SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant _XX_
Filed by a Party other than the Registrant ___
Check the appropriate box:
_XX_ Preliminary Proxy Statement
____ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
____ Definitive Proxy Statement
____ Definitive Additional Materials
____ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CT COMMUNICATIONS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_ No Fee Required
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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___ Fee paid previously with preliminary materials.
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___Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CT COMMUNICATIONS, INC.
68 Cabarrus Avenue, East
Concord, North Carolina 28025
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on January 28, 1999
TO THE SHAREHOLDERS:
A Special Meeting of Shareholders of CT Communications, Inc. (the
"Company") will be held at the Company's Customer Care Center, 2000
Progress Place, Northeast, in Concord, North Carolina, on Thursday,
January 28, 1999, at 9:00 a.m., local time, for the following
purposes:
(1) To consider and act upon a proposal to amend the Company's
Restated Articles of Incorporation to (a) provide for one
class of Common Stock, consisting of 100,000,000 authorized
shares, and (b) reclassify, change and convert each issued
and outstanding share of Voting Common Stock into 4.4 shares
of Common Stock and each issued and outstanding share of
Class B Nonvoting Common Stock into 4.0 shares of Common
Stock (the "Recapitalization"); and
(2) To transact such other business as may properly come before
the Special Meeting or any adjournment or adjournments
thereof.
The Voting Common Stock and Class B Nonvoting Common Stock are
the only classes of capital stock to be reclassified in the
Recapitalization. Therefore, the holders of the Voting Common Stock
and the Class B Nonvoting Common Stock are the persons entitled to
vote at the Special Meeting. December 1, 1998 has been fixed as the
record date for determining the shareholders entitled to notice of
and to vote at the Special Meeting, and at any adjournment or
adjournments thereof.
You are cordially invited to attend the Special Meeting. Whether
or not you plan to attend, please sign, date and return the
accompanying proxy promptly, so that your shares may be represented
and voted at the Special Meeting. A return envelope is enclosed for
your convenience.
By order of the Board of Directors,
December __, 1998
Barry R. Rubens
Secretary
<PAGE>
CT COMMUNICATIONS, INC.
68 Cabarrus Avenue, East
Concord, North Carolina 28025
Proxy Statement
Special Meeting of Shareholders
to be held on January 28, 1999
This Proxy Statement is first being mailed to the shareholders of
CT Communications, Inc. (the "Company") on or about December __,
1998 in connection with the Special Meeting of Shareholders to be
held on Thursday, January 28, 1999, at 9:00 a.m., local time, at the
Company's Customer Care Center, 2000 Progress Place, Northeast, in
Concord, North Carolina (the "Special Meeting"), and at any
adjournment or adjournments thereof. The purpose of the Special
Meeting is to take action upon a proposed amendment to the Company's
Restated Articles of Incorporation (the "Recapitalization
Amendment"), which would (i) provide for one class of Common Stock,
consisting of 100,000,000 shares, and (ii) reclassify the Company's
Voting Common Stock (the "Voting Common Stock") and Class B
Nonvoting Common Stock (the "Class B Nonvoting Common Stock" and,
together with the Voting Common Stock, the "Exchanged Securities")
into a single class of common stock (the "Common Stock").
Pursuant to the Recapitalization Amendment, each outstanding
share of the Voting Common Stock would be reclassified, changed and
converted into 4.4 shares of Common Stock (the "Voting Common Stock
Conversion Ratio"), with cash to be paid in lieu of issuing any
fractional shares, and each outstanding share of the Company's Class
B Nonvoting Common Stock would be reclassified, changed and
converted into 4.0 shares of Common Stock (the "Class B Nonvoting
Common Stock Conversion Ratio" and, together with the Voting Common
Stock Conversion Ratio, the "Conversion Ratios"). In addition, all
outstanding options to purchase shares of Voting Common Stock and
Class B Nonvoting Common Stock would be converted automatically into
options to purchase shares of Common Stock in an amount and at an
exercise price appropriately adjusted to reflect the respective
Conversion Ratios. The foregoing actions are referred to in this
Proxy Statement as the "Recapitalization."
This Proxy Statement is being sent to the holders of the Voting
Common Stock and the holders of Class B Nonvoting Common Stock.
Approval of the Recapitalization Amendment will require the
affirmative vote of holders of a majority of the shares of each such
class outstanding and entitled to vote at the Special Meeting, each
voting separately as a class. The Company's 4-1/2% Preferred Stock and
5% Preferred Stock will remain outstanding and will not be affected
by the Recapitalization Amendment. Accordingly, the holders thereof
are not entitled to notice of the Special Meeting or to vote with
respect to the approval of the Recapitalization Amendment.
Therefore, this Proxy Statement and the form of proxy to be used at
the Special Meeting, which is being solicited by the Board of
Directors of the Company, is being sent only to the holders of the
Exchanged Securities.
Because approval of the proposed Recapitalization Amendment
requires the affirmative vote of the holders of a majority of the
shares of each class of the Exchanged Securities outstanding and
entitled to vote at the Special Meeting, each voting separately as a
class, abstentions from voting, as well as broker non-votes, will
have the same effect as a negative vote. Accordingly, the Board of
Directors urges the holders of the Exchanged Securities to complete,
date and sign the accompanying proxy and return it promptly in the
enclosed, postage-paid envelope.
<PAGE>
THE SPECIAL MEETING OF SHAREHOLDERS
The Special Meeting will be held on Thursday, January 28, 1999 at
9:00 a.m., local time, at the Company's Customer Care Center, 2000
Progress Place, Northeast, in Concord, North Carolina for the
purpose of approving the Recapitalization Amendment.
