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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
FEBRUARY 7, 2000
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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CELLNET FUNDING, L.L.C.
(Exact name of registrant as specified in its charter)
DELAWARE COMMISSION FILE NUMBER: 94-3298620
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 000-21409 Identification Number)
125 SHOREWAY ROAD
SAN CARLOS, CALIFORNIA 94070
(Address of principal executive offices, including zip code)
(650) 508-6000
(Registrant's Telephone Number, Including Area Code)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On February 4, 2000, CellNet Funding, L.L.C. and its parent company,
CellNet Data Systems, Inc., together with other affiliated entities
(collectively, the "Debtors"), filed voluntary petitions for relief under
Chapter 11 of Title 11 of the United States Code, 11 U.S.C. sections 101 et seq.
(the "Bankruptcy Code") in the United States Bankruptcy Court for the District
of Delaware -- IN RE CELLNET DATA SYSTEMS, INC., ET AL., DEBTORS, Chapter 11,
Case No. 00-844. The directors and officers of the Debtors are expected to
remain in possession during the proceedings, subject to the supervision and
orders of the Court.
Debtors filed their petitions pursuant to a proposal letter (the
"Proposal Letter") and an attached summary of terms of an agreement (the
"Summary of Terms") with Schlumberger Limited ("Schlumberger") pursuant to which
Schlumberger, or an entity designated by it, would acquire all or substantially
all of the assets and business operations of the Debtors and certain specified
liabilities related thereto. A copy of the Proposal Letter and Summary of Terms
is attached as an exhibit to this Report on Form 8-K under Item 7 (c). The
proposed acquisition by Schlumberger or its designee is subject, among other
things, to the negotiation of definitive documentation on terms satisfactory to
each of the parties.
CellNet Data Systems, Inc., parent company of the Registrant, issued
a press release concerning the proposed acquisition on February 1, 2000. A copy
of that press release is attached as an exhibit to this Report on Form 8-K under
Item 7 (c). Registrant's parent company also issued a press release concerning
the filing of the voluntary bankruptcy petitions on February 4, 2000. A copy of
that press release is attached as an exhibit to this Report on Form 8-K under
Item 7 (c).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Proposal Letter and Summary of Terms dated January 31, 2000
99.2 Press Release dated February 1, 2000
99.3 Press Release dated February 4, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CellNet Funding, L.L.C.
(Registrant)
Date: February 7, 2000 By: Cellnet Data Systems, Inc., Manager
---------------------------------------
David L. Perry
Vice President and Secretary
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EXHIBIT 99.1
[Schlumberger Limited Letterhead]
January 31, 2000
CellNet Data Systems, Inc.
125 Shoreway Road
San Carlos, CA 94070
Attn: Mr. John LaMacchia
PROPOSAL LETTER
Dear Mr. LaMacchia:
This letter and the attached summary of terms (together, the "Proposal
Letter") sets forth our proposal concerning the acquisition of all or
substantially all of the assets and business operations of CellNet Data Systems,
Inc. and its subsidiaries (the "Company"; together with its subsidiaries, the
"Debtors") by Schlumberger Limited or one or more entities to be designated by
Schlumberger Limited (the "Purchaser") prior to closing (the "Proposed
Transaction"). Capitalized terms used herein and not otherwise defined are used
herein as defined in the attached summary of terms.
The terms and conditions of this Proposal Letter are not limited to
those set forth herein. Those matters that are not covered or made clear herein
or in the attached summary of terms are subject to mutual agreement of the
parties. The terms and conditions of this Proposal Letter may only be modified
in writing. In addition to the conditions set forth in the attached summary of
terms, this Proposal Letter is subject to the receipt of a support letter, in
form and substance acceptable to the Purchaser, executed on behalf of certain
holders of the Existing Notes.
The Debtors agree to indemnify and hold harmless the Purchaser and each
of its affiliates and their officers, directors, employees, agents and advisors
(each, an "Indemnified Party") from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with any case or proceeding pursuant to any bankruptcy, insolvency,
reorganization, moratorium, or similar law or any restructuring of you or any of
your subsidiaries or affiliates or any of the transactions contemplated hereby,
whether or not an Indemnified Party is a party thereto and whether or not the
transactions contemplated hereby are consummated; provided that the foregoing
indemnity will not, as to any Indemnified Party, apply to claims, damages,
losses, liabilities or expenses to the extent that they are determined by the
final non-appealable judgment of a court of competent jurisdiction to have
resulted from the willful misconduct or gross negligence of such Indemnified
Party.
