UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 20, 1999
WIRELESS ONE, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-26836 72-1300837
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Incorporation) Identification No.)
2506 Lakeland Drive, Jackson, Mississippi 39208
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (601) 936-1515
1080 River Oaks Drive, Suite A150, Jackson, Mississippi
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
On July 20, 1999, Wireless One, Inc. (the
"Company") issued a press release announcing that it
will amend its plan of reorganization and disclosure
statement in accordance with a term sheet negotiated with
MCI WORLDCOM, Inc. ("MCI WorldCom") and that the Company will
become a wholly-owned subsidiary of MCI WorldCom pursuant to
the amended plan of reorganization, subject to
Bankruptcy Court and other necessary approvals. The
press release and term sheet are attached as exhibits
99.1 and 99.2 hereto, respectively, and each is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Press Release dated July 20, 1999.
99.2 Chapter 11 Plan of Reorganization Term Sheet
<PAGE>
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.
WIRELESS ONE, INC.,
a Delaware corporation
Date: July 20, 1999 /s/ Thomas G. Noulles
Thomas G. Noulles
Senior VP and General Counsel
<PAGE>
EXHIBIT INDEX
EXHIBITS
- ---------
(c) Exhibits.
99.1 Press Release dated July 20, 1999.
99.2 Chapter 11 Plan of Reorganization Term Sheet
[WIRELESS ONE LOGO]
Contact: Henry G. Schopfer III
Executive V.P. & Chief Financial Officer
2506 Lakeland Drive
Jackson, MS 39208
601.936.1515
FOR IMMEDIATE RELEASE
WIRELESS ONE TO BECOME WHOLLY-OWNED SUBSIDIARY
OF MCI WORLDCOM
JACKSON, MISS., July 20, 1999 - Wireless One, Inc. (OTC Bulletin Board -
WIRL) announced today that it will amend its proposed plan of
reorganization and disclosure statement in accordance with a term sheet
negotiated with MCI WORLDCOM, Inc. (NASDAQ: WCOM) Under the amended plan,
Wireless One will become a wholly-owned subsidiary of MCI WorldCom.
Henry Burkhalter, Wireless One President and CEO stated, "We are
pleased to announce this amended plan to become a part of MCI WorldCom.
MCI WorldCom has the resources to accelerate our strategies to deploy
Wireless One's high-speed two-way wireless data transmission services to
businesses in the company's eleven southeastern states footprint. Our
customers, employees, suppliers and channel lessors should all benefit from
this association with MCI WorldCom during these exciting and rapidly
changing times in the wireless communications industry."
The amended plan will provide that the holders of Wireless One's two
series of unsecured senior notes, other than MCI WorldCom holders, will be
paid all principal and accrued interest or the full accreted value of their
senior notes, as the case may be, through the effective date of the amended
plan. All other liabilities of the company will remain unimpaired under
the amended plan. The company's existing stockholders will receive cash
aggregating $22,611,110 on a pro rata basis. Based on the current number
of shares outstanding and vested in-the-money options, the company
estimates that the per share cash payment under the amended plan would be
approximately $1.31. The term sheet summarizing the contemplated terms of
the amended plan will be contained in a current report on Form 8-K filed by
Wireless One with the Securities and Exchange Commission.
Wireless One stated that it expects to file the amended plan
reflecting the terms of the term sheet as soon as possible. Confirmation
of the amended plan will be subject to the requirements of the bankruptcy
code and must be approved by the court. Completion of the reorganization
will also require consent of the Federal Communications Commission.
-more-
<PAGE>
WIRELESS ONE, INC.
Wireless One's exclusive licenses in the MMDS and WCS spectrums enable
the company to provide digital broadband (i.e., high-capacity) wireless
access (commonly known as "BWA") services (such as high-speed Internet
connection, data transmission and telephone). In addition, the company
provides analog wireless multichannel subscription television programming
(commonly known as "wireless cable") services primarily in small to
mid-size markets in the southern and southeastern United States.
Wireless One has an eCommerce partnership with Netgateway, Inc.
whereby Netgateway has created an electronic mall at www.wirelessonemall.
com. The mall allows businesses to set up economical eCommerce
"storefronts" to offer products and services and gives consumers a
convenient, no-charge and secure place to shop on the Internet.
Wireless One also has a marketing alliance with DIRECTV, Inc. that
enables it to provide expanded television programming via Direct Broadcast
Satellite signal.
