<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
MERCOM, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERCOM, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
MERCOM, INC.
105 Carnegie Center
Princeton, New Jersey 08540
(609) 734-3700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 1995
The Annual Meeting of Stockholders of Mercom, Inc. will be held on Tuesday,
May 16, 1995, at the executive offices of Mercom, Inc., 105 Carnegie Center,
Princeton, New Jersey 08540, at 10:00 A.M. local time. The meeting will be held
for the following purposes:
1. To elect seven (7) Directors to serve for a term of one (1) year each.
2. To ratify the selection of Coopers and Lybrand L.L.P. as independent
auditors for the fiscal year ending December 31, 1995.
3. To act upon such other matters as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 28, 1995, will
be entitled to vote at the meeting either in person, or by proxy.
In order to insure that your shares are represented and are voted in
accordance with your wishes, KINDLY DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. You are cordially invited to attend
the meeting and, if you do so, you may personally vote your shares regardless of
whether you have previously submitted a signed proxy to the Company.
By order of the Board of Directors.
/s/ JOHN D. FILIPOWICZ
JOHN D. FILIPOWICZ
Corporate Secretary
April 25, 1995
<PAGE>
MERCOM, INC.
PROXY STATEMENT
This proxy statement is furnished to the stockholders of Mercom, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company, for use at the Annual Meeting
of Stockholders (the "Meeting") to be held on Tuesday, May 16, 1995, at 10:00
A.M. local time, at the Company's executive offices, 105 Carnegie Center,
Princeton, New Jersey, and at any adjournment or postponement thereof. Shares
represented by properly executed proxies will be voted at the meeting, in
accordance with the directions set forth therein. If no direction is specified,
the shares will be voted by the persons named as proxy holders in favor of
Proposals 1 and 2. As to any other business which may properly come before the
Meeting and be submitted to a vote of stockholders, proxies will be voted in the
best judgment of the designated proxy holders. The form of proxy enclosed is
for use by a stockholder if the stockholder is unable to attend or does not
desire to vote in person. Any proxy may be revoked at any time insofar as it has
not been exercised. Stockholders may revoke proxies by written notice to the
Company, by delivery of a proxy bearing a later date, or by personally appearing
at the Meeting and casting a contrary vote. This proxy statement and the
accompanying proxy are being mailed to stockholders on or about April 25, 1995.
The close of business on March 28, 1995 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting and at any adjournment or postponement thereof. On March 28, 1995,
there were 2,393,530 shares of Common Stock of the Company outstanding. Each
share of Common Stock is entitled to one vote. The Company's Common Stock is
the only class of voting securities outstanding.
The holders of record of a majority of the issued and outstanding Common
Stock and entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business. Directors are
elected by a plurality of the votes cast at the Meeting. The holders of Common
Stock do not have cumulative voting rights in the election of Directors. The
affirmative vote of a majority of the total shares represented is required for
approval of Proposal 2 or any other matter as may properly come before the
Meeting or any adjournment or postponement thereof. Broker non-votes on the
proposals with respect to the election of Directors and the ratification of the
selection of auditors are treated as shares as to which voting power has been
withheld by the beneficial holders of those shares and, therefore, as shares not
entitled to vote on such proposals. Votes will be tabulated at the Meeting by
Inspectors of Election.
1
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PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's Articles of Incorporation and Bylaws, the
Board of Directors has determined that the Company's Board shall consist of
seven persons and has nominated seven individuals for election as directors at
the Meeting. The individuals nominated for election (the "Nominees") as
Directors are: Bruce C. Godfrey; Clifford L. Jones; David C. McCourt; Michael
J. Mahoney; Raymond B. Ostroski; Harold J. Rose, Jr.; and George C. Stephenson.
Those persons who are elected Directors at the Meeting will hold office for the
ensuing year or the election and qualification of their respective successors.
