SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 16, 1998
Atlantic Coast Airlines Holdings, Inc.,
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21976 13-3621051
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
515-A Shaw Road, Dulles, VA 20166
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (703) 925-6000
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
On December 16, 1998, the board of directors of Atlantic
Coast Airlines Holdings, Inc., adopted a stockholder rights plan.
Item 7. Financial Information, Pro Forma Financial Information
and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
Pursuant to General Instruction F of Form 8-K, the following
documents are incorporated by reference herein and attached as
exhibits hereto:
Exhibit Description
99.1 Summary of the Rights issued pursuant to the
Rights Agreement, dated as of January 27,
1999, between Atlantic Coast Airlines
Holdings, Inc., and Continental Stock Transfer
& Trust Company.
99.2 Press release of December 16, 1998 regarding
adoption of stockholder rights plan.
99.3 Form of letter to be sent to stockholders
announcing the adoption of stockholder rights
plan and transmitting Summary of the Rights.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has caused this current report to be
signed on its behalf by the undersigned hereunto duly authorized.
ATLANTIC COAST AIRLINES HOLDINGS,
INC.
Date: January 28, 1999 By: /s/ Paul H. Tate
Name: Paul H. Tate
Title: Executive Vice
President, Chief Financial
Officer, Treasurer and Assistant
Secretary
EXHIBIT 99.1
SUMMARY OF THE RIGHTS
On December 16, 1998 (the "Rights Dividend Declaration
Date"), the Board of Directors of Atlantic Coast Airlines
Holdings, Inc. (the "Corporation") declared a dividend of
one right (a "Right") to purchase fractions of shares of its
Series B Junior Participating Preferred Stock, having the
rights, preferences, privileges and restrictions described
in Paragraph K below (the "Preferred Stock") and, under
certain circumstances, other securities, for each
outstanding share of the Corporation's common stock, par
value $.02 per share (the "Common Stock"), to be distributed
to stockholders of record at the close of business on
January 29, 1999 (the "Record Date"). The description and
terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") dated as of January 27, 1999 between the
Corporation and Continental Stock Transfer & Trust Company,
as Rights Agent.
The following is a brief description of the Rights. It is
intended to provide a general description only and is
qualified in its entirety by reference to the Rights
Agreement, which is attached as Exhibit 99.1 to the
Corporation's Form 8-A dated January 27, 1999.
A. Issuance of the Rights
Each share of Common Stock outstanding at the close of
business on the Record Date will receive one Right. In
addition, prior to the earliest of the Distribution Date, a
Section 13 Event or the Expiration Date (as each is defined
in this Summary), one additional Right (as such number may
be adjusted pursuant to the provisions of the Rights
Agreement) will be issued with each share of Common Stock
issued after the Record Date. Following the Distribution
Date and prior to the expiration or redemption of the
Rights, the Corporation will issue one Right (as such number
may be adjusted pursuant to the provisions of the Rights
Agreement) for each share of Common Stock issued pursuant to
the exercise of stock options or under employee plans or
upon the exercise, conversion or exchange of securities
issued by the Corporation prior to the Distribution Date.
The "Expiration Date" means the earliest
of: (i) January 27, 2009 (ten years after date of Rights
Agreement); (ii) the date of redemption of the Rights;
(iii) the date the Board orders an exchange of Rights; or
(iv) the date of consummation of a tender offer approved as
fair to and in the best interests of the Corporation and its
stockholders and adequately priced, with each stockholder
receiving the same consideration per share in the same
manner.
B. Common Stock Certificates Represent the Rights
Prior to the Distribution Date
Prior to the Distribution Date (as defined herein), no
separate Rights certificates will be issued. Instead, the
Rights will be evidenced by the certificates for the Common
Stock to which they are attached and will be transferred
with and only with such Common Stock certificates. The
surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificate. New Common Stock certificates issued after the
Record Date will contain a legend incorporating the Rights
Agreement by reference.
