SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): APRIL 20, 1994
IDB COMMUNICATIONS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-14972 93-0933098
(Commission (I.R.S. Employer
File No.) Identification No.)
10525 West Washington Boulevard, Culver City, California
(Address of Principal Executive Offices)
90232-1922
(Zip Code)
(213) 870-9000
(Registrant's Telephone Number, Including Area Code)
ITEM 5. Other Events.
On April 20, 1994, IDB Communications Group, Inc. (the
"Company" or "IDB") entered into a Letter of Intent (the "Letter
of Intent") dated as of April 20, 1994 with Peoples Telephone
Company, Inc. ("PTel"). The Letter of Intent provides that IDB
and PTel intend to enter into a definitive agreement which will
set forth the terms and conditions of a merger between IDB and
PTel (the "Merger") pursuant to which each outstanding share of
common stock, $.01 par value, of PTel will be converted into 1.1
shares of common stock, $.01 par value, of IDB. The proposed
merger is subject to satisfaction of customary conditions,
including completion of due diligence by both parties, execution
of a definitive agreement, approval by the shareholders of both
companies and certain regulatory filings, and is expected to be
completed by the end of 1994.
The description contained herein of the Letter of Intent,
PTel and the Merger, which does not purport to be complete, is
qualified in its entirety by reference to the Letter of Intent,
which is attached hereto as Exhibit 99.2.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
Exhibit
No. Description
99.1 Press Release dated April 21, 1994.
99.2 Letter of Intent dated April 20, 1994.
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, thereunto duly authorized, in the
City of Culver City, State of California, on April 22, 1994.
IDB COMMUNICATIONS GROUP, INC.
By: \s\ Edward R. Cheramy
Edward R. Cheramy
President
EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
IDB COMMUNICATIONS SIGNS LETTER OF INTENT TO MERGE WITH PEOPLES
TELEPHONE COMPANY
IDB EXPECTS COMBINATION TO BOOST EARNINGS
LOS ANGELES, CA and MIAMI, FL - APRIL 21, 1994 -- IDB
Communications Group, Inc. (NASDAQ:IDBX) and Peoples Telephone
Company, Inc. (NASDAQ:PTEL) today jointly announced they have
signed a letter of intent under which IDB will merge with
Peoples. Shareholders of the Miami-based Peoples will receive
1.1 shares of IDB Communications common stock for each share of
Peoples common stock, subject to possible adjustment based upon
IDB's stock price prior to closing. As of March 31, 1994,
Peoples Telephone has approximately 15.8 million common shares
outstanding and approximately 3.1 million common shares issuable
upon the exercise of outstanding options and warrants at an
aggregate price of approximately $23 million. The transaction
will be effected as a pooling of interests, and will not be
taxable to current Peoples shareholders. IDB Communications
expects the merger to boost its 1994 earnings per share.
Peoples has been in the public pay telephone business since 1985.
The Company has an installed base of approximately 50,000
public, inmate and cellular pay telephones located in 46 states.
During recent years Peoples has leveraged its industry expertise
to expand into related telecommunication businesses including
correctional facility telephones, cellular telephone rentals and
prepaid calling cards.
The proposed acquisition is subject to satisfaction of customary
conditions, including completion of due diligence by both
parties, execution of a definitive agreement, approval by the
shareholders of both companies and certain regulatory filings,
and is expected to be completed by the end of 1994.
Jeffrey P. Sudikoff, chairman and CEO of IDB, stated, "One of our
key goals in 1994 is to expand IDB's presence in the domestic
telecommunications marketplace. The merger with Peoples will
accomplish this objective. Jeff Hanft and his team have built
Peoples into the largest independent operator of public pay
telephones in the United States. Combined with the company's
related telecommunications services, Peoples currently generates
more than 300 million minutes of long distance traffic a year.
As a result, Peoples and IDB will have the foundation for a
highly profitable domestic public switched network."
"We fully expect this combination to have a positive impact on
1994 IDB earnings per share. By applying many of the principles
we have successfully used in acquisitions during the past few
years we expect to significantly enhance the operating strengths
of Peoples while vastly expanding our domestic marketing
capabilities," Mr. Sudikoff added.
Jeff Hanft, CEO of Peoples stated, "IDB has emerged as the most
innovative, rapidly growing telecommunications company in the
world. We at Peoples share many of the same visions and
strategic approaches of IDB's management team. We look forward
to working with IDB and believe that all of our customers,
employees and shareholders will benefit from the combination of
the two companies."
