<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
ORION NETWORK SYSTEMS, INC.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
68628K104
(CUSIP Number)
John P.C. Bailey
Kingston Communications International Limited
Telephone House, Carr Lane
Kingston upon Hull HU1 3RE
United Kingdom
011-44-1-482-602-576
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 31, 1997
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1 (b)(3) or (4), check
the following box |_|.
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 68628K104 Page 2 of _____ Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
Kingston Communications International Limited
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |_|
3 SEC Use Only
4 Source of Funds* OO
5 Check box if disclosure of legal proceedings is required pursuant
to item 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
England and Wales
7 Sole Voting Power
Number of
Shares
Beneficially 8 Shared Voting Power
Owned By 640,857
Each
Reporting 9 Sole Dispositive Power
Person
With
10 Shared Dispositive Power
640,857
11 Aggregate Amount Beneficially Owned by Each Reporting Person
640,857
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
|_|
13 Percent of Class Represented By Amount in Row (11)
5.5%
14 Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 68628K104 Page 3 of _____ Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Kingston Communications (Hull) plc
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |_|
3 SEC Use Only
4 Source of Funds*
N\A
5 Check box if disclosure of legal proceedings is required pursuant
to item 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
England and Wales
7 Sole Voting Power
Number of
Shares
Beneficially 8 Shared Voting Power
Owned By 640,857
Each
Reporting 9 Sole Dispositive Power
Person
With
10 Shared Dispositive Power
640,857
11 Aggregate Amount Beneficially Owned by Each Reporting Person
640,857
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
|_|
13 Percent of Class Represented By Amount in Row (11)
5.5%
14 Type of Reporting Person*
CO, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer
(a) Title of Class of Securities
common stock, par value $.01 per share ("Common Stock")
(b) Name of Issuer
ORION NETWORK SYSTEMS, INC. (the "Issuer")
(c) Address of Issuer's Principal Executive Offices
2440 Research Boulevard, Suite 400
Rockville, MD 20850
Item 2. Identity and Background
This statement of beneficial ownership interest is being filed
by the following persons: (i) Kingston Communications International Limited, a
company existing under the laws of England and Wales ("Kingston") and (ii)
Kingston Communications (Hull) plc, a company existing under the laws of England
and Wales ("PLC"). Kingston is a wholly owned subsidiary of PLC.
The principal business office and principal business activity
of each of the Reporting Persons is as follows:
(a) Kingston
Telephone House, Carr Lane
Kingston upon Hull HU1 3RE
United Kingdom
Principal Business Activity:
Investment in international satellite facilities.
(b) PLC
Telephone House, Carr Lane
Kingston upon Hull HU1 3RE
United Kingdom
Principal Business Activity:
Public telecommunications network operator.
Information regarding the executive officers and directors of
each of the Reporting Persons is as follows:
(a) Identity - Refer to Annex A
(b) Residence or Business Address - Refer to Annex A
(c) Present principal occupation or employment - Refer
to Annex A
(d)-(e) None of the Reporting Persons and none of the
directors or executive officers who are identified on
Annex A have been convicted in a criminal proceeding
(excluding traffic violations or similar
misdemeanors) or been a party to a civil proceeding
of a judicial or administrative body of jurisdiction
that resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to U.S. federal or state
securities laws or finding any violations with
respect to such laws.
(f) Citizenship - Refer to Annex A
Item 3. Source and Amount of Funds or Other Consideration
Acquisition of 11,215 shares of the 6% Series C Cumulative
Redeemable Convertible Preferred Stock ("Series C Stock") of the Issuer by
Kingston - Kingston acquired 11,215 shares of Series C Stock in exchange for all
of Kingston's limited partnership interest in International Private Satellite
Partners, L.P. ("Orion Atlantic") and in exchange for refund rights of Kingston
related to certain advances made by Kingston to Orion Atlantic.
