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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1999
REGISTRATION STATEMENT NO. 333-41839
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REGISTRATION STATEMENT
ON FORM S-3
UNDER THE SECURITIES ACT OF 1933
---------------------
FIRSTCOM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 87-0464860
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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220 ALHAMBRA CIRCLE
SUITE 910
CORAL GABLES, FLORIDA 33134
(305) 448-4422
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
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FIRSTCOM CORPORATION
220 ALHAMBRA CIRCLE
SUITE 910
CORAL GABLES, FLORIDA 33134
ATTN.: CORY SHADE, GENERAL COUNSEL
(305) 448-4422
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SHARES AMOUNT AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED TO BE REGISTERED PER UNIT(1) OFFERING PRICE FEE(2)
<S> <C> <C> <C> <C>
Common Stock, $.001 541,250 9.8752 5,344,952.00 1,485.87
</TABLE>
(1) Estimated solely for the purpose of calculating the Registration Fee
pursuant to Rule 457( )
(2) Calculated in accordance with Rule 457( )
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted. The
information in this prospectus will be amended or completed.
<PAGE>
Subject to completion dated July 28, 1999
PROSPECTUS
541,250 SHARES
FIRSTCOM CORPORATION
COMMON STOCK
This Prospectus relates to 541,250 shares of Common Stock issued in
transactions exempt from the registration requirements of the Securities Act of
1933 and shares issuable upon the exercise of outstanding warrants and options
to purchase shares of Common Stock.
We are registering these common shares pursuant to commitments made to
the selling shareholders. We are paying the expenses of registering the common
shares, other than underwriting discounts and selling commissions, and fees and
expenses of counsel or other advisers to the selling shareholders. We will not
receive any of the proceeds from the sale by the selling shareholders of their
common shares, but we will receive the proceeds from the exercise of the
warrants and options.
The selling shareholders may sell their common shares in public or
private transactions, at prevailing market prices or at privately negotiated
prices.
Our common shares are quoted on the Nasdaq Small Cap market under the
symbol "FCLX." On July 22, 1999, the last reported sale price of our common
shares on the Nasdaq Small Cap market was $10.00.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 4
FOR A DESCRIPTION OF CERTAIN RISKS RELATING TO FIRSTCOM AND THE PURCHASE OF OUR
COMMON SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF OUR COMMON SHARES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
INCORPORATED IN THIS PROSPECTUS BY REFERENCE. WE HAVE NOT AUTHORIZED ANYONE ELSE
TO PROVIDE YOU WITH DIFFERENT INFORMATION. OUR COMMON SHARES ARE NOT BEING
OFFERED IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE OF THIS PROSPECTUS AND THOSE OTHER DOCUMENTS.
The date of this prospectus is July 28, 1999.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION PAGE
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<S> <C>
Prospectus Summary............................................................................ 1
Our Company.......................................................................... 1
Our Business Strategy................................................................ 3
Risk Factors.................................................................................. 4
We have significant indebtedness..................................................... 4
We have experienced operating losses and we expect these losses
to continue for the next several years.......................................... 5
We anticipate significant future capital requirements................................ 5
We have a limited operating history upon which you can evaluate our performance...... 6
We have entered into recently deregulated markets that present greater
challenges than entering into mature markets.................................... 6
Our growth strategy could place a strain on our resources............................ 6
Future acquisitions could result in dilution to shareholders and involve
other unique risks.............................................................. 7
Our success depends on market acceptance of, and subscriber
demand for, our services........................................................ 7
We may experience delays or unanticipated expenses associated
with the construction of our networks........................................... 7
The telecommunications industry is highly competitive................................ 7
We need to keep pace with rapid industry and technological change.................... 8
Damage to our networks or system failure could result in a loss of customers......... 8
Changes in anticipated government deregulation could adversely
affect our operations and planned growth........................................ 8
We depend on rights-of-way and other third party agreements.......................... 9
We depend upon local telecommunications providers.................................... 9
Departure of key personnel could harm our business................................... 9
Because all of our operations are based in counties outside the United
States, our business is subject to risks relating to economic and
Political uncertainty, including inflation and foreign taxes.................... 9
Strong labor unions in Latin American markets may increase our expenses.............. 10
Our operations may suffer from computer problems relating to the Year 2000........... 10
Cautionary Statement regarding Forward Looking Information........................... 11
Use of Proceeds............................................................................... 11
Registering Shareholders...................................................................... 11
Plan of Distribution.......................................................................... 14
Legal Matters................................................................................. 15
Experts ..................................................................................... 15
Where You Can Find More Information........................................................... 15
Issuance of Common Stock...................................................................... 16
Incorporation of Certain Documents By Reference............................................... 16
</TABLE>
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REFERENCES TO ADDITIONAL INFORMATION
This prospectus incorporates important business and financial
information about our company from documents that we have filed with the SEC but
have not included in or delivered with this document. If you write or call us,
we will send you these documents, excluding exhibit unless the exhibit is
specifically incorporated by reference as an exhibit in this prospectus, without
charge. You can contact us at:
FirstCom Corporation
220 Alhambra Circle
Suite 910
Coral Gables, Florida 33134
(305) 448-4422
Attn: Cory Shade
General Counsel
If you request any incorporated documents, we will mail them to you by
first class mail, or another equally prompt means, by the next business day
after we receive your request.
See "Where You Can Find More Information" on page 15 for more
information about our company or the documents referred to in this prospectus.
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PROSPECTUS SUMMARY
THE FOLLOWING IS ONLY A SUMMARY AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE MORE DETAILED
INFORMATION CONTAINED IN THIS PROSPECTUS AND ALL OTHER INFORMATION, INCLUDING
THE FINANCIAL INFORMATION AND STATEMENTS WITH NOTES, REFERRED TO IN THIS
PROSPECTUS AS DISCUSSED IN THE SECTION OF THIS PROSPECTUS TITLED "WHERE YOU CAN
FIND MORE INFORMATION" ON PAGE 15.
OUR COMPANY
GENERAL
We operate as a competitive local exchange carrier in five major
metropolitan business centers in three South American countries, including
Santiago, Chile; Lima, Peru; and Bogota, Cali and Cartagena, Colombia. We
primarily target business customers and other telecommunications carriers and
other high volume users by offering a wide range of high bandwidth integrated
services including voice, data, video, audio and Internet services. Specific
service offerings in each country vary depending on the current concessions held
by us in the particular country, local laws and regulations and the
infrastructure in the country. We believe that the size, expected growth and
increasing deregulation of the telecommunications industry in Latin America
offers us opportunities to broaden our existing service offerings and to expand
our operations in additional key Latin American business centers.
Before November 1996, we were a development stage company and our
activities primarily consisted of the acquisition of licenses, concessions and
rights-of-way in certain key Latin American markets. Beginning in November 1996,
when we hired a new management team, we have focused on the development and
operation of high-capacity fiber optic networks in key Latin American business
centers.
