<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BROOKS FIBER PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4813 43-1656187
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
</TABLE>
------------------------
425 WOODS MILL ROAD SOUTH, SUITE 300
TOWN & COUNTRY, MISSOURI 63017
(314) 878-1616
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAVID L. SOLOMON
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
425 WOODS MILL ROAD SOUTH, SUITE 300
TOWN & COUNTRY, MISSOURI 63017
(314) 878-1616
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
JOHN P. DENNEEN, ESQ.
BRYAN CAVE LLP
211 NORTH BROADWAY, SUITE 3600
ST. LOUIS, MISSOURI 63102
(314) 259-2000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: The
securities registered on this form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per
share and associated Preferred
Stock Purchase Rights............ 5,000,000 shares $36.75 $183,750,000 $55,682
==============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c); the proposed maximum offering price is based on the
average of the high and low prices of the Registrant's Common Stock on
August 4, 1997.
------------------------
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectus herein is a combined Prospectus and also relates to Registration
Statement No. 333-21223 previously filed with the Commission on Form S-4, and
effective March 20, 1997, which registered an aggregate of 10,000,000 shares of
which 4,813,774 remain unsold as of the date of this filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 6, 1997
15,000,000 SHARES
BROOKS FIBER PROPERTIES, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
BROOKS FIBER PROPERTIES LOGO ---------------------
This Prospectus relates to shares of Common Stock, par value $0.01 per
share (the "Common Stock"), of Brooks Fiber Properties, Inc. (the "Company")
that have been and may be offered and issued by the Company from time to time in
connection with acquisitions by the Company of other businesses and properties.
It is anticipated that shares of Common Stock issued in any such acquisition
generally will be valued at a price reasonably related to the market value of
the Common Stock at or around the time of agreement on the terms of an
acquisition or delivery of the shares.
This Prospectus also relates to offers and sales from time to time of
shares of Common Stock issued by the Company in any such acquisition that may be
reoffered to the public by persons who may be deemed to be underwriters thereof.
Such shares may be sold directly by such persons in brokerage transactions or
may be sold by underwriters for such persons. The Company will not receive any
of the proceeds from the sale of any shares sold by selling stockholders (the
"Selling Stockholders") or their underwriters.
SEE "RISK FACTORS" ON PAGES 5 TO 9 FOR A DISCUSSION OF CERTAIN RISKS
ASSOCIATED WITH AN INVESTMENT IN THE COMMON STOCK.
The Common Stock is listed on the Nasdaq National Market under the symbol
"BFPT." On August 4, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $36.813 per share.
---------------------
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 , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or document filed or incorporated by reference as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto.
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 and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information filed by the Company with the Commission may be inspected and copied
at the Public Reference Section of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.D. 20549 and at the regional offices of
the Commission located at Suite 1300, Seven World Trade Center, New York, New
York 10048 and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60601-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and its public reference facilities in New
York, New York and Chicago, Illinois at prescribed rates. The Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information filed electronically by the Company
with the Commission through its Electronic Data Gathering Analysis and Retrieval
(EDGAR) System. Shares of the Company's Common Stock are listed on the Nasdaq
National Market under the symbol "BFPT", and copies of the aforementioned
materials may also be inspected at the office of the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed with the Commission by the
Company under the Exchange Act, are incorporated herein by reference:
(i) Annual Report on Form 10-K (as amended on Form 10-K/A, filed on March
31, 1997) for the fiscal year ended December 31, 1996;
(ii) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1997;
(iii) Current Reports on Form 8-K dated March 3, 1997, March 28, 1997,
March 31, 1997, May 5, 1997, May 29, 1997, June 5, 1997 and June 20,
1997; and
(iv) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A/A, Amendment No. 2,
dated April 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of effectiveness of the
Registration Statement of which this Prospectus is part and prior to the
termination of the Offering made hereby shall be deemed to be incorporated in
this Prospectus by reference and to be a part hereof from the date of filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference 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 subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE FROM DAVID L.
SOLOMON, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, BROOKS FIBER
PROPERTIES, INC., 425 WOODS MILL ROAD SOUTH, SUITE 300, TOWN & COUNTRY, MISSOURI
63017, (314) 878-1616. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD ALLOW AT LEAST FIVE (5) BUSINESS DAYS FOR DELIVERY.
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<PAGE> 4
THE COMPANY
The Company is a leading full service provider of competitive local
telecommunications services, commonly referred to as a competitive local
exchange carrier ("CLEC"), in selected markets within the United States. The
Company acquires and constructs its own state-of-the-art fiber optic networks
and facilities and leases network capacity from others to provide long distance
carriers ("IXCs"), Internet Service Providers ("ISPs"), wireless carriers and
business, government, institutional and other end users with an alternative to
the incumbent local exchange companies ("ILECs") for a broad array of high
quality voice, data, video transport and other telecommunications services.
The Company specifically targets second and third tier markets (those with
populations ranging from 250,000 to two million) with attractive demographic,
economic, competitive and telecommunications demand characteristics, as well as
selected first tier markets. The Company believes that there are attractive
return opportunities for CLECs in second and third tier markets due to the
combination of (i) continuing pro-competitive regulatory changes that have
increased the addressable market for CLEC services and (ii) the competitive
dynamics which, until 1994, focused CLEC network development primarily in larger
markets.
