As filed with the Securities and Exchange Commission on January 7, 1997
Registration No. 333-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
PRICELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-3043811
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
PriCellular
45 Rockefeller Plaza
New York, New York 10020
(212) 459-0800
(Address and telephone number of registrant's principal executive offices)
Robert Price
PriCellular Corporation
45 Rockefeller Plaza
New York, New York
(212) 459-0800
(Name, address and telephone number of agent for service)
Copies to:
Richard D. Truesdell, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to
rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration
number for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Amount of
Title of Shares Amount to be Aggregate Price Aggregate Registration
to be Registered Registered Per Unit(1) Offering Price(1) Fee
- -------------------- ------------ --------------- ----------------- ------------
<S> <C> <C> <C> <C>
Class A Common Stock,
$.01 par value per share...... 1,948,052 shares $11.06 $21,545,455.12 $6,529
<FN>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) based on a per share price of $11.06, the average
of the high and low price of $11.25 and $10.88 of the Company's Class A
Common Stock on January 3, 1997.
______________________
</TABLE>
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, as amended or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
=============================================================================
SUBJECT TO COMPLETION DATED JANUARY 7, 1997
1,948,052 Shares
PriCellular
PriCellular Corporation
Class A Common Stock
(par value $.01 per share)
This prospectus relates to the offer and sale from time to time
by Horizon Cellular Telephone Company of Central Kentucky, L.P. ("Horizon") of
a total of 1,948,052 shares of Class A Common Stock, $.01 par value (the
"Class A Common Stock"), of PriCellular Corporation (the "Company"). Horizon
currently owns an aggregate of 1,948,052 shares of Class A Common Stock issued
to Horizon in January 1997 in connection with the acquisition by the Company
of certain assets from Horizon. The Company will not receive any of the
proceeds from the sale of the shares offered hereby.
Horizon, directly or through agents, brokers, dealers or
underwriters designated from time to time, may sell shares of the Class A
Common Stock from time to time on terms to be determined at the time of sale.
To the extent required, the specific number of shares to be sold, the purchase
price and public offering price, the names of any resale agent, dealer or
underwriter, and the terms and amount of any applicable commission or discount
with respect to a particular offer will be set forth in a Prospectus
Supplement and/or post-effective amendment to the Registration Statement of
which this Prospectus constitutes a part. See "Plan Of Distribution".
Horizon and any such agents, brokers, dealers or
underwriters may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any
commissions received by them and any profit on the resale of the Class A
Common Stock purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
The Company has agreed to bear all expenses of registration of
the Class A Common Stock under federal and state securities laws and to
indemnify Horizon and such agents, brokers, dealers and underwriters against
certain civil liabilities, including certain liabilities under the Securities
Act.
The Class A Common Stock is listed on the American Stock
Exchange under the symbol "PC". On January 3, 1997, the last reported sale
price of the Class A Common Stock on the American Stock Exchange Composite
Tape was $11 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.
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 NO SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
ADDITIONAL INFORMATION
PriCellular Corporation 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 Securities and Exchange Commission
(the "Commission"). These reports, proxy and information statements and other
information may be inspected without charge and copied at the public reference
facilities maintained by the Commission at its principal offices at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such materials also can be obtained from the Public
Reference Section of the Commission at prescribed rates at the principal
offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a site on the
Internet that contains reports, proxy statements and other information
regarding registrants that file electronically with the Commission at
http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Class A Common Stock offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms a part of the Registration
Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed thereto, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of such
documents are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference. The Registration Statement
and the Exhibits thereto can be inspected and copied at the public
reference facilities and regional offices referred to above and at the
offices of the American Stock Exchange, Inc., 86 Trinity Place, New York,
N.Y. 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by
reference thereto and makes a part hereof the following documents,
heretofore filed with the Commission pursuant to the Exchange Act: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995
(the "1995 10-K"); (ii) the Company's Quarterly Report on Form 10-
Q for the quarterly period ended March 31, 1996; (iii) the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1996; (iv) the
Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996; (v) the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders (the "1996 Proxy"); (vi) the description of the Class
A Common Stock contained in the Company's Registration Statement on Form 8-A
filed on December 8, 1994; (vii) the description of the Class A Common Stock
contained in the Company's Registration Statement on Form 8-A/A filed on June
19, 1996; (viii) the Company's Current Report on Form 8-K filed on May 8, 1996
(other than the financial statements of Hudson Cellular Limited Partnership
and Dutchess County Cellular Telephone Company, Inc. included therein); (ix)
the Company's Current Report on Form 8-K filed on June 20, 1996; (x) the
Company's Current Report on Form 8-K filed on October 15, 1996; and (xi) the
Company's Current Report on Form 8-K filed on October 16, 1996.
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 this
Prospectus and prior to termination of the offering being made hereby
(collectively with the documents listed in the preceding paragraph, the
"Incorporated Documents") shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the respective dates of
the filing of such documents. Any statement contained herein or 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 and the
Registration Statement of which it is a part 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
or such Registration Statement.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, upon written or
oral request by any such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents which are not specifically
incorporated by reference to such documents. Requests for such copies should
be directed to Stuart B. Rosenstein, Chief Financial Officer, PriCellular
Corporation, 45 Rockefeller Plaza, New York, New York 10020, telephone (212)
459-0800.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information (including the financial statements and the notes
thereto) included elsewhere in this Prospectus. Unless otherwise indicated,
all references herein to "PriCellular" or the "Company" include its
subsidiaries and predecessors. References herein to the "Recent Transactions"
and "Pending Transactions" refer to the recent transactions and pending
transactions, respectively, described below under "Acquisitions and
Dispositions -- Recent Transactions" and "Acquisitions and Dispositions --
Pending Transactions". Except for historical financial information and unless
otherwise indicated, all references herein to Pops, Net Pops and the Company's
Systems give effect to the Pending Transactions. Certain of the Pending
Transactions may not be consummated prior to the offering of any securities
hereunder.