Today, we are operating state-of-the-art fiber optic IP/ATM networks in
Santiago, Chile and Lima, Peru, and, as a result of our February 1999
acquisition of FirstCom Colombia S.A., formerly known as Teleductos, S.A., we
currently have operations in Bogota, Cali and Cartagena, Colombia. IP/ATM is an
information transfer standard that is one of a general class of packet
technologies. IP/ATM can be used by many different information systems,
including local area networks to deliver traffic at varying rates, permitting a
mix of voice, data, video and multimedia. A brief description of our fiber optic
networks is as follows:
o CHILE. Our fiber optic network in Chile is approximately 120
kilometers and currently extends through Santiago's downtown
business district and the outlying industrial and airport corridor.
o PERU. Our fiber optic network in Peru is approximately 700
kilometers and currently extends through Lima's major commercial and
industrial districts, and the port city of Callao.
o COLOMBIA. Our fiber optic network in Colombia is approximately 580
kilometers and currently extends through Bogota's major commercial
and industrial districts.
CHILE
In Chile, we currently hold concessions to provide the following
services:
o voice and data transmission services and value-added services on a
private line basis;
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o public switched domestic and international long distance services;
and
o public switched local services.
We also maintain a concession to own and operate satellite earth
stations throughout Chile. Through our Chilean subsidiaries, we
currently provide our corporate customers in Santiago with the
following services:
o high-quality voice and high-speed data communications services on a
private line basis, LAN to LAN interconnections, dedicated channels
for access to local information warehouses (i.e. credit bureaus,
etc.), remote terminal access, PBX to PBX connections, remote
printing capabilities, local and wide area network design,
engineering, installation, systems' integration and support
services;
o domestic and international long distance services, that are switched
and transported, in part, through our own gateway switch and
satellite earth station, as well as through interconnections with
other Chilean long distance carriers; and
o Internet access services on a dial-up and dedicated access basis, as
well as value-added services such as web-hosting and corporate
e-mail. Our services are provided through our approximately
120-kilometer ATM digital fiber optic network which currently
extends through most of Santiago's downtown business district and
the outlying industrial park and airport corridors.
In December 1997, we acquired Iusatel Chile, S.A., now known as
FirstCom Long Distance S.A., a company based in Santiago, Chile, which provides
domestic and international long distance services. FirstCom Long Distance's long
distance traffic is switched and transported, in part, through our own gateway
switch and satellite earth station, as well as through interconnections with
other Chilean long distance carriers. The acquisition of FirstCom Long Distance
has enabled us to provide long distance services to our existing corporate
customers, bundle a variety of service offerings, including long distance and
data services, to attract additional customers and access the Chilean
international long distance market, which was estimated to be approximately $183
million dollars in 1997.
In October 1998, we acquired Red de Computadores S.A., now known as
FirstCom Internet S.A., based in Santiago, Chile, which provides Internet access
services on a dedicated and dial-up basis, as well as value-added services such
as web-hosting and corporate e-mail. The acquisition of FirstCom Internet has
enabled us to secure one of the largest dedicated Internet access customer base
in Chile and strategically position us to facilitate and potentially benefit
from the growth of Internet users in Chile.
PERU
In May 1996, we acquired Resetel S.A., now known as FirstCom Peru S.A.,
based in Lima, Peru, which holds a concession to provide local private line
voice and data services. Through FirstCom Peru, we offer high-speed data
transmission services on a private line basis, including LAN to LAN
interconnection, remote terminal access, dedicated channels for access to the
Internet and voice services on a private line basis. We provide our services in
Peru through FirstCom Peru's approximately 700-kilometer ATM digital fiber optic
network which currently extends throughout the major commercial and industrial
districts of Lima and the port city of Callao.
As a result of the accelerated liberalization of Peru's
telecommunications markets and termination of Telefonica de Peru's exclusive
concession to provide public switched local and long distance telephony services
effective August 1, 1998, we applied for and were granted a concession to
provide international and domestic public switched long distance voice services
in Peru. On April 27, 1999, FirstCom Peru signed an agreement with Telefonica
del Peru to interconnect their networks. We anticipate that this new
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agreement will extend the reach of our network by allowing our customers to
originate and terminate international and domestic long distance calls from, and
to, all locations in Peru served by Telefonica. We intend to expand FirstCom
Peru's existing service offerings to provide long distance public switched
telephony in 1999. Through FirstCom Peru, we have also received a concession to
provide public switched local voice services in Peru.
COLOMBIA
On February 2, 1999, we acquired 76% of FirstCom Colombia, a company
operating in the Colombian cities of Bogota, Cali and Cartagena. FirstCom
Colombia provides over 130 multinational, national and local businesses a broad
array of high-quality data communication services, including point-to-point and
point-to-multipoint network services from speeds ranging from 19.2 Kbps to 100
Mbps, for intranet, extranet and Internet services. These services are provided
over our approximately 580 kilometer digital high-speed fiber optic network
which currently extends through the commercial and industrial areas of Bogota.
FirstCom Colombia has established joint venture alliances to complete the
installation of local fiber optic infrastructure and last mile fiber optic
access in Cali and Cartagena. During 1999, we intend to complete an upgrade of
FirstCom Colombia's fiber optic network by replacing existing SDH nodes with an
ATM/IP backbone platform.
OUR BUSINESS STRATEGY
Our goal is to become a leading provider of high bandwidth
telecommunications services to business and other high volume users and carriers
operating in key Latin American business centers. We believe that the size and
growth potential of key Latin American business centers coupled with the ongoing
liberalization of the telecommunications markets throughout the region offer us
considerable opportunities for growth. Our strategy is to target business users
and telecommunications carriers in key Latin American business centers. These
users are typically located in major metropolitan areas, require high
reliability, high volume data transmission and voice capabilities and, in the
case of telecommunications carriers, substantial capacity to interconnect POPs.
In addition, many of our existing and targeted customers have operations in more
than one key Latin American business center in which we currently operate or may
operate in the future. We believe that by targeting users with multiple
geographic locations we will benefit through cost reductions, streamlined
investments and common decision making.
We seek to enter markets where we can construct or acquire fiber optic
networks and offer telecommunications services in advance of full market
liberalization. We have already implemented this strategy in Peru, where we were
one of the first companies to have established a telecommunications system
before the liberalization of Peru's telecommunications market in August 1998,
and in Colombia, where full market liberalization has not yet occurred. We
believe that our early entry into the Peruvian and Colombian markets will enable
us to establish strong business relationships with our targeted customers before
the onset of widespread competition, although no assurance can be given that we
will be able to effectively compete with existing and future market
participants.
We install advanced network and switching equipment into our fiber
optic networks that enable interconnections with existing public networks and
the provision of switched telephone services. If and to the extent permitted by
applicable laws and regulations, we will seek to secure a growing portion of
potential customers' and our customers' existing and targeted telecommunications
business by adding local, long distance, enhanced voice and data services to the
private line services we currently offer. However our ability to expand our
service offerings may be limited by our available capital resources and other
factors. We believe our customers require maximum reliability, high-quality
service, broad geographic coverage, strong customer service and innovative
services delivered in a timely and cost-effective manner. We believe that these
needs have often been unmet by the incumbent PTT in markets where we currently
operate.
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We expect to selectively enter additional key Latin American business
centers in part by acquiring controlling interests in existing companies that
have licenses, concessions and rights-of-way to install and operate fiber optic
networks or by applying for such licenses and concessions and negotiating for
such rights-of-way directly. We may also acquire other telecommunications
service providers in existing and targeted markets that enable us to expand or
enhance our current operations. We believe that many emerging local and long
distance carriers, cellular providers and recently privatized PTTs are likely to
seek alliances with local access providers with fiber optic networks, such as
us, to compete more effectively in the Latin America telecommunications markets.