Industry sources have estimated that the 1995 aggregate revenues of all
ILECs approximated $102 billion, of which approximately $89 billion was derived
from switched services. Initially, CLECs were able to compete for only the
non-switched special access/private line services portion of this market (which
accounted for an estimated $8.6 billion of ILEC revenues in 1995). Accordingly,
the development of competitive networks occurred initially in larger
metropolitan areas that have proportionately greater revenue potential for this
limited portion of the local exchange market. However, since February 1994, as a
result of actions by the Federal Communications Commission (the "FCC") requiring
ILECs to allow CLECs to connect their networks to the ILECs' networks (the
"Interconnection Decisions"), CLECs have also been permitted to compete for the
collocated special access and switched access transport/termination services
portion of this market (which together accounted for an estimated $13.8 billion
of ILEC revenues in 1995). This has enhanced the opportunities for the
development of competitive networks in second and third tier cities, which
constitute a significant portion of the local exchange market. In addition, most
states have taken regulatory and legislative action to open their markets to
local exchange competition. The Company expects that continuing pro-competitive
regulatory changes, including those mandated by the Telecommunications Act of
1996, together with increasing customer demand, will create more opportunities
to introduce additional services, expand the Company's networks and address a
larger customer base. The Company also expects that access revenues from IXCs
will increase as the IXCs move their access business away from the ILECs (which
are seeking the regulatory approvals necessary to compete with the IXCs in
providing long distance service) to competitive providers of local
telecommunications services.
The Company's networks are generally developed to access at least 70% to
80% of the identified business, government and institutional and user revenue
base and the IXC facilities ("Points of Presence" or "POPs") and substantially
all of the central officers of the ILECs within their markets. The Company's
goal is to become the primary full service provider of competitive local
telecommunications services to IXCs, ISPs, wireless carriers and business,
government, institutional and other end users in selected cities by offering
superior products with excellent customer service at prices below those charged
by the ILECs.
The Company provides a variety of special access and private line, local
dial tone and switched access termination and origination services to its IXC
and end user customers. Retail business customers in markets served by the
Company can acquire centrex and long-distance services direct from the Company.
The Company also provides other enhanced services such as high speed video
conferencing, frame relay and ATM-based packet transport services and Internet
access products. A subsidiary of the Company provides a full range of
consulting, management, engineering and
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<PAGE> 5
information system solutions for telephone, cable television and power
companies, wireless providers and other telecommunication infrastructure owners
and operators in the United States and elsewhere.
The Company's principal executive offices are located at 425 Woods Mill
Road South, Suite 300, Town & Country, Missouri 63017, and its telephone number
is (314) 878-1616.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
The statements contained or incorporated by reference in this Prospectus
which are not historical facts are forward-looking statements that involve risks
and uncertainties. Management wishes to caution the reader that these
forward-looking statements are only predictions; actual events or results may
differ materially as a result of risks facing the Company. Such risks include,
but are not limited to, the Company's ability to successfully market its
services to current and new customers, access markets, identify, finance and
complete suitable acquisitions, design fiber optic backbone routes, install
cable and facilities, including switching electronics, and obtain rights-of-way,
building access rights and any required governmental authorizations, franchises
and permits, all in a timely manner, at reasonable costs and on satisfactory
terms and conditions, as well as favorable regulatory, legislative and judicial
developments.
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RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, the following risk factors should be carefully considered in
evaluating the Company and its businesses before acquiring the shares of Common
Stock offered hereby.
LIMITED HISTORY OF OPERATIONS; NEGATIVE CASH FLOW AND OPERATING LOSSES
The Company was formed in November 1993. Prospective investors, therefore,
have limited historical financial information about the Company upon which to
base an evaluation of the Company's performance and an investment in shares of
Common Stock of the Company. Given the Company's limited operating history,
there is no assurance that it will be able to generate sufficient cash flow to
service its debt and to compete successfully in the telecommunications business.
The development of the Company's businesses and the acquisition,
installation and expansion of its networks require significant expenditures, a
substantial portion of which are made before any revenues may be realized. Such
capital expenditures are expected to increase as the Company decides to pursue
opportunities created by the accelerated pace of regulatory changes designed to
open local exchange markets to CLEC competition. These expenditures, together
with the associated early service costs, result in negative cash flow and
operating losses until an adequate revenue base may be established. There can be
no assurance that an adequate revenue base will be established in each of the
Company's systems. Certain of the expenditures are expensed as incurred, while
certain other expenditures are capitalized. The Company will continue to incur
expenditures in connection with the acquisition, development and expansion of
its networks, services and customer base. There can be no assurance that the
Company will achieve or sustain profitability or generate sufficient positive
cash flow to service its debt.
SIGNIFICANT FUTURE CAPITAL REQUIREMENTS
Expansion of the Company's existing networks and services, the acquisition
and development of new networks and services and the funding of initial
operating losses will require significant capital expenditures. The Company has
deployed switches serving substantially all of the Company's operating networks.
The Company is also adding capabilities to provide enhanced services such as
high speed video conferencing, frame relay and ATM-based packet transport
services and Internet access products and plans to offer such services in all of
its operating networks. The Company currently intends to fund the expansion of
its networks and the deployment of switches in all of such networks with full
capabilities for local dial tone and switched access termination and origination
services, from the Company's existing cash balances and the net proceeds of
additional financings to be obtained in the future and through joint ventures.
The Company's growth and additional funds to support other strategic initiatives
will require substantial additional capital. The Company will continue to
evaluate additional revenue opportunities in each of its markets and, as
attractive additional opportunities may develop, the Company plans to make
additional capital investments in its networks that might be required to pursue
such opportunities. The Company expects to meet such additional capital needs
with additional borrowings under existing and future credit facilities, proceeds
from the sale of additional equity securities and joint ventures and internally
generated funds. There can be no assurance, however, that the Company will be
successful in raising sufficient additional debt or equity capital on terms that
it will consider acceptable or that the Company's operations will produce
positive consolidated cash flow in sufficient amounts. Failure to raise and
generate sufficient funds may require the Company to delay or abandon some of
its planned future expansion or expenditures, which could have a material
adverse effect on the Company's growth and its ability to compete in the
telecommunications services industry.
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<PAGE> 7
The Company's expectations of required future capital expenditures are
based on the Company's current estimates. There can be no assurance that actual
expenditures will not be significantly higher or lower.
