<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
AMENDMENT NO. 1
TO
SCHEDULE 14D-1
Tender Offer Statement Pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934
and
SCHEDULE 13D/A
(AMENDMENT NO. 2)
Under the Securities Exchange Act of 1934
________________
EMERGING COMMUNICATIONS, INC.
(Name of Subject Company)
________________
INNOVATIVE COMMUNICATION CORPORATION
INNOVATIVE COMMUNICATION COMPANY, LLC
JEFFREY J. PROSSER
(Bidders)
________________
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
________________
29089K108
(CUSIP Number of Class of Securities)
________________
Jeffrey J. Prosser
Innovative Communication Company, LLC
Chase Financial Center
P.O. Box 1730
St. Croix, U.S. Virgin Islands 00821
(340) 777-7700
<PAGE>
Copy to:
Roger Meltzer, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
________________
Calculation of Filing Fee
- ------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee**
--------------------- --------------------
$54,860,644.50 $10,973
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* For purposes of calculating the filing fee only. The filing fee was
calculated, pursuant to Section 13(e)(3) of the Securities Exchange Act of
1934, as amended, and Rule 0-11 thereunder, on the basis of 5,352,258
shares of Common Stock (the number of shares of Common Stock outstanding on
the date hereof, but excluding 5,606,873 shares of Common Stock owned by
Innovative Communications Company), multiplied by the proposed acquisition
price of U.S. $10.25 per share.
** 1/50 of 1% of Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and date of its filing.
<TABLE>
<S> <C> <C>
Amount Previously Paid: $10,973 Filing Parties: Innovative Communication Corporation
Innovative Communication Company
Jeffrey J. Prosser
Form of Registration No.: Schedule 14D-1 Date Filed: August 24, 1998
</TABLE>
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<PAGE>
CUSIP No. 29089K108 14D-1 and 13D
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
INNOVATIVE COMMUNICATION CORPORATION
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCES OF FUNDS OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S. VIRGIN ISLANDS
- -------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 0 SHARES
- -------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES 0
- -------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0%
- -------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON CO
- -------------------------------------------------------------------------------
<PAGE>
CUSIP No. 29089K108 14D-1 and 13D
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
INNOVATIVE COMMUNICATION COMPANY, LLC
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCES OF FUNDS N.A.
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
- -------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 5,606,873 SHARES
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES [ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 51%
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10. TYPE OF REPORTING PERSON HC,OO (LIMITED LIABILITY
COMPANY)
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<PAGE>
CUSIP No. 29089K108 14D-1 and 13D
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JEFFREY J. PROSSER
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCES OF FUNDS N.A.
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S. VIRGIN ISLANDS
- -------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 5,730,864 SHARES
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES [X]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 52%
- -------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON IN
- -------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 to Schedule 14D-1 and Schedule 13D/A
(Amendment No. 2) (the "Schedule 14D-1 and 13D") relates to the offer by
Innovative Communication Corporation, a U.S. Virgin Islands corporation (the
"Purchaser") and a wholly owned subsidiary of Innovative Communication Company,
LLC, a Delaware limited liability company (the "Parent"), to purchase all the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Emerging Communications, Inc., a Delaware corporation (the "Company"), not
currently directly or indirectly owned by Parent, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated August 24, 1998 and First Supplement to the Offer
to Purchase dated September 10, 1998 (the "Offer to Purchase") and in the
related Letter of Transmittal (the "Letter of Transmittal", together with the
Offer to Purchase, the "Offer"), each of which are annexed to and filed with
this Schedule 14D-1 and 13D as Exhibits (a)(1), (a)(1)(A) and (a)(2),
respectively. This Schedule 14D-1 and Schedule 13D is being filed on behalf of
the Purchaser, the Parent and Jeffrey J. Prosser. The item numbers and responses
thereto below are in accordance with the requirements of Schedule 14D-1 and
Schedule 13D respectively of the Securities Exchange Act of 1934, as amended.
<PAGE>
Item 11. Material to Be Filed as Exhibits.
(a)(1) - Offer to Purchase.
(a)(1)(A) - First Supplement to Offer to Purchase
(a)(2) - Letter of Transmittal (including Guidelines for
Certification Taxpayer Identification Number on Form
W-9).
