SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (date of earliest event reported): November 23, 1998
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I-LINK INCORPORATED
(Exact name of registrant as specified in its charter)
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Florida 0-17973 59-2291344
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020
(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 576-5000
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Item 5. Other Events
On November 23, 1998 I-Link reached an agreement in principal for a new
financing arrangement with Winter Harbor, LLC. ("Winter Harbor"), a significant
shareholder of the Company and an entity with which the Company has other
existing financing arrangements. Winter Harbor will provide to I-Link a new
bridge loan facility of up to $8,000,000, which can be drawn down in increments
of up to $1,000,000. The maturity date for the bridge loan facility is October
31, 1999. The bridge loan will be junior to the Company's existing debt to
Winter Harbor and shall be pari passu with the balance of the Company's general
obligations. The bridge loan will be secured by the assets of the Company via a
second priority lien that will be junior to the existing first lien granted by
the Company to Winter Harbor. Amounts drawn against the bridge loan will bear
interest at rates which increase from quarter to quarter over the life of the
loan. The initial interest rate will be the Wall Street Journal Prime Rate plus
four points. The rate will increase by one point per every succeeding three
month period subject to a maximum rate equal to the Wall Street Journal Prime
Rate plus seven points. To date, I-Link has drawn $3,241,712 against the bridge
loan. For each ten dollars of bridge loan drawn, I-Link will issue to Winter
Harbor a warrant to purchase one share of common stock, at an exercise price of
2.78 per share, which price is adjustable, subject to a minimum exercise price
of $1.25 per share. The warrants shall have a maturity date of 7.5 years from
the date of issue, and will have demand and piggy back rights. If the Company
elects not to repay all amounts drawn down on the bridge loan by February 1,
1999, it may, in lieu thereof, issue additional warrants to Winter Harbor, so
that the total number of warrants issued would increase to one warrant for each
one dollar outstanding. The Company is required to obtain shareholder approval
pursuant to the maintenance criteria of the Nasdaq Stock Market in connection
with such an election not to repay all amounts drawn down on the bridge loan by
February 1, 1999.
Additionally, Winter Harbor shall assist I-Link in obtaining a standby
letter of credit in the amount of $3,000,000, by acting as the account party
thereto, to secure additional capital leases of equipment and telephone lines
relative to the proposed expansion of I-Link's telecommunications network. For
such assistance with respect to the standby letter of credit, I-Link will pay
Winter Harbor a facility fee of 1% per annum on the undrawn portion of the
letter of credit, and will issue to Winter Harbor warrants to purchase 300,000
shares of common stock on the same terms as the bridge loan warrants. In the
event that (i) the Company elects not to repay all amounts drawn down on the
bridge loan by February 1, 1999 or (ii) the standby letter of credit is drawn
upon, then Winter Harbor will receive similar warrants to purchase an additional
2,700,000 shares of common stock.
Finally, I-Link is to initiate a rights offering for $20,000,000 of a new
Series N Convertible Preferred Stock (the "Series N") with a liquidation value
of $1,000 per share. The Series N shall be convertible into shares of I-Link
common stock at the lower of: (i) a conversion rate to be determined; (ii) 110%
of the average trading price of the common stock for any 20 day period
subsequent to issuance; (iii) the price at which common stock or common stock
equivalents are issued in the future; and (iv) the exercise price or conversion
rate of any new options, warrants, preferred stock or other convertible
security. In no event shall the conversion rate be less than $1.25. Winter
Harbor is obligated to exchange any indebtedness under the bridge loan on a
dollar-for-dollar basis for shares of Series N, and Winter Harbor will have the
option to purchase any shares of Series N not subscribed for by others in the
rights offering.
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THE FOREGOING DESCRIPTION IS SUBJECT TO THE NEGOTIATION OF THE DEFINITIVE
AGREEMENTS AND IS SUBJECT TO THE FINAL AGREEMENTS, COPIES OF WHICH WILL BE
APPENDED AS EXHIBITS TO ONE OF THE COMPANY'S PERIODIC REPORTS HEREAFTER FILED BY
THE COMPANY UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOLLOWING NEGOTIATION AND
EXECUTION OF THE AGREEMENTS.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
I-LINK INCORPORATED
(Registrant)
Dated: December 16, 1998 By: /s/ John W. Edwards
John W. Edwards, President and
Chief Executive Officer
Dated: December 16, 1998 By: /s/ Karl S. Ryser, Jr.
Karl S. Ryser, Jr.
Chief Financial Officer
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