HOLDING COMPANY STRUCTURE
The Company is a holding company which derives substantially all of its
revenues from its subsidiaries. As such, the Company is dependent to some extent
upon dividends and other payments from its subsidiaries to generate the funds
necessary to meet its cash obligations. The ability of the Company's
subsidiaries to make such payments will be subject to, among other things, the
availability of sufficient surplus funds and restrictive covenants in debt
agreements that may restrict the ability of certain subsidiaries to pay
dividends to the Company. However, the Company does not believe that such
restrictions will have a material impact on the Company's ability to meet its
cash obligations.
RISKS ASSOCIATED WITH IMPLEMENTATION OF GROWTH STRATEGY
The expansion and development of the Company's operations will depend,
among other things, on the Company's ability to assess markets, identify,
finance and complete suitable acquisitions, design fiber optic network backbone
routes, install cable and facilities, including switches, and obtain
rights-of-way, building access rights and any required government
authorizations, franchises and permits, all in a timely manner, at reasonable
costs and on satisfactory terms and conditions. As a result, there can be no
assurance that the Company will be able successfully to expand its existing
networks or acquire or develop new networks in a timely manner in accordance
with its strategic objectives.
The Company expects to continue to enhance its systems in order to offer
its customers switched access termination and origination services and local
dial tone, centrex and desk top products, as well as other enhanced services in
all of its systems as quickly as practicable and as permitted by applicable
regulations. The Company believes its ability to offer, market and sell these
products and services will be important to the Company's ability to meet its
long term strategic growth objectives, but is dependent on continued favorable
regulatory, legislative and judicial developments and the acceptance of such
products and services by the Company's customers. No assurance can be given that
such developments or acceptance will occur.
RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS
The Company expects that part of its future growth will come from
acquisitions. The acquisition of additional systems and businesses will depend
on the Company's ability to identify suitable acquisition candidates, to
negotiate acceptable terms for their acquisition and to finance any such
acquisitions. The Company will also be subject to competition for suitable
acquisition candidates. Any acquisitions, if made, could divert the resources
and management time of the Company and would require integration with the
Company's existing networks and services. As a result, there can be no assurance
that any such acquisitions will occur or that any such acquisitions, if made,
would be made in a timely manner or on terms favorable to the Company or would
be successfully integrated into the Company's operations.
COMPETITION
In each of the cities served by the Company's networks, the services
offered by the Company compete principally with the services offered by the ILEC
serving that area. ILECs have long-standing relationships with their customers,
have the potential to subsidize competitive services from monopoly service
revenues, and benefit from favorable state and federal regulations. While the
FCC's Interconnection Decisions and the Telecommunications Act of 1996 provide
increased business opportunities to CLECs such as the Company, they also provide
the ILECs with increased
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pricing flexibility for their services and other regulatory relief, which could
also have a material adverse effect on CLECs, including the Company. If the
ILECs are allowed by regulators to lower their rates for their services, engage
in substantial volume and term discount pricing practices for their customers,
or seek to charge CLECs substantial fees for interconnection to the ILECs'
networks, the income of CLECs, including the Company, could be materially
adversely affected.
ILECs can also adversely impact the pace by which CLECs can add new
customers by prolonging the process of providing unbundled network elements,
collocations, intercompany trunks, and operations support system (OSS)
interfaces, which allow the electronic transfer between ILECs and CLECs of
needed information about customer accounts, service orders and repairs. Although
the Telecommunications Act of 1996 requires ILECs to provide the unbundled
network elements, interconnections and OSS interfaces needed to allow the
customers of CLECs and other new entrants to the local exchange market to obtain
service comparable to that provided by the ILECs in terms of installation time,
repair response time, billing and other administrative functions, in many cases
the ILECs have not complied with the mandates of such Act.
The Company also faces, and expects to continue to face, competition from
other current and potential market entrants, including other CLECs, IXCs, cable
television companies, electric utilities, microwave carriers, wireless telephone
system operators and private networks built by large end users. In January 1994,
MCI Communications Corporation ("MCI") announced that its MCImetro unit would
invest more than $2.0 billion in fiber optic rings and local switching equipment
in major metropolitan markets in the United States to provide direct connection
to its customers and to provide alternative local telephone services to other
IXCs. The recently announced acquisition of MCI by British Telecommunications
could increase the resources available to MCI for the above purposes. AT&T Corp.
("AT&T") and Sprint Corporation have also indicated their intention to offer
local telecommunications services in certain U.S. markets, either directly or in
conjunction with CLECs or cable operators, and WorldCom, Inc. and MFS
Communications Company, a major CLEC, completed a merger on December 31, 1996
which has enabled WorldCom, Inc. to offer a "one-stop shopping" combination of
long distance, local exchange and Internet access services. A continuing trend
toward combinations and strategic alliances in the telecommunications industry,
including potential consolidation among RBOCs, or among CLECs in second and
third tier cities, or transactions between telephone companies and cable
companies outside of the telephone company's service area, or between IXCs and
CLECs, could give rise to significant new competitors.
The Company believes that as a result of various legislative and regulatory
initiatives, including the Telecommunications Act of 1996, the legal barriers to
local exchange competition will be removed more quickly than had earlier been
anticipated. The introduction of such competition, however, also means that
ILECs may be authorized to provide long distance services under provisions of
the Telecommunications Act of 1996 more quickly than had earlier been
anticipated. When ILECs are permitted to provide such services, they will
ultimately be in a position to offer single source service.
The Company also competes with equipment vendors and installers, and
telecommunications management companies with respect to certain portions of its
business.
Many of the Company's current and potential competitors have financial,
personnel and other resources substantially greater than those of the Company,
as well as other competitive advantages over the Company.
DEPENDENCE ON BUSINESS FROM IXCS
Historically, a significant percentage of the Company's consolidated
revenues were attributable to access services provided to IXCs, particularly
services provided to MCI and AT&T. The loss of access revenues from IXCs in
general or the loss of MCI or AT&T as customers could have a material adverse
effect on the Company's business.
