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): March 30, 2000
Pathnet Telecommunications, Inc.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
333-91469 52-2201331
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(Commission File No.) (I.R.S. Employer
Identification No.)
1015 31ST STREET, N.W.
WASHINGTON, DC 20007
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(Address of principal executive offices) (Zip Code)
(202) 625-7284
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On March 30, 2000, the Registrant completed a contribution and
reorganization transaction in which:
o it acquired 100% shares of Pathnet, Inc. ("Pathnet") common stock and
series A, B, and C convertible preferred stock in exchange for
substantially similar shares of its own common stock and series A, B,and C
convertible preferred stock;
o Pathnet became a wholly owned subsidiary of the Registrant;
o Three new investors, The Burlington Northern and Santa Fe Railway Company,
CSX Transportation, Inc. and Colonial Pipeline Company, contributed rights
of way along their existing railroad and pipeline corridors, valued at
approximately $187.0 million, in exchange for 8,511,607 shares of the
Registrant's series D convertible preferred stock;
o Colonial Pipeline Company also contributed (i) $38.0 million in cash in
return for 1,729,631 shares of the Registrant's series E convertible
preferred stock; (ii) $1 million in cash in return for an option,
exercisable by Colonial and certain of Colonial's affiliates, to purchase
up to 1,593,082 shares of the Registrant's series E convertible preferred
stock, or under certain circumstances, series D preferred stock, plus an
option to purchase a number of shares of the Registrant's common stock; and
(iii) $4 million in cash in return for a single fiber optic conduit along a
portion of the Colonial right of way corridors or other telecommunications
assets of equivalent value;
o it received a loan of $50 million from Pathnet representing the proceeds
remaining from Pathnet's initial equity investments and the issue of
Pathnet's 12 1/4% Senior Notes due 2008; and
o it acquired from Pathnet, for a $70 million promissory note, three fiber
optic development contracts, related assets, other agreements and the
rights to use Pathnet's name and other intellectual property as well as
fiber assets currently held by Pathnet's subsidiary, Pathnet Fiber Optics,
LLC.
The Registrant intends to continue to use the assets in its telecommunications
business.
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Item 5. Other Events
The press release of the Registrant dated April 6, 2000, which is filed as
an exhibit hereto, is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(C) EXHIBITS.
The following exhibits are filed as a part of this Current Report on Form
8-K:
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
99.1 Registrant's press release dated April 6, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PATHNET TELECOMMUNICATIONS, INC.
Dated: April 14, 2000 By: /s/ James M. Craig
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Name: James M. Craig
Title: Executive Vice-President
Chief Financial Officer
and Treasurer (Principal
Financial Officer and Controller)
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EXHIBIT INDEX
PATHNET TELECOMMUNICATIONS, INC.
Current Report on Form 8-K
EXHIBIT NUMBER DESCRIPTION
99.1 Registrant's press release dated April 6, 2000.
Exhibit 99.1
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FOR IMMEDIATE RELEASE
Contact:
Becky Haight
Investor Relations
Pathnet
(877) 227-5600
[email protected]
Patti Kelly
Media Relations
Pathnet
(703) 390-2868
[email protected]
PATHNET CLOSES STRATEGIC INVESTMENT TRANSACTION
Washington, D.C. (April 6,2000) -- Pathnet, Inc., and its new parent company,
Pathnet Telecommunications, Inc., today announced closure of its strategic
investment transaction with Colonial Pipeline Company, The Burlington Northern
and Santa Fe Railway Company and CSX Transportation, Inc. Pathnet
Telecommunications, henceforth "Pathnet", received the right to develop over
12,000 miles of these investors' rights-of-way holdings. In addition to
providing a portion of the rights-of-way access, Colonial Pipeline also made a
first tranche cash investment of $43 million in Pathnet with a second tranche of
$25 million expected upon the completion of Pathnet's Chicago to Denver fiber
build. The new investors received an approximate one-third equity stake in
Pathnet as well as proportionate representation on the Pathnet Board of
Directors.
"We are thrilled to close this transaction and welcome industry leaders like
Colonial Pipeline, BNSF and CSX into our company," said Dick Jalkut, Pathnet
president and chief executive officer. "The right to select from our new
partners' extensive rights-of-way facilitates our strategy of reaching second-
and third- tier markets by bridging the "Digital Divide" through our VPOP Plus
service. This cutting-edge service combines local access with transport service
enabling competitive telephony service in these areas."
Pathnet is a "next generation" carriers' carrier providing high capacity,
digital transport and competitive local access services to under-served and
second- and third-tier U.S. cities. It provides service to inter-exchange
carriers, local exchange carriers, Internet service providers, Regional Bell
Operating Companies, cellular operators and resellers. Pathnet currently has
6,800 route miles of completed network and 700 route miles of network under
construction. Additional information about Pathnet can be found on the company's
web site at: WWW.PATHNET.NET.
THE STATEMENTS MADE BY PATHNET AND PATHNET TELECOM IN THIS PRESS RELEASE MAY BE
FORWARD-LOOKING IN NATURE. NO ASSURANCE CAN BE GIVEN THAT FUTURE RESULTS WILL BE
ACHIEVED; ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN
FORWARD-LOOKING STATEMENTS. PATHNET AND PATHNET TELECOM BELIEVE THAT THEIR
PRIMARY RISK FACTORS INCLUDE, BUT ARE NOT LIMITED TO: SIGNING ADDITIONAL
AGREEMENTS WITH PRIVATE NETWORK OPERATORS AND OTHERS; OFFERING SERVICES TO
TELECOMMUNICATION SERVICE PROVIDERS; ENTERING INTO PARTNERING ARRANGEMENTS;
BUILDING A DIGITAL NETWORK; MEETING MARKET DEMAND AND CUSTOMER SERVICE
EXPECTATIONS; AND OBTAINING ADDITIONAL FINANCING. ADDITIONAL INFORMATION
CONCERNING THESE AND OTHER POTENTIAL IMPORTANT FACTORS CAN BE FOUND WITHIN
PATHNET TELECOM'S AND PATHNET'S PERIODIC REPORTS FILED WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION UNDER THE FEDERAL SECURITIES LAWS. STATEMENTS IN THIS
RELEASE SHOULD BE EVALUATED IN LIGHT OF THESE IMPORTANT FACTORS.