THE COMPANY
PriCellular, through its subsidiaries, owns and operates FCC
licensed cellular telephone systems in the United States, primarily in smaller
MSAs and strategically located RSAs. The Company operates its Systems
principally in the Midwest and Mid-Atlantic regions in addition to markets
north of New York City and south of Albany, NY. As of September 30, 1996 on an
actual basis, the Company owned cellular interests representing approximately
4.2 million Total Pops and had approximately 136,000 subscribers. The Company
sells and markets its products and services principally under the
CELLULARONE[Registered] brand name through a distribution network of over 60
full service retail locations, a direct sales force and a small, select group
of agents. In addition, the Company has formed a strategic alliance with AT&T
Wireless Services, Inc. ("McCaw/AT&T Wireless"), a principal stockholder,
allowing it to take advantage of McCaw/AT&T Wireless' acquisition experience,
vendor discounts, centralized "back office" functions and joint marketing
opportunities in markets which are adjacent to McCaw/AT&T Wireless markets.
Through selective acquisitions and asset swaps, the Company has
concentrated its efforts on creating an integrated network of cellular systems
in contiguous service areas. After giving effect to the Pending Transactions
(each of which is subject to certain conditions, including FCC approval) and
the Recent Transactions, the Company will own cellular interests representing
approximately 4.8 million Net Pops with approximately 144,000 subscribers,
representing a penetration rate of 3.0%. These interests consist principally
of four large operating clusters of cellular Systems:
Upper Midwest Cluster -- a 1.7 million Net Pop cluster of 14 non-
wireline Systems covering approximately 70,000 contiguous square miles
in Minnesota, Wisconsin and Michigan.
Mid-Atlantic Cluster -- an 857,000 Net Pop cluster of five contiguous
non-wireline Systems consisting of five RSAs in Ohio, Pennsylvania and
West Virginia covering more than 10,000 contiguous square miles.
New York Cluster -- a 1.1 million Net Pop cluster of two MSAs and two
RSAs covering more than 8,000 contiguous square miles in suburban New
York located between New York City and the Albany, NY MSA of SBC
Communications Inc., formerly Southwestern Bell Corporation
("Southwestern Bell").
Kentucky Cluster -- a 785,000 Net Pop cluster of four RSAs adjacent to
Louisville and Lexington, KY. These 38 counties cover more than
13,000 square miles.
In addition, the Company owns a 44.5% interest in a joint venture with
Southwestern Bell (which is managed and operated by Southwestern Bell),
representing 264,000 Net Pops, and certain other cellular interests.
During the first nine months of 1996, the Company's customer
base increased from 78,227 to 135,840. This significant growth in
subscribers was due to both acquisitions and increased penetration of its
existing markets. Revenues and EBITDA of the Company were $81.2 million
and $30.5 million, respectively, for the nine months ended September 30,
1996, in each case before giving effect to the Recent Transactions and the
Pending Transactions. On a pro forma basis, after giving effect to the
Recent Transactions and the Pending Transactions, the revenues and EBITDA
of the Company for the nine months ended September 30, 1996 would have been
$94.4 million and $35.7 million, respectively.
PriCellular completed an initial public offering of its Class A
Common Stock in December 1994. Its principal stockholders include members of
the family of Robert Price, President of the Company, McCaw/AT&T Wireless, a
subsidiary of AT&T Corp. ("AT&T"), Aeneas Venture Corporation, an affiliate of
Harvard Private Capital Group, Inc. and a wholly owned subsidiary of the
President and Fellows of Harvard College ("Harvard Private Capital"), Spectrum
Equity Investors, L.P., ("Spectrum"), The Thomas H. Lee Company, Sandler
Capital Management and The Public School Employes' Retirement System of
Pennsylvania. During 1994 and 1995, these stockholders invested in excess of
$135.0 million in exchange for their current equity interests. McCaw/AT&T
Wireless' investment in the Company consisted of cash, minority interests and
a significant amount of capital equipment.
The Company was incorporated under the laws of the State of
Delaware on August 23, 1994. The principal executive offices of the Company
are located at 45 Rockefeller Plaza, New York, New York 10020, and its
telephone number is (212) 459-0800.
Cellular Markets and Systems
The Company has concentrated its efforts on creating an
integrated network of cellular systems in each of its operating clusters. The
table below summarizes certain information concerning the Company's markets
after giving effect to the Pending Transactions. See "Acquisitions and
Dispositions -- Pending Transactions."
