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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 25, 2000
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SPECTRASITE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 56-2027322 0-27217
(State or other (I.R.S. Employer (Commission File Number)
jurisdiction of Identification Number)
incorporation or
organization)
</TABLE>
<TABLE>
<S> <C>
100 REGENCY FOREST DRIVE 27511
CARY, NORTH CAROLINA (Zip Code)
(Address of principal executive
offices)
</TABLE>
(919) 468-0112
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On August 31, 2000, SpectraSite filed a Form 8-K reporting that SpectraSite
had entered into an agreement with affiliates of SBC Communications, Inc. to
sublease approximately 3,900 towers and that Trimaran Fund II, L.L.C. and
certain other investors participating in the Trimaran investment program, which
we refer to as the Trimaran group, agreed to purchase shares of our common stock
in a private placement. The following information supplements, and to the extent
inconsistent with, supercedes, the information provided in the original Form
8-K.
THE SBC TOWER TRANSACTION
On August 25, 2000, we entered into an agreement to acquire leasehold and
subleasehold interests in approximately 3,900 wireless communications towers
from SBC in exchange for $982.7 million in cash and approximately 14.3 million
shares of our common stock, subject to adjustment, valued at $325.0 million. We
will manage, maintain and lease available space on the SBC towers, and we will
have the right to co-locate tenants on the towers. SBC is an anchor tenant on
all of the towers and will pay us a monthly fee per tower of $1,400, subject to
an annual adjustment. In addition, we have agreed to enter into a five-year
exclusive build-to-suit agreement with SBC under which we will develop and
construct substantially all of SBC's new towers during the term of the
agreement. The SBC transaction will close in stages, with an initial closing
expected in the fourth quarter of 2000 and a final closing in the first half of
2002. At each closing, we will make a pro rata payment of cash and stock to SBC
for the actual towers subleased. We expect to use cash-on-hand, proceeds from
the Trimaran investment and proceeds from this offering to fund the cash portion
of the consideration payable to SBC and to pay fees and expenses. This offering
is not conditioned upon the consummation of the SBC tower transaction, and if
the SBC tower transaction is not consummated according to schedule or at all, we
will use the net proceeds from this offering to fund costs related to the
construction and acquisition of other towers, and for working capital and
general corporate purposes.
We expect the SBC tower transaction to close in stages. We anticipate an
initial closing in the fourth quarter of 2000, and the final closing should
occur in the first half of 2002.
The consummation of the SBC tower transaction is subject to certain
conditions, including:
-- the execution of a joinder agreement to our registration rights
agreement and an amendment to our stockholders' agreement, which
includes SBC's right to designate one member of our board of
directors;
-- receipt by SBC of a tax opinion at the initial closing relating to
the tax treatment of the transaction structure; and
-- the receipt of certain required consents and approvals, including any
required consents of the ground lessors of the towers to be subleased
by us.
We cannot assure you that the SBC tower transaction will be consummated on
the terms described in this document or at all.
On August 25, 2000, we entered into an agreement to sublease and agreed to
enter into a site marketing agreement, lease and sublease agreement and a
build-to-suit agreement with SBC at the initial closing of the transaction. The
following are summaries of the material terms of these agreements, followed by
summaries of the material terms of commitment letters regarding the amended
credit facility we will enter into following the initial closing and the
Trimaran investment we expect to close on or about November 20, 2000.
AGREEMENT TO SUBLEASE
Under the agreement to sublease between SBC, SpectraSite and Southern
Towers, Inc., our subsidiary, Southern Tower, will receive the right to lease,
sublease, contract, operate, market and manage 3,900 tower sites owned or leased
by SBC, including the right to co-locate tenants on the towers, in exchange for
an aggregate consideration of approximately $1.3 billion.
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We will pay to SBC at the inception of each lease all applicable lease
payments for the site leased or subleased by us under the sublease. In the event
that leases or subleases covering the full 3,900 towers are transferred to us,
the aggregate consideration payable to SBC will consist of approximately $982.7
million in cash and $325.0 million in our common stock. Under the agreement, the
stock portion of the consideration initially is 14,291,997 shares valued at
$22.74 per share. The stock consideration is subject to an adjustment payment if
the average closing price of our stock during the 60-day period immediately
preceding the third anniversary of the initial closing is less than $22.74. The
adjustment payment may be accelerated if a change of control or certain
specified liquidity events occur prior to the third anniversary date. In any
case, the adjustment payment is always payable by us, at our option, in the form
of cash or shares of our common stock. In the event that leases or subleases
covering the full 3,900 towers are transferred to us, the maximum amount
potentially payable by us to satisfy the adjustment payment is approximately
$139.8 million in cash or 10.8 million shares.
