SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
McLEODUSA INCORPORATED
(Name of Issuer)
CLASS A COMMON STOCK, $.01 PAR VALUE
(Title of class of securities)
582266 10 2
(CUSIP Number)
Stephen O. Meredith, Esq.
Edwards & Angell, LLP
101 Federal Street
Boston, MA 02110-1800
(617) 439-4444
(Name, Address, and Telephone Number of person
authorized to receive notices and communications)
March 31, 1999
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D/A, and is
filing this schedule because of Rule 13d-1 (b)(3) or (4), check the
following box: [__].
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities of that section of the Exchange Act but shall be subject to all
other provisions of the Exchange Act (however, see the Notes).
<PAGE>
1. Name of Reporting Person / I.R.S. Identification No. of Above Person
Media/Communications Partners III Limited Partnership
2. Check the Appropriate Box if a Member of a Group
(a) X
(b) _____
3. SEC Use Only
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of 7 Sole Voting Power
Shares
Beneficially 3,728,608
Owned By 8 Shared Voting Power
Each
Reporting -0-
Person With 9 Sole Dispositive Power
3,728,608
10 Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,728,608
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
13. Percent of Class Represented by Amount in Row (11)
5.01%
14. Type of Reporting Person
PN
<PAGE>
1. Name of Reporting Person / I.R.S. Identification No. of Above Person
M/C Investors L.L.C.
2. Check the Appropriate Box if a Member of a Group
(a) X
(b) _____
3. SEC Use Only
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of 7 Sole Voting Power
Shares
Beneficially 185,251
Owned By 8 Shared Voting Power
Each
Reporting -0-
Person With 9 Sole Dispositive Power
185,251
10 Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
185,251
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
13. Percent of Class Represented by Amount in Row (11)
.25%
14. Type of Reporting Person
PN
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Class A Common Stock, $.01 par value (the "Common
Stock"), of McLeodUSA Incorporated, a Delaware corporation (the "Company"),
whose principal executive offices are located at 6400 C Street, S.W., P.O. Box
3177, Cedar Rapids, Iowa 52406-3177.
Item 2. Identity and Background.
This statement is being filed by Media/Communications Partners III Limited
Partnership ("M/C Partners III") and M/C Investors L.L.C. ("M/C Investors")
(each a "Reporting Person," and collectively, the "Reporting Persons"). M/C III,
L.L.C. is the sole general partner of M/C Partners III ("M/C III").
The principal business address of each of M/C Partners III, M/C Investors and
M/C III is 75 State Street, Suite 2500, Boston, MA 02109. M/C Partners III, a
Delaware limited partnership, and M/C Investors, a Delaware limited liability
company, were formed for the purpose of investing in equity and equity-related
securities primarily acquired or issued in venture capital investments and other
private equity transactions in the media and communications industry. M/C III, a
Delaware limited liability company, was formed to serve as the sole general
partner of M/C Partners III.
During the last five years, neither of the Reporting Persons nor M/C III (i) has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Persons acquired shares of Common Stock in exchange for
shares of common stock of Ovation Communications, Inc., a Delaware corporation
("Ovation"), on March 31, 1999 pursuant to an Agreement and Plan of Merger dated
as of January 7, 1999 by and among the Company, Bravo Acquisition Corporation,
Ovation and certain stockholders of Ovation (including M/C Partners III and M/C
Investors) (the "Merger Agreement"). A copy of the Merger Agreement was filed as
Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 14, 1999.
Item 4. Purpose of Transaction.
The Reporting Persons acquired the Common Stock for investment purposes.
After the issuance of the Common Stock pursuant to the Merger Agreement, Peter
H.O. Claudy, a member of M/C III and M/C Investors, will be elected as a
director of the Company. Subject to the restrictions on the disposition of
Common Stock pursuant to the Stockholders' Agreement described in Item 5 below,
any or all of the shares of Common Stock beneficially owned by the Reporting
Persons may be sold or otherwise disposed of from time to time. The Reporting
Persons have no other plans or proposals which relate to or would result in any
of the matters enumerated in paragraphs (a) through (j) of Item 4 of Schedule
13D. See Item 6 below for a description of the Stockholders' Agreement.
Item 5. Interest in Securities of Issuer.
(a) M/C Partners III beneficially owns an aggregate of 3,728,608 shares of
Common Stock, which represents approximately 5.01 percent of the 74,393,054
shares of Common Stock outstanding on March 31, 1999.
M/C Investors beneficially owns an aggregate of 185,251 shares of Common
Stock, which represents approximately .25 percent of the shares of Common Stock
outstanding on March 31, 1999.
On January 7, 1999, M/C Investors and M/C Partners III entered into a
Stockholder's Agreement with the Company, IES Investments Inc. ("IES"), Clark E.
