits required for construction. In addition, as the pace of
tower construction has increased in recent years, the demand for manpower and
equipment needed to erect towers has been increasing. Additionally, we cannot
assure you that build opportunities will become available that meet our economic
criteria. Our expansion plans call for
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<PAGE> 16
a significant increase in construction activity. We cannot assure you that we
will be able to overcome the barriers to new construction or that the number of
towers planned for construction will be completed. Our failure to complete the
necessary construction could have a material adverse effect on our business,
financial condition and results of operations.
WE COMPETE WITH COMPANIES THAT HAVE GREATER FINANCIAL RESOURCES.
We face competition for customers from various sources, including:
- - wireless communications providers and utility companies that own and
operate their own communications site networks and lease communications
site space to other carriers;
- - site development companies that acquire space on existing
communications sites for wireless communications providers and manage
new tower construction;
- - other independent communications site companies; and
- - traditional local independent communications site operators.
Wireless communications providers that own and operate their own
communications site networks generally are substantially larger and have greater
financial resources than we have. We believe that site location and capacity,
price, quality of service, type of service and density within a geographic
market historically have been and will continue to be the most significant
competitive factors affecting communications site rental companies. We believe
that competition for communications site acquisitions will increase and that
additional competitors will enter the tower rental market, certain of whom may
have greater financial and other resources than we have.
OUR BUSINESS DEPENDS ON DEMAND FOR WIRELESS COMMUNICATIONS.
Substantially all of our revenue is derived from leases of
communications site space, most of which are with wireless communications
providers. Accordingly, our future growth depends, to a considerable extent,
upon the continued growth and increased availability of cellular and other
wireless communications services. We cannot assure you that the wireless
communications industry will not experience severe and prolonged downturns in
the future or that the wireless communications industry will expand as quickly
as forecasted. The wireless communications industry, which includes paging,
cellular, personal communications services ("PCS"), fixed microwave, specialized
mobile radio ("SMR"), enhanced specialized mobile radio ("ESMR") and other
wireless communications providers, has undergone significant growth in recent
years and remains highly competitive, with service providers in a variety of
technologies and two or more providers of the same service (up to seven for PCS)
within a geographic market competing for subscribers. The demand for rental
space on our communications sites is dependent on a number of factors that are,
to a large extent, beyond our control, including the following:
- - demand for wireless services;
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<PAGE> 17
- - financial condition and access to capital of wireless communications
providers;
- - strategy of wireless communications providers with respect to owning or
leasing communications sites;
- - government licensing of broadcast rights;
- - changes in telecommunications regulations; and
- - general economic conditions.
The demand for space on our communications sites is primarily dependent
on the demand for wireless communications services. A slowdown in the growth of
the wireless communications industry in the United States would depress network
expansion activities and reduce the demand for our communications sites. In
addition, a downturn in a particular wireless segment as a result of
technological competition or other factors beyond our control could adversely
affect the demand for rental communications sites. Advances in technology could
also reduce the need for site-based transmission and reception. In addition,
wireless services providers often enter into "roaming" and "resale" arrangements
that permit providers to serve customers in areas where they do not have
facilities. In most cases, these arrangements are intended to permit a
provider's customers to obtain service in areas outside the provider's license
area or, in the case of resale arrangements, to permit a provider that does not
have any licenses to enter the wireless marketplace.
Current FCC rules, which are subject to sunset requirements that vary
from service to service and market to market, also give licensed wireless
service providers the right to enter into roaming and resale arrangements with
other providers licensed to serve overlapping service areas. Such roaming and
resale arrangements could be viewed by some wireless service providers as
superior alternatives to constructing their own facilities or leasing space on
communications sites that we own. If such arrangements were to become common,
there could be a material adverse effect on our prospects, financial condition
and results of operations.
The emergence of new technologies that do not require terrestrial
antenna sites and can be substituted for those that do also could have a
negative impact on our operations. For example, the FCC has granted license
applications for four low-earth orbiting satellite systems that are intended to
provide mobile voice and data services. In addition, the FCC has issued licenses
for several low-earth orbiting satellite systems that are intended to provide
solely data services. Although such systems are currently highly
capital-intensive and technologically untested, mobile satellite systems could
compete with land-based wireless communications systems, thereby reducing the
demand for the infrastructure services we provide. The occurrence of any of
these factors could have a material adverse effect on our business, financial
condition or results of operations.
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<PAGE> 18
OUR BUSINESS REQUIRES COMPLIANCE AND APPROVAL WITH REGULATORY AUTHORITIES.
The FCC and the Federal Aviation Administration (the "FAA") regulate
towers used for wireless communications transmitters and receivers. Such
regulations control siting, lighting and marking of towers and may, depending on
the characteristics of the tower, require registration of tower facilities.
Wireless communications equipment operating on communications sites is
separately regulated and independently licensed by the FCC. Certain proposals to
construct new towers or to modify existing towers are reviewed by the FAA to
ensure that the tower will not present a hazard to aviation. Tower owners may
have an obligation to paint towers or install lighting to conform to FAA
standards and to maintain such painting and lighting. Tower owners may also bear
the responsibility of notifying the FAA of any tower lighting failures. Failure
to comply with existing or future applicable requirements may lead to civil
penalties or other liabilities. Such factors could have a material adverse
effect on our financial condition or results of operations.
Local regulations, including municipal or local ordinances, zoning
restrictions and restrictive covenants imposed by community developers, vary
greatly, but typically require tower owners to obtain approval from local
officials or community standards organizations prior to tower construction.
Local regulations can delay or prevent new tower construction or site upgrade
projects, thereby limiting our ability to respond to customer demand. In
addition, such regulations increase costs associated with new tower
construction. We cannot assure you that existing regulatory policies will not
adversely affect the timing or cost of new tower construction or that additional
regulations will not be adopted that increase such delays or result in
additional costs to us. Such factors could have a material adverse effect on our
future growth. Our customers may also become subject to new regulations or
regulatory policies that adversely affect the demand for tower sites. We cannot
assure you that existing regulatory policies will not adversely affect the
timing or cost of new tower construction or that additional regulations will not
be adopted that increase such delays or result in additional costs to us. Such
factors could have a material adverse effect on our future growth. Our customers
may also become subject to new regulations or regulatory policies that adversely
affect the demand for tower sites.
Our growth strategy will be affected by our ability to obtain the
permits, licenses and zoning relief necessary to build new towers. The tower
rental industry often encounters significant public resistance when attempting
to obtain the necessary permits, licenses and zoning relief for construction or
improvements of towers. We cannot assure you that we can obtain the permits,
licenses and zoning relief necessary to continue the expansion of our
communications site rental business. The failure to obtain such permits,
licenses and zoning relief would have a material adverse effect on our business,
financial condition and results of operations.
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<PAGE> 19
OUR SUCCESS DEPENDS UPON OUR RETAINING KEY EMPLOYEES.
Our success depends to a significant degree upon the continued
contributions of key management, engineering, sales and marketing, customer
support and finance personnel, some of whom may be difficult to replace.
Although we maintain employment agreements with certain of our employees, we
cannot assure you that the services of such personnel will continue to be
available to us. We do not maintain key man life insurance policies on our
executives that would adequately compensate us for any loss of services of such
executives. The loss of the services of these executives could have a material
adverse effect on our business.
COMPETING TECHNOLOGIES AND OTHER ALTERNATIVES COULD REDUCE THE DEMAND FOR OUR
SERVICES.
Most types of wireless services currently require ground-based network
facilities, including communications sites, for transmission and reception. The
extent to which wireless service providers lease such communications sites
depends on a number of factors beyond our control, including the level of demand
for such wireless services, the financial condition and access to capital of
such providers, the strategy of providers with respect to owning or leasing
communications sites, government licensing of communications services, changes
in telecommunications regulations and general economic conditions. In addition,
wireless service providers frequently enter into agreements with competitors
allowing each other to utilize one another's wireless communications facilities
to accommodate customers who are out of range of their home provider's services.
Such agreements may be viewed by wireless service providers as a superior
alternative to leasing space for their own antenna on communications sites we
own. The proliferation of such agreements could have a material adverse effect
on our business, financial condition or results of operations.
The emergence of new technologies that do not require terrestrial
antenna sites and can be substituted for those that do also could have a
negative impact on our operations. For example, the FCC has granted license
applications for four low-earth orbiting satellite systems that are intended to
provide mobile voice or data services. In addition, the FCC has issued licenses
for several low-earth orbiting satellite systems that are intended to provide
solely data services. Although such systems are currently highly
capital-intensive and technologically untested, mobile satellite systems could
compete with land-based wireless communications systems, thereby reducing the
demand for the infrastructure services we provide. The occurrence of any of
these factors could have a material adverse effect on our business, financial
condition or results of operations.
WE ARE SUBJECT TO ENVIRONMENTAL LAWS THAT IMPOSE LIABILITY WITHOUT REGARD TO
FAULT AND ENVIRONMENTAL REGULATIONS THAT COULD ADVERSELY AFFECT OUR OPERATIONS.