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The Debtors agree that this Proposal Letter is for their confidential use only
and will not be disclosed except in accordance with the terms of paragraph 12 of
the summary of terms.
This Proposal Letter shall be governed by the laws of the State of New
York. Delivery of an executed counterpart of this Proposal Letter by telecopier
shall be effective as delivery of a manually executed counterpart of this
Proposal Letter. The parties hereto hereby irrevocably waive all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Proposal Letter, the
transactions contemplated hereby or the actions of the Purchaser in the
negotiation, performance or enforcement hereof.
Please evidence your acceptance of the provisions of this Proposal
Letter and the other matters referred to above by signing the enclosed copy of
this Proposal Letter and returning it to the undersigned at or before 5:00 P.M.
(New York City time) on February 1, 2000, the time at which the Purchaser's
proposal set forth above (if not so accepted prior thereto) will expire.
Very truly yours,
SCHLUMBERGER LIMITED
By /s/ Jean-Marc Perraud
------------------------
Title: Treasurer
ACCEPTED this 31st day of
January 2000
CELLNET DATA SYSTEMS, INC.
By /s/ John T. LaMacchia
--------------------------
Title: President & Chief Executive Officer
Confidential
Summary of Terms
The following sets forth the summary of terms with respect to the
acquisition of all or substantially all of the assets and business operations of
CellNet Data Systems, Inc. and its subsidiaries (the "Company"; together with
its subsidiaries, the "Debtors") by Schlumberger Limited or one or more entities
to be designated by Schlumberger Limited (the "Purchaser") prior to closing (the
"Proposed Transaction").
1. Assets to be Acquired. Pursuant to a sale under Section 363 of
the Bankruptcy Code (a "363 Sale") or to a plan of reorganization of the
Debtors, the Purchaser would acquire
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all assets of the Company free and clear of all liens other than certain
liens to be agreed (the "Assets"), other than the Excluded Assets (as defined
below), used in, held for use in, or related to the business and operations
of the Company, including, without limitation, (i) the assets of the
Company's subsidiaries or the stock or other ownership interest of the
Company in each of its subsidiaries, (ii) intellectual property, (iii)
contracts, pending contracts and rights, leases and customer files to be
specified by the Purchaser, (iv) all goodwill and other intangibles, and (v)
all licenses, permits and other assets necessary to conduct the business. The
"Excluded Assets" shall mean such obsolete and redundant equipment to be
agreed upon in the asset purchase agreement, CellNet Funding LLC (subject to
provisions to be agreed upon in the asset purchase agreement concerning its
assets) and other assets to be agreed, including any avoidance actions. The
parties agree to work together to determine whether with respect to any
subsidiary, the use of an asset sale will impose material tax liability to
such subsidiary and in such case, shall consider alternative structures,
including a stock acquisition or plan of reorganization to mitigate or
eliminate such liability or to facilitate the transfer of FCC licenses and/or
preserve the incumbency status of any license holders under FCC docket 97-81;
provided, that such alternative structure does not result in any contingent
liabilities to the Purchaser or impair the Proposed Transaction in any
material way.
2. Liabilities to be Assumed. The Purchaser will assume the
following liabilities of the Debtors and no others: liabilities with respect to
critical vendors (to be agreed) under all assigned contracts and leases, the
project financing, the DIP Facility, liabilities specified in paragraph 5,
property taxes with respect to acquired assets and, to the extent set forth in
the business plan and not paid under the DIP Facility, post petition payables,
including professional fees, accruing prior to the Closing Date.
3. Implementation. At the Closing of the Proposed Transaction,
the Purchaser will acquire the Assets in consideration for, and the Company and
the Purchaser shall implement the Proposed Transaction, as follows:
(I). The Company will assign to the Purchaser, and the Purchaser will
assume, the liabilities identified in paragraph 2 above, and such other
liabilities of the Company, as determined by the Purchaser.
(II). The Purchaser will provide the Company with $55 million in cash
to satisfy transaction fees, administrative and priority claims and for
distribution to other creditors, including the holders of the Existing Notes and
reserves for pending litigation.
(III). The Purchaser will provide the Company with up to $26 million in
cash, to repay in full the aggregate outstanding principal amount of the
existing bridge financing provided by the holders of the Existing Notes which
amount shall include all accrued but unpaid pre-and post-petition interest
thereon. In addition, the Purchaser will provide the Company with cash to repay
the reasonable and documented post-petition fees and expenses of
PricewaterhouseCoopers LLP and counsel in connection with matters related to or
arising from the secured status of the Existing Notes in an amount not to exceed
$200,000.