(a)(3) - Letter to brokers, dealers, commercial banks,
trust companies and nominees.
(a)(4) - Letter to clients.
(a)(5) - Notice of Guaranteed Delivery.
(a)(6) - Press Release issued by the Company and the
Purchaser, dated August 18, 1998
(a)(7) - Form of newspaper advertisement, dated August 24,
1998.
(b)(1) - Commitment Letter of the RTFC.
(c)(1) - Agreement and Plan of Merger (the "Merger among the
Purchaser, ICC Merger Sub Agreement"), dated as
of August 17, 1998,Corporation and the Company.
(c)(2) - Non-Competition Agreement dated December 31, 1997
among the Company, ATN and Mr. Prosser.
(c)(3) - Indemnity Agreement dated December 31, 1997 among
the Company, ATN, Mr. Prosser and Mr. Prior.
(c)(4) - Tax Sharing Agreement dated December 31, 1997 among
the Company, ATN, Mr. Prosser and Mr. Prior.
(c)(5) - Employment Agreement dated December 31, 1997 between
Mr. Prosser and the Company.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
(g)(1) - Complaint, Brickell Partners v. Jeffrey J. Prosser,
----------------- ----------
et al., C.A. No. 16415NC.
<PAGE>
SIGNATURE
After due 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.
Dated: September 10, 1998
INNOVATIVE COMMUNICATION CORPORATION
By: /s/ Jeffrey J. Prosser
---------------------------------------
Name: Jeffrey J. Prosser
Title: President
INNOVATIVE COMMUNICATION COMPANY, LLC
By: /s/ Jeffrey J. Prosser
---------------------------------------
Name: Jeffrey J. Prosser
Title: Sole Member
/s/ Jeffrey J. Prosser
------------------------------------------
Jeffrey J. Prosser
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT NAME PAGE NUMBER
---- ------------ -----------
<S> <C> <C> <C>
(a)(1)* -- Offer to Purchase.
(a)(1)(A) -- First Supplement to Offer to Purchase
(a)(2)* -- Letter of Transmittal (including Guidelines for Certification
Taxpayer Identification Number on Form W-9).
(a)(3)* -- Letter to brokers, dealers, commercial banks, trust companies
and nominees.
(a)(4)* -- Letter to clients.
(a)(5)* -- Notice of Guaranteed Delivery.
(a)(6)* -- Press Release issued by the Company and the Purchaser,
dated August 18, 1998.
(a)(7)* -- Form of newspaper advertisement, dated August 24, 1998.
(b)(1)* -- Commitment Letter of the RTFC.
(c)(1)* -- Agreement and Plan of Merger (the "Merger Agreement"), dated
as of August 17, 1998, among the Purchaser, ICC Merger Sub
Corporation and the Company.
(c)(2)* -- Non-Competition Agreement dated December 31, 1997 among the
Company, ATN and Mr. Prosser.
(c)(3)* -- Indemnity Agreement dated December 31, 1997 among the
Company, ATN, Mr. Prosser and Mr. Prior.
(c)(4)* -- Tax Sharing Agreement dated December 31, 1997 among the
Company, ATN, Mr. Prosser and Mr. Prior.
(c)(5)* -- Employment Agreement dated December 31, 1997 between Mr.
Prosser and the Company.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
(g)(1)* -- Complaint, Brickell Partners v. Jeffrey J. Prosser, et al.,
----------------- --------------------------
C.A. No. 16415NC.
</TABLE>
- ----------------
* Previously Filed
<PAGE>
EXHIBIT (A)(1)(A)
FIRST SUPPLEMENT
TO
OFFER TO PURCHASE
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
EMERGING COMMUNICATIONS, INC.
