<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1999
Registration No. 333-84951
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
POWERTEL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 58-1944750
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
(706) 645-9523 (FACSIMILE)
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
----------------
JILL F. DORSEY
VICE PRESIDENT/GENERAL COUNSEL
POWERTEL, INC.
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
(706) 645-9523 (FACSIMILE)
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------
Copy to:
James Walker IV, Esq.
Terresa R. Tarpley, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 817-6000
(404) 817-6050 (facsimile)
----------------
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend 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, please 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. [ ]
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDER 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 SECURITIES, AND THE SELLING STOCKHOLDER IS
NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
Subject to Completion, dated September 22, 1999
PROSPECTUS
1,764,706 Shares
POWERTEL, INC.
Common Stock
----------------
One of our stockholders, The Huff Alternative Income Fund, L.P., may
offer and sell these shares from time to time. The selling stockholder acquired
these shares upon conversion of our Series C Convertible Preferred Stock, which
the selling stockholder purchased from us on June 5, 1997.
The selling stockholder will receive all of the net proceeds from the
sale of these shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of these shares. We will not
receive any proceeds from the sale of these shares.
Our common stock is quoted on the Nasdaq National Market under the
symbol "PTEL." On September 20, 1999, the last reported sales price of our
common stock was $50.19 per share.
Our principal executive offices are located at 1233 O.G. Skinner
Drive, West Point, Georgia 31833, and our telephone number is (706) 645-2000.
----------------
YOU SHOULD CONSIDER CAREFULLY THE "RISK FACTORS"
BEGINNING ON PAGE 4 BEFORE PURCHASING
ANY OF THE COMMON STOCK OFFERED HEREBY.
----------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
September 22, 1999
<PAGE> 3
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
NEITHER WE NOR THE SELLING STOCKHOLDER HAS AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING
STOCKHOLDER IS OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF POWERTEL
COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF
THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF
ANY SALE OF THE SHARES.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................................................................................... 3
Information Incorporated by Reference................................................................... 3
Forward-Looking Information............................................................................. 4
Risk Factors............................................................................................ 4
Use of Proceeds......................................................................................... 10
Powertel................................................................................................ 10
Selling Stockholder..................................................................................... 19
Plan of Distribution.................................................................................... 19
Legal Matters........................................................................................... 22
Experts................................................................................................. 22
</TABLE>
2
<PAGE> 4
AVAILABLE INFORMATION
Powertel files annual, quarterly and special reports, proxy
statements, and other information with the Securities and Exchange Commission.
You may read and copy any document we file with the SEC at the following SEC
public reference rooms: 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549 and 7 World Trade Center, Suite 1300, New York, New York, 10048. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the SEC's web site
at http://www.sec.gov.
Our common stock is quoted on The Nasdaq National Market under the
symbol "PTEL," and our SEC filings can also be read at the following Nasdaq
address: Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below, and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, until the earlier of (a) 180 days after the
effective date of the registration statement (Registration No. 333-84951), of
which this prospectus forms a part, or (b) the date the selling stockholder
sells all the shares. The documents we incorporate by reference are:
1. our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
2. our Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
3. our Quarterly Report on Form 10-Q for the quarter ended June
30, 1999;
4. our Current Report on Form 8-K filed on June 16, 1999
relating to the sale of certain tower assets by us and our
subsidiaries;
5. our Current Report on Form 8-K filed on May 17, 1999 relating
to the sale of our cellular assets; and
6. the description of our common stock contained in our
registration statement on Form 8-A, declared effective by the
SEC on December 20, 1993, including any amendment or report
filed for the purpose of updating this information.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Vice President/General Counsel,
Powertel, Inc., 1233 O.G. Skinner Drive, West Point, GA 31833; telephone number
(706) 645-2000.
3
<PAGE> 5
FORWARD-LOOKING INFORMATION
This prospectus, including the information incorporated by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We
intend these forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in these sections. All statements
regarding our expected financial position and operating results, our business
strategy and financing plans and similar matters are forward-looking
statements. These statements can sometimes be identified by our use of
forward-looking words such as "believe," "may," "will," "anticipate,"
"estimate," "continue," "expect," "could," "should," "would" or "intend." Our
actual results could differ materially from those anticipated by these
forward-looking statements as a result of the factors described under "Risk
Factors" and other information contained in this prospectus and our other SEC
filings. In particular, please review the sections captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
our annual report on Form 10-K for the year ended December 31, 1998 and our
quarterly reports on Form 10-Q for the quarters ended March 31, 1999 and June
30, 1999, which reports are incorporated by reference. You should also review
similar sections contained in any subsequently filed Exchange Act reports. In
connection with forward-looking statements which appear in these disclosures,
you should carefully consider the factors described in this prospectus under
"Risk Factors."
RISK FACTORS
You should carefully consider the risks and uncertainties described
below before making an investment decision. Our business, financial condition
and operating results could be adversely affected by any of the following
factors, in which event the trading price of our common stock could decline,
and you could lose part or all of your investment.
WE NEED SIGNIFICANT CAPITAL TO FUND OUR OPERATIONS AND EXPAND OUR BUSINESS
We require significant amounts of capital to fund our operations and
expand our personal communications services ("PCS") business. We currently
estimate that our capital expenditures will total approximately $150 million in
1999, primarily relating to:
- the continued expansion of our PCS network;
- maintenance of our network service quality and billing system
functionality; and
- completion of customer service enhancement projects.
Although we are unable to predict the amount of expenditures that we will make
beyond 1999, we may need to raise additional capital to fund and expand our
business operations. We also will need to raise additional capital if we decide
to acquire additional licenses or businesses. We may attempt to raise
additional capital through public or private debt or equity financings, vendor
financings or other means. However, we cannot guarantee that additional
financing will be available to us or, if available, that we will be able to
obtain it on terms acceptable to us, favorable to our stockholders and within
the limitations contained in our indentures, credit facility and any future
financing arrangements. If we fail to obtain additional financing, we could
experience delays in some or all of our development and expansion plans
4
<PAGE> 6
and expenditures, which could limit our ability to meet our debt service
obligations and could materially adversely affect our business, financial
condition and operating results.
IF WE CONTINUE TO EXPERIENCE OPERATING LOSSES AND NEGATIVE CASH FLOW FROM
OPERATIONS, WE MAY BE UNABLE TO MEET OUR WORKING CAPITAL REQUIREMENTS AND DEBT
SERVICE OBLIGATIONS
We have experienced significant operating losses and negative cash
flows from operating activities in recent years. We expect to continue to incur
significant operating losses and to generate negative cash flows from operating
activities in the future while we continue to construct our PCS system and
build our customer base. Our ability to satisfy our debt repayment obligations
and covenants depends upon our future performance, which is subject to a number
of factors, many of which are beyond our control. We cannot guarantee that we
will generate sufficient cash flow from our operating activities to meet our
debt service and working capital requirements, and we may need to refinance our
indebtedness. However, our ability to refinance our indebtedness will depend
on, among other things, our financial condition, the state of the public and
private debt and equity markets, the restrictions in the instruments governing
our indebtedness and other factors, some of which may be beyond our control. In
addition, if we do not generate sufficient cash flow to meet our debt service
requirements or if we fail to comply with the covenants governing our
indebtedness, we may need additional financing in order to service or
extinguish our indebtedness. We may not be able to obtain financing or
refinancing on terms that are acceptable to us or favorable to us or our
stockholders. In the absence of available financing or refinancing, we could be
forced to dispose of assets in order to make up for any shortfall in the
payments due on our indebtedness under circumstances that might not be
favorable to realizing the highest price for those assets. A substantial
portion of our assets consists of intangible assets, principally licenses
granted by the Federal Communications Commission. The value of our licenses
depends upon a variety of factors, including the success of our PCS business
and the wireless telecommunications industry in general. In addition, transfers
of interests in licenses are subject to FCC approval. As a result, we cannot
guarantee that we would be able to sell our assets quickly enough, or for
sufficient amounts, to enable us to meet our debt service or working capital
requirements.