C. Distribution Date; Issuance of Rights Certificates
The Rights will separate from the Common Stock and become
exercisable and a Distribution Date will occur (the
"Distribution Date") upon the earlier of the close of
business on the tenth day after (i) public announcement that
a person or group of affiliated or associated persons has
acquired beneficial ownership of 20% or more of the
outstanding shares of Common Stock (an "Acquiring Person")
or such earlier date as a majority of the directors becomes
aware of the existence of an Acquiring Person (the "Stock
Acquisition Date"), or (ii) the commencement of a tender or
exchange offer by any person or group, if upon consummation
thereof, such person or group of affiliated or associated
persons would be the beneficial owner of 20% or more of the
shares of Common Stock then outstanding. As soon as
practicable after the Distribution Date, Rights certificates
will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and,
thereafter, the separate Rights certificates alone will
represent the Rights.
D. Exercise of the Rights
1. Rights Initially Not Exercisable. Prior to the
Distribution Date, the Rights are not exercisable.
2. Exercise of the Rights to Purchase Preferred Stock of
the Corporation. At any time after the Distribution Date
but prior to the earlier of the expiration, exchange or
redemption of the Rights, each Right may be exercised at the
stated purchase price of $100 (subject to adjustment, the
"Exercise Price") for one one-thousandth of a share of the
Preferred Stock; provided, however, that upon the occurrence
of any of the events described below, the Rights may no
longer be exercised for the Preferred Stock and may only be
exercised for certain other securities described below.
3. Exercise of the Rights to Purchase Common Stock of the
Corporation. In the event that at any time following the
Rights Dividend Declaration Date, a person, alone or with
affiliates, becomes the beneficial owner of 20% or more of
the then outstanding shares of the Corporation's Common
Stock (except pursuant to an offer for all outstanding
shares of Common Stock which is determined by the
Corporation's Board of Directors, to be fair to and
otherwise in the best interests of the Corporation and its
stockholders (a "Permitted Offer")), then each holder of a
Right will thereafter have the right to exercise the Right
for Common Stock (or, in certain circumstances, cash,
property or other securities of the Corporation) having a
value equal to two times the Exercise Price of the Right.
If the Corporation does not have sufficient Common Shares
available for all Rights to be exercised, the Corporation
may substitute for all or any portion of the Common Stock
that would be issuable upon exercise of the Rights cash,
assets or other securities having the same aggregate value
as such Common Stock. The Rights are exercisable as
described in this paragraph only after the Corporation's
right of redemption (as described in Paragraph F below) has
expired. Notwithstanding any of the foregoing, following
the occurrence of the event set forth in this paragraph (a
"Section 11(a)(ii) Event"), all Rights that are, or under
certain circumstances specified in the Rights Agreement
were, beneficially owned by an Acquiring Person will be null
and void.
4. Exercise of the Rights to Purchase Common Stock of An
Acquiring Corporation. In the event that, at any time
following the Stock Acquisition Date, (i) the Corporation is
merged or consolidated with another company in a business
combination transaction in which the Corporation is not the
surviving corporation or in which the Corporation is the
surviving corporation and all or part of the Common Stock of
the Corporation is exchanged for stock of any other person,
cash or any other property (other than a merger that follows
a Permitted Offer), or (ii) more than 50% of the assets or
earning power of the Corporation and its subsidiaries (taken
as a whole) is sold or transferred, then each holder of a
Right (except Rights that previously have been voided as set
forth above) will thereafter have the right to exercise the
Right for common stock of the acquiring company having a
value equal to two times the Exercise Price of the Right.
(An event described in this paragraph is a "Section 13
Event.")