Proxies
The accompanying form of proxy is for use at the Special Meeting.
A shareholder of the Company who is entitled to vote as herein
described may use this proxy if he or she is unable to attend the
Special Meeting in person or wishes to have his or her shares voted
by proxy even if he or she does attend the Special Meeting. The
proxy may be revoked by the person giving it by appearing at the
Special Meeting and electing to vote in person or by submitting a
written notice of revocation or submitting a duly executed proxy
bearing a later date to CT Communications, Inc., Post Office Box
227, Concord, North Carolina 28026-0227, Attention: Corporate
Secretary. Such notice or proxy, however, must actually be received
by the Company prior to the vote of the shareholders at the Special
Meeting. All shares entitled to vote and represented by valid
proxies received pursuant to this solicitation will be voted in the
manner specified therein, if such proxies are not revoked before
they are exercised. If no specification is made, the proxies will
be voted in favor of approval of the Recapitalization Amendment.
The Board of Directors of the Company is not aware of any other
matters that may be presented for action at the Special Meeting. If
other matters do properly come before the Special Meeting, however,
shares represented by proxies in the accompanying form will be voted
by the persons named in the proxy in accordance with their best
judgment.
Solicitation of proxies may be made in person or by mail,
telephone or telegraph by directors, officers and regular employees
of the Company, who will not be specially compensated for such
solicitation. Nominees, fiduciaries and other custodians will be
requested to forward solicitation materials to beneficial owners and
secure their voting instructions, if necessary, and will be
reimbursed for the expenses incurred in sending proxy materials to
beneficial owners. All costs of solicitation of proxies from the
shareholders will be borne by the Company.
Record Date and Voting Rights
Only the holders of Voting Common Stock and Class B Nonvoting
Common Stock, which comprise the only classes of capital stock to be
reclassified in the Recapitalization, are entitled to vote at the
Special Meeting. Holders of shares of the Company's 4-1.2% Preferred
Stock and 5% Preferred Stock will not be affected by the
Recapitalization Amendment and, accordingly, are not entitled to
vote with respect to the approval of the Recapitalization Amendment.
The Board of Directors has fixed the close of business on
December 1, 1998, as the record date for the determination of
shareholders of the Company entitled to receive notice of and, if
applicable, to vote
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at the Special Meeting (the "Record Date"). At the close of business
on the Record Date, there were outstanding ______ shares of Voting
Common Stock held by _____ holders of record and _______ shares of Class
B Nonvoting Common Stock held by ___ holders of record. Also, at the
Record Date, the directors, officers and affiliates of the Company
beneficially owned a total of ______ shares (____%) of the Voting Common
Stock and ________ shares (____%) of the Class B Nonvoting Common Stock.
Each share of each class of Exchanged Securities is entitled to
one vote with respect to the Recapitalization Amendment. In
addition, each share of Voting Common Stock is entitled one vote as
to any other proposals that may properly come before the Special
Meeting. The holders of the Class B Nonvoting Common Stock, 4-1/2%
Preferred Stock and 5% Preferred Stock are not entitled to vote with
respect to any other matter that may be presented at the Special
Meeting.
The affirmative vote of a majority of (i) the outstanding shares
of Voting Common Stock, voting as a single class, and (ii) the
outstanding shares of Class B Nonvoting Common Stock, voting as a
single class, is necessary for the approval the Recapitalization
Amendment, as required by Section 55-10-04(a)(2) of the North
Carolina General Statutes (the "NCGS"). The presence, either in
person or by properly executed proxy, of the holders of a majority
of the outstanding Voting Common Stock and a majority of the
outstanding Class B Nonvoting Common Stock is necessary to
constitute a quorum at the Special Meeting.
The Company intends to count shares of Voting Common Stock and
Class B Nonvoting Common Stock that are present in person at the
Special Meeting but not voting, and shares of such stock for which
the Company has received proxies but with respect to which holders
of shares have abstained, as present at the Special Meeting for
purposes of determining the presence or absence of a quorum for the
transaction of business. Brokers who hold shares in "street name"
for customers who are the beneficial owners of such shares are
prohibited from giving a proxy to vote such shares on the approval
of the Recapitalization Amendment without specific instructions from
their customers. Because the NCGS requires the affirmative vote of
holders of a majority of the shares outstanding of each class to
approve the Recapitalization Amendment, abstentions from voting, as
well as broker non-votes, will have the effect of a vote against the
approval of the Recapitalization Amendment.
Absence of Appraisal Rights
Under the NCGS, no shareholder of the Company is entitled to
appraisal rights in connection with the Recapitalization Amendment.
Recommendation of Board of Directors
The Board of Directors of the Company has unanimously approved
the Recapitalization Amendment and believes that the
Recapitalization Amendment is fair to, and in the best interests of,
the Company and its shareholders. Accordingly, the Board of
Directors recommends that the holders of the Exchanged Securities
vote FOR adoption and approval of the Recapitalization Amendment at
the Special Meeting.
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THE RECAPITALIZATION AMENDMENT
THE FOLLOWING PARAGRAPHS CONTAIN CERTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS. WORDS SUCH AS "EXPECTS," "ANTICIPATES,"
"BELIEVES," "ESTIMATES," VARIATIONS OF SUCH WORDS AND OTHER SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS.