BECAUSE WE ARE SUBJECT TO COVENANTS, WE HAVE A LIMITED ABILITY TO ENGAGE IN
SOME TYPES OF TRANSACTIONS
Our indentures and our credit facility subject us to covenants, and
any additional financing agreements that we enter into in the future may also
subject us to covenants. The covenants in our indentures and our credit
facility affect, and in some cases significantly limit or prohibit, our ability
to:
- incur additional indebtedness and/or create liens;
- make prepayments of certain indebtedness;
- make investments;
- engage in transactions with stockholders and affiliates;
- issue capital stock;
- sell assets; and
- engage in mergers and consolidations.
5
<PAGE> 7
If we do not comply with the covenants in our indentures and our credit
facility, our obligations to repay the debt outstanding under those documents
may be accelerated. In addition, covenants contained in our credit facility
require us to maintain financial ratios and to achieve targeted performance
levels. We cannot guarantee that we will be able to maintain these financial
ratios or to achieve these targeted performance levels. Our failure to maintain
these ratios or to achieve these targeted performance levels would constitute
events of default under the credit facility, even if we are still able to meet
our debt service obligations. An event of default under the credit facility
would allow the lenders to accelerate the maturity of that indebtedness. This
could cause a significant portion of our other indebtedness, including notes
outstanding under our indentures, to become immediately due and payable.
VARIOUS FACTORS OUTSIDE OF OUR CONTROL MAY AFFECT OUR OPERATING RESULTS AND
CAUSE POTENTIAL FLUCTUATIONS IN OUR QUARTERLY RESULTS
Our future success depends on a number of factors, many of which are
beyond our control. In particular, our revenue depends on our ability to
attract and keep subscribers. Most of our subscribers may discontinue their
service any time for any reason. Our operating results, cash flows and
liquidity may fluctuate significantly in the future due to factors beyond our
control, which include:
- how quickly we are able to acquire new subscribers;
- how expensive it will be to acquire new subscribers;
- how much money we have to spend to improve our business and
expand our operations;
- how quickly we are able to develop new products and services
that our subscribers require and accept;
- how our prices compare to those of our competitors; and
- other general economic factors.
It is possible that in some future period, our operating results
and/or our growth rate will be below what public market analysts and investors
expect. If that happens, the market price of our common stock could decline
materially.
THE LACK OF NATIONAL GSM COVERAGE MAY HINDER OUR GROWTH
Although FCC technical standards for analog cellular systems assure
nationwide compatibility between all cellular carriers and handsets, the FCC
has not adopted a nationwide technology standard for PCS operations.
Accordingly, each PCS licensee is free to select among several competing, and
currently incompatible, technologies. We use the Global System for Mobile
Communications ("GSM") technical standard in our markets. For our subscribers
to roam in other markets, either at least one PCS licensee in the other market
must use the GSM standard, or subscribers must use dual-mode handsets
compatible with a cellular system in the other market. Dual-mode handsets are
more expensive than single-mode handsets. The comparatively higher cost, or the
potential lack of consumer acceptance of these handsets, may prevent us from
retaining current subscribers or attracting new subscribers.
Our principal PCS competitors use standards other than GSM. As a
result, our subscribers may not be able to conveniently use PCS services while
roaming in some areas outside our markets.
6
<PAGE> 8
Sprint PCS and PrimeCo use PCS systems based on the Code Division Multiple
Access ("CDMA") standard. CDMA providers, including competitors in several of
our markets, own licenses covering approximately 100% of the U.S. population.
AT&T Wireless uses a PCS system based on the Time Division Multiple Access
("TDMA") standard. TDMA providers own licenses covering over 96% of the U.S.
population. We and other PCS licensees who use GSM systems own licenses
covering markets which represent over 98% of the U.S. population. However,
certain major metropolitan areas, such as New Orleans, are not served by GSM
providers because licenses covering those areas were not awarded to a GSM
provider in the recent FCC reauctions of licenses. In addition, we cannot
guarantee that PCS licensees who use GSM systems will successfully build out
their markets, or that those who currently use GSM will continue to use GSM.
There may also be delays in deploying GSM systems in other markets due to the
financial constraints of certain GSM service providers. Accordingly, GSM
systems may cover less of the U.S. population than competing standards, and we
may have difficulty competing successfully with providers offering a larger
coverage footprint or more extensive roaming capabilities.
There is also a continuing debate as to whether a single international
standard should be adopted for the next generation of PCS technology worldwide.
The outcome of the debate could have a significant impact on us if a non-GSM
standard is chosen as the single worldwide standard for next generation PCS
communications.
SIGNIFICANT COMPETITION IN THE MARKETPLACE MAY HINDER OUR GROWTH
Competition for wireless subscribers is based principally on the
services and features offered, system quality, customer service, system
coverage, system capacity and price. We currently compete with multiple
providers of PCS, cellular and other wireless services. In each market in which
we operate, the FCC initially granted six PCS licenses and two cellular
licenses. Under current FCC rules, PCS licenses may be combined or further
subdivided among any number of providers, subject to certain FCC rules.
Competition in our markets is intense. Our principal wireless services
competitors include BellSouth Mobility, GTE Wireless, AT&T Wireless and Sprint
PCS. Many of these competitors have substantially greater financial, technical,
marketing, sales and distribution resources than we have, and several operate
in multiple segments of the industry. Several of our competitors, through joint
ventures and affiliation arrangements, operate or plan to operate nationwide
wireless systems throughout the continental United States.
We also compete with paging, dispatch and continental mobile telephone
companies, resellers, and landline telephone service providers. In addition,
specialized mobile radio licensees, including Nextel, operate digital mobile
communications systems using existing specialized mobile radio frequencies in
many cities throughout the United States, including some of our markets. These
systems, referred to as enhanced specialized mobile radio, compete with our
systems. Given rapid advances in the wireless communications industry, we
cannot guarantee that new technologies will not evolve that will compete with
our products and services. We expect some competitors to market other services,
such as cable television access or landline local exchange or interexchange
services, with their wireless telecommunications service offerings.
Competition in our industry is intense and is a cause of subscriber
attrition. We may need to reduce our prices in order to meet reductions in
rates by others. Reductions in our prices could adversely affect us by reducing
the revenue we receive from our customers. If we are unable or unwilling to
reduce our prices, or do not respond quickly to competitive developments, we
could lose customers to our competitors. We cannot guarantee that we will
continue to compete successfully in this environment or that technologies and
products that are more commercially effective than ours will not be developed.
7
<PAGE> 9
WE ARE SUBJECT TO LITIGATION WHICH COULD ADVERSELY AFFECT OUR BUSINESS
We are subject from time to time to legal proceedings that arise out
of our business operations, including service, billing and collection matters.
Although the actual damages sought in these legal proceedings are generally
small, some of these legal proceedings may seek punitive damages and/or attempt
to be certified as class actions. While we do not expect these legal
proceedings to have a material adverse effect on our business, financial
condition and operating results, we cannot guarantee that the resolution of any
or all of them will not have a material adverse effect.
