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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 8, 1998
MICROTEL INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-10346 77-0226211
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
4290 East Brickell Street, Ontario, California 91761
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (909) 456-4321
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
REPLACEMENT CREDIT FACILITY
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On July 8, 1998, the Company finalized a $10.5 million credit facility
with a commercial finance company which provides a term loan of approximately
$1.5 million and a revolving line of credit of up to $8 million based upon
available assets, of which the Company has utilized approximately $4 million
and a capital equipment acquisition credit line of up to $1 million. This
credit facility replaced the existing credit facilities of the Company's
domestic operating companies and provides expanded borrowing capability based
upon available assets.
SALE OF SERIES A CONVERTIBLE PREFERRED STOCK
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On July 8, 1998, the Company completed the sale to three institutional
investors of 200 shares of Series A convertible preferred stock (the
"Preferred Shares") at $10,000 per share and one million warrants to purchase
the Company's common stock exercisable at $1.25 per share, expiring May 22,
2001. The Company received net proceeds of approximately $1,843,000 after
deduction of commissions and transaction-related expenses and utilized such
proceeds for working capital. The Preferred Shares are convertible into the
common stock of the Company at the option of the holder thereof at any time
after the ninetieth (90th) day of issuance thereof at the conversion price
per share of Preferred Share equal to $10,000 divided by the lesser of (x)
$1.25 and (y) One Hundred Percent (100%) of the arithmetic average of the
three lowest closing bid prices over the forty (40) trading days prior to the
exercise date of any such conversion. No more than 20% of the aggregate
number of Preferred Shares originally purchased and owned by any single may
be converted in any thirty (30) day period after the ninetieth (90th) day of
issuance. In the event of any liquidation, dissolution or winding up of the
Company, the holders of shares of Preferred Shares are entitled to receive,
prior and in preference to any distribution of any of the assets of this
corporation to the holders of the company's common stock by reason of their
ownership, an amount per share equal to $10,000 for each outstanding
Preferred Share. Any unconverted Preferred Shares may be redeemed at the
option of the Company for cash at a per share price equal to $11,500 per
Preferred Share and any Preferred Shares which remain outstanding as of May
22, 2003 are subject to mandatory redemption by the Company at the same
per-share redemption price.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MICROTEL INTERNATIONAL, INC.
By: /s/ James P. Butler
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James P. Butler
Chief Financial Officer
Date: July 30, 1998
