UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of June, 1998
TELEGLOBE INC.
(Translation of registrant's name into English)
1000, rue de La Gauchetiere ouest, Montreal, Quebec H3B 4X5 Canada
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F____ Form 40-F X
---
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes _____ No X
---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______.)
<PAGE>
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.
TELEGLOBE INC.
By: /s/ Andre Bourbonnais
---------------------
Name: Andre Bourbonnais
Title: Vice-President, Legal Affairs and
Corporate Secretary
Date: June 24, 1998
Form 27
MATERIAL CHANGE REPORT UNDER
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
ITEM 1. REPORTING ISSUER
The head office and principal office of Teleglobe Inc. is
located at 1000 de LaGrauchetiere Street West, Montreal, Quebec,
H3B 4X5.
ITEM 2. DATE OF MATERIAL CHANGE
The effective date of the material change was June 14, 1998.
ITEM 3. PRESS RELEASE
The press release issued pursuant to section 75(1) of the
Securities Act (Ontario) was issued on June 14, 1998 at Toronto,
Ontario.
ITEM 4. SUMMARY OF MATERIAL CHANGE
See press release dated June 14, 1998 attached as Schedule A.
ITEM 5. FULL DESCRIPTION OF MATERIAL CHANGE
Merger Agreement
Under the terms of an Agreement and Plan of Merger entered
into on June 14, 1998 (the "Merger Agreement"), Teleglobe Inc.
("Teleglobe"), North Merger Sub Corporation, a Delaware corporation
and a direct wholly-owned subsidiary of Teleglobe ("Merger Sub")
and Excel Communications, Inc., a Delaware corporation ("Excel")
have approved, subject to regulatory approvals, the merger of
Merger Sub with and into Excel (the "Merger") with Excel to be the
surviving corporation in such Merger.
Under the terms of the Merger Agreement, each outstanding
share of common stock, par value $0.001 per share, of Excel issued
and outstanding immediately prior to the effective time of the
Merger will be converted into the right to receive 0.885 common
share without par value of Teleglobe. As a result, (i) Teleglobe
will receive full equity ownership of the outstanding stock of the
surviving corporation, (ii) Excel stockholders will own
approximately 48.5% of the outstanding common shares of Teleglobe
and (iii) Teleglobe shareholders immediately prior to the effective
time of the Merger will own approximately 51.5% of the outstanding
common shares of Teleglobe subject to the right of BCE Inc. to
exercise at closing its option to purchase additional common shares
so as to maintain its equity ownership level at 20% in Teleglobe.
This transaction is intended to be accounted for as a pooling of
interests and will be tax-free for the companies and their
shareholders.
<PAGE>
At or prior to the effective time of the Merger, the Board of
Directors of Teleglobe will take all necessary action so that the
Board of Directors of Teleglobe shall be comprised of an equal
number of representatives designated by Teleglobe and Excel, and
independent representatives selected jointly by Teleglobe and Excel
to serve until the next annual meeting of shareholders of
Teleglobe. Following the consummation of the Merger, Mr. Charles
Sirois will continue to serve as Chairman and Chief Executive
Officer of Teleglobe and Mr. Kenny A. Troutt will become Vice
Chairman and President and Chief Operating Officer of Teleglobe
while remaining President and Chief Executive Officer of Excel.
Paolo Guidi will continue as Chief Executive Officer of Teleglobe
Communications Corporation.
Purpose of the Transaction
The purpose of the Merger is to combine Teleglobe's
intercontinental network with Excel's channels of distribution and
U.S. network in order to offer a broad array of new products and
services to homes, businesses, carriers and Internet service
providers around the world.
Conditions
Under the terms of the Merger Agreement, the obligations of
the parties to complete the amalgamation are subject to the
fulfillment or waiver of various conditions precedent including
regulatory approvals having been obtained, such as approvals under
applicable communications laws, approval under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 and approval under the
Competition Act (Canada).
Consents and Voting Agreements
Holders representing a majority of outstanding Teleglobe
common shares and Excel common stock have consented to the
transaction and committed to vote in favour of matters related to
the transaction.