Plan of Recapitalization
The Board of Directors has approved and recommends that the
shareholders approve a proposal to amend the Company's Restated
Articles of Incorporation to (i) provide for one class of Common
Stock, consisting of 100,000,000 authorized shares, and (ii)
reclassify, change and convert each issued and outstanding share of
Voting Common Stock into 4.4 shares of Common Stock, with cash being
paid in lieu of issuing fractional shares, and each issued and
outstanding share of Class B Nonvoting Common Stock into 4.0 shares
of Common Stock. In addition, all outstanding options to purchase
shares of Voting Common Stock and Class B Nonvoting Common Stock
would be converted automatically into options to purchase shares of
Common Stock in an amount and at an exercise price appropriately
adjusted to reflect the respective Conversion Ratios. The full text
of the Recapitalization Amendment is attached hereto as Exhibit A.
Description of Common Stock
If the Recapitalization Amendment is adopted, the Company will
have 100,000,000 shares of Common Stock authorized for issuance
under its Articles of Incorporation, rather than the currently
authorized 18,000,000 shares (consisting of 3,000,000 authorized
shares of Voting Common Stock and 15,000,000 shares of Class B
Nonvoting Common Stock). The Company would have __________ shares
of Common Stock issued and outstanding as of the Record Date, on a
pro forma basis, rather than _______ shares of Voting Common Stock
and __________ shares of Class B Nonvoting Common Stock. The
number of authorized and issued and outstanding shares of the
Company's 4-1/2% Preferred Stock and 5% Preferred Stock will remain the
same.
In addition to the shares of Common Stock to be issued and
outstanding following the effectiveness of the Recapitalization
Amendment, an aggregate of approximately __________ shares of Common
Stock would be reserved for issuance under the Company's Rights
Agreement, dated August 27, 1998 (the "Rights Agreement") and under
the Company's various stock benefit plans, calculated on a pro forma
basis as of the Record Date. Therefore, approximately __________
additional shares of Common Stock would be available for issuance
from time to time in the future for any proper corporate purposes,
including equity financing, stock splits, stock dividends,
acquisitions and stock benefit plans. In comparison, an aggregate
of approximately __________ shares of Voting Common Stock and Class
B Nonvoting Common Stock were reserved for such purposes as of the
Record Date, leaving approximately __________ shares available for
future issuance. No further action or authorization by the
shareholders would be necessary prior to the issuance of additional
shares of Common Stock unless applicable laws or regulations would
require such approval in a given instance. The Company currently
has no agreements,
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understandings or plans for the issuance of additional shares of Common
Stock, except for the reserved shares indicated above.
Except as amended by the Recapitalization Amendment, the
Company's Articles of Incorporation will not be changed. Also, the
Company's Bylaws are not being changed. Therefore, the Common Stock
will be identical to the Voting Common Stock with regard to voting,
distribution, dissenters', liquidation, and preemptive rights, and
in all other respects. The Common Stock will be identical to the
Class B Nonvoting Common Stock in all such respects, except that the
holders of Common Stock will be entitled to one vote per share on
all matters presented to the Company's shareholders. Holders of
Class B Nonvoting Common Stock are not entitled to vote on matters
presented to the shareholders, unless otherwise required by law.
The Board of Directors has instructed management of the Company
to cause the Common Stock to be designated for trading on the Nasdaq
National Market in the event that the shareholders approve the
Recapitalization Amendment. The Company has applied to have the
Common Stock approved by the National Association of Securities
Dealers, Inc. for designation on the Nasdaq National Market upon
notice of issuance and expects the Common Stock to begin trading on
the Nasdaq National Market after the effectiveness of the
Recapitalization Amendment. The Common Stock would trade under the
symbol "_____." Currently, there is no established trading market
for the Voting Common Stock or the Class B Nonvoting Common Stock,
although a Charlotte-based brokerage firm is currently acting as
broker for the Class B Nonvoting Common Stock as sales are offered
for sale.
The Company has engaged __________________ to act as registrar
and transfer agent for the Common Stock. The Company currently
serves as registrar and transfer agent for the Voting Common Stock
and the Class B Nonvoting Common Stock.
Reasons for the Recapitalization
The Board of Directors and management of the Company have, on
numerous occasions over the past two years, considered the Company's
various strategic alternatives, including the proposed
Recapitalization. After thorough consideration and discussion of
such issues and in consultation with the Company's financial and
legal advisors, the Board has concluded that the Recapitalization is
advisable and in the best interests of the Company and its
shareholders. At its meeting on October 1, 1998, the Board approved
the Recapitalization and recommended the adoption of the
Recapitalization Amendment by the Company's shareholders. The Board
believes that adoption of the Recapitalization Amendment would offer
a number of potential benefits to the Company and its shareholders,
which are described below.
Trading Market. The conversion of the Voting Common Stock and
the Class B Nonvoting Common Stock at the respective Conversion
Ratios would result in approximately four times as many shares of
common stock being outstanding. The Board believes that having a
single class of Common Stock, consisting of a significantly larger
number of outstanding shares that trade on the Nasdaq National
Market should encourage both a greater number and broader range of
investors in the Company. The Board of Directors believes that, as
a result, brokerage firms will be more willing to evaluate the
5
Company's securities as a possible investment opportunity for their
clients and may be more willing to act as a market maker in the
Company's securities under these circumstances. The Board believes
that the result should be an increased demand for the Company's
common shares, as well as a more liquid trading market.
