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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934
Date of Report (date of earliest event reported) October 27, 1999
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Florida East Coast Industries, Inc.
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(Exact name of Registrant as specified in its charter)
Florida 2-89530 59-2349968
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(State or other jurisdiction (Commission File (IRS Employer Identification
of incorporation) Number) (Number)
One Malaga Street, St. Augustine, Florida 32084
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 904-826-2398
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ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
See the following press release dated October 27, 1999 announcing the intention
of The St. Joe Company and Florida East Coast Industries, Inc., subject to the
approval by the shareholders of Florida East Coast Industries, Inc. ("FECI") and
IRS approval, to implement a recapitalization of FECI and a spin off of St.
Joe's 54% interest in FECI to St. Joe shareholders.
The Distribution and Recapitalization Agreement between The St. Joe Company and
Florida East Coast Industries, Inc; the Shareholders Agreement between Alfred I.
duPont Testamentary Trust, Nemours Foundation and Florida East Cost Industries,
Inc., and Master Agreement between St. Joe and Gran Central Corporation will be
filed with the Company's Quarterly Report on Form 10-Q on or before November 15,
1999.
JACKSONVILLE AND ST. AUGUSTINE, FLORIDA (October 27, 1999): The St. Joe Company
(NYSE: JOE) and Florida East Coast Industries, Inc. (NYSE: FLA) announced today
that they have agreed to undertake a recapitalization of Florida East Coast to
facilitate a pro rata tax-free spin-off to St. Joe's shareholders of St. Joe's
54 percent equity interest in Florida East Coast.
As part of the recapitalization, St. Joe will exchange all of its
shares of Florida East Coast common stock for an equal number of shares of a new
class of Florida East Coast common stock. The holders of the new class of
Florida East Coast common stock will be entitled to elect 80% of the members of
the Board of Directors of Florida East Coast, but the new Florida East Coast
common stock will otherwise have substantially identical rights to the existing
common stock. The new class of Florida East Coast common stock will be
distributed pro rata to St. Joe shareholders in a tax-free distribution. St. Joe
will not retain any equity interest in Florida East Coast after the spin-off is
completed.
"The spin-off allows us to efficiently deliver significant value to our
shareholders and allows St. Joe to sharpen its focus on its real estate
businesses by transferring directly to our shareholders this valuable, but
non-core, asset," said Peter S. Rummell, chairman and CEO of St. Joe. "The
spin-off will allow St. Joe to divest itself of its Florida East Coast stock in
a tax efficient manner."
"Every aspect of this transaction is a win-win proposition for the
Florida East Coast and St. Joe shareholders," said Robert W. Anestis, chairman
and CEO of Florida East Coast. "It will allow Florida East Coast greater
flexibility to deploy strategies to build value for shareholders and customers
through our core businesses of transportation, commercial and industrial real
estate and telecommunications. With this new ownership arrangement, we will also
be free to modify our capital structure to increase shareholder value,
including, if appropriate, share repurchases and the prudent use of leverage."
At the closing of the transaction, various service agreements between
St. Joe and Gran Central Corporation, a wholly owned subsidiary of Florida East
Coast, will become effective. Under the terms of these agreements, which extend
for up to three years after the closing of the transaction, Gran Central will
retain St. Joe, acting through its affiliates St. Joe Commercial,
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Advantis and Codina Group, to continue to develop and manage certain commercial
real estate holdings of Gran Central. The terms of these agreements have also
been approved by both boards of directors, and in the judgment of the boards,
reflect arms-length terms and conditions that are commonly found in today's
marketplace.
"With these agreements, the commercial real estate arms of each
company, St. Joe Commercial and Florida East Coast's real estate division, the
Gran Central Corporation, will capitalize on a unique combination of assets and
expertise that bring to the marketplace expanded financial strength and superior
capabilities," said Rummell. "In addition, St. Joe Commercial and Gran Central
have separately agreed to form a joint venture in order to develop certain
properties they each own, and plan to seek and commence other new commercial
real estate development opportunities throughout Florida."