Item 4. Purpose of Transaction
The acquisition by Kingston of securities of the Issuer
convertible into Common Stock (the "Acquisition Transaction") was undertaken in
conjunction with certain reorganization and recapitalization transactions of the
Issuer, Oldco, and Orion Atlantic (the "Restructuring Transactions"). The
principal elements of the Restructuring Transactions were (i) the merger of a
special purpose merger subsidiary into Orion Network Systems, Inc. ("ONS") and
the exchange, pursuant to the merger of each of the preferred and common shares
of ONS for preferred and common shares of Orion Newco Services, Inc., (ii) the
exchange by British Aerospace Communications, COM DEV Satellite Communications
Limited, Kingston, Lockheed Martin Commercial Launch Services, Inc., MCN, and
Trans Atlantic Satellite, Inc. (collectively the "Exchanging Partners") of their
limited partnership interests in Orion Atlantic and certain refund rights for
shares of Series C Stock of the Issuer; (iii) an aggregate investment of
$60,000,000 by British Aerospace Holdings, Inc. ("BAe") and Matra Marconi Space
UK Limited ("Matra") in the Issuer in the form of convertible junior
subordinated debentures, (iv) the exchange by British Aerospace Satellite
Investments, Inc. of its interest in Asia Pacific Space and Communications Ltd.
for shares of Oldco and (v) the public sale by the Issuer of units of senior
notes and common stock warrants in the approximate amount of $710,000,000
resulting in net proceeds to the Issuer of approximately $575,000,000 after
provision for certain pre-funded interest payments.
Upon completion of the Restructuring Transactions, ONS became
a wholly owned subsidiary of the Issuer and changed its name from Orion Network
Systems, Inc. to Orion Oldco Services, Inc. ("Oldco") and the Issuer changed its
name from Orion Newco Services, Inc. to Orion Network Systems, Inc.
The Restructuring Transactions also resulted in the
refinancing of $210,000,000 of existing indebtedness of Orion Atlantic under a
credit agreement (together with any related documents and agreements, the "Orion
1 Credit Facility") dated December 6, 1991 among Orion Atlantic, certain banks
and other lenders and the Chase Manhattan Bank (National Association), as agent
and the release of commitments of the Exchanging Partners to support the Orion 1
Credit Facility pursuant to certain Communication Satellite Capacity Agreements
and Contingent Communication Satellite Capacity Agreements.
The Reporting Persons undertook the Acquisition Transaction
for investment purposes.
The shares of Series C Preferred Stock owned by the Reporting
Persons are being held for investment purposes. Subject to contractual and legal
restrictions or limitations, economic and market conditions and such other
considerations as they may deem relevant, the Reporting Persons may, from time
to time, acquire additional shares of Common Stock or additional Convertible
Instruments in the open market, in private transactions or otherwise. The
Reporting Persons may also dispose of some or all of the shares of Series C
Stock owned by them, in the open market, in private transactions or otherwise.
The Issuer is obligated to pay dividends on the Series C Preferred Stock. For as
long as any of the Reporting Persons own any shares of Series C Stock, they will
receive additional shares of Common Stock from the Issuer in accordance with the
terms of the Series C Stock.
Except as discussed in the immediately preceding paragraph,
none of the Reporting Persons presently has any plans or proposals which related
to or would result in any of the actions described in clauses (a) through (j) of
the instructions to Item 4 to Schedule 13D or in any action similar to any of
those enumerated in said clauses (a) through (j).
Item 5. Interest in Securities of the Issuer
(a) Kingston owns (or is presently entitled to own) 11,215 shares of
Series C Stock that at the date of issuance (January 31, 1997) were convertible
into 640,857 shares of Common Stock. As of January 31, 1997, the Reporting
Persons owned or had an immediate right to acquire upon conversion 640,857
shares of Common Stock or approximately 5.5% of the total number of shares of
Common Stock issued and outstanding as reported in the Issuer's proxy statement
dated January 15, 1997, as calculated in accordance with Rule 13d-3(d)(1).
