================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934)
CD RADIO INC.
(NAME OF ISSUER)
CD RADIO INC.
(NAME OF PERSON(S) FILING STATEMENT)
5% DELAYED CONVERTIBLE PREFERRED STOCK
(TITLE OF CLASS OF SECURITIES)
NONE
(CUSIP NUMBER OF CLASS OF SECURITIES)
DAVID MARGOLESE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CD RADIO INC.
SIXTH FLOOR, 1001 - 22ND STREET, N.W.
WASHINGTON, D.C. 20037
TELEPHONE (202) 296-6192
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMISSIONS ON BEHALF
OF THE PERSON(S) FILING STATEMENT)
COPY TO:
LEONARD V. QUIGLEY
MITCHELL S. FISHMAN
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 373-3000
OCTOBER 16, 1997
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
================================================================================
Transaction Valuation* Amount of Filing Fee
$120,016,756.00 $ 24,003.36
================================================================================
*Calculated pursuant to Rule 0-11(b)(2) under the Securities Exchange Act of
1934, based on the book value of the 5% Delayed Convertible Preferred Stock to
be received by the Issuer.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $35,369.00
Form or Registration No.: Form S-4
Filing Party: CD Radio Inc.
Date Filed: September 2, 1997
================================================================================
<PAGE>
ITEM 7. FINANCIAL INFORMATION.
(a)(5) The information set forth in pages 1 through 6 of Part I,
"Financial Information" of the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997, attached to this Schedule as Exhibit (g)(3), is
incorporated herein by reference.
(a)(6) The book value per share of the Company's Common Stock, par value
$.001 per share, as of the end of September 30, 1997 was $2.57.
ITEM 8. ADDITIONAL INFORMATION.
The information set forth in the entire text of the Supplement, dated
October 31, 1997, to the Prospectus, dated October 16, 1997, is incorporated
herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(7) Supplement, dated October 31, 1997, to the Prospectus, dated
October 16, 1997.
(g)(3) The information set forth in pages 1 through 6 of Part I,
"Financial Information" of the Company's Quarterly Report on Form
10-Q for the period ended September 30, 1997.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this amended statement is true, complete and
correct.
Date: November 6, 1997
CD RADIO INC.
By: /s/ Andrew J. Greenebaum
----------------------------
Andrew J. Greenebaum
Executive Vice President and
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
(A)(7) -- Supplement, dated October 31, 1997, to the Prospectus, dated
October 16, 1997.
(G)(3) -- Pages 1 through 6 of Part I of the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1997.
4
<PAGE>
Exhibit (a)(7)
--------------
Supplement, dated October 31, 1997, to the Prospectus, dated October 16, 1997
<PAGE>
SUPPLEMENT TO PROSPECTUS, DATED OCTOBER 16, 1997
- ------------------------------------------------
CD RADIO INC.
Offer to Exchange
10 1/2% Series C Convertible Preferred Stock
for 5% Delayed Convertible Preferred Stock
------------------------------------------------
This Supplement (the "Supplement") amends and supplements certain
information contained in the Prospectus dated October 16, 1997 (the
"Prospectus"). The Prospectus is hereby amended by the terms of this Supplement
and the matters addressed herein supersede any contrary statements contained in
the Prospectus. Defined terms used herein and not otherwise defined shall have
the meanings assigned to them in the Prospectus.
This Supplement amends the conditions of the Exchange Offer as set forth
on pages 1, 14 and 49 of the Prospectus by conditioning the Exchange Offer upon
a minimum of 60% (instead of 95%) of the issued and outstanding shares of the 5%
Preferred Stock being tendered for exchange and not withdrawn prior to the
Expiration Date.
This Supplement amends the restrictions on transfer provisions of the New
Preferred Stock as set forth on pages 15, 21, 22 and 87 of the Prospectus by not
allowing any Transfer of New Preferred Stock or Converted Stock (i) for a period
commencing on the Expiration Date and ending on December 22, 1997, (ii) for a
period of four weeks following notice by the Company that it is about to
commence the first public offering of Common Stock subsequent to the Expiration
Date and (iii) for a period of 180 days following the date of execution of an
underwriting or similar agreement for the first public offering of Common Stock
subsequent to the Expiration Date; provided that if a holder is prevented by
applicable law from owning assets subject to such restrictions on Transfer, such
restrictions shall be inapplicable to such holder and the Company will have a
right of first refusal with respect to all shares of New Preferred Stock held by
such holder that is exercisable for a period equal to the lesser of (a) the
applicable period specified in clause (i), (ii) or (iii) above, and (b) 90 days.