Our operations are subject to federal, state and local environmental
laws and regulations regarding the use, storage, disposal, emission, release and
remediation of hazardous and nonhazardous substances, materials or wastes. Under
certain of these laws, we could be held strictly, jointly and severally liable
for the remediation of hazardous substance contamination at its facilities or at
third-party waste disposal sites and also could be held liable for any personal
or property damage related to such contamination. Although we believe that we
are in substantial
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<PAGE> 20
compliance with and have no material liability under all applicable
environmental laws, there can be no assurance that the costs of compliance with
existing or future environmental laws and liability related thereto will not
have a material adverse effect on our business, financial condition or results
of operations.
The FCC requires tower owners subject to the agency's antenna structure
registration program to comply at the time of registration with federal
environmental rules that may restrict the siting of towers. Under these rules,
tower owners are required initially to identify whether proposed sites are in
environmentally sensitive locations. If so, the tower owners must prepare and
file environmental assessments, which must be reviewed by the FCC staff prior to
registration and construction of the particular towers.
IF WE SUSTAIN DAMAGE TO OUR COMMUNICATIONS SITES IN EXCESS OF OUR INSURANCE
COVERAGE, OUR BUSINESS COULD BE ADVERSELY AFFECTED.
Our communications sites are subject to risks from vandalism and risks
associated with natural disasters such as tornadoes, hurricanes, fires and
earthquakes. We maintain certain insurance to cover the cost of replacing
damaged communications sites and general liability insurance to protect us in
the event of an accident involving a communications site, but we do not maintain
business interruption insurance. Accordingly, damage to a group of our
communications sites could result in a significant loss of revenue and could
have a material adverse effect on our results of operations and financial
condition. In addition, a communications site accident for which we are
uninsured or underinsured could have a material adverse effect on our financial
condition or results of operations.
WE MAY NOT BE ABLE TO REPURCHASE THE CONVERTIBLE NOTES OR THE SENIOR NOTES OR
REPAY DEBT UNDER OUR CREDIT FACILITY IN THE EVENT OF A CHANGE OF CONTROL.
Upon the occurrence of certain change of control events, holders of the
Convertible Notes and the Senior Notes may require Pinnacle Holdings Inc. to
offer to repurchase all of their notes. Pinnacle Holdings Inc. may not have
sufficient funds at the time of the change of control to make the required
repurchases or restrictions in our credit facility may not allow such
repurchases. Additionally, a "change of control" (as defined in the Convertible
Indenture and the Senior Indenture) is an event of default under our credit
facility, which would permit the lenders to accelerate the debt, which also
would cause an event of default under the indentures.
The source of funds for any repurchase required as a result of any
change of control will be our available cash or cash generated from operating or
other sources, including borrowings, sales of assets, sales of equity or funds
provided by a new controlling entity. We cannot assure you, however, that
sufficient funds will be available at the time of any change of control to make
any required repurchases of the Convertible Notes or the Senior Notes tendered
and to repay debt under our credit facility. Furthermore, the use of available
cash to fund the potential consequences of a change of control may impair our
ability to obtain additional financing in the future. Any future credit
agreements or other agreements relating to indebtedness to which we may become a
party may contain similar restrictions and provisions.
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<PAGE> 21
RISKS CONCERNING POTENTIAL NEGATIVE HEALTH EFFECTS OF RADIO FREQUENCY EMISSIONS.
Along with wireless communications providers that utilize our
communications sites, we are subject to government requirements and other
guidelines relating to radio frequency emissions. The potential connection
between radio frequency emissions and certain negative health effects, including
some forms of cancer, has been the subject of substantial study by the
scientific community in recent years. To date, the results of these studies have
been inconclusive. Although we have not been subject to any claims relating to
radio frequency emissions, we cannot assure you that we will not be subject to
such claims in the future, which could have a material adverse effect on our
results of operations and financial condition.
IF WE FAIL TO QUALIFY AS A REIT, WE WILL BE SUBJECT TO A VARIETY OF TAXES AND
PENALTIES.
We have elected to be taxed as a REIT under Sections 856-860 of the
Internal Revenue Code of 1986, as amended (the "Code"). We believe that we have
been organized and operated to date in such a manner as to qualify for taxation
as a REIT. However, prospective investors should be aware that the federal tax
rules and regulations relating to REITs are highly technical and complex, and
that our qualification as a REIT during each taxable year (including prior
years) will depend on our ability to meet these requirements, through actual
annual operating results, income distribution levels, stock ownership
requirements and tests relating to our assets and sources of income. Therefore,
we cannot assure you that we have operated or will operate in a manner so as to
qualify or remain qualified as a REIT. Furthermore, depending on our assessment
of the strategic importance of acquisitions which may become available to us in
our existing line of business or in complementary non-real estate based
communications site or services activities, we may acquire, operate and derive
income from assets, businesses or entities that will cause us to no longer
qualify as a REIT. In this regard, we recently acquired certain assets from
Motorola prior to determining whether such assets, and the income derived from
such assets, would permit us to continue to meet the qualification requirements
for a REIT. Subsequent to making such commitment, we structured the ownership of
the assets so acquired in a manner that we believe will ensure our continued
qualification as a REIT.
However, because of the restrictions imposed on our operations by
seeking to retain our qualification as a REIT, we have evaluated whether to
terminate our REIT qualification. With respect to taxable years for which we are
qualified as a REIT, we could be subject to a variety of taxes and penalties if
we engage in certain prohibited transactions, fail to satisfy REIT distribution
requirements or recognize gain on the sale or other disposition of certain types
of property. If we cease to remain qualified as a REIT and we cannot utilize any
of the relief provisions which may be applicable, or terminate our REIT election
voluntarily, we will be subject to corporate level income tax at regular
corporate rates on our net income unreduced by distributions to stockholders,
together with interest and penalties to the extent applicable to prior periods.
However, because we have not reported any net taxable income (determined before
the deduction for dividends paid) in any of our corporate income tax returns
since our filing of an election to be taxed as a REIT, unless our reported net
taxable loss is adjusted, any corporate income tax liability from a retroactive
determination by the Internal Revenue Service (the "Service") that we, to date,
failed to satisfy all of the requirements for REIT qualification during any such
year would likely be minimal. Nevertheless, with respect to any year in which we
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recognize positive net taxable income, the loss of REIT status or a
determination that we did not qualify as a REIT may have a material adverse
affect on our financial condition or results from operations. In such
circumstances, we may have made distributions to our stockholders as required to
retain our REIT status but would neither be entitled to receive such
distributions back from our stockholders nor be entitled to a tax deduction for
such distributions. At the present time, we do not anticipate that we will
recognize net taxable income for the foreseeable future.
WE EXPECT TO EXPERIENCE VOLATILITY IN OUR STOCK PRICE THAT COULD AFFECT YOUR
INVESTMENT.
The stock market has from time to time experienced significant price
and volume fluctuations that have affected the market price for the common
stock of companies. In the past, certain broad market fluctuations have been
unrelated or disproportionate to the operating performance of these companies.
Any significant fluctuations in the future might result in a material decline in
the market price of our common stock. In the past, following periods of
volatility in the market price of a particular company's securities, securities
class action litigation has often been brought against such company. We may
become involved in this type of litigation in the future. Litigation is often
expensive and diverts management's attention and resources, which could have a
material adverse effect upon our business and operating results.
OUR RAPID GROWTH MAY BE DIFFICULT TO MANAGE.
We have grown rapidly. Our ability to manage growth effectively will
require us to continue to implement and improve our operational, financial and
management information systems; continue to develop the management skills of our
managers and supervisors; and continue to train, motivate and manage our
employees. Our failure to effectively manage growth could have a material
adverse effect on our results of operations.
WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE
SECURITIES OFFERED OTHER THAN THE COMMON STOCK WE HAVE ISSUED OR THAT SUCH A
MARKET WILL NOT BE VOLATILE.
There is no established trading market for the securities offered other
than the common stock we have issued and we do not intend to apply for listing
of the securities offered on any national securities exchange or for quotation
of the securities offered on any automated dealer quotation system. We have
been advised by the underwriters that they presently intend to make a market in
the securities offered after the consummation of an offering of securities
issued in connection with this prospectus, although they are under no obligation
to do so and may discontinue any market-making activities at any time without
any notice. Accordingly, no assurance can be given as to the price of the
securities offered, the liquidity of the trading market for the securities
offered or that an active public trading market for the securities offered will
develop. If an active public trading market for the securities offered does not
develop, the market price and liquidity of the securities offered may be
adversely
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affected. If the securities offered are traded, they may trade at a discount
from their initial offering price, depending upon prevailing interest rates, the
market for similar securities, the performance of Pinnacle and certain other
factors. The liquidity of, and trading markets for, securities offered may also
be adversely affected by general declines in the market for non-investment grade
debt. Such declines may adversely affect the liquidity of, and trading markets
for, the securities offered, independent of the financial performance of or
prospects for Pinnacle.
Historically, the markets for securities similar to the securities
offered has been subject to disruptions that have caused substantial price
volatility. There can be no assurance that the market for the securities offered
will not be subject to similar disruptions. Any such disruptions may have a
material adverse effect on the value of the securities offered.
WE HAVE ADOPTED ANTI-TAKEOVER PROVISIONS THAT COULD AFFECT THE SALE OF PINNACLE
HOLDINGS INC.