<TABLE>
<CAPTION>
Total Date of
Market(a) Pops Ownership Net Pops Acquisition
- ----------------------------------- -------------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Upper Midwest Cluster
Duluth, MN/Superior, WI MSA 240,234 100.0% 240,234 04/28/94
Eau Claire, WI MSA 143,701 97.1 139,588 04/28/94
Wausau, WI MSA 121,727 95.4 116,069 03/28/95
MN-2A RSA 38,766 100.0 38,766 07/07/95
MN-3 RSA 59,528 100.0 59,528 04/28/94
MN-4 RSA 15,226 100.0 15,226 07/27/95
MN-5 RSA 207,107 100.0 207,107 07/07/95
MN-6 RSA 220,067 100.0 220,067 11/23/94(b)
WI-1 RSA 110,749 100.0 110,749 04/28/94
WI-2 RSA 85,645 100.0 85,645 11/18/96
WI-3 RSA 140,697 100.0 140,697 11/23/94(b)
WI-4 RSA 118,993 100.0 118,993 01/07/97
WI-6A RSA 32,939 100.0 32,939 11/23/94(b)
MI-1 RSA 203,391 100.0 203,391 03/07/95
Mid-Atlantic Cluster
OH-7 RSA 257,290 100.0% 257,290 09/27/95
OH-10A RSA 62,345 100.0 62,345 09/29/95
PA-9 RSA 188,096 100.0 188,096 02/02/96
WV-2 RSA 79,567 100.0 79,567 12/20/95
WV-3 RSA 269,709 100.0 269,709 07/23/96
New York Cluster
Orange County, NY MSA 327,053 100.0% 327,053 10/17/96
Poughkeepsie, NY MSA 263,723 94.8 249,942 04/23/96
NY-5 RSA 382,180 100.0 382,180 12/29/95
NY-6 RSA 111,373 100.0 111,373 04/23/96
Kentucky Cluster
KY-4 RSA 245,952 100.0% 245,952 01/07/97
KY-5 RSA 158,204 100.0 158,204 01/07/97
KY-6 RSA 260,920 100.0 260,920 01/07/97
KY-8 RSA 119,840 100.0 119,840 01/07/97
Southwestern Bell Joint Venture
Laredo, TX MSA 176,162 44.5% 78,392 11/30/95(b)
IL-4 RSA 216,119 44.5 96,173 11/30/95(b)
IL-6 RSA 201,234 44.5 89,549 11/30/95(b)
Other Interests n/a n/a 81,633 various
--------- ---------
Total 5,058,537 4,787,217
========= =========
- -----------------
<FN>
(a) All of the Company's licenses are non-wireline licenses with the exception
of the license for the Laredo, TX MSA.
(b) Assumes the acquisition of the remaining shares of Cellular Information
Systems, Inc. ("CIS"). On November 23, 1994, the Company acquired
approximately 90.8% (on a fully diluted basis) of the equity of CIS. As of
September 30, 1996, the Company owned approximately 93.3% (on a fully
diluted basis) of the equity of CIS.
</TABLE>
RISK FACTORS
In addition to the other matters described in this Prospectus,
the prospective purchaser of the securities offered hereby should consider the
specific factors set forth below.
This Prospectus contains and incorporates by reference
statements which constitute forward looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Those statements appear
in a number of places in this Prospectus and the Incorporated Documents and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers primarily with respect to the future
operating performance of the Company. Prospective purchasers of the securities
offered hereby are cautioned that any such forward looking statements are not
guarantees of future performance and may involve risks and uncertainties, and
that actual results may differ from those in the forward looking statements as
a result of various factors. The accompanying information contained in and
incorporated by reference in this Prospectus, including without limitation the
information set forth below and the information under the headings
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in certain of the Incorporated Documents, identifies important
factors that could cause such differences.
Limited Operating History; Net Losses
Since its formation, the Company has concentrated on the
acquisition, exchange, construction, initial operation and development of
cellular telephone systems. The Company has operated cellular telephone
systems since 1989; however, it has acquired all of its existing Systems
between April 1994 and November 1996. On a pro forma basis, after giving
effect to the Recent and Pending Transactions and the other transactions
described in the Unaudited Pro Forma Condensed Consolidated Financial
Statements incorporated by reference herein, the Company would have incurred
an accounting net loss of $29.7 million and $56.2 million for the nine months
ended September 30, 1996, and the year ended December 31, 1995, respectively.
There can be no assurance that the Company's future operations, individually
or in the aggregate, will generate sufficient earnings to pay its obligations.
Leverage and Ability to Meet Required Debt Service
Without regard to any increase in valuation of assets since
their acquisition by the Company, the Company still considers itself highly
leveraged. On a pro forma basis, after giving effect to the Recent and
Pending Transactions and the other transactions in the Unaudited Pro Forma
Condensed Consolidated Financial Statements incorporated by reference
herein, for the nine months ended September 30, 1996, and the year ended
December 31, 1995, the Company's ratio of EBITDA to total interest expense
would have been 0.7 and 0.4, respectively, and the Company's deficiency of
earnings to fixed charges would have been $29.7 million and $56.2 million,
respectively. The Company considers that this is a high degree of leverage
and could limit its ability to make acquisitions, withstand competitive
pressures or adverse economic conditions, obtain necessary financing or
take advantage of business opportunities that may arise.
The Company's ability to meet its debt service requirements
will require consistent, significant and sustained growth in the Company's
cash flow. There can be no assurance that the Company will be successful in
improving its cash flow by a sufficient magnitude or in a timely manner or in
raising additional equity or debt financing to enable the Company to meet its
debt service requirements.
Business Risks Associated with Pending and Recent Transactions
The information appearing herein is presented assuming the
acquisition by the Company of 100% of the capital stock of CIS and the
consummation of the other Pending Transactions. There can be no assurances
that the Company will be successful in consummating any or all of such
acquisitions or the Pending Transactions in a timely manner or on the terms
described herein.
The Company has filed applications seeking FCC approval for
each of the Recent Transactions. The Company consummated such acquisitions
after the grant of FCC approvals but, in certain cases, prior to the
expiration of the 40 to 45-day finality period during which FCC approvals are
subject to reconsideration or review. There can be no assurance that any or
all of such approvals will not be reconsidered or reviewed or that such
approvals will not be revoked pursuant to any such proceeding. In the event
any such approvals are revoked, the Company could be required to refile its
applications, rescind the acquisition or otherwise dispose of the System
acquired pursuant to the acquisition.
The Company will also be subject to risks that new Systems,
including all of its existing Systems which were acquired since 1994, and the
Systems to be acquired pursuant to the Pending Transactions, will not perform
as expected and that the returns from such Systems will not support the
indebtedness incurred to acquire, or the capital expenditures needed to
develop, such Systems. See "Acquisitions and Dispositions -- Pending
Transactions" and "--Recent Transactions".
Competition
The Company competes with one other cellular licensee in each
of its cellular markets, most of which are larger and have greater financial
resources than the Company, as well as paging companies and landline telephone
service providers. Current policies of the FCC authorize only two licensees to
operate cellular systems in each market, and the Company expects there will
continue to be competition from the other licensee authorized to serve each
cellular market in which the Company operates. Competition for subscribers
between cellular licensees is based principally upon the services and
enhancements offered, the technical quality of the cellular system, customer
service, system coverage and capacity and price.