The Voting Common Stock and the Class B Nonvoting Common Stock
have typically traded at relatively stable prices in the past,
although such trading has been infrequent. A more liquid trading
market may make the market price more volatile. The Board cannot
predict, however, what impact the Reclassification would have on the
market prices of the Common Stock, and there can be no assurances
that the price would increase.
Increase in Authorized Common Stock. As discussed above, the
Recapitalization Amendment would increase the number of authorized
shares of Common Stock from 18,000,000 to 100,000,000 and the number
of shares available for future issuance from __________ shares to
__________ shares. The Board of Directors believes that it is
desirable to have additional authorized shares of Common Stock
available for possible future financings, acquisition transactions
and other general corporate purposes, including stock splits, stock
dividends or stock benefit plans. Having such additional authorized
shares of Common Stock available for issuance in the future would
give the Company greater flexibility and may allow such shares to be
issued without the expense and delay of a special shareholders
meeting. Although such issuance of additional shares in respect of
future acquisitions and financings would dilute existing equity
ownership of the Company, the Company would issue such shares only
if the Board believes that such transactions ultimately would
increase the value of the Company to its shareholders.
Greater Access to Capital Markets. The Board of Directors
believes that the creation of a single class of Common Stock that
trades on the Nasdaq National Market will create a more liquid
trading market for the Company's shares, as described above. The
Board further believes that this may allow the Company better access
to the capital markets in the event that the Company should
determine to raise capital through an offering of its Common Stock.
The Board believes that, as a result, potential investors would be
more interested in purchasing the Common Stock, thereby increasing
demand in any potential offering. Rapid changes in the
telecommunications industry highlight the need for the Company to be
flexible in reacting to those changes and the opportunities they
present. However, the Company has no current plans to offer or sell
its Common Stock.
Greater Ability to Make Acquisitions. Management of the Company
regularly evaluates various acquisition alternatives and expects to
continue to do so in the foreseeable future. As described above,
the Recapitalization will increase the number of shares of Common
Stock authorized for issuance, will increase the number of shares
outstanding, will simplify the Company's capital structure and is
expected to create a more liquid market for the Common Stock. The
Board of Directors believes that the Recapitalization may,
therefore, enhance the Company's ability to make acquisitions in
which the Common Stock is used as the consideration for the purchase
price. The Board believes that, in such cases, the shareholders of
a target company would be more willing to accept the Common Stock as
acquisition consideration because its market value will be more
readily ascertainable and the shares will be easier to sell, if they
should so desire. Shareholders of a target company may, therefore,
be more likely to support
6
such an acquisition by voting in favor of it or encouraging management
to pursue a transaction with the Company.
The Company does not currently have any acquisition plans, and
there can be no assurance that the Company will seek to make an
acquisition or be able to effect any acquisition if the
Recapitalization Amendment is adopted.
Effects on Relative Ownership and Voting Power; Premium Payment to
Voting Common Stock Holders
Holders of the Voting Common Stock currently are the only
shareholders entitled to vote at meetings of the Company's
shareholders, unless otherwise provided by law. Heirs of L.D.
Coltrane, Sr., including L.D. Coltrane, III, and Michael R. Coltrane
(the "Coltrane Family"), collectively hold a controlling interest in
the Voting Common Stock. Therefore, the Coltrane Family currently
has voting control over most matters as to which the shareholders
may vote. The Recapitalization will significantly dilute the voting
control of the Company currently held by the holders of Voting
Common Stock, including the Coltrane Family. For example, former
holders of Voting Common Stock will own ____% of the voting power
upon the effectiveness of the Recapitalization, rather than 100%.
In addition, former holders of Voting Common Stock and former
holders of Class B Nonvoting Common Stock will no longer have class
voting rights in those situations where such rights currently are
required by law.
Currently, the Voting Common Stock and the Class B Nonvoting
Common Stock receive the same per share cash dividends.
Furthermore, as of the Record Date, the Voting Common Stock
represented ____% of the outstanding common equity of the Company,
while the Class B Nonvoting Common Stock represented ____%. As a
result of the Recapitalization, the holders of the Class B Nonvoting
Common Stock will experience a ____% reduction in their interest in
the aggregate of future dividends that may be paid on the Common
Stock and a ____% reduction in their equity ownership of the
Company. This is because the Voting Common Stock Conversion Ratio
is 10% greater than the Class B Nonvoting Common Stock Conversion
Ratio.
The Board of Directors established the relative Conversion Ratios
based on a thorough evaluation of numerous factors. In particular,
the Board considered (i) the historical difference between the per
share trading price of the Voting Common Stock and the Class B
Nonvoting Common Stock, (ii) various information regarding typical
trading price differentials of the common stock of other companies,
(iii) the superior voting power of the Voting Common Stock compared
to the Class B Nonvoting Common Stock, and (iv) the benefits that
should accrue to the holders of both classes of shares if the
Recapitalization Amendment is adopted.
After considering all of these issues, the Board of Directors
believes that the Recapitalization, including the relative
Conversion Ratios, is fair to the Company's shareholders.
7
Tax Consequences
THE FOLLOWING DISCUSSION IS INTENDED ONLY AS A BRIEF SUMMARY OF
THE FEDERAL INCOME TAX RULES, AS BASED ON THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), CURRENTLY IN EFFECT. THIS SUMMARY
IS NOT MEANT TO BE EXHAUSTIVE AND DOES NOT DESCRIBE STATE, LOCAL,
FOREIGN OR OTHER TAX CONSEQUENCES. SHAREHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE
PROPOSED RECAPITALIZATION TO THEM INDIVIDUALLY, INCLUDING TAX
REPORTING REQUIREMENTS AND TAX CONSEQUENCES UNDER STATE, LOCAL OR
FOREIGN LAW.