Provisions of Pinnacle Holdings Inc.'s certificate of incorporation,
its bylaws and Delaware law could make it more difficult for a third party to
acquire Pinnacle Holdings Inc., even if doing so would be beneficial to its
stockholders.
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USE OF PROCEEDS
Unless otherwise indicated in the prospectus supplement, the net
proceeds from the sale of securities offered by this prospectus will be used to
fund acquisitions and for general corporate purposes, including capital
expenditures, the repayment or refinancing of debt and to meet working capital
needs. Pending such uses, we anticipate that we will invest the net proceeds in
interest-bearing securities.
RATIO OF EARNINGS TO FIXED CHARGES
Pinnacle's ratio of earnings to fixed charges for each
of the periods indicated is as follows:
<TABLE>
<CAPTION>
Three
Months
Ended
Fiscal Year Ended December 31, March 31,
------------------------------ ---------
1995 1996 1997 1998 1999 2000
----- ------- ------- -------- -------- ----
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Pre-tax loss from continuing operations before
adjustment for in-kind preferred stock dividends
and accretion .................................. $(645) $(2,016) $(8,461) $(36,630) $(60,821) (22,158)
Fixed charges:
Interest expense ............................... 205 1,252 6,925 12,300 22,953 8,776
Amortization of original issue discount and debt
issue costs .................................... -- -- 292 16,426 23,708 6,426
Rentals:
Office space (33%) ............................. 10 32 62 102 134 71
Telecommunications sites (33%) ................. 29 124 427 1,106 5,531 3,270
Preferred stock dividends and accretion ........... -- -- -- 3,094 2,930 --
----- ------- ------- -------- -------- -----
Total fixed charges ............................... 244 1,408 7,706 33,028 55,256 18,543
===== ======= ======= ======== ======== ======
Pre-tax loss from continuing operations before
adjustment for in-kind preferred stock
dividends and accretion ........................ $(401) $ (608) $ (755) $ (6,696) $ (8,495) $(3,615)
===== ======= ======= ======== ======== ========
Ratio of earnings to fixed charges ................ (a) (a) (a) (a) (a) (a)
===== ======= ======= ======== ======== ========
</TABLE>
(a) Due to Pinnacle's losses in 1995, 1996, 1997, 1998, 1999 and the three
months ended March 31, 2000, the ratio coverage was less than 1:1. Pinnacle must
generate additional earnings of $645, $2,016, $8,461, $39,724, $63,751 and
$22,158 in 1995, 1996, 1997, 1998, 1999 and the three months ended March 31,
2000, respectively, to achieve a coverage ratio of 1:1.
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THE SECURITIES
Pinnacle may from time to time offer under this prospectus, separately
or together:
- unsecured senior or subordinated debt securities,
- shares of common stock,
- shares of preferred stock, which may be represented by
depositary shares as described below,
- warrants to purchase shares of common stock,
- warrants to purchase shares of preferred stock,
- warrants to purchase depositary shares and
- warrants to purchase debt securities.
The aggregate initial offering price of the offered securities will not
exceed $900,000,000.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth general terms and provisions of
the debt securities to which any prospectus supplement may relate. We will
describe the particular terms and provisions of the series of debt securities
offered by a prospectus supplement, and the extent to which such general terms
and provisions described below may apply thereto, in the prospectus supplement
relating to such series of debt securities.
The senior debt securities are to be issued in one or more series under
an indenture, as supplemented or amended from time to time between Pinnacle and
an institution that we will name in the related prospectus supplement, as
trustee. For ease of reference, we will refer to the indenture relating to
senior debt securities as the senior indenture and we will refer to the trustee
under that indenture as the senior trustee. The subordinated debt securities are
to be issued in one or more series under an indenture, as supplemented or
amended from time to time, between Pinnacle and an institution that we will name
in the related prospectus supplement, as trustee. For ease of reference, we will
refer to the indenture relating to subordinate debt securities as the
subordinate indenture and we will refer to the trustee under that indenture as
the subordinate trustee. This summary of certain terms and provisions of the
debt securities and the indentures is not necessarily complete, and we refer you
to the copy of the form of the indentures which are or will be filed as an
exhibit to the registration statement of which this prospectus forms a part,
and to the Trust Indenture Act. Whenever we refer to particular defined terms of
the indentures in this section or in a prospectus supplement, we are
incorporating these definitions into this prospectus or the prospectus
supplement.
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GENERAL
The debt securities will be issuable in one or more series pursuant to
the applicable indenture, a supplemental indenture relating to such series of
debt securities or a resolution of Pinnacle's board of directors or a committee
of the board. Unless otherwise specified in a prospectus supplement, each series
of senior debt securities will rank equally in right of payment with all of
Pinnacle's other senior obligations. Each series of subordinated debt securities
will be subordinated and junior in right of payment to the extent and in the
manner set forth in the subordinated indenture and any supplemental indenture
relating to that debt. In addition such subordinated debt securities may rank
equal or senior in right of payment to other subordinated indebtedness, which
may have been issued or will be issued in the future. Except as otherwise
provided in a prospectus supplement, the indentures will not limit the
incurrence or issuance of other secured or unsecured debt of Pinnacle, whether
under the indentures, any other indenture that Pinnacle may enter into in the
future or otherwise. For more information, you should read the prospectus
supplement relating to a particular offering of securities.
The applicable prospectus supplement or prospectus supplements will
describe the following terms of each series of debt securities:
- the title of the debt securities and whether such series
constitutes senior debt securities or subordinated debt
securities;
- any limit upon the aggregate principal amount of the debt
securities;
- the date or dates on which the principal of the debt
securities is payable or the method of that determination or
the right, if any, of Pinnacle to defer payment of principal;
- the rate or rates, if any, at which the debt securities will
bear interest (including reset rates, if any, and the method
by which any such rate will be determined), the interest
payment dates on which interest will be payable and the right,
if any, of Pinnacle to defer any interest payment;
- the place or places where, subject to the terms of the
indenture as described below under the caption "--Payment and
Paying Agents," the principal of and premium, if any, and
interest, if any, on the debt securities will be payable and
where, subject to the terms of the indenture as described
below under the caption "--Denominations, Registration and
Transfer," Pinnacle will maintain an office or agency where
debt securities may be presented for registration of transfer
or exchange and the place or places where notices and demands
to or upon Pinnacle in respect of the debt securities and the
indenture may be made;
- any period or periods within, or date or dates on which, the
price or prices at which and the terms and conditions upon
which debt securities may be redeemed, in whole or in part, at
the option of Pinnacle pursuant to any sinking fund or
otherwise;
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- the obligation, if any, of Pinnacle to redeem or purchase the
debt securities pursuant to any sinking fund or analogous
provisions or at the option of a holder and the period or
periods within which, the price or prices at which, the
currency or currencies including currency unit or units, in
which and the other terms and conditions upon which the debt
securities will be redeemed or purchased, in whole or in part,
pursuant to such obligation;
- the denominations in which any debt securities will be
issuable if other than denominations of $1,000 and any
integral multiple thereof;
- if other than in U.S. dollars, the currency or currencies,
including currency unit or units, in which the principal of,
and premium, if any, and interest, if any, on the debt
securities will be payable, or in which the debt securities
shall be denominated;
- any additions, modifications or deletions in the events of
default or covenants of Pinnacle specified in the indenture
with respect to the debt securities;
- if other than the principal amount, the portion of the
principal amount of debt securities that will be payable upon
declaration of acceleration of the maturity thereof;
- any additions or changes to the indenture with respect to a
series of debt securities that will be necessary to permit or
facilitate the issuance of the series in bearer form,
registrable or not registrable as to principal, and with or
without interest coupons;
- any index or indices used to determine the amount of payments
of principal of and premium, if any, on the debt securities
and the manner in which such amounts will be determined;
- subject to the terms described under "--Global Debt
Securities," whether the debt securities of the series will be
issued in whole or in part in the form of one or more global
securities and, in such case, the depositary for the global
securities;
- the appointment of any trustee, registrar, paying agent or
agents:
- the terms and conditions of any obligation or right of
Pinnacle or a holder to convert or exchange debt securities
into preferred securities or other securities;
- whether the defeasance and covenant defeasance provisions
described under the caption "--Satisfaction and Discharge;
Defeasance" will be inapplicable or modified;
- any applicable subordination provisions in addition to those
set forth herein with respect to subordinated debt securities;
and
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- any other terms of the debt securities not inconsistent with
the provisions of the applicable indenture.
We may sell debt securities at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. We will describe material U.S. federal
income tax consequences and special considerations applicable to the debt
securities in the applicable prospectus supplement.
If the purchase price of any of the debt securities is payable in one
or more foreign currencies or currency units or if any debt securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any debt securities is
payable in one or more foreign currencies or currency units, we will set forth
the restrictions, elections, material U.S. federal income tax considerations,
specific terms and other information with respect to such issue of debt
securities and such foreign currency or currency units in the applicable
prospectus supplement.