THE ZONING APPROVALS THAT WE OFTEN NEED TO ERECT A TOWER STRUCTURE MAY HINDER
OUR BUILDOUT PLANS
State and local authorities generally have broad power to establish
regulations concerning the use of land in their jurisdictions. These
regulations may restrict or prohibit the construction of antenna towers in
particular locations and, consequently, may limit the number of antenna sites
available to us. We have experienced, and may experience in the future,
difficulty in obtaining zoning approvals for tower and antenna sites. These
difficulties may delay, or in some cases prevent, our construction of towers
and placement of antennae. We cannot guarantee that the application of zoning
and other land use regulations by state and local authorities will not have a
material adverse effect on our future buildout.
Under the 1996 Telecommunications Act, states may not restrict cell
siting or modification based upon the environmental effects of radio frequency
emissions if those emissions meet the standards which the FCC imposed in 1996.
However, state and local governmental authorities continue to impose
regulations that expressly prohibit the construction of additional tower sites,
including several governmental authorities in our markets. In some cases,
judicial or other proceedings are pending to challenge a local government's
authority in this area. However, it is possible that local governmental
authorities may continue to adopt policies or moratoria on construction of new
towers or facilities which will delay or prevent the construction of portions
of our PCS system.
RADIO FREQUENCY EMISSIONS AND THE USE OF MOBILE TELEPHONES MAY POSE HEALTH OR
SAFETY CONCERNS
Media reports and university and industry studies have suggested that
radio frequency emissions from wireless handsets may be linked to various
adverse health consequences, including cancer and injuries from automobile
accidents, and may interfere with various electronic medical devices, including
hearing aids and pacemakers. Concerns over radio frequency emissions may
discourage the use of wireless handsets or could lead to governmental
regulation that could adversely affect our business. Several jurisdictions have
proposed legislation which would prohibit or restrict the use and/or possession
of a mobile telephone while driving an automobile. If this legislation is
adopted in a substantial number of markets, it may have an adverse effect on
our business.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION, ANY CHANGE IN WHICH COULD
AFFECT OUR BUILDOUT PLANS OR FINANCIAL PERFORMANCE
The licensing, construction, operation, acquisition and sale of
wireless systems is regulated by the FCC. Changes in the regulation of these
activities, including the issuance of new licenses, could adversely affect our
operations. In addition, we cannot guarantee that our licenses will be renewed.
All PCS licenses are granted for a 10-year period. At the end of this period
the licensee must apply for renewal. Licenses may be revoked by the FCC at any
time for cause and renewal of our licenses is also subject to satisfaction of
the FCC's build-out requirements.
8
<PAGE> 10
We must obtain a number of authorizations and permits from federal,
state and local governments. Some of our operating costs are also affected by
governmental actions that are beyond our control. We cannot guarantee that we
will be able to obtain and retain all necessary governmental authorizations and
permits. Our failure to do so could negatively affect our existing operations
and delay or prohibit proposed operations.
Many aspects of the wireless communications industry are subject to
federal and state regulations that are constantly evolving. These regulations
apply to matters such as technical interconnection requirements, access to 911
service and universal service obligations. Regulations also apply to
interference between various types of wireless systems and between wireless
devices and other devices, including medical devices. We may be required to
modify our business plans or operations in response to new and evolving
regulations. We cannot guarantee that we will be able to do so in a cost
effective manner, or at all.
THE MAJORITY OF OUR COMMON STOCK IS HELD BY FOUR INVESTORS, AND THEY EXERCISE
SIGNIFICANT INFLUENCE OVER US
As of September 20, 1999, ITC Holding Company, Inc. beneficially owned
approximately 27%, SCANA Communications, Inc. beneficially owned approximately
17%, The Huff Alternative Income Fund, L.P. beneficially owned approximately 9%
and Ericsson Inc. beneficially owned approximately 14% of our outstanding
common stock. Ericsson Inc., which owns all of our outstanding Series A
Convertible Preferred Stock, has agreed to sell all of this preferred stock to
Sonera Ltd. Assuming the consummation of this transaction, Sonera will
beneficially own approximately 14% of our outstanding common stock, and
Ericsson will not own any. These beneficial ownership percentages include
shares of our common stock currently owned directly or indirectly by a person
and shares of common stock that such person has the right to acquire within 60
days after September 20, 1999 because of that person's ownership of our
preferred stock that is convertible during such period. If these persons acted
together, they would have sufficient voting power to control the outcome of
corporate actions submitted to our stockholders for approval and to control our
management and affairs, including the election of our board of directors and
some types of change of control transactions.
WE ARE SUBJECT TO PROVISIONS THAT MAY PREVENT A THIRD-PARTY FROM EFFECTING A
CHANGE OF CONTROL
Even if our stockholders would benefit from a change of control,
provisions in our certificate of incorporation, our bylaws, the Delaware
Corporation Law and the agreements governing our debt could delay or impede the
removal of incumbent directors or discourage a third-party from attempting to
acquire control of us. For example:
- We have a staggered board of directors.
- Our certificate of incorporation authorizes the board of
directors to issue shares of preferred stock, in one or more
series, and to determine the terms, conditions, rights,
privileges and preferences of this preferred stock without
further stockholder approval.
- We are governed by Section 203 of the Delaware Corporation
Law, which prohibits us from engaging in some mergers,
consolidations, sales or other transactions with any person
who owns more than a particular percentage of our stock for a
period of three years after the date of the transaction in
which the person acquired that percentage of our stock,
unless specified conditions are met.
9
<PAGE> 11
- Our indebtedness may also become due and payable upon a
change in control.
Any of these provisions could have the effect of delaying, deferring, or
preventing a change of control.
OUR OPERATIONS MAY BE HARMED IF OUR OR OUR VENDORS' COMPUTER PROGRAMS DO NOT
FUNCTION PROPERLY IN THE YEAR 2000
Most of the world's computer hardware and software have historically
used only two digits to identify the year in a date, often meaning that the
computer will fail to distinguish dates in the 21st century from dates in the
20th century. As a result, various problems may arise from the improper
processing of dates and date-sensitive calculations by computers and other
machinery as the year 2000 is approached and reached. We are currently
remediating our critical systems to address the year 2000 issue. Critical
systems are those whose failure poses a risk of disruption to our ability to
provide PCS services, collect revenues, meet safety standards or comply with
legal requirements. We expect to incur internal staff costs as well as
consulting and other expenses related to infrastructure and facilities
enhancements necessary to prepare the systems for the year 2000. We cannot
guarantee that the remediation of our critical systems will be complete by the
year 2000. Much of our technology, including technology associated with our
critical systems, is purchased from third parties, and our network is
interconnected with the networks of many third parties. We are dependent on
those third parties to assess the impact of the Year 2000 issue on the
technology and services they supply and to take any necessary corrective
action. Our plan includes obtaining letters from all third parties to determine
whether they have adequately assessed the problem and taken corrective action.
We cannot guarantee that these third parties will have taken the necessary
corrective action before the year 2000.
USE OF PROCEEDS
The Huff Alternative Income Fund, L.P. will receive all of the
proceeds from the sale of the shares offered by this prospectus. We will not
receive any of the proceeds.
POWERTEL
Unless otherwise indicated, all population data set forth herein is
based on the 1998 Paul Kagan Associates, Inc. Cellular/PCS POP Book, and all
industry data set forth herein is based upon information compiled by the
Cellular Telecommunications Industry Association and/or Paul Kagan Associates,
Inc.
We provide PCS services in the southeastern United States under the
name "Powertel." Our licenses encompass a territory of approximately 246,000
contiguous square miles with a population of approximately 24.4 million people.
