SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
PHOENIX NETWORK, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value
(Title of Class of Securities)
718910102
---------------
(CUSIP Number)
Robert S. Woodruff Drake S. Tempest, Esq.
Qwest Communications O'Melveny & Myers LLP
International Inc. Citicorp Center
555 Seventeenth Street, Suite 1000 153 East 53rd Street, 54th Floor
Denver, Colorado 80202 New York, New York 10022-4611
(303) 291-1400 (212) 326-2000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 6, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
[ ].
- --------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("ACT") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, SEE
the NOTES).
CUSIP Number 718910102
---------
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
Page 1 of 18 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Qwest Communications International Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES ----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,967,057
EACH REPORT- ----------------------------------
ING PERSON 9 SOLE DISPOSITIVE POWER
WITH ----------------------------------
10 SHARED DISPOSITIVE POWER
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,967,057
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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Page 2 of 18 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Qwest 1997-5 Acquisition Corp.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES ----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,967,057
EACH REPORT- ----------------------------------
ING PERSON 9 SOLE DISPOSITIVE POWER
WITH ----------------------------------
10 SHARED DISPOSITIVE POWER
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,967,057
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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Page 3 of 18 Pages
<PAGE>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anschutz Company
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES ----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,967,057
EACH REPORT- ----------------------------------
ING PERSON 9 SOLE DISPOSITIVE POWER
WITH ----------------------------------
10 SHARED DISPOSITIVE POWER
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,967,057
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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Page 4 of 18 Pages
<PAGE>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Anschutz Family Investment Company LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES ----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,967,057
EACH REPORT- ----------------------------------
ING PERSON 9 SOLE DISPOSITIVE POWER
WITH ----------------------------------
10 SHARED DISPOSITIVE POWER
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,967,057
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
Page 5 of 18 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Philip F. Anschutz
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES ----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,967,057
EACH REPORT- ----------------------------------
ING PERSON 9 SOLE DISPOSITIVE POWER
WITH ----------------------------------
10 SHARED DISPOSITIVE POWER
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,967,057
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
Page 6 of 18 Pages
<PAGE>
ITEM 1. SECURITY AND THE ISSUER
The title of the class of equity securities to which this
statement relates is:
Common Stock, $.001 par value ("COMPANY COMMON STOCK"), of
Phoenix Network, Inc., a Delaware corporation (the "COMPANY").
The name of the issuer, address of its principal executive
offices are:
Phoenix Network, Inc.
13952 Denver West Parkway
Building 53
Golden, Colorado 80402.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed on behalf of Qwest Communications
International Inc., a Delaware corporation ("QWEST"), Qwest 1997-5 Acquisition
Corp., a Delaware corporation ("QWEST SUBSIDIARY"), Anschutz Company, a Delaware
corporation ("ANSCO"), Anschutz Family Investment Company LLC, a Colorado
limited liability company ("ANSLLC"), and Philip F. Anschutz ("ANSCHUTZ").
Anschutz may be deemed to control Qwest, Qwest Subsidiary and AnsCo, as he is
the sole beneficial owner of the capital stock of AnsCo, which in turn is the
beneficial owner of approximately 84% of the outstanding shares of common stock,
par value $.01 per share (the "QWEST COMMON STOCK", of Qwest, including
4,300,000 shares of Qwest Common Stock issuable upon the exercise of a warrant
granted to AnsLLC, and Qwest in turn is the sole beneficial owner of the capital
stock of Qwest Subsidiary. Qwest, Qwest Subsidiary, AnsCo, AnsLLC and Anschutz
are collectively referred to as the "REPORTING PERSONS".
The principal business address of Qwest and Qwest Subsidiary
is 1000 Qwest Tower, 555 Seventeenth Street, Denver, Colorado 80202. The
principal business address of Anschutz, AnsCo and ANSLLC is 2400 Qwest Tower,
555 Seventeenth Street, Denver, Colorado 80202. Anschutz is a citizen of the
United States of America.