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In addition, the Company's growth strategy assumes increased revenues from
IXCs following the deployment of switches on its networks and the provision of
switched access origination and termination services. There is no assurance that
the IXCs will continue to increase their utilization of the Company's services,
or will not reduce or cease their utilization of the Company's services, which
could have a material adverse effect on the Company.
REGULATION
The Company is subject to varying degrees of federal, state and local
regulation. The Company is not currently subject to price cap or rate of return
regulation, nor is it currently required to obtain FCC authorization for the
installation, acquisition or operation of its network facilities. However, the
FCC has determined that non-dominant carriers, such as the Company and its
subsidiaries, are required to file interstate tariffs on an ongoing basis. The
Company's subsidiaries that provide intrastate services are also generally
subject to certification and tariff filing requirements by state regulators.
Challenges to these tariffs by third parties could cause the Company to incur
substantial legal and administrative expenses. Although the trend in federal and
state regulation appears to favor increased competition, no assurance can be
given that changes in current or future regulations adopted by the FCC or state
regulators or other legislative or judicial initiatives relating to the
telecommunications industry would not have a material adverse effect on the
Company. In particular, the Company's ability to compete in the segments of the
local exchange market recently opened to CLEC competition depends upon continued
favorable pro-competitive regulatory changes and may be adversely affected by
the greater pricing flexibility and other regulatory relief granted to ILECs
under the Telecommunications Act of 1996. A court decision invalidating recent
FCC access pricing and "pick and choose" rules may slow the pace of open
competition initiatives and result in individual states having a more prominent
role in the opening of local exchange markets to competition. However, the
Company believes that the decision will not have any material adverse effect on
the Company because the Company has in effect or expects to have in effect
interconnection agreements with the ILECs for all of its operating networks.
NEED TO OBTAIN AND MAINTAIN PERMITS AND RIGHTS-OF-WAY
In order to acquire and develop its networks, the Company must obtain and
maintain local franchises and other permits, as well as rights to utilize
underground conduit and pole space and other rights-of-way from entities such as
ILECs and other utilities, railroads, long distance providers, state highway
authorities, local governments and transit authorities. The Telecommunications
Act of 1996 requires that local governmental authorities treat
telecommunications carriers in a competitively neutral, non-discriminatory
manner, and that most utilities, including most ILECs and electric companies,
afford CLECs access to their poles and conduits and rights-of-way at reasonable
rates on non-discriminatory terms and conditions. There can be no assurance that
the Company will be able to maintain its existing franchises, permits and rights
or to obtain and maintain the other franchises, permits and rights needed to
implement its business plan on acceptable terms. Although the Company does not
believe that any of the existing arrangements will be cancelled, or will not be
renewed, as needed, cancellation or non-renewal of certain of such arrangements
could materially adversely affect the Company's business in the affected city.
In addition, the failure to enter into and maintain any such required
arrangements for a particular network, including a network which is already
under construction, may affect the Company's ability to develop that network.
RAPID TECHNOLOGICAL CHANGES
The telecommunications industry is subject to rapid and significant changes
in technology. While the Company believes that for the foreseeable future these
changes will neither materially adversely affect the continued use of optical
fiber telecommunications networks nor materially hinder the Company's ability to
acquire necessary technologies, the effect of technological changes
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<PAGE> 10
on the businesses of the Company cannot be predicted. Thus, there can be no
assurance that technological developments will not have a material adverse
effect on the Company.
DEPENDENCE ON KEY PERSONNEL
The Company's businesses are managed by a relatively small number of senior
management and operating personnel, the loss of certain of whom could have a
material adverse effect on the Company. The Company believes that its ability to
manage its planned growth successfully will depend in large part on its
continued ability to attract and retain highly skilled and qualified personnel.
NO DIVIDENDS
The Company does not anticipate paying dividends on the Common Stock for
the foreseeable future, and the ability of the Company to pay dividends on the
Common Stock is restricted by certain debt covenants. The Company anticipates
that it will reinvest its earnings, if any, in the Company's businesses.
AUTHORIZED BUT UNISSUED STOCK; ANTI-TAKEOVER PROVISIONS
At June 30, 1997, the Company's Board of Directors had the authority to
issue approximately 104.1 million additional shares of Common Stock which had
not been reserved for future issuance pursuant to employee benefit plans and
outstanding warrants and 990,012 shares of undesignated preferred stock,
including authority to determine the price, rights, preferences and privileges
of those preferred shares without any further vote or action by the
stockholders. The issuance of such shares, while potentially providing desirable
flexibility in connection with possible future acquisitions, equity financings
and other corporate purposes, might have a dilutive effect on earnings per share
and on the equity ownership of holders of the Company's Common Stock and could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. In addition, the
Company has adopted a Stockholders Protection Rights Plan, and is subject to the
anti-takeover provisions of Section 203 of the General Corporation Law of the
State of Delaware which prohibits the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
Furthermore, the Company's Second Restated Certificate of Incorporation provides
that the Board of Directors is divided into three classes with the directors
serving staggered three-year terms. Moreover, most of the Company's existing
indebtedness and employee stock plans are subject to acceleration in the event
of a change-in-control of the Company. Such agreements and provisions could have
the effect of delaying, deferring or preventing a change-in-control of the
Company by increasing the aggregate cost to potential investors of an
acquisition of the Company.
PLAN OF DISTRIBUTION AND SELLING STOCKHOLDERS
The Company continually evaluates possible acquisitions of additional
telecommunications systems and businesses. From time to time, the Company may
enter into binding or nonbinding letters of intent, or definitive agreements, to
acquire particular businesses or properties. The shares of Common Stock covered
by this Prospectus (and other securities convertible into, or exercisable for,
such shares of Common Stock) may be offered and issued in connection with such
acquisitions. The consideration offered by the Company in such acquisitions, in
addition to the shares of Common Stock covered by this Prospectus, may include
cash, debt or other securities (which may be convertible into, or exercisable
for, shares of Common Stock of the Company covered by this Prospectus), and
assumption by the Company of liabilities of the businesses acquired. The
9
<PAGE> 11
Company has not received and does not expect to receive any cash proceeds (other
than working capital of acquired businesses) in connection with any such
issuances of Common Stock.