We hold licenses to serve the Major Trading Areas ("MTAs") of Atlanta, Georgia;
Jacksonville, Florida; Memphis, Tennessee/Jackson, Mississippi; and Birmingham,
Alabama, as well as 13 Basic Trading Areas ("BTAs") in Kentucky and Tennessee.
We hold 30 MHz of spectrum in our MTA markets, and we hold 20 MHz of spectrum
in all of our BTA markets except for the Knoxville, Tennessee BTA, where we
hold a license for 10 MHz of spectrum. We have one of the largest contiguous
licensed PCS footprints in the southeastern United States.
We introduced our services in October 1996 in Jacksonville, Florida
and Montgomery, Alabama, and we have, to date, launched our services in a total
of 34 markets in the Southeast. In most of these markets, we were the first to
offer PCS services commercially. As of June 30, 1999, we had approximately
292,000 postpaid subscribers and 90,000 prepaid subscribers.
10
<PAGE> 12
On April 30, 1999, we sold substantially all of our cellular assets in
western Georgia and eastern Alabama to Public Service Cellular, Inc. for $89
million in cash. On June 2, 1999, we sold 619 of our communications towers to a
subsidiary of Crown Castle International Corp. for an aggregate of $262 million
in cash. In connection with this sale, we agreed to lease space on these towers
for a period of ten years, with three five year renewal periods that we may
exercise at our option. Following the closing of the tower sale, we entered
into a binding letter agreement with Crown Castle that provides for Crown
Castle to purchase up to 31 additional tower sites on or before December 31,
1999 for approximately $13 million and for Crown Castle to provide us with
build-to-suit tower construction services through December 31, 2000.
THE WIRELESS TELECOMMUNICATIONS INDUSTRY
Since 1983, the demand for wireless telecommunications services has
grown dramatically as cellular, paging and other emerging wireless
communications services have become widely available and increasingly
affordable. Service revenues for the wireless telephone industry reached
approximately $29.6 billion for the year ending June 30, 1998, as compared to
approximately $364.3 million for the year ending June 30, 1985. The number of
wireless telephone subscribers nationwide has grown from approximately 680,000
in 1986 to more than 77 million at the end of July 1999.
Analog cellular services are the most widely deployed two-way wireless
services available today. However, analog cellular systems transmit voice and
data signals by means of one continuous electronic signal that varies in
amplitude or frequency over a single radio channel. In contrast, digital
systems, including the systems used to provide PCS, transmit signals as a
stream of digits that is compressed before transmission, enabling a single
radio channel to carry multiple simultaneous signal transmissions. This
increased capacity, along with other enhancements in digital protocols, allows
digital-based wireless technologies to offer new and enhanced services,
including greater call privacy and single number (or "find me") service, and
more robust data transmission features, including "mobile office" applications
(including facsimile and e-mail).
Although PCS and cellular networks use similar technologies and
hardware, they are incompatible because they operate on different frequencies
and utilize different signaling protocols. We began marketing dual-mode
handsets capable of receiving and transmitting over both analog cellular and
GSM-based PCS networks in December 1998. Our dual-mode service offering allows
for automatic delivery of calls over analog cellular systems to our PCS
subscribers roaming in areas where GSM-based PCS service is not available and
where we have a roaming agreement with the analog cellular provider.
PCS systems in the United States operate under one of three digital
transmission protocols - GSM, CDMA or TDMA. These protocols are incompatible
with each other. Our network uses GSM, which is the leading digital wireless
technology in the world with over 170 million subscribers worldwide. We are
also a member of the GSM Alliance L.L.C., a consortium of 17 PCS carriers which
offer PCS service using the GSM protocol in over 3,400 cities and towns
throughout the United States. Through the GSM Alliance, we allow our customers
to roam in most major metropolitan areas in the United States and Canada. GSM
Alliance members include us, Aerial, Airadigm, BellSouth Mobility DCS, the GSM
subsidiary of BellSouth Corporation, Conestoga Wireless, Cook Inlet PCS, DIGIPH
PCS, Iowa Wireless Services, Microcell Connexions, NPI Wireless, Omnipoint,
Pacific Bell Mobile Services, VoiceStream and Wireless 2000 PCS, among others.
We offer a single roaming rate to our customers when roaming on any GSM network
throughout the United States and Canada and have recently launched our new
50-State Rate(sm) allowing our customers to roam on any U.S. GSM network at no
extra charge.
11
<PAGE> 13
While various incompatible PCS protocols have emerged because of the
absence of a required universal digital signaling protocol, there is an ongoing
debate focused on determining the next generation of worldwide wireless
standards. Controversy exists over whether world standards organizations, such
as the European Telecommunications Standards Institute ("ETSI") and the
International Telecommunications Union, should dictate a single standard for
third generation ("3G") wireless services. The leading protocols under
consideration include W-CDMA, which is a GSM-based version of next generation
wideband CDMA technology supported by the GSM Alliance, and CDMA2000, which is
a CDMA-based 3G technology supported by certain U.S. manufacturers. This debate
has become highly visible in international politics. ETSI, which has advocated
W-CDMA as the European 3G standard, is being challenged by other standards
bodies and the United States as being isolationist and precluding non-European
manufacturers from a significant marketplace in the future. The GSM Alliance is
actively lobbying for the adoption of multiple standards for 3G wireless, much
like the co-existing standards for second generation wireless today. However,
these international standards debates could have a significant impact upon the
future of GSM carriers in the event that a standard or family of standards are
adopted that have limited backwards compatibility with our existing GSM
networks.
OUR OPERATIONS
Markets
Our licenses cover approximately 246,000 contiguous square miles in
portions of the following 12 states: Alabama; Arkansas; Florida; Georgia;
Illinois; Indiana; Kentucky; Louisiana; Mississippi; Missouri; South Carolina;
and Tennessee. Our markets include approximately 24.4 million people. We
currently provide PCS services in the 34 markets where we have completed our
initial buildout. Generally, our "initial buildout" of a licensed territory
includes the construction of cell sites:
(a) in metropolitan areas with a population greater than 100,000
people;
(b) in smaller cities that, due to location or demographics, we
consider to be strategically important; and
(c) along the major highway corridors connecting these areas.
We have completed the initial buildout of our PCS system in the
following cities:
<TABLE>
<CAPTION>
GEORGIA TENNESSEE ALABAMA
------- --------- -------
<S> <C> <C>
Athens Chattanooga Anniston
Atlanta Jackson Auburn-Opelika
Augusta Memphis Birmingham
Brunswick Nashville Decatur
Columbus Dothan
LaGrange Florence
Macon MISSISSIPPI Gadsen
Savannah ----------- Huntsville
West Point Jackson Montgomery
Tupelo Tuscaloosa
</TABLE>
12
<PAGE> 14
<TABLE>
FLORIDA SOUTH CAROLINA KENTUCKY
------- -------------- --------
<S> <C> <C>
Gainesville Aiken Louisville
Jacksonville Hilton Head Lexington
Panama City
St. Augustine
Tallahassee
</TABLE>
We also offer service along the major highway corridors connecting all of our
markets. Based on customer demand and competitive factors, we intend to
continue the buildout of our PCS system to enhance and expand our coverage. As
of June 30, 1999, we had approximately 382,000 subscribers.
