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): February 12, 1998
World Access, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-19998 65-0044209
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
945 E. Paces Ferry Road,
Suite 2240, Atlanta, Georgia 30326
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 231-2025
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Item 5. Other Events.
On February 12, 1998, World Access, Inc. (the "Company") announced that
it had signed a letter of intent to acquire Cherry Communications Incorporated
(d/b/a Resurgens Communications Group) ("Resurgens") in a merger transaction
upon terms to be negotiated.
Also on February 12, 1998, the Company announced a delay in reporting
earnings due to the negotiations with Resurgens.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits. The following exhibits are filed herewith by direct
transmission via "edgar."
99.1 Letter of Intent dated February 12, 1998 between World Access,
Inc. and Cherry Communications Incorporated (d/b/a Resurgens
Communications Group).
99.2 Press Release issued on February 12, 1998 (regarding execution
of letter of intent).
99.3 Press Release issued on February 12, 1998 (regarding delay in
announcing earnings).
1
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLD ACCESS, INC.
By: /s/ Martin D. Kidder
---------------------------------
Martin D. Kidder
Its Vice President and Controller
Dated as of February 20, 1998
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Exhibit 99.1
February 12, 1998
CONFIDENTIAL
Cherry Communications Incorporated
(d/b/a Resurgens Communications Group)
945 East Paces Ferry Road
Atlanta, Georgia 30326
Attn: Mr. John D. Phillips, Chairman and Chief Executive Officer
Gentlemen:
This letter sets forth the terms upon which World Access, Inc., a
Delaware corporation ("Acquiror"), and Cherry Communications Incorporated,
(d/b/a Resurgens Communications Group) an Illinois corporation ("Target"), agree
to enter into discussions regarding a possible business combination between
Target and Acquiror (the "Transaction").
In consideration of the mutual covenants set forth below, Acquiror and
Target agree as follows:
1. Proposed Terms.
Attached as Exhibit A is a Preliminary Summary Term Sheet (the "Term
Sheet") for the Transaction. Although it is the intent of the parties that their
discussions initially proceed based on the Term Sheet, the terms contained in
the Term Sheet have not been agreed to by the parties, are not binding on the
parties, are subject to change based upon due diligence results and are not
intended to create rights in favor of the parties with respect to the
Transaction. Without limiting the generality of the foregoing, it is the intent
of the parties that, until the execution and delivery of a definitive agreement
with respect to the Transaction, no agreement shall exist among them and there
shall be no obligations whatsoever based on such things as parol evidence,
extended negotiations, "handshakes," oral understandings or courses of conduct
(including reliance and changes of position). The obligations of the parties to
consummate the Transaction shall be subject in all respects to the negotiation,
execution and delivery of a definitive agreement approved by the boards of
directors of Acquiror and Target and the satisfaction of the conditions
contained in the definitive agreement, including, without limitation, any
necessary corporate and regulatory approval and the confirmation of the Target's
Plan of Reorganization. However, the obligations of Acquiror and Target pursuant
to section 2 of this
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February 12, 1998
Page 2
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letter are intended to be binding and enforceable obligations of Acquiror and
Target, with Section 2 continuing in full force and effect until this letter of
intent is terminated pursuant to Section 2 hereof.
2. Public Announcements; Termination.
A. Public Announcements. Target will not, at any time, without the
prior written consent of Acquiror, make any announcement, issue any press
release or make any other public statement with respect to this letter of intent
or any of the terms or conditions hereof except as may be necessary to comply
with any law, regulation or order and then only after prior written notice to
Acquiror of the timing, context and content of such announcement, press release
or statement.
B. Termination. This letter of intent may be terminated (i) by mutual
consent of the parties; or (ii) by either party if the Definitive Agreement has
not been executed by April 30, 1998.
Please indicate your agreement with the terms of this letter by
executing it in the space provided below and returning a copy to us.
Very truly yours,
WORLD ACCESS, INC.