We have tailored our strategy to adapt to the specific economic and
regulatory environments of each market in which we operate. Our ability to
implement our business strategy may be affected by a number of factors including
the factors described in "Risk Factors" beginning on page 4 of this prospectus.
Each of these factors is, to a large extent, subject to economic, financial,
competitive, regulatory and other factors, many of which are beyond our control.
Accordingly, we cannot assure you that we will successfully implement our
business strategy, in whole or in part. Our viability, profitability and growth
depend upon the successful continued implementation of our business plan.
Unless the context otherwise requires, references in this prospectus to
us refer to FirstCom Corporation and our subsidiaries. Our principal executive
offices are located at 220 Alhambra Circle, Suite 910, Coral Gables, Florida
33134.
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING MATTERS IN DECIDING WHETHER TO MAKE
AN INVESTMENT IN OUR COMMON SHARES. YOU SHOULD ALSO CONSIDER THE OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS. ALSO, PLEASE REFER TO THE DISCUSSION
UNDER THE HEADING "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION"
ON PAGE 11 OF THIS PROSPECTUS.
WE HAVE SIGNIFICANT INDEBTEDNESS.
We have significant indebtedness and substantial debt service
requirements. As of March 31, 1999, we have approximately $137 million of total
long-term indebtedness and stockholders' deficit of $0.8 million. In addition,
in each year since our inception, our earnings have been inadequate to cover our
fixed charges by a substantial amount. Our ability to make scheduled payments
with respect to our indebtedness will depend upon (a) our ability to implement
our business plan, to expand our operations and to successfully develop our
customer base in our target markets, (b) the ability of our subsidiaries to
remit cash to us in a timely manner and (c) our future operating performance. We
expect that we will continue to generate cash losses for the foreseeable future.
We cannot assure you that the we will be successful in developing and
maintaining a level of cash flow from operations sufficient to permit us to pay
the principal of, and interest on, our indebtedness. If we are unable to
generate sufficient cash flow from operations to service our indebtedness, we
may have to modify our growth plans, restructure or refinance our indebtedness
or seek additional capital. We cannot assure you that any of these strategies
could be effected on satisfactory terms, if at all, in light of our high
leverage or that any such strategy would yield sufficient proceeds to service
our indebtedness. Our high level of indebtedness imposes substantial risks to
holders of our securities, including the following:
o our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or general corporate
purposes may be impaired;
o a substantial portion of our cash flow from operations must be
dedicated to service our indebtedness and will not be available for
capital expenditures and other purposes in
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furtherance of our strategic growth objectives, and our failure to
generate sufficient cash flow to service this indebtedness could
result in a default under this indebtedness;
o the Indenture under which our senior notes were issued contains
restrictions on our ability to pay dividends or to repurchase
securities and imposes numerous other operating and financing
restrictions, the failure to comply with which may result in a
default under the Indenture;
o We are more highly leveraged than many of our competitors which may
place us at a competitive disadvantage;
o our high degree of leverage could make us more vulnerable to adverse
changes in our business and general economic conditions; and
o our ability to satisfy our obligations under our indebtedness will
be dependent upon risks, uncertainties and contingencies affecting
our business and operations, many of which are beyond our control,
such as general economic conditions, the entry of new competitors in
our markets and the introduction of new technology.
WE HAVE EXPERIENCED OPERATING LOSSES AND WE EXPECT THESE LOSSES TO CONTINUE FOR
THE NEXT SEVERAL YEARS.
We have never generated positive cash flow from consolidated operations
and, since our inception, have incurred significant net operating losses and
negative cash flow. As of March 31, 1999, we had an accumulated deficit of $58.6
million. We expect to continue to incur significant operating losses and
negative cash flow from operations for at least the next two years in connection
with establishing our local networks and implementing our business plan. We
cannot assure you that our networks or any of our other services will ever
provide a revenue base adequate to achieve or sustain profitability or to
generate positive cash flow and the failure to do so may adversely impact the
price of our common shares.
WE ANTICIPATE SIGNIFICANT FUTURE CAPITAL REQUIREMENTS.
Expansion of our existing networks and services and the development of
new networks and services will require significant capital expenditures, the
amount of which we are presently unable to predict. We may need additional
capital for any or all of the following purposes:
o to finance our anticipated growth;
o to fund working capital needs and future debt service obligations;
o to take advantage of unanticipated opportunities, including more
rapid international expansion, acquisitions of customer bases or
businesses or investments in, or strategic alliances with, companies
that are complementary to our current operations;
o to develop or expand into new services; and
o to otherwise respond to unanticipated competitive pressures.
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We currently expect to obtain such additional capital, if necessary,
through internally generated cash flow and from offerings of additional debt or
equity securities. However, we cannot assure you that we will be successful in
producing sufficient internally generated cash flow or raising sufficient
capital on acceptable terms, if at all. Moreover, the amount of, and the terms
and conditions of the instruments relating to, our current outstanding
indebtedness may adversely affect our ability to raise additional capital.
Failure to internally generate or raise sufficient funds may require us to
delay, abandon or reduce the scope of any potential future expansion, which
could have a material adverse effect on our business, financial condition and
results of operations.
WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE OUR PERFORMANCE.
We acquired our principal operations in Santiago, Chile in July 1994,
in Lima, Peru in May 1996, and in Bogota, Cali and Cartagena, Colombia in
February 1999 and we have limited experience in operating our business. We have
not commenced operations in any other country. Prospective investors therefore
have limited historical financial and operating information about us upon which
to base an evaluation of our performance.
WE HAVE ENTERED INTO RECENTLY DEREGULATED MARKETS THAT PRESENT GREATER
CHALLENGES THAN ENTERING INTO MATURE MARKETS.
Our viability, profitability and growth depend upon the successful
implementation of our business plan. Our ongoing business plan includes the
acquisition or formation of new local operators in markets where we currently do
not have operations and, in many of our existing and future markets, offering
services that have historically been provided only by a government or
privately-owned carrier of telecommunication services or those having dominant
market share (the "PTTs"). Accordingly, we may face delays and problems inherent
in establishing a new business in an evolving industry, including, among other
things, hiring experienced and qualified personnel. Other risks associated with
our business plan include:
o securing necessary licenses and adhering to applicable regulatory
requirements;
o obtaining any required zoning variances or other governmental or
local regulatory approvals; and
o obtaining rights-of-way agreements to install or develop our fiber
optic networks.
OUR GROWTH STRATEGY COULD PLACE A STRAIN ON OUR RESOURCES.
We have a limited operating history and our rapid growth could place a
strain on our management, operating and financial resources. In addition, we
explore opportunities to provide additional telecommunications services in Latin
America on an ongoing basis. Our ability to manage growth and expansion
effectively will require continued implementation of, and improvements to, our
operating and financial systems and will require us to expand, train and manage
our employee base. Furthermore, our ability to expand our operations will, among
other things, depend upon our ability to identify acquisitions in the future,
or, if identified, to arrive at prices and terms which are attractive to us and
may also depend on consents from third parties, including regulatory
authorities. Although we believe that we have made adequate allowances for the
costs and risks associated with future growth and expansion, we cannot assure
you that our systems, procedures and controls or financial resources will be
adequate to support our operations, that our management will be able to keep
pace with this growth or that we will be able to successfully consummate future
acquisitions on acceptable terms, or at all. If we are unable to manage growth
and/or expansion effectively, our business, operating results and financial
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condition and our ability to generate sufficient cash flow to service our
indebtedness will be materially and adversely affected which would also
adversely affect the value of our common shares.