IDB Communications Group, Inc. is a global telecommunications
company that operates a domestic and international
communications network providing its customers with
international private line and long distance telephone services,
radio and television transmission services, facsimile and data
connections, mobile satellite communications capabilities and the
design and integration of satellite networks worldwide.
Peoples Telephone Company, Inc., one of the nation's leading
public communications companies, owns and operates approximately
50,000 public, inmate and cellular pay telephones in 46 states.
For the year ended December 31, 1993, the Company reported
revenues of $121.8 million, an increase of 63%, net income of
$5.3 million, an increase of 64%, and cash flow from operations
of $27.5 million, an increase of 54%, all as compared to the year
ended December 31, 1992.
EXHIBIT 99.2
IDB COMMUNICATIONS GROUP, INC.
10525 West Washington Boulevard
Culver City, California 90232
April 20, 1994
Peoples Telephone Company, Inc.
2300 N.W. 89th Place
Miami, Florida 33172
Attention: Jeffrey Hanft
Chief Executive Officer
Re: Proposed Merger of Peoples Telephone Company,
Inc. and IDB Communications Group, Inc.
Gentlemen:
This letter of intent sets forth certain non-binding
understandings and certain binding agreements between Peoples
Telephone Company, Inc. ("PTC") and IDB Communications Group,
Inc. ("IDB"), regarding a possible merger between PTC and IDB.
1. The following paragraphs in this Section 1 reflect our
mutual understanding of the matters described in them, but do not
constitute a complete statement of, or a legally binding or
enforceable agreement or commitment with respect to, the matters
described therein:
1.1 The Merger. The transaction would be effected by a merger
(the "Merger") of PTC and IDB (or a wholly owned subsidiary of
IDB) pursuant to which each outstanding share of common stock,
$.01 par value, of PTC (the "PTC Common Stock") would be
converted into 1.10 shares of common stock, $.01 par value, of
IDB (the "IDB Common Stock"); provided, however, that the maximum
aggregate market value of IDB Common Stock (calculated based on
the average of market prices during a 20 trading day period prior
to closing (the "Pre-Closing Trading Period")) required to be
issued in exchange for PTC Common Stock in connection with the
Merger (including all shares of PTC Common Stock issuable upon
conversion of outstanding options, warrants and similar rights)
shall not exceed $391 million; provided further, however, that in
the event that the per share price of IDB Common Stock
(calculated based on the average of market prices during the Pre-
Closing Trading Period) is less than $16.00 per share prior to
closing, PTC shall have the absolute right, but not the
obligation, to terminate the merger agreement and abandon the
Merger (a "Price Termination"). In the event PTC so elects to
effect a Price Termination, IDB shall promptly reimburse PTC for
all of its fees and out-of-pocket costs and expenses reasonably
incurred through the date of termination directly in connection
with considering, pursuing or consummating the definitive
transaction agreement, the Merger and the transactions
contemplated hereby and thereby (the "PTC Expenses"). Except as
otherwise provided in existing contractual arrangements providing
for or permitting the vesting and/or exercise of options or
warrants as a result of or in connection with the Merger or the
other transactions contemplated by this letter of intent, all
outstanding options and warrants to purchase PTC Common Stock
will be assumed by IDB and become exercisable for IDB Common
Stock at the same ratio as is applicable to the exchange of PTC
Common Stock for IDB Common Stock in connection with the Merger.
1.2 Definitive Agreement. IDB and PTC will promptly proceed
to negotiate and enter into a definitive transaction agreement,
containing customary and mutually satisfactory representations
and warranties, covenants, conditions and other agreements (which
terms and provisions will generally be parallel for IDB and PTC).
There will be no condition to closing relating to financing
commitments or arrangements. The parties will endeavor to
perform substantial due diligence prior to entering into the
definitive agreement, with a view to providing for as few and
limited conditions to closing of the Merger as practicable. The
form and substance of the definitive agreement must be
satisfactory to both parties.
1.3 Accounting and Tax Matters. It is intended by the
parties that the Merger, for accounting purposes, will be
accounted for as a "pooling of interests" and, for federal income
tax purposes, will qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code.