It is not anticipated that any of these Nominees will become unavailable for any
reason, but, if that should occur before the Meeting, the persons named on the
enclosed Proxy reserve the right to substitute another person of their choice as
nominee or to vote for such lesser number of Directors as may be prescribed by
the Board of Directors.
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the selection of Coopers &
Lybrand L.L.P. as the Company's independent auditors for the fiscal year ending
December 31, 1995. It is not anticipated that representatives of Coopers &
Lybrand L.L.P. will be present at the meeting.
If the stockholders do not ratify this appointment, other independent
auditors will be considered by the Board of Directors. Notwithstanding the
stockholders' ratification of the selection of the independent auditors, the
Board of Directors reserves the right to select other independent auditors at
its discretion.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of Coopers & Lybrand L.L.P. to serve as the
Company's independent auditors for the fiscal year ending December 31, 1995.
2
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INFORMATION CONCERNING ELECTION OF DIRECTORS
Information as of March 1, 1995, concerning the principal occupation and
beneficial ownership of Common Stock of the Company for the Nominees for
election as Directors is set forth below:
Nominee Director Since Age
------- -------------- ---
Bruce C. Godfrey 1994 39
Executive Vice President and Chief Financial Officer of the Company since May
1994; Executive Vice President and Chief Financial Officer, C-TEC Corporation
("C-TEC") since April 1994; Former Senior Vice President, Daniels & Associates,
an investment banking firm specializing in the cable television, mobile
communications and entertainment businesses. Mr. Godfrey does not own any
Common Stock of the Company.
Clifford L. Jones 1991 67
Served as President, Capital Region Economic Development Corporation until
February 1994; Past President, Pennsylvania Chamber of Business & Industry;
Director, Pennsylvania Power & Light Company. Mr. Jones has sole voting and
investment power over 100 shares of Common Stock of the Company.
Michael J. Mahoney 1994 44
President and Chief Operating Officer of the Company since March 1, 1994;
Executive Vice President of the Company from 1991-1994; President and Chief
Operating Officer, C-TEC since February 1994; Executive Vice President, C-TEC
Cable Systems, Inc. ("CCS") from 1991 - 1994; Former Executive Vice President
and Chief Operating Officer, Harron Communications Corp. Mr. Mahoney does not
own any Common Stock of the Company.
3
<PAGE>
Nominee Director Since Age
------- -------------- ---
David C. McCourt 1993 38
Chairman and Chief Executive Officer of the Company since October 1993;
Chairman, Chief Executive Officer and Director, C-TEC; President, Chief
Executive Officer and Director, RCN Corporation; President and Director,
Metropolitan Fiber Systems/McCourt, Inc.; Director, MFS Communications Company,
Inc. and MFS Telecom, Inc. Mr. McCourt does not own any Common Stock of the
Company.
Raymond B. Ostroski 1994 40
Executive Vice President and General Counsel of the Company since February 1995;
Executive Vice President, General Counsel and Corporate Secretary, C-TEC since
February 1995. Mr. Ostroski has sole voting and investment power with respect
to 2,000 shares of Common Stock of the Company.
Harold J. Rose, Jr. 1991 59
Partner, RK Associates, real estate management consultants; Former Chairman of
the Board and Chief Executive Officer of Merchants Bancorp, Inc. and Chairman of
the Board of Merchants Bank, N.A. and Merchants Bank (North). Mr. Rose does not
own any Common Stock of the Company.
George C. Stephenson 1991 49
Managing Director, PaineWebber, Inc. Mr. Stephenson has sole voting and
investment power over 5,000 shares of Common Stock of the Company.
EXECUTIVE COMPENSATION
Except with respect to the Company's management agreement dated January 1,
1992 (the "Management Agreement") with CCS, a wholly-owned subsidiary of C-TEC,
no executive officer of the Company received any compensation for services
rendered on behalf of the Company during the fiscal year ended December 31,
1994. See "Certain Transactions."
4
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SECURITY OWNERSHIP OF STOCK
Security Ownership of Management
--------------------------------
As of March 1, 1995, C-TEC Properties, Inc., a wholly-owned subsidiary of C-
TEC ("C-TEC Properties"), owned 1,044,194 shares of Common Stock of the Company.