FORWARD-LOOKING STATEMENTS
Certain statements made in this press release, including statements
that are not a statement of historical fact, may constitute
"forward-looking" statements as defined in the Securities Act of 1933,
as amended. Such statements include, without limitation, statements
regarding future liquidity, cash needs and alternatives to address capital
needs, and are indicated by words or phrases such as "anticipate,"
"estimate," "plans," "projects," "continuing," "ongoing," "expects,"
"management believes," "the company believes," "the company intends," "we
believe," "we intend," and similar words or phrases.
Important factors that could cause actual results to differ materially
from the company's expectations include, without limitation, bankruptcy
court approval and any other approvals required for the amended plan, any
other matters requiring bankruptcy court or other approvals, the future
amount of the company's negative cash flow, the future results of the
company's operations, resolution of the company's supply need for modems
used in the company's high speed Internet product, business opportunities
that may be presented to and pursued by the company, changes in laws or
regulations, uncertainty of the company's ability to obtain FCC
authorizations, competition, physical limitations of wireless cable
transmission, changes in general business and economic conditions in the
company's operation regions and issues arising from Year 2000 information
technology matters, many of which are beyond the control of the company.
Further information regarding these and other factors that might cause
future results to differ from those projected in the forward-looking
statements is described in more detail under the heading "Factors That May
Affect Future Results of the Company" in the company's Form 10-K for
the year ended December 31, 1998 and under the heading "Management's
Discussion and Analysis" in the company's Form 10-Q for the quarter ended
March 31, 1999.
# # #
EDITORS NOTE: More information about Wireless One is available on the
internet at
www.wirelessone.com.
CHAPTER 11 PLAN OF REORGANIZATION
TERM SHEET
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I. BACKGROUND
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A.On or about March 15, 1999 the Debtor filed a Plan of Reorganization
(the "Initial Plan"). The Initial Plan was based upon an agreement (the
"Bondholders Agreement") between the Debtor and the Unofficial Committee of
Noteholders and certain other holders of the Debtor's Senior Notes entered
into shortly prior to the commencement of the Debtor's chapter 11 case.
B.The Initial Plan contained, among other things, the following terms
and assumptions:
1.The enterprise value of the Reorganized Debtor was assumed to
be $160 million.
2.Senior Noteholders would receive 95.5% of the primary common
equity of the Reorganized Debtor.
3.Existing common shareholders would receive (a) 4% of the
primary common equity of the Reorganized Debtor, and (b) warrants to
purchase 10% of the common equity at an exercise price that would
equate to a total equity value of the Reorganized Debtor equivalent to
the accreted value of the Senior Notes as of the filing of the
petition (approximately $327 million). The exercise price of the
warrants would be reduced to an amount based upon a total equity value
of $250 million upon the occurrence of a change of control.
4.In order to retain management and to provide incentive to
management to achieve and expedite Debtor's reorganization, contingent
upon their continued employment by the Debtor until the plan of
reorganization was implemented, members of management of the Debtor
would receive options to purchase 1,100,000 shares of the Reorganized
Debtor (10% of the outstanding shares after exercise of the management
options, but before exercise of the shareholder warrants). Of this
amount, 444,000 shares would be awarded by the Debtor's existing Board
of Directors and 666,000 shares would be awarded by the Board of
Directors of the Reorganized Debtor. In addition, certain management
contracts would be assumed (as amended) and other employment terms
were established.
C.Subsequent Events
1.After the filing of the Initial Plan:
a. MCI Worldcom Inc. ("MCI") purchased (i) the rights of the
lender under the Debtor's DIP facility, and (ii) more than
two-thirds (2/3) in amount of the Senior Notes.
b. Certain other investments were made in companies in the
Debtor's industry by MCI and other entities.
2.Based principally upon these investments in other comparable
companies, the Debtor believed that its enterprise value had
substantially increased. Accordingly, the Debtor announced that it
was reviewing the appropriateness of the Initial Plan. As a result,
the Debtor did not obtain approval of the Disclosure Statement
relating to the Initial Plan by the May 31, 1999 deadline set forth in
the Bondholders Agreement.
3.MCI advised the Debtor that (a) it believed that the Initial
Plan should be confirmed because any increases in the enterprise value
of the Debtor were not sufficient to entitle common stockholders to
any recovery, and (b) if the Debtor did not pursue the Initial Plan,
MCI would seek to terminate exclusivity, reserving the right to
propose a plan of reorganization that provided less value (or no
value) to common stockholders.
D.The Revised Plan
1.The principal terms of a revised plan of reorganization (the
"Proposed Revised Plan") are described in II. below.