1.4 Approvals. The definitive agreement will require the
prior approval of the boards of directors of each party. The
Merger will be conditioned upon, among other customary
conditions, the requisite approval of the shareholders of both
parties and the receipt of required and material regulatory
approvals and orders.
2. Upon the execution of the counterpart to this letter by
you, the following paragraphs in this Section 2 shall constitute
the legally valid and binding agreements of each party,
enforceable against each such party in accordance with their
terms:
2.1 Access. Subject to the terms of the Confidentiality
Agreement between the parties dated March 10, 1994 (the
"Confidentiality Agreement"), and subject to any applicable
regulatory requirements, each party (and its subsidiaries) will
afford the other's employees, auditors, legal counsel, financial
advisor and other authorized representatives full access to their
respective filings (regulatory, securities, tax and other, other
than non-material filings), properties, books, contracts,
commitments, plans and records, and to such other documents,
information and data as the other may reasonably request, to
facilitate the other's ability to perform due diligence and
inspect and investigate such party's operations, business,
prospects, condition (financial and other), liabilities,
commitments and related matters. Each party will conduct this
inquiry and investigation in a reasonable manner during regular
business hours.
2.2 Reasonable Efforts. The parties will exchange
information, conduct due diligence and negotiate the possible
definitive agreement in good faith, and shall use their
reasonable efforts to arrive at a mutually acceptable definitive
agreement on the earliest practicable date.
2.3 Costs and Expenses. Except for IDB's obligation to
reimburse PTC for its PTC Expenses in the event of a Price
Termination and in certain other events resulting in a
termination of the definitive agreement and abandonment of the
Merger (which other events shall be set forth in the definitive
agreement), all fees, costs and expenses incurred in connection
with considering, pursuing or consummating the definitive
agreement, the Merger and the transactions contemplated hereby
and thereby shall be borne and paid solely by the party incurring
such fees, costs and expenses.
2.4 Public Statements. All press releases or other written
public communications of any sort announcing this letter of
intent or the agreements or transactions described herein (the
"Initial Releases") will be subject to the approval of both
parties, which approval shall not be unreasonably withheld. IDB
and PTC shall consult with each other with respect to, and
provide to each other forms of, and use all reasonable means to
mutually agree upon, any other press releases or written public
communications relating to this letter of intent or the
agreements or transactions described herein. Prior to the time,
if any, that a definitive agreement is entered into between the
parties, all public statements, releases and announcements by
either party regarding this letter of intent or the agreements or
transactions described herein shall be confined to the matters
described herein and in the Initial Releases, unless the parties,
prior to the release or issuance of any such other or different
statement, release or announcement, shall have consulted with one
another with respect to, and shall have used all reasonable
efforts to mutually agree upon, any such other or different
statement, release or announcement.
2.5 Effect of Letter. Except for the provisions of this
Section 2, this letter of intent is not intended to be, and shall
not be deemed to be, a legally binding or enforceable commitment
or agreement of any party hereto, and is not a commitment or
agreement to enter into a definitive transaction agreement
providing for the Merger. All obligations and commitments to
proceed with a transaction between the parties shall be contained
solely in a definitive transaction agreement executed and
delivered by both parties. Each of IDB and PTC agrees not to
institute or participate in any proceeding or action seeking to
establish a contrary position. This letter of intent supersedes
all prior or other agreements and understandings between the
parties with respect to the subject matter hereof, except for the
Confidentiality Agreement, which shall survive the execution and
delivery hereof. Upon the execution and delivery of a definitive
transaction agreement by both parties, this letter of intent
shall automatically and immediately terminate and become null,
void and of no further force or effect.
2.6 Term. This letter of intent, unless extended by written
agreement of both parties, shall terminate at midnight, Eastern
(Daylight) time, on Wednesday, May 25, 1994.
If you are in agreement with the terms and conditions of this
letter of intent, please so signify by signing and dating the
enclosed duplicate original of this letter of intent, and
returning it to us at the above address. Receipt of signed
counterparts by facsimile will bind the parties as if such were
fully executed originals.
Sincerely,
IDB COMMUNICATIONS GROUP, INC.
By: \s\ Edward R. Cheramy
Edward R. Cheramy
President
Accepted and Agreed:
PEOPLES TELEPHONE COMPANY, INC.
By: \s\ Jeffrey Hanft
Jeffrey Hanft
Chief Executive Officer