As a result of recent regulatory and legislative initiatives,
the Company's cellular operations may face increased competition from entities
providing other communication technologies and services. The Company cannot
predict the success of such competing technologies nor their operational
abilities. While some of these technologies and services are currently
operational on a limited basis, others are being developed or may be developed
in the future. The Company's cellular operations may face additional
competition from new market entrants such as personal communication services
("PCS") to the extent they become feasible. The FCC has decided to offer over
2,000 licenses for PCS use and has completed the initial rounds of its
spectrum and auction process which resulted in the award of two PCS licenses
in each Major Trading Area ("MTA") and one in each Basic Trading Area ("BTA").
PCS operators could compete directly with the Company and may have access to
substantial capital resources although in most instances such resources are
limited at this time. If these technologies are successfully developed they
may, and PCS operators claim they will, provide services and features in
addition to those currently provided by cellular companies. There can be no
assurance that the Company will be able to provide nor that it will choose to
pursue, depending on the economics thereof, such services and features. The
Company believes that traditional tested cellular is economically proven
unlike certain of the PCS and other "Buck Rogers" technologies. While the
Company believes that other technologies may be developed over either the
short or long term, the Company believes that POCS (plain old cellular
service) is tested and that the development thereof and the expansion of the
Company's clusters is the best strategy for the Company.
The Company's cellular operations may also face competition
from other "Buck Rogers" technologies which may be developed in the future,
including, but not limited to, mobile satellite systems. In addition, the FCC
has licensed Specialized Mobile Radio ("SMR") system operators to construct
digital mobile communications systems on existing SMR frequencies, referred to
as enhanced specialized mobile radio ("ESMR") in many cities throughout the
United States, including each of the cities in which the Company operates. The
Company believes that the technology, financing and engineering of these other
technologies is not as advanced as their publicity would suggest. Nonetheless,
there can be no assurance that one or more of the technologies currently used
by the Company, will not become obsolete sometime in the future. See "Business
- -- Competition" in the 1995 10-K.
Dependence on Corporate Management
The Company's decentralized management philosophy delegates
day-to-day operating decisions to the local System managers and, therefore,
the Company's affairs are managed by a small number of corporate management
personnel, the loss of any of whom could have an adverse impact on the
Company. The Company does not have any employment contracts with corporate
management personnel other than Robert Price, the Company's President. Robert
Price concurrently serves as a Director and the Chief Executive Officer and
President of Price Communications Corporation ("Price Communications").
Although PriCellular and Price Communications historically have not imposed
inconsistent demands on Robert Price's availability, there can be no
assurances that such conflicts will not arise in the future. The success of
the Company's operations and expansion strategy depends on its ability to
retain and to expand its staff of qualified personnel in the future. See
"Management" in the 1996 Proxy.
Reliance on Use of Third-Party Service Mark
The Company currently uses the registered service mark
CELLULARONE[Registered] to market the services of its non-wireline Systems.
The Company's use of this service mark is governed by five-year contracts
between the Company and Cellular One Group, the owner of the service mark.
Such contracts expire on various dates and each is renewable at the option
of the Company for three additional five-year terms, subject to the
attainment of certain customer satisfaction ratings. See "Business --
Service Marks". Under these agreements, the Company has agreed to meet a
consistent set of operating and service quality standards for its cellular
service areas. If these agreements were not renewed upon expiration or if
the Company were to fail to meet the applicable operating or service
quality standards, and therefore was no longer permitted to use the
CELLULARONE[Registered] service mark, the Company's ability both to attract
new subscribers and retain existing subscribers could be materially
impaired. The Company does not anticipate any difficulty in obtaining
renewal of its agreements with Cellular One Group or in continuing to meet
such standards. In addition, if for some reason beyond the Company's
control, the name CELLULARONE[Registered] were to suffer diminished
marketing appeal, the Company's ability both to attract new subscribers and
retain existing subscribers could be materially impaired. McCaw/AT&T
Wireless, which had been the single largest user of the
CELLULARONE[Registered] brand name, has significantly reduced its use of
the brand name as a primary service mark. There can be no assurance that
such reduction in use by McCaw/AT&T Wireless will not have an adverse
effect on the marketing appeal of the brand name.
Limits on the Company's Business
The Company has agreed not to effect certain transactions,
including, among others, any acquisition involving more than 10% of the fair
market value of the Company and certain borrowings, without the prior written
consent of McCaw/AT&T Wireless, subject to certain conditions on the ability
of McCaw/AT&T Wireless to withhold such consent. There can be no assurances
that the Company will be able to obtain any such consent. McCaw/AT&T Wireless
may withhold such consent for any reason, including because it seeks to
acquire such property itself. The failure to obtain such consent could have an
adverse effect on the Company's business. McCaw/AT&T Wireless has consented to
the Pending Transactions.
In addition, PriCellular's affiliation with McCaw/AT&T Wireless
could operate to prohibit PriCellular or McCaw/AT&T Wireless from acquiring
certain wireless franchises. If McCaw/AT&T Wireless or PriCellular has a
pre-existing ownership or management interest in a cellular carrier in an MSA
or RSA, McCaw/ AT&T Wireless or PriCellular would be precluded by FCC
regulations from acquiring the other carrier in that particular MSA or RSA.
McCaw/AT&T Wireless and PriCellular may compete by seeking to acquire directly
ownership interests in certain MSAs or RSAs.