Strategy
Our strategy is to:
- continue to build out a high-quality PCS system;
- offer a broad range of services, including enhanced services;
- expand our subscriber base by providing wireless services of
the highest quality, functionality and value;
- expand our regional market presence by managing and
affiliating with other PCS licensees, as well as potentially
acquiring additional strategic PCS licenses and other PCS
providers; and
- provide our customers with the ability to receive service in
areas outside of our service area, including internationally,
by entering into additional roaming agreements.
We intend to achieve significant market penetration by aggressively marketing
competitively-priced PCS services, including enhanced services not currently
provided by analog or digital cellular operators, and by providing superior
customer service. We intend to remain a low-cost provider of PCS services by
generating economies of scale through our operation in contiguous market areas
and our focus on customer acquisition and retention.
Services
Our service offerings consist primarily of wireline enhancement
products in which PCS supplements a customer's landline communications. We
currently offer a full range of wireless telecommunications services, including
enhanced features and services not generally provided by analog or digital
cellular operators which include:
- secure communications;
- sophisticated call management incorporating features
including caller I.D. and call forwarding;
- enhanced battery life; and
13
<PAGE> 15
- a short message service which allows subscribers to send and
receive alphanumeric and text messages on their handsets.
In addition, we have expanded our current offerings of wireless
telecommunications services to include international roaming and some data and
information services. In the future, we intend to offer single number service,
alternative line service, wireless e-mail, home zone billing, additional
information services delivered to the handset, virtual private network services
and fixed wireless services that could serve as the customer's primary mode of
telecommunication.
Our customers who subscribe to a calling plan with a $50 or higher
monthly access fee may call anywhere in the U.S. with no additional long
distance charges. Regular airtime rates apply. In July 1999, we launched our
new 50-State Rate plans which offer our customers flat-rate pricing for local,
long-distance and roaming calls on any GSM network in the U.S. We also offer
dual-mode services for an additional charge of $5 per month. We provide our
prepaid services through an advanced intelligent network platform that allows
real-time declination of a customer's account. Prepaid customers are not
required to apply for credit and may purchase prepaid vouchers to increase
their "account balance" at any time. We change our service offerings and
pricing from time to time.
Roaming
Our subscribers may roam outside their "local" markets anywhere within
our PCS coverage area without being assessed daily access fees or increased
airtime usage rates. Some of our roaming partners own licenses in MTAs and BTAs
that are contiguous to our PCS markets, which increases the size of the
contiguous geographic area where our customers can use their handsets. We
provide GSM roaming services outside of our service area at a single roaming
rate which is lower than rates traditionally offered by most cellular
providers. We have also recently introduced our new 50-State Rate plans, which
offer flat-rate prices across the U.S. on any GSM network. GSM service is
currently available in more than 3,400 cities and towns in the United States.
We have also entered into roaming agreements with international GSM providers,
primarily through our membership in the GSM Alliance, which allow subscribers
to roam internationally through the use of subscriber identity module cards.
System Buildout
Although we have completed the initial buildout of our PCS system, we
continue to build out our existing markets for increased coverage and capacity
needs, and we are also building out some secondary cities within our licensed
footprint. Generally, we select sites on the basis of their coverage of
targeted customers, the cost to construct the site and on frequency propagation
characteristics. In many cases, we must obtain zoning approval prior to
constructing a site. For new sites, our experience indicates that the site
acquisition process can take three to twelve months. Once we acquire a site and
obtain the requisite governmental approval, preparation of the site, including
grounding, ventilation and air conditioning, equipment installation, testing
and optimization, generally requires an additional two to four months.
Customer Service
We recognize that superior customer service is vital to minimizing
customer churn and to the long-term success of our business. We try to ensure
that our PCS customers are fully introduced to our service offerings, that they
understand how to use their handset and its features and that they receive
prompt and reliable service from our customer service representatives. We
provide subscribers with
14
<PAGE> 16
toll-free access to our customer service representatives 24 hours a day, seven
days a week. In addition, subscribers can reach a customer service
representative from their handsets (with no airtime charge) by dialing 611. We
have recently completed the consolidation of our inbound customer service
organization into a new call center located in Jacksonville, Florida in order
to enable us to serve our customers more efficiently.
Sales, Marketing and Distribution
We market our services primarily through:
- our direct sales force;
- retail stores and kiosks which we operate;
- a network of independent agents, each of which has a retail
store presence;
- mass merchandisers, such as Radio Shack, Office Depot and
Circuit City; and
- a limited amount of direct mail advertising.
In addition to traditional distribution channels, we market our PCS services
through the Internet, including through our Web site which includes an on-line
retail store where potential customers may apply for service and purchase
handsets and accessories. We support our marketing activities with local and
regional radio, television and print advertising.
Our direct and retail store sales force currently consists of
approximately 645 employees. We train our sales employees to understand our
products and services, so that they can provide extensive information to
prospective customers. We generally link sales commissions to subscriber
revenue and subscriber retention.
We also negotiate volume discounts from manufacturers of handsets and
pass a substantial portion of the discount on and further subsidize the cost of
these handsets to our subscribers, sales agents and distributors. Although we
subsidize a portion of most handset purchases, even after this subsidy, our
handsets are generally more expensive to subscribers than cellular handsets. We
offer over-the-air activation whereby a customer can initiate service by
purchasing a handset from any of our distribution channels and pressing any key
on the handset to reach Powertel customer service. During this call, the
customer service representative can obtain all necessary customer information
and conduct a credit scoring assessment or, if the customer has chosen the
prepaid plan, the customer service representative can activate the customer
immediately. At this time, we do not require our PCS customers to sign
long-term service contracts.
In marketing our services, we emphasize the enhanced features and
favorable pricing of our services. We also promote the improved call security
of our PCS system, which we believe encourages users to make confidential calls
that they might not otherwise make on an analog cellular telephone. We also
expect that the services offered by PCS operators will eventually be capable of
replacing some traditional landline telephone services. The potential for
increased PCS penetration of the landline market was enhanced by the 1996
Telecommunications Act, which requires local exchange carriers to interconnect
with other telecommunications providers such as us at just and reasonable rates
that are based on costs of providing the interconnection.
15
<PAGE> 17
DISPOSITION OF OUR CELLULAR ASSETS
On April 30, 1999, we and our wholly-owned subsidiaries, ICEL, Inc.
and InterCel Licenses, Inc., sold and assigned to Public Service Cellular, Inc.
substantially all of our assets and rights relating to our cellular business in
eastern Alabama and western Georgia, including FCC licenses to provide cellular
and microwave service in this area. Through this transaction, we sold all of
our cellular telephone operations. The cash purchase price for the assets was
$89,000,000. Public Service Cellular paid $82,770,000 in cash and paid
$6,230,000 into escrow. The amount paid into escrow will be held to satisfy
claims that may be made under the indemnity and purchase price adjustment
provisions of the asset purchase agreement and will be released from escrow as
set forth in the asset purchase agreement. We recorded a gain of $79.3 million
on the sale.
DISPOSITION OF SOME OF OUR TOWER ASSETS
On June 2, 1999, we, together with some of our wholly-owned
subsidiaries, sold and transferred to Crown Castle 619 of our towers, related
assets and liabilities. At the closing, Crown Castle paid us approximately $262
million in cash, which equals approximately $423,077 per site. We also gave
Crown Castle a $383,000 credit against the aggregate purchase price as
consideration for Crown Castle's acceptance of towers with site leases which
may require revenue received from us or our affiliates to be shared with the
site lessors.