FUTURE ACQUISITIONS COULD RESULT IN DILUTION TO SHAREHOLDERS AND INVOLVE OTHER
UNIQUE RISKS.
We intend to continue to pursue acquisitions of complementary services,
technologies or businesses, although we have no present understandings,
commitments or agreements with respect to any such acquisitions except as
described in this prospectus. Future acquisitions could result in potentially
dilutive issuances of equity securities, the incurrence of debt and contingent
liabilities and an increase in amortization expenses related to goodwill and
other intangible assets, which could have a material adverse effect upon our
business, financial condition and results of operations. Acquisitions involve
numerous risks, including difficulties in the assimilation of the operations,
technologies, services and products of the acquired companies and the diversion
of management's attention from other business concerns.
OUR SUCCESS DEPENDS ON MARKET ACCEPTANCE OF, AND SUBSCRIBER DEMAND FOR, OUR
SERVICES.
Our success is subject to a number of business, economic, regulatory
and competitive factors, many of which are beyond our control, including the
extent to which prospective subscribers will use our services. The successful
implementation of our growth strategy is dependent, among other things, on our
expectation that demand for our current services will increase significantly in
our existing markets and that there will be strong demand for services that we
introduce in the future. We have only recently begun providing
telecommunications services in Peru and Colombia. Subscriber demand for our
services in the markets in which we currently operate and in those in which we
expect to operate is uncertain. Failure to gain market acceptance for, or
subscriber demand of, current or planned services would have a material adverse
effect on us.
WE MAY EXPERIENCE DELAYS OR UNANTICIPATED EXPENSES ASSOCIATED WITH THE
CONSTRUCTION OF OUR NETWORKS.
Our business sometimes requires substantial construction of new, or
additions to existing, network systems. Construction activity may require us to
obtain qualified subcontractors, the availability of which varies significantly
from country to country. Construction projects are subject to overruns and
delays not within our control or the control of our subcontractors, such as
those caused by government entities, financing delays and catastrophic
occurrences. Delays also can arise from design changes and material or equipment
shortages or delays in delivery. Services to buildings can be delayed if the
operating companies or their subcontractors have difficulty in obtaining
easements from private parties. Failure to complete construction on a timely
basis could jeopardize our subscriber contracts, franchises and licenses or put
us at a competitive disadvantage.
THE TELECOMMUNICATIONS INDUSTRY IS HIGHLY COMPETITIVE.
The international telecommunications industry is highly competitive.
Our success depends upon our ability to compete with a variety of other
telecommunications providers in each of our markets, including global alliances
among some of the world's largest telecommunications carriers, PTTs, wireless
telephone companies and microwave carriers. Other existing and potential
competitors include cable television companies, railway companies, electric
companies and other utilities with rights-of-way and large end users which have
private networks. The intensity of this competition has recently increased and
we believe that this competition will continue to intensify as the number of new
market entrants increases. Many of our existing and potential competitors have
substantially greater financial, marketing and other resources than we have. If
our competitors devote significant additional resources to the provision of
telecommunications services to our target customer base, that action would have
a material
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adverse effect on our business, financial condition and/or results of
operations. We cannot assure you that we will be able to compete successfully
against these existing and potential competitors. Competition for customers in
the telecommunications industry is primarily based on price and, to a lesser
extent, on the type and quality of services offered. We have no control over the
prices set by our competitors, and some of our competitors may be able to use
their financial resources to cause severe price competition. Any significant
price competition would have a material adverse effect on our business,
financial condition and results of operations. Additionally, intensified
competition in certain of our markets may cause us to reduce our prices, which
may reduce our revenue and margins.
WE NEED TO KEEP PACE WITH RAPID INDUSTRY AND TECHNOLOGICAL CHANGE.
Our future financial performance will depend, in part, upon our ability
to anticipate and adapt to rapid regulatory and technological changes occurring
in the telecommunications industry and upon our ability to offer, on a timely
basis, services that meet evolving industry standards. We cannot assure you that
we will be able to adapt to such technological changes or offer these services
on a timely basis or establish or maintain a competitive position. The
international telecommunications industry is changing rapidly due to, among
other things, deregulation, privatization of PTTs, technological improvements,
expansion of telecommunications infrastructure and the globalization of the
world's economies and free trade. In addition, the telecommunications industry
is in a period of rapid technological evolution. We are unable to predict which
of the many possible future product and service offerings will be important to
establish and maintain our competitive position or what expenditures will be
required to develop and provide these products and services. We cannot assure
you that one or more of these factors will not vary unpredictably, which could
have a material adverse effect on us. In addition, we cannot assure you, even if
these factors turn out as we anticipate, that we will be able to implement our
strategy or that our strategy will be successful in this rapidly evolving
market.
DAMAGE TO OUR NETWORKS OR SYSTEM FAILURE COULD RESULT IN A LOSS OF CUSTOMERS.
Our success in marketing our services to business and government users
requires that we provide adequate reliability, capacity and security via our
network infrastructure. Our networks are subject to physical damage, power loss,
capacity limitations, software defects and breaches of security (by computer
virus, break-ins or otherwise), all of which may cause interruptions in service
or reduced capacity for our customers. Interruptions in service, capacity
limitations or security breaches could have a material adverse effect on our
business, financial condition and results of operations.
CHANGES IN ANTICIPATED GOVERNMENT DEREGULATION COULD ADVERSELY AFFECT OUR
OPERATIONS AND PLANNED GROWTH.
National and local laws and regulations differ significantly among the
countries in which the Company currently operates and plans to operate. The
interpretation and enforcement of such laws and regulations vary and could limit
our ability to provide certain telecommunications services. Furthermore, changes
in current or future laws or regulations or future judicial intervention could
have a material adverse effect on us. In addition, our strategy is based, in
large part, upon the expected deregulation of the telecommunications markets in
various countries throughout Latin America. We cannot assure you that any of
those countries will proceed with the expected deregulation on schedule, or at
all, or that the trend towards deregulation will not be stopped or reversed.
There may be significant resistance to the implementation of legislation which
is directed toward deregulation from PTTs, regulators, trade unions and other
sources. These and other potential obstacles to deregulation would have a
material adverse effect on our operations and growth.
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WE DEPEND ON RIGHTS-OF-WAY AND OTHER THIRD PARTY AGREEMENTS.
We are required to obtain easements, rights-of-way, franchises and
licenses from various private parties, actual and potential competitors and
local governments in order to construct and maintain our fiber optic networks.
We do not yet have all of the approvals required to implement our network
business plan in prospective new markets, and we cannot assure you that we will
be able to obtain and maintain approvals on acceptable terms or that other
service providers will not obtain similar approvals that will allow them to
compete against us or enter a market before us. Some of the agreements for
approvals obtained by us may be short-term or revocable at will, and we cannot
assure you that we will have continued access to approvals after their
expiration. If any of these agreements were terminated or could not be renewed
and we were forced to remove our fiber optic cable or abandon our network in
place, such termination or non-renewal would have a material adverse effect on
our business, results of operations and financial condition.
WE DEPEND UPON LOCAL TELECOMMUNICATIONS PROVIDERS.