As a result of its ownership of all of the issued and outstanding
shares of Kingston, PLC may be deemed to be a beneficial owner of the shares of
Series C Stock owned directly by Kingston.
(b) By reason of its direct ownership of 100% of the voting securities
of Kingston, PLC may be deemed to share voting and dispositive power over all
the shares of Series C Stock directly owned by Kingston. PLC may be deemed to
share voting and dispositive power over all of the shares of Common Stock and
Convertible Instruments directly owned by each of the other Reporting Persons as
a result of its indirect ownership of 100% of the voting securities of each of
the other Reporting Persons.
(c) Acquired 11,215 shares of Series C Preferred Stock directly from
the Issuer on January 31, 1997 in exchange for all of its limited partnership
interest in Orion Atlantic and in exchange for the right to receive certain
refund payments.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer
In connection with the Acquisition Transactions, the Reporting Persons
have entered into the contracts described below relating to the securities of
the Issuer. Each of the following summaries of agreements are qualified by
reference to the full text of such agreement, each of which is filed herewith as
an exhibit to this statement on Schedule 13D and are either attached hereto or
are incorporated herein by reference to filings made with the Securities and
Exchange Commission by either the Issuer or Oldco:
Section 351 Exchange Agreement and Plan of Conversion, dated as of June
__, 1996 ("Exchange Agreement") and First Amendment to Section 351
Exchange Agreement and Plan of Conversion dated as of December , 1996
among Orion Atlantic, Oldco, OrionSat and the Exchanging Partners (the
"First Amendment") - Pursuant to the Exchange Agreement and the First
Amendment, the Exchanging Partners (including Kingston) received shares
of Series C Stock of the Issuer in exchange for all of their limited
partnership interests in Orion Atlantic and all of their rights to
refunds of certain advances made by the Exchanging Partners to Orion
Atlantic. The Exchange Agreement also, among other things, required the
termination of the obligations of the Exchanging Partners and their
affiliates with respect to the Orion 1 Credit Facility. Under the
registration rights agreement attached as Exhibit D to the Exchange
Agreement (the "Exchanging Partner Registration Rights Agreement") the
Issuer is obligated to provide certain demand, shelf and "piggy back"
registration rights to the holders of the Series C Stock with respect
to shares of Common Stock they receive as dividends on the Series C or
upon conversion of the Series C Stock. Under a resale restriction
letter agreement (the "Resale Restriction Letter"), attached as Exhibit
E to the Exchange Agreement, the Exchanging Partners have agreed not to
transfer any of the shares of Common Stock received as dividends or
upon conversion for a period of 180 days from the date of issuance of
the Series C Stock (January 31, 1997) without the prior consent of the
Issuer and to limit their aggregate sales of such shares for a period
of 5 years to no more than 25% of the total available in any 90 days
period, except pursuant to a underwritten, registered public offering
or in certain other circumstances.
Certificate of Designation, Rights and Preferences of Series C 6%
Cumulative Redeemable Convertible Preferred Stock (the "Certificate of
Designation") - The Certificate of Designation, which establishes the
terms of the Series C Stock provides, among other things, for a 6%
annual cumulative dividend to be paid only in shares of Common Stock
(except for dividends of fractional shares which are to be paid in
cash). The number of shares of Common Stock to be distributed in
satisfaction of the dividend on the Series C Stock is determined by
dividing the dividend entitlement (6% per annum on the outstanding
Series C Stock) by the higher of (a) the average market price per share
of Common Stock over a period of 20 consecutive business days
immediately preceding the dividend reference date or (b) a price of
$10.21 (subject to adjustments for stock splits, recapitalizations or
other subdivisions of the Common Stock). Dividends are paid annually,
upon conversion of any shares of Series C Stock, the date on which a
liquidation payment is made and upon final maturity (February 1, 2022).