If any index is used to determine the amount of payments of principal,
premium, if any, or interest on any series of debt securities, we will describe
the material U.S. federal income tax, accounting and other considerations
applicable thereto in the applicable prospectus supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable prospectus supplement, the
debt securities will be issuable only in registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. Debt securities of
any series will be exchangeable for other debt securities of the same issue and
series, of any authorized denominations of a like aggregate principal amount,
the same original issue date, stated maturity and bearing the same interest
rate.
Holders may present each series of debt securities for exchange as
provided above, and for registration of transfer, with the form of transfer
endorsed thereon, or with a satisfactory written instrument of transfer, duly
executed, at the office of the appropriate securities registrar or at the office
of any transfer agent designated by Pinnacle for such purpose and referred to in
the applicable prospectus supplement, without service charge and upon payment of
any taxes and other governmental charges as described in the indenture. Pinnacle
will appoint the trustee of each series of debt securities as securities
registrar for such series under the indenture. If the applicable prospectus
supplement refers to any transfer agents, in addition to the securities
registrar initially designated by Pinnacle with respect to any series, Pinnacle
may at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, provided that
Pinnacle maintains a transfer agent in each place of payment for the series.
Pinnacle may at any time designate additional transfer agents with respect to
any series of debt securities.
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In the event of any redemption, neither Pinnacle nor the trustee will
be required to:
- issue, register the transfer of or exchange debt securities of
any series during a period beginning at the opening of
business 15 days before the day of mailing of a notice for
redemption of debt securities of that series, and ending at
the close of business on the day of mailing of the relevant
notice of redemption, or
- transfer or exchange any debt securities so selected for
redemption, except, in the case of any debt securities being
redeemed in part, any portion not being redeemed.
GLOBAL DEBT SECURITIES
Unless otherwise specified in the applicable prospectus supplement, the
debt securities of a series may be issued in whole or in part in the form of one
or more global securities that we will deposit with, or on behalf of, a
depositary identified in the prospectus supplement relating to such series.
Global debt securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual debt securities represented by it, a global debt
security may not be transferred except as a whole by the depositary for the
global debt security to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any nominee to a successor depositary or any nominee of the
successor.
The specific terms of the depositary arrangement with respect to a
series of debt securities will be described in the prospectus supplement
relating to the series. Pinnacle anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a global debt security, and the deposit of the
global debt security with or on behalf of the applicable depositary, the
depositary for the global debt security or its nominee will credit on its
book-entry registration and transfer system, the respective principal amounts of
the individual debt securities represented by the global debt security to the
accounts of persons, more commonly known as participants, that have accounts
with the depositary. These accounts will be designated by the dealers,
underwriters or agents with respect to the debt securities or by Pinnacle if the
debt securities are offered and sold directly by Pinnacle. Ownership of
beneficial interests in a global debt security will be limited to participants
or persons that may hold interests through participants. Ownership of beneficial
interests in the global debt security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
depositary or its nominee with respect to interests of participants and the
records of participants with respect to interests of persons who hold through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of the securities in definitive form. These
limits and laws may impair the ability to transfer beneficial interests in a
global debt security.
So long as the depositary for a global debt security, or its nominee,
is the registered owner of the global debt security, the depositary or its
nominee, as the case may be, will be considered the sole owner or holder of the
debt securities represented by the global debt security
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for all purposes under the indenture. Except as provided below, owners of
beneficial interests in a global debt security will not be entitled to have any
of the individual debt securities of the series represented by the global debt
security registered in their names, will not receive or be entitled to receive
physical delivery of any debt securities of the series in definitive form and
will not be considered the owners or holders of them under the indenture.
Payments of principal of, and premium, if any, and interest on
individual debt securities represented by a global debt security registered in
the name of a depositary or its nominee will be made to the depositary or its
nominee, as the case may be, as the registered owner of the global debt security
representing the debt securities. None of Pinnacle, the trustee, any paying
agent, or the securities registrar for the debt securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interest of the global debt
security for the debt securities or for maintaining, supervising or reviewing
any records relating to those beneficial ownership interests.
Pinnacle expects that the depositary for a series of debt securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent global debt security representing any of the debt
securities, immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of the global debt security for the debt securities as shown on the
records of the depositary or its nominee. Pinnacle also expects that payments by
participants to owners of beneficial interests in the global debt security held
through the participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in "street name." These payments will be the
responsibility of these participants.
Unless otherwise specified in the applicable prospectus supplement, if
the depositary for a series of debt securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by Pinnacle within 90 days, Pinnacle will issue individual debt
securities of the series in exchange for the global debt security representing
the series of debt securities. In addition, unless otherwise specified in the
applicable prospectus supplement, Pinnacle may at any time and in its sole
discretion, subject to any limitations described in the prospectus supplement
relating to the debt securities, determine not to have any debt securities of
the series represented by one or more global debt securities and, in such event,
will issue individual debt securities of the series in exchange for such global
debt securities. Further, if Pinnacle so specifies with respect to the debt
securities of a series, an owner of a beneficial interest in a global debt
security representing debt securities of the series may, on terms acceptable to
Pinnacle, the trustee and the depositary for the global debt security, receive
individual debt securities of the series in exchange for such beneficial
interests, subject to any limitations described in the prospectus supplement
relating to the debt securities. In any such instance, an owner of a beneficial
interest in a global debt security will be entitled to physical delivery of
individual debt securities of the series represented by the global debt security
equal in principal amount to its beneficial interest and to have the debt
securities registered in its name. Individual debt securities of the series so
issued will be issued in denominations, unless otherwise specified by Pinnacle,
of $1,000 and integral multiples thereof. The applicable
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prospectus supplement may specify other circumstances under which individual
debt securities may be issued in exchange for the global debt security
representing any debt securities.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement,
payment of principal of, and premium, if any, and any interest on debt
securities will be made at the office of the trustee in New York or at the
office of such paying agent or paying agents as Pinnacle may designate from time
to time in the applicable prospectus supplement, except that at the option of
Pinnacle payment of any interest may be made:
- except in the case of global debt securities, by check mailed
to the address of the person or entity entitled thereto as
such address shall appear in the securities register; or
- by transfer to an account maintained by the person or entity
entitled thereto as specified in the securities register,
provided that proper transfer instructions have been received
by the regular record date. Unless otherwise indicated in the
applicable prospectus supplement, we will make payment of any
interest on debt securities to the person or entity in whose
name the debt security is registered at the close of business
on the regular record date for the interest payment, except in
the case of defaulted interest. Pinnacle may at any time
designate additional paying agents or rescind the designation
of any paying agent; however, Pinnacle will at all times be
required to maintain a paying agent in each place of payment
for each series of debt securities.
Any moneys deposited with the trustee or any paying agent, or held by
Pinnacle in trust, for the payment of the principal of, and premium, if any, or
interest on any debt security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable will, at
the request of Pinnacle, be repaid to Pinnacle or released from such trust, as
applicable, and the holder of the debt security will thereafter look, as a
general unsecured creditor, only to Pinnacle for payment.
OPTION TO DEFER INTEREST PAYMENTS OR TO PAY-IN-KIND
If provided in the applicable prospectus supplement, Pinnacle will have
the right, at any time and from time to time during the term of any series of
debt securities, to defer the payment of interest for such number of consecutive
interest payment periods as may be specified in the applicable prospectus
supplement, subject to the terms, conditions and covenants, if any, specified in
such prospectus supplement, provided that an extension period may not extend
beyond the stated maturity of the final installment of principal of the series
of debt securities. If provided in the applicable prospectus supplement,
Pinnacle will have the right, at any time and from time to time during the term
of any series of debt securities, to make payments of interest by delivering
additional debt securities of the same series. Certain material U.S. federal
income tax consequences and special considerations applicable to the debt
securities will be described in the applicable prospectus supplement.
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SUBORDINATION
Except as set forth in the applicable prospectus supplement, the
subordinated indenture will provide that the subordinated debt securities will
be subordinated and junior in right of payment to all senior indebtedness of
Pinnacle. The term "senior indebtedness" will be defined in the applicable
prospectus supplement. If:
- Pinnacle defaults in the payment of any principal, or premium,
if any, or interest on any senior indebtedness when the same
becomes due and payable, whether at maturity or at a date
fixed for prepayment or declaration or otherwise; or
- an event of default occurs with respect to any senior
indebtedness permitting the holders thereof to accelerate the
maturity thereof and written notice of such event of default,
requesting that payments on subordinated debt securities
cease, is given to Pinnacle by the holders of senior
indebtedness,
then unless and until the default in payment or event of default shall
have been cured or waived or shall have ceased to exist, no direct or indirect
payment, in cash, property or securities, by set-off or otherwise, will be made
or agreed to be made on account of the subordinated debt securities or interest
thereon or in respect of any repayment, redemption, retirement, purchase or
other acquisition of subordinated debt securities.