We are dependent upon incumbent local exchange companies to provide
telecommunications services to us and to our customers. We have from time to
time experienced delays in receiving telecommunications services, and we cannot
assure you that we will be able to obtain these services on the scale and within
the time frames required by us at an affordable cost, or at all. Any failure to
obtain these services or additional capacity on a timely basis at an affordable
cost, or at all, would have a material adverse effect on our business, financial
condition and results of operations.
DEPARTURE OF KEY PERSONNEL COULD HARM OUR BUSINESS.
We are managed by a small number of key executive officers and
operating personnel, including Patricio E. Northland, our Chairman, President
and Chief Executive Officer, and Douglas G. Geib II, our Executive Vice
President and Chief Financial Officer. The loss of our key personnel could have
a material adverse effect on business. Further, we believe that our future
success will depend in large part on our continued ability to attract and retain
skilled and qualified personnel with experience in the telecommunications
industry. These employees are in great demand and are often subject to competing
offers of employment.
BECAUSE ALL OF OUR OPERATIONS ARE BASED IN COUNTIES OUTSIDE THE UNITED STATES,
OUR BUSINESS IS SUBJECT TO RISKS RELATING TO ECONOMIC AND POLITICAL UNCERTAINTY,
INCLUDING INFLATION AND FOREIGN TAXES.
All of our current and planned operations are based in Latin America.
Accordingly, we are subject to economic, political or social instability or
other developments not typical of investments made in the United States. These
events could adversely affect our financial condition and results of operations.
During the past several years, countries in Latin America in which we operate or
plan to operate have been characterized by varying degrees of inflation, uneven
growth rates and political uncertainty. We currently do not have political risk
insurance in the countries in which we conduct business. While we carefully
consider these risks when evaluating investment opportunities and seek to
mitigate these and other risks by diversifying our operations in a number of
Latin American countries, we may be materially adversely affected as a result of
these risks.
Our operations depend upon the economies of the markets in which we
operate. These markets include countries with economies in various stages of
development or structural reform, some of which are subject to rapid
fluctuations in terms of consumer prices, employment levels, gross domestic
product and interest and foreign exchange rates. We are subject to fluctuations
in the local economies in which we operate. To the extent such fluctuations have
an effect on the ability of subscribers to pay for our services, the growth of
our services in these markets could be impacted negatively. Many of the
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countries in which we operate, or expect to operate, do not have established
credit bureaus, thereby making it more difficult for us to ascertain the
creditworthiness of potential subscribers. Accordingly, we may experience a
higher level of bad debt expense than otherwise would be the case.
Certain of our targeted markets are in countries in which the rate of
inflation is significantly higher than that of the United States. We intend to
price our products and services in US dollars to mitigate any effects of
inflation; however, we cannot assure you that any significant increase in the
rate of inflation in these countries could be offset, in whole or in part, by
corresponding price increases by the Company, even over the long-term.
Distributions of earnings and other payments, including interest, received from
our subsidiaries and affiliates may be subject to withholding taxes imposed by
the jurisdictions in which such entities are formed or operating, which will
reduce the amount of after-tax cash we can receive from these entities. In
general, a United States corporation may claim a foreign tax credit against our
federal income tax expense for such foreign withholding taxes and for foreign
income taxes paid directly by foreign corporate entities in which it owns 10% or
more of the voting stock. Our ability to claim foreign tax credits and to
utilize net foreign losses is, however, subject to numerous limitations, and we
may incur incremental tax costs as a result of these limitations or because we
are not in a tax-paying position in the United States. We may also be required
to include in our income for United States federal income tax purposes our
proportionate share of certain earnings of those foreign corporate subsidiaries
that are classified as "controlled foreign corporations" without regard to
whether distributions have been actually received from our subsidiaries.
STRONG LABOR UNIONS IN LATIN AMERICAN MARKETS MAY INCREASE OUR EXPENSES.
In most Latin American countries labor unions are considered to be
strong and influential. Accordingly, while none of our operations are currently
unionized, we may encounter strikes or other types of conflicts with labor
unions or our personnel in our markets which could adversely affect us. In
addition, in response to pressure by labor unions, many Latin American
governments in countries in which we currently or plan to have operations have,
at times, actively regulated cross-border transactions, including placing
limitations on imported goods. These regulations may result in delays and
increased costs for us.
OUR OPERATIONS MAY SUFFER FROM COMPUTER PROBLEMS RELATING TO THE YEAR 2000.
The Year 2000 issue is the result of computer controlled systems using
two digits rather then four to define the applicable year. This could result in
system failure or miscalculations causing disruptions in our operations
including, among other things, temporary inability to process transactions, send
invoices or engage in similar normal business activities.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain of our normal business activities or
operations. These failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of third-party suppliers and customers, we are unable to
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our results of operations, liquidity or financial
condition.
If we cannot operate effectively after December 31, 1999, we could,
among other things, face substantial claims by customers or loss of revenue due
to service interruptions, inability to fulfill contractual obligations or to
bill customers accurately and on a timely basis, and increased expenses
associated with litigation, stabilization of operations following critical
system failures, and the execution of contingency plans. We could also
experience an inability by customers and others to pay, on a timely basis or at
all, obligations to us. Under these circumstances, the adverse effects, although
not quantifiable at this time, would be material.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
The information contained in this prospectus contains "forward-looking
statements" that reflect our current expectations, hopes, intentions, plans and
strategies. The words or phrases "is expected," "will continue," anticipates,"
"estimates," "expects," "plans," "intends," or similar expressions in this
prospectus or in the documents incorporated in this prospectus by reference are
intended to identify "forward-looking statements" within the meaning of Section
21E of the Securities Exchange Act of 1934 and Section 27A of the Securities
Act, as enacted by the Private Securities Litigation Reform Act of 1995. We
cannot assure you that these forward-looking statements will prove to have been
correct. Important factors that could cause our actual results to differ
materially from the expectations that may be implied by these forward-looking
statements include, but are not limited to, the economic environment of the
Latin American countries in which we operate, changes in governmental
regulation, our liquidity and capital resources, competition, actual demand for
our services and the other factors identified in this prospectus and in the
documents incorporated in this prospectus by reference. We do not undertake to
update any of these forward-looking statements. All statements in this
prospectus and in the documents incorporated in this prospectus by reference are
forward-looking statements, except for historical information.
All subsequent written and oral forward-looking statements attributable
to us or any person acting on our behalf are qualified by the cautionary
statements in this section. We have no obligation to revise or update these
forward-looking statements.
USE OF PROCEEDS
We will receive no proceeds from the sale of any of the common shares
being offered by the selling shareholders under this prospectus. We will receive
proceeds from the exercise of the warrants and options for which we are
registering the underlying common shares. These proceeds will be used for
working capital requirements and other general corporate purposes.
REGISTERING SHAREHOLDERS
The following table sets forth the names of our shareholders whose
common shares are being registered in this offering, the number of common shares
owned by each these shareholders, the number of common shares that may be
offered by each of these shareholders pursuant to this prospectus and the number
of common shares each of these shareholders will own after completion of this
offering, assuming all of the common shares being registered in this offering
are sold.
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<TABLE>
COMMON SHARES BENEFICIALLY OWNED(1)
Name of registering shareholders Number of
(2)(3) Number of Shares Shares Offered
Before Offering in this Offering
<S> <C> <C> <C>
Douglas MacLellan (13) 115,000 115,000
Varel International Limited 152,480 152,480
Zelbord Properties Limited 347,520 347,520
Aldo Figueroa (42) 14,000 14,000
Roger Cristoph (43) 2,250 2,250
</TABLE>
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- -------------------------
(1) Includes common shares owned and common shares issuable upon the exercise
of outstanding vested and unvested stock options and warrants.