It is contemplated that the terms of acquisitions will be determined by
negotiations between the Company and the owners or controlling persons of the
businesses and properties to be acquired, with the Company taking into account
the past and potential earning power and growth of the businesses or properties
acquired and other relevant factors, and it is anticipated that shares of Common
Stock covered by this Prospectus (and other securities convertible into, or
exercisable for, such shares of Common Stock) will generally be valued at prices
reasonably related to the market value of the Common Stock either at the time
the terms of the acquisition are tentatively agreed upon or at or about the time
or times of delivery of the shares or other securities. No underwriting
discounts or commissions will be paid, although finder's fees may be paid from
time to time with respect to specific acquisitions. Any person receiving such
fees may be deemed to be an underwriter within the meaning of the Securities
Act.
Selling Stockholders may sell the shares of Common Stock being offered
hereby from time to time in transactions on the Nasdaq National Market, in
negotiated transactions or otherwise, at market prices prevailing at the time of
the sale or at negotiated prices. Such shares may be sold by Selling
Stockholders directly in brokerage transactions or in transactions involving
broker-dealers, who may act solely as agents or may acquire shares of Common
Stock as principals, and may be deemed to be underwriters within the meaning of
the Securities Act. Broker-dealers participating in such transactions may
receive discounts or commissions from Selling Stockholders (and, if they act as
agent for the purchaser of such shares of Common Stock, from such purchaser).
Participating broker-dealers may agree with Selling Stockholders to sell a
specified number of shares of Common Stock at a stipulated price per share and,
to the extent such broker-dealer is unable to do so acting as an agent for
Selling Stockholders, to purchase as principal any unsold shares of Common Stock
at that price. Broker-dealers who acquire shares of Common Stock as principal
may thereafter resell such shares of Common Stock from time to time in
transactions (which may involve sales to or through other broker-dealers) on the
Nasdaq National Market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with such resales may pay or receive commissions in connection with the purchase
of such shares of Common Stock. Any commissions paid or concessions allowed to
any broker-dealer, and, if any broker-dealer purchases such shares of Common
Stock as principal, any profits received on the resale of such shares of Common
Stock, may be deemed to be underwriting discounts and commissions under the
Securities Act. The Company will receive none of the proceeds from any such
sales.
VALIDITY OF COMMON STOCK
The validity of the Common Stock offered hereby will be passed upon for the
Company by Bryan Cave LLP, St. Louis, Missouri. John P. Denneen, Esq., a member
of Bryan Cave LLP, is Secretary of the Company and its subsidiaries. Mr. Denneen
and two other members of Bryan Cave LLP own an aggregate of 49,426 shares of
Common Stock of the Company, and one of such members owns an option to purchase
22,220 shares of Common Stock at $11.35 per share.
INDEPENDENT AUDITORS
The consolidated financial statements of the Company as of December 31,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1996 incorporated by reference in this Prospectus have been audited by KPMG
Peat Marwick LLP, independent certified public accountants, as stated in their
report incorporated by reference herein.
The consolidated financial statements of Metro Access Networks, Inc. as of
December 31, 1996 and for the year then ended incorporated by reference in this
Prospectus have been audited by KPMG Peat Marwick, LLP, independent certified
public accountants, as stated in their report incorporated by reference herein.
10
<PAGE> 12
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SHARES OF COMMON STOCK OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................... 2
Incorporation of Certain Documents by
Reference................................ 2
The Company................................ 3
Information Regarding Forward Looking
Statements............................... 4
Risk Factors............................... 5
Plan of Distribution and Selling
Stockholders............................. 9
Validity of Common Stock................... 10
Independent Auditors....................... 10
</TABLE>
======================================================
======================================================
BROOKS FIBER
PROPERTIES, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
---------------------------------------
[BROOKS FIBER PROPERTIES LOGO]
---------------------------------------
======================================================
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following is a summary of Section 145 of the General Corporation Law of
the State of Delaware (the "DGCL").
Subject to restrictions contained in the statute, a corporation may
indemnify any person, who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding by reason of
the fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection therewith if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, in connection with any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. A person who is successful on the merits or otherwise in any suit or
matter covered by the indemnification statute shall be indemnified, and
indemnification is otherwise authorized upon a determination that the person to
be indemnified has met the applicable standard of conduct required. Such
determination shall be made by a majority vote of the board of directors who
were not parties to such action, suit or proceeding, even though less than a
quorum, or if there are no such directors, or if such directors so direct, by
special independent counsel in a written opinion, or by the stockholders of the
corporation. Expenses incurred in defense may be paid in advance upon receipt by
the corporation of written undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that the recipient is not entitled to
indemnification under the statute. The indemnification provided by statute is
not exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of shareholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such person. Insurance may be purchased on behalf of any
person entitled to indemnification by the corporation against any liability
asserted against him or her and incurred in an official capacity regardless of
whether the person could be indemnified under the statute. References to the
corporation include all constituent corporations absorbed in a consolidation or
merger as well as the resulting corporation and anyone seeking indemnification
by virtue of acting in some capacity with a constituent corporation would stand
in the same position as if such person had served the resulting or surviving
corporation in the same capacity.
The Second Restated Certificate of Incorporation and By-Laws of the Company
provide for indemnification of directors and officers of the Company to the
maximum extent permitted by the DGCL.