Page 7 of 18 Pages
<PAGE>
During the past five years, none of the Reporting Persons and,
to the knowledge of the Reporting Persons, none of the executive officers or
directors of the Reporting Persons, if applicable, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Certain information with respect to the
executive officers and directors of the Reporting Persons, if applicable, is set
forth on Schedule A attached hereto.
Qwest is principally engaged in the telecommunications
business, providing voice, video and data transmission services. It constructs
and installs fiber optic communications systems for interexchange carriers and
other communications entities and for its own network use. Qwest Subsidiary has
been organized to effect the Merger (as defined in Item 4 below).
Anschutz and AnsCo are principally engaged, directly or
indirectly, in railroad transportation, communications, natural resources, real
estate and sports entertainment.
AnsLLC is principally engaged in making investments.
Qwest and Qwest Subsidiary constitute, and are filing this
statement, as a "group" within the meaning of Rule 13d-5 under the Securities
Exchange Act of 1934 (the "EXCHANGE ACT"). Anschutz, AnsLLC and AnsCo
constitute, and are filing this statement, as a "group", within such meaning.
The Reporting Persons do not otherwise constitute, and are not filing this
statement, as a "group", within such meaning.
Page 8 of 18 Pages
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Qwest will acquire all the issued and outstanding shares of
Company Common Stock in the Merger without the payment of any consideration,
except with respect to payments by Qwest in lieu of the issuance of fractional
shares of Qwest Common Stock in the Merger (as defined in Item 4 below).
No payments are required to be made by the Reporting Persons
in connection with the Voting Agreements (as defined in Item 4 below).
ITEM 4. PURPOSE OF TRANSACTION
On January 6, 1998, the Company, Qwest and Qwest Subsidiary
entered into a definitive Agreement and Plan of Merger dated as of December 31,
1997 (the "MERGER AGREEMENT"), providing for a merger (the "MERGER") that will
result in the Company becoming a wholly-owned subsidiary of Qwest. The Company
and Qwest intend that the Merger qualify for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"). The Merger Agreement also provides for an
amendment to the Certificate of Incorporation of the Company (the "CERTIFICATE
AMENDMENT") that would effect the conversion of all outstanding shares of
Company Series I Preferred Stock, par value $.001 per share, of the Company (the
"COMPANY SERIES I PREFERRED STOCK") into shares of Company Common Stock
immediately prior to the time that the Merger becomes effective under applicable
laws (the "EFFECTIVE TIME").
Copies of the mutual press release dated January 6, 1998 of
the Company and Qwest (the "PRESS RELEASE") and the Merger Agreement have been
filed with the Securities and Exchange Commission (the "COMMISSION") by the
Company as Exhibits 99.1 and 99.2 to the Current Report on Form 8-K of the
Company dated January 8, 1998. The Merger Agreement and Press Release are hereby
incorporated herein by reference as Exhibits 1 and 2, respectively. The
following description of the Merger Agreement is qualified by reference to the
Merger Agreement incorporated herein by reference.
Page 9 of 18 Pages
<PAGE>
The Merger Agreement provides for the merger of Qwest
Subsidiary with and into the Company, pursuant to which all outstanding shares
of Company Common Stock and all outstanding shares of Company Series I Preferred
Stock will be acquired for that number of shares of Qwest Common Stock having an
aggregate market value equal to $28.5 million, subject to certain adjustments
and limitations described below, and up to $4 million in cash, in the aggregate,
contingent upon the outcome of certain litigation described below. The actual
number of shares of Qwest Common Stock to be issued in the Merger to the holders
of shares of Company Common Stock and holders of Company Series I Preferred
Stock will be determined by dividing
(i) the quotient obtained by dividing the Acquisition Value by the
Effective Time Adjusted Average Market Price by
(ii) the sum of (a) the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time, (b) the
number of shares of Company Common Stock issuable upon
conversion of all shares of Company Series I Preferred Stock
outstanding immediately prior the Effective Time and (c) the
number of shares of Company Common Stock that would be issued
if all warrants that are not required by the Merger Agreement
to be cancelled or otherwise terminated were exercised in
accordance with their terms immediately prior to the Effective
Time.