(2) The Offering is intended to satisfy certain obligations of the Company to
the registering shareholders. The registering shareholders are under no
obligation to sell all or any portion of their common shares being
offered hereby, immediately or after the date of this prospectus. Because
the registering shareholders may sell all or part of their common shares,
no estimate can be given as to the number of common shares that will be
held by any registering shareholder upon termination of the Offering made
hereby.
(3) Assumes that each Selling shareholder will sell all of the common shares
offered pursuant to this prospectus, but not any other common shares
beneficially owned by such Selling shareholder. However, none of the
registering shareholders has indicated their intention to sell any of the
common shares owned by them as of the date of this prospectus.
(4) Mr. MacLellan is a former director of the Company. Includes 25,000 common
shares issuable upon the exercise of outstanding stock options which are
fully vested. Unless exercised, the options will expire on December 31,
2003.
(5) Includes 400,000 common shares owned and common shares issuable upon the
exercise of outstanding vested and unvested stock options and warrants.
Unless exercised 250,000 options expire in August 2003, 100,000 expire in
February 2009 and 50,000 expire in May 2009.
(6) Aldo Figueroa is a former employer of the Company. The common shares are
issuable upon the exercise of options that expire on October 1, 2003.
(7) The common shares are issuable upon the exercise of outstanding warrants.
Unless exercised, the warrants will expire on June 30, 2000.
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PLAN OF DISTRIBUTION
The selling shareholders may sell their common shares in various ways
and at various prices. Some of the methods by which the selling shareholders may
sell their shares include:
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o block trades in which a broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such
broker or dealer for the selling shareholder's account pursuant to
this prospectus;
o sales under Rule 144 rather than by using this prospectus;
o from time to time by pledgees, donees, transferees or other
successors in interest, including but not limited to Bear, Stearns
Securities Corp;
o a combination of any such methods of sale; or
o any other legally permitted method.
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The applicable sales price may be affected by the type of transaction.
The selling shareholders may also pledge their shares pursuant to the
margin provisions of their customer agreements with their brokers. If there is a
default by the selling shareholders, the brokers may offer and sell the pledged
shares.
Brokers or dealers may receive commissions or discounts from the
selling shareholders (or, if the broker-dealer acts as agent for the purchaser
of the shares, from such purchaser) in amounts to be negotiated which are not
expected to exceed those customary in the types of transactions involved. We
cannot estimate at the present time the amount of commissions or discounts, if
any, that will be paid by the selling shareholders in connection with sales of
the shares.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In that event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
Under the securities laws of certain states, the shares may be sold in
those states only through registered or licensed broker-dealers or pursuant to
available exemptions from such requirements. In addition, in certain states the
shares may not be sold therein unless the shares have been registered or
qualified for sale in such state or an exemption from such requirement is
available and is complied with.
We have agreed to pay certain fees and expenses incident to the
registration of the common shares. We have agreed to indemnify the selling
shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The selling shareholders and other persons participating in the
distribution of the shares offered hereby are subject to the applicable
requirements of Regulation M promulgated under the Exchange Act in connection
with sales of the shares.
LEGAL MATTERS
Baker & McKenzie, Miami, Florida will pass upon the validity of the
issuance of the common shares being offered by this prospectus.
EXPERTS
Ernst & Young LLP, independent certified public accountants, have
audited our consolidated financial statements and schedule included in our
Annual Report on Form 10-KSB for the year ended December 31, 1998, as set forth
in their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedule
are incorporated by reference in reliance on Earnst & Young LLP's report, given
on their authority as experts in accounting and auditing.
The financial statements as of December 31, 1997 and for each of the
two years in the period ended December 31, 1997 incorporated in this Prospectus
by reference to the Annual Report on Form 10-KSB for the year ended December 31,
1998 have been so included in reliance on the report (which contains an
explanatory paragraph relating to the Company's restatement of its financial
statements for the years ended December 31, 1997 and 1996 to reflect the effect
of revising the price per share of Company common stock issued in connection
with the May 1996 acquisition of FirstCom Peru (formerly Resetel S.A. from $2.25
to $5.99 per share) of PricewaterhouseCoopers LLP, independent accountants,
given the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the
Securities Act that registers the sale of our common shares covered by this
prospectus. The registration statement, including the attached exhibits and
schedules, contains additional relevant information about us. The rules and
regulations of the SEC allow us to omit some information included in the
registration statement from this prospectus.
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In addition, we file reports, proxy statements and other information
with the SEC under the Securities Exchange Act of 1934. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
read and copy this information at the following locations of the SEC:
<TABLE>
<CAPTION>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, including us,
which file electronically with the SEC. The address of that site is
http://www.sec.gov. You can also inspect reports, proxy statements and other
information about each of us at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
ISSUANCE OF COMMON STOCK
Since March 31, 1999 and through July 23, 1999, approximately 2.7
million shares of common stock have been issued in connection with the exercise
of stock options and warrants. Total cash proceeds from such exercises was
approximately $8.5 million.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
document. This means that the companies can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be a part of this
document except for any information that is superseded by information that is
included directly in this document.
This document incorporates by reference the documents listed below that
we have previously filed with the SEC. They contain important information about
our companies and their financial condition. Some of these filings have been
amended by later filings, which are also listed.
SEC FILINGS (FILE NO. 0-25194) PERIOD/DATE FILED
- ------------------------------ -----------------
Annual Report on Form 10-KSB December 31, 1998 (filed March 31, 1999)
Current Reports on Form 8-K June 30, 1999 (filed July 8, 1999)
Registration Statements Form 8-A dated November 29, 1994 setting
forth a description of our common shares;
Form 8-A dated April 3, 1998 setting forth a
description of the Common Stock Purchase
Rights
Subsequently filed reports All documents filed by us under Sections
13(a), 13(c), 14or 15(d) of the Exchange Act
after the date of this prospectus and prior
to the termination of this offering.
Any statement contained herein or in a document all or any portion of
which is incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such earlier statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
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We have not authorized anyone to give any information or make any
representation about this offering or our company that differs from, or adds to,
the information in this document or in our documents that are publicly filed
with the SEC. Therefore, if anyone does give you different or additional
information, you should not rely on it.
If you are in a jurisdiction where it is unlawful to offer or sell, or
to ask for offers to buy or sell, the common shares offered by this prospectus,
or if you are a person to whom it is unlawful to direct these activities, then
the offer presented by this prospectus does not extend to you.
The information contained in this document speaks only as of its date
unless the information specifically indicates that another date applies.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses incurred by the Company in connection with the issuance
and distribution of the securities being registered are as follows. All amounts
are estimated except the Securities and Exchange Commission registration fee.