Also on June 2, 1999, pursuant to master site agreements, we and
certain of our subsidiaries agreed to pay Crown Castle monthly rent of $1,800
per tower for the continued use of the space that we or our affiliates occupied
on the towers prior to the closing. Monthly payments under the individual site
leases are subject to increase based on an agreed upon schedule and if and when
we or our affiliates add equipment to a site. In any event, the monthly rent,
including additional rents related to the addition of equipment, will be
increased on each fifth anniversary of each site lease up to an amount that is
115% of the rent paid during the preceding five year period. The term of each
site lease is ten years. We have the right to extend any site lease for up to
three additional five year periods. Each site lease will automatically renew
for an option term unless we or our affiliates notify Crown Castle of our
intent not to renew at least 180 days prior to the end of the then current
term. We recorded a gain of $47.9 million in 1999 on the sale, and we will
amortize a deferred gain of $85.5 million over the 10-year lease term.
Following the closing of this sale, we and Crown Castle entered into a
binding letter agreement that contemplates, subject to certain conditions,
Crown Castle purchasing an additional 31 sites from us. We expect this sale to
close on or before December 2, 1999, for a total purchase price of
approximately $13 million. The letter agreement also contemplates a
build-to-suit tower construction contract between us and Crown Castle for 40
tower sites through December 31, 2000.
COMPETITION; OTHER TELECOMMUNICATIONS TECHNOLOGIES
Competition in the wireless communications business is intense, and we
expect it to continue to increase as a result of the entrance of new
competitors and the development of new technologies, products and services.
Each of the markets in which we compete is or will be served by multiple other
wireless service providers, including cellular, PCS and other wireless
operators and resellers.
We compete directly with several other PCS providers, including
BellSouth Mobility, GTE Wireless, Sprint PCS and AT&T Wireless, in our PCS
markets. The FCC continues to auction additional licenses for wireless
services, which may allow more new competitors to enter the marketplace. We
expect that existing wireless service providers in our PCS markets will
continue to upgrade their systems.
16
<PAGE> 18
Some of these providers have been operational for a number of years and have
significantly greater financial and technical resources than those available to
us. Our wireless competitors include AT&T Wireless, AirTouch, BellSouth
Mobility, GTE Mobilnet, Alltel and Price Communications Wireless. Two of our
PCS competitors, AT&T Wireless and Sprint PCS, claim a national digital network
which some customers may view as an advantage. We, however, continue to believe
that the majority of wireless consumers are still primarily interested in
regional service, and that relatively few consumers use a national roaming
feature.
Continuing technological advances in telecommunications, and FCC
policies encouraging the development of new spectrum-based technologies, make
it impossible to predict the extent of future competition. The 1996
Telecommunications Act alters regulatory and industry barriers which for years
deterred easy competition within and between telecommunications markets. The
amended statute and related FCC rulemakings are expected to continue to open
new avenues for competitive offerings of wireless, wireline and hybrid
services.
Since the introduction of PCS and ESMR, the two-way wireless services
industry has experienced a downward trend in market prices. We anticipate that
this trend will continue in the future due to increased competition. We compete
to attract and retain customers principally on the basis of our service
offerings and pricing, our customer service and our large contiguous footprint.
Our ability to compete successfully will also depend, in part, on our ability
to anticipate and respond to various competitive factors affecting the
industry, including new services that may be introduced, changes in consumer
preferences, demographic trends, economic conditions and discount pricing
strategies by competitors, which could adversely affect our operating margins.
Beginning March 23, 1999, the FCC re-auctioned additional PCS licenses
(including licenses reserved for small businesses) which, for various reasons,
had been returned to the FCC. These licenses were for varying amounts of
spectrum, ranging from 10 MHz to 30 MHz. While we did not participate directly
in this auction, we provided certain financing, subject to restrictions, to a
qualified small business, Eliska Wireless, Inc., that acquired licenses for 15
MHz of spectrum in each of the Knoxville, Tennessee BTA and the
Kingsport/Johnson City/Bristol, Tennessee BTA.
REGULATION OF WIRELESS TELECOMMUNICATIONS SYSTEMS
The FCC regulates the licensing, construction, operation and
acquisition of wireless telecommunications systems in the United States
pursuant to the Communications Act of 1934, as amended, and the rules,
regulations and policies promulgated by the FCC. Additional regulatory
authority over PCS providers is granted to the FCC by the Budget Act and the
1996 Telecommunications Act.
Under the Communications Act, the FCC is authorized to establish
regulations governing the interconnection of PCS systems with wireline and
other wireless carriers, allocate channels and frequencies, grant or deny
license renewals and applications for transfer of control or assignment of PCS
licenses, monitor the foreign ownership of PCS licenses, and impose fines and
forfeitures for any violations of FCC regulations. The 1996 Telecommunications
Act and ongoing FCC rulemakings have led to new regulations concerning
interconnection of networks. The 1996 Telecommunications Act also permits the
FCC to lift regulations where they are no longer necessary in the public
interest.
Licensing of PCS. The FCC has divided the United States and its
possessions and territories into PCS markets made up of 493 BTAs and 51 MTAs.
Each MTA consists of at least two BTAs. Numerous licensees may compete in each
PCS service area. The FCC has allocated 120 MHz of radio spectrum in
17
<PAGE> 19
the 2 GHz band for licensed broadband PCS services. The FCC divided the 120 MHz
of spectrum into six individual blocks, each of which is allocated to serve
either MTAs or BTAs. Under the FCC's rules, a broadband PCS licensee may own
combinations of licenses (e.g., one MTA (30 MHz) and one BTA (10 MHz)) with
total aggregate spectrum of up to 45 MHz in a single geographic area. All PCS
licenses are granted for a 10-year period, at the end of which they must be
renewed. Licenses may be revoked at any time for cause, including failure to
meet certain buildout requirements imposed by the FCC on all PCS licensees.
Other FCC Requirements. The FCC also imposes requirements on our
operations with respect to interconnection to other telecommunications, the
provision of 911 and enhanced 911 services, mandatory contributions to the
FCC's universal service fund, obligations to allow resale of our services, and
other technical and reporting matters.
Other Federal Regulations. Wireless systems are subject to Federal
Aviation Administration regulations relating to the location, lighting and
construction of wireless transmitter towers and antennas and may be subject to
regulation under the National Environmental Policy Act and the environmental
regulations of the FCC. We use common carrier point-to-point microwave and
traditional landline facilities to connect our cell sites and to link them to
our main switching offices. These facilities are separately licensed by the FCC
and are subject to regulation as to technical parameters and service.
State and Local Regulation. In 1993, Congress amended the
Communications Act to preempt state or local regulation of the entry of, or the
rates charged by, any commercial or private mobile radio service provider.
Notwithstanding this preemption, a state may petition the FCC for authority to
begin regulating or to continue regulating CMRS rates. Petitioners must
demonstrate that existing market conditions cannot protect consumers from
unreasonable and unjust rates or that the service is a replacement for
traditional wireline telephone service for a substantial portion of the
wireline service within the state. So far, the states in which we currently
provide or plan to provide service (Alabama, Arkansas, Florida, Georgia,
Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, South Carolina
and Tennessee) either have not sought to regulate these matters or, in the case
of Louisiana, have had their petition to regulate denied by the FCC.
States are not, however, prohibited from regulating other terms and
conditions of CMRS, such as service quality, billing procedures and consumer
protection standards. In addition, the siting and construction of transmitter
towers, antennas and equipment shelters are often subject to state or local
zoning, land use and other regulations.
EMPLOYEES AND AGENTS
As of June 30, 1999, we had approximately 1,700 employees. We
anticipate that the continued development of our PCS system will require us to
continue to hire a substantial number of new employees. None of our employees
is represented by a labor organization, and we consider our employee relations
to be good.