All options, warrants and other rights to acquire common and preferred stock of
the Company that are not exercised as of the effective time of the Merger will
be cancelled or otherwise terminated, except that warrants to purchase up to
378,333 shares of Company Common Stock in the aggregate may remain outstanding
at the Effective Time if (a) the Company shall have used commercially reasonable
efforts to cause the cancellation or other termination of such warrants and (b)
only shares of Qwest Common Stock (and not equity securities of the surviving
corporation in the Merger or any other person) shall be issuable upon exercise
of such warrants after the Effective Time.
Page 10 of 18 Pages
<PAGE>
Qwest will, promptly following the Cash Consideration Date,
pay to each holder of Company Common Stock and Company Series I Preferred Stock
whose shares are converted into the right to receive, at the Effective Time, the
Qwest Common Stock, an amount equal to the sum of (1) the Cash Consideration and
(2) an amount equal to 7% per annum of the Cash Consideration from the date of
the closing of the Merger (the "CLOSING DATE") to, but not including, the date
of such payment, for each such share of Company Common Stock.
For the purposes of the Merger Agreement, the following terms
have the meanings assigned to them below:
"ACQUISITION VALUE" means the amount by which (1) $28,500,000 exceeds
(2) the sum of the aggregate amount paid and payable by the Company as
of the Effective Date pursuant to (A) paragraph A.14.1 of Attachment A
to the Resale Solutions Switched Services Agreement dated December 1996
between the Company and Sprint Communications Company L.P. with respect
to the difference between the Company's Actual Net Usage (as defined
therein) and $12,000,000 during months 1-12 of the term of such
agreement and (B) Section 3 of the Carrier Agreement between the
Company and MCI Telecommunications Corporation with respect to the
difference between the Company's Usage Charges (as defined therein) and
its Annual Commitment (as defined therein) during the term of such
agreement.
"AGGREGATE NUMBER" means the sum of (a) the number of shares of Company
Common Stock outstanding immediately prior to the Effective Time, (b)
the number of shares of Company Common Stock issuable upon conversion
of all shares of Company Series I Preferred Stock outstanding
immediately prior to the Effective Time and (c) the number of shares of
Company Common Stock that would be issued if all warrants that are not
cancelled or otherwise terminated in accordance with Section 7.1(j) of
the Merger Agreement were exercised in accordance with their terms
immediately prior to the Effective Time.
Page 11 of 18 Pages
<PAGE>
"AVERAGE MARKET PRICE" per share of any class of stock on any date
means the average of the daily closing prices of the shares of such
stock for the fifteen (15) consecutive trading days commencing twenty
(20) trading days before such date.
"CASH CONSIDERATION" means an amount equal to the quotient obtained by
dividing (1) (A) $4,000,000 minus (B) the LDDS Liability plus (C) any
amounts recovered by any of Qwest and its subsidiaries on or before the
Cash Consideration Date under the Van Essen Indemnification and Hold
Harmless Agreement (as defined in the Merger Agreement) (net of all
out-of-pocket costs, fees and expenses, including, without limitation,
the fees and disbursements of counsel and the expenses of litigation,
incurred in connection with collecting such amounts, in each case to
the extent not reimbursed pursuant to the Van Essen Indemnification and
Hold Harmless Agreement) by (2) the Aggregate Number; PROVIDED that, if
there has not occurred a settlement or other final, nonappealable
resolution of the litigation styled LDDS/WORLDCOM, INC. AND DIAL-NET,
INC. v. AUTOMATED COMMUNICATION, INC. AND JUDY VAN ESSEN KENYON, C.A.
No. 3:93-CV-463 (WS) (U.S.D.C. S.D. Miss) (the "LDDS LITIGATION"), on
or prior to the Cash Consideration Date, the Cash Consideration shall
be an amount equal to zero dollars ($0).
