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Filed by NorthPoint Communications Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
Deemed Filed Pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: NorthPoint Communications Group, Inc.
Commission File No. 000-29828
THE FOLLOWING INFORMATION WAS DISSEMINATED TO EMPLOYEES OF NORTHPOINT
COMMUNICATIONS GROUP, INC. ON THE NORTHPOINT INTRANET BEGINNING ON AUGUST 22,
2000:
August 22, 2000
If there is an overlap in management job title/responsibility between NorthPoint
and Verizon, which job holder (NPC or Verizon) will have priority? Will the
person who loses the job because of duplication be given another job of the same
pay/title within NorthPoint or Verizon?
We are not expecting many cases of redundant jobs between the two companies. At
this stage, the transition team that will make policy decisions is still
forming. For this reason, the policy decision about overlapping jobs will not be
made for several months.
Going from 131 million shares outstanding to 310 million shares seems highly
dilutive to the value of the existing shares/options that we have. It seems the
potential upside range of the stock price has narrowed considerably. How is this
a good thing?
We will issue these new shares only in conjunction with receiving all the cash,
all the assets and all the customers that Verizon is bringing us. When we get
those, we will be getting a lot more value, as a company, and our risks
(financial especially) go down significantly. As a result, it is not dilutive to
us, as the company will be worth a multiple of what it is worth with 131 million
shares today, and our likelihood of continued success will have risen. Over
time, after the merger closes, as we execute, we hope that the stock price will
reflect that increased value and decreased risk.
What is the actual difference between a merger and an acquisition as it relates
to this deal?
The term "acquisition" usually refers to a situation where a company sells all
of its stock or assets to another company and is completely "acquired." A
"merger" is a situation where two companies are combined to create one company.
A merger is merely one way in which a company can be "acquired." Other ways
include the straight sale by a company of its assets or stock or cash or the
stock of the acquiring company. Each is just a different way of doing the same
thing.
A merger, though, can also be a way in which two companies can join their
operations to create one larger company that is owned by the old shareholders of
the combined companies. That is the case here. Our DSL business is being merged
with Verizon's DSL business. After the merger, Verizon and our shareholders will
own the new business. Verizon is "acquiring" 55 percent of the new NorthPoint in
exchange for contributing its DSL business, but it is not acquiring the entire
company. If NorthPoint had been acquired, following the closing Verizon would
have owned all of the stock of new NorthPoint and all decisions about the
business would have been made by Verizon, the company's only stockholder.
Instead, we are combining the two companies into a bigger and better company --
it is a combination of complementary companies. NorthPoint management will
remain in place, the new NorthPoint will have its own board of directors and we
will retain three seats on the board of directors.
Why did we release all of our information regarding quarterly results and merger
information on the same day?
It seems to be very confusing to evaluate the response from Wall Street with so
much information dropped at the same time. NorthPoint is obligated by the
Securities and Exchange Commission (SEC) to release significant news such as
this transaction immediately upon finalization, and we are also obligated to
release
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our earnings promptly. As a result, we needed to do both the same day.
While it may have been a lot of information, the merger with Verizon gave us
access to a larger audience to tell our story about this deal.
I joined the company pre-IPO with an option strike price of $18. My vested
shares have never been "in the money." This is true for the majority of
NorthPoint employees. Is the board considering lowering the strike price for all
employees so the options have some value?
We understand that many employees are in the same position that you find
yourself in. Unfortunately, there are serious accounting implications that
result from any option re-pricing that would have a very negative impact on our
financial results. This means that an adjustment to the exercise price on
outstanding options is not a viable possibility for the company. This is just
one more reason why all of us must be focused on building NorthPoint, and
thereby creating shareholder value.
Will there be a severance package to any employee losing a job because of the
merger?
We do not expect people to lose jobs as a result of this merger. On the
contrary, we expect the new NorthPoint, which will be considerably larger than
the old NorthPoint and still growing, will need to hire more people.
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NorthPoint Communications Group, Inc. and Verizon Communications will file a
joint proxy statement/prospectus and other documents regarding the proposed
business combination transaction referenced in the foregoing information with
the Securities and Exchange Commission. Investors and security holders are urged
to read the proxy statement/prospectus, when it becomes available, because it
will contain important information. A definitive joint proxy
statement/prospectus will be sent to stockholders of NorthPoint Communications
Group, Inc. seeking their approval of the proposed transaction. Investors and
security holders may obtain a free copy of the definitive joint proxy
statement/prospectus (when it is available) and other documents filed by
NorthPoint Communications Group, Inc. and Verizon Communications with the
Commission at the Commission's web site at www.sec.gov. The definitive joint
proxy statement/prospectus and these other documents may also be obtained for
free by NorthPoint stockholders by directing a request to: NorthPoint
Communications Group, Inc., 303 Second Street, South Tower, San Francisco, CA
94107, Attn: Investor Relations, (415) 403-4003, email:
[email protected].
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this release which are not historical facts
may be deemed to contain forward-looking statements. Such statements are
indicated by words or phrases such as "anticipate," "estimate," "projects,"
"believes," "intends," "expects" and similar words and phrases. Actual results
may differ materially from those expressed or implied in any forward-looking
statement as a result of certain risks and uncertainties. Some of these risks
and uncertainties include, without limitation: NorthPoint's dependence on
strategic third parties to market and resell its services, intense competition
for NorthPoint's service offerings, dependence on growth in demand for DSL-based
services, ability to raise additional capital, the inability to obtain, or meet
conditions imposed for, governmental approvals for the proposed merger with
Verizon Communications' DSL business, the failure of NorthPoint's stockholders
to approve the merger, costs related to the merger, the risk that NorthPoint's
and Verizon's DSL businesses will not be integrated successfully, the failure of
NorthPoint to realize anticipated benefits of the merger and other economic,
business, competitive and/or regulatory risks and uncertainties detailed in the
company's Securities and Exchange Commission filings. Prospective investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any of the forward-looking statements
contained herein to reflect future events or developments.