18
<PAGE> 20
SELLING STOCKHOLDER
The selling stockholder is The Huff Alternative Income Fund, L.P.
("Huff"). Huff will convert its shares of Series C Convertible Preferred Stock
into 1,764,706 shares of common stock prior to the effective date of the
registration statement of which this prospectus forms a part. Huff acquired the
Series C Preferred from us on June 5, 1997. Our registration of these shares
does not necessarily mean that Huff will sell all or any of these shares. The
following table sets forth certain information, as of September 20, 1999, with
respect to the number of shares of common stock beneficially owned by Huff and
assumes the sale of all of the shares offered hereby.
<TABLE>
NUMBER OF PERCENTAGE
SHARES SHARES OF SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED PRIOR NUMBER OF OWNED AFTER OWNED AFTER
NAME OF SELLING STOCKHOLDER(1) TO THE OFFERING SHARES OFFERED THE OFFERING THE OFFERING
- ----------------------------- --------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
The Huff Alternative Income Fund, L.P..... 2,668,306 1,764,706 903,600 3.0%
</TABLE>
- ------------------
(1) The address for The Huff Alternative Income Fund, L.P. is 67 Park
Place, Morristown, New Jersey 07960.
PLAN OF DISTRIBUTION
We are registering the shares offered by this prospectus on behalf of
Huff and its pledgees, donees, transferees and successors in interest. Huff or
its pledgees, donees, transferees or successors in interest may sell or
distribute these shares from time to time. Huff may make these sales directly
or through broker-dealers or underwriters who may act solely as agents, or who
may acquire shares as principals. The distribution of the shares may be
effected in one or more transactions that may take place through the Nasdaq
National Market, including block trades or ordinary broker's transactions, or
through privately negotiated transactions, or through a combination of any
these methods of sale, at market prices prevailing at the time of sale, at
prices related to the prevailing market prices, at negotiated prices or at
fixed prices, which may be changed. Huff reserves the right to accept or
reject, in whole or in part, any proposed purchase of these shares, whether the
purchase is to be made directly or through agents. We will not receive any
proceeds from the sale of the shares.
The shares may be sold in one or more of the following types of
transactions, or in any combination of the following types of transactions:
(a) a cross or block trade, including a transaction in which the
broker-dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as
principal to facilitate the transaction;
(b) purchases by a broker-dealer or underwriter as principal and
resale by such broker-dealer or underwriter for its account
pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of such
exchange;
(d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
(e) in transactions "at the market" to or through market makers
of our common stock or into an existing market for the common
stock;
19
<PAGE> 21
(f) in other ways not involving market makers or established
trading markets, including direct sales of the shares to
purchasers or sales of the shares effected through agents;
(g) through transactions in options, swaps or other derivatives
which may or may not be listed on an exchange;
(h) in privately negotiated transactions; or
(i) in transactions to cover short sales.
In effecting sales, broker-dealers engaged by Huff may arrange for other
broker-dealers to participate in the resales. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this prospectus.
From time to time, Huff may pledge or grant a security interest in
some or all of these shares. If Huff defaults in performance of the obligations
secured by these shares, the pledgees or secured parties may offer and sell the
shares from time to time by this prospectus. Huff also may transfer and donate
these shares in other circumstances. The number of shares beneficially owned by
Huff will decrease as and when Huff transfers or donates these shares or
defaults in performing any obligations secured by these shares. The plan of
distribution for shares offered and sold under this prospectus will otherwise
remain unchanged, except that the transferees, donees, pledgees, other secured
parties or other successors in interest will be selling stockholders for
purposes of this prospectus.
In connection with distributions of the shares or otherwise, Huff may
enter into hedging transactions with broker-dealers. In connection with such
transactions, broker-dealers may engage in short sales of the shares registered
hereunder in the course of hedging the positions they assume, including
positions assumed in connection with distributions of these shares by such
broker-dealers. Huff may also sell shares short and redeliver the shares to
close out such short positions. Huff may also enter into option or other
transactions with broker-dealers which require the delivery to the
broker-dealer of the shares registered hereunder, which the broker-dealer may
resell or otherwise transfer pursuant to this prospectus. Huff may also loan or
pledge the shares registered hereunder to a broker-dealer and the broker-dealer
may sell the shares so loaned or upon a default the broker-dealer may effect
sales of the pledged shares pursuant to this prospectus.
Huff has advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers
regarding the sale of these shares, nor is there an underwriter or coordinating
broker acting in connection with the proposed sale of these shares. However,
Huff may use brokers, dealers, underwriters or agents to sell these shares.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions. This compensation may be paid by Huff or the
purchasers of the shares for whom such persons may act as agent, or to whom
they may sell as principal, or both. The compensation as to a particular person
may be less than or in excess of customary commissions. Because Huff and such
broker-dealers and any other participating broker-dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, they will be subject to the prospectus delivery requirements of the
Securities Act. In addition, any commission, discount, concession or profit
they realize with respect to the resale of these shares while acting as
principals may be deemed to be underwriting discounts or commissions under the
Securities Act. Neither we nor Huff can presently estimate the amount of such
compensation. The aggregate proceeds to Huff from the sale of the shares
20
<PAGE> 22
will be the purchase price of the common stock sold less the aggregate agents'
commissions if any, and other expenses of issuance and distribution not borne
by us.
If Huff sells these shares in an underwritten offering, the
underwriters may acquire these shares for their own account and resell the
shares from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. In such event, we will set forth in a supplement to this
prospectus the names of the underwriters and the terms of the transactions,
including any underwriting discounts, concessions or commissions and other
items constituting compensation of the underwriters and broker-dealers. The
underwriters from time to time may change any public offering price and any
discounts, concessions or commissions allowed or reallowed or paid to
broker-dealers. Unless otherwise set forth in a supplement, the obligations of
the underwriters to purchase the shares will be subject to certain conditions,
and the underwriters will be obligated to purchase all of the shares specified
in the supplement if they purchase any of the shares.
If Huff notifies us that it has entered into any material arrangement
with a broker-dealer for the sale of these shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, we will file a supplement to this prospectus, if
required, disclosing:
(a) the name of each selling stockholder and of the participating
broker-dealer(s);
(b) the number of shares involved;
(c) the price at which such shares were sold;
(d) the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
(e) that such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by
reference in this prospectus; and
(f) other facts material to the transaction.
In addition, we will file a supplement to this prospectus if we are notified
that a donee or pledgee intends to sell more than 500 shares.
We have advised Huff that during such time as they may be engaged in a
distribution of these shares, they are required to comply with Regulation M
under the Exchange Act. With certain exceptions, Regulation M prohibits Huff,
any affiliated purchasers and other persons who participate in such a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete.
We have agreed to bear certain expenses of registration of the common
stock under the federal and state securities laws and of any offering and sale
hereunder not including commissions of dealers or agents, fees attributable to
the sale of the shares and some other expenses. We have agreed to indemnify
Huff, and we may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of these shares, against certain
liabilities, including some potential liabilities under the Securities Act.
Huff may agree to indemnify any broker-dealer or agent that participates in
21
<PAGE> 23
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We may postpone any action under the registration rights agreement
with Huff for a discrete period of time, not exceeding 90 days, if, in our
reasonable judgment, we determine that effecting the registration at such time
might (1) adversely affect a pending or contemplated financing, acquisition,
disposition of assets or stock, merger or other significant transaction or (2)
require us to make public disclosure of information the disclosure of which we
believe in good faith could have a significant adverse effect upon us. This
offering will terminate on the earlier of (a) 180 calendar days after the
effective date of the registration statement or (b) the date on which Huff has
sold all of the shares offered hereby.