This Supplement substitutes the term "Units Offering" for the term "Notes
Offering" and its related definition. The "Units Offering" is hereby defined as
the Company's offering of units (collectively, the "Units"), each consisting of
$1,000 principal amount at maturity of Senior Discount Notes due 2007 of the
Company (the "Notes") and warrants (the "Warrants") to purchase Common Stock of
the Company (the aggregate number of such shares of Common Stock to be
determined upon the pricing of the Units Offering). The term "Offerings" is
hereby amended to include the Units Offering and the Stock Offering.
This Supplement extends the Exchange Offer until 12:00 Midnight, New York
City time, on November 14, 1997, unless extended (the "Expiration Date") and the
definition of "Expiration Date" on pages 1, 13 and 45 is hereby amended in
accordance with the foregoing.
------------------------------------------------
The date of this Supplement is October 31, 1997.
------------------------------------------------
<PAGE>
Exhibit (g)(3)
--------------
Pages 1 through 6 of Part I of the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1997
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the period
May 17,1990
Three months ended Nine months ended (date of inception)
----------------------------- ----------------------------- -------------
September 30, September 30, September 30, September 30, to September 30,
1997 1996 1997 1996 1997
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Expenses:
Legal, consulting and
regulatory fees 1,356,711 372,137 2,603,025 978,521 9,851,989
Other general and administrative 864,850 285,259 1,711,204 865,743 9,243,968
Research and development 7,953 24,176 43,010 76,781 1,959,365
Write-off of investment in
Sky-Highway Radio Corp. -- -- -- -- 2,000,000
------------ ------------ ------------ ------------ ------------
Total expenses 2,229,514 681,572 4,357,239 1,921,045 23,055,322
------------ ------------ ------------ ------------ ------------
Other income (expense)
Interest income 1,575,436 17,447 2,873,120 62,836 3,201,792
Interest expense -- (3,363) (4,944) (13,183) (171,394)
------------ ------------ ------------ ------------ ------------
1,575,436 14,084 2,868,176 49,653 3,030,398
------------ ------------ ------------ ------------ ------------
Net loss $ (654,078) $ (667,488) $ (1,489,063) $ (1,871,392) $(20,024,924)
------------ ------------ ------------ ------------ ------------
Preferred stock dividend
requirements (8,662,500) -- (51,975,000) -- (51,975,000)
------------ ------------ ------------ ------------ ------------
Net loss applicable
to common stockholders $ (9,316,578) $ -- $(53,464,063) $-- $(71,999,924)
============ ============ ============ ============ ============
Per common share:
Net Loss $ (0.06) $ (0.07) $ (0.14) $ (0.20)
Preferred stock dividend
requirements (0.74) -- (4.83) --
------------ ------------ ------------ ------------
Net loss per common share $ (0.80) $ (0.07) $ (4.97) $ (0.20)
============ ============ ============ ============
Weighted average common shares
outstanding 11,710,794 9,405,677 10,760,684 9,440,913
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1997 1996
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 29,385,798 $ 4,583,562
Interest receivable and other 566,247 9,368
------------- -------------
Total current assets 29,952,045 4,592,930
------------- -------------
Property and equipment in service, at cost:
Technical equipment 254,200 254,200
Office equipment and other 91,625 89,220
Demonstration equipment 38,664 38,664
------------- -------------
384,489 382,084
Less accumulated depreciation (232,700) (213,344)
------------- -------------
151,789 168,740
------------- -------------
Satellite construction in process 31,150,000 --
Other assets
Launch deposit 3,526,563 --
FCC license deposit 16,669,200 --
Designated cash 66,676,800 --
Other deposits 303,793 303,793
------------- -------------
Total other assets 87,176,356 303,793
------------- -------------
Total assets $ 148,430,190 $ 5,065,463
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 63,400 $ 131,118
Other 17,230 20,174
------------- -------------
Total current liabilities 80,630 151,292
Deferred rent and other 1,436 15,795
------------- -------------
Total liabilities 82,066 167,087
------------- -------------
Commitments and contingencies