"CASH CONSIDERATION DATE" means the date that is the earlier of (1) the
third anniversary of the Closing Date and (2) the date as of which
Qwest shall have determined, in the exercise of its reasonable judgment
and after having exercised commercially reasonable efforts to obtain
recovery under the Van Essen Indemnification and Hold Harmless
Agreement, that it is not reasonably likely in the circumstances that
Qwest and its Subsidiaries shall recover substantial additional amounts
under such agreement on or before the third anniversary of the Closing
Date (net of all out-of-pocket costs, fees and expenses, including,
without limitation, the fees and disbursements of counsel and the
expenses of litigation, incurred in connection with collecting such
amounts, in each case to the extent not reimbursed or likely to be
reimbursed pursuant to the Van Essen Indemnification and Hold Harmless
Agreement on or before the third anniversary of the Closing Date);
PROVIDED that in no event shall any of Qwest and its Subsidiaries be
required to exercise more than commercially reasonable efforts with
respect to such recovery.
Page 12 of 18 Pages
<PAGE>
"EFFECTIVE TIME ADJUSTED AVERAGE MARKET PRICE" means (i) the Average
Market Price per share of Qwest Common Stock at the Effective Time if
such Average Market Price is equal to or greater than $52.50 and equal
to or less than $67.50, (ii) $52.50 if the Average Market Price per
share of Qwest Common Stock at the Effective Time is equal to or
greater than $47.50 and less than $52.50, (iii) $67.50 if the Average
Market Price per share of Qwest Common Stock at the Effective Time is
equal to or less than $72.50 and greater than $67.50, (iv) the Average
Market Price per share of Qwest Common Stock at the Effective Time plus
fifty percent (50%) of the amount such Average Market Price is less
than $47.50 if such Average Market Price at the Effective Time is less
than $47.50, or (v) the Average Market Price per share of Qwest Common
Stock at the Effective Time less fifty percent (50%) of the amount such
Average Market Price is greater than $72.50 if such Average Market
Price at the Effective Time is greater than $72.50.
"LDDS LIABILITY" means the aggregate amount of any Loss (as defined in
the Merger Agreement) of any of Qwest and its Subsidiaries in
connection with, arising from or related to the LDDS Litigation,
including, without limitation, any damages or any fees, expenses or
other disbursements of counsel.
The Merger Agreement also provides for agreements by
stockholders (collectively, the "PRINCIPAL STOCKHOLDERS") beneficially owning
7,967,057 shares of Company Common Stock, or approximately 22.22% of the
outstanding shares of Company Common Stock as of December 31, 1997, and all
outstanding shares of Company Series I Preferred Stock to enter into the Voting
Agreements, substantially on the terms set forth below.
Page 13 of 18 Pages
<PAGE>
The Board of Directors of the Company has by resolution (the
"BOARD APPROVAL") (a) determined that the Merger and the other Transactions
contemplated by the Merger Agreement (collectively, the "TRANSACTIONS"), taken
as a whole, are in the best interests of the Company and its stockholders, (b)
approved the Certificate Amendment, the Merger Agreement and the Merger, (c)
approved the other agreements contemplated by the Merger Agreement and the other
Transactions and (d) recommended that the stockholders of the Company approve
the Certificate Amendment, the Merger Agreement and the Merger. J.C. Bradford &
Co., L.L.C. delivered to the Board of Directors of the Company its written
opinion to the effect that, as of January 6, 1998, the Merger Consideration (as
defined in the Merger Agreement) to be received by the holders of Company Common
Stock and Company Series I Preferred Stock in the Merger is fair to such
stockholders from a financial point of view.
The Merger Agreement contains customary representations,
warranties, covenants and agreements of the parties and (a) covenants of the
Company and Qwest to prepare a proxy statement and registration statement,
respectively, with respect to the approval of the Certificate Amendment, the
Merger Agreement and the Merger, and (b) covenants of the Company (1) to call
and convene the Company Stockholders Meeting (as defined in the Merger
Agreement) to consider the approval of the Certificate Amendment, the Merger
Agreement and the Merger and (2) not to solicit, negotiate, recommend or accept
proposals with respect to Business Combination Transactions (as defined in the
Merger Agreement) or enter into Business Combination Transactions.