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If the Proposed Transaction does not close for any reason, the Purchaser will
not have any obligation hereunder.
4. DIP Facility. The Debtors shall file petitions for Chapter 11 cases,
in the District of Delaware, on or before February 4, 2000 (the "Filing Date").
In connection with the Proposed Transaction and subject to the satisfaction of
the conditions in paragraph 9 and such others as shall be agreed to, the
Purchaser agrees to arrange debtor in possession financing (the "DIP Facility")
to the Debtors on the following terms and conditions, and on usual and customary
representations, warranties and covenants:
Amount: A multiple draw term loan in an amount not to exceed $30
million. Interim advances (the "Interim DIP Facility") in an amount up to $8
million will be available for a period (the "Interim Period") not to exceed 20
days after the Filing Date pending final court approval of the DIP Facility.
Financing Closing Date: Financing Closing Date shall occur promptly,
but no later than 1 business day after the entry of an interim order approving
the Interim DIP Facility.
Interest: 10% per annum
Fees: 1% on the aggregate amount of the DIP Facility
Security: All of the real and personal property of the Company,
including, without limitation, the stock of its subsidiaries, and all other
assets currently securing the existing bridge financing on a pari passu basis
with the lien securing the existing bridge financing. In addition, the DIP
Facility and the existing bridge financing shall have a pari passu
super-priority claim over all administrative expenses of the kind specified in
Sections 503(b) and 507(b) of the Bankruptcy Code pursuant to Section 364(c)(1)
of the Bankruptcy Code subject to a carve out for (i) fees pursuant to 28 U.S.C.
Section 1930, (ii) any fees payable to the clerk of the bankruptcy court and
(iii) in the event of an occurrence and continuance of a default, accrued and
unpaid fees and expenses of the professionals retained by the Debtors and any
statutory committee in the cases in an aggregate amount approved by the
bankruptcy court not to exceed $1,000,000.
The DIP Facility order shall provide, in the form of adequate
protection, that the existing bridge financing shall have a pari passu lien on
all of the Company's real and personal property acquired subsequently to the
Filing Date.
Purpose: Proceeds of the loans under the DIP Facility shall be used
solely to pay for the post-petition operating expenses of the Company incurred
in the ordinary course of business, including ordinary course trade payables, to
pay the employee bonuses described in paragraph 5(ii) below, for costs and
expenses of administration of the bankruptcy cases, to pay a 1% collateral
sharing fee to holders of the existing bridge financing, for capital
expenditures and other general corporate purposes, in each case in accordance
with an approved budget.
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Maturity Date: The earliest to occur of (i) the expiration of the
Interim Period, in the event a final order is not entered on or before such
date, (ii) the date of entry of an order confirming a plan of reorganization
with respect to the Company, (iii) the consummation of any asset sale and (iv)
the date that is 3 months after the Filing Date.
Conditions: Subject to usual and customary conditions precedent
including, without limitation, approved short term weekly cash flow budgets and
based upon the business plan agreed to by the Company and the Purchaser and such
other procedural conditions as will be set forth in the documentation.
5. Employee Matters. Upon the Closing Date, the Company's 1999 bonus
plan and retention bonus plan shall be paid to certain employees as follows: (i)
to any employee of the Company that is entitled to receive such payments and
that is hired by the Purchaser in connection with the Proposed Transaction, 100%
of the aggregate amount of the 1999 bonus payment and the retention payment
earned by such employee within 10 days of the closing of the Proposed
Transaction to be paid by the Purchaser, (ii) to any employee of the Company
that is employed by the Debtors at the Closing Date and not hired by the
Purchaser or any employee employed by the Debtors at the Filing Date but
terminated by the Company other than for cause prior to the Closing Date, 100%
of the aggregate amount of the 1999 bonus payment earned by such employee, any
severance payment earned by such employee (including accrued wages and vacation
pay and withholding taxes) pursuant to the Company's severance policy in effect
on the date hereof and the retention payment earned by such employee to be paid
by the Purchaser and (iii) to any employee of the Company that resigns prior to
the closing date of the Proposed Transaction, no 1999 bonus, retention or
severance payment shall be made by the Purchaser.