David C. McCourt, Michael J. Mahoney, Bruce C. Godfrey and Raymond B. Ostroski
are the principal executive officers of C-TEC Properties. Directors and
executive officers as a group beneficially owned 7,100 shares of Common Stock,
representing less than one percent of the outstanding Common Stock of the
Company.
Security Ownership of Certain Beneficial Owners
-----------------------------------------------
So far as is known to the Company, as of March 1, 1995, no persons, except
those listed below, owned beneficially more than five percent (5%) of the
outstanding Common Stock. With respect to the named persons, the following
information is based on Schedules 13D or 13G filed with the Securities and
Exchange Commission ("SEC"), copies of which were supplied to the Company by
said persons. The table below discloses the name and address of such beneficial
owners, the total number of shares beneficially owned by each and their
percentage of ownership in relation to the total shares outstanding and entitled
to vote as of March 1, 1995.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (1) of Class
------------------- -------------------- ---------
<S> <C> <C>
C-TEC Corporation (2) 1,044,194 43.63%
105 Carnegie Center
Princeton, New Jersey 08540
Ruane, Cunniff & Co., Inc. (3) 173,330 7.24%
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798
William L. Matheson 127,862 5.3%
430 South Beach Road
Hobe Sound, Florida 33455
</TABLE>
__________________________________
(1) The number of shares stated in this column includes shares owned directly
or indirectly, through any contract, arrangement, understanding,
relationship, or which the indicated beneficial owner otherwise has the
power to vote, or direct the voting of, and/or has investment power.
5
<PAGE>
(2) As set forth in Amendment No. 16 to C-TEC's Schedule 13D dated January 4,
1993, such shares are owned by C-TEC Properties, Inc.
(3) Based on information obtained from Schedule 13G for the Common Stock of the
Company filed on February 10, 1995, with the Securities and Exchange
Commission by Ruanne, Cunniff & Co., Inc.
CERTAIN TRANSACTIONS
The Company entered into a Management Agreement with CCS pursuant to which
CCS operates and manages the Company's cable properties. The Management
Agreement provides that the Company will pay CCS: (a) an annual fee equal to
the greater of: (i) $500,000 or (ii) a percentage of the Company's annual
revenues (ranging from 5% of $10 million of revenues, as defined, to 4% of
revenues in excess of $20 million); and (b) an annual incentive bonus equal to
twenty-five percent (25%) of the Company's earnings before interest,
depreciation, amortization and taxes ("EBIDAT") as adjusted, during the
applicable fiscal year less the base year EBIDAT of $3.85 million. During 1994,
CCS earned, pursuant to the Management Agreement, management and incentive fees
of approximately $1.1 million. In addition, pursuant to the Management
Agreement, the Company paid C-TEC Services, Inc., a wholly-owned subsidiary of
C-TEC ("C-TEC Services"), $28,326 for certain services (including without
limitation, legal, accounting, tax and public relations services) performed for
the Company by C-TEC Services and/or non-affiliated third-parties. The cost of
such services (to the extent rendered by C-TEC and its affiliates) was
determined in accordance with the Management Agreement by calculating all of C-
TEC Services' direct and indirect labor, overhead and employee benefit costs
associated with the provision of such services.