Except as set forth in the applicable prospectus supplement, the
subordinated indenture will provide that in the event of:
- any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar
proceeding relating to Pinnacle, its creditors or its
property;
- any proceeding for the liquidation, dissolution or other
winding-up of Pinnacle, voluntary or involuntary, whether or
not involving insolvency or bankruptcy proceedings;
- any assignment by Pinnacle for the benefit of creditors; or
- any other marshaling of the assets of Pinnacle;
all present and future senior indebtedness, including, without limitation,
interest accruing after the commencement of the proceeding, assignment or
marshaling of assets, will first be paid in full before any payment or
distribution, whether in cash, securities or other property, will be made by
Pinnacle on account of subordinated debt securities. In that event, any payment
or distribution, whether in cash, securities or other property, other than
securities of Pinnacle or any other corporation provided for by a plan of
reorganization or a readjustment, the payment of which is subordinate, at least
to the extent provided in the subordination provisions of the indenture, to the
payment of all senior indebtedness at the time outstanding and to any securities
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issued in respect thereof under any such plan of reorganization or readjustment
and other than payments made from any trust described in the "Satisfaction and
Discharge; Defeasance" below, which would otherwise but for the subordination
provisions be payable or deliverable in respect of subordinated debt securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of Pinnacle being
subordinated to the payment of subordinated debt securities will be paid or
delivered directly to the holders of senior indebtedness, or to their
representative or trustee, in accordance with the priorities then existing among
such holders until all senior indebtedness shall have been paid in full. No
present or future holder of any senior indebtedness will be prejudiced in the
right to enforce subordination of the indebtedness evidenced by subordinated
debt securities by any act or failure to act on the part of Pinnacle.
MODIFICATION OF INDENTURES
From time to time, Pinnacle and the trustees may modify the indentures
without the consent of any holders of any series of debt securities with respect
to some matters, including:
- to cure any ambiguity, defect or inconsistency or to correct
or supplement any provision which may be inconsistent with any
other provision of the indenture;
- to qualify, or maintain the qualification of, the indentures
under the Trust Indenture Act; and
- to make any change that does not materially adversely affect
the interests of any holder of such series of debt securities.
In addition, under the indentures, Pinnacle and the trustee may modify
some rights, covenants and obligations of Pinnacle and the rights of holders of
any series of debt securities with the written consent of the holders of at
least a majority in aggregate principal amount of the series of outstanding debt
securities; but no extension of the maturity of any series of debt securities,
reduction in the interest rate or extension of the time for payment of interest,
change in the optional redemption or repurchase provisions in a manner adverse
to any holder of the series of debt securities, other modification in the terms
of payment of the principal of, or interest on, the series of debt securities,
or reduction of the percentage required for modification, will be effective
against any holder of the series of outstanding debt securities without the
holder's consent.
In addition, Pinnacle and the trustees may execute, without the consent
of any holder of the debt securities, any supplemental indenture for the purpose
of creating any new series of debt securities.
EVENTS OF DEFAULT
The indentures will provide that any one or more of the following
described events with respect to a series of debt securities that has occurred
and is continuing constitutes an "event of default" with respect to that series
of debt securities:
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- failure for 60 days to pay any interest or any sinking fund
payment on the series of debt securities when due, (subject to
the deferral of any due date in the case of an extension
period);
- failure to pay any principal or premium, if any, on the series
of the debt securities when due whether at maturity, upon
redemption, by declaration or otherwise;
- failure to observe or perform in any material respect certain
other covenants contained in the indenture for 90 days after
written notice has been given to Pinnacle from the trustee or
the holders of at least 25% in principal amount of the series
of outstanding debt securities;
- default resulting in acceleration of other indebtedness of
Pinnacle for borrowed money where the aggregate principal
amount so accelerated exceeds $25 million and the acceleration
is not rescinded or annulled within 30 days after the written
notice thereof to Pinnacle by the trustee or to Pinnacle and
the trustee by the holders of 25% in aggregate principal
amount of the debt securities of the series then outstanding,
provided that the event of default will be remedied, cured or
waived if the default that resulted in the acceleration of
such other indebtedness is remedied, cured or waived; or
- certain events in bankruptcy, insolvency or reorganization of
Pinnacle.
The holders of not less than a majority in outstanding principal amount
of the series of debt securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee of
the series. The trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the series may declare the principal due and
payable immediately upon an event of default. The holders of a majority in
aggregate outstanding principal amount of the series may annul the declaration
and waive the default if the default (other than the non-payment of the
principal of the series which has become due solely by the acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the trustee
of the series.
The holders of a majority in outstanding principal amount of a series
of debt securities affected thereby may, on behalf of the holders of all the
holders of the series of debt securities, waive any past default, except a
default in the payment of principal or interest, unless the default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the trustee
of the series, or a default in respect of a covenant or provision which under
the related indenture cannot be modified or amended without the consent of the
holder of each outstanding debt security of the series. Pinnacle is required to
file annually with the trustees a certificate as to whether or not Pinnacle is
in compliance with all the conditions and covenants applicable to it under the
indentures.
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In case an event of default shall occur and be continuing as to a
series of debt securities, the trustee of the series will have the right to
declare the principal of and the interest on the debt securities, and any other
amounts payable under the indenture, to be forthwith due and payable and to
enforce its other rights as a creditor with respect to the debt securities.
No holder of any debt securities will have any right to institute any
proceeding with respect to the indenture or for any remedy thereunder, unless
the holder shall have previously given to the trustee written notice of a
continuing event of default and unless also the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of the series
shall have made written request and offered reasonable indemnity to the trustee
of the series to institute the proceeding as a trustee, and unless the trustee
shall not have received from the holders of a majority in aggregate principal
amount of the outstanding debt securities of the class a direction inconsistent
with the request and shall have failed to institute the proceeding within 60
days. However, these limitations do not apply to a suit instituted by a holder
of a debt security for enforcement of payment of the principal or interest on
the debt security on or after the respective due dates expressed in the debt
security.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
Unless otherwise indicated in the applicable prospectus supplement,
the indentures will provide that Pinnacle will not consolidate with or merge
into any other person or entity or sell, assign, convey, transfer or lease its
properties and assets substantially as an entirety to any person or entity
unless:
- either Pinnacle is the continuing corporation, or any
successor or purchaser is a corporation, partnership, or trust
or other entity organized under the laws of the United States
of America, any State thereof or the District of Columbia, and
the successor or purchaser expressly assumes Pinnacle's
obligations on the debt securities under a supplemental
indenture; and
- immediately before and after giving effect thereto, no event
of default, and no event which, after notice or lapse of time
or both, would become an event of default, shall have happened
and be continuing.
Unless otherwise indicated in the applicable prospectus supplement, the
general provisions of the indentures do not afford holders of the debt
securities protection in the event of a highly leveraged or other transaction
involving Pinnacle that may adversely affect holders of the debt securities.
SATISFACTION AND DISCHARGE; DEFEASANCE
The indentures will provide that when, among other things, all debt
securities not previously delivered to the trustee for cancellation:
- have become due and payable, or
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- will become due and payable at their stated maturity within
one year, and Pinnacle deposits or causes to be deposited with
the trustee, as trust funds in trust for the purpose, an
amount in the currency or currencies in which the debt
securities are payable sufficient to pay and discharge the
entire indebtedness on the debt securities not previously
delivered to the trustee for cancellation, for the principal,
and premium, if any, and interest to the date of the deposit
or to the stated maturity, as the case may be, then the
indenture will cease to be of further effect (except as to
Pinnacle's obligations to pay all other sums due pursuant to
the indenture and to provide the officers' certificates and
opinions of counsel described therein), and Pinnacle will be
deemed to have satisfied and discharged the indenture.
The indentures provide that Pinnacle may elect either:
- to terminate, and be deemed to have satisfied, all its
obligations with respect to any series of debt securities,
except for the obligations to register the transfer or
exchange of such debt securities, to replace mutilated,
destroyed, lost or stolen debt securities, to maintain an
office or agency in respect of the debt securities and to
compensate and indemnify the trustee ("defeasance"); or
- to be released from its obligations with respect to certain
covenants, ("covenant defeasance") upon the deposit with the
trustee, in trust for such purpose, of money and/or U.S.
Government Obligations, as defined in the indenture, which
through the payment of principal and interest in accordance
with the term used will provide money, in an amount sufficient
(in the opinion of a nationally recognized firm of independent
public accountants) to pay the principal of, interest on and
any other amounts payable in respect of the outstanding debt
securities of the series.
Such a trust may be established only if, among other things, Pinnacle
has delivered to the trustee an opinion of counsel (as specified in the
indenture) with regard to certain matters, including an opinion to the effect
that the holders of the debt securities will not recognize income, gain or loss
for Federal income tax purposes as a result of the deposit and discharge and
will be subject to Federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if the deposit and defeasance
or covenant defeasance, as the case may be, had not occurred.
REDEMPTION
Unless otherwise indicated in the applicable prospectus supplement,
debt securities will not be subject to any sinking fund requirements.
Unless otherwise indicated in the applicable prospectus supplement,
Pinnacle may, at its option, redeem the debt securities of any series in whole
at any time or in part from time to time, at the redemption price set forth in
the applicable prospectus supplement plus accrued and unpaid interest to the
date fixed for redemption, and debt securities in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000. If the
debt securities of any
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series are so redeemable only on or after a specified date or upon the
satisfaction of additional conditions, the applicable prospectus supplement will
specify the date or describe the conditions.