No taxable income, gain or loss should be recognized by a holder
of Voting Common Stock as a result of the exchange of one share of
Voting Common Stock into 4.4 shares of Common Stock, except that
cash distributed in lieu of fractional shares will constitute
taxable income for federal income tax purposes. The cost or other
basis for tax purposes of the Voting Common Stock held immediately
prior to the conversion will be allocated between the resulting
shares of Common Stock. No taxable income, gain or loss should be
recognized by a holder of Class B Nonvoting Common Stock as a result
of a change of one share of Class B Nonvoting Common Stock into 4.0
shares of Common Stock. The cost or other basis for tax purposes of
the Class B Nonvoting Common Stock held immediately prior to the
conversion will be allocated between the resulting shares of Common
Stock. The shares of Common Stock acquired in the exchange would be
deemed to have the same holding period(s) as the Voting Common Stock
and Class B Nonvoting Common Stock that are converted into Common
Stock.
Securities Law Issues
The conversion of shares of Voting Common Stock and Class B
Nonvoting Common Stock into shares of Common Stock will not
constitute an offer, "offer to sell," or "sale" of a security within
the meaning of Section 2(3) of the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 145 thereunder.
Consequently, the Company has not, for the purpose of the
Recapitalization Amendment, registered the Common Stock under the
Securities Act.
Because there would be no sale of the Common Stock at the
Effective Time, shareholders would not be deemed to have acquired
such shares separately from the previously held shares of Voting
Common Stock or Class B Nonvoting Common Stock. Therefore, at the
Effective Time, shares of Voting Common Stock or Class B Nonvoting
Common Stock that have been registered under the Securities Act or
are otherwise "unrestricted shares" will be deemed to be freely
tradeable (unless they are held by an affiliate of the Company, as
defined in Rule 144 of the Securities Act) and will be converted
into freely tradeable shares of Common Stock.
Shares of Voting Common Stock and Class B Nonvoting Common Stock
that are deemed to be "restricted shares" under Rule 144 (which are
generally identified by a legend on the stock certificate), will be
converted into restricted shares of Common Stock. Affiliates of the
Company and holders of restricted shares of Common Stock can resell
these shares in the public market in reliance on Rule 144 or
pursuant to a registration statement.
8
Anti-Takeover Effect
To the extent the Recapitalization provides the Company with a
broader shareholder base, creates a more liquid trading market and
removes voting control from the Coltrane Family, the
Recapitalization may indirectly make it easier to acquire control of
the Company through a negotiated or unsolicited tender offer or
other accumulation of the Common Stock or through a proxy contest.
This is because a broader shareholder base may increase the number
of shareholders from which a potential acquiror or proxy contestant
could purchase or acquire control of a sufficient number of shares
of Common Stock. The Recapitalization may, however, also make it
more difficult or expensive to take control of the Company through
such means because the Recapitalization would dilute the
concentrated voting power currently held by the holders of the
Voting Common Stock. Thus, any person or entity seeking control of
the Company would need to acquire or control a greater number of
shares of Common Stock than of Voting Common Stock, thereby making
such a takeover more expensive.
The Recapitalization is being proposed primarily for the reasons
set forth above, rather than as an antitakeover measure, which
reasons include a more liquid trading market, availability of
additional authorized shares of Common Stock, greater access to
capital markets and greater ability to make acquisitions. The
Recapitalization is not being proposed in response to any effort to
acquire control of the Company, and the Board of Directors is not
aware of any such effort.
Effective August 28, 1998, holders of the Voting Common Stock and
the Class B Nonvoting Common Stock received a dividend of one common
share purchase right (a "Right") for each such outstanding share
pursuant to the Company's Rights Agreement. Each Right entitles the
holder to purchase one share of Voting Common Stock or Class B
Nonvoting Common Stock, as the case may be, at a specified purchase
price upon the occurrence of certain events. If the
Recapitalization Amendment is adopted by the shareholders, the
Rights Agreement and the Rights will be adjusted automatically to
provide that holders of Rights may purchase shares of Common Stock
at an appropriately adjusted purchase price. Shareholders will then
receive a summary of the Rights Agreement and the Rights, as
modified.
The Rights and the provisions of the Company's Restated Articles
of Incorporation regarding the staggered Board of Directors, removal
of directors for cause only, supermajority voting for certain
business combinations and the availability of authorized but
unissued shares of Common Stock may have certain anti-takeover
effects in addition to those described above. Such provisions could
make the Company a less attractive target for a hostile takeover bid
or render it more difficult or discourage a merger proposal, the
assumption of control through the acquisition of a large block of
capital stock or the removal of incumbent management. Such
provisions also may inhibit or impede fluctuations in the market
price of the Common Stock that may result from actual or potential
takeover attempts.
9
Conversion of Shares
If the Recapitalization Amendment is approved by the
shareholders, the Company will file the Recapitalization Amendment
with the North Carolina Secretary of State promptly after the
Special Meeting. The Recapitalization Amendment will be effective
immediately upon acceptance of that filing by the North Carolina
Secretary of State (the "Effective Time"). Upon the Effective Time
and without any further action by the Company or its shareholders,
each issued and outstanding share of Voting Common Stock will
automatically be converted into 4.4 shares of Common Stock and each
issued and outstanding share of Class B Nonvoting Common Stock will
be converted automatically into 4.0 shares of Common Stock. In
addition, all outstanding options to purchase shares of Voting
Common Stock and Class B Nonvoting Common Stock will be converted
automatically into options to purchase shares of Common Stock in an
amount and at an exercise price appropriately adjusted to reflect
the respective Conversion Ratios.
