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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) December 18, 1997
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GEOTEK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-17581 22-2358635
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(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
102 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 201-930-9305
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
On December 18, 1997, the holders of a majority in aggregate principal
amount of Geotek Communications, Inc.'s (the "Company") 15% Senior Secured
Discount Notes due 2005 (the "Secured Notes") agreed to consent to the amendment
of certain provisions of the Indenture, dated as of June 30, 1995, between the
Company and IBJ Schroder Bank & Trust Company, as trustee for the holders of the
Senior Notes (the "Indenture"), governing the Secured Notes. The principal
purposes of the amendments are to (i) effect the reallocation of 900 MHz
specialized mobile radio licenses (the "900 MHz SMR Licenses") among the
subsidiaries of the Company, all of whose outstanding capital stock (the
"Pledged Companies") is or will be pledged to IBJ Schroder Bank & Trust Company,
as collateral agent for the holders of the Secured Notes (the "Collateral
Agent"), or whose outstanding capital stock is pledged (the "HNS Pledged
Companies") to Hughes Network Systems, Inc. ("HNS") to secure certain loan
facilities given by HNS to Geotek Financing Corporation, the Company's
subsidiary ("GFC"), and certain of the Company's other subsidiaries, (ii)
provide additional collateral security for the Secured Notes, (iii) permit the
Company to incur additional indebtedness for working capital needs and general
corporate purposes, (iv) permit the Company and its subsidiaries to secure
certain indebtedness by granting additional liens on assets that are not
collateral for the Secured Notes, (v) permit the Company to use a portion of the
proceeds from certain asset dispositions for working capital needs and general
corporate purposes, and (vi) permit the Company to transfer certain licenses
from the Pledged Companies to other subsidiaries of the Company if the Company
achieves specified subscriber levels.
Under the amendments, the Company will be permitted to incur up to
$20,000,000 of secured debt (increased from $10,000,000) and up to $70,000,000
of unsecured debt for general corporate purposes. The amount of unsecured debt
permitted will be based on the amount of equity proceeds received by the Company
after November 1, 1997: the Company will be permitted to incur unsecured
indebtedness equal to (i) two times the net cash proceeds received from the
issuance and sale of the Company's capital stock up to $40,000,000 of unsecured
indebtedness plus (ii) the net cash proceeds received from the issuance and sale
of the Company's capital stock up to $30,000,000 of unsecured indebtedness. In
addition, the Company will be permitted (i) to incur additional unsecured
indebtedness or (ii) to use the proceeds from asset sales outside the ordinary
course of business (including the recent sale of the Company's interest in Bogen
Communications International, Inc. but excluding the sales of the Company's
interests in National Band Three Limited ("NB3") and Terrafon Bundelfunk GmbH &
Co. KG and Terrafon Geschaftsfuhrungs Gesellschaft mbH (collectively,
"Terrafon")) for working capital needs and general corporate purposes, up to an
aggregate of $40,000,000. The Company will also be permitted to use up to 40% of
the net cash proceeds from the sales of the Company's interests in NB3 and
Terrafon for working capital needs and general corporate purposes. The Company
will be required to use at least 40% of the net cash proceeds from the NB3 and
Terrafon sales to purchase assets for use in the Company's GEONET systems in
Boston, New York, Philadelphia and Washington D.C. (except that the Company may
use up to $10,000,000 of such proceeds to purchase assets for use in the GEONET
systems outside such northeast region markets) and at
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least 20% of such proceeds to make a tender offer to the holders of the Secured
Notes, on a pro rata basis according to the accreted value of the Secured Notes,
within 30 days after the consummation of such sales.
The amendments also include provisions for the reallocation of the
Company's 900 MHz SMR Licenses among the Pledged Companies, the HNS Pledged
Companies, and other subsidiaries of the Company (the "License Reallocation").
HNS has consented to the License Reallocation. Certain of the 900 MHz SMR
Licenses held by the Pledged Companies will be subject to release if the Company
(i) has at least 100,000 subscribers in the aggregate or (ii) has at least
50,000 subscribers in the aggregate and GFC provides the Collateral Agent with a
third priority pledge of the stock of the HNS Pledged Companies, while others
will be subject to release if (i) the Company has at least 30,000 subscribers in
the aggregate, (ii) after the release, the released licenses will be used to
secure (whether by pledge of the capital stock of the holder of the released
licenses or a pledge of the released licenses) indebtedness permitted under the
Indenture and (iii) the Company provides the Collateral Agent with a second
priority lien on the capital stock of the holder of the released licenses or on
the released licenses themselves. In conjunction with the amendments, the
Company and its operating subsidiary, Geotek USA, Inc., will grant a security
interest in network equipment and related assets used in the Boston, New York,
Philadelphia and Washington D.C. markets to the Collateral Agent.
Effectiveness of the amendments is subject to satisfaction of certain
closing conditions, including the delivery of customary certificates of officers
of the Company and opinions of counsel. In addition, certain provisions of the
amendments will not become effective until certain regulatory approvals for the
License Reallocation are received.
In conjunction with the consent to the amendments by the holders of a
majority in aggregate principal amount of the Senior Notes, HNS and S-C Rig
Investments III, L.P. ("S-C Rig") have agreed to the amendment of their
respective loan facilities to incorporate the Indenture as amended into the
default provisions of such loan facilities. In addition, the Company has agreed
with S-C Rig that the Company will not, without S-C Rig's consent, grant a
security interest in network infrastructure used in the Dallas, Houston, Miami,
Orlando, Phoenix, San Antonio or Tampa markets except for certain liens
permitted under the Indenture. However, S-C Rig will not unreasonably withhold
its consent to the Company's grant of liens on such assets in the Miami, Orlando
and Tampa markets in connection with certain debt financing that may be received
within the next six months.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(C) Exhibits
99 Press Release of Geotek Communications, Inc. dated
December 19, 1997.
