SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 14, 1998
(October 13, 1998)
------------------------------------------------
Date of report (Date of earliest event reported)
Telco Systems, Inc.
------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-12622 94-2178777
-------------------- --------------------- ------------------
(State or Other Juris- (Commission File No.) (IRS Employer
diction of Incorporation) Identification No.)
68 Nahatan Street
Norwood, Massachusetts 02062
------------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(781) 551-0300
----------------------------------------------------
(Registrant's telephone number, including area code)
Item 5. Other Events.
On October 13, 1998, Telco Systems, Inc. (the "Company") and
World Access, Inc. ("World Access") announced that they had agreed in
principle to amend the Merger Agreement, dated as of June 4, 1998 (the
"Merger Agreement"), among the Company, World Access, WAXS INC., a wholly
owned subsidiary of World Access, and Tail Acquisition Corporation, a
wholly owned subsidiary of WAXS, in order to, among other things, establish
a minimum purchase price to be paid by World Access of $12.00 per Company
common share and to provide World Access with the option to pay the
purchase price using either World Access common stock or a combination of
World Access common stock and cash, subject to a minimum of 45% of the
purchase price being paid in the form of World Access common stock to
ensure tax-free treatment to the Company's stockholders in respect of the
World Access common stock they receive. The companies' agreement in
principle provides that the deadline for completing the merger contemplated
by the Merger Agreement (the "Merger") will be extended until December 31,
1998.
The value of the World Access common stock included in the
purchase price will be determined based upon the average of the last
reported sales prices of the World Access common stock during a 20
trading-day period prior to the effective time of the Merger. The
companies' agreement in principle provides that, if such average sales
price is less than $12.00, World Access will be permitted to terminate the
Merger Agreement.
The amendment to the Merger Agreement contemplated by the
agreement in principle (the "Amendment") is expected to be executed in the
near future, subject to the companies' agreement as to the form of the
Amendment and the approval of each of their Boards of Directors. Until the
execution of the Amendment, the Merger Agreement will remain unchanged and
in full force and effect in accordance with its terms.
A copy of the press release announcing the companies' agreement
in principle is attached hereto as Exhibit 99.1 and is incorporated herein
by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
Exhibit 99.1 Press Release dated October 13, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned's duly authorized signatory.
Dated: October 14, 1998
TELCO SYSTEMS, INC.
By: /s/ William J. Stuart
______________________________
Name: William J. Stuart
Title: Vice President and Chief Financial
Officer
EXHIBIT INDEX
Exhibit No. Description
Exhibit 99.1 Press Release dated October 13, 1998.
[Graphic]
News Release
SUMMARY: WORLD ACCESS, INC. AND TELCO SYSTEMS, INC.
AGREE TO AMEND MERGER AGREEMENT
FOR IMMEDIATE RELEASE
ATLANTA, GEORGIA - October 13, 1998 - World Access, Inc. (Nasdaq: WAXS) and
Telco Systems, Inc. (Nasdaq: TELC) announced today that they have agreed in
principle to amend their existing agreement to merge the two companies. The
amendment will establish a minimum purchase price to be paid by World
Access of $12.00 per Telco Systems' common share and provide World Access
the option to pay the purchase price using either World Access common stock
or a combination of World Access common stock and cash. A minimum of 45% of
the purchase price will be paid in the form of World Access common stock to
ensure tax-free treatment to Telco Systems shareholders in respect of the
World Access common stock they receive. If the value of World Access common
stock, as defined in the merger agreement, is less than $12.00 per share,
World Access will have the right to terminate the agreement.
World Access and Telco Systems have instructed their respective counsel to
prepare an amendment to the merger agreement to provide for the revised
terms. The amendment is subject to approval by the boards of directors of
both companies and is expected to be executed in the near future. The
proposed merger is also subject to the approval of the stockholders of both
companies. Definitive proxy materials are currently expected to be mailed
shortly to the stockholders of World Access and Telco Systems, and the
merger is expected to be consummated in late November.
Steven A. Odom, Chairman and Chief Executive Officer of World Access, said,
"The amendment to the merger agreement is in response to the recent decline
in trading prices of both World Access and Telco Systems' common stock.
Despite continued positive trends reported by both companies, the stock
market has established short-term market valuations for World Access and
Telco Systems that dictated an adjustment in purchase price and structure
would be required to ensure the merger is consummated. We view the merger
with Telco Systems as a key element of our long-term strategy and are
excited about the proprietary technology, advanced product offerings,
strong customer relationships and management experience that Telco Systems
will bring to World Access."
Dr. William B. Smith, President and Chief Executive Officer of Telco
Systems, said, "We are pleased by this amendment to our merger agreement
with World Access as a response to market conditions. With this agreement
for a minimum price for our shareholders removing uncertainty related to
the merger, we stand ready to continue with the integration process, which
has already uncovered a number of opportunities based on the synergy
between our two companies."
World Access, Inc. develops, manufactures and markets wireline and wireless
switching, transport and access products for the global telecommunications
markets. The Company's products allow telecommunications service providers
to build and upgrade their central office and outside plant networks in
order to provide a wide array of voice, data and video services to their
business and residential customers. World Access offers digital switches,
billing and network telemanagement systems, cellular base stations, fixed
wireless local loop systems, intelligent multiplexers, microwave and
millimeterwave radio systems and other telecommunications network products.
To support and complement its product sales, the Company also provides its
customers with a broad range of design, engineering, manufacturing,
testing, installation, repair and other value-added services. Telco
Systems' integrated access solutions - that are deployed at the network
edge - provide organizations with a flexible, cost-effective means of
transmitting voice, data, video and image traffic over public and private
networks. These products are used in a wide variety of applications by
network service providers, such as interexchange carriers, local exchange
carriers, government agencies, utilities and wireless service providers, as
well as by corporations around the world.
This press release contains forward-looking statements that involve risks
and uncertainties. Actual results, including the level of earnings of both
World Access and Telco Systems, and the success of the proposed merger may
differ from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
risks associated with acquisitions, such as difficulties in the
assimilation of operations, technologies and products of the acquired
companies, risks of entering new markets, competitive response, and a
downturn in the telecommunications industry. For a more detailed
description of the risk factors associated with World Access and Telco
Systems, please refer to the SEC filings of the respective companies.
CONTACT: World Access, Inc. Mark A. Gergel or Nancy de Jonge
(404-231-2025)
Telco Systems, Inc. William J. Stuart or Betty Rock
(781-551-0300)
###