The holders of the Series C Stock are entitled to vote their Series C
Stock on an "as converted basis" (i.e. one vote for each whole share of
Common Stock that would be issuable upon conversion of such Series C
Stock at the time the vote is taken.) The Series C Stock is subject to
redemption and to mandatory conversion into Common Stock, as provided
by the Certificate of Designation.
Except as otherwise specifically disclosed in Item 5 and this Item 6,
none of the Reporting Persons and, to the knowledge of the Reporting Persons,
none of the individuals identified in Annex A have any contract, arrangement,
understanding or relationship among themselves or with any other
person with respect to any securities of the Issuer.
Item 7. Materials to be filed as Exhibits
The following materials are filed as exhibits to this
statement of beneficial ownership on Schedule 13D and are either attached hereto
or are incorporated by reference to registration statements or periodic reports
of the Issuer or Oldco filed with the Securities and Exchange Commission, as
permitted under Rule 12b-32 of the general rules and regulations under the
Securities Exchange Act of 1934:
1. Joint Filing Agreement among Kingston and PLC dated
February 25, 1997;
2. Exchange Agreement (including, Exchanging Partner
Registration Rights Agreement (Exhibit D thereto) and
Resale Restriction Letter (Exhibit E thereto));
3. Form of Certificate of Designation of Series C 6%
Cumulative Redeemable Convertible Preferred Stock
of the Issuer; and
4. First Amendment to Exchange Agreement.
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 25, 1997
KINGSTON COMMUNICATIONS INTERNATIONAL
LIMITED
By: /s/ John P.C. Bailey
--------------------
Name: John P.C. Bailey
Title: Company Secretary
KINGSTON COMMUNICATIONS (HULL) PLC
By: /s/ John P.C. Bailey
--------------------
Name: John P.C. Bailey
Title: Company Secretary
<PAGE>
ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSONS
KINGSTON COMMUNICATIONS (HULL) PLC
NON-EXECUTIVE DIRECTORS
===============================================================================
Name and Title; Principal Address Citizenship
Occupation
- -------------------------------------------------------------------------------
Frederick Rowland Beedle 5, Spencer Court, British
Postman; Member, Saner Street,
Hull City Council Hull HU 3 2TL
United Kingdom
- -------------------------------------------------------------------------------
Julie Lowery 16, Gloucester Street, British
Retired; Member, Hull City Hull HU 4 6PT
Council United Kingdom
- ------------------------------------------------------------------------------
George Evans Andrews 170, Amethyst Road, British
Retired; Member, Hull City Hull
Council United Kingdom
- -------------------------------------------------------------------------------
Ann Stanley 58, Ellesmere Avenue, British
Housewife; Member, Hull City Holderness Road,
Council Hull HU 8 9BT
United Kingdom
- -------------------------------------------------------------------------------
Michael Sidney Adamson 12, Emmott Road, British
Executive Manager, Kingston Haworth Park,
Communication (Hull) plc Hull HU 6 7AX
United Kingdom
- -------------------------------------------------------------------------------
Leonard Maxwell Bird 375 Salthouse Road, British
Retired Solicitor; Hull HU 8 9HS
Member, Hull City Council United Kingdom
- -------------------------------------------------------------------------------
Leslie William Upfold 18 Wadhurst Close, British
Retired Trades Union Officer; Bransholme,
Member, Hull City Council Hull HU 7 6BH
United Kingdom
- -------------------------------------------------------------------------------
Steven James Bayes 7 Hinderwell Street, British
Nursing Officer; Member, Princes Avenue
Hull City Council Hull HU 5 3QN
United Kingdom
===============================================================================
<PAGE>
KINGSTON COMMUNICATIONS (HULL) PLC
EXECUTIVE DIRECTORS
================================================================================
Name and Title; Principal Address Citizenship
Occupation
