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Pursuant to Rule 424B(3)
Registration No. 333-03389
PROSPECTUS
820,404 SHARES
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
COMMON STOCK
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This Prospectus relates to the sale by Henry Zachs, Judith Zachs, Newton
Brenner, Christopher Jenkins, Waring Partridge, David Abel, Estate of Danny
Arnold, Estate of Robert Austin, The Ed and Natalie Friendly Trust, Nathan
Golden, Jeffrey Gordon, Eugene Goodwin, Rabbi Leon Kahane, Frank Kilpatrik,
Lawrence Family Trust, Perry Leff, Donald Meaders, George Newhart, Kenneth
Newmark, Susan Newmark, Pierce O'Donnell, Don Rickles, Barbara Rickles, Ronald
Rizzo, Anne Roberts, Larry Scharf, Bart Sokolow, Ronald Shlensky, Anthony
Thompson and Tayemi Thompson, (all of the foregoing parties are hereinafter
referred to as the "Selling Stockholders") of a maximum 820,404 shares of
Common Stock, par value $.01 per share (the "Common Stock"), of Cellular
Communications of Puerto Rico, Inc., a Delaware corporation (the "Company")
(and associated Series A Junior Participating Preferred Stock Purchase Rights
(the "Rights")). Such Common Stock was originally issued by the Company as
consideration in certain acquisition transactions. See "RECENT DEVELOPMENTS."
The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by this Prospectus. See "SELLING STOCKHOLDERS" and "PLAN
OF DISTRIBUTION."
The Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations/National Market System ("Nasdaq National Market") under
the symbol CCPR. On May 28, 1996 the last reported sale price of the Common
Stock on the Nasdaq National Market was $30.875 per share. Prospective
purchasers of the Common Stock are urged to obtain current information as to
market prices of the Common Stock.
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SEE "RISK FACTORS" ON PAGES 3 THROUGH 5 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 29, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and New York Regional Office, 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and
other information can also be inspected at the offices of the Nasdaq National
Market, Reports Section, 1735 K Street, N.W., Washington, D.C., 20006 on which
certain securities of the Company are listed and traded.
The Company has filed with the Commission a Registration Statement on Form
S-3 (which together with all amendments and exhibits is referred to herein as
the "Registration Statement"). This Prospectus does not contain all
information set forth in the Registration Statement and the exhibits and
schedules filed thereunder, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement which may be inspected
and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1995 (File No. 0-19869).
2. The Company's Current Report on Form 8-K, dated April 23, 1996 (File
No. 0-19869).
3. The description of the Common Stock which is contained in the
registration statements filed by the Company to register such securities
under Section 12 of the Securities Act of 1933, as amended (the "Securities
Act"), including any amendments or reports filed for the purpose of
updating such description (File No. 0-19869).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the shares of Common Stock hereunder
shall be deemed to be incorporated by reference herein and to be part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE IN
THIS PROSPECTUS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE DOCUMENTS THAT THIS
PROSPECTUS INCORPORATES). WRITTEN OR ORAL REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO RICHARD J. LUBASCH, SECRETARY, CELLULAR COMMUNICATIONS OF PUERTO
RICO, INC., 110 EAST 59TH STREET, NEW YORK, NEW YORK 10022, TELEPHONE (212)
906-8470.
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RISK FACTORS
Ownership of the Common Stock offered hereby involves certain risks.
Prospective owners of the Common Stock, prior to engaging in any transaction
which would result in the ownership thereby of the Common Stock, should
carefully consider the following factors, in addition to all other information
contained in this Prospectus or incorporated herein by reference.
COMPETITION
Federal Communications Commission ("FCC") regulations provide that two
licensees will be authorized to provide cellular service in each cellular
service area. In the Commonwealth of Puerto Rico, the Company's wholly or
majority-owned subsidiaries, or other affiliates, face significant competition
from the Puerto Rico Telephone Company ("PRTC"), the other licensee for such
service area and which is also the sole landline telephone service provider in
Puerto Rico. PRTC is owned by the government of the Commonwealth of Puerto
Rico. PRTC is significantly larger and better capitalized than the Company and
enjoyed more than a five-year head start in fully marketing its cellular
telephone service. The Company believes that PRTC presently provides service
to approximately 61% of the subscribers to cellular telephone service in the
Commonwealth of Puerto Rico. In the U.S. Virgin Islands, the Company and its
wholly or majority owned subsidiaries, or other affiliates, face significant
competition from VitelCellular, Inc. ("VitelCellular"). VitelCellular is an
affiliate of Virgin Islands Telephone Company, which is the provider of
landline telephone service in the U.S. Virgin Islands and is also the other
licensee in each U.S. Virgin Islands cellular service area. The Company
believes that VitelCellular is significantly larger and better capitalized
than the Company. The Company believes that VitelCellular currently provides
service to approximately 45% of the subscribers of cellular service on the
U.S. Virgin Islands. Furthermore, the Company's cellular and paging operations
are dependent upon interconnection with these local landline telephone service
providers for the origination and termination of calls that constitute a large
proportion of the Company's mobile service operations. The Telecommunications
Act of 1996 contains certain provisions regarding such interconnection;
however, it is still premature to predict the effect of such legislation on
the Company's business.
