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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
(AMENDMENT NO. 2)
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. On November 17, 2000, SpectraSite filed an amendment to
its Form 8-K setting forth certain details regarding the SBC transaction and
describing the closing of the investment by the Trimaran group. The following
information supplements, and to the extent inconsistent with, supercedes, the
information provided in the original Form 8-K and amendment no. 1 thereto.
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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 entered 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 a final closing expected 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. At the initial closing on December 14,
2000, we acquired subleasehold interests in 739 towers for consideration
consisting of approximately $175 million in cash and approximately 2.5 million
shares of common stock.
Consummation of subsequent closings of the SBC tower transaction is subject
to certain conditions, including the receipt of certain required consents and
approvals, including any required consents of the ground lessors of the towers
to be subleased by us at each closing. We cannot assure you that any or all
subsequent closings will be consummated on the terms described in this report or
at all.
We entered into an agreement to sublease with SBC on August 25, 2000 and
into a site marketing agreement, lease and sublease agreement and a
build-to-suit agreement with SBC on December 14, 2000. The following are
summaries of the material terms of these agreements, followed by summaries of
the material terms of a commitment letter regarding the amended credit facility
we will enter into following the initial closing and the Trimaran investment.
AGREEMENT TO SUBLEASE
Under the agreement to sublease between SBC, SpectraSite and Southern
Towers, Inc., our subsidiary, Southern Towers, 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.
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 expected in the first quarter of
2002. We expect each closing to include at least 250 sites.
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, which 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.
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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 substantially all of 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 for
any reason other than our default or our exclusion of such 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, and we will lease back to SBC 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 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 lease back certain 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.
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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 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.
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BUILD-TO-SUIT AGREEMENT
Under the build-to-suit agreement, we have the exclusive right, and are
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 to be agreed upon by the parties. 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.
SBC has 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 is required to sell such sites and towers to us at
a price calculated in accordance with a cost schedule 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
Memorandum. 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 is 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.
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SBC COMMUNICATIONS, INC.
SBC Communications, Inc. is a global communications leader. Through its
subsidiaries--Southwestern Bell, Ameritech, Pacific Bell, SBC Telecom, Nevada
Bell, SNET and Sterling Commerce--SBC and its affiliated companies provide a
full range of voice, data, networking and e-business services, including local
and long-distance voice, high-speed Internet access and data transport, voice
and data network integration, software and process integration, Web site and
application hosting, e-marketplace development, paging and messaging, as well as
cable and satellite television, security services, and directory advertising and
publishing.
SBC Communications files periodic reports and other information with the
SEC. For more information about SBC Communications, you should read its SEC
filings. However, we are not incorporating any of SBC Communications' SEC
filings by reference in this document.
AMENDED AND RESTATED CREDIT FACILITY
SpectraSite Communications, Inc., a wholly owned subsidiary of 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,
CIBC World Markets Corp., Credit Suisse First Boston, Bank of Montreal, Chicago
Branch and Toronto Dominion (Texas), Inc. to provide approximately $1.1 billion
pursuant to an amended and restated credit facility, which we anticipate will
provide up to $1.2 billion of borrowing capacity. SpectraSite Communications
anticipates that it will amend and restate its existing credit facility during
the first quarter of 2001, after the consummation of this offering. 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 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.
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;
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-- 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, the convertible 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
On November 20, 2000, the Trimaran group purchased 4.0 million shares of
common stock at a price of $18.75 per share, and received warrants to purchase
an additional 1.5 million shares of common stock. The warrants are exercisable
immediately; the exercise price for 600,000 shares is $21.56 per share, the
exercise price for 450,000 shares is $23.86 per share, and the exercise price
for the remaining 450,000 is $28.00 per share. The warrants contain standard
anti-dilution protection, a cashless exercise right and an expiration date seven
years after issuance. We will use the $75.0 million of proceeds from this
investment to partially fund the SBC tower transaction and for general corporate
purposes.
The Trimaran group has agreed not to sell, transfer or otherwise dispose of
the common stock it acquired for the 90-day period following purchase. 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 has the right to one demand
registration.
The requisite stockholders' party to our stockholders' agreement approved
an amendment to that agreement to provide that so long as the Trimaran group and
Canadian Imperial Bank of Commerce affiliates and Caravelle Investment Fund,
L.L.C. collectively own collectively 5% or more of Holdings' outstanding stock,
the Trimaran group and Canadian Imperial Bank of Commerce and their respective
affiliates will have the right to designate a representative to attend the
meetings of Holdings' board of directors as an observer.
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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.
99.1 Press release announcing the initial closing of the SBC tower
transaction.
99.2 Press release announcing a Rule 144A offering of 12 1/2% senior
notes due 2010.
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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
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David P. Tomick
Executive Vice President and
Chief Financial Officer
Dated: December 15, 2000