We have agreed with SBC that the sublease of the sites will be consummated
in a series of closings with the last closing in the first quarter of 2002. We
expect each closing to include approximately 250 sites with the first in the
fourth quarter of 2000.
If any one of the closings contemplated by the SBC tower transaction is not
consummated due to our failure to satisfy certain conditions or due to certain
specified defaults by us, and after the initial closing only if it would have a
substantial likelihood of preventing a closing, then, in addition to any other
remedies SBC may have at equity or law, SBC will have the right:
-- to require us to pay to SBC a termination fee of 4% of the aggregate
amount of lease payments that would be payable to SBC under the
sublease;
-- to terminate all agreements with us; and
-- at SBC's option, to rescind all prior closings.
If SBC elects to rescind the prior closings, payment of the termination fee
will be made by netting it against the amounts previously paid to SBC at all
prior closings, and SBC will return to us any amount in excess of the
termination fee.
SITE MARKETING AGREEMENT
Under the site marketing agreement, we will be allowed to co-locate new
tenants on the 3,900 communications towers before we sublease them. We will be
entitled to receive 20% of the third-party rentals received as a result of any
co-location of a third-party by us until the time that we sublease the site and
100% of such third-party rentals thereafter. In the event that we do not
consummate the closing of the sublease for the site, we will be entitled to
receive 20% of the third-party rental for the applicable term of the third-party
co-location agreement.
LEASE AND SUBLEASE AGREEMENT
Under the terms of the sublease, SBC will lease or sublease to us the land,
tower and improvements at each site, other than certain space reserved by it for
use in its telecommunications business, and subject to the rights of third
parties under existing subleases and co-location agreements.
We will remit to SBC, at the commencement of the lease with respect to each
site, all lease payments due for the subleased property as described in the
agreement to sublease and may also pay additional amounts for certain
alterations to the subleased property made by SBC at our request.
We will be entitled to use the subleased property at each site for
operating, managing, maintaining and marketing the tower and improvements at the
site, including the leasing of space to co-location tenants. SBC has agreed to
initially pay us a monthly fee per tower for its reserved space of $1,400 per
site, subject to an annual increase of the lesser of 5% and changes in the
consumer price index plus 4%. After 10 years, the monthly fee for a site will be
reset to 90% of the agreed upon market rate if it is then above that market
rate. After the tenth anniversary of the applicable site commencement date, the
monthly fee is subject to an annual
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increase based on changes in the consumer price index or, in the case of sites
as to which the monthly fee has been reset to 90% of the market rate, based on
the then current market rate of increase for comparable properties.
We have agreed to pay directly to the applicable ground lessor the ground
rent relating to each site that is leased by us from SBC. In addition, we have
agreed to sublease, on commercially reasonable terms, available space on the
towers to parties who have existing co-location agreements with SBC, and we will
receive all rents and other economic benefits from those subleases.
The average term of the sublease for all sites is approximately 27 years,
assuming renewals or extensions of the underlying ground leases for the sites.
SBC will be obligated to exercise all renewal options contained in the ground
leases of the sites, subject to certain limited exceptions. We will be
responsible for negotiating and obtaining ground lease extensions or renewals
which are not provided for in the ground leases.
Under the sublease, SBC will have reserved space at each site. The reserved
space will generally consist of the portion of the site, including space on the
tower, in use by SBC on the date the site becomes subject to the sublease.
Although SBC will have the right, without increasing the related leaseback
charge, to expand the reserved space on up to 300 towers by utilizing up to an
additional 15% of the total tower loading on the applicable tower for new or
additional communications equipment, in no event may the SBC equipment, both new
and existing, occupy more than two platforms on any of those towers. SBC will
also have the right to expand the reserved space on towers in excess of 300
towers so long as SBC pays us an additional monthly charge of $100 per
additional antenna, or the space equivalent of one additional antenna, not to
exceed $1,600 per month in the aggregate per additional platform. If SBC locates
any additional equipment, except for microwave dishes and related equipment, on
a platform that is not already occupied by SBC's communications equipment, SBC's
additional monthly charge for that additional platform is not to be less than
$1,200. The additional charge incurred as a result of SBC's expansion of its
communication equipment on towers beyond 300 towers will increase 5% per year
until 10 years after the applicable site became subject to the sublease, and
will increase thereafter in the same manner as the basic monthly fees payable by
SBC.
