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 reported event): January 12, 2001
MOTIENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-23044 93-0976127
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification No.)
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
(703) 758-6000
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
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ITEM 5. Other Events
Introduction
On January 12, 2001, Motient Corporation ("we" or "us") entered into a
definitive agreement, subject to certain conditions, to combine our satellite
communications business with that of TMI Communications and Company Limited
Partnership ("TMI"). This combined entity will provide mobile satellite services
to the entire North American continent. In addition, upon closing the combined
venture will receive $50 million of new investment from the existing investors
in Motient Satellite Ventures LLC, increasing such investors' aggregate
ownership interest in the venture from 20% to 40%. These transactions are
described below.
Background
In June 2000, we formed a new joint venture subsidiary, Motient
Satellite Ventures LLC, which has since been renamed Mobile Satellite Ventures
LLC ("Satellite Ventures"), in which we own 80% of the membership interests. The
remaining interest is currently owned by three investors controlled by Columbia
Capital, Spectrum Equity Investors LP and Telcom Ventures, L.L.C. (collectively,
the "Investors"). Satellite Ventures has been using Motient's existing satellite
network to conduct research and development activities and exploring the
technical, strategic, and market potential of new wireless voice and data
communications services.
Under the terms of the June transactions forming Satellite Ventures,
the Investors had certain rights to elect to purchase an additional 40% stake in
Satellite Ventures, for an extra payment of $120 million. Upon such exercise,
Satellite Ventures would have had the right to elect to consummate the purchase
of all of our satellite business assets, pursuant to the terms of an Asset Sale
Agreement signed at the time of the June transactions. The purchase price for
such assets would have been equal to the sum of a $24 million down payment paid
in June, plus the $120 million to be received by Satellite Ventures from the
Investors.
On November 29, 2000, we sold our retail transportation business to
Aether Systems, Inc. The retail transportation business assets sold to Aether
included part of our satellite business assets that would have been sold to
Satellite Ventures pursuant to the Asset Sale Agreement signed in June. Aether
agreed to pay us $45 million, plus the book value of inventory, for the
transportation business assets. In addition, we have the opportunity to receive
up to an additional $22.5 million as an "earn-out" payment, subject to the
satisfaction of certain operating results for the business during 2001.
In connection with the Aether transaction, we and the other members of
Satellite Ventures agreed to reduce the purchase price in the Asset Sale
Agreement with Motient from $120 million to $80.5 million, plus half of any
earn-out consideration that would have been received by Motient from Aether.
This adjustment was made to account for the fact that we received consideration
in the Aether transaction in exchange for assets which otherwise would have been
available to be acquired by Satellite Ventures.
The Current Transaction
The terms of our original transaction involving Satellite Ventures have
been amended in several respects. First, the Investors have agreed, subject to
the terms and conditions reflected in the agreement, to invest additional money
in Satellite Ventures and increase their stake in Satellite Ventures, as well as
having an option to invest additional money to increase their stake in the
future. The Agreement calls for the Investors to pay $50 million (in addition to
the $50 million paid in June), to become (in the aggregate) the owners of 40% of
the outstanding interests of Satellite Ventures. The Investors will also have an
option (the "Second Option"), exercisable through June 29, 2002 for an
additional $40 million, to increase their ownership in Satellite Ventures to
50.66% (with each individual Investor's stake being less than 20%).
Second, upon closing of the transaction, TMI will contribute its
satellite communications business assets to Satellite Ventures, along with our
satellite business assets as described below. Certain of the Canadian assets
will be held through a Canadian-affiliated license company. In connection with
its contribution of assets to Satellite Ventures, TMI will become the owner of
approximately 27% of the outstanding equity of Satellite Ventures, and will also
receive a cash payment of $7.5 million, as well as a $11.5 million 5-year note.
Upon closing of these transactions, we will contribute our remaining
satellite assets (net of the assets sold to Aether as described above) to
Satellite Ventures, in exchange for a cash payment of $45 million and a 5-year,
$15 million note. Upon Closing, we will own approximately 33% of the outstanding
interests and be the largest single shareholder of Satellite Ventures.
A portion of Satellite Ventures' cash payment to TMI at closing will be
funded by our loan of $2.5 million, in exchange for a note back in the same
amount. The $11.5 million note payable to TMI will have priority over the two
notes that will be issued to Motient.
Under the original transaction, at any time until June 29, 2002, the
Investors had certain rights to elect to convert their interests in Satellite
Ventures into shares of our common stock at a conversion price which will be set
at the time of exercise, between $12 and $20 per share, as specified in the June
Investment Agreement. As part of the current transactions, this right will
remain in place, but will be limited to an aggregate of $55 million of their
interest in Satellite Ventures. This right would expire upon the earlier of the
closing of the Second Option or June 29, 2002.
Under the terms of the bank facility waivers received by Motient in
connection with these transactions, half of all amounts to be received by
Motient from Satellite Ventures in connection with Motient's sale of its
satellite business assets to Satellite Ventures, i.e., $45 million in cash and a
$15 million note payable, will be used to repay outstanding amounts, and
permanently reduce commitments, under Motient's revolving credit facility.
The consummation of the transactions is subject to receipt of all
necessary regulatory governmental approvals and consents, including, for
example, approvals under the Hart-Scott-Rodino Antitrust Improvements Act, and
FCC approvals with respect to both the transfer of Motient's FCC licenses and
Satellite Ventures' plans for a new generation integrated terrestrial- satellite
system, approvals by Canadian regulatory authorities with respect to the
transfer of TMI's communications licenses to the new venture, and other
customary conditions relating to due diligence review, third party consents, and
similar matters. In certain circumstances, beginning in January 2002, if certain
closing conditions have not been obtained, we and TMI have certain rights to
require the closing to proceed at such time, and if less than all of the
Investors wishes to close at such time, we and TMI may, under certain
circumstances, purchase the interests in Satellite Ventures that would have
otherwise been acquired by any such non-participating Investors.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
The following document is filed as an exhibit to the report:
99.1 Press Release dated January 16, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MOTIENT CORPORATION
By: /s/Randy S. Segal
Randy S. Segal
Senior Vice President, General
Counsel and Secretary
Date: January 16, 2001
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