No fractional shares will be issued in connection with the
Recapitalization. Rather, holders of Voting Common Stock who would
otherwise be entitled to receive a fraction of a share of Common
Stock (after taking into account all certificates held by such
shareholder) will receive in lieu thereof cash (without interest) in
an amount equal to such fractional part of a share of Common Stock
multiplied by $___________ (the "Voting Common Stock Market Value").
The Voting Common Stock Market Value equals the price at which
shares of Voting Common Stock were sold on ________________, 1998
(which is the last known arms length sale of Voting Common Stock)
divided by 4.4 to reflect the Voting Common Stock Conversion Ratio.
No holder of Voting Common Stock will be entitled to dividends,
voting rights or any other rights as a shareholder in respect of any
fractional share. The Class B Nonvoting Common Stock Conversion
Ratio will not result in any fractional shares.
Promptly after the Effective Time, First Union National Bank (the
"Transfer Agent") will mail to each record holder of a stock
certificate representing shares of the Exchanged Securities
instructions and transmittal materials for effecting the surrender
of stock certificates representing shares of the Exchanged
Securities in exchange for replacement certificates representing the
number of whole shares of Common Stock into which such shares of the
Exchanged Securities have been converted.
Shareholders are requested not to send any stock certificates
with the enclosed proxy, and not to surrender stock certificates for
exchange, until they receive such transmittal materials from the
Transfer Agent.
After receipt of the transmittal materials from the Transfer
Agent, shareholders may complete and return such materials to the
Transfer Agent along with the certificate or certificates
representing their shares of the Exchanged Securities. Upon
delivery of such materials and certificates to the Transfer Agent by
a shareholder, the shareholder will be entitled to receive a new
stock certificate representing the number of whole shares of Common
Stock into which such shares of the Exchanged Securities have been
converted (as represented by the certificate or certificates
surrendered to the Transfer Agent) and, where applicable, a check
for the amount (without interest) representing the value of any
fractional shares. Until surrendered, each stock certificate will
represent for all purposes the number of whole shares of Common
10
Stock into which the shares represented by such certificate were
converted at the Effective Time, as determined by the Transfer
Agent's records. Such shareholders shall be entitled to vote at any
shareholders meetings (to the extent permitted by law) and to
receive any dividends or other distributions on the Common Stock.
If any new certificate representing shares of Common Stock is to
be issued in a name or number of shares other than that in which or
in respect of which the surrendered certificate is registered, it
will be a condition to such issuance that the person requesting such
issuance deliver to the Transfer Agent all documents necessary to
evidence and effect such transfer (with signature guarantees) and
pay to the Transfer Agent any transfer or other taxes required by
reason thereof or establish to the Transfer Agent's satisfaction
that such taxes have been paid or are not applicable. In the event
any certificate representing shares of the Exchanged Securities has
been lost, stolen or destroyed, the Transfer Agent will issue a new
certificate representing the number and class of shares into which
the shares represented by such certificate were converted pursuant
to the recapitalization upon the making of an affidavit of that fact
by the person claiming such certificate to be lost, stolen or
destroyed. As a condition precedent to such issuance, the Company
may require a bond in such sum as the Company may direct to
indemnify the Company against any claim that may be made against the
Company with respect to the certificate that is alleged to have been
lost, stolen or destroyed.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the beneficial
ownership by all directors and executive officers of the Company of
the Company's various classes of equity securities as of October 15,
1998. In addition, the table presents information regarding each
shareholder known to the Company to beneficially own more than 5% of
the Voting Common Stock, which is the only class of securities of
the Company with general voting rights. Unless otherwise noted, all
shares set forth in the table are directly owned, with sole voting
and investment power, by such shareholder.
Class B Nonvoting Common Stock to be
Voting Common Stock Common Stock Owned after
Beneficially Owned Beneficially Owned Recapitalization(2)
------------------ ------------------ -------------------
% of % of % of
Name(1) Number Class Number Class Number Class
- --------------- ------- ------ -------- -------- -------- -------
L. D. Coltrane III
P.O. Box 227
Concord, NC
28026-0227 51,101(3) 15.2% 2,419(4) * 234,520 2.5%
Michael R. Coltrane
P.O. Box 227
Concord, NC
28026-0227 43,786(5) 13.0% 36,269(6) 1.9% 337,734 3.6%
11
Betty Gay Bivens
400 Avinger Lane
Davidson, NC
28036 42,943 13.0% 9,649 * 227,545 2.4%
Phyllis C.Ausband
2310 Coventry Lane
Daleville, VA
24083
33,932(7) 10.1% 26,244(8) 1.3% 254,276 2.7%
First Charter
National Bank
Trust Department
P.O. Box 228
Concord, NC
28026-0228 26,121(9) 7.8% 101,849(10) 5.2% 522,328 5.6%
Mariam C. Schramm
(Mrs. T. M. Schramm)
400 Avinger Lane
Davidson, NC
28036 23,287 6.9% 106,631 5.5% 528,986 5.7%
World Div. Bd. of
Global Min. U. M. Church
475 Riverside Drive
15th Floor
New York, NY
10027 22,643 6.7% 245,304 12.5% 1,080,845 11.6%
Phil W.