5. Adjustment of Number of Rights, Purchase Price and
Number of Units of Preferred Stock. The Exercise Price
payable and/or the number of shares of Preferred Stock or
other securities or property issuable upon exercise of the
Rights are subject to proportionate adjustment from time to
time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) in the event
holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the
Preferred Stock or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets
(excluding cash dividends) or of subscription rights or
warrants (other than those referred to above). If at any
time after the Rights Dividend Declaration Date and prior to
the Distribution Date the Corporation declares a stock
dividend on, subdivides or combines the outstanding shares
of Common Stock, the number of Rights associated with each
share of Common Stock will be proportionately adjusted.
E. Fractional Rights and Fractional Shares
The Corporation is generally not required to issue
fractional Rights, fractions of shares of Preferred Stock
(other than fractions that are integral multiples of one one-
thousandth of a share) or fractions of shares of Common
Stock and, in lieu thereof, an adjustment in cash will be
made based on the market price of the Rights, Preferred
Stock or Common Stock, respectively.
F. Redemption of the Rights
In general, the Corporation may redeem all (but not less
than all) of the Rights at a price of $.001 per Right
(subject to adjustment to reflect stock splits, stock
dividends or similar transactions) at any time until the
earlier of the tenth day following the Stock Acquisition
Date or the close of business on January 27, 2009 (ten years
after date of Rights Agreement). This redemption period may
be extended by the Board of Directors by amending the Rights
Agreement as described in Paragraph H below prior to the
time when the Rights become nonredeemable. The Redemption
Price may be paid in cash, shares of Common Stock or any
other consideration the Board of Directors deems
appropriate. 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 Rights will
be to receive the $.001 Redemption Price.
G. Exchange of the Rights
At any time after a Section 11(a)(ii) Event or a Section 13
Event and before any person or group acquires 50% or more of
the outstanding Common Stock, the Board of Directors of the
Corporation may cause the Corporation to exchange some or
all of the outstanding and exercisable Rights for Common
Stock at a one-to-one exchange ratio (appropriately adjusted
to reflect stock splits, dividends or similar transactions).
Rights may not be exercised after the Board orders their
exchange. If there is not sufficient authorized but
unissued Common Stock to fund an exchange, the Board may
fund the exchange through other consideration, including
issuance of debt and/or equity. In addition, at any time
before any person or group becomes an Acquiring Person , the
Board may exchange some or all of the Rights for rights of
substantially equivalent value.
H. Amendments
Other than those provisions relating to the Redemption Price
of the Rights, any of the provisions of the Rights Agreement
may be supplemented or amended by the Board of Directors of
the Corporation prior to the Distribution Date, without
approval of the Rights holders, whether or not a supplement
or amendment is adverse to the Rights holders. From and
after the Distribution Date, any provisions of the Rights
Agreement (other than those provisions relating to the
Redemption Price of the Rights) may be amended by the Board
of Directors in order to (i) cure any ambiguous, defective
or inconsistent provision, (ii) shorten or lengthen any time
period or (iii) otherwise change any provision that the
Board of Directors deems necessary or desirable and that
does not materially and adversely affect the interests of
holders of Rights (other than any Acquiring Person);
provided, the Rights Agreement may not be amended to
(A) make the Rights again redeemable after the Rights have
ceased to be redeemable or (B) change any other time period
unless such change is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits
to, the holders of the Rights (other than any Acquiring
Person).
I. Expiration
The Rights will expire upon the earliest to occur of the
close of business on January 27, 2009 (ten years after date
of Rights Agreement), the exchange or redemption of the
Rights by the Corporation or the consummation of a Permitted
Offer transaction followed by a merger or consolidation of
the Corporation with another company in which all
stockholders of the Corporation receive the same
consideration and terms as in the Permitted Offer.
J. No Stockholder Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Corporation,
including, without limitation, the right to vote or to
receive dividends.