McLeod, Mary E. McLeod, Richard A. Lumpkin and Gail G. Lumpkin, (the "1999
Stockholders' Agreement"). On or about January 26, 1999, certain former
shareholders of Consolidated Communications Inc., along with certain permitted
transferees, also became parties to the 1999 Stockholders' Agreement
(collectively, the "CCI Shareholders").
The CCI Shareholders are as follows:
Gail G. Lumpkin;
Margaret Lumpkin Keon, as Trustee under the Margaret Lumpkin Keon Trust dated
May 13, 1978;
Mary Lee Sparks and Steven L. Grissom, as Trustees of the Mary Lee Sparks Trust
dated May 13, 1978;
Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Mary
Green Lumpkin Gallo Trust Agreement dated December 29, 1989, one for the benefit
of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne Keon,
Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin
Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee
Sparks, Christina Louise Sparks, and John Woodruff Sparks;
Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Richard
Adamson Lumpkin Grandchildren's Trust dated September 5, 1980, one for the
benefit of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne
Keon, Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks,
Barbara Lee Sparks, Christina Louise Sparks, and John Woodruff Sparks;
Bank One, Texas, N.A., as Trustee of the three trusts established by Richard
Adamson Lumpkin under the Trust Agreement dated February 6, 1970, one for the
benefit of each of Richard Anthony Lumpkin, Margaret Anne Keon, and Mary Lee
Sparks; and
David R. Hodgman and Steven L. Grissom, as Trustees of the twelve 1990 Personal
Income Trusts established by Margaret L. Keon, Mary Lee Sparks, and Richard A.
Lumpkin, each dated April 20, 1990, one for the benefit of each of Joseph John
Keon III, Katherine Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela
Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin, Elizabeth
Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks, Christina Louise
Sparks, and John Woodruff Sparks.
The Reporting Persons, together with the Company, IES, Clark B. McLeod, Mary E.
McLeod, Richard A. Lumpkin, Gail G. Lumpkin, and the CCI Shareholders
(collectively, the "Reporting Group") comprise a group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934. Collectively, and
insofar as is known to the Reporting Persons and M/C III, this Reporting Group
beneficially owns a total of 29,396,498 shares of Common Stock, which represents
39.5 percent of the number of shares of Common Stock outstanding on March 31,
1999.
The following table sets forth information regarding the shares of Common Stock
beneficially owned by the Reporting Group as determined from public filings:
<TABLE>
<CAPTION>
Voting and Number of Percent of
Reporting Group Dispositive Shares of Outstanding
Members Trust Powers Common Stock Common Stock
<S> <C> <C> <C> <C>
Gail Gawthrop Lumpkin N/A Sole 311,127 0.4
Mary Lee Sparks and Trust Agreement dated May 13, Shared 332,209 0.5
Steven L. Grissom 1978 f/b/o Mary Lee Sparks
Bank One, Texas NA; Richard Adamson Lumpkin Shared 23,403 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Joseph John Keon
and investments) III
Bank One, Texas NA; Richard Adamson Lumpkin Shared 23,403 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Katherine
and investments) Stoddert Keon
Bank One, Texas NA; Richard Adamson Lumpkin Shared 23,403 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Lisa Anne Keon
and investments)
Bank One, Texas NA; Richard Adamson Lumpkin Shared 23,403 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Margaret Lynley
and investments) Keon
Bank One, Texas NA; Richard Adamson Lumpkin Shared 23,403 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Pamela Keon
and investments) Vitale
Bank One, Texas NA; Richard Adamson Lumpkin Shared 23,403 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Susan Tamara Keon
and investments) DeWyngaert
Bank One, Texas NA; Richard Adamson Lumpkin Shared 54,688 0.1
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Benjamin Iverson
and investments) Lumpkin
Bank One, Texas NA; Richard Adamson Lumpkin Shared 54,688 0.1
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Elizabeth
and investments) Arabella Lumpkin
Bank One, Texas NA; Richard Adamson Lumpkin Shared 31,176 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Anne Romayne
and investments) Sparks
Bank One, Texas NA; Richard Adamson Lumpkin Shared 31,176 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Barbara Lee
and investments) Sparks
Bank One, Texas NA; Richard Adamson Lumpkin Shared 31,176 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o Christina Louise
and investments) Sparks
Bank One, Texas NA; Richard Adamson Lumpkin Shared 31,176 0.0
Richard A. Lumpkin Grandchildren's Trust dated
(power to direct vote 9/5/80 f/b/o John Woodruff
and investments) Sparks
Bank One, Texas NA; Trust named for Joseph John Keon Shared 169,891 0.2
Richard A. Lumpkin III created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for Katherine Shared 169,891 0.2