Widenhouse 3,651(11) 1.1% 21,509(12) 1.1% 102,100 1.1%
Jerry H.
McClellan 694(13) * 6,182(14) * 27,781 *
O. C. Chewning,
Jr 557 * 534 * 4,586 *
Ben F. Mynatt 514(15) * 2,579 * 12,577 *
John R. Boger,
Jr. 195(16) * 777(17) * 3,966 *
Thomas A.
Norman 150 * 5,888(18) * 24,212 *
Catherine A. Duda
128 * 1,271(19) * 5,647 *
S. E. Leftwich 82 * 437 * 2,108 *
Kenneth R. Argo 68 * 4,422(20) * 17,987 *
Nicholas L.
Kottyan 45 * 5,306(21) * 21,422 *
Barry R. Rubens 30 * 5,368(22) * 21,604 *
12
All directors and
executive officers
of the Registrant
as a group (14
persons) (23) 143,944 42.9% 102,660 5.2% 1,043,993 11.1%
- -------------------
* Less than 1%
(1) Addresses are provided for persons owning more than 5% of
the outstanding shares of Voting Common Stock. All other
persons are directors or executive officers of the Company.
(2) Pro forma to reflect the conversion of the Voting Common
Stock at the 4.4-to-one Conversion Ratio and the conversion
of the Class B Nonvoting Common Stock at the 4.0-to-one
Conversion Ratio.
(3) Includes 7,131 shares owned by spouse.
(4) Includes 13 shares owned by spouse.
(5) Includes 21,793 shares held by trusts for which Mr. Coltrane
is a co-trustee with Phyllis C. Ausband, his sister, with
whom he shares voting and investment power, and 1,308 shares
owned by spouse.
(6) Includes 15,466 shares held by trusts for which Mr. Coltrane
is a co-trustee with Phyllis C. Ausband, his sister, with
whom he shares voting and investment power, 225 shares owned
by spouse, and 5,766 shares represented by currently
exercisable options.
(7) Includes 21,793 shares held by trusts for which Ms. Ausband
is a co-trustee with Michael R. Coltrane, her brother, with
whom she shares voting and investment power, and 87 shares
owned by spouse.
(8) Includes 15,466 shares held by trusts for which Ms. Ausband
is a co-trustee with Michael R. Coltrane, her brother, with
whom she shares voting and investment power.
(9) Includs 16,173 shares held by two employee retirement plans
of the Company for which First Charter National Bank
("FCNB") serves as trustee and 9,948 shares held by various
trusts for which FCNB serves as trustee. FCNB has sole or
shared voting and investment power over all such shares.
(10) Includes 21,046 shares held by two employee retirement plans
of the Company for which FCNB serves as trustee and 80,805
shares held by various trusts for which FCNB serves as
trustee. FCNB has sole or shared voting and investment
power over all such shares.
(11) Includes 189 shares owned by spouse.
(12) Includes 12,627 shares owned by spouse.
(13) Includes 202 shares owned by spouse.
(14) Includes 1,345 shares owned by spouse and 1,124 shares
represented by currently exercisable options.
(15) Includes 487 shares owned by spouse.
(16) Includes 145 shares owned by spouse.
(17) Includes 112 shares owned by spouse.
(18) Includes 3,468 shares represented by currently exercisable
options.
(19) Includes 573 shares represented by currently exercisable
options.
(20) Includes 484 shares owned by spouse and 109 shares
represented by currently exercisable options.
(21) Includes 3,482 shares represented by currently exercisable
options.
(22) Includes 3,582 shares represented by currently exercisable
options.
(23) Includes an aggregate of 18,104 shares represented by
currently exercisable options. Does not include 26,121
shares of Voting Common Stock, 101,849 shares of Class B
Nonvoting Common Stock held by First Charter National Bank.
L. D. Coltrane III and Michael R Coltrane are shareholders
and Michael R. Coltrane is a director of First Charter
Corporation, the parent corporation of First Charter
National Bank. None of the directors or executive officers
of the Company owned any shares of the Company's 4-1/2%
Preferred Stock or 5% Preferred Stock as of October 15, 1998.
13
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
the Company knows of no matters that will be presented for
consideration at the Special Meeting other than as described in this
Proxy Statement. However, if any other matters shall come before
the Special Meeting or any adjournment or postponement thereof and
be voted upon, the enclosed proxies shall be deemed to confer
discretionary authority to the individuals named as proxies therein
to vote the shares represented by such proxy as to any such matters.
14
EXHIBIT A
TEXT OF THE RECAPITALIZATION AMENDMENT
If the Recapitalization Amendment is approved, Article 2 of the
Company's Restated Articles of Incorporation, which sets forth the
Company's currently authorized capital stock, will be amended by
deleting Article 2 in its entirety and substituting the following
therefor:
The aggregate number of shares which the Corporation shall have
authority to issue is 100,019,000 shares of capital stock, which
shall be classified and bear designations as follows:
(a) 100,000,000 shares of common stock designated as Common
Stock.
(b) 2,000 shares of preferred stock designated as Four and One-half
Percent Preferred Stock.
(c) 17,000 shares of preferred stock designated as Five Percent
Preferred Stock.