Potential for Adverse Regulatory Change and Need for Regulatory Approvals
The licensing, construction, operation, acquisition and sale of
cellular systems, as well as the number of cellular and other wireless
licensees permitted in each market, are regulated by the FCC. Changes in the
regulation of cellular activities (such as a decision by the FCC to permit
more than two cellular licensees in each MSA or RSA market) and other wireless
carriers could have a material adverse effect on the Company's operations. In
addition, all cellular licenses in the United States were granted for an
initial 10-year term and are subject to renewal. The Company's cellular
licenses expire in various years from 1997 to 2001. While the Company believes
that each of these licenses will be renewed based upon FCC rules establishing
a presumption in favor of licensees that have complied with their regulatory
obligations during the initial license period, there can be no assurance that
all of the Company's licenses will be renewed.
Fluctuations in Market Value of Licenses
A substantial portion of the Company's assets consists of its
interests in cellular licenses. The future value of the Company's
interests in its cellular licenses will depend significantly upon the
success of the Company's business. While there is a current market for the
Company's licenses, such market may not exist in the future or the values
obtainable may be significantly lower than at present. The transfer of
interests in such licenses is subject to prior FCC approval and is subject
to certain rights of first refusal, which may have the effect of reducing
the value of the licenses. As a consequence, there can be no assurance
that the proceeds from the liquidation or sale of the Company's assets
would be sufficient to pay the Company's obligations, and a significant
reduction in the value of the licenses could require a charge to the
Company's results of operations.
Equipment Failure; Natural Disaster
Although the Company carries "business interruption" insurance,
a major equipment failure or a natural disaster affecting any one of the
Company's central switching offices or certain of its cell sites could have a
significant, adverse effect on the Company's operations.
Radio Frequency Emission Concerns
Media reports have suggested that certain radio frequency
("RF") emissions from portable cellular telephones may be linked to cancer
and interfere with heart pacemakers and other medical devices. Concerns
over RF emissions and interference may have the effect of discouraging the
use of cellular telephones, which could have an adverse effect upon the
Company's business. In August 1996, the FCC adopted new guidelines and
methods for evaluating the environmental effects of RF emissions. The
updated guidelines generally are more stringent than the previous rules,
based on recommendations of federal health and safety agencies, including
the Environmental Protection Agency and the Food and Drug Administration.
However, the Company does not believe these guidelines will have a material
impact on the Company's operations. Among the guidelines are limits for
specific absorption rate for evaluating certain hand-held devices such as
cellular telephones, as well as guidelines for the evaluation of cellular
transmitting facilities. The Company believes that the cellular telephones
currently marketed and in use by the Company's customers, as well as the
Company's transmitting facilities, comply with the new standards.
Moreover, the FCC preempted state and local government regulation of
cellular and other personal wireless services facilities based on RF
environmental effects to the extent that such facilities comply with the
FCC's rules concerning such RF emissions. Potential interference to
medical devices involves primarily digital transmissions rather than
analog. Industry, government, and medical experts have been conducting
tests and developing methods for reducing or eliminating such interference.
Potential Adverse Effect on Market Price of Shares Eligible for Future Sale
Sales of the Company's Common Stock in the public market
could adversely affect the market price of the Class A Common Stock. As of
September 30, 1996, the Company had 38,499,995 shares of Common Stock
outstanding. Of these shares, 16,244,987 shares of Class A Common Stock
are freely tradeable without restriction (except as to affiliates of the
Company) and the remaining 2,611,763 shares of Class A Common and all
19,643,245 outstanding shares of Class B Common Stock are "restricted
securities" as defined in Rule 144 under the Securities Act ("Rule 144").
The holders of 13,643,560 of the outstanding shares of Class B Common
Stock, the holders of the Series A Cumulative Convertible Preferred Stock
(which shares are convertible as of September 30, 1996 into between
9,940,000 and 14,824,000 shares of Common Stock (subject to adjustment))
and the holders of the 10 3/4% Senior Subordinated Convertible Discount
Notes (which notes are convertible as of September 30, 1996 into between
4,031,000 and 4,904,000 shares of Common Stock) are entitled to certain
rights with respect to the registration of such shares, or the shares
issuable upon conversion of any such convertible securities, for offer and
sale to the public. In addition, the Company has registered up to
2,636,719 shares of Class A Common Stock reserved for issuance under its
1994 Stock Option Plan.
USE OF PROCEEDS
Shares of the Class A Common Stock are being offered solely for
the account of Horizon. The Company will not receive any proceeds from
sales of the Class A Common Stock.
RICE RANGE OF CLASS A COMMON STOCK AND DIVIDEND POLICY
Price Range of Class A Common Stock
The Class A Common Stock is listed on the American Stock Exchange
under the symbol "PC". The table below sets forth, for the periods
indicated, the high and low sales prices of the Class A Common Stock on the
American Stock Exchange.
Period High Low
------ ---- ---
1994: Fourth quarter (since initial
public offering on December 15, 1994)........... $4.89 $4.61
1995:
First quarter........................................... $5.06 $3.33
Second quarter.......................................... $4.86 $3.33
Third quarter........................................... $8.96 $4.64
Fourth quarter.......................................... $9.52 $7.36
1996:
First quarter.......................................... $10.70 $7.20
Second quarter......................................... $11.60 $9.40
Third quarter.......................................... $11.90 $7.40
Fourth quarter......................................... $12.75 $10.63
1997: First quarter (through January 3)............... $10.75 $11.50
A recent last sale price for the Class A Common Stock on the
American Stock Exchange is set forth on the cover page of this Prospectus.
On November 1, 1996, there were 78 holders of record of the Class A Common
Stock, based upon the number of holders of record and the number of
individual participants in certain security position listings.
There is no established public trading market for the
Company's Class B Common Stock. On November 1, 1996, there were 19 holders
of Class B Common Stock of record.
Previously reported share prices have been restated to give
effect to the 5-for-4 Class A Common Stock splits in October 1996, March
1996 and August 1995.
Dividend Policy
The Company anticipates that any income generated in the
foreseeable future will be retained for the development and expansion of
its business and the repayment of indebtedness, and therefore does not
anticipate paying dividends on its Common Stock or Preferred Stock in the
foreseeable future. The Company has not paid cash dividends since
inception.