Termination Fee
The Merger Agreement provides for the payment of a termination
fee of US$120 million by one of Teleglobe or Excel to the other
under certain circumstances involving the termination of the Merger
Agreement.
Option Agreements
In connection with the Merger Agreement, each of Teleglobe and
Excel has entered into an option agreement, granting to the other,
subject to regulatory approvals, the right to acquire, under
certain circumstances, up to approximately 19.9% of its outstanding
common shares. This option is at a cash purchase price equal to
US$27.563 per share of Excel and Cdn$25.812 per share of Teleglobe.
The option will become exercisable by Teleglobe or Excel in
connection with the termination of the Merger Agreement in
circumstances where the termination fee is payable by the other
<PAGE>
party and in certain other circumstances involving a breach of the
Merger Agreement by the other party. The total proceeds which
Teleglobe or Excel may receive from these options and the
termination fee is limited to US$120 million.
Commercial Arrangements
Teleglobe and Excel have agreed that they will immediately
pursue commercial arrangements for Excel to sell Teleglobe products
and services and for Teleglobe to sell Excel services.
Additionally, the companies have agreed to plan the integration of
their networks, accelerating the timetable to achieve cost savings.
Teleglobe
Teleglobe is recognized as a world leader in the international
telecommunications industry. The corporation's global network
includes submarine cable and satellite facilities, meeting the
global connectivity needs of established and emerging carriers from
around the world, as well as those of consumers, multinational
corporations, ISP's and broadcasters. Teleglobe also has a 35%
interest in ORBCOMM, the world's first commercial low-earth-orbit
satellite-based data communications system.
Excel
Excel Communications, Inc. is the fifth largest long distance
company in the United States. Utilizing a state-of-the-art,
facilities-based network, the company offers its subscribers
residential and commercial long distance services, dial-around
services, calling cards and paging services. Excel markets these
products nationwide to residential and commercial customers under
the Excel and Telco subsidiaries. Excel has more than 3,000
employees who support the corporate, network management, billing,
teleservices and marketing functions of the company.
ITEM 6. CONFIDENTIAL REPORT
Not applicable.
ITEM 7. OMITTED INFORMATION
No significant facts have been omitted from this report.
ITEM 8. SENIOR OFFICER
Andre Bourbonnais, Vice President Legal Affairs and Corporate
Secretary, of Teleglobe Inc., is the officer knowledgeable about
the details of this material change report.
THE FOREGOING ACCURATELY DISCLOSES THE MATERIAL CHANGE REFERRED TO HEREIN, IN
WITNESS WHEREOF THIS REPORT IS EXECUTED AT MONTREAL, THIS 22ND DAY OF JUNE,
1998.
<PAGE>
TELEGLOBE INC.
Per: (s) Andre Bourbonnais
---------------------------
Andre Bourbonnais
Vice President Legal Affairs and
Corporate Secretary
<PAGE>
PRESS RELEASE FOR IMMEDIATE RELEASE
TELEGLOBE AND EXCEL COMMUNICATIONS ANNOUNCE
US$7 BILLION MERGER OF EQUALS
Global communications company targets world-wide residential, business,
wholesale and Internet growth opportunities
MONTREAL and DALLAS, June 14, 1998 - Teleglobe Inc. (NYSE, TSE, ME : TGO), a
world leader in the intercontinental telecommunications industry, and Excel
Communications, Inc. (NYSE : ESI), the fifth-largest long distance carrier in
the United States, today announced that the have signed a definitive merger
agreement, creating a global, integrated long distance communications company
reaching 240 countries and having a combined equity market value (based on
June 12, closing prices) of approximately US$7 billion (C$10 billion).
The merger represents a major development in the international communications
industry. It combines Teleglobe's extensive intercontinental network - the
second-largest in reach in North America and the third-largest in the world -
with Excel's unique and effective channels of distribution and US network in
order to offer a broad array of new products and services to homes,
businesses, carriers and Internet service providers (ISP's) around the world.