AT
$10.25 NET PER SHARE
BY
INNOVATIVE COMMUNICATION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
INNOVATIVE COMMUNICATION COMPANY, LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 21, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A MAJORITY OF
THE OUTSTANDING SHARES NOT BENEFICIALLY OWNED DIRECTLY OR INDIRECTLY BY THE
PARENT (AS DEFINED HEREIN) OR ITS AFFILIATES AS OF THE DATE THE SHARES ARE
ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER AND (II) THE RECEIPT BY THE
PURCHASER (AS DEFINED HEREIN) OF FUNDS SUFFICIENT TO PERMIT IT TO PURCHASE ALL
SHARES TENDERED IN THE OFFER AND PAY THE MERGER CONSIDERATION (AS DEFINED IN
THE OFFER TO PURCHASE). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. SEE "THE OFFER--1. TERMS OF THE
OFFER" IN THE OFFER TO PURCHASE AND "THE OFFER--13. CERTAIN CONDITIONS OF THE
OFFER" HEREIN AND IN THE OFFER TO PURCHASE
THE BOARD OF DIRECTORS OF THE COMPANY AND THE SPECIAL COMMITTEE HAVE
UNANIMOUSLY (WITH MR. PROSSER ABSTAINING) DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, HAVE APPROVED THE OFFER AND THE MERGER AND RECOMMEND THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of Common Stock, par value $0.01 per share (the "Shares"), of the
Company should either (1) complete and sign the Letter of Transmittal
accompanying the Offer to Purchase (the "Letter of Transmittal"), or a
facsimile thereof, in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile) or, in the case of a book-entry transfer of
Shares effected pursuant to the procedure set forth in "The Offer--3.
Procedure for Tendering Shares," in the Offer to Purchase an Agent's Message
(as defined in the Offer to Purchase) in lieu of the Letter of Transmittal,
and any other required documents to the Depositary (as defined in the Offer to
Purchase) and either deliver the Letter of Transmittal (or such facsimile)
together with the certificate(s) representing the tendered Shares or deliver
such Shares pursuant to the procedure for book-entry transfer set forth in
"The Offer--3. Procedure for Tendering Shares," in the Offer to Purchase or
(2) request such stockholder's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee are urged to contact such broker, dealer,
commercial bank, trust company or other nominee if they desire to tender
Shares so registered.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedures for guaranteed delivery set forth in
"The Offer--3. Procedure for Tendering Shares" in the Offer to Purchase.
Mr. Prosser, the Parent and the Purchaser make no recommendation to any
stockholder as to whether to tender or refrain from tendering Shares.
Stockholders must make their own decisions whether to tender Shares and, if
so, how many Shares to tender.
Questions and requests for assistance may be directed to the Information
Agent (as defined in the Offer to Purchase) or to the Dealer Manager (as
defined in the Offer to Purchase) at their respective addresses and telephone
numbers set forth on the back cover of this First Supplement to Offer to
Purchase. Requests for additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be directed to the
Information Agent, the Dealer Manager or to brokers, dealers, commercial banks
or trust companies, and copies will be furnished promptly at the Purchaser's
expense.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR THE MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
THE DEALER MANAGER FOR THE OFFER IS:
PRUDENTIAL SECURITIES INCORPORATED
THE DATE OF THIS FIRST SUPPLEMENT TO THE OFFER TO PURCHASE IS SEPTEMBER 10,
1998
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF EMERGING COMMUNICATIONS, INC.:
INTRODUCTION
The following information amends and supplements the information contained
in the Offer to Purchase dated August 24, 1988 (the "Offer to Purchase") of
Innovative Communication Corporation, a U.S. Virgin Islands corporation (the
"Purchaser") and a wholly owned subsidiary of Innovative Communication
Company, a Delaware limited liability company (the "Parent"), relating to the
Purchaser's offer to purchase all of the outstanding Common Stock, par value
$0.01 per share (the "Shares"), of Emerging Communications, Inc., a Delaware
corporation (the "Company"), at $10.25 per Share, net to the seller in cash,
and upon the terms and subject to the conditions set forth in the Offer to
Purchase, as supplemented and amended by this First Supplement, and in the
related Letter of Transmittal (which collectively constitute the "Offer"),
which terms and conditions remain applicable in all respects to the Offer.
Terms not defined herein have the meanings set forth in the Offer to Purchase.
The Items set forth below correspond to the Items set forth in the Offer to
Purchase. This First Supplement should be read in conjunction with the Offer
to Purchase.