Subject to certain conditions described in the sublease, SBC will also have
the right to substitute other available space on the tower for the reserved
space, and a right of first refusal as to available space which we intend to
sublease to a third-party. For the first 300 times SBC exercises its right of
first refusal, SBC will be required to pay us rent for the applicable space
equal to the lesser of the rent that would have been charged to the proposed
third-party and a rent that is proportional to the monthly fee under the
sublease. After the first 300 times that SBC exercises its right of first
refusal, SBC will be required to pay us rent for the applicable space equal to
the rent that would have been charged to the third-party.
On the tenth anniversary of the commencement date of the sublease with
respect to a site, and thereafter on each fifth-year anniversary of the tenth
anniversary date, SBC will have the right, subject to certain notice
requirements, to withdraw from the reserved space at such site. In that case,
SBC's rights with respect to the withdrawn reserved space will terminate, SBC
will no longer be responsible for the related monthly charges and the withdrawn
reserved space will become part of our subleased property.
We will have the option to purchase the sites subject to the sublease upon
the expiration of the sublease as to those sites. The purchase price for each
site will be a fixed amount to be stated in the sublease plus the fair market
value of certain alterations made to the related tower by SBC. The aggregate
purchase option price for all 3,900 towers has a value of approximately $251.5
million as of August 25, 2000 and will accrete at a rate of 10% per year to the
applicable expiration of the sublease of a site. In the event that we purchase
such sites, SBC shall have the right to continue to lease the reserved space for
successive one year terms at a rent equal to the lesser of the agreed upon
market rate and the then current monthly fee, which monthly fee shall be subject
to an annual increase based on changes in the consumer price index.
The sublease may be terminated by each party in the event of certain
breaches by the other party, including failure to make required payments under
the sublease in a timely manner, breaches of covenants in the sublease, breaches
of representations and warranties, and insolvency. SBC may terminate the
sublease as to a site following a breach and failure to cure relating to that
site. SBC may terminate the entire sublease
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upon the occurrence of unwaived defaults by us in respect of more than 50 sites
during any consecutive five-year period. Holders of collateral assignments,
mortgages and similar security instruments encumbering our interest under the
sublease will have rights to cure our defaults and may, under certain
circumstances, replace us as a party under the sublease.
We may terminate the sublease as to a site following a breach and failure
to cure by SBC relating to that site. We may terminate the entire sublease upon
the insolvency of SBC. Upon a termination by us, SBC is obligated to refund to
us the portion of our prepaid rent allocable to the applicable site for the
period after the effective date of the termination.
The sublease contains restrictions on our ability to transfer our interest
in the subleased sites. SBC has the right to transfer its interest in the sites
on a site-by-site basis in connection with a sale or transfer of all or a
portion of SBC's wireless business and is entitled, under certain circumstances,
to be released of its obligations with respect to a transferred site.
Subject to certain conditions and exceptions described in the sublease, we
have agreed to indemnify SBC in the event that as a result of certain actions or
failures by us, SBC is unable to claim or obtain certain federal income tax
depreciation deductions and interest deductions arising from the
characterization of our lease payments to SBC as a loan, or is required to
include any unanticipated item in income. Additionally, subject to certain
exceptions, we have agreed to indemnify SBC from and against any taxes and
related charges, other than income taxes, imposed with respect to the subleased
property and certain actions relating thereto.
The sublease by its terms is subordinate to existing and future mortgages
on the subleased property. However, this subordination is conditioned on the
delivery by the mortgagee of a non-disturbance, subordination and attornment
agreement which provides that the mortgagee will recognize our rights under the
sublease, including our purchase option, and that in the event of a foreclosure
of a mortgage, mortgagee will not disturb our possession of the subleased
property so long as no event of default has occurred and is continuing under the
sublease.
BUILD-TO-SUIT AGREEMENT
Under the build-to-suit agreement, we will be given the exclusive right,
and will be obligated, to develop and construct all new wireless communications
towers which SBC and certain of its affiliates elect to have constructed in the
United States, Puerto Rico and the U.S. Virgin Islands, other than sites subject
to certain existing build-to-suit agreements and certain sites currently under
development. The term of the build-to-suit agreement is five years, subject to
extension under certain circumstances more fully described below. SBC also has
the right to engage us to develop and construct up to a maximum of 100
additional towers for affiliates of SBC that are not party to the build-to-suit
agreement. We have the right, in lieu of constructing a new tower within any
search area identified by SBC, to propose that SBC co-locate its communications
equipment on an existing tower owned, operated or leased by us. SBC may reject
any proposed co-location if it reasonably believes the proposed tower or site
does not meet certain minimum requirements or if there are alternative locations
in the area available to SBC on better economic terms. We have the non-exclusive
right to offer co-location services to SBC for fees to be agreed upon by us and
SBC.