The Merger Agreement contains customary conditions to the
obligations of the parties to effect the Merger, including (1) the approval of
the Certificate Amendment, the Merger Agreement and the Merger by holders of a
majority of the outstanding shares of Company Common Stock and holders of a
majority of the outstanding shares of Company Series I Preferred Stock, voting
together as a class, and by holders of a majority of the outstanding shares of
Company Series I Preferred Stock, voting separately as a class, (2) receipt of
all necessary regulatory approvals, including clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (3) the
delivery to the Company of an opinion of the independent auditors of the Company
to the effect that the Merger will qualify for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and (4) the execution and delivery of certain other
documents relating to the Merger.
Page 14 of 18 Pages
<PAGE>
The Merger Agreement provides for the closing of the Merger to
occur on the later of (a) the first business day following the day on which the
last to be satisfied or waived of the conditions precedent to the obligations of
the parties under the Merger Agreement shall have been satisfied or waived, as
the case may be, and (b) such other time as the parties may agree. The parties
expect the closing of the Merger to occur in the second quarter of 1998.
The Merger Agreement permits each of the parties to terminate
the parties' respective obligations to effect the Merger at any time after May
31, 1998 and permits one party or both parties, as the case may be, to terminate
such obligations upon the occurrence of certain events, including (a) the breach
by a party of its representations, warranties, covenants and agreements in the
Merger Agreement, (b) the occurrence of a circumstance or event that constitutes
either (1) a Material Adverse Effect (as defined in the Merger Agreement) (other
than an Event of Default under the Credit Agreement) with respect to the Company
or (2) an Event of Default under the Credit Agreement (as each such term is
defined in the Merger Agreement) and the debt thereunder shall become due and
payable or the Lender thereunder shall have exercised any rights or remedies in
connection therewith, (c) the failure of the stockholders of the Company to
approve the Certificate Amendment, the Merger Agreement and the Merger, (d) in
general, the authorization, recommendation or proposal by the Board of Directors
of the Company of (or the public announcement of its intention to authorize,
recommend or propose) an agreement with respect to a Business Combination
Transaction with a person other than Qwest or Qwest Subsidiary, the
recommendation by the Board that the stockholders of the Company accept or
approve any such Business Combination Transaction or the failure by the Board to
timely publicly confirm the Board Approval in response to a tender offer or
exchange offer for the Company Common Stock and (e) the occurrence of a Business
Combination Transaction (other than the Transactions).
Page 15 of 18 Pages
<PAGE>
The Merger Agreement provides for the payment of liquidated
damages of $100,000 by a party to the other party or parties, as the case may
be, under certain circumstances upon or following the termination of the
parties' obligations to effect the Merger, and the payment of $3,000,000 under
certain circumstances by the Company to Qwest and Qwest Subsidiary if a Business
Combination Transaction (other than the Transactions) occurs on or before
January 5, 1999.
Contemporaneously with the execution of the Merger Agreement,
Qwest entered into voting agreements and proxies (each such agreement and proxy,
a "VOTING AGREEMENT") with certain Principal Stockholders beneficially owning
7,967,057 shares of Company Common Stock in the aggregate and, as of December
31, 1997, 39,500 shares of Company Series I Preferred Stock in the aggregate,
which shares constitute (a) approximately 22.22% of all outstanding shares of
Company Common Stock as of December 31, 1997, after giving effect to the
conversion of the shares of Company Series I Preferred Stock Units shares of
Company Common Stock contemplated by the Merger Agreement, (b) all outstanding
shares of Company Series I Preferred Stock as of December 31, 1997 and (c) a
combined voting power equal to 23.82% of the voting power of the outstanding
shares of Company Common Stock and the outstanding shares of Company Series I
Preferred Stock, taken together as a single class, in each case as of December
31, 1997. The form of the Voting Agreements is attached as Exhibit A to the
Merger Agreement and is incorporated by reference herein. The following
description of the Voting Agreements is qualified by reference to Exhibit A to
the Merger Agreement incorporated herein by reference.