Significant competition can also be expected from the other cellular
licensee in each other service area in which the Company's wholly or majority-
owned subsidiaries, or other affiliates, now, or in the future, might compete.
Alternative communications technologies now existing, in the process of
development, or to be developed in the future may also provide competition.
These include, without limitation, landline telephone service, conventional
mobile radio systems, specialized mobile radio systems, paging services,
microcell-based cordless telephones, mobile satellite services and personal
communications services ("PCS"). The FCC has recently awarded PCS licenses for
Puerto Rico and the U.S. Virgin Islands to AT&T and Centennial Cellular Corp.
("Centennial"). AT&T is the largest telecommunications company in the United
States; Centennial is an experienced cellular service provider in the U.S.
mainland and has affiliates that offer cable television services and fiber-
optic based telecommunications services in Puerto Rico. Both AT&T and
Centennial are expected to provide strong competition in the mobile
telecommunications market in Puerto Rico. The FCC will award four additional
PCS authorizations through competitive bidding in each area where the Company
provides cellular service. The Company is eligible to bid for and acquire at
least one of these authorizations in each such area. PCS is expected to
utilize digital technology which may provide better sound quality and
ancillary functions not currently available in the Company's system.
Accordingly, PCS will provide significant competition to the Company's
cellular and paging operations and may render current cellular technology
obsolete.
FRAUD
The cellular industry continues to be subject to fraudulent activity.
Cloning, which is one form of fraud, refers to the use of scanners and other
electronic devices to illegally obtain telephone numbers and electronic serial
numbers during cellular transmission. These stolen telephone and serial number
combinations can be programmed into a cellular phone and used to obtain
fraudulent access to cellular networks. Roaming fraud
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occurs when a phone programmed with a number stolen from the Company's
customer is used to place a fraudulent call from another carrier's market,
resulting in a roaming fee charged to the Company that cannot be collected
from the customer. The Company continues to work to reduce the negative
impacts of fraud through investment in new technologies and the deployment of
other measures. In its own markets, the Company has had significant success in
detecting and reducing fraudulent usage of numbers stolen from the Company's
customers. The cost of cellular fraud could have a significant impact on the
Company's operating results for the foreseeable future.
REGULATORY UNCERTAINTIES
The licensing, construction, operation, acquisition and sale of cellular
telephone systems are regulated at the federal level by the FCC and, to some
extent, the Federal Aviation Administration ("FAA"). In addition, certain
aspects of cellular telephone operations are or may be subject to public
utility regulation at the state, commonwealth or local level. Future changes
in the laws and regulations governing such aspects of cellular telephone
operations, either at the federal, state, commonwealth or local level, may
have a material adverse impact on the cellular telephone operations of the
Company.
FLUCTUATIONS IN THE VALUE OF WIRELESS LICENSES; RENEWAL OF FCC LICENSES
A substantial portion of the Company's assets consists of interests in
entities holding cellular licenses, the value of which will depend upon the
success of the operations of such entities and the growth and future direction
of the cellular industry generally. Values of licenses also have been affected
by fluctuations in the level of supply and demand for such licenses. In
addition, the infrequency with which licenses are traded or sold may increase
the difficulty of establishing values for the Company's license interests. Any
transfer of control of an entity holding a domestic license is subject to
prior FCC approval. Where licenses are held by partnerships, transfers of
ownership interests in such entities are often subject to contractual
restrictions.
In addition, investment returns from acquisitions of interests in existing
entities holding wireless licenses or from licenses acquired through auctions
may be lower than those resulting from the Company's early license awards
because of the substantial purchase prices required to acquire such interests.
Also, under current FCC regulations, each license is subject to renewal.
Because it is possible that there will be competition for the licenses upon
the expiration of their initial ten-year terms, there can be no assurance that
any such license will be renewed in favor of the Company.
LACK OF GEOGRAPHIC DIVERSIFICATION
The Company's business as of the date of this Prospectus is confined to the
operation of cellular telephone and paging systems in the Commonwealth of
Puerto Rico and the U.S. Virgin Islands. As such, it is highly dependent on
trends in the use of cellular telephone and paging services and is subject to
economic, social, political and governmental conditions in the Commonwealth of
Puerto Rico and in the U.S. Virgin Islands.
RADIO FREQUENCY EMISSIONS CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones might be linked to cancer. The Company has
collected and reviewed relevant scientific information and, based on such
information, is not aware of any credible evidence linking the usage of
portable cellular telephones with cancer. The FCC currently has a rulemaking
proceeding pending to update the guidelines and methods it uses for evaluating
RF emissions in radio equipment, including cellular telephones. While the
proposal would impose more restrictive standards on RF emissions from low-
power devices such as portable cellular telephones, it is anticipated that all
cellular telephones currently marketed and in use will comply with those
standards. The Telecommunications Act of 1996 requires that the FCC complete
action in that rulemaking proceeding within 180 days after February 7, 1996.