By:____________________________
Name:
Title:
AGREED AND ACCEPTED:
CHERRY COMMUNICATIONS INCORPORATED
(d/b/a Resurgens Communications Group)
By:____________________________
Name:
Title:
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CONFIDENTIAL
PRELIMINARY SUMMARY TERM SHEET
February 12, 1998
1. Structure of Transaction and Consideration.
A. Structure of Transaction. A wholly-owned subsidiary of
Acquiror or an affiliate of Acquiror will merged with and into Target (the
"Merger").
B. Consideration. In connection with the Merger, all of the
outstanding capital stock of Target and certain of its outstanding indebtedness
will be converted into the right to receive shares of the Acquiror's capital
stock in amounts to be negotiated.
2. Definitive Agreement.
A. Definitive Agreement. The parties will negotiate in
good-faith to prepare and execute a definitive merger agreement as soon as
possible to give effect to the Merger (the "Definitive Agreement"). The
Definitive Agreement will be subject to the satisfactory completion of
Acquiror's due diligence investigation of Target, approval of its board of
directors and such other conditions upon which the parties may agree.
B. Closing Conditions. The closing of the Merger will be
subject to the satisfaction or waiver of customary conditions, including,
without limitation, the receipt of all necessary corporate and regulatory
approvals, the confirmation of Target's Plan of Reorganization, and such other
conditions upon which the parties may agree.
C. Customary Terms. The Definitive Agreement will contain
representations, conditions, covenants and the like typical in agreements for
transactions such as the one proposed.
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Exhibit 99.2
SUMMARY: WORLD ACCESS, INC. SIGNS LETTER
OF INTENT TO ACQUIRE RESURGENS
COMMUNICATIONS GROUP
CONTACT: Steven A. Odom Chairman & CEO
Hensley E. West President & COO
Mark A. Gergel Exec. VP & CFO
(404) 231-2025
FOR IMMEDIATE RELEASE
ATLANTA, GEORGIA - February 12, 1998 - WORLD ACCESS, INC. (NASDAQ: WAXS),
announced today that it has signed a letter of intent to acquire Cherry
Communications Incorporated (d/b/a Resurgens Communications Group) ("Resurgens")
in a merger transaction upon terms to be negotiated. Resurgens, currently
operating under the protection of Chapter 11 of the United States Bankruptcy
Code, is a facilities-based provider of international network access, commonly
referred to in the industry as a carriers' carrier. Resurgens had revenues of
approximately $180 million in 1997.
The transaction is subject to, among other things, the satisfactory completion
by World Access of its due diligence investigation of Resurgens, the preparation
and execution of a definitive merger agreement, the receipt of the requisite
corporate and regulatory approvals and the confirmation of Resurgens' Plan of
Reorganization. World Access has retained The Robinson-Humphrey Company, Inc. as
its financial advisor in connection with the transaction.
In October 1997, John D. ("Jack") Phillips entered into a series of agreements
whereby, among other things, he became the new Chairman and Chief Executive
Officer of Resurgens and Resurgens was placed into bankruptcy. WorldCom, Inc.
("WorldCom"), a major customer and vendor of Resurgens, has subsequently agreed
to provide Resurgens up to $28 million in financing in the form of a debtor in
possession facility and other credits. Upon consummation of the anticipated Plan
of Reorganization, WorldCom is expected to own approximately 55% of the
outstanding stock of Resurgens.
Steven A. Odom, Chairman and Chief Executive Officer of World Access, said, "The
acquisition of Resurgens would be in line with the Company's strategy to provide
its customers with a complete telecommunications network solution, including
switching, transport and access products and related services. The international
network access product offered by Resurgens is a critical element of new and
expanded networks currently being planned or implemented by many customers of
World Access. We believe the ability to offer both equipment and network access
would provide World Access with a more comprehensive and cost-competitive
product offering, especially for international competitive local exchange
providers ("CLECs") and other providers of phone service in emerging growth
markets."