SELECTED FINANCIAL DATA
(In thousands, except ratios)
The Company acquired all of its existing Systems in a series
of acquisitions between April 1994 and November 1996. Accordingly, the
following historical financial data is not necessarily indicative of future
results of operations. The selected financial data set forth below for the
Company for the nine months ended September 30, 1996 and 1995 have been
prepared on the same basis as the audited consolidated financial statements
and contain all adjustments, consisting of normal recurring adjustments
that the Company considers necessary for a fair presentation of the
financial position and results of operations for the periods presented.
The selected financial data set forth below for the Company for the years
ended December 31, 1995, 1994 and 1993 and as of December 31, 1995 and 1994
is derived from, and qualified by reference to, the audited consolidated
financial statements incorporated by reference elsewhere herein. The
selected financial data set forth below for the Company as of and for the
years ended December 31, 1992 and 1991, and as of December 31, 1993 is
derived from audited consolidated financial statements not included
elsewhere herein. The selected financial data set forth below should be
read in conjunction with the "Unaudited Pro Forma Condensed Consolidated
Financial Statements," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial
statements of the Company incorporated by reference herein.
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Years Ended December 31,
----------------------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues...................... $81,215 $25,187 $41,504 $5,209 $3,809 $4,859 $2,274
Cost of cellular service...... 20,999 6,353 10,694 1,892 835 1,265 742
Cost of equipment sold........ 6,822 2,825 4,951 814 255 411 317
-------- ------- ------- ------- ------- ------- -------
Gross margin.................. 53,394 16,009 25,859 2,503 2,719 3,183 1,215
General and administrative.... 12,349 5,277 9,048 4,854 1,280 3,272 1,744
Sales and marketing........... 11,568 4,002 7,464 1,151 379 517 545
Depreciation and amortization. 15,416 6,461 10,337 2,720 1,695 3,089 3,157
-------- ------- ------- ------- ------- ------- -------
Operating profit (loss)....... 14,061 269 (990) (6,222) (635) (3,695) (4,231)
Net gain on sale of
investments in cellular
operations.................. 177 11,598 11,598 6,819 11,986 2,557
Interest expense, net......... (28,543) (10,719) (18,839) (1,940) (271) (572) (97)
Other income (expense), net... 1,062 270 520 (97) (439) (855) (586)
-------- ------- ------- ------- ------- ------- -------
Income (loss) before
provision for income taxes
and extraordinary item...... (13,243) 1,418 (7,711) (1,440) 10,641 (2,565) (4,914)
Provision for income taxes.... (172)
Gain on early
extinguishment of debt, 147
net of tax.....................
-------- ------- ------- ------- ------- ------- -------
Net income (loss)............. $(13,243) $1,418 $(7,711) $(1,440) $10,616 $(2,565) $(4,914)
Net income (loss) after ======== ======= ======= ======= ======= ======= =======
adjustment for accrued
preferred stock dividends... $(17,849) $1,418 $(7,711) $(1,440) $10,616 $(2,565) $(4,914)
Net income (loss) per
common share................ $ (0.46) $ 0.05 $ (0.24) $ (0.06) $ 0.56 $ (0.14) $ (0.26)
</TABLE>
<TABLE>
<CAPTION>
As of Years Ended December 31,
September 30, -----------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit) $51,661 $116,415 $26,488 $(139) $3,277 $3,311
Net fixed assets 61,047 52,041 26,144 389 1,700 1,556
Total assets 581,663 544,766 215,744 6,755 19,719 20,698
Long-term debt 364,810 315,216 113,683 4,000 6,410 6,793
Total liabilities 390,665 339,038 137,508 4,680 10,144 8,558
Stockholders' equity 190,998 205,728 78,236 2,075 9,575 12,140
</TABLE>
ACQUISITIONS AND DISPOSITIONS
Pending Transactions
The Company believes that the Pending Transactions described
below support the Company's acquisition strategy. The Systems to be acquired
afford opportunities for increased marketing and engineering synergies.
Remaining Shares of CIS
The Company currently intends to acquire all of the
outstanding shares of capital stock of CIS not currently owned by the
Company, although the Company is not required to do so. Such acquisitions
may be effected through privately negotiated or open market purchases,
subsequent tender offers, a merger or similar business combination between
the Company and CIS or otherwise. As of September 30, 1996, there were
outstanding approximately 841,000 shares of CIS capital stock not owned by
the Company, representing approximately 6.7% of the fully diluted equity of
CIS. The Company acquired its current holdings of CIS capital stock in
November 1994 for approximately $2 per share.
Recent Transactions
The Company has filed applications seeking FCC approval for
each of the Recent Transactions. The Company consummated such transactions
after the grant of FCC approvals, but, in certain cases, prior to the
expiration of the 40 to 45-day finality period during which FCC approvals are
subject to reconsideration or review. There can be no assurance that any or
all of such approvals will not be reconsidered or reviewed or that such
approvals will not be revoked pursuant to any such proceeding. In the unlikely
event any such approvals are revoked, the Company could be required to refile
its applications, rescind the acquisition or sell the acquired System.
During 1995 and through January 1997, the Company consummated
or agreed to make several strategic acquisitions which expanded its Upper
Midwest Cluster and established the Kentucky Cluster, the Mid-Atlantic Cluster
and the New York Cluster. In addition, in July 1996 the Company disposed of a
stand-alone wireline System in Alabama considered by management to be
non-strategic.
Expansion of Upper Midwest Cluster
On March 7, 1995, the Company acquired from Buckhead Telephone
Company ("BTC") the assets of the System serving the MI-1 RSA (203,391 Pops)
for approximately $17.7 million in cash.