5% Delayed Convertible Preferred Stock, $0.001 par value;
8,000,000 shares authorized, 5,222,608 shares issued and
outstanding at September 30, 1997 (liquidation preference
of $136,400,000), at net carrying value 116,083,011
Stockholders' equity:
Preferred stock, $0.001 par value, 50,000,000 shares
authorized; 8,000,000 shares designated as 5% Delayed
Convertible Preferred Stock --
Common stock, $0.001 par value; 200,000,000 shares
authorized; 12,577,844 and 10,313,391 shares issued and
outstanding at September 30, 1997 and December 31, 1996,
respectively 12,578 10,300
Additional paid-in capital 104,252,459 23,423,936
Deficit accumulated during the development stage (71,999,924) (18,535,860)
------------- -------------
Total stockholders' equity 32,265,113 4,898,376
------------- -------------
Total liabilities and stockholders' equity $ 148,430,190 $ 5,065,463
============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the period
Nine months ended May 17,1990
------------------------------- (date of inception)
September 30, September 30, to September 30,
1997 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,489,063) $ (1,871,392) $ (20,024,924)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on disposal of equipment 2,943 -- 2,943
Depreciation and amortization 27,008 39,890 251,051
Write off of investment in Sky-Highway Radio Corp. -- -- 2,000,000
Compensation expense in connection with 1,715,500
issuance of stock options -- 240,000 901,576
Common stock issued for services rendered -- 406,844
Common stock options granted for services
rendered -- -- 119,820
Increase (decrease) in cash and cash equivalents
resulting from changes in assets and liabilities:
Interest receivable and other (556,879) (35,642) (566,247)
Due to related party -- -- 350,531
Deposits -- -- (303,793)
Accounts payable and accrued expenses (67,718) 100,460 138,639
Other liabilities (17,303) 29,889 18,666
------------- ------------- -------------
Net cash used in development stage activities (2,101,012) (1,089,951) (15,396,238)
------------- ------------- -------------
Cash flows from investing activities:
Payments for satellite construction (31,150,000) -- (31,150,000)
Advance payment for launch services (3,526,563) -- (3,526,563)
License fee payments to the FCC (16,669,200) -- (16,669,200)
Designated cash (66,676,800) -- (66,676,800)
Capital expenditures (13,000) -- (405,782)
Acquisition of Sky-Highway Radio Corp. -- -- (2,000,000)
-------------
------------- ------------- -------------
Net cash used in investing activities (118,035,563) -- (120,428,345)
------------- ------------- -------------
Cash flows from financing activities:
Proceeds from issuance of units and common stock, net 24,395,000 -- 38,952,482
Proceeds from issuance of preferred stock, net 120,517,811 -- 120,517,811
Proceeds from exercise of stock warrants -- 4,127,388 4,589,088
Proceeds from issuance of promissory notes -- -- 200,000
Proceeds from issuance of promissory notes to
related parties -- -- 2,965,000
Proceeds from exercise of stock options by 181,000
Company employees 26,000 105,000 (200,000)
Repayment of promissory note -- -- (2,435,000)
Repayment of promissory notes to related parties -- -- 440,000
Loan from officer -- --
------------- ------------- -------------
Net cash provided by financing activities 144,938,811 4,232,388 165,210,381
------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents 24,802,236 3,142,437 29,385,798
Cash and cash equivalents at the beginning of period 4,583,562 1,799,814 --
============= ============= =============
Cash and cash equivalents at the end of period $ 29,385,798 $ 4,942,251 $ 29,385,798
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
GENERAL
The accompanying consolidated financial statements do not include all
of the information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles.
In the opinion of management, all adjustments (consisting only of normal,
recurring adjustments) considered necessary to fairly reflect the Company's
consolidated financial position and consolidated results of operations have been
included. These financial statements should be read in connection with the
Company's consolidated financial statements and the notes thereto for the fiscal
year ended December 31, 1996 included in the Company's annual report on Form
10-K/A as filed with the Securities and Exchange Commission (the "SEC").