Upon completion of a tower or SBC's acceptance of an existing tower, space
on the tower will be leased by us to SBC under a master lease covering all of
SBC's space on towers which are subject to the build-to-suit agreement. Under
the build-to-suit sublease, SBC will pay rent of $1,400 per month per site,
subject to an annual adjustment based on changes in the consumer price index.
The term of the build-to-suit sublease will be 32 years. The space to be leased
will be sufficient to accommodate up to 12 antennas conforming to certain
specifications described in the build-to-suit agreement, as well as a microwave
dish at a location specified in the build-to-suit agreement. After the tenth
anniversary of the commencement date of the build-to-suit sublease with respect
to any site, SBC will have the right, subject to certain notice requirements, to
withdraw from such site. SBC will have the right to terminate the build-to-suit
sublease as to a site in the event of a default by us, in our capacity as
lessor, that is not cured within a specified period and under certain other
circumstances.
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SBC will have the right under the build-to-suit agreement, in lieu of
having us construct one or more towers, to acquire, develop and construct its
own sites and towers in accordance with the standards applicable to the
performance of our development obligations. SBC will be required to sell such
sites and towers to us at a price calculated in accordance with a cost schedule
to be attached to the build-to-suit agreement.
SBC may cause towers that are being developed under the build-to-suit
agreement to be substituted for towers that are excluded from the agreement to
sublease. All of the substitute towers will be leased by SBC to us under the
sublease described in the "Lease and Sublease Agreement" section of this report.
In the case of any such tower constructed by us, SBC will acquire the tower from
us at our cost plus our customary profit margin.
The term of the build-to-suit agreement will be five years, plus any
additional time as is required for the completion of a number of towers equal to
the number of towers that have become substitute towers under the agreement to
sublease.
SBC will have the right to liquidated damages of $7,500 per month, not to
exceed $15,000 in the aggregate, for any site that has not been substantially
completed in accordance with the construction schedule provided for in the
build-to-suit agreement.
We may terminate the build-to-suit agreement in the event of a bankruptcy
or other insolvency event relating to SBC. SBC may terminate the build-to-suit
agreement with respect to a site in the event of certain defaults by us with
respect to such site or the assessment of liquidated damages in excess of
$15,000 for failure to substantially complete such site in accordance with the
prescribed construction schedule. SBC may terminate the entire build-to-suit
agreement in the event of a bankruptcy or other insolvency event relating to us,
the assessment of liquidated damages in excess of $0.2 million in any
twelve-month period and the occurrence of unwaived defaults with respect to 10%
or more of the proposed tower sites accepted by SBC during any twelve-month
period.
AMENDED CREDIT FACILITY
SpectraSite Communications, Inc., a wholly owned subsidiary of SpectraSite
Holdings, entered into a $500.0 million credit facility in connection with the
Nextel tower acquisition. SpectraSite Communications has borrowed $200.0 million
under that facility. In connection with the SBC tower transaction, SpectraSite
Communications received a commitment from Canadian Imperial Bank of Commerce and
CIBC World Markets Corp. to provide approximately $1.2 billion pursuant to an
amended and restated credit facility. SpectraSite Communications anticipates
that it will amend and restate its existing credit facility during the fourth
quarter of 2000 or the first quarter of 2001, after the consummation of this
offering and the initial closing of the SBC tower transaction. This offering is
not conditioned upon the consummation of the amendment and restatement of the
existing credit facility.
The following is a summary of certain provisions of the amended credit
facility. Since it is a summary, it does not purport to be complete and is
subject to, and is qualified in its entirety by, the final terms of the amended
credit facility. Those terms may differ from the provisions contained in the
commitment letter and described in this summary. In addition, the commitment is
subject to various conditions. There can be no assurance that SpectraSite
Communications will be able to enter into a definitive amended and restated
credit agreement implementing the terms and conditions of the commitment.
SpectraSite Communications currently expects that the amended credit
facility will consist of:
-- a $350.0 million revolving credit facility, which would mature on
June 30, 2007;
-- a $500.0 million multiple draw term loan facility, which would be
drawable at any time during the period of 18 months after the amended
and restated credit facility is entered into, mature on June 30,
2007; and
-- a $350.0 million term loan facility, which would mature on December
31, 2007.
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SpectraSite Communications expects that it will be required to pay a
commitment fee on the unused portion of the amended credit facility. The
commitment fee would be between 1.0% and 0.5% of the unused portion, depending
on the total amount of the facility outstanding.