2.In summary, as compared to the Initial Plan, the Proposed
Revised Plan makes the following changes, among others:
a. The assumed enterprise value of the Reorganized Debtor
has been increased from $160 million to $420 million.
b. Existing common stockholders, who were to receive 398,000
shares of the Reorganized Debtor (4% of the primary common
equity), will become entitled to an additional 101,454.17
shares of the Reorganized Debtor. In addition, the exercise
price of the warrants will be reduced to the change of
control price specified in the Initial Plan. See 2e. below.
c. At the requirement of MCI, the number of options to which
senior management will be entitled will be reduced from
1,100,000 to 444,000. In exchange for that reduction, MCI
agreed that the exercise price on the remaining options will
be reduced from $13.51 to $11.26. See 2e. below.
d. Senior Noteholders, other than MCI, will receive cash
payment of all principal and accrued interest or the full
accreted value of their Senior Notes, as the case may be,
through the Effective Date.
e. Shareholders and management option holders will have
their rights to the shares, warrants and options described in
2b. and 2c. above converted into cash at a price of $29.57
per share and will not receive shares, warrants or options.
The $29.57 price is based upon the foregoing assumed
enterprise value of $420 million.
f. MCI will provide the Reorganized Debtor with the funds
necessary to make all payments contemplated by the Proposed
Revised Plan. Those funds will be provided in the form of a
capital contribution.
g. MCI will receive 100% of the equity of the Reorganized
Debtor.
II. SUMMARY OF TERMS
----------------
<TABLE>
<S> <C>
MCI WORLDCOM DIP FACILITY Converted to a post-Chapter 11 Term Loan in accordance
Estimated Amount: with its terms. Warrants issued in connection with
$36.05 million (Proposed) prepetition loan from Merrill Lynch Global Allocation
Fund, Inc., all of which have been acquired by MCI,
will be cancelled on the Effective Date.
BTA NOTES Reinstated or otherwise unimpaired.
Estimated Amount:
$22.2 million
OTHER HOLDERS OF SENIOR NOTES
AND SENIOR DISCOUNT NOTES
Estimated Senior Notes Accrued Full cash payment on Effective Date of Plan of all
Value: {1}/ $3.9 million, including principal and then accrued interest.
interest, payable at Effective Date.
Estimated Senior Discount Notes
Accreted Value:
$12.0 million, Full cash payment on Effective Date of Plan of Accreted
payable on Effective Date. Value.
MCI WORLDCOM SENIOR NOTES AND 100% of Common Stock of Reorganized Wireless One (1,000
SENIOR DISCOUNT NOTES shares of Common Stock to be issued).
$341.1 million, including
interest on Senior Notes and
Accreted Value of Senior Discount
Notes, on Effective Date.
OTHER PRE-PETITION UNSECURED Reinstated or Paid in Full.
INDEBTEDNESS
Estimated Amount:
$7-10 million
HOLDERS OF OLD COMMON STOCK Holders of Old Common Stock will receive cash payments
aggregating $22,611,110 on a pro rata basis payable on
the Effective Date. All "in the money" options and
warrants that are vested will be deemed exercised as of
the Effective Date and the holders thereof will share
in the distribution to holders of Old Common Stock on a
pro rata basis, less the exercise price of the
respective options or warrants. All other unexercised
options and warrants for Old Common Stock will be
cancelled on the Effective Date. All Old Common Stock
and any other equity derivatives will be cancelled on
the Effective Date.
</TABLE>
<TABLE>
<CAPTION>
CALCULATION OF DISTRIBUTION AMOUNT:
REORGANIZED $ PER SHARE TOTAL
---------- ----------- -----
DEBTOR
------
SHARES{2}/
---------
<S> <C> <C> <C>
INITIAL PLAN
SHARES 398,000.00 $29.57 $11,768,860
INCREMENTAL
DISTRIBUTION 101,454.17 29.57 3,000,000
INITIAL PLAN
WARRANTS 1,235,000.00 6.35{3}/ 7,842,250
--------------
$22,611,110
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
MANAGEMENT OPTIONS MCI has required that the options contemplated by the
Initial Plan not be granted, because MCI's objective is
to own 100% of the outstanding shares of the
Reorganized Debtor upon the Effective Date. In
addition, MCI has emphasized the importance and value
to it of retaining the services of management.
Accordingly, the Initial Plan has been revised as
follows as a result of negotiations with MCI and
representatives of management: The persons entitled to
receive the options to purchase an aggregate of 444,000
shares of common stock of the Reorganized Debtor under
the Initial Plan as determined by the Debtor's existing
Board of Directors will receive cash payments
aggregating $8,129,640 (the "Bankruptcy Incentive
Compensation") to be distributed in accordance with the
intended option grant contemplated under the Initial
Plan and payable on the Effective Date. While these
payments are in lieu of prior rights with respect to
the contemplated options and constitute compensation to
management for services rendered through the period of
the bankruptcy, the Debtor's existing board of
directors in consultation with MCI and with the consent
of the affected recipient of Bankruptcy Incentive
Compensation may determine that a portion of the
payments to such recipient will be deferred and made
contingent upon future services under the management
contracts described below.