The Company is a party to a Credit Agreement with Morgan Guaranty Trust
Company of New York ("Morgan Guaranty") dated as of November 26, 1989, as
amended (as amended, the "Credit Agreement"). In December of 1992, 1993, and
1994, the Company and Morgan Guaranty restructured the principal payments due
under the Credit Agreement for the respective year. Based on its latest
financial projections, the Company determined that it would not be able to make
the principal payments of long-term debt as scheduled under the Credit Agreement
for 1995. On March 31, 1995, C-TEC Corporation, which owns 43.63% of the
Company's outstanding Common Stock, loaned $887,000 to the Company to enable it
to make its principal payment of $887,000 scheduled for March 31, 1995, under
the Credit Agreement. The loan from C-TEC will bear interest at a rate equal to
the weighted average effective rate charged under the Credit Agreement for the
relevant period and is payable on demand. At December 31, 1994, the weighted
average effective interest rate under the Credit Agreement was 6.65%.
Management and the Company's bank are working toward a mutually acceptable
restructuring of the debt and/or equity of the Company. However, there is no
assurance that it will be successful or that C-TEC would provide additional debt
financing to the Company.
6
<PAGE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board of Directors of the Company held four (4) regularly scheduled
meetings in 1994.
The Company does not have a nominating or compensation committee.
The Audit/Affiliated Transactions Review Committee held five (5) meetings in
1994. The Committee supervised, among other things, the continuous internal
audit program of the Company, reviewed and advised the Board with respect to
affiliate transactions and advised and aided the officers of the Company in
administrative matters. The current committee consists of Harold J. Rose, Jr.,
Chairman, Clifford L. Jones and George C. Stephenson.
Directors' Fees
---------------
Each Director of the Company is paid an annual retainer of $6,000, plus $500
for each Board meeting attended during 1994. Committee Chairmen are paid $1,000
for each committee meeting attended while other committee members are paid $500
for each meeting attended. Members of the Executive Committee are not
compensated for participating in the meetings of said committee. Directors who
are also employees of C-TEC have authorized the payment of such fees to their
employer, C-TEC Services, consistent with the terms of their employment with C-
TEC. The following fees were paid in 1994: Clifford L. Jones $9,000; Harold J.
Rose, Jr. $10,500; George C. Stephenson $9,000 and C-TEC Services, $25,250.
OTHER MATTERS
The Board of Directors does not know of any other matters that may come
before the Meeting. However, if any other matters properly come before the
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.
7
<PAGE>
GENERAL INFORMATION
Financial Information
---------------------
A copy of the Company's 1994 Annual Report to Stockholders containing the
Consolidated Financial Statements of the Company, including the report thereon
of Coopers & Lybrand L.L.P., independent accountants, accompanies this proxy
statement.
Upon the written request of any person who on March 28, 1995, was a record
owner of the Company's Common Stock, or who represents in good faith that he was
on such date a beneficial owner of such stock entitled to vote at the Annual
Meeting, the Company will send to such person, without charge, a copy of its
Annual Report on Form 10-K for 1994, as filed with the Securities and Exchange
Commission. Requests for the Report should be directed to Valerie Haertel,
Director of Investor Relations, Mercom, Inc., 105 Carnegie Center, Princeton,
New Jersey 08540
Solicitation of Proxies
-----------------------
The Company will bear the cost of solicitation of proxies. In addition to
the use of the mail, proxies may be solicited by officers, directors and regular
employees of the Company, personally or by telephone, telecopy or telegraph, and
the Company may reimburse persons holding stock in their names or those of their
nominees for their expenses in forwarding soliciting materials to their
principals.
It is important that proxies be returned promptly, even if you are expecting
to attend the meeting in person. Therefore, stockholders are urged to fill in,
date, sign and return the enclosed proxy in the enclosed envelope, to which no
postage need be affixed if mailed in the United States.
Stockholders' Proposals
-----------------------
Any stockholder who desires to submit a proposal to be considered for
inclusion in the proxy statement and proxy of the Company relating to the 1996
Annual Meeting of Stockholders must submit such proposal in writing to the
Company by December 27, 1995. Such proposals should be hand delivered or
mailed, return receipt requested, to the Secretary of the Company.
By order of the Board of Directors.
/s/ JOHN D. FILIPOWICZ
JOHN D. FILIPOWICZ
Corporate Secretary
Dated: April 25, 1995
8