The Voting Agreement with each Principal Stockholder provides
for, among other things, (a) the agreement of such Principal Stockholder to
cause all shares of Company Common Stock or Company Series I Preferred Stock, as
the case may be, beneficially owned by such Principal Stockholder as of the date
of the Merger Agreement to be counted for purposes of determining the existence
of a quorum at the Company Stockholders Meeting, to cause all such shares to be
voted against any action or agreement that, in the case of Voting Agreements
with Principal Stockholders only holding shares of Company Common Stock, would
result in a breach of the Merger Agreement, impede or delay the conclusion of
the Transactions or materially reduce the benefits of the Transactions to Qwest
or Qwest Subsidiary and in the case of each Voting Agreement, to cause all such
shares to be voted to approve the Certificate Amendment, the Merger Agreement
and the Merger and against any Business Combination Transaction (other than the
Transactions) and (b) grant to Qwest and Qwest Subsidiary of an irrevocable
proxy in connection therewith. Each Principal Stockholder has agreed in its
Voting Agreement not to transfer any shares of Company Common Stock or Company
Series I Preferred Stock, as the case may be, subject to the Voting Agreement,
except that the Principal Stockholder beneficially owning all outstanding shares
of Company Series I Preferred Stock may convert such shares into shares of
Company Common Stock, which shares of Company Common Stock would not be subject
to the related Voting Agreement. Each Voting Agreement will terminate the day
following the termination date under the Merger Agreement.
Page 16 of 18 Pages
<PAGE>
Qwest cautions that the Press Release describing the Merger
contains forward-looking statements that include, among others, statements
concerning Qwest's plans to complete a 16,000 route mile coast-to-coast,
technologically advanced, fiber optic telecommunications network (the "QWEST
NETWORK"), expectations as to funding its capital requirements, anticipated
expansion of carrier and commercial services and other statements of
expectations, beliefs, future plans and strategies, anticipated developments and
other matters that are not historical facts. Qwest cautions that these forward-
looking statements are subject to risks and uncertainties that could cause
actual events or results to differ materially from those expressed or implied by
the statements. The most important factors that could prevent Qwest from
achieving its stated goals include, but are not limited to, failure by Qwest to
(i) manage effectively and cost efficiently the construction of the route
segments, (ii) enter into additional customer contracts to sell dark fiber or
provide high volume capacity and otherwise expand its telecommunications
customer base on the on the QWEST Network and (iii) obtain additional
rights-of-way and maintain all necessary rights-of-way.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The Reporting Persons may be deemed to share the power,
pursuant to the Voting Agreements, to vote 7,967,057 shares of Company Common
Stock in the aggregate and 39,500 shares of Company Series I Preferred Stock in
the aggregate, which shares constitute (a) approximately 22.22% of all
outstanding shares of Company Common Stock as of December 31, 1997, after giving
effect to the conversion of the shares of Company Series I Preferred Stock Units
shares of Company Common Stock contemplated by the Merger Agreement, (b) all
outstanding shares of Company Series I Preferred Stock as of December 31, 1997
and (c) a combined voting power equal to 23.82% of the voting power of the
outstanding shares of Company Common Stock and the outstanding shares of Company
Series I Preferred Stock, taken together as a single class, in each case as of
December 31, 1997.
Qwest intends to acquire control over the Company pursuant to
the Merger Agreement and the Voting Agreements. If the Merger is effected, Qwest
will acquire all the outstanding shares of capital stock of the Company.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF ISSUER
Reference is made to Item 4 above and the exhibits
incorporated herein by reference for a description of the Merger Agreement the
Voting Agreements.
Page 17 of 18 Pages
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Schedule A Additional Information Required by Item 2
of Schedule 13D.
Exhibit 1 Agreement and Plan of Merger dated as of December 31,
1997 among Phoenix Network, Inc., Qwest
Communications International Inc. and Qwest 1997-5
Acquisition Corp.(1)
Exhibit 2 Press release of Qwest Communications International
Inc. and Phoenix Network, Inc. dated January 8,
1998.(2)
- --------
(1) Filed as Exhibit 99.2 to the Current Report on Form 8-K of Phoenix Network,
Inc. dated January 8, 1998 and filed with the Commission on January 8, 1998,
and incorporated herein by reference.
(2) Filed as Exhibit 99.1 to the Current Report on Form 8-K of Phoenix Network,
Inc. dated January 8, 1998 and filed with the Commission on January 8, 1998,
and incorporated herein by reference.