There can be no assurance that Huff will sell any or all of the shares
of common stock offered by it under this prospectus. It is possible that a
significant number of these shares could be sold at the same time. Such sales,
or the perception that such sales could occur, may adversely affect prevailing
market prices for the Powertel common stock.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been
passed upon for us by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta,
Georgia.
EXPERTS
The consolidated financial statements of Powertel, Inc. as of December
31, 1998 and 1997 and for each of the years in the three-year period ended
December 31, 1998 have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon such reports and upon the
authority of said firm as experts in accounting and auditing.
22
<PAGE> 24
POWERTEL, INC.
<PAGE> 25
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by
Powertel in connection with the sale of the common stock being registered. All
amounts are estimates except the SEC Registration Fee.
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 16,588
Printing expenses............................................. 30,000
Legal fees and expenses....................................... 50,000
Accounting fees and expenses.................................. 10,000
Miscellaneous expenses........................................ 3,412
------------
Total................................................... $ 110,000
============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Powertel's Third Restated Certificate of Incorporation, as amended,
contains provisions that provide that no director of Powertel shall be liable
for breach of fiduciary duty as a director except for (i) any breach of the
director's duty of loyalty to Powertel or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; (iii) liability under Section 174 of the Delaware
Corporation Law; or (iv) any transaction from which the director derived an
improper personal benefit. Powertel's Certificate of Incorporation contains
provisions that further provide for the indemnification of directors and
officers to the fullest extent permitted by the Delaware Corporation Law. Under
Powertel's Amended and Restated Bylaws, Powertel is required to advance expenses
incurred by an officer or director in defending any such action if the director
or officer undertakes to repay such amount if it is determined that the director
or officer is not entitled to indemnification.
Powertel's Certificate of Incorporation also provides that, except as
expressly prohibited by law, Powertel shall indemnify its directors, officers,
employees and agents and its former directors, officers, employees and agents
and those who serve, at Powertel's request, in such capacities with another
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
the defense of any action, suit, or proceeding in which they or any of them were
or are made parties or are threatened to be made parties by reason of their
serving or having served in such capacity. Powertel's Certificate of
Incorporation provides, however, that such person must have acted in good faith
and in a manner such person reasonably believed to be in (or not opposed to) the
best interests of Powertel and, in the case of a criminal action, such person
must have had no reasonable cause to believe his or her conduct was unlawful. In
addition, Powertel's Certificate of Incorporation does not permit
indemnification in an action or suit by or in the right of Powertel, where such
person has been adjudged liable to Powertel, unless, and only to the extent
that, a court determines that such person fairly and reasonably is entitled to
indemnity for costs the court deems proper in light of liability adjudication.
Indemnity is mandatory to the extent a claim, issue or matter has been
successfully defended. In addition, Powertel has entered into indemnity
agreements with all of its directors and officers pursuant to which Powertel has
agreed to indemnify the directors and officers as permitted by the Delaware
Corporation Law and has obtained directors and officers liability insurance.
II-1
<PAGE> 26
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1* Stock Purchase Agreement dated as of May 23, 1997 between the
Company and The Huff Alternative Income Fund, L.P. (Filed as
Exhibit 10(a) to Registration Statement on Form S-4, File No.
333-31399, and incorporated herein by reference).
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Nelson Mullins Riley & Scarborough, L.L.P.
(included in Exhibit 5.1).
24.1* Power of Attorney.
- -----------------
* Previously filed.
</TABLE>
ITEM 17. UNDERTAKINGS.
We hereby undertake:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) 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 a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(c) 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) and (b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by us pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
II-2
<PAGE> 27
2. That, for the purpose of determining any liability under the
Securities Act, 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 post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
4. That, for the purpose of determining any liability under the
Securities Act, each filing of our annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the 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.
5. To deliver or cause to be delivered with the prospectus, to
each person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by our director, officer, or controlling person 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, we 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 Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Powertel,
Inc. 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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Point, State of Georgia, on this 21st day of
September, 1999.
POWERTEL, INC.
By: /s/ Allen E. Smith
---------------------------------
Allen E. Smith
President/Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities listed below and on the 21st day of September, 1999.
Signatures Title
- ---------- -----
* Chairman of the Board of Directors
- ------------------------------
Campbell B. Lanier, III
/s/ Allen E. Smith Chief Executive Officer, President
- ------------------------------ and Director
Allen E. Smith (Principal Executive Officer)
* Chief Financial Officer and
- ------------------------------ Executive Vice President
Fred G. Astor, Jr. (Principal Financial and
Accounting Officer)
* Director
- ------------------------------
Donald W. Burton
* Director
- ------------------------------
O. Gene Gabbard
* Director
- ------------------------------
Ann Milligan
II-4
<PAGE> 29
* Director
- ------------------------------
Maurice P. O'Connor
* Director
- ------------------------------
William H. Scott, III
* Director
- ------------------------------
William B. Timmerman
* Director
- ------------------------------
Donald W. Weber
*By /s/ Allen E. Smith
- ------------------------------
Allen E. Smith
Attorney-in-Fact
II-5
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF NELSON MULLINS RILEY & SCARBOROUGH, LLP]
September 21, 1999
Board of Directors
Powertel, Inc.
1233 O.G. Skinner Drive
West Point, Georgia 31833
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
This firm has acted as counsel to Powertel, Inc., a Delaware
corporation (the "Company"), in connection with its registration, pursuant to a
registration statement on Form S-3 filed on August 11, 1999, as amended, with
the Securities and Exchange Commission (the "Registration Statement"), for
resale of 1,764,706 shares of the Company's common stock, par value $0.01 per
share (the "Shares"), previously issued by the Company to The Huff Alternative
Income Fund, L.P. ("Huff") upon the conversion of 50,000 shares of the Company's
Series C Convertible Preferred Stock. This opinion letter is furnished to you at
your request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection with the
Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. A copy of the Registration Statement and amendments thereto.
2. An executed copy of the Stock Purchase Agreement dated May 23,
1997 between the Company and Huff.
3. The Third Restated Certificate of Incorporation of the
Company, as amended, as certified by the Secretary of the
Company on the date hereof as then being complete, accurate
and in effect.
4. The Amended and Restated Bylaws of the Company, as certified
by the Secretary of the Company on the date hereof as then
being complete, accurate and in effect.
5. Resolutions of the Board of Directors of the Company adopted
on May 23, 1997 and August 11, 1999, as certified by the
Secretary of the Company on the date hereof as then being
complete, accurate and in effect.
<PAGE> 2
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. We have also assumed
the accuracy, completeness and authenticity of the foregoing certifications of
public officials, governmental agencies and departments, and corporate
officials. This opinion letter is given, and all statements herein are made, in
the context of the foregoing.
This opinion letter is based as to matters of law solely on the General
Corporation Law of the State of Delaware. We express no opinion herein as to any
other laws, statutes, regulations or ordinances.
Based upon, subject to and limited by the foregoing, we are of the
opinion that the Shares are validly issued, fully paid and non-assessable under
the General Corporation Law of the State of Delaware.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement and should not be quoted in whole or in part or otherwise be referred
to, or filed with or furnished to any governmental agency or other person or
entity, without the prior written consent of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not hereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
/s/ Nelson Mullins Riley & Scarborough, L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated February 5, 1999 included in
Powertel, Inc.'s Annual Report on Form 10-K for the year ending December 31,
1998 into this Registration Statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 20, 1999