SPECIAL FACTORS
3. FAIRNESS OF THE OFFER AND THE MERGER.
Each of Mr. Prosser, the Parent and the Purchaser believes that transactions
to be consummated pursuant to the Offer and the Merger Agreement, including
the $10.25 cash consideration proposed to be paid in the Offer and pursuant to
the Merger, are fair to the minority stockholders of the Company. The offer
price provides a substantial premium over pre-announcement market prices to
holders of the Shares and enables the Company's stockholders to receive cash
for their stockholdings now at a premium per share price. The $10.25 offer
price represents a premium of 46.4% over the market price of the Company's
Common Stock as of May 28, 1998 (the day prior to public announcement that the
Parent had proposed to acquire the Shares at $9.125 per Share). The belief by
each of Mr. Prosser, the Parent and the Purchaser that the terms of the Offer
and the transactions contemplated by the Merger Agreement are fair to the
minority stockholders of the Company is based primarily on the fact that the
$10.25 cash consideration offers a substantial premium over historical market
prices and the pre-announcement market price of the Common Stock. Mr. Prosser,
the Parent and the Purchaser did not take into account the net book value of
the Shares (although such value as of June 30, 1998 was $5.66 per Share,
substantially below the offer price) because they did not, and do not, believe
that such valuation is relevant in evaluating the fairness of the Offer or the
transactions contemplated by the Merger Agreement. In addition, they did not
take into account the going concern value or liquidation value of the Company
in making the Offer and do not believe that such valuations are relevant in
evaluating the Offer or the Merger because Mr. Prosser currently controls the
Company, the Shares to be acquired pursuant to the Offer and the Merger
represent a minority interest in the Company and Mr. Prosser has indicated
that he is not interested under any circumstances in selling his interest in
the Company. In addition, no offers have been received from any unaffiliated
person to acquire control of the Company during the past eighteen months.
While the opinion of Houlihan Lokey was not available to Mr. Prosser, the
Parent or the Purchaser prior to the execution of the Merger Agreement, such
opinion, together with the approval of the Offer and the Merger Agreement by
the Special Committee and the Board of Directors, confirm their belief that
these transactions are fair to the minority stockholders of the Company. In
addition, the requirement that the Minimum Tender Condition not be waived
without the consent of the Company, which was demanded by the Special
Committee and which has the effect of requiring a majority of the minority
stockholders to accept the Offer for the Offer and the Merger to be
consummated, further confirms the belief by Mr. Prosser, the Parent and the
Purchaser that the terms of the Offer and the transactions contemplated by the
Merger Agreement are fair to the minority stockholders of the Company.
While Mr. Prosser, the Parent and the Purchaser believe the Offer and the
transactions contemplated by the Merger Agreement are fair to the minority
stockholders of the Company, they make no recommendation to any stockholder as
to whether to tender or refrain from tendering Shares. Stockholders must make
their own decisions whether to tender Shares and, if so, how many Shares to
tender. Based on the foregoing, each of Mr. Prosser, the Parent and the
Purchaser believes the consideration proposed to be paid in the Offer and the
Merger is fair to the stockholders of the Company (other than the Parent and
the Purchaser).
S-1
<PAGE>
None of Mr. Prosser, the Purchaser, the Parent or Prudential Securities
Incorporated ("Prudential"), their financial advisor, solicited other offers
for the Company or its assets, and there can be no assurance that the terms of
the Offer are as favorable to the public stockholders of the Company as could
be obtained in one or more transactions with an unaffiliated party or parties.
6. RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS AND THE SPECIAL
COMMITTEE.
In determining that the Offer and the transactions contemplated by the
Merger Agreement are fair to, and in the best interests of, the minority
stockholders of the Company, the Special Committee and the Board of Directors
did not take into account the net book value of the Shares (although such
value as of June 30, 1998 was $5.66 per Share, substantially below the offer
price) because they did not, and do not, believe that such valuation is
relevant in evaluating the fairness of the Offer or the transactions
contemplated by the Merger Agreement. In addition, they did not take into
account the liquidation value of the Company and do not believe that such
valuation is relevant in evaluating the Offer or the Merger because Mr.
Prosser currently controls the Company, the Shares to be acquired pursuant to
the Offer and the Merger represent a minority interest in the Company and Mr.
Prosser has indicated that he is not interested under any circumstances in
selling his interest in the Company.
