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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) July 19, 2000
PentaStar Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-27709 84-1502003
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1522 Blake Street, Denver CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 825-4400
None
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
On July 19, 2000, PentaStar Communications, Inc. ("PentaStar"), through
a wholly-owned subsidiary, completed the acquisition of the assets of the
Network Services Group of Telecomm Industries Corp. ("TCMM") pursuant to a
Purchase Agreement ("Agreement") dated April 15, 2000.
The initial purchase consideration paid at closing for the assets
consisted of $1,065,000 of cash, the issuance of 278,949 shares of PentaStar's
common stock, $.0001 par value (which shares had a fair market value as defined
in the agreement of $6,465,000), the assumption of $5,723,000 in debt and the
assumption of certain operating liabilities. Of the $5,723,000 of assumed debt,
$1,260,000 was paid at closing with the remaining $4,463,000 of assumed debt
secured by approximately $6,500,000 of future commissions due to PentaStar from
existing Ameritech contracts, which should be realized over the next several
years. Additional cash purchase consideration up to $1,000,000 can be earned by
TCMM based upon achieving certain financial performance criteria commencing with
the period beginning April 1, 2000. The purchase price also includes an earn-out
arrangement based upon (a) four times the sum of the earnings before interest,
taxes and amortization of the operations acquired by PentaStar from TCMM, less
an amount equal to 10% of the remaining assumed debt ("EBITA") for the period
April 1, 2000 to March 31, 2001 minus (b) consideration already paid. The
earnout amount, if any, is payable in cash, PentaStar common stock or a
combination thereof, at PentaStar's option. The total amount of cash and stock
consideration and assumed short-term debt paid at closing cannot exceed
$18,000,000. The 278,949 shares of PentaStar common stock were placed in a
general indemnification escrow until the date in which the earnout amount is
determined. The initial stock consideration is subject to post-closing
adjustments based upon achievement, or non-achievement of a certain EBITA amount
during the earn-out period.
The consideration was determined based upon negotiations between the
parties. The source of funds used by PentaStar to pay the cash portion of the
consideration was proceeds from PentaStar's October 1999 initial public offering
of equity securities and the Company's credit facility.
TCMM is a full-service communications agent that focuses on providing
voice, data, cellular, video and telephone network solutions to business
customers. TCMM's Network Services Group is Ameritech's largest distributor of
voice and data services. TCMM has a Five-Star rating with Ameritech, a
distinction made by Ameritech for those distributors that excel in sales,
customer service and customer satisfaction. In addition to being the largest
overall Ameritech agent, TCMM is the largest agent in the individual Ameritech
states of Indiana and Ohio. TCMM is also an authorized distributor for
BellSouth.
Item 7. Financial Statements and Exhibits
a) Financial Statements.
In accordance with Item 7(a)(4) of Form 8-K, the financial statements
required to be filed with the Commission will be filed by an amendment
to this report no later than 60 days after the due date of this
report.
b) Pro Forma Financial Information.
In accordance with Item 7(b)(2) of Form 8-K, any pro forma financial
information required to be filed with the Commission will be filed by
an amendment to this report no later than 60 days after the due date
of this report.
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c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
2.12 Purchase Agreement dated April 15, 2000 among PentaStar
Communications, Inc., PentaStar Corporation and Telecomm
Industries Corp. Pursuant to Item 601 (b)(2) of Regulation S-B
under the Securities Exchange Act of 1934, the exhibits to the
Purchase Agreement have been omitted. PentaStar agrees to
furnish copies of such exhibits to the Commission upon
request.
2.13 Letter Agreement dated July 18, 2000 among PentaStar
Communications, Inc., PentaStar Corporation and Telecomm
Industries Corp. Pursuant to Item 601 (b)(2) of Regulation S-B
under the Securities Exchange Act of 1934, the exhibits to the
Letter Agreement have been omitted. PentaStar agrees to
furnish copies of such exhibits to the Commission upon
request.
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SIGNATURE
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.
Date: August 2, 2000 PENTASTAR COMMUNICATIONS, INC.
By: /s/ David L. Dunham
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David L. Dunham
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
2.12 Purchase Agreement dated April 15, 2000 among PentaStar
Communications, Inc., PentaStar Corporation and Telecomm
Industries Corp. Pursuant to Item 601 (b)(2) of Regulation S-B
under the Securities Exchange Act of 1934, the exhibits to the
Purchase Agreement have been omitted. PentaStar agrees to
furnish copies of such exhibits to the Commission upon
request.
2.13 Letter Agreement dated July 18, 2000 among PentaStar
Communications, Inc., PentaStar Corporation and Telecomm
Industries Corp. Pursuant to Item 601 (b)(2) of Regulation S-B
under the Securities Exchange Act of 1934, the exhibits to the
Letter Agreement have been omitted. PentaStar agrees to
furnish copies of such exhibits to the Commission upon
request.
</TABLE>