The directors and officers of the Company are insured under a policy of
directors' and officers' liability insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See Index to Exhibits.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-1
<PAGE> 14
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of Prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any other material change to such information in this Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities being offered
therein and the offering of such securities at the time may be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which are being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a Prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), that such reoffering prospectus will contain
the information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(6) That every Prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as part of an amendment to
the Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(7) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11, or 13 of this
Form, within one (1) business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of this Registration Statement through the date of
responding to the request.
II-2
<PAGE> 15
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in this Registration Statement
when it became effective, provided this undertaking does not apply if the
information required to be included in a post-effective amendment by this
undertaking is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement.
(9) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed by
the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Town and Country, State
of Missouri, on August 6, 1997.
BROOKS FIBER PROPERTIES, INC.
By: JAMES C. ALLEN
------------------------------------
James C. Allen
Vice Chairman and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James C. Allen and David L. Solomon, and each of
them, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement and any other
documents and instruments incidental thereto, and any registration statement
filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming that each of said
attorneys-in-fact and agents and/or either of them, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 6, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
ROBERT A. BROOKS Director (Chairman of the Board)
- --------------------------------------------
Robert A. Brooks
JAMES C. ALLEN Vice Chairman, Chief Executive Officer
- -------------------------------------------- and Director (Principal Executive Officer)
James C. Allen
D. CRAIG YOUNG President and Director
- -------------------------------------------- (Chief Operating Officer)
D. Craig Young
DAVID L. SOLOMON Executive Vice President and
- -------------------------------------------- Chief Financial Officer
David L. Solomon (Principal Financial and Accounting Officer)
ROBERT F. BENBOW Director
- --------------------------------------------
Robert F. Benbow
WILLIAM J. BRESNAN Director
- --------------------------------------------
William J. Bresnan
Director
- --------------------------------------------
W. Bruce Hanks
JONATHAN M. NELSON Director
- --------------------------------------------
Jonathan M. Nelson
</TABLE>
II-4
<PAGE> 17
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
GLEN F. POST, III Director
- --------------------------------------------
Glen F. Post, III
G. JACKSON TANKERSLEY, JR. Director
- --------------------------------------------
G. Jackson Tankersley, Jr.
Director
- --------------------------------------------
Ronald H. Vander Pol
CAROL DEB. WHITAKER Director
- --------------------------------------------
Carol deB. Whitaker
</TABLE>
II-5
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated December 19, 1995 between
the Company and Brooks Telecommunications Corporation
(incorporated by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-1 (File No. 333-1924) filed
with the Commission on March 4, 1996 (the "IPO Form S-1"))
2.2 Agreement and Plan of Merger dated January 17, 1996 between
the Company, Brooks Fiber Communications of Michigan, Inc.,
City Signal, Inc. and Ronald H. Vander Pol (incorporated by
reference to Exhibit 2.2 to the IPO Form S-1)
2.3 Agreement and Plan of Merger dated as of April 1, 1997
between the Company, Brooks Fiber Communications of Texas,
Inc., Century Telephone Enterprise, Inc. and Metro Access
Networks, Inc., (incorporated by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K dated May 5, 1997)
4.1 Second Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-4 (File No. 333-29427)
filed with the Commission on June 17, 1997 (the "June Form
S-4")
4.2 By-laws of the Company, as amended on April 29, 1997
(incorporated by reference to Exhibit 3.6 to the June Form
S-4)
4.3 Rights Agreement dated February 29, 1996 between the Company
and The Boatmen's Trust Company, as Rights Agent
(incorporated by reference to Exhibit 4.2 to the IPO Form
S-1)
4.4 Amended and Restated Stockholders Agreement dated as of June
15, 1995 (incorporated by reference to Exhibit 4.3 to the
IPO Form S-1)
4.5 Amended and Restated Registration Rights Agreement dated as
of June 15, 1995 (incorporated by reference to Exhibit 4.4
to the IPO Form S-1)
5.1 Opinion of Bryan Cave LLP regarding the validity of the
Common Stock
23.1 Consent of Bryan Cave LLP (included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
24.1 Power of Attorney (included on signature page)
</TABLE>
II-6
<PAGE> 1
[BRYAN CAVE LLP LETTERHEAD]
EXHIBIT 5.1
August 5, 1997
Board of Directors
Brooks Fiber Properties, Inc.
425 Woods Mill Road South, Suite 300
Town & Country, Missouri 63017
Gentlemen:
We are acting as special counsel for Brooks Fiber Properties, Inc., a
Delaware corporation (the "Company"), in connection with various legal matters
relating to the filing of a Registration Statement on Form S-4 (the
"Registration Statement") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), covering the registration of
5,000,000 shares of the Company's Common Stock, par value $.01 per share
("Common Stock"), and associated Preferred Stock Purchase Rights (the
"Rights"). The Rights, if and when they become exercisable, would entitle the
registered holders thereof (with certain exceptions) to purchase from the
Company one one-thousandth of a share of the Company's Series A Junior
Participating Preferred Stock, par value $.01 per share ("Series A Preferred
Stock"), at a price of $100.00 per one one-thousandth of a share of Series A
Preferred Stock, subject to adjustment. The Rights have been authorized and
distributed pursuant to the Rights Agreement dated as of February 29, 1996
("Rights Agreement") between the Company and The Boatmen's Trust Company, as
Rights Agent, to which Rights Agreement reference is made for the terms and a
description of the Rights.
In connection herewith, we have examined and relied without independent
investigation as to matters of fact upon such certificates of public officials,
such statements and certificates of officers of the Company and originals or
copies certified to our satisfaction of the Registration Statement, the Second
Restated Certificate of Incorporation and By-laws of the Company, the Rights
Agreement, proceedings of the Board of Directors of the Company and such other
corporate records, documents, certificates and instruments as we have deemed
necessary or appropriate in order to enable us to render the opinions expressed
below. In rendering this opinion, we have assumed the genuineness of all
signatures on all documents examined by us, the authenticity of all documents
submitted to us as originals and the conformity to authentic originals of all
documents submitted to us as certified or photostatted copies.
