UNITED STATES
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): January 10, 2000
Commission file number 333-64367
GOLDEN SKY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1749060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4700 BELLEVIEW, SUITE 300
KANSAS CITY, MO 64112
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code, (816) 753-5544
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ITEM 5. OTHER EVENTS
Merger with Pegasus Communications Corporation
On January 11, 2000 Golden Sky Holdings, Inc. issued the press release
attached hereto as Exhibit 99.1, announcing that it has entered into a
definitive merger agreement with Pegasus Communications Corporation. Golden Sky
Holdings is the parent company of Golden Sky DBS, Inc., which is the parent
company of Golden Sky Systems, Inc.
DIRECTV Litigation
On January 11, 2000, Golden Sky Holdings issued the press release
attached hereto as Exhibit 99.2, announcing that it and Pegasus Communications
Corporation filed a class action lawsuit against DIRECTV, Inc. and Hughes
Communication Galaxy.
Bank Credit Facility Amendment
On January 10, 2000, Golden Sky Holdings issued the press release
attached hereto as Exhibit 99.3, announcing that Golden Sky Systems has
completed an amendment to its bank credit facility, effective as of December 31,
1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Golden Sky Holdings, Inc. press release, dated January 11, 2000
announcing that it has entered into a definitive merger agreement
with Pegasus Communications Corporation.
99.2 Golden Sky Holdings, Inc. press release, dated January 11, 2000
announcing that it and Pegasus Communications Corporation filed a
class action lawsuit against DIRECTV, Inc. and Hughes
Communication Galaxy.
99.3 Golden Sky Holdings, Inc. press release, dated January 10, 2000
announcing that Golden Sky Systems, Inc. has completed an
amendment to its bank credit facility, effective as of December
31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOLDEN SKY SYSTEMS, INC.
By: /s/ John R. Hager
-------------------------
John R. Hager
Chief Financial Officer
Date: January 18, 2000
EXHIBIT 99.1
KANSAS CITY, MO, January 11, 2000 - Golden Sky Holdings, Inc. (Golden
Sky) today announced that it has signed a definitive agreement to merge with
Pegasus Communications Corporation for approximately $1 billion in stock and
assumed liabilities.
The transaction firmly establishes Pegasus, which is based in Bala
Cynwyd, Pennsylvania, as one of the nation's largest multichannel video
providers. Privately held Golden Sky is the second largest independent provider
of DIRECTV and currently serves 345,200 subscribers in 24 states, and has
exclusive rights to serve approximately 1.86 million households. The combined
operations of Pegasus and Golden Sky will serve in excess of 1.1 million
subscribers in 41 states and reach approximately 7 million rural households. The
1.1 million subscribers will make Pegasus the third largest provider of DBS and
the 8th largest multichannel video provider in the US, including satellite and
cable. Moreover, Pegasus is the only multichannel video provider focused
exclusively on rural and underserved areas of the country.
Pursuant to the terms of the transaction, Pegasus will issue 6.5
million shares of its Class A common stock to Golden Sky shareholders, currently
valued at $632 million, based on yesterday's closing price of $97.25 per share.
Golden Sky's net debt and other liabilities totaled approximately $373 million
as of September 30, 1999. The transaction has been approved by the boards of
directors of both companies. Pending shareholder and certain other approvals,
the transaction is expected to close during the second quarter of 2000. Upon
completion of the transaction, Golden Sky will become a wholly owned subsidiary
of Pegasus Communications Corporation.
Golden Sky Chairman and CEO Rodney A. Weary noted, "We are excited
about the opportunity to join forces with Pegasus. The scale and operating
efficiencies expected to result from this merger will better position our
combined companies to be the preeminent provider of subscription television and
other satellite services to consumers in rural America. We are proud of Golden
Sky's track record of rapidly penetrating our rural markets at low subscriber
acquisition costs and our generally low subscriber churn results. We believe our
past accomplishments provide a firm foundation for the continued growth of our
combined businesses."
Marshall W. Pagon, President, Chairman and CEO of Pegasus, stated, "The
acquisition of Golden Sky is a major step in unifying the nation's independent
providers of DIRECTV. With a critical mass of well over one million subscribers,
our combined operations affirm Pegasus' position as the only large-scale
distributor of multichannel video services focused exclusively on rural areas of
the US. Rural television households comprise one-third of the nation's viewing
audience and account for approximately 67% of DBS subscribers nationally. The
addition of Golden Sky only serves to increase the opportunities available to
grow our DBS business."
"However, additional scale in our DBS operations is only the first
benefit of this transaction for Pegasus. The deal also substantially increases
the audience to which we can offer new digital services through the Pegasus
retail network, our 2,500-outlet distribution network, as we pursue our strategy
of bringing digital multichannel video, broadband internet access and other
satellite-delivered services to rural America. The success of DBS in rural
America has illustrated clearly the degree to which this substantial market is
underserved by media and information providers, particularly cable companies.
Our distribution network and rapidly growing reach uniquely positions us to
bring the benefits of new technology to these homes, and satellite is the ideal
medium to do so."