As discussed in the second full paragraph of page 8 of the Offer to
Purchase, on August 4, 1998, Houlihan Lokey representatives informed the
Special Committee that Houlihan Lokey was not in a position to render an
opinion that the original offer price of $9.125 per Share was fair to the
public stockholders from a financial point of view. Houlihan Lokey based such
conclusion on the results of valuation analyses described under "SPECIAL
FACTORS--Recommendation of the Board of Directors and the Special Committee--
Valuation of Emerging Communications Inc." and "--Fairness of Consideration"
in the Offer to Purchase (such analyses consisting of a "market multiple
approach", a "discounted cash flow approach", an "acquisition premium
analysis" and a "comparable transaction multiples" analysis) calculated as of
August 4, 1998. The market multiple approach as of August 4, 1998 yielded a
valuation of the Company's Common Stock in the range of $7.90 to $10.37 per
Share and the discounted cash flow approach as of August 4, 1998 yielded a
valuation of the Company's Common Stock in the range of $9.36 to $13.74 per
Share. The acquisition premiums implied by the original $9.125 offer relative
to the "30-day unaffected trading price" and the 52-week high and low for the
Common Stock of the Company as of August 4, 1998 were 33.5%, 1.4% and 46.0%,
respectively. The comparable transaction multiples as of August 4, 1998
indicated: (i) the TIC/Revenue multiples had a median of 2.7x; (ii) the
TIC/EBIT multiples had a median of 16.3x; and (iii) the TIC/EBITDA multiples
had a median of 12.9x. The TIC/Revenue, TIC/EBIT and TIC/EBITDA multiples for
the Company based on the original offer price of $9.125 were 3.2x, 12.8x and
6.8x, respectively, utilizing the financial results of the Company for the
latest 12 month period on a pro forma basis ended June 30, 1998. Houlihan
Lokey informed the Special Committee that the analysis described above, taken
as a whole, indicated that the $9.125 original offer was not adequate
compensation to the shareholders (other than the Parent and the Purchaser).
This conclusion was based primarily on the fact that the offer was below the
range of values under the discounted cash flow approach.
S-2
<PAGE>
THE OFFER
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The information concerning the Company contained in the Offer to
Purchase was taken from or based upon publicly available documents and records
on file with the Commission. Notwithstanding the statements contained in the
second sentence of the first full paragraph on page 24 of the Offer to
Purchase, Mr. Prosser, as the Chairman, Chief Executive Officer and
controlling stockholder of the Company, has reviewed the information contained
in the Company's public documents, and Mr. Prosser, the Parent and the
Purchaser each believe that all information contained herein concerning the
Company is true and correct in all material respects.
Certain Projections. Mr. Prosser and the Parent and their representatives
from time to time receive projections of financial results prepared by the
management of the Company in the ordinary course of business as a part of its
financial planning process. Although the Company does not as a matter of
course publicly disclose projections as to future revenues or earnings,
because they were received by Mr. Prosser and the Parent, the Purchaser made
the projections available to all stockholders in the Offer to Purchase.
Accordingly, the Company does not intend to update or otherwise revise such
prospective financial information to reflect circumstances existing since
their preparation or to reflect the occurrence of unanticipated events, even
in the event that any or all of the underlying assumptions are shown to be in
error. Furthermore, the Company does not intend to update or revise such
prospective financial information to reflect changes in general economic or
industry conditions.
NONE OF THE PROJECTIONS SET FORTH IN THE OFFER TO PURCHASE IS TO BE REGARDED
AS FACT AND SUCH PROJECTIONS SHOULD NOT BE RELIED UPON AS ACCURATE
REPRESENTATIONS OF FUTURE RESULTS. IN ADDITION, BECAUSE THE ESTIMATES AND
ASSUMPTIONS UNDERLYING THE SUMMARY PROJECTIONS, AS TO FUTURE RESULTS, ARE
BASED UPON EVENTS AND CIRCUMSTANCES THAT HAVE NOT TAKEN PLACE AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT FINANCIAL, MARKET, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT
ACCURATELY AND ARE BEYOND PARENT'S, THE PURCHASER'S AND THE COMPANY'S CONTROL,
THEY ARE INHERENTLY IMPRECISE AND THERE CAN BE NO ASSURANCE THAT THE PROJECTED
RESULTS CAN BE REALIZED. THEREFORE, IT IS EXPECTED THAT THERE WILL BE
DIFFERENCES BETWEEN THE ACTUAL AND PROJECTED RESULTS AND THAT THE ACTUAL
RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE PROJECTED.