Pinnacle will mail notice of any redemption at least 30 days but not
more than 60 days before the redemption date to each holder of debt securities
to be redeemed at the holder's registered address. Unless Pinnacle defaults in
the payment of the redemption price, on and after the redemption date interest
shall cease to accrue on the debt securities or portions thereof called for
redemption.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable prospectus supplement,
the debt securities of any series may be convertible or exchangeable into other
securities. The specific terms on which debt securities of any series may be so
converted or exchanged will be set forth in the applicable prospectus
supplement. These terms may include provisions for conversion or exchange,
either mandatory, at the option of the holder, or at the option of Pinnacle, in
which case the number of shares of other securities to be received by the
holders of debt securities would be calculated as of a time and in the manner
stated in the applicable prospectus supplement.
CERTAIN COVENANTS
The indentures will contain certain covenants regarding, among other
matters, corporate existence, payment of taxes and reports to holders of debt
securities. If and to the extent indicated in the applicable prospectus
supplement, these covenants may be removed or additional covenants added with
respect to any series of debt securities.
GOVERNING LAW
The indentures and the debt securities will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE TRUSTEES
Each trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to these provisions, each trustee is under no obligation
to exercise any of the powers vested in it by the indenture at the request of
any holder of the debt securities, unless offered reasonable indemnity by the
holder against the costs, expenses and liabilities which might be incurred
thereby. Each trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 155,000,000 shares. Those
shares consist of (1) 150,000,000 shares designated as common stock, $0.001
par value per share and (2) 5,000,000 shares designated as preferred stock,
$0.001 par value per share. The only equity securities currently outstanding are
shares of common stock. As of April 30, 2000, there were approximately
48,340,923 shares of common stock issued and outstanding.
COMMON STOCK
Our common stock is listed on the Nasdaq National Market under the
symbol "BIGT." Each holder of our common stock will be entitled to one vote for
each share held. Stockholders will not have the right to cumulate their votes in
elections of directors. Accordingly, holders of a majority of the issued and
outstanding common stock will have the right to elect all of our directors and
otherwise control us, subject to any voting rights of the then outstanding
preferred stock, if any.
Holders of our common stock will be entitled to dividends on a pro rata
basis upon declaration of dividends by our board of directors. Dividends will be
payable only out of unreserved and unrestricted surplus that is legally
available for the payment of dividends. Any determination to declare or pay
dividends in the future will be at the discretion of our board of directors and
will depend on our results of operations, financial condition, contractual or
legal restrictions and other factors deemed relevant by our board of directors.
In order to maintain our REIT status, however, we are required to distribute to
stockholders 95% of our taxable income. Our credit facility, the Senior
Indenture and the Convertible Indenture currently prohibit us from paying any
dividends other than those required to be paid to maintain our REIT Status.
Upon our liquidation, holders of our common stock will be entitled to a
pro rata distribution of our assets, after payment of all amounts owed to our
creditors, and subject to any preferential amount payable to holders of our
preferred stock, if any.
PREFERRED STOCK
The following description of preferred stock and the description of the
terms of a particular series of preferred stock that will be set forth in the
related prospectus supplement are not complete. These descriptions are qualified
in their entirety by reference to the certificate of designation relating to
that series. The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by the certificate of designation
relating to that series. The prospectus supplement also will contain a
description of certain United States federal income tax consequences relating to
the purchase and ownership of the series of preferred stock that is described in
the prospectus supplement.
As of April 30, 2000, there were no shares of preferred stock
outstanding. The board of directors has the authority, without further action by
the stockholders, to issue up to 5,000,000 shares of preferred stock in one or
more series and to fix the following terms of the preferred stock.
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<PAGE> 39
Any or all of the rights of the preferred stock may be greater than the
rights of the common stock.
The prospectus supplement will specify as to each issuance of preferred
stock:
- the maximum number of shares,
- the designation of the shares,
- the annual dividend rate, if any, whether the dividend rate is
fixed or variable, the date dividends will accrue, the
dividend payment dates and whether dividends will be
cumulative,
- the price and the terms and conditions for redemption, if any,
including redemption at our option or at the option of the
holders, including the time period for redemption, and any
accumulated dividends or premiums,
- the liquidation preference, if any, and any accumulated
dividends upon the liquidation, dissolution or winding up of
Pinnacle's affairs,
- any sinking fund or similar provision, and, if so, the terms
and provisions relating to the purpose and operation of the
fund,
- the terms and conditions, if any, for conversion or exchange
of shares into or for any other class or classes of our
capital stock or any series of any other class or classes, or
into or for any other series of the same class, or any other
securities or assets, including the price or the rate of
conversion or exchange and the method, if any, of adjustment,
- the voting rights and
- any or all other preferences and relative, participating,
optional or other special rights, privileges or
qualifications, limitations or restrictions.
Preferred stock will be fully paid and nonassessable upon issuance. The
preferred stock or any series of preferred stock may be represented, in whole or
in part, by one or more global certificates, which will represent an aggregate
number of shares equal to that of the preferred stock represented by the global
certificate.
Each global certificate will:
- be registered in the name of a depositary or a nominee of the
depositary identified in the prospectus supplement,
- be deposited with such depositary or nominee or a custodian
for the depositary and
- bear a legend regarding any restrictions on exchanges and
registration of transfer and any other matters as may be
provided for under the certificate of designation.
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<PAGE> 40
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Pinnacle may elect to offer depositary shares, each representing a
fraction (to be set forth in the prospectus supplement relating to a particular
series of shares of preferred stock) of a share of a particular series of shares
of preferred stock as described below. In the event Pinnacle elects to do so,
depositary receipts evidencing depositary shares will be issued to the public.
The shares of any class or series of shares of preferred stock
represented by depositary shares will be deposited under a deposit agreement
among Pinnacle, a depositary selected by Pinnacle and the holders of the
depositary receipts. The depositary will be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000. Subject to the terms of the deposit agreement, each
owner of a depositary share will be entitled, in proportion to the applicable
fraction of a preferred share represented by such depositary share, to all the
rights and preferences of the shares of preferred stock represented thereby
(including dividend, voting, redemption and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of the related class or series of
shares of preferred stock in accordance with the terms of the offering described
in the related prospectus supplement. Copies of the forms of deposit agreement
and depositary receipt will be filed as exhibits to or incorporated by reference
in the registration statement of which this prospectus forms a part, and the
following summary is qualified in its entirety by reference to such exhibits.
Pending the preparation of definitive depositary receipts, the
depositary may, upon the written order of Pinnacle, issue temporary depositary
receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive depositary receipts but not in
definitive form. Definitive depositary receipts will be prepared thereafter
without unreasonable delay, and temporary depositary receipts will be
exchangeable for definitive depositary receipts without charge to the holder
thereof.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other
distributions received in respect of the related class or series of shares of
preferred stock to the record holders of depositary shares relating to such
class or series of shares of preferred stock in proportion to the number of such
depositary shares owned by such holders.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled thereto, unless the depositary determines that it is not feasible to
make such distribution, in which case the depositary may, with the approval of
Pinnacle, sell such property and distribute the net proceeds from such sale to
such holders.
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<PAGE> 41
WITHDRAWAL OF SHARES
Upon surrender of the depositary receipts at the corporate trust office
of the depositary (unless the related depositary shares have previously been
called for redemption), the holder of the depositary shares evidenced thereby is
entitled to delivery of the number of whole shares of the related class or
series of shares of preferred stock and any money or other property represented
by such depositary shares. Holders of depositary shares will be entitled to
receive whole shares of the related class or series of shares of preferred stock
on the basis set forth in the prospectus supplement for such class or series of
shares of preferred stock, but holders of such whole shares of preferred stock
will not thereafter be entitled to exchange them for depositary shares. If the
depositary receipts delivered by the holder evidence a number of depositary
shares in excess of the number of depositary shares representing the number of
whole shares of preferred stock to be withdrawn, the depositary will deliver to
such holder at the same time a new depositary receipt evidencing such excess
number of depositary shares. In no event will fractional shares of preferred
stock be delivered upon surrender of depositary receipts to the depositary.
REDEMPTION OF DEPOSITARY SHARES
Whenever Pinnacle redeems shares of preferred stock held by the
depositary, the depositary will redeem as of the same redemption date the number
of depositary shares representing shares of the related class or series of
shares of preferred stock so redeemed. The redemption price per depositary share
will be equal to the applicable fraction of the redemption price per share
payable with respect to such class or series of shares of preferred stock. If
less than all the depositary shares are to be redeemed, the depositary shares to
be redeemed will be selected by lot or pro rata as may be determined by the
depositary.
VOTING THE SHARES OF PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
shares of preferred stock are entitled to vote, the depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary shares relating to such shares of preferred stock. Each record holder
of such depositary shares on the record date (which will be the same date as the
record date for the shares of preferred stock) will be entitled to instruct the
depositary as to the exercise of the voting rights pertaining to the amount of
the class or series of shares of preferred stock represented by such holder's
depositary shares. The depositary will endeavor, insofar as practicable, to vote
the number of shares of preferred stock represented by such depositary shares in
accordance with such instructions, and Pinnacle will agree to take all action
which the depositary deems necessary in order to enable the depositary to do so.