The potential domestic and international long distance telecommunications
market for the combined company in the G-7 countries where Teleglobe is
currently licensed to operate - United States, Japan, Germany, France, United
Kingdom, Italy and Canada - exceeds US$150 billion and should continue to
grow rapidly over the next few years.
Under the terms of the merger agreement, Teleglobe shareholders will retain
their shares and each share of Excel Communications, Inc. will be exchanged
for 0.885 of share of Teleglobe Inc. common stock, after giving effect to
Teleglobe's previously announced two-for-one stock split for its shareholders
of record on June 15, 1998. This merger of equals transaction is intended to
be accounted for on a "pooling of interests" basis and will be tax-free for
the companies and their shareholders. Teleglobe intends to maintain its
annual dividend of C$0.34 per share (US$0.24). "This merger unlocks value
for shareholders of both companies. Combining Teleglobe's global reach and
its portfolio of products and services with Excel's marketing savvy and its
proven distribution system is a perfect fit that satisfies each company's
greatest strategic needs," commented Charles Sirois, Chairman and CEO of
Teleglobe Inc. "By jointing with Kenny Troutt and his colleagues at Excel,
Teleglobe has significantly accelerated implementation of its strategy for
rapid growth and retail market penetration. With this merger, Teleglobe has
reached its target for retail expansion four or five years ahead of schedule
and can now move on to more ambitious objectives".
Kenny A. Troutt, Chairman, CEO and President of Excel Communications added:
"This merger is a perfect strategic fit. Excel and Teleglobe are two
companies that are highly profitable, complementary, entrepreneurial and
growth-oriented. The combination of Teleglobe's global network and licenses
with our strong distribution channels will create a global player that can
market a host of products, including Internet access, calling cards, pre-paid
calling cards and operator services, to residential and commercial customers
in the U.S., as well as in an increasing number of other countries as they
open their markets to competition."
<PAGE>
The boards of directors of both companies have unanimously approved the
merger. In addition, holders representing a majority of outstanding
Teleglobe shares, including BCE Inc., and a majority of outstanding Excel
Communications shares have approved the merger and committed to vote in favor
of other related matters. This merger is subject to approvals by US and
Canadian authorities as well as other closing conditions. The companies
anticipate that the merger will close before the end of the year.
Teleglobe and Excel have entered into certain reciprocal option agreements,
each granting to the other company the right to acquire, under certain
circumstances, up to 19.9% of its outstanding common shares at a pre-
announcement closing price per common share. The options would become
exercisable by Teleglobe or Excel in connection with the termination of the
merger agreement, under certain circumstances, and other company would be
entitled to the benefits derived therefrom. In addition, the merger
agreement provides for the payment of a US$120 million termination fee under
certain circumstances.
The combined company will be named Teleglobe Inc. and will be headquartered
in Montreal. Its global telecommunications operation will remain in McLean
(Va) and Excel's existing operations will continue to be directed from
Dallas, Texas. Other principal places of business for the combined company
are located in Chantilly (Va), London (UK), Frankfurt (Germany), Paris
(France), Tokyo (Japan) and Hong Kong (China).
Merger Benefits
The merger is expected to be accretive to earnings per share of Teleglobe
Inc. from its inception, even before taking into account expected revenue
enhancements and operating synergies. The management of Teleglobe and Excel
have identified the following significant revenue enhancements and operating
synergies resulting from the merger:
- -- The leveraging of Teleglobe's global network and operating licenses in
18 countries will provide a platform of the geographic expansion of
Excel's proven relationship marketing channels into new geographic
markets in Europe, Asia, Latin America, Australia and Africa, as well as
in Canada;
- -- The introduction of Teleglobe's products and services - such as
international long distance, operator services, calling cards, Internet
connectivity and international business services - to Excel's existing
customer base;
- -- The integration of Teleglobe's global and Excel's US network to reduce
international and US long distance termination fees paid currently by
the companies to other networks.
Teleglobe and Excel have agreed that they will immediately pursue commercial
arrangements for Excel to sell Teleglobe products and services and for
Teleglobe to sell Excel services. Additionally, the companies have agreed to
plan for the integration of their networks, accelerating the timetable to
achieve cost savings.