Each share of Voting Common Stock of the Corporation outstanding
when these Articles of Amendment become effective, shall be
reclassified, changed and converted into 4.4 fully paid and
nonassessable shares of Common Stock, with cash to be paid in lieu
of any fractional shares. Each share of Class B Nonvoting Common
Stock of this Corporation issued and outstanding when these Articles
of Amendment become effective, shall be reclassified, changed and
converted into 4.0 fully paid and nonassessable shares of Common
Stock. In addition, all outstanding options to purchase shares of
Voting Common Stock and Class B Nonvoting Common Stock shall be
converted automatically into options to purchase shares of Common
Stock in an amount and at an exercise price appropriately adjusted
to reflect the foregoing conversion ratios.
15
VOTING COMMON STOCK
This Proxy is Solicited on Behalf
of the Board of Directors of
CT COMMUNICATIONS, INC.
Special Meeting of Shareholders, January 28, 1999
KNOW ALL MEN BY THESE PRESENT, that the undersigned shareholder
of CT COMMUNICATIONS, INC., a North Carolina corporation (the
"Company"), hereby constitutes and appoints L. D. Coltrane III,
Michael R. Coltrane and Barry R. Rubens, attorneys and proxies with
full power of substitution, for and on behalf of the undersigned to
act and vote as indicated below, according to the number of shares
of the Company's Voting Common Stock held of record by the
undersigned on December 1, 1998, and as fully as the undersigned
would be entitled to act and vote if personally present at the
Special Meeting of Shareholders to be held at the Company's Customer
Care Facility, 2000 Progress Place, Concord, North Carolina, at 9:00
a. m., local time, January 28, 1999, and any adjournment or
adjournments thereof (the "Special Meeting"), as follows:
(1) Approval of an amendment to the Company's Restated Articles
of Incorporation to (a) provide for one class of Common
Stock, consisting of 100,000,000 authorized shares, and (b)
reclassify, change and convert each issued and outstanding
share of the Company's Voting Common Stock into 4.4 shares
of Common Stock and each issued and outstanding share of
Class B Nonvoting Common Stock into 4.0 shares of Common
Stock.
__ FOR __ AGAINST __ ABSTAIN
(2) In their discretion, the proxies are authorized to act and
vote upon any other business which may properly be brought
before said meeting or any adjournment or adjournments
thereof.
The undersigned hereby ratifies and confirms all that said
attorneys and proxies or any of them lawfully do or cause to be done
by virtue hereof. A majority of said attorneys and proxies who
shall be present and acting as such at the Special Meeting or any
adjournment thereof, or if only one such attorney and proxy be
present and acting, then that one, shall have and may exercise all
powers hereby conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED IN FAVOR OF PROPOSAL 1.
The undersigned hereby acknowledges receipt of the Notice of
Special Meeting of Shareholders, dated December __, 1998, and the
Proxy Statement furnished therewith.
Dated this _____ day of ______________, 199__.
________________________________(SEAL)
________________________________(SEAL)
NOTE: Signature should agree with
name on stock certificate as printed
thereon. When shares are held by
joint tenants, both should sign.
Executors, administrators, trustees
and other fiduciaries, and persons
signing on behalf of corporations or
partnerships, should so indicate when
signing.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. THANK YOU.
<PAGE>
CLASS B NONVOTING COMMON STOCK
This Proxy is Solicited on Behalf
of the Board of Directors of
CT COMMUNICATIONS, INC.
Special Meeting of Shareholders, January 28, 1999
KNOW ALL MEN BY THESE PRESENT, that the undersigned shareholder
of CT COMMUNICATIONS, INC., a North Carolina corporation (the
"Company"), hereby constitutes and appoints L. D. Coltrane III,
Michael R. Coltrane and Barry R. Rubens, attorneys and proxies with
full power of substitution, for and on behalf of the undersigned to
act and vote as indicated below, according to the number of shares
of the Company's Class B Nonvoting Common Stock, held of record by
the undersigned on December 1, 1998, and as fully as the undersigned
would be entitled to act and vote if personally present at the
Special Meeting of Shareholders to be held at the Company's Customer
Care Center, 2000 Progress Place, Concord, North Carolina, at 9:00
a. m., local time, January 28, 1999, and any adjournment or
adjournments thereof (the "Special Meeting"), as follows:
(1) Approval of an amendment to the Company's Restated
Articles of Incorporation to (a) provide for one class of
Common Stock, consisting of 100,000,000 authorized shares,
and (b) reclassify, change and convert each issued and
outstanding share of the Company's Voting Common Stock
into 4.4 shares of Common Stock and each issued and
outstanding share of Class B Nonvoting Common Stock into
4.0 shares of Common Stock.
__ FOR __ AGAINST __ ABSTAIN
(2) In their discretion, the proxies are authorized to act and
vote upon any other business which may properly be brought
before said meeting or any adjournment or adjournments
thereof.
The undersigned hereby ratifies and confirms all that said
attorneys and proxies or any of them lawfully do or cause to be done
by virtue hereof. A majority of said attorneys and proxies who
shall be present and acting as such at the Special Meeting or any
adjournment thereof, or if only one such attorney and proxy be
present and acting, then that one, shall have and may exercise all
powers hereby conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED IN FAVOR OF PROPOSAL 1.
The undersigned hereby acknowledges receipt of the Notice of
Special Meeting of Shareholders, dated December __, 1998, and the
Proxy Statement furnished therewith.
Dated this _____ day of ______________, 199__.
____________________________________(SEAL)
____________________________________(SEAL)
NOTE: Signature should agree with
name on stock certificate as printed
thereon. When shares are held by
joint tenants, both should sign.
Executors, administrators, trustees
and other fiduciaries, and persons
signing on behalf of corporations or
partnerships, should so indicate when
signing.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. THANK YOU.
<PAGE>