The recapitalization, exchange and spin-off are expected to be
completed during the second quarter of 2000 and are subject to a number of
conditions including the receipt of an Internal Revenue Service ruling
concerning the tax-free status of the proposed spin-off and the approval of the
recapitalization by a majority of the minority shareholders of Florida East
Coast. The boards of directors of The St. Joe Company and Florida East Coast
Industries have unanimously approved the transaction.
Florida East Coast was advised by Donaldson Lufkin & Jenrette
Securities Corporation. The St. Joe Company was advised by Morgan Stanley Dean
Witter.
As of September 30, 1999 St. Joe had 87,073,831 shares of common stock
issued and outstanding and owned 19,609,216 shares of Florida East Coast's
common stock, representing a 54 percent equity interest.
ABOUT THE COMPANIES
Florida East Coast Industries, a publicly held company based in St.
Augustine, Florida, conducts operations through four wholly owned subsidiaries,
Gran Central Corporation (GCC), Florida East Coast Railway Company (FECR),
International Transit, Inc.
(ITI) and FEC Telecom, Inc.
GCC develops, leases and manages over 5.0 million square feet of
office, service and warehouse space, including a number of industrial and
commercial parks in Jacksonville, Orlando and Miami, and owns approximately
18,000 acres of real estate primarily along the east coast of Florida. FECR is a
regional freight railroad with operations on 351 miles of main line track, from
Jacksonville to Miami. ITI provides truckload service, intermodal drayage and
transportation logistics and brokerage services throughout the mid-west and the
southeastern United States. FEC Telecom is based in Orlando, Florida and will
utilize and seek to expand Florida East Coast's "Florida Footprint" telecom
assets. Florida East Coast controls 12,600 fiber miles of "dark fiber" fiber
optic cable and telecommunications conduit assets comprising a 780-mile
"telecommunication loop" that will reach 12 of Florida's 15 largest population
centers and 73 percent of its total population.
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The St. Joe Company, a publicly held company based in Jacksonville,
Florida, is one of the Southeast's largest real estate operating companies. It
is engaged in community, commercial, industrial, leisure and resort development,
along with residential and commercial real estate services. St. Joe is comprised
of two real estate development arms, St. Joe Commercial and Arvida, each with a
services component. The company also has significant interests in timber.
CONFERENCE CALL
A joint St. Joe and Florida East Coast conference call has been
scheduled for today, Wednesday, October 27, 1999 at 10:00 am Eastern time. Peter
S. Rummell, chairman and CEO of St. Joe, Robert W. Anestis, chairman and CEO of
Florida East Coast, Kevin M. Twomey, president and CFO of St. Joe and Robert H.
Nazarian, executive vice president and CFO of Florida East Coast will explain
the transaction announced today and take questions.
If you wish to participate in the call, please phone 800.230.1766 (for
domestic calls from the United States) or 612.288.0329 (for international calls)
approximately ten minutes before the scheduled start time. You will be asked to
identify yourself to the operator. Approximately three hours following the call,
you may access a replay of the call by phoning 800.475.6701 (domestic) or
320.365.3844 (international) using access code 477511.
The St. Joe Company will also broadcast the conference call live over
the Internet in a listen-only format via Vcall. To participate, please visit
http://www.vcall.com/. Access will be available 20 minutes prior to the
scheduled start time. A replay of the conference call will be posted to the St.
Joe web site at http://www.joe.com approximately two hours following the call.
The replay will also be available at Vcall's web site for 30 days following the
conference call.
More information about St. Joe can be found at the web site
http://www.joe.com.
More information about Florida East Coast can be found at the web site
http://www.feci.com.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
FLORIDA EAST COAST INDUSTRIES, INC.
BY: /s/ Heidi J. Eddins
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Senior Vice President, General
Counsel & Secretary
Dated: October 27, 1999
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