6. Documents. The Debtors shall each file a bankruptcy petition for
relief under chapter 11 of the Bankruptcy Code as soon as possible and in any
event no later than February 4, 2000. In order to consummate the transactions
contemplated herein, the Debtors and the Purchaser shall use their best efforts
to execute and deliver (A) definitive documents with respect to the DIP
Facility, upon the Filing Date, and (B) with respect to the Asset Sale, (I) upon
the Filing Date, a motion to obtain, on an expedited basis, a bid protection
order in form reasonably acceptable to the Purchaser, providing, among other
things, for the topping fee described in paragraph 7 below, and sale/auction
procedures including minimum overbid requirements, and (II) as soon as possible
after the Filing Date and in any event, no later than February 8, 2000, a
purchase agreement. The terms of each of the definitive documents shall be in
form and substance reasonably acceptable to the Purchaser and the Company and
shall contain customary terms, conditions, representations, warranties,
covenants, indemnities (other than the asset purchase agreement) and other
agreements.
7. Break-up Fee. (A) Upon entry of an appropriate order of the
bankruptcy court, in the event that the Debtors or all or substantially all of
the Debtors' assets, taken as a whole, (including, without limitation, the stock
and assets of its subsidiaries) are sold to a third party or the Debtors accept
a competing bid in the form of a recapitalization plan, whether pursuant to
"higher and better offer" in a sale under Section 363 or otherwise, the
Purchaser will be entitled to a break-up fee of $5 million plus reimbursement
for reasonable fees and expenses (including professional fees and expenses)
incurred by the Purchaser in connection with the Proposed
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Transaction, subject to the approval of the bankruptcy court which obligation
shall constitute an allowed claim against the Debtors under sections 503 and
507(a) of the Bankruptcy Code. The Debtors shall consult with and consider
the views of the holders of the Existing Notes as to whether the Debtors
should accept a competing bid and in the case of a dispute, such dispute
shall be resolved by the Bankruptcy Court. In addition, in connection with
obtaining court approval of this summary of terms, as required in paragraph 6
above, the Debtors will use their best efforts to obtain Court approval of
bid protections that, among other things, will provide minimum overbid
requirements of $7.5 million over the consideration (i.e., an amount equal to
the consideration described in paragraph 3 above) for the initial bid and
$2.5 million over the then-highest bid of any additional bids. Other
anticipated auction requirements would likely include requirements regarding
the ability of any potential bidders to consummate an alternative
transaction, the nonexistence of financing and due diligence conditions and
that all competing bids be based on an acquisition of all or substantially
all of the assets of the Company as proposed by the Purchaser or a
recapitalization plan and provide an agreement to honor existing client
contracts.
(B) Prior to the entry of an order approving the overbid protections
and break-up fee described above, the Company and its advisors shall (i) not
solicit any other third-party proposals, (ii) not negotiate with any third party
other than the Purchaser, and (iii) promptly inform the Purchaser of any
inquiries it receives from third parties, except with respect to any action to
the extent required by the Debtor's fiduciary obligations to the estate in the
written opinion of the Debtor's outside counsel, and following at least 3
business days notice to the Purchaser.
8. Interim Operations. From the execution date of this summary of terms
through the Closing Date:
(A) the Company will not, and will not cause its subsidiaries, to:
(I) operate the Company and its subsidiaries other than in the ordinary
course of business and consistent with past practice.
(II) enter into any material agreement concerning the Company or any
subsidiary or make any material change or modification to any existing agreement
concerning the Company or any subsidiary, other than in the ordinary course of
business and consistent with past practice and, with respect to any material
agreement, with the prior consent of the Purchaser, which consent shall not be
unreasonably withheld.
(III) hire or terminate employees without the prior consent of the
Purchaser, which consent shall not be unreasonably withheld.
(IV) make or support any motion before the bankruptcy court that would
be inconsistent with this letter or the Proposed Transaction.
(B) the Company will, and will cause its subsidiaries to,
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(I) comply with the terms of a business plan to be agreed upon between
the Purchaser and the Company.
(II) assist the Purchaser's coordination team in familiarizing itself
with all aspects of the Company's business, operations and technology. Such team
will be located at the Company's facilities.
(III) meet with representatives of the Purchaser frequently and in any
event no less than once per week.
(IV) consult with the Purchaser about any material matters concerning
the Company and the Proposed Transaction and will work with the Purchaser to
propose a plan of reorganization or a motion for the 363 Sale that will
accomplish the Proposed Transaction.
