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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 17, 2000
Leap Wireless International, Inc.
(Exact name of registrant as specified in its charter)
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Delaware 0-29752 33-0811062
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of Incorporation)
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10307 Pacific Center Court, San Diego, California 92121
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (858) 882-6000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 17, 2000, Leap Wireless International, Inc., a Delaware
corporation (the "Company"), and an indirect subsidiary of the Company, Cricket
Communications, Inc. ("Cricket"), completed the acquisition of substantially all
of the assets of Chase Telecommunications Holdings, Inc. ("CTH"). The
acquisition was effected pursuant to that certain Asset Purchase Agreement dated
as of December 24, 1998 (the "Asset Purchase Agreement"), by and among the
Company, CTH, Chase Telecommunications, Inc. ("ChaseTel"), Anthony Chase, an
individual, and Richard McDugald, an individual. Prior to completion of the
acquisition, the Company owned 7.2% of the outstanding common stock of CTH.
Pursuant to the Asset Purchase Agreement, the Company acquired all of the
outstanding common stock of ChaseTel Licensee Corp. ("Licensee"), and Cricket
acquired substantially all of the other assets of CTH, including all of the
outstanding common stock of ChaseTel. The Company and Cricket acquired the
assets in exchange for: (a) $6.3 million in cash; (b) a five-year warrant to
purchase 1% of the outstanding common stock (643,068 shares) of Cricket
Communications Holdings, Inc., a subsidiary of the Company which owns Cricket,
with an aggregate exercise price of $1.0 million; (c) the return to CTH of
shares of CTH common stock held by the Company and all outstanding warrants to
purchase CTH common stock held by the Company; and (d) a future cash payment of
up to $41 million (plus certain fees and expenses) to be based on the earnings
of the wireless telecommunications business developed using the PCS licenses
acquired from CTH during the fifth full fiscal year following the acquisition.
The terms of the acquisition, including the purchase price, were
established through arms-length negotiations between the Company and CTH.
The Company and Cricket acquired the CTH assets subject to outstanding
indebtedness: (a) to QUALCOMM Incorporated in the amount of approximately $29
million; (b) to Cricket in the amount of approximately $77 million; and (c) to
the Federal Communications Commission in the principal amount of approximately
$79 million. Concurrently with the completion of the acquisition, the
outstanding indebtedness to QUALCOMM Incorporated was repaid with the proceeds
of borrowings under Cricket's credit facility with Lucent Technologies Inc. and
the outstanding indebtedness to Cricket was forgiven.
The primary assets of CTH consisted of the common stock of ChaseTel, an
operating company owning wireless telecommunications networks in Chattanooga and
Nashville, Tennessee, the common stock of Licensee, which holds 11 FCC C-Block
PCS licenses (each of 15MHz) in Tennessee and surrounding states, and the common
stock of ChaseTel Real Estate Holding Company, Inc., which owns certain real
property interests in Tennessee. Prior to the acquisition, these assets were
used to provide wireless telecommunications services and the Company and Cricket
intend to continue such uses for the acquired assets.
ITEM 5. OTHER EVENTS.
At a meeting on March 30, 2000, the Board of Directors of the Company (the
"Board") approved an amendment (the "Amendment") to the Company's stockholder
rights plan
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(the "Rights Plan"). Under the Rights Plan, the Board previously declared a
dividend in September 1998 of one preferred stock purchase right (a "Right") for
each outstanding share of the Company's common stock, $.0001 par value per
share.
As a result of the Amendment, the exercise price of each Right was
increased from $90.00 to $350.00 per Right, subject to adjustment. Each Right
entitles stockholders to buy one one-thousandth of a share of Series A Junior
Participating Preferred Stock at an exercise price of $350.00, subject to
customary anti-dilution adjustments, upon the triggering event of a person (the
"Acquirer") acquiring, or making a tender or exchange offer for, 15% or more of
the Company's outstanding common stock. Each Right entitles its holder, other
than the Acquirer, to purchase shares of the Company's common stock with a
market value of twice the Right's exercise price. In addition, if another
company acquires the Company in a merger or other business combination, or if
the Company sells more than 50% of its consolidated assets or earning power,
these Rights will entitle the Company's stockholders, other than the Acquirer,
to purchase, for the exercise price, shares of the common stock of the acquiring
company having a market value of two times the exercise price.
The description and terms of the Rights are more fully set forth in a
Rights Agreement, dated as of September 14, 1998, as the same may be amended
from time to time, between the Company and Harris Trust Company of California,
as Rights Agent, as filed with the Securities and Exchange Commission as Exhibit
4.1 to the Company's Current Report on Form 8-K on September 18, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The financial statements required by this item will be filed by
amendment to this Current Report on Form 8-K not later than 60 days
after April 3, 2000.
(b) Pro Forma Financial Information.
