<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.
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(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):
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[_] 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:
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(3) Filing Party:
(4) Date Filed:
Notes:
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MERCOM, INC.
105 Carnegie Center
Princeton, New Jersey 08540
(609) 734-3700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 10, 1996
The Annual Meeting of Stockholders of Mercom, Inc. will be held on October
10, 1996, 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, 1996.
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 September 16, 1996,
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
September 18, 1996
<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 October 10, 1996, 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 September 18, 1996.
The close of business on September 16, 1996, 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. As of September 16,
1996, there were 4,787,060 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
<PAGE>
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, 1996. 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, 1996.
2
<PAGE>
INFORMATION CONCERNING ELECTION OF DIRECTORS
Information as of June 30, 1996, 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 40
Executive Vice President and Chief Financial Officer of the Company since April
1994; Executive Vice President and Chief Financial Officer, C-TEC Corporation
("C-TEC"); Senior Vice President, Daniels & Associates, an investment banking
firm specializing in the cable television, mobile communications and
entertainment businesses (January 1984 - April 1994). Mr. Godfrey does not own
any Common Stock of the Company.
Clifford L. Jones 1991 68
Adjunct Professor, Penn State University and Project Facilitator; 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 with respect to 300 shares of Common Stock of the Company.
Michael J. Mahoney 1994 45
President and Chief Operating Officer of the Company since February 1994;
Executive Vice President of the Company (June 1991 - February 1994); President
and Chief Operating Officer, C-TEC. Former Executive Vice President and Chief
Operating Officer, Harron Communications Corp. Mr. Mahoney does not own any
Common Stock of the Company.
David C. McCourt 1993 39
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. since January 1992; Director, MFS
Communications Company, Inc., MFS Telecom, Inc. and Cable Satellite Public
Affairs Network ("C-SPAN"). Mr. McCourt shares voting and investment power with
respect to 50,000 shares of Common Stock of the Company.
3
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Nominee Director Since Age
- - ------- -------------- ---
Raymond B. Ostroski 1994 41
Executive Vice President and General Counsel of the Company since February 1995;
Vice President, General Counsel and Corporate Secretary of the Company from
1991-1995; Executive Vice President, General Counsel and Corporate Secretary, C-
TEC. Mr. Ostroski has sole voting and investment power with respect to 4,000
shares of Common Stock of the Company.
Harold J. Rose, Jr. 1991 60
Partner, RK Associates, real estate management consultants since 1990; 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 50
Managing Director, PaineWebber, Inc. since January 1988. Mr. Stephenson has
sole voting and investment power with respect to 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 C-TEC Cable Systems, Inc. ("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, 1995. See "Certain Transactions."
4
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SECURITY OWNERSHIP OF STOCK
Security Ownership of Management
- - --------------------------------
As of June 30, 1996, C-TEC owned 2,964,250 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 the Company. Directors and
executive officers as a group beneficially owned 59,000 shares of Common Stock,
representing less than two percent of the outstanding Common Stock of the
Company.
Security Ownership of Certain Beneficial Owners
- - -----------------------------------------------
So far as is known to the Company, 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 June 30, 1996.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- - ------------------- -------------------- ---------
<S> <C> <C>
C-TEC Corporation 2,964,250 61.92%
105 Carnegie Center
Princeton, New Jersey 08540
Lappin Capital Management, L.P. (1) 463,019 9.67%
767 Third Avenue, 16th Floor
New York, New York 10017
- - ----------------------------------
</TABLE>
(1) Based on information obtained from Schedule 13D for the Common Stock of the
Company filed through December 15, 1995, with the SEC by Lappin Capital
Management, L.P. and LBL Group, L.P.
5
<PAGE>
CERTAIN TRANSACTIONS
The Company entered into the 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 ("EBITDA") as adjusted, during the applicable fiscal year
less the base year EBITDA of $3.85 million. During 1995, CCS earned, pursuant to
the Management Agreement, management and incentive fees of approximately $1.2
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"),
$95,593 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 (the "Credit Agreement"). The Credit Agreement was most recently amended
on August 16, 1995, and consists of a 7.5-year amortizing term loan with a final
maturity of December 31, 2002. In addition, the Company entered into a 364-day
credit facility of $2,000,000 which matured on August 14, 1996. Prior to this,
on March 31, 1995, C-TEC, which owns 61.92% 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. C-TEC also
loaned the Company $1,400,000 to pay amounts related to the Lahey lawsuit. The
Company paid interest in 1995 of $39,000 to C-TEC in connection with these two
demand notes. The demand notes were repaid in August 1995 as part of the
refinancing.
6
<PAGE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board of Directors of the Company held five (5) meetings in 1995.
The Company does not have a nominating or compensation committee.
The Audit/Affiliated Transactions Review Committee held four (4) meetings
in 1995. This 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 1995. 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 1995: Clifford L. Jones $10,500; Harold J.
Rose, Jr. $12,500; George C. Stephenson $10,500 and C-TEC Services, $37,500.
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
Upon the written request of any person who on September 16, 1996, was a
record owner of the Company's Common Stock, or who represents in good faith that
he or she 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 1995, 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 1997
Annual Meeting of Stockholders must submit such proposal in writing to the
Company by December 15, 1996. Such proposals should be hand delivered or mailed,
return receipt requested, to the Secretary of the Company.
By order of the Board of Directors.
JOHN D. FILIPOWICZ
Corporate Secretary
Dated: September 18, 1996
8