Golden Sky Holdings, Inc. (www.gssdirectv.com) is an independent
provider of programming services from DIRECTV, the nation's leading direct
broadcast satellite company. Golden Sky currently provides DIRECTV programming
to more than 345,000 subscribers and has approximately 70 offices throughout the
United States serving 57 rural markets. DIRECTV offers subscribers access to
more than 200 channels via satellite, including cable and broadcast networks,
sports packages, movies, and other premium services, using an 18-inch satellite
antenna dish and digital receiver.
Pegasus Communications Corporation (www.pgtv.com) is one of the fastest
growing media companies in the United States. Pegasus is the largest independent
provider of DBS services to rural parts of the United States on the DIRECTV
platform, serving approximately 1.1 million DBS subscribers in 41 states.
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Pegasus is also a broadcaster operating and/or programming ten TV stations
serving 2 million TV households in smaller markets in 10 states affiliated with
FOX, UPN and the WB.
This press release contains information about pending
transactions, and there can be no assurance that these transactions will be
completed.
EXHIBIT 99.2
KANSAS CITY, MO, January 11, 2000 - Golden Sky Holdings, Inc. (Golden Sky)
announced today that it and Pegasus Communications Corporation have filed a
class action lawsuit against DIRECTV, Inc. and Hughes Communications Galaxy. The
lawsuit was filed in the United States District Court, Central District of
California.
Golden Sky and Pegasus have filed on behalf of themselves and as
representatives of a class of those similarly situated within the National Rural
Telecommunications Cooperative (NRTC) affiliate and member universe. The action
is asserting various claims, including intentional interference with contractual
relations, interference with prospective economic advantage and declaratory
relief.
Rodney Weary, Chairman and President of Golden Sky commented, "The suit
does not reflect a lack of confidence in the merits of the NRTC's separate
actions. Rather, it is designed to improve the options available to NRTC members
as a whole and to improve Golden Sky's, and Pegasus' direct position with regard
to the issues at hand."
"This suit was filed because DIRECTV is in violation of a number of
aspects of its obligations to the NRTC, and by extension, Pegasus", said
Marshall W. Pagon, President, Chairman and CEO of Pegasus. "It positions
Pegasus, and all members and affiliate members of the NRTC, to obtain class
standing, making us eligible to participate more directly in any remedies
awarded including punitive damages."
Mr. Pagon further commented, "This action demonstrates our intention to
vigorously and fully defend our rights under our agreements with NRTC and
DIRECTV and to pursue any and all remedies available to us."
Golden Sky Holdings, Inc. (www.gssdirectv.com) is an independent
provider of programming services from DIRECTV, the nation's leading direct
broadcast satellite company. Golden Sky currently provides DIRECTV programming
to more than 345,000 subscribers and has approximately 70 offices throughout the
United States serving 57 rural markets. DIRECTV offers subscribers access to
more than 200 channels via satellite, including cable and broadcast networks,
sports packages, movies, and other premium services, using an 18-inch satellite
antenna dish and digital receiver.
Pegasus Communications Corporation (www.pgtv.com) is one of the fastest
growing media companies in the United States. Pegasus is the largest independent
provider of DBS services to rural parts of the United States on the DIRECTV
platform, serving approximately 1.1 million DBS subscribers in 41 states.
Pegasus is also a broadcaster operating and/or programming ten TV stations
serving 2 million TV households in smaller markets in 10 states affiliated with
FOX, UPN and the WB.
This press release contains information about pending
transactions, and there can be no assurance that these transactions will be
completed.
EXHIBIT 99.3
KANSAS CITY, MO, January 10, 2000 - Golden Sky Systems, Inc. announced
today that it has completed an amendment to its bank credit facility. The
amendment, which was effective as of December 31, 1999, waives the Company's
third quarter 1999 covenant violations and amends certain future covenant
requirements. Pursuant to the amendment, the Company may borrow up to an
additional $20.0 million under the bank credit facility prior to March 31, 2000.
Any such incremental borrowings, which are secured by letters of credit provided
by certain of the Company's shareholders, must be repaid by March 31, 2000 from
the proceeds of either a private or public equity offering. The required
repayment date may be deferred until May 31, 2000 under certain conditions. Upon
repayment, the Company will have potential incremental borrowing capacity during
the year ending December 31, 2000 equal to the lessor of the proceeds received
from either a public or private equity offering or $20.0 million. Coincident
with the amendment of the bank credit facility, the Company entered into stock
subscription agreements with certain of its shareholders for an aggregate of
$20.0 million of Company preferred stock.
Golden Sky Systems, Inc. (www.gssdirectv.com), a wholly-owned
subsidiary of Golden Sky DBS, Inc., is an independent provider of programming
services from DIRECTV, the nation's leading direct broadcast satellite company.
Golden Sky currently provides DIRECTV programming to more than 345,000
subscribers and has approximately 70 offices throughout the United States
serving 57 rural markets. DIRECTV offers subscribers access to more than 200
channels via satellite, including cable and broadcast networks, sports packages,
movies, and other premium services, using an 18-inch satellite antenna dish and
digital receiver.