Additional concerns have been expressed about the safety of emissions from
cellular facilities which transmit calls to customers' telephone handsets. The
Company's facilities
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are licensed by the FCC and comply with the exposure levels set by the FCC.
The Telecommunications Act of 1996 provides that state and local governments
may not regulate the placement, construction or modification of personal
wireless service facilities on the basis of the environmental effects of RF
emissions as long as such facilities comply with the FCC's regulations
concerning such emissions. However, local authorities still have jurisdiction
over zoning and permitting of such facilities.
DIVIDEND POLICY
The Company has never paid cash dividends on the Common Stock and does not
anticipate paying any cash dividends in the foreseeable future. The Company
anticipates that it will retain earnings, if any, for use in the operation and
expansion of its business and does not anticipate paying any cash dividends in
the foreseeable future. Additionally, the terms of a $200,000,000 revolving
credit facility into which the Company and one of its subsidiaries have
entered contains provisions that restrict the payment of cash dividends on the
Common Stock.
HOLDING COMPANY STRUCTURE
As a holding company, the Company is ultimately dependent upon cash
distributions from the entities in which it owns interests to fund operations
and to pay the principal and interest on the Company's indebtedness. While
there are presently no material contractual restrictions on the ability of the
Company's operating entities to make payments or other distributions to the
Company, there can be no assurances that such restrictions will not exist at
any time in the future.
CONFLICTS OF INTEREST
Certain directors and/or officers of Cellular Communications, Inc. ("CCI")
are also directors and/or officers of the Company. When such persons act in
their capacity as directors and/or officers of the Company, they have a
fiduciary duty to the Company and its stockholders, which includes a duty of
loyalty to the Company and its stockholders. If a conflict of interest were to
emerge between CCI and the Company, however, there would be no assurance that
the interests of the Company would be fully protected in such instance or that
any such conflict would necessarily be resolved in favor of the Company.
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Restated Certificate of Incorporation
(the "Restated Certificate of Incorporation") and the Company's By-laws (the
"By-laws") as well as the Rights Agreement (as hereinafter defined), and
certain instruments of indebtedness of the Company, as well as Section 203 of
the Delaware General Corporation Law which prohibits certain persons from
engaging in business combinations with the Company, may be considered to have
anti-takeover effects and may delay, defer or prevent a change in the control
of the Company that might otherwise be beneficial to the Company's
stockholders. The foregoing may also adversely affect prevailing market prices
for the Common Stock. See "PURPOSES AND EFFECTS OF CERTAIN PROVISIONS OF THE
RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND THE RIGHTS AGREEMENT."
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THE COMPANY
The Company is a Delaware corporation which was originally organized under
the name EC Acquisition, Inc. on May 18, 1988. The Company, through wholly and
majority-owned entities, or other affiliates, holds licenses from the FCC to
own and operate cellular telephone and paging systems and conduct other
related operations. The only markets served by the entities in which the
Company has an interest are in the Commonwealth of Puerto Rico and the U.S.
Virgin Islands. Prior to February 28, 1992, the Company was a wholly-owned
subsidiary of CCI.
The Company's principal executive offices are located at 110 East 59th
Street, New York, New York 10022 and its telephone number at such address is
(212) 906-8470.
RECENT DEVELOPMENTS
On December 26, 1995 the Company and CCPR Services, Inc. ("CCPR"), a wholly
owned subsidiary of the Company, entered into an Agreement and Plan of
Reorganization (the "HMZ Reorganization Agreement") with HMZ San Juan Inc., a
Connecticut corporation ("HMZ"), and Henry Zachs, Newton Brenner and
Christopher Jenkins, all of the stockholders of HMZ (collectively, the "HMZ
Stockholders"). The HMZ Reorganization Agreement provides, among other things,
for the purchase by CCPR of a 2.6627% interest in San Juan Cellular Telephone
Company, a general partnership ("San Juan Cellular"), subject to certain
regulatory approvals. Pursuant to the HMZ Reorganization Agreement, on
February 7, 1996, the Company issued 350,000 shares of Common Stock and the
associated Rights to HMZ in exchange for such interest in San Juan Cellular.
San Juan Cellular provides, pursuant to authorization by the FCC, cellular
radio and related communications services in Puerto Rico. HMZ subsequently
distributed the 350,000 shares of Common Stock and the associated Rights to
the HMZ Stockholders and to Judith Zachs.
On December 26, 1995, the Company and CCPR entered into an Agreement and
Plan of Reorganization (the "NTC Reorganization Agreement") with National
Telephone Company, a Delaware corporation ("NTC"), and Waring Partridge, the
sole stockholder of NTC (the "Sole Stockholder"). The NTC Reorganization
Agreement provides, among other things, for the purchase by CCPR of a 2.6627%
interest in San Juan Cellular, subject to certain regulatory approvals.
Pursuant to the NTC Reorganization Agreement, on February 7, 1996, the Company
issued 350,000 shares of Common Stock and the associated Rights to NTC in
exchange for such interest in San Juan Cellular. NTC subsequently distributed
the 350,000 shares of Common Stock and the associated Rights to the Sole
Stockholder.