Richard A. Lumpkin Stoddert Keon created under
(power to direct vote the Mary Green Lumpkin Gallo
and investments) Trust Agreement dated
December 29, 1989
Bank One, Texas NA; Trust named for Lisa Anne Keon Shared 54,891 0.1
Richard A. Lumpkin created under the Mary Green
(power to direct vote Lumpkin Gallo Trust Agreement
and investments) dated December 29, 1989\
Bank One, Texas NA; Trust named for Margaret Lynley Shared 154,891 0.2
Richard A. Lumpkin Keon created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for Pamela Keon Shared 154,891 0.2
Richard A. Lumpkin Vitale created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for Susan Tamara Keon Shared 154,891 0.2
Richard A. Lumpkin created under the Mary Green
(power to direct vote Lumpkin Gallo Trust Agreement
and investments) dated December 29, 1989
Bank One, Texas NA; Trust named for Benjamin Iverson Shared 308,965 0.4
Richard A. Lumpkin Lumpkin created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for Elizabeth Shared 308,965 0.4
Richard A. Lumpkin Arabella Lumpkin created under
(power to direct vote the Mary Green Lumpkin Gallo
and investments) Trust Agreement dated
December 29, 1989
Bank One, Texas NA; Trust named for Anne Romayne Shared 93,459 0.1
Richard A. Lumpkin Sparks created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for Barbara Lee Shared 43,459 0.1
Richard A. Lumpkin Sparks created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for Christina Louise Shared 43,459 0.1
Richard A. Lumpkin Sparks created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Bank One, Texas NA; Trust named for John Woodruff Shared 43,459 0.1
Richard A. Lumpkin Sparks created under the Mary
(power to direct vote Green Lumpkin Gallo Trust
and investments) Agreement dated December 29,
1989
Margaret L. Keon Margaret Lumpkin Keon Trust dated Sole 506,461 0.7
(settlor and trustee) May 13, 1978
Steven L. Grissom and Margaret L. Keon 1990 Personal Shared 75,037 0.1
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Joseph John Keon III dated
(power to direct sale April 20, 1990
of shares)
Steven L. Grissom and Margaret L. Keon 1990 Personal Shared 75,037 0.1
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Katherine Stoddert Keon
(power to direct sale dated April 20, 1990
of shares)
Steven L. Grissom and Margaret L. Keon 1990 Personal Shared 75,037 0.1
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Lisa Anne Keon dated
(power to direct sale April 20, 1990
of shares)
Steven L. Grissom and Margaret L. Keon 1990 Personal Shared 75,037 0.1
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Margaret Lynley Keon dated
(power to direct sale April 20, 1990
of shares)
Steven L. Grissom and Margaret L. Keon 1990 Personal Shared 75,037 0.1
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Pamela Keon Vitale dated
(power to direct sale April 20, 1990
of shares)
Steven L. Grissom and Margaret L. Keon 1990 Personal Shared 75,037 0.1
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Susan Tamara Keon
(power to direct sale DeWyngaert dated April 20,
of shares) 1990
Steven L. Grissom and Richard Anthony Lumpkin 1990 Shared 724,601 1.0
David R. Hodgman; Personal Income Trust for the
Richard A. Lumpkin Benefit of Benjamin Iverson
(power to direct sale Lumpkin dated April 20, 1990
of shares)
Steven L. Grissom and Richard Anthony Lumpkin 1990 Shared 724,601 1.0
David R. Hodgman; Personal Income Trust for the
Richard A. Lumpkin Benefit of Elizabeth Arabella
(power to direct sale Lumpkin dated April 20, 1990
of shares)
Steven L. Grissom and Mary Lee Sparks 1990 Personal Shared 150,224 0.2
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Anne Romayne Sparks dated
(power to direct sale April 20, 1990
of shares)
Steven L. Grissom and Mary Lee Sparks 1990 Personal Shared 150,224 0.2
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Barbara Lee Sparks dated
(power to direct sale April 20, 1990
of shares)
Steven L. Grissom and Mary Lee Sparks 1990 Personal Shared 150,224 0.2
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of Christina Louise Sparks
(power to direct sale dated April 20, 1990
of shares)
Steven L. Grissom and Mary Lee Sparks 1990 Personal Shared 150,224 0.2
David R. Hodgman; Income Trust for the Benefit
Richard A. Lumpkin of John Woodruff Sparks dated
(power to direct sale April 20, 1990
of shares)
Bank One, Texas NA; Richard Anthony Lumpkin Trust Shared 1,822 0.0
Richard A. Lumpkin under the Trust Agreement
(power to direct dated February 6, 1970
vote and investments)
Bank One, Texas NA; Margaret Anne Keon Trust under Shared 60,619 0.1
Richard A. Lumpkin the Trust Agreement dated
(power to direct vote February 6, 1970
and investments)
Bank One, Texas NA; Mary Lee Sparks Trust under the Shared 107,030 0.1
Richard A. Lumpkin Trust Agreement dated
(power to direct vote February 6, 1970
and investments)
Richard A. Lumpkin N/A Sole 11,250 (1) 0.0
(1) Consists of 11,250 shares underlying presently exercisable option.