Amount
Registration fee - Securities and Exchange Commission $ 1,485.87
Legal fees and expenses 5,000.00
Accounting fees and expenses 3,000.00
Printing and engraving expenses 2,000.00
Miscellaneous 1,000.00
Total $ 12,485.87
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION
Our Articles of Incorporation and By-laws contain certain provisions
that eliminate the liability of our directors and officers to the fullest extent
permitted by the Texas Business Corporation Act, except that they do not
eliminate liability for: (i) any breach of the duty of loyalty to the Company or
our shareholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) an act or omission
for which the liability of a director is expressly provided by an applicable
statute; or (iv) any transaction from which the director derived an improper
personal benefit. The Texas Business Corporation Act provides that Texas
corporations may indemnify any director, officer or employee made or threatened
to be made a party to a proceeding, by reason of the former or present official
capacity of such person, if such person (i) conducted himself in good faith and
(ii) reasonably believed that his conduct was in the corporation's best
interests or, in the case of any criminal proceeding, that his conduct was not
unlawful and opposed to the corporation's best interests. The indemnification
provision does not permit indemnification of officers, directors and employees
(i) when such persons are found liable to the corporation or (ii) for any
transaction from which such persons derive improper personal benefour. The
foregoing provisions may reduce the likelihood of derivative litigation against
directors, officers and employees of the Company and may discourage or deter
shareholders or management from bringing a lawsuit against directors and
officers for breaches of their fiduciary duties, even though such an action, if
successful, might otherwise have benefited the Company and our shareholders.
The Company has entered into an indemnification agreement with each
director (an "Indemnitee"). Pursuant to the indemnification agreement, the
Company will indemnify an Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by the
agreement, our Articles of Incorporation and By-laws, or statute. In addition,
the Company will indemnify each Indemnitee against any and all expenses incurred
in connection with claims relating to the fact that such Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company or any subsidiary
of the Company, and the Company will advance all such expenses. The Company
maintains directors' and officers' liability insurance.
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Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and therefore unenforceable.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ---------------------------------------------------------------------
2.1 Stock Purchase Agreement, dated as of September 9, 1997, as amended,
between FirstCom Corporation and Inversiones Druma S.A. for the
acquisition of 99.9% of the outstanding shares of capital of Iusatel
Chile S.A., previously acquisition of 99.9% of the outstanding shares
of capital of Iusatel Chile S.A., previously filed as an exhibit to
Registrant's Current Report on Form 8-K, filed with the Commission on
September 24, 1997 and incorporated herein by reference
3.1 Articles of Incorporation of FirstCom Corporation previously filed as
an exhibit to the Registrant's Form 8-A Registration Statement, filed
with the Commission on November 29, 1994 and incorporated herein by
reference.
3.2 By-laws of FirstCom Corporation previously filed as an exhibit to
Amendment No. 4 to the Form S-4 Registration Statement of the
Registrant, filed with the Commission on August 12, 1998 and
incorporated herein by reference.
4.1 Purchase Agreement, dated as of October 21, 1997 by and among
InterAmericas Communications Corporation (known as FirstCom
Corporation), Hewster Chile S.A., Red de Servicios Empresariales de
Telecomunicaciones S.A. and UBS Securities LLC previously filed as an
exhibit to Registrant's Registration Statement on Form S-4, filed with
the Commission on December 10, 1997 and incorporated herein by
reference.
4.2 Form of Existing Note previously filed as an exhibit to Registrant's
Registration Statement on Form S-4, filed with the Commission on
December 10, 1997 and incorporated herein by reference.
4.3 Indenture, dated as of October 27, 1997 between InterAmericas
Communications Corporation and State Street Bank & Trust Company, N.A.
previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and
incorporated herein by reference.
4.4 A/B Exchange Registration Rights Agreement, dated as of October 27,
1997, between FirstCom Corporation and UBS Securities LLC previously
filed as an Exhibit to Registrant's Registration Statement on Form
S-4, filed with the Commission on December 10, 1997 and incorporated
herein by reference.
4.5 Warrant Agreement, dated as of October 27, 1997, between the
Registrant and State Street Bank & Trust Company, N.A. previously
filed as an exhibit to Registrant's Registration Statement on Form
S-4, filed with the Commission on December 10, 1997 and incorporated
herein by reference.
4.6 Warrant Registration Rights Agreement, dated as of October 27, 1997
between FirstCom Corporation and UBS Securities LLC previously filed
as an Exhibit to Registrant's Registration Statement on Form S-4,
filed with the Commission on December 10, 1997 and incorporated herein
by reference.
4.7 Specimen of FirstCom Corporation 14% Senior Note due October 27, 2007
previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and
Incorporated herein by reference.
4.8 Proceeds Pledge and Escrow Agreement, dated as of October 27, 1997
between FirstCom Corporation and State Street Bank and Trust Company,
N.A., previously filed as an exhibit to Registrant's Registration
Statement on Form S-4, filed with the Commission on December 10, 1997
and incorporated herein by reference.
5.1 Opinion of Baker & McKenzie.
10.1 Employment Agreement, dated as of October 7, 1997, between
InterAmericas
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Communications Corporation (now known as FirstCom Corporation) and
Patricio E. Northland, previously filed as an exhibit to Amendment No.
4 to the Form S-4 Registration Statement of the Registrant filed with
the Commission on August 12, 1998 and incorporated herein by
reference.
10.2 Employment and Severance Agreement, dated as of April 14, 1997,
between InterAmericas Communications Corporation (now known as
FirstCom Corporation) and Douglas G. Geib previous filed as an exhibit
to Amendment No. 4 to the Form S-4 Registration Statement of the
Registrant filed with the Commission on August 12, 1998 and
incorporated herein by reference.
21.1 Subsidiaries of the Registrant previously filed as an exhibit to
Registrant's Form 10-KSB, filed with the Commission on March 10, 1998
and incorporated herein by reference.
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (on file with the SEC).
25.1 Statement of Eligibility of State Street Bank and Trust Company, N.A.
previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and
incorporated herein by reference
99.1 Form of Letter of Transmittal previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.2 Form of Notice of Guaranteed Delivery previously filed as an exhibit
to Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.3 Form of Exchange Agent Agreement previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.4 Form of Information Agent Agreement previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement;
20
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on our behalf by the undersigned, thereunto
duly authorized, in the City of Coral Gables, State of Florida, on this 26 day
of July, 1999.
FIRSTCOM CORPORATION.
By: /s/ PATRICIO E. NORTHLAND
----------------------------
Patricio E. Northland
President and Chief
Executive Officer
21
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ PATRICIO E. NORTLAND President, Chief July 26, 1999
- -------------------------- Executive Officer and Director
Patricio E. Northland (Principal Executive Officer)
/s/ DOUGLAS G. GEIB, II Chief Financial Officer, Vice July 26, 1999
- ------------------------- President (Principal Financial
Douglas G. Geib, II and Accounting Officer)
/s/ PATRICIO E. NORTHLAND Chairman of the Board July 26, 1999
- ------------------------- and Director
Patricio E. Northland
/s/ DOUGLAS GEIB, II Director July 26, 1999
- -------------------------
Douglas Geib, II
/s/ DAVID KLEINMAN Director July 26, 1999
- -------------------------
David Kleinman
/s/ GEORGE CARGIL Director July 26, 1999
- -------------------------
George Cargil
/s/ ANDREW HULSH Director July 26, 1999
- -------------------------
Andrew Hulsh
22
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------------------------------------------------------
2.1 Stock Purchase Agreement, dated as of September 9, 1997, as amended,
between FirstCom Corporation and Inversiones Druma S.A. for the
acquisition of 99.9% of the outstanding shares of capital of Iusatel
Chile S.A., previously acquisition of 99.9% of the outstanding shares
of capital of Iusatel Chile S.A., previously filed as an exhibit to
Registrant's Current Report on Form 8-K, filed with the Commission on
September 24, 1997 and incorporated herein by reference
3.1 Articles of Incorporation of FirstCom Corporation previously filed as
an exhibit to the Registrant's Form 8-A Registration Statement, filed
with the Commission on November 29, 1994 and incorporated herein by
reference.