<PAGE>
The New Teleglobe
The merger will create the fourth-largest telecommunications carrier in the
North American long distance market, with approximately 4,800 employees
worldwide serving more than 275 carriers worldwide, nearly six million
residential customers and approximately 65,000 business customers, including
more international ISP's than any other telecommunications company. The
combined company will be owned (on a fully-diluted basis) 51.5% by the
current shareholders of Teleglobe Inc. and 48.5% by the current shareholders
of Excel Communications, Inc., without giving effect to a contractual right
of BCE Inc. to purchase additional shares so as to maintain a 20% minimum
ownership interest in Teleglobe Inc.
The new company features:
- -- Combined equity market value of US$7 billion (C$10 billion), based on
closing stock prices prior to announcement;
- -- Annual dividend of C$.034 per share (US$0.24);
- -- Combined first quarter 1998 annualized revenues of approximately US$3.5
billion (C$5 billion);
- -- Combined first quarter 1998 annualized EBITDA of almost US$600 million
(C$830 million);
- -- Combined first quarter 1998 annualized traffic of approximately 15.7
billion minutes;
- -- Licenses to own, operate and/or resell facilities-based networks in 18
countries, including all G-7 countries;
- -- One of the world's most extensive Internet backbones, serving 109 ISP's
in 71 countries;
- -- Over 70 offices in 30 countries by year end;
- -- Proven U.S.-based marketing channels poised for international expansion;
and
- -- Listings on New York Stock Exchange, Toronto Stock Exchange and Montreal
Exchange.
"This merger is about growth, expansion and opportunities. For employees,
the new Teleglobe will open exciting opportunities, as we enter new markets
and attract new customers," confirmed Charles Sirois.
Management Structure
Teleglobe will be led by a management team with extensive telecommunications
experience and a history of attracting and maintaining customers through the
creation of strong sales and marketing relationships. Upon completion of the
merger, Charles Sirois will serve as Chairman and Chief Executive Officer of
Teleglobe Inc. Kenny Troutt will become Vice Chairman, President and Chief
Operating Officer of Teleglobe Inc. and remain Chief Executive Officer of
Excel Communications. Paolo Guidi will continue as Chief Executive Officer
of Teleglobe Communications Corporation.
<PAGE>
The board of directors will be comprised of an equal number of
representatives of Teleglobe and Excel, as well as jointly selected members.
Excel Second Quarter Outlook
Excel also announced that it expects EPS for the second quarter of 1998 to be
in the US$0.22 to US$0.25 range as a result of lower than expected revenues.
This range is above EPS results of US$0.21 for the first quarter of 1998, and
is at or slightly below the range of analyst estimates for the second
quarter.
Company Descriptions
Teleglobe Inc. is recognized as a world leader in the intercontinental
telecommunications industry. The company's global network includes submarine
cable and satellite facilities, meeting the global connectivity needs of
established and emerging carriers from around the world, as well as those of
consumers, multinational corporations, ISP's and broadcasters. Teleglobe
also has a 35% interest in ORBCOMM, the world's first commercial low-earth-
orbit satellite-based data communications system. Teleglobe Inc.'s home page
on the World Wide Web is http://www.teleglobe.com.
Excel Communications, Inc. is the fifth largest long distance company in the
United States. Utilizing a state-of-the-art, facilities-based network, the
company offers its subscribers residential commercial long distance services,
dial-around services, calling cards and paging services. Excel markets these
products nationwide to residential and commercial customers under the Excel
and Telco subsidiaries. Excel has more than 3,000 employees who support the
corporate, network management, billing, teleservices and marketing functions
of the company. Excel Communications Inc.'s home page on the World Wide Web
is http://www.excel.com.
- 30 -
This release may contain forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future
events or results.
CONTACT:
TELEGLOBE INC. EXCEL COMMUNICATIONS, INC.
Media: Sylvia Morin Media: Kenneth Kracmer
514-868-7762 214-863-8400
Investors: Jacques Deforges Investors: Mary Bell
514-868-7716, 214-863-8730
or Nicole Blanchard
514-868-8148