SATELLITE CONSTRUCTION
On August 5, 1997, the Company's satellite vendor Space Systems/Loral
("Loral") agreed to an amendment to the Company's satellite construction
contract under which Loral agreed to defer for three years $20 million in
payments to be made by the Company in connection with the contract. In addition,
on the same date, Loral's parent company, Loral Space & Communications Ltd.,
("Loral Space") purchased from the Company 1.9 million shares of common stock
for $25 million.
BROADCAST LICENSE
In April 1997, the Federal Communications Commission held an auction
for two national satellite radio broadcast licenses. The Company was the winning
bidder in such auction for one of these licenses (the "FCC License") with a bid
price of $83.3 million. Of the total bid price, $16.7 million was initially
deposited with the FCC, with the remainder due within 10 business days following
the public notice by the FCC that it is prepared to award the license. The
Company has classified $66.6 million as designated cash in the September 30,
1997 balance sheet reflecting the balance due the FCC if and when the license is
awarded. In October 1997, the FCC announced it was prepared to award the license
and the Company paid the $66.6 million due to the FCC. The Company was awarded
the FCC License on October 10, 1997.
4
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
PRIVATE PLACEMENT
In April 1997, the Company completed a private placement of its 5%
Delayed Convertible Preferred Stock (the "5% Preferred Stock"). The Company sold
a total of 5.4 million shares of the 5% Preferred Stock for an aggregate sale
price of $135 million. In connection with the private placement, the Company
paid $10.1 million in fees to its placement agent, Libra Investments, Inc.
("Libra"), and $2.7 million to Batchelder & Partners, Inc., a
financial advisory firm. In addition, the Company agreed to grant a warrant to
Libra to purchase 486,000 shares of the 5% Preferred Stock with an exercise
price of $25.00 per share. As a result of the private placement, options to
purchase 200,000 shares of Common Stock held by Batchelder & Partners, Inc. vest
and become exercisable for three years with an exercise price of $6.25.
Reference is made to the Company's report on Form 8-K filed May 5, 1997 for a
description of the terms of the 5% Preferred Stock.
LOAN AGREEMENTS
On July 22, 1997, the Company entered into two loan agreements
(collectively the "AEF Agreements") with Arianespace Finance S.A. ("AEF"), a
subsidiary of Arianespace S.A. ("Arianespace"), to finance approximately $105
million of the estimated $176 million price of the services to be provided by
Arianespace in connection with the launch of the Company's two satellites. Under
these agreements, the Company is able to borrow funds from AEF to meet the
progress payments due to Arianespace for the construction of each launch vehicle
and other launch costs (the "Loans"). The Company has the opportunity upon
satisfying a variety of conditions specified in the AEF Agreements to extend the
Loans. Otherwise, if not refinanced, the Company will be required to repay the
Loans in full, together with accrued interest and all fees and other amounts
due, approximately three months before the applicable launch date. The AEF
Agreements impose restrictions on the Company's ability to permit liens on
certain assets of the Company, other than liens in favor of AEF. If the Loans
are extended, the Company will be subject to provisions restricting its ability
to incur additional indebtedness or make investments. As of September 30, 1997
the Company had not borrowed funds under the AEF Agreement.
5
<PAGE>
NET LOSS PER COMMON SHARE
Net loss per common share has been computed based on the weighted
average number of common and common equivalent shares outstanding. Common
equivalent shares representing the common shares that would be issued on
conversion of convertible securities and exercise of outstanding stock options
and warrants reduced by the number of shares which could be purchased from the
related exercise proceeds are not included since their effect would be
anti-dilutive.
The net loss attributable to common stockholders has been adjusted for
deemed dividends. The deemed dividend relates to the discount feature associated
with the Company's 5% Delayed Convertible Preferred Stock, computed in
accordance with the SEC's position on accounting for preferred stock which is
convertible at a discount to the market. The discount, which totaled
approximately $52 million, was recognized as a return to the 5% Delayed
Convertible Preferred Stock shareholders over the period April 1997 through July
1997, which is the minimum period in which the shareholders can realize that
return.
For reporting periods ending after December 15, 1997, the Company will
be required to report earnings (loss) per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). As
long as the Company continues to experience net losses, there will be no
material impact on the Company's net loss per share from adoption of SFAS 128.
6