On March 28, 1995, the Company acquired, pursuant to an
agreement (the "Wausau Purchase Agreement"), a 50.02% general partnership
interest and a 0.58% limited partnership interest in Wausau Cellular Limited
Partnership, a Delaware limited partnership that wholly owns the System
serving the Wausau, WI MSA (116,069 Net Pops) for $5.4 million in cash.
On July 7, 1995, the Company consummated a transaction with
Western Wireless Corporation ("Western Wireless") pursuant to which the
Company exchanged the System serving the Lubbock, TX MSA (229,051 Pops) for
approximately 330,000 Net Pops, most of which are contiguous to the Upper
Midwest Cluster. The Net Pops acquired consist of the System serving the MN-5
RSA, the portion of the System serving the MN-3 RSA that the Company did not
own, a portion of the MN-2 RSA (Beltrami County), approximately 87.0% of the
System serving the Alton/Granite City, IL MSA, an additional 10.0% of the
System serving the Eau Claire, WI MSA and an additional 14.5% of the System
serving the Wausau, WI MSA. In addition, Western Wireless agreed to pay the
Company $3.0 million in exchange for the Company's agreement not to compete
with Western Wireless within the Lubbock, TX MSA for a period of three years
following the exchange. Western Wireless retained ownership of certain cell
sites and other capital equipment.
On August 10, 1995, the Company acquired from Louise Hart 49.0%
of the System serving the MN-4 RSA (7,461 Net Pops), for approximately
$75,000. In addition, the Company entered into an agreement, in accordance
with FCC rules, to provide management and operation services to the MN-4 RSA.
On November 18, 1996, the Company acquired from Wisconsin II
Venture the 85,645 Pop WI-2 RSA for approximately $4.3 million in cash, or $50
per Pop. The Company's existing Systems surround the WI-2 RSA. Prior thereto,
the Company had interim operating authority for the WI-2 RSA.
On January 7, 1997, the Company exchanged its standalone
wireline Systems in Alabama for both the WI-4 RSA and approximately $18.0
million in cash ($2.0 million of which is attributable to a two year
covenant not to compete). The Systems exchanged are the Company's 137,308
Pop Florence, AL MSA and its 62,724 Pop AL-1B RSA. The WI-4 RSA abuts the
Company's MI-1 RSA to the northeast, its WI-3 RSA to the northwest and its
Wausau, WI MSA to the west. The foregoing transaction is referred to
herein as the "WI-4 Exchange".
The Kentucky Cluster Acquisition
On January 7, 1997, the Company purchased four RSAs in Kentucky
(approximately 785,000 Net Pops) from a subsidiary of Horizon Cellular
Telephone Company, L.P. for $116.5 million (subject to adjustment) consisting
of $94.0 million in cash and 1,948,052 shares of the Company's Class A Common
Stock. The foregoing transaction is referred to herein as the "Kentucky
Cluster Acquisition".
The Mid-Atlantic Cluster Acquisitions
On September 27, 1995, the Company acquired from United States
Cellular Corporation ("USCC") substantially all of the assets of the System
serving the OH-7 RSA (257,290 Pops) for $39.5 million in cash.
On December 20, 1995, the Company acquired from USCC
substantially all of the assets of the System serving the WV-2 RSA (79,567
Pops) for $7.8 million in cash.
On February 2, 1996, the Company acquired from USCC
substantially all of the assets of the System serving the PA-9 RSA (188,096
Pops) for $26.1 million in cash.
On July 23, 1996, the Company acquired the WV-3 RSA (269,709
Pops) from a subsidiary of Horizon Cellular Telephone Company, L.P. for $35.0
million in cash. The WV-3 RSA is situated directly south of the Company's PA-
9 RSA and directly east of the Company's WV-2 RSA.
The New York Cluster Acquisitions
On December 29, 1995, the Company acquired from Cellular of
Upstate New York Inc. substantially all of the assets of the System serving
the NY-5 RSA (382,180 Net Pops) for approximately $65.9 million in cash.
On April 23, 1996, the Company acquired from subsidiaries of
USCC the System serving the NY-6 RSA (111,373 Net Pops) and 83% of the System
serving the Poughkeepsie, NY MSA (249,942 Net Pops). The Company acquired
substantially all of the assets serving the NY-6 RSA for approximately $19.8
million in cash and 83% of the stock of the Dutchess County Cellular Telephone
Company serving the Poughkeepsie, NY MSA for approximately $38.9 million, with
one half paid in cash and the balance in a three-year note bearing interest at
the prime rate (the "Poughkeepsie Note").
On October 17, 1996, the Company consummated an exchange
transaction with Vanguard Cellular Systems, Inc., pursuant to which it
exchanged certain of its Systems in the Mid-Atlantic Cluster for, among other
things, the Orange County, NY MSA and an additional 11.1% of the Company's
majority-owned Poughkeepsie, NY MSA. The Company exchanged an aggregate of
520,528 Net Pops consisting of its OH-9 RSA, a portion of its OH-10 RSA
(excluding Perry and Hocking counties) and the Parkersburg, WV/Marietta, OH
MSA for the Orange County, NY MSA (327,053 Pops), 11.1% of the Poughkeepsie,
NY MSA (29,367 Net Pops), 12.2% of the Janesville, WI MSA (18,296 Net Pops)
and approximately 28,509 additional Net Pops, including small interests in the
Eau Claire, WI and Wausau, WI MSAs (in each of which the Company currently has
a majority interest). The Orange County, NY MSA abuts the Company's NY-5 MSA
to the north, the Company's Poughkeepsie, NY MSA to the east and the New York
City MSA of McCaw/AT&T Wireless to the south and east (bordering Westchester,
Putnam and Rockland counties). The foregoing transaction is referred to as the
"Orange County Exchange".