Page 18 of 18 Pages
<PAGE>
Signature
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 12, 1998
Date
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Robert S. Woodruff
-----------------------------------------
Robert S. Woodruff
Executive Vice President - Finance,
Chief Financial Officer and
Treasurer
S-1
<PAGE>
Signature
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 12, 1998
Date
QWEST 1997-5 ACQUISITION CORP.
By: /s/ Robert S. Woodruff
---------------------------
Robert S. Woodruff
Treasurer
S-2
<PAGE>
Signature
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 12, 1998
Date
ANSCHUTZ COMPANY
By: /s/ Philip F. Anschutz
------------------------
Philip F. Anschutz
Chairman and
Chief Executive Officer
ANSCHUTZ FAMILY INVESTMENT COMPANY LLC
By: ANSCHUTZ COMPANY,
its Manager
By: /s/ Philip F. Anschutz
-------------------------
Philip F. Anschutz
Chairman and
Chief Executive Officer
S-3
<PAGE>
Signature
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 12, 1998
Date
By:/s/ Philip F. Anschutz
-------------------------
Philip F. Anschutz
S-4
<PAGE>
EXHIBIT INDEX
-------------
Schedule A Additional Information Required by Item 2 of Schedule
13D.
Exhibit 1 Agreement and Plan of Merger dated as of December 31,
1997 among Phoenix Network, Inc., Qwest
Communications International Inc. and Qwest 1997-5
Acquisition Corp.(1)
Exhibit 2 Press release of Qwest Communications International
Inc. and Phoenix Network, Inc. dated January 8,
1998.(2)
- --------
(1) Filed as Exhibit 99.2 to the Current Report on Form 8-K of Phoenix Network,
Inc. dated January 8, 1998 and filed with the Commission on January 8, 1998,
and incorporated herein by reference.
(2) Filed as Exhibit 99.1 to the Current Report on Form 8-K of Phoenix Network,
Inc. dated as of January 8, 1998 and filed with the Commission on January 8,
1998, and incorporated herein by reference.
Ex. - 1
<PAGE>
SCHEDULE A
Additional information required by Item 2 of Schedule 13D.
1. QWEST COMMUNICATIONS INTERNATIONAL INC. Set forth below is the name and
business address of each executive officer or director of Qwest. Each of such
persons is a citizen of the United States of America.
<TABLE>
<CAPTION>
DIRECTORS
Name Principal Occupation/Title Address
- ---- -------------------------- -------
<S> <C> <C>
Philip F. Anschutz Chairman, The Anschutz Corporation
Qwest Communications 555 17th Street
International Inc. Denver, CO 80202
Chairman,
Anschutz Company and The
Anschutz Corporation
Joseph P. Nacchio President and CEO, Qwest Communications
Qwest Communications International Inc.
International Inc. 555 17th Street
Denver, CO 80202
Robert S. Woodruff Executive Vice President - Qwest Communications
Finance, CFO and Treasurer, International Inc.
Qwest Communications 555 17th Street
International, Inc. Denver, CO 80202
Jordan L. Haines Director, 75-125 Huron Drive
Qwest Communications Indian Wells, CA 92210
International Inc.
Cannon Y. Harvey President, The Anschutz Corporation
Anschutz Company and The 555 17th Street
Anschutz Corporation Denver, CO 80202
Richard T. Liebhaber Director, 1100 Chain Bridge Road
Qwest Communications McLean, VA 22101-2213
International Inc.
Douglas L. Polson Vice President - Finance, The Anschutz Corporation
Anschutz Company and The 555 17th Street
Anschutz Corporation Denver, CO 80202
Craig D. Slater Vice President - Acquisitions The Anschutz Corporation
and Investments, 555 17th Street
Anschutz Company and The Denver, CO 80202
Anschutz Corporation
W. Thomas Stephens President and Chief 3333 E. Platte Avenue
Executive Officer, Littleton, CO 80121
MacMillan Bloedel Ltd.
</TABLE>
Sched. A - 1
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
Name Principal Occupation/Title Address
- ---- -------------------------- -------
<S> <C> <C>
Richard L. Smith Vice President and Chief Qwest Communications
Financial Officer International Inc.