In the event the Proposed Transaction does not close, all information developed
by the Purchaser and the Company hereunder will be subject to the terms of the
confidentiality agreement in effect on the date hereof between the Purchaser and
the Seller.
9. Conditions to Summary of Terms. This summary of terms is subject to
the following conditions: (A) the Purchaser shall not receive any information
materially inconsistent with the information received in the course of its
legal, financial, tax, operational and accounting due diligence with respect to
the Debtors and the Proposed Transaction through January 27, 2000, (B) no
material adverse change in the business, condition (financial or otherwise),
operations, performance or prospects of the Company and its subsidiaries (taken
as a whole) since January 27, 2000, except as otherwise disclosed in writing to
the Purchaser and (C) the execution and delivery of definitive documents on
terms and conditions satisfactory to the Purchaser in accordance with paragraph
6.
10. Closing Conditions to Asset Acquisition. Usual and customary,
including court approval of a plan of reorganization and/or 363 Sale in each
case on terms and conditions acceptable to the Purchaser that implements the
Proposed Transaction, and other regulatory approvals (including
Hart-Scott-Rodino and FCC).
11. Termination. This proposal will terminate and the parties'
obligations hereunder shall terminate, upon the earliest of (A) February 4, 2000
if the Debtor has not filed a bankruptcy petition with the District Court of
Delaware by that date, together with such other first day motions reasonably
acceptable to the Purchaser, (B) February 21, 2000 if the Debtor has not
obtained bankruptcy court approval of this summary of terms, including Court
approval of the fees and expenses described in paragraph 7, by that date, (C)
March 24, 2000 if the Company has not proposed a plan of reorganization or the
court has not approved the 363 Sale, or (D) the date the Company seeks
bankruptcy court approval of an agreement or transaction with any third party
(including any of the Company's creditors). Notwithstanding such termination or
anything to the contrary in this letter, paragraphs 7 and 12 shall survive such
termination.
12. Confidentiality. This summary of terms is being delivered with the
understanding, the terms and conditions set forth herein shall remain strictly
confidential, and will not be
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disclosed, without the prior consent of each of the parties hereto other than
to the advisors of the parties hereto, the unofficial committee of
bondholders and their advisors, and other debt holders of the Company, in
each case, so long as such party agrees to maintain the confidential nature
of this summary of terms. Upon the execution of this summary of terms, each
party may make public announcements, issue press releases or make other
statements regarding the status, general terms, conditions and facts of the
Proposed Transaction, provided, however, that each party shall afford the
other an opportunity to review any such press release prior to its issuance
and shall not issue the same without the prior written consent of the other
party which consent shall not be unreasonably withheld.
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EXHIBIT 99.2
CellNet Data Systems to be Acquired By Schlumberger Resource Management Services
Through an Asset Acquisition Following CellNet Chapter 11 Filing and Court
Approval
SAN CARLOS, Calif., February 1, 2000 -- CellNet Data Systems, Inc.
(NASDAQ:CNDS), a market-leading provider of telemetry services, announced today
that its Board of Directors has approved a proposed asset acquisition by
Schlumberger Resource Management Services (RMS), a business unit of Schlumberger
Limited (NYSE: SLB), for $55 million in cash, the repayment or assumption of
certain secured financing in the amount of approximately $120 million, and the
assumption of certain other liabilities. The Schlumberger RMS asset acquisition
of CellNet would be handled through a Chapter 11 filing and would require final
approval by the Bankruptcy Court, a process that CellNet anticipates completing
by the end of April 2000.
If the Court approves the proposed transaction in its present form, the CellNet
14% Senior Discount Notes and those liabilities not assumed by Schlumberger RMS
will share in the $55 million cash noted above. Furthermore, there will be no
value allocated to the current equity of the CellNet common stock (NASDAQ: CNDS)
and the 7% Exchangeable Preferred Securities of CellNet Funding, LLC (NASDAQ:
CNDSP). The allocation of the distributions (dividends) held in escrow for
CellNet Funding, LLC (NASDAQ:CNDSP) will be subject to review by the Court.
In connection with the filing, Schlumberger RMS will provide
debtor-in-possession (DIP) funding to enable CellNet to continue its ongoing
operations, including, but not limited to, the ongoing provision of network
services, the deployment of networks for its current customers, and the
marketing of its network services to prospective customers. Upon closing of the
acquisition, the DIP funding will be extinguished.
