<PAGE>
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
Date of Report (Date of earliest event reported): September 7, 1999
PRODIGY COMMUNICATIONS CORPORATION
____________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE
__________________________________________________
(State or other jurisdiction of incorporation)
000-25333 04-3323363
__________________________ _________________________________
(Commission File Number) (IRS Employer Identification No.)
44 SOUTH BROADWAY, WHITE PLAINS, NY 10601
______________________________________________________
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code): (914) 448-8000
NA
_______________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On September 7, 1999, Prodigy Communications Corporation ("Prodigy")
entered into a definitive agreement to acquire the BizOnThe.Net web hosting
business and subscribers of U.S. Republic Communications, Inc. ("USR"), an
indirect majority-owned subsidiary of VarTec Telecom, Inc. ("VarTec"). The
transaction is structured as an asset purchase. The closing of the transaction
is subject to certain customary closing conditions and regulatory approvals.
The purchase price payable at the closing will consist of 1,454,545 shares
of Prodigy common stock, $11 million in cash and the repayment of a $9 million
loan from VarTec to USR. USR can elect to receive additional shares in lieu of
some or all of the $11 million cash payment, in which case the number of
additional shares to be issued will be determined based upon market value
immediately prior to the closing date.
Prodigy will also be required to issue an additional 727,272 shares into an
escrow account. Some or all of these shares will be released to U.S. Republic
at various times over the two-year period following the closing. The escrow
account will secure the indemnification obligations of USR and USR's
shareholders as well as certain post-closing adjustments.
In addition to the amounts payable at closing, in 2001 Prodigy will be
required to issue up to 727,272 shares, contingent upon the attainment by the
acquired business of specified earn-out targets.
The parties agreed to value the Prodigy stock issued in the acquisition at
$27.50 per share, other than any shares issued in lieu of the $11 million cash
payment described above. Based on the agreed valuation, and assuming the
issuance of all shares issuable pursuant to the foregoing earn-out and escrow
arrangements, the total purchase price is $100 million. The actual value of the
total purchase price is dependent upon the market price of Prodigy common stock
and the number of shares issued to USR under the foregoing earn-out and escrow
arrangements.
<PAGE>
SIGNATURE
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.
Date: September 10, 1999 PRODIGY COMMUNICATIONS CORPORATION
By: /s/ Andrea S. Hirsch
-----------------------------
Andrea S. Hirsch
Executive Vice President and
General Counsel