On December 26, 1995 the Company and CCPR entered into an Agreement (the
"PCT Reorganization Agreement" and, collectively with the HMZ Reorganization
Agreement and the NTC Reorganization Agreement, the "Reorganization
Agreements") with Pacific Cellular Telephone Systems, a California limited
partnership ("PCT") and David Abel, Estate of Danny Arnold, Estate of Robert
Austin, The Ed and Natalie Friendly Trust, Nathan Golden, Jeffrey Gordon,
Eugene Goodwin, Rabbi Leon Kahane, Frank Kilpatrik, Lawrence Family Trust,
Perry Leff, Donald Meaders, George Newhart, Kenneth Newmark, Susan Newmark,
Pierce O'Donnell, Don Rickles, Barbara Rickles, Ronald Rizzo, Anne Roberts,
Larry Scharf, Bart Sokolow, Ronald Shlensky, Anthony Thompson and Tayemi
Thompson, the foregoing being all of the limited and general partners of PCT
(collectively, the "Partners"). The PCT Reorganization Agreement provides,
among other things, for the purchase by CCPR of a .902% interest in San Juan
Cellular, subject to certain regulatory approvals. Pursuant to the PCT
Reorganization Agreement, on February 8, 1996, the Company issued 120,404
shares of Common Stock and the associated Rights to PCT in exchange for such
interest in San Juan Cellular. PCT subsequently distributed the 120,404 shares
of Common Stock and the associated Rights to the Partners.
As a result of the consummation of the transactions contemplated by each of
the Reorganization Agreements, the Company has a 100% interest in San Juan
Cellular.
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SELLING STOCKHOLDERS
All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholders. As of the date of this Prospectus, the Selling
Stockholders beneficially owned all of the shares of Common Stock offered
hereby. Although the Company believes certain Selling Shareholders benefically
own shares of Common Stock not being registered hereby, the Company does not
believe that the Selling Shareholders own material amounts of shares of Common
Stock not being registered hereby. Immediately after the sale of all of the
shares of Common Stock offered hereby, Judith Zachs will own 625 shares of
Common Stock of the Company and Henry Zachs will own 3,000 shares of Common
Stock of the Company. Other than with regards to Judith Zachs and Henry Zachs,
the Company believes that immediately after the sale of all of the shares of
Common Stock offered hereby, the Selling Stockholders will not own any
material amounts of shares of Common Stock or any other shares of the capital
stock of the Company (assuming the Selling Stockholders do not acquire any
other such shares after the date of this Prospectus). Pursuant to the
Reorganization Agreements, the Company acquired an aggregate interest of
6.146% in San Juan Cellular and, in connection therewith, the Company issued
the shares of Common Stock offered hereby.
Pursuant to the registration rights provisions of the Reorganization
Agreements, the Company has, among other things, filed with the Commission the
Registration Statement of which this Prospectus is a part, and has agreed to
use all reasonable efforts to cause such Registration Statement to become
effective as soon as reasonably practicable. Additionally, pursuant to such
provisions, the Selling Stockholders have agreed that if a Selling Stockholder
is deemed to be an affiliate of the Company, then that Selling Stockholder
will furnish all information and take such other actions as may reasonably be
requested by the Company to assist the Company in fulfilling the obligations
of the Company referred to in the previous sentence. The Company will not
receive any cash proceeds or other amounts from the sale of the shares of
Common Stock offered hereby.
To the best knowledge of the Company, none of the Selling Stockholders nor
any of their respective affiliates are, or have in the past three years been,
a director or officer of the Company or any of the Company's affiliates.
Except for the transactions contemplated pursuant to this Prospectus or the
Reorganization Agreements, to the best knowledge of the Company, there is not,
and there has not in the past three years been, any material relationship
between the Company and its affiliates, on the one hand, and any of the
Selling Stockholders, on the other.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be sold from time to time in
one or more transactions to purchasers either directly by the Selling
Stockholders, through agents designated by the Selling Stockholders or through
brokers, dealers or underwriters to be designated by the Selling Stockholders,
at such prices (whether at fixed offering prices, prevailing market prices,
varying prices determined at the time of sale or otherwise) and on such terms
as may be determined by the Selling Stockholders at the time of sale;
additionally, such sales may be made on the Nasdaq National Market or in the
over-the-counter market or otherwise. Such agents, brokers, dealers or
underwriters will likely receive commissions or discounts from the Selling
Stockholders in customary and ordinary amounts to be negotiated immediately
prior to the sale. The Selling Stockholders and any agents, dealers or
underwriters that participate with the Selling Stockholders in the
distribution of the shares of Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act and any commissions
received by them and any profit on the resale of the shares of Common Stock
purchased by them may be deemed underwriting commissions or discounts under
the Securities Act. To the extent required under the Securities Act, the
aggregate amount of shares of Common Stock being offered and the terms of the
offering, the names of any such agents, brokers, dealers or underwriters and
any applicable commission with respect to a particular offer will be set forth
in an accompanying Prospectus supplement. The aggregate proceeds to the
Selling Stockholders from the sale of the shares of Common Stock offered
hereby will be the selling price of the shares of Common Stock sold less the
aggregate commissions and discounts thereon, if any, and other expenses
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of issuance and distribution. None of the proceeds from the sale of the shares
of Common Stock offered hereby will be received by the Company.