John T. LaMacchia, CellNet president and chief executive officer, said, "This
transaction ensures that CellNet continues to provide superior network service
to its current utility customers, and continues to deploy and market its
networks and technology. After an exhaustive search for short- and long-term
financing, our board determined this acquisition to be the best available
option.
"With the provision of the DIP funding and the proposed acquisition plan,
CellNet is able to remove the short-term financial uncertainty surrounding its
ongoing operations. Recognizing the importance of our suppliers, we intend to
contact them as soon as possible regarding our
<PAGE>
situation. We value our supplier relationships and are working to keep those
relationships intact as CellNet begins the transition to becoming a part of
the Schlumberger RMS team."
The Company
CellNet Data Systems, Inc. is an industry pioneer and leading provider of
low-cost "telemetry services" defined as the ability to transmit and receive
data for the remote monitoring and control of devices. CellNet networks are the
largest and fastest-growing of their kind in the world, providing connectivity
for millions of devices in the energy industry and other municipal markets. For
more Company information visit http://www.cellnet.com.
Certain statements contained in this News Release are forward-looking
statements, including, without limitation, statements relating to: expectations
with respect to the acquisition of CellNet by Schlumberger RMS; the removal of
financial uncertainty; the ability to meet CellNet's short-term and long-term
financial needs; the approval by the Court of CellNet's pre-arranged bankruptcy
filing; its ability to continue ongoing operations, network services and network
deployments; the ability to keep supplier and other relationships intact; its
ability to meet its commitments to employees, customers and suppliers; and the
effect of a Chapter 11 Reorganization on the value of any common stock of
CellNet and/or 7% Exchangeable Preferred Securities of CellNet Funding, L.L.C.
These statements therefore are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Actual results may differ
from these statements and such differences may be material. Investors are
encouraged to review CellNet's most recent Form 10-K and Form 10-Q filed with
the Securities and Exchange Commission for a discussion of these and additional
factors that could affect CellNet's future performance.
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EXHIBIT 99.3
CellNet Data Systems Files Chapter 11
SAN CARLOS, Calif., February 4, 2000 -- CellNet Data Systems, Inc. (NASDAQ:
CNDS) announced today that it has filed a voluntary petition for protection
under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy
Court in Delaware.
As previously announced on February 1, 2000, CellNet's Board of Directors
approved a proposed asset acquisition by Schlumberger Resource Management
Services (RMS), a business unit of Schlumberger Limited (NYSE: SLB), for $55
million in cash, the repayment or assumption of certain secured financing in the
amount of approximately $120 million, and the assumption of certain other
liabilities. The Schlumberger RMS asset acquisition of CellNet will be handled
through the Chapter 11 filing and should receive, subject to higher and better
offers, final approval by the Bankruptcy Court, a process that CellNet
anticipates completing by the end of April 2000.
If the Court approves the proposed transaction in its present form, the CellNet
14% Senior Discount Notes and those liabilities not assumed by Schlumberger RMS
will share in the $55 million cash noted above. Furthermore, there will be no
value allocated to the current equity of
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the CellNet common stock (NASDAQ: CNDS) and the 7% Exchangeable Preferred
Securities of CellNet Funding, LLC (NASDAQ: CNDSP). The allocation of the
distributions (dividends) held in escrow for CellNet Funding, LLC (NASDAQ:
CNDSP) will be subject to review by the Court.
In connection with the filing, Schlumberger RMS is providing
debtor-in-possession (DIP) funding to enable CellNet to continue its ongoing
operations, including, but not limited to, the ongoing provision of network
services, the deployment of networks for its current customers, and the
marketing of its network services to prospective customers. Upon closing of the
acquisition, the DIP funding will be extinguished.
For more Company information visit http://www.cellnet.com.
Certain statements contained in this News Release are forward-looking
statements, including, without limitation, statements relating to: expectations
with respect to the acquisition of CellNet by Schlumberger RMS; the approval by
the Court of CellNet's pre-arranged bankruptcy filing; its ability to continue
ongoing operations, network services and network deployments; the ability to
keep supplier and other relationships intact; its ability to meet its
commitments to employees, customers and suppliers; and the effect of a Chapter
11 Reorganization on the value of any common stock of CellNet and/or 7%
Exchangeable Preferred Securities of CellNet Funding, L.L.C. These statements
therefore are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Actual results may differ from these
statements and such differences may be material. Investors are encouraged to
review CellNet's most recent Form 10-K and Form 10-Q filed with the Securities
and Exchange Commission for a discussion of these and additional factors that
could affect CellNet's future performance.
