SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Preferred Networks, Inc.
(Name of Issuer)
Common Stock, par value $.0001 per share
(Title of Class of Securities)
73990510
(CUSIP Number)
Thomas R. Stephens, Esq.
Bartlit Beck Herman Palenchar & Scott
511 Sixteenth Street Suite 700
Denver, Colorado 80202
(303) 592-3100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 17, 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.
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.
*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).
(Continued on following page(s))
Page 1 of 10 Pages
<PAGE>
CUSIP No. 73990510 13D Page 2 of 10 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PNC Capital Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,877,115
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
9 SOLE DISPOSITIVE POWER
EACH
REPORTING 1,877,115
10 SHARED DISPOSITIVE POWER
PERSON
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,877,115
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ------------------------------------ ------------------------------------------
CUSIP No. 73990510 13D Page 3 of 10 Pages
-----------
===============================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PNC Holding Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRE
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,877,115
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
9 SOLE DISPOSITIVE POWER
EACH
REPORTING 1,877,115
10 SHARED DISPOSITIVE POWER
PERSON
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,877,115
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 73990510 13D Page 4 of 10 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PNC Bank Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,877,115
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
9 SOLE DISPOSITIVE POWER
EACH
REPORTING 1,877,115
10 SHARED DISPOSITIVE POWER
PERSON
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,877,115
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 10 of 10 Pages
Introductory Statement
This amended statement on Schedule 13D relates to the Common
Stock, no par value (the "Shares"), of Preferred Networks, Inc., a Georgia
corporation (the "Company"). Items 3, 4, 5, 6 and 7 of this statement,
previously filed by PNC Capital Corp., a Delaware corporation ("PNCCC"), PNC
Holding Corp., a Delaware corporation ("PNCHC") and PNC Bank Corp., a
Pennsylvania corporation ("PNCBC") (collectively the "Reporting Persons"), by
virtue of the relationships described previously in this statement, is hereby
amended as set forth below.
Item 3. Source and Amount of Funds or Other Consideration.
No change except for the addition of the following:
The total amount of funds required by PNCCC to acquire the
shares of the Class B Redeemable Preferred Stock (the "Class B Shares") and the
Company's warrants to acquire common stock (the "1998 Warrants") described in
Item 5(c) was $232,273.50.
Such funds were provided by PNCCC's capital available for investment.
Item 4. Purpose of Transaction.
No change except for the addition of the following:
PNCCC acquired the Class B Shares and 1998 Warrants reported
in Item 5(c) for investment only. Depending upon their evaluation of the
Company's investments and prospects, and upon future developments (including,
but not limited to, market for the Class B Shares and 1998 Warrants, the
effective yield on the Class B Shares, availability of funds, alternative uses
of funds, and money, stock market and general economic conditions), each of the
Reporting Persons may from time to time purchase Class B Shares and/or 1998
Warrants, dispose of all or a portion of the Class B Shares and/or 1998 Warrants
that it holds, or cease buying or selling Class B Shares and/or 1998 Warrants.
Any such additional purchases or sales of the Class B Shares and/or 1998
Warrants may be in open market or privately-negotiated transactions or
otherwise.
On March 17, 1998, PNCCC entered into a Class B Redeemable
Preferred Stock Purchase Agreement (the "Class B Purchase Agreement") with the
Company and certain other investors pursuant to which PNCCC acquired, for an
aggregate purchase price of $232,273.50, 154,849 Class B Shares, and 391,032
1998 Warrants.
The Class B Shares are entitled to a liquidation preference of
$1.50 per share plus accrued dividends. Dividends on the Class B Shares will
accrue on the liquidation preference at the rate of 15% per annum, compounded
annually, in preference to any dividends on the Shares and any other class
ranking junior to the Class B Shares. The Class B Shares will be entitled to one
vote per share and will be entitled to vote together with the common stock on
matters submitted to a vote of the Company's stockholders. In addition, the
Class B Shares will be entitled to a class vote on certain matters, including
without limitation repurchases of common stock, material changes in the
Company's line of business, entering into any merger, consolidation or
amalgamation, sale of all or substantially all of the Company's assets,
acquisitions of more than $5,000,000, and incurring certain indebtedness. The
Class B Shares are redeemable at any time by the Company at a price equal to
$1.50 plus accrued dividends, and each holder of Class B Shares may require that
its Class B Shares be redeemed at any time after March 17, 2003 or earlier in
certain circumstances. The holders of Class B Shares are entitled to preemptive
rights in connection with any new issuance of equity securities by the Company
in a private placement. In addition, the holders of Class B Shares are entitled
to elect one director.
Each 1998 Warrant permits a holder to acquire, at any time
during the five year period commencing on March 17, 1998, one Share for an
exercise price of $1.50 per Share, subject to adjustment as provided in the form
of the 1998 Warrant. Payment of the exercise price may be made in cash, debt or
equity securities of the Company, or by withholding from the Shares otherwise to
be delivered upon exercise a number of Shares which have a value equal to the
exercise price. Under some circumstances the holders of the 1998 Warrants may be
required to exercise the 1998 Warrants prior to their expiration.
Pursuant to the Class B Purchase Agreement, PNCCC and the
Company and certain other stockholders of the Company amended the Registration
Rights Agreement dated as of June 21, 1995, among such persons, as amended (the
"1998 Registration Rights Amendment"), pursuant to which the holders of 1998
Warrants will have the right to exercise certain demand and piggyback
registration rights with respect to, and, subject to certain restrictions, the
Company will be required to register, the Shares obtainable upon exercise of the
1998 Warrants.
Pursuant to the Class B Purchase Agreement, the Company, among
other things, (i) made certain representations and warranties to the investors
acquiring Class B Shares and 1998 Warrants, (ii) agreed to provide such
investors with certain inspection and information rights, and (iii) agreed to
reimburse such investors for certain expenses.