USE OF PROCEEDS
The Company will not receive any of the net proceeds from the sale of shares
of Common Stock offered hereby.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The authorized capital stock of the Company consists of 32,500,000 shares,
of which 2,500,000 are shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), and 30,000,000 are shares of Common Stock. No shares
of Preferred Stock are issued and outstanding, although 80,000 shares of
Series A Junior Participating Preferred Stock have been designated and
reserved for issuance in connection with the exercise, upon certain events, of
the Rights in accordance with the Rights Agreement (as hereinafter defined).
For a description of the Rights and the Series A Junior Participating
Preferred Stock, see "PURPOSES AND EFFECTS OF CERTAIN PROVISIONS OF THE
RESTATED CERTIFICATE OF INCORPORATION, THE BY-LAWS AND THE RIGHTS AGREEMENT--
Stockholder Rights Plan." The following description is qualified in all
respects by reference to the Restated Certificate of Incorporation and the By-
laws, which are incorporated by reference herein and copies of which may be
obtained as described under "AVAILABLE INFORMATION."
COMMON STOCK
All shares of Common Stock (1) participate equally in dividends payable to
holders of Common Stock when and as declared by the Company's Board of
Directors and in net assets available for distribution to holders of Common
Stock on liquidation or dissolution (subject to any prior rights of any class
of Preferred Stock which may be issued by the Company in the future), (2) have
one vote per share on all matters submitted to a vote of the Company's
stockholders and (3) do not have cumulative voting rights in the election of
directors. All issued and outstanding shares of the Common Stock are fully
paid and nonassessable. The shares of Common Stock are neither redeemable nor
convertible, and the holders thereof have no preemptive or subscription rights
to purchase any securities of the Company. Upon any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the remaining
net assets, if any, of the Company shall be distributed pro rata to the
holders of the Common Stock.
The Restated Certificate of Incorporation, the By-laws and the Rights
Agreement contain certain provisions that are intended to enhance the
likelihood of continuity and stability in the composition of the Company's
Board of Directors and which may have the effect of delaying, deferring or
preventing a future takeover or change in control of the Company unless such
takeover or change of control is approved by the Company's Board of Directors.
Such provisions may also render the removal of the current Board of Directors
and of management more difficult. See "PURPOSES AND EFFECTS OF CERTAIN
PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION, THE BY-LAWS AND THE
RIGHTS AGREEMENT."
PREFERRED STOCK
The Board of Directors is authorized to provide for the issuance of shares
of Preferred Stock in one or more series, and to fix for each such series such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated in a
Certificate of Designation adopted by the Board of Directors
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providing for the issue of such series and as are permitted by the Delaware
General Corporation Law (the "DGCL").
TRANSFER AGENT
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Company's Common Stock.
PURPOSES AND EFFECTS OF CERTAIN
PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION,
THE BY-LAWS AND THE RIGHTS AGREEMENT
GENERAL
Certain provisions contained in the Restated Certificate of Incorporation,
the By-laws and the Rights Agreement, dated as of January 24, 1992, between
the Company and Continental Stock Transfer & Trust Company (the "Rights
Agreement"), could make the acquisition of control of the Company by means of
a tender offer, open market purchases, a proxy contest, or otherwise, more
difficult. Set forth below is a description of such provisions contained in
the Restated Certificate of Incorporation, the By-laws and the Rights
Agreement. Such description is intended as a summary only and is qualified in
its entirety by reference to the Restated Certificate of Incorporation, the
By-laws and the Rights Agreement, which are incorporated by reference herein
and copies of which may be obtained as described under "AVAILABLE
INFORMATION".
CLASSIFIED BOARD OF DIRECTORS
The Restated Certificate of Incorporation and the By-laws provide that the
Board of Directors be divided into three classes of directors, with the
classes to be as nearly equal in number as possible. One class of directors is
elected each year for a three-year term. The Company believes that including a
classified board provision in the Restated Certificate of Incorporation is
advantageous to the Company and its stockholders because it enhances the
likelihood of continuity and stability in the composition of the Board of
Directors and in the policies formulated by the Board of Directors. The
Company believes that this, in turn, permits the board to represent more
effectively the interests of all stockholders.