THE INCLUSION OF THE SUMMARY PROJECTIONS SHOULD NOT BE REGARDED AS A
REPRESENTATION BY PARENT, THE PURCHASER, OR THE COMPANY, OR ANY OF THEIR
RESPECTIVE AFFILIATES OR REPRESENTATIVES, THAT THE PROJECTED RESULTS WILL BE
ACHIEVED. THE SUMMARY PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARDS PUBLIC
DISCLOSURE OR COMPLYING WITH PUBLISHED GUIDELINES OF THE COMMISSION OR
GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS. THE INDEPENDENT AUDITORS OF THE COMPANY DO NOT ASSUME ANY
RESPONSIBILITY FOR THE ACCURACY OF THE SUMMARY PROJECTIONS. THE SUMMARY
PROJECTIONS HAVE NOT BEEN EXAMINED, REVIEWED OR COMPILED BY THE COMPANY'S
INDEPENDENT AUDITORS, AND ACCORDINGLY THEY HAVE NOT EXPRESSED AN OPINION OR
ANY OTHER ASSURANCE ON THEM.
Correction. Page 28 of the Offer to Purchase incorrectly indicated that
Richard N. Goodwin, a Director at the Company, owns no Shares. Mr. Goodwin
owns 5,000 Shares.
13. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not be
obligated to accept for payment any Shares if the Minimum Tender Condition or
the Financing Condition shall not have been satisfied prior to the expiration
of the Offer or, subject to the terms of the Merger Agreement, waived prior to
the expiration of
the Offer or, if on or after August 24, 1998, and prior to the expiration of
the Offer, any of the events set forth in clauses (a) through (g) of the first
paragraph under "THE OFFER--Certain Conditions of the Offer" in the Offer to
Purchase shall occur.
S-3
<PAGE>
The Purchaser and the Parent do not have sufficient cash on hand or readily
marketable assets to permit the Purchaser to consummate the Offer and the
Merger. Therefore, if the conditions to the RTFC's commitment to provide the
Credit Facility are not satisfied or waived and/or the RTFC does not otherwise
provide the funds committed under the RTFC Commitment Letter, the Financing
Condition will not be satisfied and the Purchaser will terminate the Offer.
Mr. Prosser, the Parent and the Purchaser are not aware of any existing event
or condition that could result in the RTFC not providing the funds committed
under the RTFC Commitment Letter.
S-4
<PAGE>
SCHEDULE I
OPINION OF HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL
<PAGE>
HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL
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INVESTMENT BANKERS
AUGUST 17, 1998
The Special Committee of the Board of Directors of Emerging Communications,
Inc.
c/o Mr. Richard Goodwin
Chairman of the Special Committee of the Board of Directors
Chase Financial Center
P.O. Box 1730
St. Croix, U.S. Virgin Islands 08821
Dear Gentlemen:
We understand that Innovative Communication Corporation (the "Purchaser" or
"ICC"), a company wholly owned by Jeffrey J. Prosser, has proposed to purchase
the common equity of Emerging Communications, Inc. (the "Company"), pursuant
to the terms of an agreement and plan of merger (the "Agreement") dated as of
August 17, 1998, among the Company, the Purchaser and a wholly owned
subsidiary of the Purchaser. As more specifically set forth in the Agreement,
holders of each share of issued and outstanding common stock of the Company
will be entitled to receive a cash price of $10.25 per share, pursuant to a
tender offer. Promptly after the purchase of shares in the tender offer, and
the satisfaction or waiver of certain conditions set forth in the Agreement, a
subsidiary of ICC will be merged with and into the Company and each holder of
shares will be entitled to receive a cash price of $10.25 per share. Such
transactions and all related transactions are referred to collectively herein
as the "Transaction."
You have requested our opinion (the "Opinion") as to the matters set forth
below. The Opinion addresses only the fairness from a financial point of view
of the consideration to be received by the Company's common shareholders
(other than the Purchaser or Jeffrey J. Prosser) in the Transactions and does
not constitute a recommendation to the shareholders as to whether such
shareholders should tender their shares in the Transaction. The Opinion does
not address the Company's underlying business decision to effect the
Transaction. We have not been requested to, and did not, solicit third party
indications of interest in acquiring all or any part of the Company.