3.2 By-laws of FirstCom Corporation previously filed as an exhibit to
Amendment No. 4 to the Form S-4 Registration Statement of the
Registrant, filed with the Commission on August 12, 1998 and
incorporated herein by reference.
4.1 Purchase Agreement, dated as of October 21, 1997 by and among
InterAmericas Communications Corporation (known as FirstCom
Corporation), Hewster Chile S.A., Red de Servicios Empresariales de
Telecomunicaciones S.A. and UBS Securities LLC previously filed as an
exhibit to Registrant's Registration Statement on Form S-4, filed with
the Commission on December 10, 1997 and incorporated herein by
reference.
4.2 Form of Existing Note previously filed as an exhibit to Registrant's
Registration Statement on Form S-4, filed with the Commission on
December 10, 1997 and incorporated herein by reference.
4.3 Indenture, dated as of October 27, 1997 between InterAmericas
Communications Corporation and State Street Bank & Trust Company, N.A.
previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and
incorporated herein by reference.
4.4 A/B Exchange Registration Rights Agreement, dated as of October 27,
1997, between FirstCom Corporation and UBS Securities LLC previously
filed as an Exhibit to Registrant's Registration Statement on Form
S-4, filed with the Commission on December 10, 1997 and incorporated
herein by reference.
4.5 Warrant Agreement, dated as of October 27, 1997, between the
Registrant and State Street Bank & Trust Company, N.A. previously
filed as an exhibit to Registrant's Registration Statement on Form
S-4, filed with the Commission on December 10, 1997 and incorporated
herein by reference.
4.6 Warrant Registration Rights Agreement, dated as of October 27, 1997
between FirstCom Corporation and UBS Securities LLC previously filed
as an Exhibit to Registrant's Registration Statement on Form S-4,
filed with the Commission on December 10, 1997 and incorporated herein
by reference.
4.7 Specimen of FirstCom Corporation 14% Senior Note due October 27, 2007
previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and
Incorporated herein by reference.
4.8 Proceeds Pledge and Escrow Agreement, dated as of October 27, 1997
between FirstCom Corporation and State Street Bank and Trust Company,
N.A., previously filed as an exhibit to Registrant's Registration
Statement on Form S-4, filed with the Commission on December 10, 1997
and incorporated herein by reference.
5.1 Opinion of Baker & McKenzie.
10.1 Employment Agreement, dated as of October 7, 1997, between
InterAmericas Communications Corporation (now known as FirstCom
Corporation) and Patricio E. Northland, previously filed as an exhibit
to Amendment No. 4 to the Form S-4 Registration Statement of the
Registrant filed with the Commission on August 12, 1998 and
incorporated herein by reference.
23
<PAGE>
10.2 Employment and Severance Agreement, dated as of April 14, 1997,
between InterAmericas Communications Corporation (now known as
FirstCom Corporation) and Douglas G. Geib previous filed as an exhibit
to Amendment No. 4 to the Form S-4 Registration Statement of the
Registrant filed with the Commission on August 12, 1998 and
incorporated herein by reference.
21.1 Subsidiaries of the Registrant previously filed as an exhibit to
Registrant's Form 10-KSB, filed with the Commission on March 10, 1998
and incorporated herein by reference.
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney.
25.1 Statement of Eligibility of State Street Bank and Trust Company, N.A.
previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and
incorporated herein by reference
99.1 Form of Letter of Transmittal previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.2 Form of Notice of Guaranteed Delivery previously filed as an exhibit
to Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.3 Form of Exchange Agent Agreement previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.4 Form of Information Agent Agreement previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
24
EXHIBIT 5.1
ANDREW HULSH
[email protected]
(305) 789-8985
July 23, 1999
FirstCom Corporation
200 Alhambra Circle
Coral Gables, Florida 33134
Gentlemen:
FirstCom Corporation., a Texas corporation (the "Company"), has filed
with the Securities and Exchange Commission a Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Act"). Such Registration Statement relates to the sale by certain shareholders
of the Company (the "Selling Shareholders") of up to 541,250 shares of Common
Stock, par value $.001 per share (the "Common Stock"), of the Company (the
"Offering"). We have acted as counsel to the Company in connection with the
preparation and filing of the Registration Statement.
In connection with the Registration Statement, we have examined,
considered and relied upon copies of the following documents (collectively, the
"Documents"): (i) the Company's Articles of Incorporation, as amended to date,
and Bylaws, as currently in effect; (ii) resolutions of the Company's Board of
Directors authorizing the Offering and the issuance of the Common Stock to be
sold by the Company and related matters; (iii) the Registration Statement and
schedules and exhibits thereto; and (iv) such other documents and instruments
that we have deemed necessary for the expression of the opinions herein
contained. In making the foregoing examinations, we have assumed, without
investigation, the genuineness of all signatures and the authenticity of all
documents submitted to us as originals, the conformity to authentic original
documents of all documents submitted to us as copies, and the veracity of the
Documents. As to various questions of fact material to the opinion expressed
below, we have relied, to the extent we deemed reasonably appropriate, upon the
representations or certificates of officers and/or directors of the Company upon
documents, records and instruments furnished to us by the Company, without
independently verifying the accuracy of such certificates, documents, records or
instruments.
Based upon the foregoing examination, and subject to the qualifications
set forth below, we are of the opinion that the Common Stock to be sold in the
Offering has been duly and validly authorized, issued, fully paid and
non-assessable.
Although we have acted as counsel to the Company in connection with the
preparation and filing of the Registration Statement, our engagement has been
limited to certain matters about which we have been consulted. Consequently,
there may exist matters of a legal nature involving the Company in which we have
not been consulted and have not represented the Company. Further, we have not
acted as counsel to the Selling Shareholders. We express no opinion as to the
laws of any jurisdiction other than the laws of the State of Florida. The
opinions expressed herein concern only the effect of the laws
<PAGE>
July 7, 1998
Page 2
(excluding the principles of conflict of laws) of the State of Florida as
currently in effect. This opinion letter is limited to the matters stated herein
and no opinions may be implied or inferred beyond the matters expressly stated
herein. The opinions expressed herein are given as of this date, and we assume
no obligation to update or supplement our opinions to reflect any facts or
circumstances that may come to our attention or any change in law that may occur
or become effective at a later date.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the prospectus comprising a part of the Registration Statement. In
giving such consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations promulgated thereunder.
Very truly yours,
BAKER & McKENZIE
By: /S/ BAKER & McKENZIE
-------------------
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of FirstCom
Corporation for the registration of 941,250 shares of its common stock and to
the incorporation by reference therein of our report dated February 19, 1999,
with respect to the consolidated financial statements and schedule of FirstCom
Corporation included in its Annual Report on Form 10-KSB for the year ended
December 31, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
July 22, 1999
Miami, Florida
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 2, 1998, except as to the restatement to reflect the effect of revising
the price per share of the Company's common stock issued in connection with the
May 1996 acquisition of FirstCom Peru from $2.25 to $5.99, which is as of August
6, 1998, which appears in FirstCom Corporation's Form 10-KSB for the year ended
December 31, 1998. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
July 23, 1999
Miami, Florida