With a classified Board of Directors, it will generally take a majority
stockholder two annual meetings of stockholders to elect a majority of the
Board of Directors. As a result, the classified board may discourage proxy
contests for the election of directors or purchases of a substantial block of
stock because its provisions could operate to prevent obtaining control of the
board in a relatively short period of time. The classification provisions
could also have the effect of discouraging a third party from making a tender
offer or otherwise attempting to obtain control of the Company, even though
such an attempt might be beneficial to the Company and its stockholders. In
addition, because under the Restated Certificate of Incorporation directors
may be removed only for cause, a classified board would delay stockholders who
do not agree with the policies of the Board of Directors from replacing a
majority of the Board of Directors for two years, unless they can demonstrate
the directors should be removed for cause and obtain the requisite vote.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
The Restated Certificate of Incorporation and the By-laws provide that the
number of directors be fixed from time to time exclusively by the Board of
Directors, but consist of not more than fifteen nor less than three directors.
In addition, the Restated Certificate of Incorporation and the By-laws provide
that, subject to any rights of holders of any shares of Preferred Stock, if
any, a majority of the Board of Directors then in office may fill any
vacancies on the Board of Directors. Accordingly, the Board of Directors could
temporarily prevent any stockholder from obtaining majority representation on
the board by enlarging the size of the board and filling the new directorships
with its own nominees.
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Under the DGCL and the Restated Certificate of Incorporation, a director
serving on a classified board may be removed by the stockholders only for
cause. Moreover, the Restated Certificate of Incorporation provides that
directors may be removed only by the affirmative vote of holders of at least a
majority of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
The Restated Certificate of Incorporation provides that stockholder action
can be taken only at an annual or special meeting of stockholders and
prohibits stockholder action by written consent in lieu of a meeting. The
Restated Certificate of Incorporation and the By-laws provide that, subject to
the rights of holders of any series of Preferred Stock, special meetings of
stockholders can be called only by the Board of Directors, the Chairman of the
Board of Directors or the President. Stockholders are not permitted to call a
special meeting or to require that the Board of Directors call a special
meeting of stockholders. Moreover, the business permitted to be conducted at
any special meeting of stockholders is limited to the purpose or purposes
specified in the written notice of such meeting.
The provisions of the Restated Certificate of Incorporation prohibiting
stockholder action by written consent may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting unless a
special meeting is called by the Board of Directors, the Chairman of the Board
of Directors or the President. These provisions would also prevent the holders
of a majority of the voting power of the Voting Stock from using the written
consent procedure to take stockholder action and from taking action by consent
without giving all the stockholders of the Company entitled to vote on a
proposed action the opportunity to participate in determining such proposed
action. Moreover, a stockholder could not force stockholder consideration of a
proposal over the opposition of the Board of Directors, the Chairman of the
Board of Directors or the President by calling a special meeting of
stockholders prior to the time the Board of Directors, the Chairman of the
Board of Directors or the President believes such consideration to be
appropriate.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS
The By-laws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors (the "Nomination Procedure") and with
regard to business to be brought before an annual or special meeting of
stockholders of the Company (the "Business Procedure").
The Nomination Procedure provides that, subject to the rights of holders of
any series of Preferred Stock, if any, only persons who are nominated by, or
at the direction of, the Board of Directors or by a stockholder who has given
timely written notice to the Secretary prior to the meeting at which directors
are to be elected, will be eligible for election as directors of the Company.
The Business Procedure provides that at an annual or special meeting only such
business may be conducted as has been specified in the notice of meeting,
brought before the meeting by or at the direction of the Board of Directors or
by a stockholder who has given timely written notice to the Secretary of such
stockholder's intention to bring such business before the meeting. Under the
Nomination Procedure or the Business Procedure, to be timely, notice must be
received by the Company not less than 75 days nor more than 90 days prior to
the annual or special meeting of stockholders, provided, however, that in the
event that less than 90 days' notice or prior public disclosure of the meeting
date is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the fifteenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made, whichever first occurs.
Under the Nomination Procedure, a stockholder's notice to the Company
proposing to nominate a person for election as a director must contain certain
information (i) about each proposed nominee, including, without limitation,
(a) the name, age, business address and residence address of the nominee, (b)
the principal occupation or employment of the nominee, (c) the class, series
and number of shares of capital stock of the Company which
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are beneficially owned by the nominee, and (d) any other information relating
to the nominee that is required to be disclosed in solicitations of proxies
for election of directors pursuant to the Rules and Regulations of the
Commission under the Exchange Act (including such person's written consent to
being named in the proxy statement as a nominee and to serving as director if
elected) and (ii) about the stockholder proposing to nominate such person,
including, without limitation, the name and record address of the stockholder
and the class, series and number of shares of capital stock of the Company
which are beneficially owned by the stockholder. The Company may require any
proposed nominee to furnish such other information as may reasonably be
required by the Company to determine the eligibility of such proposed nominee
to serve as a director of the Company. Under the Business Procedure, a
stockholder's notice relating to the conduct of business other than the
nomination of directors at an annual meeting must contain certain information
about such business and about the proposing stockholder including, without
limitation, a brief description of the business desired to be brought before
the meeting, the name and record address of the proposing stockholder, the
class, series and number of shares of capital stock of the Company owned by
the proposing stockholder and a description of any material interest of the
stockholder in such business. If the officer presiding at a meeting determines
that a person was not nominated in accordance with the Nomination Procedure,
such person will not be eligible for election as a director and such
nomination shall be disregarded. If such presiding officer determines that
business was not properly brought before such meeting in accordance with the
Business Procedure, such business will not be transacted at such meeting.