NEW YORK
31 West 52nd Street, 11th Floor
New York, New York 10019-6118
Tel 212.582.5000 Fax 212.582.7405
Broker/dealer services through
Houlihan Lokey Howard & Zukin Capital.
LOS ANGELES
CHICAGO SAN FRANCISCO
MINNEAPOLIS WASHINGTON, D.C.
DALLAS ATLANTA TORONTO
<PAGE>
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
1. reviewed the publicly available financial information of the Company
since the split-off of the Company from Atlantic Tele-Network, Inc.
("ATN"), including the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 and the Quarterly Report on 10-Q for the
quarter ended March 31, 1998;
2. reviewed the Proxy Statement for the Special Meeting of Stockholders
of Atlantic Tele-Network, Inc. dated December 9, 1997;
3. reviewed a draft copy of Schedule 13E-3 dated June 22, 1998, including
the draft agreement and plan of merger contained therein;
4. reviewed unaudited financial results of the Company through June 30,
1998 as prepared by the Company;
5. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and projected
operations and performance of the Company;
6. visited certain facilities and business offices of the Company in St.
Thomas, U.S. Virgin Islands;
7. reviewed forecasts dated March 25, 1998 as prepared by the Company's
management for the years ending December 31, 1998 through 2007;
8. reviewed the historical market prices and trading volume for the
publicly traded securities of the Company;
9. reviewed publicly available financial data for certain companies that
we deem comparable to the Company, and publicly available prices and
premiums paid in other transactions that we considered similar to the
Transaction;
10. held discussions with Jeffrey J. Prosser, the majority shareholder of
the Company and the sole shareholder of ICC, and with certain members of
Prudential Securities who are acting as financial advisor to Mr. Prosser;
11. conducted such other studies, analyses and inquiries as we have
deemed appropriate.
We have relied upon and assumed, without independent verification, that the
financial forecasts and projections provided to us have been reasonably
prepared and reflect the best currently available estimates of the future
financial results and condition of the Company, and that there has been no
material change in the assets, financial condition, business or prospects of
the Company since the date of the most recent financial statements made
available to us.
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it. We have not made any physical inspection or
independent appraisal of any of the properties or assets of the Company. Our
opinion is necessarily based on business, economic, market and other
conditions as they exist and can be evaluated by us at the date of this
letter.
We hereby consent to your reference to the Opinion in, and the inclusion of
the Opinion as an exhibit to, materials to be filed with the Securities and
Exchange Commission in connection with the Transaction. This Opinion is
delivered to each recipient subject to the conditions, scope of engagement,
limitations and understandings set forth in this Opinion and our engagement
letter, and subject to the understanding that the obligations of Houlihan
Lokey in the Transaction are solely corporate obligations, and no officer,
director, employee, agent, shareholder or controlling person of Houlihan Lokey
shall be subjected to any personal liability whatsoever to any person, nor
will any such claim be asserted by or on behalf of you or your affiliates.
I-2
<PAGE>
Based upon and subject to the foregoing, and in reliance thereon, it is our
opinion that the consideration to be received by the Company's common
shareholders (other than the Purchaser or Jeffrey J. Prosser) in the
Transaction is fair from a financial point of view.
HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL
/s/ Houlihan Lokey Howard & Zukin Capital
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, certificates for the Shares and any other required documents
should be sent by each stockholder of the Company or such stockholder's
broker-dealer, commercial bank, trust company or other nominee to the
Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission
(for Eligible Institutions only):
Tender & Exchange Department
P.O. Box 11248 (212) 815-6213
Church Street Station
New York, New York 10286-1248 Confirm by telephone:
(800) 507-9357
By Hand or Overnight Delivery:
Tender & Exchange Department
101 Barclay Street
Receive and Deliver Window
New York, New York 10286
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and
locations listed below. Requests for additional copies of the Offer to
Purchase, the Letter of Transmittal and the other tender offer materials may
be directed to the Information Agent, the Dealer Manager or to brokers,
dealers, commercial banks or trust companies or other nominees, and copies
will be furnished promptly at the Purchaser's expense.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO] MacKenzie
Partners, Inc.
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL FREE: (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
18th Floor
New York, NY 10292
(212) 778-1800