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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 hereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
Date: December 22, 1997 By: /s/ Robert Vecsler
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Name: Robert Vecsler
Title: Secretary and General Counsel
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EXHIBIT 99
Contact: Randy Miller/Elysa Gonzalez
Corporate/Investor Communications
201-930-9305
GEOTEK RESTRUCTURES TO FOCUS ON U.S. GROWTH
-- Sale of European Assets for $85MM, Credit Amendment and
Corporate Restructuring Enhances Opportunities for Long-Term Growth--
Montvale, New Jersey, December 19, 1997 -- Geotek Communications, Inc. (Nasdaq:
GOTK) announced today that it is restructuring corporate assets, credit
agreements and its management structure to better focus on delivering mobile
business solutions to its U.S. subscriber base.
Geotek said it has reached agreements to sell its European analog assets to
Montreal-based Telesystem International Wireless Inc. for approximately $85
million in cash. It simultaneously announced the successful completion of
agreements with senior note holders providing broader latitude to use funds from
the sale of assets for working capital. In conjunction with these agreements the
company announced a corporate restructuring designed to focus its sales,
marketing and product development functions on serving the needs of the
company's growing U.S. customer base.
Geotek's European network businesses consist of National Band Three Limited, an
analog wireless network in the United Kingdom, and a 50 percent stake in
Terrafon Bundelfunk GmbH & Co. KG, a similar network in Germany. The sales are
subject to regulatory approvals in each country and other conditions, and are
expected to close within 60 days.
"Our service capabilities have improved dramatically over the past nine months,
and customers with mobile networking needs are responding positively," said
Yaron Eitan, Chief Executive Officer of Geotek. "The sale of our analog
operations in Europe and our recent sale of Bogen Communications International
provides us a total of approximately $103.5 million in additional capital
without dilution. With the amended bondholder agreement, we now have the
financial flexibility to use those funds to further develop and enhance our
service offerings."
Consistent with the decision to focus its resources on the domestic opportunity,
Geotek said it is streamlining both management and staffing. It has initiated a
company-wide cost reduction program and is redrawing functional boundaries to
improve efficiency and focus. Management changes include elevating the head of
Geotek's U.S. operations, Michael McCoy, to Executive Vice President and Chief
Operating Officer of Geotek Communications. The operations, product delivery and
sales functions, which previously had separate reporting lines, will all report
to Mr. McCoy. In addition, a strategic marketing and product development group
has been formed to operate alongside these functions; it will be led by George
Calhoun, Senior Vice President, Strategic Marketing.
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All corporate finance and accounting functions, which were previously separated
by business unit, are being consolidated under Chief Financial Officer Robert
Kerstein. Robert Vecsler, General Counsel, currently responsible for legal and
regulatory affairs and human resources, assumes additional duties in planning
and business development as Senior Vice President, Business Affairs. Messrs.
McCoy, Calhoun, Vecsler and Kerstein will all report to Mr. Eitan.
"Our priority focus going forward is on growing our U.S. subscriber base," Mr.
Eitan said. "Our growth rate is improving and we hope to deliver even stronger
subscriber growth in the near term by enhancing the quality and range of our
coverage and by completing the development of new mobile data applications."
Geotek agreed to amend certain provisions in the indenture governing its 15%
Senior Notes as well as its Soros Group and Hughes Network Systems ("HNS")
credit facilities. The amendment will provide Geotek broader latitude in using
funds raised from the sale of assets for general corporate purposes.
"This amendment is integral to our current financing plans and is a major step
in developing the added flexibility Geotek needs to implementing its long-term
business plan." Mr. Kerstein said. Under the agreements, Geotek will be allowed
to use the entire $18.5 million in proceeds from the recently announced sale of
Bogen Communications International for general corporate purposes. Further,
Geotek will be able to use 40 percent of the proceeds from the European network
sales for general corporate purposes and 40 percent for replacement or
telecommunications assets and will apply the remaining 20 percent to retire
existing senior noteholders indebtedness.
Under the terms of the original indenture, the use of proceeds from the sale of
assets or from the incurrence of debt was restricted to the purchase of "hard"
replacement or telecommunications assets. As part of this agreement the company
will be allowed, under certain circumstances, to use the proceeds from the
incurrence of additional debt for general corporate purposes.
The agreement includes a redistribution of Geotek's 900 MHz specialized mobile
radio licenses among Geotek subsidiaries pledged to the senior noteholders and
HNS. As part of the agreement and license redistribution, Geotek has agreed to
pledge to its senior noteholders and HNS security interests in additional 900
MHz licenses. Further, Geotek agreed to provide its senior noteholders a
security interest in network equipment in its northeast markets and agreed with
Soros to secure its consent prior to any grant of security in Geotek's remaining
current markets. The transaction is subject to certain closing conditions
including the receipt of appropriate regulatory approvals.
Geotek Communications, Inc. is a provider of mobile business solutions and
services. The Company targets selected transportation, distribution, field
service and contacting industry segments and is currently providing wireless
services to more than 10,000 users in Dallas, Houston, Galveston, San Antonio,
Phoenix, Boston, New York/New Jersey, Philadelphia, Delaware, Washington, D.C.,
Baltimore, northern Virginia, Orlando, Central and Southern Florida. For more
information on Geotek, visit our web site at www.geotek.com or call
1-888-39-FLEET.