By requiring advance notice of nominations by stockholders, the Nomination
Procedure will afford the Board of Directors a meaningful opportunity to
consider the qualifications of the proposed nominees and, to the extent deemed
necessary or desirable by the Board of Directors, to inform stockholders about
such qualification. By requiring advance notice of proposed business, the
Business Procedure will provide a more orderly procedure for conducting annual
meetings of stockholders and, to the extent deemed necessary or desirable by
the Board of Directors, will provide the Board of Directors with a meaningful
opportunity to inform stockholders, prior to such meetings, of any business
proposed to be conducted at such meetings, together with any recommendation of
the Board of Directors' position as to action to be taken with respect to such
business, so as to enable stockholders better to determine whether they desire
to attend such a meeting or grant a proxy to the Board of Directors as to the
disposition of any such business. Although the Restated Certificate of
Incorporation and the By-laws do not give the Board of Directors any power to
approve or disapprove stockholder nominations for the election of directors or
proposals for action, they may have the affect of precluding a contest for the
election of directors or the consideration of stockholder proposals if the
proper procedures are not followed, and of discouraging or deterring a third
party from conducting a solicitation of proxies to elect its own slate of
directors or to approve its proposal without regard to whether consideration
of such nominees or proposals might be harmful or beneficial to the Company
and its stockholders.
PREFERRED STOCK
The Restated Certificate of Incorporation authorizes the Board of Directors
to issue one or more series of Preferred Stock and to determine, with respect
to any series of Preferred Stock, the powers, designations, preferences,
optional or other rights, if any, and the qualifications, limitations or
restrictions thereof.
The Company believes that the ability of the Board of Directors to issue one
or more series of Preferred Stock will provide increased flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise. The authorized shares of Preferred Stock,
as well as shares of Common Stock, will be available for issuance without
further action by the Company's stockholders, unless such action is required
by applicable law or the rules of any stock exchange on which the Company's
securities may be listed or applicable rules of any self-regulatory
organization. If the approval of the Company's stockholders is not required
for the issuance of shares of Preferred Stock or Common Stock, the Board of
Directors does not intend to seek stockholder approval. The Board of Directors
will make any determination to issue such shares based on its judgment as to
the best interests of the Company and its stockholders. The Board of
Directors, in so acting, could issue Preferred Stock having terms that could
discourage an acquisition attempt or other transaction that some or a majority
of the stockholders might believe to be in their best interests or in which
stockholders might
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receive a premium for their stock over the then current market price of such
stock. The Company has no present plan to issue any shares of the Preferred
Stock, although 80,000 shares of Series A Junior Preferred Stock have been
designated and reserved for future issuance pursuant to the Rights Agreement.
AMENDMENT OF THE BY-LAWS AND CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF
INCORPORATION
Under the DGCL, the stockholders have the right to adopt, amend or repeal
the by-laws of a corporation. In addition, if the certificate of incorporation
so provides, the by-laws may be amended by the board of directors. The By-laws
provide that they may be amended by the Board of Directors or stockholders,
provided that if the amendment is to be adopted by the stockholders, the
affirmative vote of the holders of at least 66 3/4 percent of the Voting
Stock, voting together as a single class, is required. Other provisions set
forth in the Restated Certificate of Incorporation relate to the election and
the term of directors, the prohibition of stockholder action without a
meeting, calling a stockholders' meeting, the elimination of personal
liability of directors and the amendment of the By-laws only by the
affirmative vote of the holders of at least 66 2/3 percent of the Voting
Stock, voting together as a single class.
ANTI-TAKEOVER STATUTE
Section 203 of the DGCL prohibits certain transactions between a Delaware
corporation and an "interested stockholder," which is defined therein as a
person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15 percent or more of the
outstanding voting shares of a Delaware corporation. This provision prohibits
certain business combinations (defined broadly to include mergers,
consolidations, sales or other dispositions of assets having an aggregate
value in excess of 10 percent of the consolidated assets of the corporation,
and certain transactions that would increase the interested stockholder's
proportionate share ownership in the corporation) between an interested
stockholder and a corporation for a period of three years after the date the
interested stockholder acquired its stock unless (i) the business combination
is approved by the corporation's Board of Directors prior to the date the
interested stockholder acquired shares, (ii) the interested stockholder
acquired at least 85 percent of the voting stock of the corporation in the
transaction in which it became an interested stockholder or (iii) the business
combination is approved by a majority of the board of directors and by the
affirmative vote of 66 2/3 percent of the votes entitled to be cast by
disinterested stockholders at an annual or special meeting. The Restated
Certificate of Incorporation and By-laws do not exclude the Company from the
restrictions imposed under Section 203 of the DGCL.
STOCKHOLDER RIGHTS PLAN
The following description of the Rights Agreement is qualified in its
entirety by reference to the Rights Agreement, which has been incorporated by
reference herein and a copy of which may be obtained as described under
"AVAILABLE INFORMATION."