Based upon the foregoing and in reliance thereon, and upon our review of
<PAGE> 2
Board of Directors
Brooks Fiber Properties, Inc.
August 5, 1997
Page 2
applicable statutes and case law, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
(1) The Company is a corporation validly existing in good
standing under the laws of the State of Delaware;
(2) When,
(i) the Registration Statement, including any
amendments thereto, shall have become effective under the Act;
and
(ii) the shares of Common Stock being registered by
the Company shall have been duly issued and sold for valid
consideration as contemplated by the Registration Statement;
then such shares of Common Stock will be legally issued, fully paid
and non-assessable; and
(3) The Company, as a Delaware corporation, has the authority to
issue the Rights without stockholder approval as a matter properly
within the business judgment of the Board of Directors of the
Company, and, assuming that such judgment has been exercised in good
faith (which we know of no reason to question), the Rights have been
duly authorized and validly issued.
The basis for our opinion in clause (3) above is described below.
The General Corporation Law of the State of Delaware (the "DGCL")
expressly authorizes a Delaware corporation, subject to any provisions in its
certificate of incorporation, to create and issue rights entitling the holders
thereof to purchase from the corporation any shares of its capital stock of any
class or classes (DGCL, Section 157). The Board of Directors of the Company
may, by resolution, determine the terms upon which, including the time or times
at or within which, and the price or prices at which, any such shares may be
purchased from the Company upon exercise of any of such rights. In the absence
of actual fraud in the transaction, the judgment of the directors as to the
consideration for the issuance of such rights and the sufficiency thereof shall
be conclusive (DGCL, Section 157). The DGCL does not require stockholder
approval for the issuance of rights.
The Company's Second Restated Certificate of Incorporation does not
contain any restriction or limitation on the authority of the Board of
Directors of the Company to authorize, or of the Company to issue rights.
However, the Company must have sufficient authorized but unissued shares
available in the event that the Rights are exercised. Based on the number of
shares of the Company's Common Stock, warrants and options outstanding on June
30, 1997, following the exercise of such outstanding warrants and options, the
Company would have 39,527,997 shares of Common Stock issued and outstanding,
and 110,472,003 shares of Common Stock and 1,040,012 shares of Preferred Stock,
par value $.01 per share (including 50,000 shares
<PAGE> 3
Board of Directors
Brooks Fiber Properties, Inc.
August 5, 1997
Page 3
designated as Series A Preferred Stock), authorized but not outstanding.
Accordingly, following such exercises, the Company would have sufficient
authorized but not outstanding shares of Series A Preferred Stock to fulfill
its obligations in the event the Rights were then exercised. The Rights
Agreement contains provisions which obligate the Company to reserve sufficient
shares of Series A Preferred Stock to permit exercise in full of all
outstanding Rights.
Delaware courts have, on a number of occasions, concluded that
corporations organized in Delaware are authorized to issue rights having terms
and conditions similar to those set out in the Rights Agreement. These cases
have supported the authority of the board of directors of a corporation to
adopt rights plans and issue the rights in the absence of any stockholder
approval. See, e.g., Moran v. Household International, Inc., 500 A.2d 1346
(Del. 1985) ("Household") (the Delaware Supreme Court held that a Delaware
corporation had sufficient authority to adopt a flip-over rights plan under
Delaware corporate law); Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.,
506 A.2d 173, 181 (Del. 1986) (the Delaware Supreme Court spoke approvingly of
a flip-in rights plan in dicta); American Gen. Corp. v. Unitrin, Inc., C.A.
Nos. 13656 and 13699, Del. Ch. LEXIS 187, *26-7 (1994), rev'd on other grounds,
651 A.2d 1361 (Del. 1995) (Delaware Chancery Court refused to enjoin a
shareholder rights plan with flip-in and flip-over provisions after determining
the Delaware corporation's board adopted the plan upon concluding in good faith
that a bidder's cash offer for all shares was inadequate); Tate & Lyle PLC v.
Staley Continental Inc., CCH Fed. Sec. L. Rep. 1988 Dec. &93.764 (Del. Ch.
1988) (Delaware Chancery Court refused to enjoin shareholder rights plan with
both flip-over and flip-in provisions and refused to order redemption of rights
under plan); BNS Inc. v Koppers Co., 683 F. Supp. 458 (D.C. Del. 1988) (U.S.
District Court for the District of Delaware refused to order directors of
Delaware corporation to redeem rights under plan that had both flip-in and
flip-over rights); CRTF Corp. v. Federated Dept. Stores, Inc., CCH Fed. Sec. L.
Rep. 1988 Dec. &93.711 (S.D.N.Y. 1988) (U.S. District Court for the Southern
District of New York rejected a request for a preliminary injunction based,
inter alia, upon a challenge to the validity under Delaware law of rights plan
containing both flip-in and flip-over provisions and refused to order board of
directors to redeem rights); Moore Corp. v. Wallace Computer Servs., 907 F.
Supp 1545 (D. Del. 1995) (Delaware District Court held that Board's decision
not to redeem poison pill as part of a "just say no" defense against hostile
tender offer was a valid exercise of its business judgment).
Some courts have granted injunctions requiring a board of directors
to redeem rights of the sort discussed in this letter. See, e.g., City Capital
Assocs. L.P. v. Interco Inc., 551 A. 2d 787 (Del. Ch. 1988); and Grand Met. PLC
v. The Pillsbury Co., CCH Fed. Sec. L. Rep. 1988-89 Dec. &94.104 (Del. Ch.
1988). However, we do not interpret these decisions as undermining the
validity of the rights there involved or the adoption or issuance thereof.
Rather, these cases relate to the propriety of a decision by a board of
directors to leave existing rights outstanding under certain circumstances
after an acquisition offer has been made.