The foregoing summaries of the Class B Purchase Agreement, the
rights and preferences of the Class B Shares, the terms of the 1998 Warrants and
the 1998 Registration Rights Amendment are qualified in their entirety by
reference to the Class B Purchase Agreement attached hereto as Exhibit 9, the
rights and preferences of the Class B Shares attached hereto as Exhibit 10, the
form of the 1998 Warrant attached hereto as Exhibit 11, and the 1998
Registration Rights Amendment attached hereto as Exhibit 12, respectively.
Except as described in this Item 4, none of the Reporting
Persons nor any of the PNC Directors and Officers has formulated any plans or
proposals which relate to or would result in any matter required to be disclosed
in response to paragraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
No change except for the addition of the following:
(a) PNCCC is the direct beneficial owner of 416,997 Shares,
1,303,333 warrants issued in 1997 and 156,785 1998 Warrants (collectively, the
"Warrants"), or approximately 10.6% of the sum of (i) the 16,270,028 Shares
deemed outstanding as of March 17, 1998, according to information received from
the Company, plus (ii) such Warrants. By virtue of the relationships previously
reported in this Statement, PNCHC and PNCBC may be deemed to have indirect
beneficial ownership of the Shares and Warrants directly beneficially owned by
PNCCC.
(b) PNCCC has the direct power to direct the disposition of
and vote the Shares and Warrants held by it. By virtue of the relationships
previously described in this Statement, PNCHC and PNCBC may be deemed to have
the indirect power to vote and direct the disposition of the Shares and Warrants
held by PNCCC.
(c) On March 17, 1998, PNCCC acquired the Class B Shares and
1998 Warrants described in Item 3 of this Statement in a privately negotiated
transaction with the Company for aggregate consideration of $232,273.50.
Except as set forth above, none of the Reporting Persons or
the PNC Directors and Officers have effected any transaction in the Shares
during the past 60 days.
(d) PNCCC has the right to receive and the power to direct the
receipt of dividends from, and proceeds from the sale of, the Shares and
Warrants held by it, and, by virtue of the relationships previously reported in
this Statement, PNCHC and PNCCB has the power to direct receipt of dividends
from, and the proceeds from the sale of, the Shares and Warrants held by PNCCC.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
No change except for the addition of the following:
The information included under Item 4 of this statement on
Schedule 13D in connection with the Class B Purchase Agreement, the Class B
Shares, the 1998 Warrant and the 1998 Registration Rights Amendment is hereby
incorporated in its entirety by this reference.
Other than set forth above, none of the Reporting Persons has
any contract, arrangement, understanding or relationship (legal or otherwise)
with any person with respect to securities of the Company, including, but not
limited to, transfer or voting of any such securities, finder's fees, joint
ventures, loans or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
No change except the addition of the following:
Exhibit 9. Class B Redeemable Preferred Stock Purchase
Agreement dated as of March 17, 1998 among Alta Communications
IV, Alta Comm S By S, LLC, Centennial Fund IV, L.P., Fleet
Equity Partners VI, L.P., Fleet Venture Resources, Inc.,
Saugatuck Capital Company Limited Partnership III, PNC Capital
Corp., Primus Capital Fund III Limited Partnership, certain
other investors and Preferred Networks, Inc., incorporated by
reference to Exhibit 10 to amendment number 1 to the Schedule
13D filed by Centennial Fund IV, L.P. in connection with the
common stock of Preferred Networks, Inc. on March 24, 1998.
Exhibit 10. Articles of Amendment setting forth the rights and
preferences of the Class B Redeemable Preferred Stock of
Preferred Networks, Inc., incorporated by reference to Exhibit
11 to amendment number 1 to the Schedule 13D filed by
Centennial Fund IV, L.P. in connection with the common stock
of Preferred Networks, Inc. on March 24, 1998.
Exhibit 11. Form of Common Stock Purchase Warrant to be issued
pursuant to the Class B Redeemable Preferred Stock Purchase
Agreement dated as of March 17, 1998 among Alta Communications
IV, Alta Comm S By S, LLC, Centennial Fund IV, L.P., Fleet
Equity Partners VI, L.P., Fleet Venture Resources, Inc.,
Saugatuck Capital Company Limited Partnership III, PNC Capital
Corp., Primus Capital Fund III Limited Partnership, certain
other investors and Preferred Networks, Inc., incorporated by
reference to Exhibit 12 to amendment number 1 to the Schedule
13D filed by Centennial Fund IV, L.P. in connection with the
common stock of Preferred Networks, Inc. on March 24, 1998.
Exhibit 12. Form of Amendment to Registration Rights Agreement
dated June 21, 1995 among Alta Communications IV, Alta Comm S
By S, LLC, Centennial Fund IV, L.P., Fleet Equity Partners VI,
L.P., Fleet Venture Resources, Inc., Chisholm Partners II,
L.P., Saugatuck Capital Company Limited Partnership III, PNC
Capital Corp., Primus Capital Fund III limited partnership,
Preferred Networks, Inc., and certain other persons,
incorporated by reference to Exhibit 13 to amendment number 1
to the Schedule 13D filed by Centennial Fund IV, L.P. in
connection with the common stock of Preferred Networks, Inc.
on March 24, 1998.
<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.
Date: March 24, 1998
David McL. Hillman, Executive Vice President
and Principal of PNC Capital Corp.
Date: March 24, 1998
Robert L. Haunschild, Chairman and President
of PNC Holding Corp, and Senior Vice
President and Chief Financial Officer of PNC
Bank Corp.