At a meeting held on January 23, 1992 the Board of Directors adopted the
Rights Agreement. The Rights Agreement provides that one Right will be issued
with each share of the Common Stock issued (whether originally issued or from
the Company's treasury) on or after the date of the Distribution and prior to
the Rights Distribution Date (as hereinafter defined). The Rights are not
exercisable until the Rights Distribution Date and will expire at the close of
business on February 28, 2002 unless previously redeemed by the Company as
described below. When exercisable, each Right entitles the owner to purchase
from the Company one-hundredth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $100.
Except as described below, the Rights will be evidenced by all the Common
Stock certificates and will be transferred with the Common Stock certificates,
and no separate Rights certificates will be distributed. The Rights will
separate from the Common Stock and a "Rights Distribution Date" will occur
upon the earlier of (i) 10 days following a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15 percent
or more of the outstanding shares of the Common Stock (the "Stock Acquisition
Date") and (ii) 10 business days following
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<PAGE>
the commencement of a tender offer or exchange offer that would result in a
person or group becoming an Acquiring Person.
After the Rights Distribution Date, Rights certificates will be mailed to
holders of record of the Common Stock as of the Rights Distribution Date and
thereafter the separate Rights certificates alone will represent the Rights.
The Series A Junior Participating Preferred Stock issuable upon exercise of
the Rights will be entitled to a minimum preferential quarterly dividend
payment of $.01 per share and will be entitled to an aggregate dividend of 100
times the dividend, if any, declared per share of Common Stock. In the event
of liquidation, the holders of the Series A Junior Participating Preferred
Stock will be entitled to a minimum preferential liquidation payment of $1 per
share and will be entitled to an aggregate payment of 100 times the payment
made per share of the Common Stock. Each share of Series A Junior
Participating Preferred Stock will have 100 votes and will vote together with
the Common Stock. In the event of any merger, consolidation or other
transaction in which shares of the Common Stock are changed or exchanged, each
share of Series A Junior Participating Preferred Stock will be entitled to
receive 100 times the amount received per share of the Common Stock. These
rights are protected by customary antidilution provisions. Because of the
nature of the Series A Junior Participating Preferred Stock's dividend,
liquidation and voting rights, the value of a share of Series A Junior
Participating Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of the Common Stock.
In the event that a person becomes an Acquiring Person (except pursuant to a
tender offer or an exchange offer for all outstanding shares of the Common
Stock at a price and on terms determined by at least a majority of the members
of the Board of Directors who are not officers of the Company and who are not
representatives, nominees, affiliates or associates of an Acquiring Person, to
be (i) at a price which is fair to the Company stockholders and (ii) otherwise
in the best interests of the Company and its stockholders (a "Qualifying
Offer")), each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price, the Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following occurrence of any such event,
all Rights that are or (under certain circumstances specified in the Rights
Agreement) were beneficially owned by any Acquiring Person (or certain related
parties) will be null and void. However, Rights are not exercisable following
the occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving entity or the Common Stock is changed
or exchanged (other than a merger which follows a Qualifying Offer and
satisfies certain other requirements) or (ii) 50 percent or more of the
Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon the exercise thereof at the
then current exercise price common stock of the acquiring company having a
value equal to two times the exercise price of the Right.
At any time until 10 days following the Stock Acquisition Date, the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right.
Immediately upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of the
Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights
become exercisable for the Common Stock (or other consideration) or for common
stock of the acquiring company as set forth above.
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Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Rights Distribution Date. After the Rights
Distribution Date, the provisions of the Rights Agreement may be amended by
the Board of Directors in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person) or to shorten or lengthen any time period
under the Rights Agreement, provided that no amendment to adjust the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
The Rights have certain anti-takeover effects as they will cause substantial
dilution to a person or group that acquires a substantial interest in the
Company without the prior approval of the Board of Directors. Among the
effects is that the Rights could discourage a takeover attempt that might
otherwise allow the holders of Common Stock to sell such Common Stock at a
premium to the then current market price or which might otherwise be
beneficial to stockholders.
LEGAL MATTERS
The validity of the shares of Common Stock and the associated Rights offered
hereby will be passed upon for the Company by Richard J. Lubasch, Senior Vice
President, General Counsel and Secretary of the Company. Mr. Lubasch owns
shares of the Company's capital stock and options to acquire additional shares
of the Company's capital stock.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1995 have
been audited by Ernst & Young, LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CON-
STITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JU-
RISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Risk Factors.............................................................. 3
The Company............................................................... 6
Recent Developments....................................................... 6
Selling Stockholders...................................................... 7
Plan of Distribution...................................................... 7
Use of Proceeds........................................................... 8
Description of Capital Stock.............................................. 8
Purposes and Effects of Certain Provisions of the Restated Certificate of
Incorporation, the By-laws and the Rights Agreement...................... 9
Legal Matters............................................................. 14
Experts................................................................... 14
</TABLE>
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820,404 SHARES
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
COMMON STOCK
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P R O S P E C T U S
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MAY 29, 1996
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