</TABLE>
<TABLE>
<CAPTION>
Calculation of Distribution Amount:
REORGANIZED $ PER SHARE TOTAL
----------- ----------- -----
DEBTOR
------
SHARES{4}/
---------
<S> <C> <C> <C>
INITIAL PLAN
OPTIONS 444,000 $18.31{5}/ $8,129,640
The Reorganized Debtor will be under no obligation to
deliver the 666,000 additional management options, as
provided in the Initial Plan.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
BT ALEX BROWN BT Alex Brown: Cash payment of $1,978,500 payable on
the Effective Date (per court-approved stipulation:
50,000 Reorganized Debtor shares x $29.57 = $1,478,500
plus $500,000.)
----
MANAGEMENT The Company and certain senior managers will also
execute management contracts on terms summarized in
Exhibit A attached. Management will receive the
bonuses described in Exhibit A.
NEW BOARD OF DIRECTORS The new Board of Directors will consist of three
directors. MCI Worldcom will nominate the directors.
RELEASES AND INDEMNIFICATION The Plan will provide for (i) releases of Wireless
One's claims (including any derivative claims) against
Wireless One's officers and directors, (ii) releases of
Wireless One's officers and directors by all of
Wireless One's creditors and interest holders, and
(iii) continuation of indemnification of directors and
continuation of directors' and officers' insurance for
Wireless One's officers and directors at least at
present level of coverage. See Exhibit B. MCI
Worldcom will specifically confirm its agreement to the
foregoing to the extent necessary or appropriate to
ensure the enforceability of such releases and
continuation of such indemnification to the maximum
extent permitted by law.
</TABLE>
**FOOTNOTES**
{1} Assumes Effective Date is September 30, 1999.
{2} No shares or warrants will actually be distributed to holders of Old
Common Stock The number of shares of the Reorganized Debtor is assumed
for purposes of calculating the Distribution Amount.
{3} Net exercise price between $29.57 and $23.22 change of control exercise
price.
{4} No options will actually be delivered to management. The number of
options is assumed for purposes of calculating the Distribution Amount.
{5} Net exercise price between $29.57 and $11.26 (Initial Plan strike price of
$13.51 less $1 million adjustment).
<PAGE>
EXHIBIT A
---------
Summary of Management Contracts
<TABLE>
<CAPTION>
WIRELESS ONE MANAGEMENT TERM ANNUAL SALARY
<S> <C> <C>
Henry Burkhalter, President & CEO 3 Years $300,000
Hank Schopfer, Executive Vice President, CFO and 2 Years $145,000
Secretary
Ernest Yates, Executive Vice President & COO 2 Years $220,000
Tom Noulles, Senior Vice President and General 2 Years $142,000
Counsel
</TABLE>
OTHER FEATURES
- --------------
<circle> Use of a company car or car allowance
<circle> 1 year severance; 1 1/2 years on change of control. (MCI
WORLDCOM acquisition will be deemed a change of control)
<circle> Annual performance bonus at the discretion of the new Board of
Directors
<circle> Standard employee benefits such as health care
<circle> Possible payment of a portion of the Bankruptcy Incentive
Compensation as signing bonus and/or retention incentive
SUMMARY OF BONUSES
- ------------------
Retention and 1998 performance bonuses in an aggregate amount of
$400,000 to be paid on the Effective Date of the Plan to employees employed
by the Company as of such date and who do not have employment agreements,
to be allocated as determined by the existing Board of Directors or
Compensation Committee, which may delegate authority to the CEO.
In addition, bonuses in an aggregate amount of $70,000 to be paid
on the Effective Date of the Plan to the employees listed above, other than
Mr. Burkhalter, who as of such date have employment agreements with the
Company and are employed by the Company, to be allocated as determined by
the existing Board of Directors or Compensation Committee, which may
delegate authority to the CEO.
<PAGE>
EXHIBIT B
---------
Indemnification
Subject to the occurrence of the Effective Date of the Plan, the
obligations of the Company, only to the extent permitted under the laws of
the State of Delaware, to indemnify, defend or reimburse directors or
officers who were or are directors or officers of the Company on or after
August 1, 1998, respectively, against any claims or causes of action as
provided in the Company's certificate of incorporation, bylaws, applicable
state law or contract, shall survive confirmation of the Plan, remain
unaffected thereby and not be discharged.