SpectraSite Communications expects that its obligations under the amended
credit facility will be guaranteed by Holdings and secured by a pledge of the
capital stock of SpectraSite Communications and of most of its subsidiaries and
by liens and security interests in substantially all the tangible and intangible
assets, other than certain real estate, of SpectraSite Communications and most
of its subsidiaries.
SpectraSite Communications may be required to prepay the credit facility in
part upon the occurrence of certain events, such as a sale of assets, the
incurrence of certain additional indebtedness and the generation of excess cash
flow.
We expect the amended credit facility will contain a number of covenants
that, among other things, restrict the ability of Holdings, SpectraSite
Communications and their subsidiaries to:
-- incur additional indebtedness;
-- create liens on assets;
-- make investments, make acquisitions, or engage in mergers or
consolidations;
-- dispose of assets;
-- enter into new lines of business;
-- engage in certain transactions with affiliates; and
-- pay dividends or make capital distributions.
We expect, however, that SpectraSite Communications will be permitted to pay
dividends for the purpose of paying cash interest when due on the 2008 notes,
the 2009 notes, the 2010 notes and the new notes so long as no default under the
credit facility then exists or would exist after giving effect to such payment.
In addition, the amended credit facility will require compliance with
certain financial covenants, including requiring SpectraSite Communications and
its subsidiaries, on a consolidated basis, to maintain:
-- a maximum ratio or total debt to annualized EBITDA;
-- a minimum interest coverage ratio; and
-- a minimum fixed charge coverage ratio.
SpectraSite Communications does not expect that such covenants will materially
impact its ability and the ability of its subsidiaries to operate their
respective businesses.
The amended credit facility will contain customary events of default.
TRIMARAN INVESTMENT
The Trimaran group has agreed to purchase 4.0 million shares of common
stock at a price of $18.75 per share, and will receive warrants to purchase an
additional 1.5 million shares of common stock. The warrants will be exercisable
immediately; the exercise price for 600,000 shares will be $21.56 per share, the
exercise price for 450,000 shares will be $23.86 per share, and the exercise
price for the remaining 450,000 shares will be $28.00 per share. We anticipate
the warrants will contain standard anti-dilution protection, a cashless exercise
right and an expiration date seven years after issuance. We will use the
anticipated $75.0 million of proceeds from this investment to partially fund the
initial closing of the SBC tower transaction and for general corporate purposes.
This transaction is subject to certain conditions, including the negotiation of
definitive documentation, and, although we cannot assure you when it will be
completed, we anticipate consummating this transaction on or about November 20,
2000.
The following is a summary of certain provisions of the Trimaran group
commitment letter. Since it is a summary, it does not purport to be complete and
is subject to, and is qualified in its entirety by, the definitive
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documents. Those terms may differ from the provisions contained in the
commitment letter and described in this summary. In addition, the commitment is
subject to various conditions.
The Trimaran group will agree not to sell, transfer or otherwise dispose of
the common stock it acquires for the 90-day period following issuance. We have
agreed to file and maintain a resale registration statement for the shares of
common stock issued to the Trimaran group and for the shares underlying the
warrants. In addition, the Trimaran group will have the right to one demand
registration.
The requisite stockholders party to our stockholders' agreement are
expected to approve an amendment to that agreement to provide that so long as
the Trimaran group and Canadian Imperial Bank of Commerce and their respective
affiliates own collectively 5% or more of SpectraSite's outstanding stock,
Caravelle Investment Fund, L.L.C. and affiliates of Canadian Imperial Bank of
Commerce will have the right to designate a representative to attend the
meetings of SpectraSite's board of directors as an observer.
DIRECTOR RESIGNATION
Andrew R. Heyer, a member of SpectraSite's board of directors since April
1999, resigned from the board effective November 15, 2000. Mr. Heyer did not
express any disagreement with SpectraSite on any matter relating to
SpectraSite's operations, policies or practices in connection with his
resignation.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
None.
(b) Pro forma financial information.
None.
(c) Exhibits.
10.1 Agreement to Sublease, dated as of August 25, 2000, by and among
SBC Wireless, Inc., for itself and on behalf of the Sublessor
Entities, SpectraSite Holdings, Inc. and Southern Towers, Inc.
(incorporated by reference to exhibit no. 10.1 of SpectraSite's
report on Form 8-K dated August 25, 2000 and filed August 31,
2000).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amended report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPECTRASITE HOLDINGS, INC.
By: /s/ DAVID P. TOMICK
------------------------------------
David P. Tomick
Executive Vice President and
Chief Financial Officer
Dated: November 16, 2000