The depositary will abstain from voting shares of preferred stock to the extent
it does not receive specific instructions from the holders of depositary shares
representing such shares of preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between Pinnacle and the depositary. However, any amendment which materially and
adversely alters the rights of the
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<PAGE> 42
holders of depositary receipts will not be effective unless such amendment has
been approved by the holders of depositary receipts representing at least a
majority (or, in the case of amendments relating to or affecting rights to
receive dividends or distributions or voting or redemption rights, 66-2/3%,
unless otherwise provided in the related prospectus supplement) of the
depositary shares then outstanding. The deposit agreement may be terminated by
Pinnacle or the depositary only (1) if all outstanding depositary shares have
been redeemed, (2) if there has been a final distribution in respect of the
related class or series of shares of preferred stock in connection with any
liquidation, dissolution or winding up of Pinnacle and such distribution has
been distributed to the holders of depositary receipts or (3) upon the consent
of holders of depositary receipts representing not less than 66-2/3% of the
depositary shares outstanding.
CHARGES OF DEPOSITARY
Pinnacle will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. Pinnacle will
pay charges of the depositary in connection with the initial deposit of the
related class or series of shares of preferred stock and any redemption of such
shares of preferred stock. Holders of depositary receipts will pay all other
transfer and other taxes and governmental charges and such other charges as are
expressly provided in the deposit agreement to be for their accounts.
The depositary may refuse to effect any transfer of a depositary
receipt or any withdrawal of shares of a class or series of preferred stock
evidenced thereby until all taxes and charges with respect to the depositary
receipt or shares of preferred stock are paid by the holders thereof.
MISCELLANEOUS
The depositary will forward all reports and communications from
Pinnacle which are delivered to the depositary and which Pinnacle is required to
furnish to the holders of the shares of preferred stock.
Neither the depositary nor Pinnacle will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the deposit agreement. The obligations of Pinnacle and the
depositary under the deposit agreement will be limited to performance in good
faith of their duties thereunder, and neither Pinnacle nor the depositary will
be obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or class or series of shares of preferred stock unless
satisfactory indemnity is furnished. Pinnacle and the depositary may rely on
written advice of counsel or accountants, or information provided by persons
presenting shares of preferred stock for deposit, holders of depositary shares
or other persons believed to be competent and on the documents believed to be
genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering to Pinnacle notice
of its election to do so, and Pinnacle may at any time remove the depositary.
Any such resignation or removal of the depositary will take effect upon the
appointment of a successor depositary, which successor must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
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<PAGE> 43
DESCRIPTION OF WARRANTS
Pinnacle has no warrants outstanding (other than options issued under
its employee stock option plans). Pinnacle may issue warrants for the purchase
of debt securities, common stock or preferred stock. Warrants may be issued
independently or together with any other securities offered by any prospectus
supplement and may be attached to or separate from such securities. Each series
of warrants will be issued under a separate warrant agreement to be entered into
between Pinnacle and a warrant agent specified in the applicable prospectus
supplement. The warrant agent will act solely as an agent of Pinnacle in
connection with the warrants of such series and will not assume any obligation
or relationship of agency or trust for or with any holders of the warrants.
Further terms of the warrants and the applicable warrant agreements will be set
forth in the applicable prospectus supplement. Copies of the form of warrant
agreement and warrant will be filed as exhibits to or incorporated by reference
in the registration statement of which this prospectus forms a part, and the
following summary is qualified in its entirety by reference to such exhibits.
The applicable prospectus supplement will describe the terms of the
warrants, including, where applicable, the following:
- the title of the warrants,
- the aggregate number of warrants,
- the price or prices at which warrants will be issued,
- the designation, terms and number of securities purchasable
upon exercise of warrants,
- the designation and terms of the securities, if any, with
which warrants are issued and the number of warrants issued
with each security,
- the date, if any, on and after which warrants and the related
securities will be separately transferable,
- the price at which each security purchasable upon exercise of
warrants may be purchased,
- the date on which the right to exercise the warrants shall
commence and the date on which that right shall expire,
- the minimum or maximum amount of warrants which may be
exercised at any one time,
- information with respect to book-entry procedures, if any and
- any other terms of the warrants, including terms, procedures
and limitations relating to the exchange and exercise of the
warrants.
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<PAGE> 44
PLAN OF DISTRIBUTION
We may offer and sell the securities directly or to or through
underwriting syndicates represented by managing underwriters, to or through
underwriters without a syndicate or through dealers or agents. The prospectus
supplement with respect to the offered securities will set forth the terms of
the offering, including the following:
- the name or names of any underwriters, dealers or agents,
- the purchase price and the proceeds we will receive from the
sale,
- any underwriting discounts, agency fees and other items
constituting underwriters' or agents' compensation and
- the initial public offering price and any discounts or
concessions allowed, re-allowed or paid to dealers.
If any underwriters are involved in the offer and sale, the securities
will be acquired by the underwriters and may be resold by them, either at a
fixed public offering price established at the time of offering or from time to
time in one or more negotiated transactions or otherwise, at prices related to
prevailing market prices determined at the time of sale. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of the
underwriters to purchase the securities will be subject to conditions precedent
and the underwriters will be obligated to purchase all the securities described
in the prospectus supplement if any are purchased. Any initial public offering
price and any discounts or concessions allowed or re-allowed or paid to dealers
may be changed from time to time.
We may offer and sell the securities directly or through an agent or
agents designated by us from time to time. An agent may sell securities it has
purchased from us as principal to other dealers for resale to investors and
other purchasers, and may reallow all or any portion of the discount received in
connection with the purchase from us to the dealers. After the initial offering
of the securities, the offering price (in the case of securities to be resold at
a fixed offering price), the concession and the discount may be changed. Any
agent participating in the distribution of the securities may be deemed to be an
"underwriter," as that term is defined in the Securities Act of 1933, of the
securities so offered and sold.
If any underwriters are involved in the offer and sale, they will be
permitted to engage in transactions that maintain or otherwise affect the price
of the securities. These transactions may include over-allotment transactions,
purchases to cover short positions created by the underwriter in connection with
the offering and the imposition of penalty bids. If an underwriter creates a
short position in the securities in connection with the offering, i.e., if it
sells more securities than set forth on the cover page of the applicable
prospectus supplement, the underwriter may reduce that short position by
purchasing the securities in the open market. In general, purchases of a
security to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. As noted above,
underwriters may also choose to impose penalty bids on other underwriters and/or
selling group members. This means that if underwriters purchase securities on
the open market to reduce their short position or to stabilize
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<PAGE> 45
the price of the securities, they may reclaim the amount of the selling
concession from those underwriters and/or selling group members who sold such
securities as part of the offering.
Neither we nor any underwriter make any representation or prediction as
to the direction or magnitude of any effect that the transactions described
above may have on the price of the securities. In addition, neither we nor any
underwriter make any representation that such underwriter will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
Underwriters, dealers and agents may be entitled, under agreements
entered into with us, to indemnification by us against some liabilities,
including liabilities under the Securities Act of 1933.
The place and time of delivery for the securities in respect of which
this prospectus is delivered will be set forth in the applicable prospectus
supplement if appropriate.
Unless otherwise indicated in the prospectus supplement, each series of
offered securities will be a new issue of securities and, other than the common
stock, which is listed on the Nasdaq National Market, for which there currently
is no market. Any underwriters to whom securities are sold for public offering
and sale may make a market in such series of securities as permitted by
applicable laws and regulations, but such underwriters will not be obligated to
do so, and any such market making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the securities.
Underwriters, agents and dealers may engage in transactions with or
perform services, including various investment banking and other services, for
us and/or any of our affiliates in the ordinary course of business.
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<PAGE> 46
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby will be passed upon for Pinnacle by Holland & Knight LLP, Tampa,
Florida, and for any underwriters, dealers or agents by counsel named in the
applicable prospectus supplement.
EXPERTS
The consolidated financial statements incorporated in this Prospectus to
the Annual Report on Form 10-K of Pinnacle Holdings Inc. for the year ended
December 31, 1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent certified public accountants, given on
the authority of said firm as experts in auditing and accounting.
The financial statements of the North American Antenna Site Business of
Motorola, Inc. as of December 31, 1997 and 1998 and for each of the years in the
three-year period ended December 31, 1998, have been incorporated herein by
reference in reliance upon the report of KPMG LLP, independent auditors.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and
other information with the Commission. You may read and copy any materials we
file with the Commission at the Commission's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the Commission at
1-800-SEC-0330 for more information on its public reference rooms. The
Commission also maintains an Internet Website at http://www.sec.gov that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission.
Pinnacle filed a registration statement on Form S-3 to register with
the Commission the securities described herein. This prospectus is a part of
that registration statement and constitutes a prospectus of Pinnacle. As
allowed by Commission rules, this prospectus does not contain all the
information that can be found in the registration statement or the exhibits to
the registration statement.
INCORPORATION BY REFERENCE
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those
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<PAGE> 47
documents. The information incorporated by reference is considered to be a part
of this prospectus, and later information that we file with the Commission will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings we make with the Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") until we sell all of the securities, or after the date of
this initial registration statement and before the effectiveness of the
registration statement. The documents incorporated by reference are:
- our Annual Report on Form 10-K for the year ended December 31,
1999 (including information specifically incorporated by
reference into our Form 10-K from our definitive Proxy
Statement for our 2000 Annual Meeting of Stockholders);
- our Quarterly Report on Form 10-Q for the quarter ended March
31, 2000;
- our Current Report on Form 8-K filed on January 4, 2000;
- our Current Report on Form 8-K filed on September 14, 1999, as
amended on November 15, 1999;
- the description of our common stock contained in our
registration statement on Form 8-A filed under the Exchange
Act on August 11, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and number:
Investor Relations
Pinnacle Holdings Inc.