Several courts in other jurisdictions have granted preliminary
injunctions against the implementation by certain corporations of various
rights plans because the court viewed the corporation laws under which those
corporations were formed as forbidding discrimination in
<PAGE> 4
Board of Directors
Brooks Fiber Properties, Inc.
August 5, 1997
Page 4
rights between holders of shares of the same series and class, and thus as
precluding provisions such as flip-in terms that may be characterized as
discriminatory against certain holders.1/ The Delaware Supreme Court held in
the Household case, however, that discrimination between shareholders, as
opposed to discrimination between shares, was permissible, and thus the
flip-over rights plan in question was valid.
A number of cases have held that exercise by a board of directors of
authority such as the power to authorize and issue rights is governed by the
business judgment rule which provides that a court will not interfere with a
good faith decision by adequately informed disinterested directors which the
directors reasonably believe is in or not opposed to the best interests of the
corporation. See, e.g., Household. However, certain courts have held that the
traditional business judgment rule should be modified when a board of directors
adopts measures that could have an anti-takeover effect. These courts have
required that, before the business judgment rule is applied in a takeover
context, the directors must carry the burden of demonstrating that there was a
danger to corporate policy and effectiveness and that the action taken was
reasonable in relation to the threat imposed. See, e.g., Unocal Corp. v. Mesa
Petroleum Co., 493 A. 2d 946, 954 (Del. 1985) ("Unocal") and Household. If the
plaintiff can succeed in proving that the sole or primary purpose of the
anti-takeover measure was entrenchment of management, good faith is negated,
and the business judgment rule will not apply. The directors then must prove
the intrinsic fairness of the measure. See, e.g., Mills Acquisition Co. v.
Macmillan, Inc., 559 A.2d 1261, 1280 (Del. 1989) (finding a lack of candor in
communications during an auction process involving a management buyout group,
the court enjoined an asset lock-up agreement and stated "[w]hen faced with
such divided loyalties, directors have the burden of establishing the entire
fairness of the transaction to survive careful scrutiny by the courts.").
- ---------------------------
1/ Asarco Inc. v. Court, 611 F.Supp. 468 (D. N.J. 1985) (holding that New
Jersey corporate law proscribed discrimination between voting power
within a class of preferred stock); Amalgamated Sugar Co. v. NL Indus.,
Inc., 644 F.Supp. 1229 (S.D. N.Y. 1986) (holding that a rights plan with
flip-in provisions which operated to dilute the equity and voting power
of acquiring shareholder was ultra vires as a matter of New Jersey law
since the New Jersey Business Corporation Act did not allow
discrimination among shareholders of same class and series of stock);
R.D. Smith & Co. v. Preway, Inc., 644 F.Supp. 868 (W.D. Wis. 1986)
(denying preliminary injunction to party opposing rights plan despite
probability that plan would be held invalid under Wisconsin law because
it discriminated by according different voting powers to shareholders
within the same class of stock); Bank of New York Co. v. Irving Bank
Corp., 536 N.Y.S.2d 923 (Sup. Ct. N.Y. Co. 1988) (holding a flip-in
provision to be a discrimination between shareholders of the same class
that was not permissible under the New York Business Corporation Law).
The state legislatures in these and certain other states whose statutes
have been similarly construed have subsequently amended their statutes
to explicitly authorize rights plans with discriminatory provisions
(see, e.g., N.J. Bus. Corp. Act Section 14A:7-7; N.Y. Bus. Corp. Law
Section 505(a)(2) and Wis. Bus. Corp. Law Section 180.0624).
<PAGE> 5
Board of Directors
Brooks Fiber Properties, Inc.
August 5, 1997
Page 5
In deciding whether to sustain anti-takeover measures adopted by a
board of directors, three elements recur in the case law. First, the board
must be reasonably diligent in the process by which it selects the
anti-takeover measure. Second, the measure adopted by the board must be a
suitable response to the threat posed. And finally, the board must carefully
structure any rights plan it may adopt in order to minimize potential abuses,
particularly abuses in the nature of actions which would prevent any takeover
offer from succeeding.
In rendering the opinion expressed in clause (3) above, we have
assumed that the Company's Board of Directors, in considering and approving the
distribution of the Rights described herein, addressed matters responsive to
the requirements set out above. Nothing has come to our attention which would
cause us to question the good faith of the directors in approving the
distribution of the Rights or which would lead us to believe that we are not
justified in relying on the assumptions referred to above.
Taking the foregoing into account, it is our opinion that rights with
terms and conditions of the sort included in the Rights Agreement are valid
under Delaware law and may thus be lawfully authorized and issued by the
Company. It is also our opinion that approval of the Rights is a matter
properly within the business judgment of the Company's Board of Directors and,
assuming that such judgment has been exercised in good faith (which we know of
no reason to question), is thus consistent with the fiduciary obligations of
the Board of Directors to the Company and its stockholders.
This opinion is not rendered with respect to any laws other than the
General Corporation Law of the State of Delaware and the Act.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Validity of Common Stock" in the Prospectus filed as a part thereof. In
giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
BRYAN CAVE LLP
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Brooks Fiber Properties, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-4 of Brooks Fiber Properties, Inc. of our report dated February 12,
1997, relating to the consolidated balance sheets of Brooks Fiber Properties,
Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996,
and all related schedules, which report appears in the December 31, 1996 annual
report on Form 10-K of Brooks Fiber Properties, Inc.
We consent to incorporation by reference in the registration statement on
Form S-4 of Brooks Fiber Properties, Inc. of our report dated April 7, 1997,
relating to the balance sheet of Metro Access Networks, Inc. as of December 31,
1996, and the related statements of operations, changes in stockholders' equity
and cash flows for the year ended December 31, 1996, which report appears in
the Form 8-K of Brooks Fiber Properties, Inc. dated May 5, 1997.
KPMG Peat Marwick LLP
St. Louis, Missouri
August 5, 1997