- --------------------------------------------------------------------------------
William Aylward Pine Trees, Berry Hill Road, British
Managing Director Adderbury, Banbury,
Oxfordshire OX 17 3HF
United Kingdom
- --------------------------------------------------------------------------------
David Michael Wood 40, The Cedar Grove, British
Director Molescroft, Beverley
East Yorkshire
United Kingdom
- --------------------------------------------------------------------------------
Stephen Denison 16, Hallgate, British
Technical Director Cottingham, East Yorkshire
HU 16 4DJ
United Kingdom
- --------------------------------------------------------------------------------
Michael Lacey 25, Beechmount Park, British
Director Edinburgh, East
Lothian EH 12 5YT
United Kingdom
- --------------------------------------------------------------------------------
Owen Francis Finn Plot 42 British
Finance Director Spindlewood
Off Brantingham Road
Elloughton HU 15 1LL
United Kingdom
==============================================================================
KINGSTON COMMUNICATIONS (HULL) PLC
EXECUTIVE OFFICERS
==============================================================================
Name and Title; Principal Address Citizenship
Occupation
- ------------------------------------------------------------------------------
John Philip Cureton Bailey 7 Thornleys, British
Company Secretary Cherry Burton,
Beverley, East Yorkshire
HU 17 7SJ
United Kingdom
==============================================================================
<PAGE>
KINGSTON COMMUNICATIONS INTERNATIONAL LIMITED
EXECUTIVE DIRECTORS
==============================================================================
Name and Title; Principal Address Citizenship
Occupation
- ------------------------------------------------------------------------------
David Michael Wood 40, The Cedar Grove, British
Director Molescroft, Beverley,
East Yorkshire
United Kingdom
- ------------------------------------------------------------------------------
John Philip Cureton Bailey 7 Thornleys, British
Company Secretary Cherry Burton,
Beverley, East Yorkshire
HU 17 7SJ
United Kingdom
- ------------------------------------------------------------------------------
David Nicholson 3 North End British
General Manager Farndon
Newark on Trent
Nottingham NG 24 35X
United Kingdom
==============================================================================
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TITLE
1 Joint filing agreement among Kingston and PLC dated
February 25, 1997.
2 Exchange Agreement dated June, 1996 among Oldco, Orion
Atlantic and each of the Exchanging Partners, including
Exchanging Partner Registration Rights Agreement (Exhibit D
thereto) and Resale Restriction Letter (Exhibit E thereto)
(Incorporated herein by reference to Exhibit 10 of Oldco's
Current Report on Form 8-K dated December 20, 1996)
3 First Amendment to Exchange Agreement dated December ,
1996 among Oldco, Orion Atlantic, Orion Satellite
Corporation and each of the Exchanging Partners
(Incorporated herein by reference to Exhibit 10.45 of the
Issuer's Registration Statement on Form S-4 No. 333-19795,
dated January 15, 1997)
4 Form of Certificate of Designation of Series C 6%
Cumulative Redeemable Convertible Preferred Stock of the
Issuer (Incorporated herein by reference to Exhibit 4.3 of
the Issuer's Registration Statement on Form S-4 No.
333-19795, dated January 15, 1997)
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
The undersigned hereby agree that this statement on Schedule 13D dated
February 25, 1997 with respect to the Common Stock of Orion Network Systems,
Inc. is, and any amendments hereto signed by each of the undersigned shall be,
filed on behalf of both of us pursuant to and in accordance with the provisions
of Rule 13(d)-1(f) under the Securities Exchange Act of 1934.
Date: February 25, 1997
KINGSTON COMMUNICATIONS INTERNATIONAL
LIMITED
By: /s/ John P.C. Bailey
------------------------
Name: John P.C. Bailey
Title: Company Secretary
KINGSTON COMMUNICATIONS (HULL) PLC
By: /s/ John P.C. Bailey
------------------------
Name: John P.C. Bailey
Title: Company Secretary