K. Terms of the Preferred Stock
The Corporation has initially reserved 50,000 shares of
Preferred Stock for issuance upon exercise of the Rights,
such number to be subject to adjustment from time to time in
accordance with the Rights Agreement. The Preferred Stock
will be nonredeemable. The dividend, liquidation and voting
rights, and the rights upon consolidation or merger, of the
Preferred Stock, are designed so that the value of the one
one-thousandth interest in a share of Preferred Stock
purchasable with each Right will approximate the value of
one share of Common Stock. Each whole share of Preferred
Stock will be entitled to receive a quarterly preferential
dividend equal to the greater of $.25 or 1,000 times any
dividend declared on the Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be
entitled to receive a preferential liquidation payment of
$1,000 per share plus the amount of accrued unpaid dividends
thereon, the holders of the Common Stock will then be
entitled to receive a liquidation payment equal to $1.00 per
share (subject to proportionate adjustment to reflect stock
splits, dividends or combinations) and the holders of the
Preferred Stock and Common Stock will then share ratably in
all assets remaining available for distribution to
stockholders. Each share of Preferred Stock will have 1,000
votes (subject to proportionate adjustment to reflect stock
splits, dividends and combinations), and will generally vote
together with the Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which
shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or other property, each
share of Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock (subject
to proportionate adjustment to reflect stock splits,
dividends and combinations).
L. Anti-Takeover Effects
The Rights are designed to protect and maximize the value of
stockholders' interests in the Corporation in the event of
an unsolicited takeover attempt in a manner or on terms not
approved by the Board of Directors. Takeover attempts
frequently include coercive tactics to deprive the Board of
Directors and stockholders of any real opportunity to
determine the destiny of the Corporation. The Rights have
been declared by the Board in order to deter such tactics,
including a gradual accumulation in the open market of a 20%
or greater position, followed by merger or a partial or two-
tier tender offer that does not treat all stockholders
equally. These tactics can unfairly pressure stockholders,
squeeze them out of their investment without giving them any
real choice and deprive them of the full value of their
shares.
The Rights may be redeemed by the Corporation as described
in Paragraph F above, and accordingly should not interfere
with any merger or business combination approved by the
Board of Directors.
Issuance of the Rights does not weaken the Corporation or
interfere with its business plans. The issuance of the
Rights themselves has no dilutive effect, will not affect
reported earnings per share, should not be taxable to the
Corporation or to its stockholders and will not change the
way in which the Corporation's shares are presently traded.
The Corporation's Board of Directors believes that the
Rights represent a sound and reasonable means of addressing
the complex issues of corporate policy created by the
current takeover environment.
The Rights may, however, have the effect of rendering more
difficult or discouraging an acquisition of the Corporation
deemed undesirable by the Board of Directors. The Rights
may cause substantial dilution to a person or group that
attempts to acquire the Corporation on terms or in a manner
not approved by the Corporation's Board of Directors, except
pursuant to an offer conditioned upon the negation, purchase
or redemption of the Rights.
EXHIBIT 99.2
PRESS RELEASE
DULLES, Va.--(BUSINESS WIRE)--Dec. 16, 1998--Atlantic
Coast Airlines Holdings Inc. ("ACAI'') (NASDAQ/NM: ACAI),
the Dulles, VA-based United Express carrier, Wednesday
announced that its Board of Directors has approved the
adoption of a stockholder rights plan.
In announcing the plan, the Company stated that the
rights plan is intended to give the Board of Directors and
management sufficient time to evaluate and respond to any
proposed change in control transaction and to prevent an
acquirer from gaining control of ACAI without offering a
fair price to all of ACAI's stockholders.
The Company added that the plan is not intended to
prevent a transaction on terms that are fair to and in the
best interest of all stockholders, and that the Board's
action was not taken in response to any specific takeover
threat.
The rights plan provides for the distribution to ACAI's
stockholders of one preferred stock purchase Right for each
share of Common Stock outstanding at the close of business
on the Jan. 29, 1999 record date and each share issued
thereafter.
The Rights will initially not be exercisable, but upon
the occurrence of certain takeover-related events, the
holders of the Rights (other than the acquiring person or
group) would, under certain circumstances, have the right to
purchase additional shares of ACAI stock (or, in some cases,
stock of the acquiring entity) at a discount to the then
market price.