The pro forma financial information required by this item will be
filed by amendment to this Current Report on Form 8-K not later than
60 days after April 3, 2000.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated December 24, 1998, by and among
Chase Telecommunications Holdings, Inc., Chase
Telecommunications, Inc., Anthony Chase, Richard McDugald and
Leap Wireless International, Inc. (incorporated herein by
reference to Exhibit 10.20 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1998, as filed with
the Securities and Exchange Commission on January 14, 1999).
99.1 Press Release, dated March 20, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 31, 2000 Leap Wireless International, Inc.
By: /s/ JAMES E. HOFFMANN
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James E. Hoffmann
Senior Vice President, General
Counsel and Secretary
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Exhibit Index
Exhibit Number Description
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2.1 Asset Purchase Agreement, dated December 24, 1998, by and
among Chase Telecommunications Holdings, Inc., Chase
Telecommunications, Inc., Anthony Chase, Richard McDugald and
Leap Wireless International, Inc. (incorporated herein by
reference to Exhibit 10.20 to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 30, 1998, as filed
with the Securities and Exchange Commission on January 14,
1999).
99.1 Press Release, dated March 20, 2000.
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EXHIBIT 99.1
Leap Wireless International Completes Acquisition Of
Operating Licenses in Tennessee
SAN DIEGO, March 20 /PRNewswire/ -- Wireless communications carrier Leap
Wireless International, Inc. (Nasdaq: LWIN - news) today announced that it has
completed a previously announced acquisition of substantially all of the assets
of Chase Telecommunications Holdings, Inc. (ChaseTel). The transaction gives
Leap 11 C-Block licenses in Tennessee covering 6.6 million potential customers
(1998 POPs) in markets such as Chattanooga, Knoxville, Memphis and Nashville.
Leap previously owned 7.2 percent of ChaseTel.
Leap's innovative Cricket(SM) service concept was introduced in Chattanooga and
Nashville, Tenn., by ChaseTel under an agreement that provided that ChaseTel
controlled the business until Leap's acquisition of ChaseTel was complete.
Cricket service, which lets customers make virtually unlimited phone calls in
their local service area, is designed to change the way people communicate by
bringing affordable wireless communications to the U.S. mass consumer market.
"Given the overwhelming response to Cricket service in its first two markets,
we believe that our simple, affordable wireless service truly has been well
received," said Susan G. Swenson, president and chief operating officer of
Leap, and president and CEO of Cricket Communications, a Leap subsidiary.
"We're excited about bringing Cricket to additional markets in Tennessee and
across the United States."
"We are delighted to have played an important role in Cricket's debut," said
Anthony Chase, CEO of ChaseTel. "We look forward to watching Cricket's progress
in the coming years."
As previously announced, the Federal Communications Commission (FCC) issued an
order approving Leap's acquisition of ChaseTel in February. A wireless company
has since filed an Application for Review of the FCC order. Leap expects the FCC
order to be upheld and will continue to introduce Cricket service in Tennessee
markets and beyond.
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About Cricket Communications, Inc.
Cricket Communications, Inc., a subsidiary of Leap Wireless International, plans
to change the way people communicate by bringing wireless communications to the
U.S. mass consumer market. Cricket's service concept, called Comfortable
Wireless and the around-town phone, is currently offered in Nashville and
Chattanooga, Tenn. Cricket service lets customers make virtually unlimited calls
in their local service area and receive calls from anywhere for one low, flat
rate. Cricket's service also allows customers to make long distance calls by
paying for these calls in advance. While roaming is not available, the local
service area provides coverage where people live, work, and play. For more
information, please visit www.cricketcommunications.com.
About Leap Wireless International, Inc.
Leap Wireless International, Inc., headquartered in San Diego, Calif., is a
wireless communications carrier that deploys, owns and operates wireless
networks in domestic and international markets with strong growth potential. In
conjunction with its strategic partners, Leap has launched all-digital wireless
service in the United States, Mexico and Chile through its operating companies.
Leap is dedicated to bringing the benefits of reliable, cost-effective and
high-quality voice and data services to domestic and emerging markets. For more
information, please visit www.leapwireless.com.
This news release contains certain "forward-looking statements," including
statements regarding the probability and effects of closing the contemplated
transactions, the markets in which Leap expects to offer Cricket service and the
appeal of the service. Forward-looking statements, which are based upon certain
assumptions and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project" or similar expressions.
The ability of the Company to predict actual results and other future events is
inherently uncertain. Important factors which may cause actual results to differ
materially from the forward-looking statements contained herein or in other
public statements by the Company are described in the section entitled "Risk
Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1999 and other documents on file with the Securities and Exchange
Commission. Those risk factors include uncertainties relating to costs,
profitability and the ability to raise sufficient capital for continued
expansion and operation.
Cricket, Comfortable Wireless and around-town phone are service marks of Cricket
Communications, Inc.
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