555 17th Street
Denver, CO 80202
Anthony J. Brodman Senior Vice President - Qwest Communications
Strategy and Planning, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
George M. Casey Senior Vice President - Qwest Communications
Carrier Markets, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
Stephen M. Jacobson Senior Vice President - Qwest Communications
Consumer Markets, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
A. Dean Wandry Senior Vice President - Qwest Communications
New Business Development, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
Nayel Shafei Executive Vice President - Qwest Communications
Product Development, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
August B. Turturro Senior Vice President - Qwest Communications
Network Construction, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
Marc B. Weisberg Senior Vice President - Qwest Communications
Corporate Development International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
Larry Seese Executive Vice President, Qwest Communications
Network Engineering International Inc.
Operations, 555 17th Street
Qwest Communications Denver, CO 80202
Corporation
</TABLE>
Sched. A - 2
<PAGE>
<TABLE>
<CAPTION>
Name Principal Occupation/Title Address
- ---- -------------------------- -------
<S> <C> <C>
Brij Khandelwal Executive Vice President Qwest Communications
and Chief Information International Inc.
Officer, 555 17th Street
Qwest Communications Denver, CO 80202
Corporation
Lewis O. Willis President of Business Qwest Communications
Markets, International Inc.
Qwest Communications 555 17th Street
Corporation Denver, CO 80202
Reynaldo V. Ortiz Senior Vice President and Qwest Communications
Managing Director, International Inc.
International, 555 17th Street
Qwest Communications Denver, CO 80202
Corporation
</TABLE>
2. QWEST SUBSIDIARY. Set forth below is the name and business address of each
executive officer or director of Qwest Subsidiary. Each of such persons is a
citizen of the United States of America.
DIRECTORS
Name Principal Occupation/Title Address
- ---- -------------------------- -------
Joseph P. Nacchio President and CEO, Qwest Communications
Qwest Communications International Inc.
International Inc. and 555 17th Street
Qwest Communications Denver, CO 80202
Corporation
Robert S. Woodruff Executive Vice President - Qwest Communications
Finance, CFO and International Inc.
Treasurer, 555 17th Street
Qwest Communications Denver, CO 80202
International Inc. and
Qwest Communications
Corporation
Sched. A - 3
<PAGE>
EXECUTIVE OFFICERS
Name Principal Occupation/Title Address
- ---- -------------------------- -------
Joseph P. Nacchio President Qwest Communications
International Inc.
555 17th Street
Denver, CO 80202
Marc B. Weisberg Vice President Qwest Communications
International Inc.
555 17th Street
Denver, CO 80202
Joseph T. Garrity Secretary Qwest Communications
International Inc.
555 17th Street
Denver, CO 80202
Robert S. Woodruff Treasurer Qwest Communications
International Inc.
555 17th Street
Denver, CO 80202
3. ANSCHUTZ COMPANY. Set forth below is the name and business address of each
executive officer or director of Anschutz Company. Each of such persons is a
citizen of the United States of America.
DIRECTORS
Name Principal Occupation/Title Address
- ---- -------------------------- -------
Philip F. Anschutz Chairman The Anschutz Corporation
555 17th Street
Denver, CO 80202
Cannon Y. Harvey President The Anschutz Corporation
555 17th Street
Denver, CO 80202
Douglas L. Polson Vice President - Finance The Anschutz Corporation
555 17th Street
Denver, CO 80202
Miles A. Williams Executive Vice President The Anschutz Corporation
555 17th Street
Denver, CO 80202
Sched. A - 4
<PAGE>
EXECUTIVE OFFICERS
Name Principal Occupation/Title Address
- ---- -------------------------- -------
Richard M. Jones Vice President, General The Anschutz Corporation
Counsel and Assistant 555 17th Street
Secretary Denver, CO 80202
Craig D. Slater Vice President The Anschutz Corporation
555 17th Street
Denver, CO 80202
Lynn T. Wood Secretary The Anschutz Corporation
555 17th Street
Denver, CO 80202
Thomas G. Kundert Treasurer The Anschutz Corporation
555 17th Street
Denver, CO 80202
Sched. A - 5