301 North Cattlemen Road
Suite 300
Sarasota, Florida 34232
Telephone: (941) 364-8886
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<PAGE> 48
$900,000,000
PINNACLE HOLDINGS INC.
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
DEPOSITARY SHARES AND WARRANTS
----------------------------
PROSPECTUS
----------------------------
, 2000
<PAGE> 49
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with
the issuance and distribution of the securities being registered hereunder. All
such fees and expenses shall be borne by the undersigned company (the
"Company").
<TABLE>
<S> <C>
Commission Registration Fee.......................................... $ *
Trustee's Fees and Expenses ......................................... *
Rating Agencies' Fees ............................................... *
Transfer Agent and Registrar Fees and Expenses....................... *
Legal Fees and Expenses.............................................. *
Accounting Fees and Expenses......................................... *
Printing, Engraving and Mailing Expenses............................. *
Miscellaneous........................................................ *
Total................................................................ $ *
========
</TABLE>
* To be filed with a Current Report on Form 8-K or an amendment to the
registration statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and Bylaws contain provisions
limiting the personal liability of its directors for monetary damages resulting
from breaches of their duty of care to the extent permitted by Section 102(b)(7)
of the Delaware General Corporation Law. The Company's Certificate of
Incorporation and Bylaws also contain provisions making indemnification of its
directors and officers mandatory to the fullest extent permitted by the Delaware
General Corporation Law, including circumstances in which indemnification is
otherwise discretionary.
The Delaware General Corporation Law permits the indemnification by a
Delaware corporation of its directors, officers, employees and other agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than derivative
actions which are by or in the right of the corporation) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and require
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. The Company has
obtained directors' and officers' liability insurance, consistent with the
provisions of the Delaware General Corporation Law, to protect directors and
officers from liabilities under various laws, including the Securities Act of
1933, as amended.
II-1
<PAGE> 50
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number
- ------
Description
----------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement*.
4.1 Certificate of Incorporation+.
4.2 Form of Senior Indenture*.
4.3 Form of Subordinated Indenture*.
4.4 Form of Senior Debt Security*.
4.5 Form of Subordinated Debt Security*.
4.6 Form of Convertible Debt Security*.
4.7 Form of Preferred Stock Certificate of Designation*.
4.8 Form of Warrant*.
4.9 Form of Warrant Agreement*.
4.10 Form of Deposit Agreement*.
5.1 Opinion of Holland & Knight LLP*.
12.1 Computation of Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends.
23.1 Consent of PricewaterhouseCoopers LLP, independent certified public accountants.
23.2 Consent of KPMG LLP, independent public accountants.
23.3 Consent of Holland & Knight LLP (included in Exhibit 5.1).
24.1 Power of Attorney of certain directors and officers of Pinnacle (set
forth on the signature page of this registration statement).
</TABLE>
II-2
<PAGE> 51
<TABLE>
<S> <C>
25.1 Form T-1 Statement of Eligibility of Trustee for Senior Indenture
under the Trust Indenture Act of 1939*.
25.2 Form T-1 Statement of Eligibility of Trustee for Subordinated
Indenture under the Trust Indenture Act of 1939*.
</TABLE>
+ Incorporated by reference to this registration statement.
* To be filed with a Current Report on Form 8-K or a Post-Effective
Amendment to registration statement.
ITEM 17. UNDERTAKINGS
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by such clauses is contained in
periodic reports filed with or furnished to the Commission by
the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
II-3
<PAGE> 52
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the Company's annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act of 1934 that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to its Certificate of Incorporation, Bylaws, by
agreement or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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 Company 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
Company 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 of 1933 and will be
governed by the final adjudication of such issue.
(d) The Company hereby undertakes:
(1) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Act.
(2) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this registration statement as of the time it
was effective.
(3) That for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at the time shall be deemed to be initial bona fide offering thereof.
II-4
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Sarasota, Florida on May 23, 2000.
PINNACLE HOLDINGS INC.
By: /s/ Steven R. Day
----------------------------------------
Name: Steven R. Day
Title: Vice President, Chief Financial
Officer and Secretary
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Robert J. Wolsey and Steven R. Day, and
each of them, as his true and lawful attorneys-in-fact and agents, each with
the power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign the Registration Statement filed herewith and any and
all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the foregoing, as fully 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 his or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
--------------
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 23, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert J. Wolsey President, Chief Executive Officer and Director
- ----------------------------- (Principal Executive Officer)
Robert J. Wolsey
</TABLE>
II-5
<PAGE> 54
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Steven R. Day Vice President, Chief Financial Officer and Director
- -----------------------------
Steven R. Day
/s/ G. Peter O'Brien Director
- -----------------------------
G. Peter O'Brien
/s/ Andrew Banks Director
- -----------------------------
Andrew Banks
/s/ Royce Yudkoff Director
- -----------------------------
Royce Yudkoff
/s/ J. Clarke Smith Director
- -----------------------------
J. Clarke Smith
</TABLE>
II-6
<PAGE> 55
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement*.
4.1 Certificate of Incorporation+.
4.2 Form of Senior Indenture*.
4.3 Form of Subordinated Indenture*.
4.4 Form of Senior Debt Security*.
4.5 Form of Subordinated Debt Security*.
4.6 Form of Convertible Debt Security*.
4.7 Form of Preferred Stock Certificate of Designation*.
4.8 Form of Warrant*.
4.9 Form of Warrant Agreement*.
4.10 Form of Deposit Agreement*.
5.1 Opinion of Holland & Knight LLP*.
12.1 Computation of Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends.
23.1 Consent of PricewaterhouseCoopers LLP, independent certified public
accountants.
23.2 Consent of KPMG LLP, independent public accountants.
23.3 Consent of Holland & Knight LLP (included in Exhibit 5.1).
24.1 Power of Attorney of certain directors and officers of Pinnacle (set
forth on the signature page of this registration statement).
25.1 Form T-1 Statement of Eligibility of Trustee for Senior Indenture
under the Trust Indenture Act of 1939*.
25.2 Form T-1 Statement of Eligibility of Trustee for Subordinated
Indenture under the Trust Indenture Act of 1939*.
</TABLE>
+ Incorporated by reference to this registration statement.
* To be filed with a Current Report on Form 8-K or a Post-Effective
Amendment to registration statement.
II-7
<PAGE> 1
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
Pinnacle's ratio of earnings to fixed charges
for each of the periods indicated is as follows:
<TABLE>
<CAPTION>
Three
Months
Ended
Fiscal Year Ended December 31, March 31,
------------------------------
1995 1996 1997 1998 1999 2000
----- ------- ------- -------- -------- ----
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Pre-tax loss from continuing operations before
adjustment for in-kind preferred stock dividends
and accretion .................................. $(645) $(2,016) $(8,461) $(36,630) $(60,821) (22,158)
Fixed charges:
Interest expense ............................... 205 1,252 6,925 12,300 22,953 8,776
Amortization of original issue discount and debt
issue costs .................................... -- -- 292 16,426 23,708 6,426
Rentals:
Office space (33%) ............................. 10 32 62 102 134 71
Telecommunications sites (33%) ................. 29 124 427 1,106 5,531 3,270
Preferred stock dividends and accretion ........... -- -- -- 3,094 2,930 --
----- ------- ------- -------- -------- -------
Total fixed charges ............................... 244 1,408 7,706 33,028 55,256 18,543
===== ======= ======= ======== ======== =======
Pre-tax loss from continuing operations before
adjustment for in-kind preferred stock
dividends and accretion ........................ $(401) $ (608) $ (755) $ (6,696) $ (8,495) $(3,615)
===== ======= ======= ======== ======== =======
Ratio of earnings to fixed charges ................ (a) (a) (a) (a) (a) (a)
===== ======= ======= ======== ======== =======
</TABLE>
(a) Due to Pinnacle's losses in 1995, 1996, 1997, 1998, 1999 and the three
months ended March 31, 2000, the ratio coverage was less than 1:1. Pinnacle must
generate additional earnings of $645, $2,016, $8,461, $39,724, $63,751 and
$22,158 in 1995, 1996, 1997, 1998, 1999 and the three months ended
March 31, 2000, respectively, to achieve a coverage ratio of 1:1.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 27, 2000 relating to the
financial statements and financial statement schedules, which appears in
Pinnacle Holdings Inc.'s Annual report on Form 10-K for the year ended December
31, 1999. We also consent to the reference to us under the headings "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Tampa, FL
May 22, 2000
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our report dated June 16, 1999, with respect to the financial
statements of The North American Antenna Sites Business of Motorola, Inc. which
appears in Pinnacle Holdings Inc.'s Form 8-K/A dated November 15, 1999 and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
KPMG LLP
Chicago, Illinois
May 22, 2000