Clark E. McLeod and N/A Sole and 9,330,734 12.5
Mary E. McLeod Shared
IES Investments, Inc. N/A Sole 10,245,457 13.8
</TABLE>
(b) M/C Partners III has sole power to vote or direct the vote of and the
sole power to dispose of or to direct the disposition of 3,728,608 shares
of Common Stock. M/C Investors has sole power to vote or direct the vote of
and the sole power to dispose of or to direct the disposition of 185,251
shares of Common Stock.
(c) None.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
Pursuant to the 1999 Stockholders' Agreement, M/C Partners III and M/C
Investors, for so long as they collectively and continuously own at least
2,500,000 shares of Class A Common Stock, shall, for the period ending on
December 31, 2001, vote their shares and take all action with their power to (i)
establish and maintain the size of the Company's Board of Directors (the
"Board") at up to eleven directors; (ii) cause to be elected to the Board one
director designated by IES (for so long as IES owns at least 4,000,000 shares of
Class A Common Stock); (iii) cause to be elected to the Board three directors
who are executive officers of the Company designated by Clark E. McLeod (for so
long as Clark and Mary McLeod collectively beneficially and continuously own at
least 4,000,000 shares of the Class A Common Stock); (iv) cause Richard A.
Lumpkin to be elected to the Board (for so long as the CCI Shareholders and
Richard A. Lumpkin collectively beneficially and continuously own at least
4,000,000 shares of the Class A Common Stock); (v) cause to be elected to the
Board a director nominated by the Board to replace a director designated by IES,
Clark E. McLeod, Mary McLeod or Richard A. Lumpkin, as provided above, because
the director no longer can or will serve as a director; (vi) cause to be elected
to the Board up to five non-employee directors nominated by the Board; and (vii)
cause to be elected to the Board one director designated by M/C Partners III and
M/C Investors (for so long as M/C Partners III and M/C Investors collectively
beneficially and continuously own at least 2,500,000 shares of Class A Common
Stock). The 1999 Stockholders' Agreement further provides that, until December
31, 2001, and subject to certain exceptions, neither M/C Partners III nor M/C
Investors will sell or otherwise dispose of any equity securities of the Company
without the consent of the Board.
The foregoing description of the 1999 Stockholders' Agreement is qualified in
its entirety by reference to the 1999 Stockholders' Agreement, which was filed
as an exhibit to the Company's current Report on Form 8-K, filed on January 14,
1999, and is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
1. Stockholders' Agreement, dated as of January 7, 1999, among the Company,
IES, Clark E. McLeod, Mary E. McLeod, Richard A. Lumpkin, Gail G. Lumpkin,
M/C Investors L.L.C. and Media/Communications Partners III Limited
Partnership. (Incorporated by reference to Exhibit 2.1 of the Form 8-K
filed by the Company on January 14, 1999.)
2. Joint Filing Agreement set forth below.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: April 8, 1999
M/C INVESTORS L.L.C.
By: /s/ David D. Croll
-----------------------
David D. Croll
Manager
MEDIA/COMMUNICATIONS
PARTNERS III
LIMITED PARTNERSHIP
By: M/C III, L.L.C., its
General Partner
By: /s/ David D. Croll
-----------------------
David D. Croll
Manager
<PAGE>
Exhibit
In accordance with Rule 13d-1(k) promulgated under the Securities Exchange
Act of 1934, the undersigned agree to the joint filing of a Statement on
Schedule 13D (including any and all amendments thereto) with respect to the
shares of Class A Common Stock, $.01 par value, of McLeodUSA Incorporated, and
further agree that this Joint Filing Agreement be included as an Exhibit
thereto. In addition, each party to this Agreement expressly authorizes each
other party to this Agreement to file on its behalf any and all amendments to
such Statement.
Date: April 8, 1999
M/C INVESTORS L.L.C.
By: /s/ David D. Croll
------------------------------------
David D. Croll
Manager
MEDIA/COMMUNICATIONS PARTNERS III
LIMITED PARTNERSHIP
By: M/C III, L.L.C., its General Partner
By: /s/ David D. Croll
------------------------------------
David D. Croll
Manager