"We are excited that Jack Phillips, a director of World Access, has agreed to
serve as the Chairman of the combined company upon consummation of the
transaction. He is one of the pioneers of the U.S alternative long distance
business, having built up Advanced Telecommunications Corporation, which merged
with WorldCom in 1992, and Resurgens Communications Group, Inc., which merged
with Metromedia Communications Corporation and WorldCom in 1993. We are also
extremely pleased that WorldCom, a recognized leader in today's
telecommunications industry, will become the largest stockholder of the combined
company in the event the transaction is consummated."
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John D. Phillips, Chairman and Chief Executive Officer of Resurgens, said "Steve
Odom and his management team have done a tremendous job over the past three
years of building World Access into a highly respected, fast growing
telecommunications equipment manufacturer. Steve will continue to serve as the
Chief Executive Officer of the combined company and I look forward to working
with him as we continue to work towards achieving significant long-term value
for World Access stockholders. Upon consummation of the Resurgens merger, World
Access will be exceptionally well positioned to provide its customers a unique,
comprehensive and value-added telecommunications network solution and to pursue
the significant growth opportunities present within the worldwide
telecommunications markets."
World Access, Inc. develops, manufactures and markets wireline and wireless
switching, transport and access products primarily for the United States,
Caribbean Basin and Latin American telecommunications markets. The Company
offers digital switches, cellular base stations, fixed wireless local loop
systems, intelligent multiplexers, digital loop carriers, microwave and
millimeterwave radio equipment and other wireless communications products. To
support and complement its product sales, the Company also provides its
customers with a broad range of design, engineering, manufacturing, testing,
installation, repair and other value-added services.
Except for any historical information contained herein, the matters discussed
in this press release contain forward-looking statements that involve risks and
uncertainties which are described in the Company's SEC reports, including the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, the
Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997 and September 30, 1997 and the Company's Registration Statement
on Form S-3 (No. 333-07087).
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Exhibit 99.3
SUMMARY: WORLD ACCESS, INC. ANNOUNCES
DELAY IN REPORTING EARNINGS DUE TO
PENDING ACQUISITION
CONTACT: Steven A. Odom Chairman & CEO
Hensley E. West President & COO
Mark A. Gergel Exec. VP & CFO
(404) 231-2025
FOR IMMEDIATE RELEASE
ATLANTA, GEORGIA - February 12, 1998 - WORLD ACCESS, INC. (NASDAQ: WAXS),
announced today that during the fourth quarter of 1997 it shipped approximately
$9.4 million of switching equipment to Cherry Communications Incorporated (d/b/a
Resurgens Communications Group) ("Resurgens"). Earlier today in a separate press
release, World Access announced that it has signed a letter of intent to acquire
Resurgens. In view of the execution of the letter of intent, World Access will
not record the shipment to Resurgens as revenue in the fourth quarter of 1997.
As a result, the Company will not meet analysts' consensus estimates for the
fourth quarter and year ended December 31, 1997. Accordingly, the Company has
delayed its previously scheduled release of financial results for the fourth
quarter and the year ended December 31, 1997 pending the outcome of its
negotiations with Resurgens.
World Access, Inc. develops, manufactures and markets wireline and wireless
switching, transport and access products primarily for the United States,
Caribbean Basin and Latin American telecommunications markets. The Company
offers digital switches, cellular base stations, fixed wireless local loop
systems, intelligent multiplexers, digital loop carriers, microwave and
millimeterwave radio equipment and other wireless communications products. To
support and complement its product sales, the Company also provides its
customers with a broad range of design, engineering, manufacturing, testing,
installation, repair and other value-added services.
Except for any historical information contained herein, the matters discussed
in this press release contain forward-looking statements that involve risks and
uncertainties which are described in the Company's SEC reports, including the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, the
Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997 and September 30, 1997 and the Company's Registration Statement
on Form S-3 (No. 333-07087).