The Rights can be redeemed by ACAI at any time, and
will otherwise expire after ten years. The threshold for
triggering the rights plan will be the acquisition of 20% or
more of the Company's common stock and exercise price of the
Rights will be $100 per share. Further details regarding the
rights plan will be provided to stockholders in a
forthcoming letter.
Atlantic Coast Airlines ("ACA'') offers more than 500
daily departures system-wide serving both Washington Dulles
and Chicago O'Hare, which are major hubs for United
Airlines. From its major hub at Washington Dulles, ACA
offers 230 daily flights to 47 cities.
The carrier provides service to six cities with 17
daily departures from Chicago O'Hare International Airport,
and ACA's route system spans from Maine to Florida and as
far West as the Dakotas, serving 53 destinations in 24
states.
Currently, the airline operates a fleet of 74 aircraft,
including 14 50-passenger Canadair Regional Jets, 32 29-
passenger Jetstream J-41s and 28 19-passenger Jetstream 32
turboprop aircraft. ACA employs over 2,000 aviation
professionals.
The common stock of Atlantic Coast Airlines Holdings
Inc., the parent of Atlantic Coast Airlines, is traded on
the Nasdaq National Market under the symbol ACAI. For more
information about ACA and our United Express service, visit
our website at www.atlanticcoast.com.
Contact:
Atlantic Coast Airlines Holdings Inc.
Rick DeLisi, director, Public Relations
703/925-6019
EXHIBIT 99.3
FORM OF LETTER TO STOCKHOLDERS
Dear Stockholder:
In an effort to assure that all Atlantic Coast
stockholders receive maximum value in the event of an
attempted or actual takeover of the Corporation, on
December 16, 1998, your Board of Directors adopted a
stockholder rights plan. We have enclosed a summary
description of the plan, which we urge you to read
carefully.
Adoption of rights plans is a common practice among
public companies in the United States. Rights plans are
intended to provide the Board of Directors with additional
time and bargaining power to protect stockholder interests
in the event of an unsolicited takeover bid. Atlantic
Coast's new rights plan is not intended to prevent a
takeover of the Corporation on terms that are in the best
interests of all stockholders. Instead, the rights plan is
designed to encourage a potential acquiror to negotiate with
the Board prior to attempting a takeover. This should
position the Board to protect your interests.
Atlantic Coast's rights plan involves a distribution of
one "Right" for each share of common stock outstanding at
the close of business on January 29, 1999. Thereafter, each
newly issued share of common stock will also include a
Right. Initially, there will be no separate Rights
certificates. Instead, each Right will simply be a part of
the share of common stock to which it is attached. It will
be represented by the common stock certificate, it will
trade automatically with the common stock and it will not be
separable or exercisable unless certain events occur.
If a person or group acquires 20% or more of Atlantic
Coast's outstanding common stock, each Right not owned by
the acquiror or its affiliates will entitle its holder to
pay the Corporation $100 (the exercise price per Right) and
receive newly issued shares of common stock worth $200. For
example, if the stock were trading at $25, each Right would
entitle its holder to purchase 8 shares for $100, or $12.50
per share. This ability of stockholders other than the
acquiror to purchase additional shares at a 50% discount
from market would cause an unapproved takeover to be much
more expensive to an acquiror. As a result, a potential
acquiror would have a strong incentive not to pursue a
hostile strategy, and instead to negotiate with your Board
of Directors to redeem the Rights or approve the transaction
so that the Rights do not become exercisable.
Adoption of a rights plan does not affect the financial
strength of the Corporation and will not interfere with our
business strategy and plans. The issuance of the Rights
alone will not affect earnings per share or change the way
in which you can presently trade the Corporation's shares.
The attached summary describes the Rights in more
detail. Thank you for your continued support of Atlantic
Coast Airlines Holdings, Inc.
Sincerely,
Kerry B. Skeen
Chief Executive Officer and President