The AL-4 RSA Disposition
During July 1996, the Company consummated the sale of its
recently-acquired AL-4 RSA for $27.5 million in cash ($2.5 million of which is
attributable to a two year covenant not to compete). In November 1995, the
Company had acquired this stand-alone RSA for $10.0 million in cash and $10.0
million in a 5-year 4% note that was subsequently converted into 1,468,860
shares of the Company's Common Stock on the closing date.
The MI-2 Disposition
In a disputed acquisition of November 14, 1994, RFB Cellular,
Inc. signed a contract to acquire the MI-2 RSA (110,742 Pops). The Company
believed it should have had the right to purchase the property and initiated
legal proceedings. In May 1995, as a result of this litigation, the Court of
Chancery of the State of Delaware awarded the Company the right to acquire the
MI-2 RSA. The defendant in the lawsuit appealed the decision. On March 22,
1996, the Delaware Supreme Court reversed the lower court's decision and
ordered the Company to reverse the acquisition and sell the license and
operating assets to the defendant. The sale was consummated on October 31,
1996. The Company received $6.5 million pursuant to such sale. The Company
believes that the loss of MI-2's operating results will not be material to the
Company's results of operations. The MI-2 RSA represented
approximately 2,000 subscribers.
PRINCIPAL STOCKHOLDERS
The following table provides certain information regarding the
beneficial ownership of the Company's Common Stock as of September 30, 1996
(reflecting the 5-for-4 stock split of the Company's Common Stock effective
October 21, 1996) by (i) each of the Company's directors and officers listed
in the summary compensation table incorporated by reference herein, (ii) all
directors and officers as a group and (iii) each person known to the Company
to be the beneficial owner of 5% or more of any class of the Company's voting
securities.
<TABLE>
<CAPTION>
Beneficial Ownership of
Class A and B Common Stock(1)
---------------------------------------------------------
Percentage of Percentage of
Combined Combined
Shares Classes Voting
--------------- ---------------- ---------------
<S> <C> <C> <C>
Name of Beneficial Owner
Directors and Officers
Robert Price(2)............................................. 7,464,272 18.2% 22.4%
Stuart B. Rosenstein(3)..................................... 184,177 0.5 0.1
Kim I. Pressman(4).......................................... 77,735 0.2 --
Steven Price(5)............................................. 4,461,406 11.5 19.3
Brion B. Applegate(6)....................................... 2,975,980 7.6 9.9
Scott Sperling(7)........................................... 6,215,000 13.7 2.8
All directors and officers as a group (6 persons)........... 19,986,601 39.1 44.1
Other 5% Stockholders
AT&T Wireless Services, Inc.(8) 6,537,544 17.0 19.4
(formerly McCaw)
5400 Carillon Point
Kirkland, WA 98033
Aeneas Venture Corporation(9) 4,051,220 10.5 18.5
(an affiliate of Harvard Private Capital Group, Inc.)
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
The Thomas H. Lee Company(10) 6,215,000 13.9 2.8
75 State Street
Boston, MA 02109
Putnam Investments, Inc.(11) 5,177,485 12.2 2.4
One Post Office Square
Boston, MA 02109
Eileen Farbman(12) 4,642,579 12.1 21.6
c/o Suite 3200
45 Rockefeller Plaza
NY, NY 10020
Janus Capital Corp.(13) 3,829,298 9.9 1.8
100 Fillmore Street
Denver, CO 80206
Spectrum Equity Investors, L.P.(14) 2,975,980 7.6 9.9
121 High Street, 26th Floor
Boston, MA 02110
The Public School Employes' Retirement System(15) 3,108,000 7.5 1.4
5 North 5th Street, Box 125
Harrisburg, PA 17108
Price Communications Corporation(16) 3,534,585 8.8 8.5
Suite 3200
45 Rockefeller Plaza
NY, NY 10020
Leo Farbman(17) 1,523,438 4.0 7.1
c/o Suite 3200
45 Rockefeller Plaza
NY, NY 10020
Alexandra Farbman(18) 1,523,438 4.0 7.1
c/o Suite 3200
45 Rockefeller Plaza
NY, NY 10020
- -------------------
<FN>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the
disposition of any security. A person is deemed as of any date to have
"beneficial ownership" of any security that such person has a right to
acquire within 60 days after such date. Any security that any person
named above has the right to acquire within 60 days is deemed to be
outstanding for purposes of calculating the ownership percentage of such
person, but is not deemed to be outstanding for purposes of calculating
the ownership percentage of any other person.
(2) Consists of 425,781 shares of Class B Common Stock owned directly by
Robert Price, 1,380,859 shares of Class B Common Stock held by Robert
Price and Eileen Farbman, as joint tenants (see also footnote 12),
1,380,859 shares of Class B Common Stock held by Robert Price and
Steven Price, as joint tenants (see also footnote 5), options to
purchase 742,188 shares of Class A Common Stock granted pursuant to
the Company's 1994 Stock Option Plan that are currently exercisable,
1,715,000 shares of Class A Common Stock held by Price Communications
and warrants to purchase 1,819,585 shares of Class B Common Stock held
by Price Communications that are currently exercisable (see also
footnote 16).
(3) Consists of 3,906 shares of Class B Common Stock owned directly by Mr.
Rosenstein, 4,178 shares of Class A Common Stock owned directly by Mr.
Rosenstein, 5,078 shares of Class A Common Stock held by Mr.
Rosenstein as custodian for his daughter, 195 shares of Class A Common
Stock held by Mr. Rosenstein as custodian for his son and options to
purchase 153,320 shares of Class A Common Stock granted pursuant to
the Company's 1994 Stock Option Plan that are currently exercisable.
Includes 17,500 options to purchase shares of Class A Common Stock
held in custody for his children that are currently exercisable. Does
not include options to purchase 190,234 shares of Class A Common Stock
granted pursuant to the Company's 1994 Stock Option Plan that are not
exercisable within 60 days.
(4) Consists of 3,906 shares of Class B Common Stock owned directly by Ms.
Pressman and options to purchase 48,829 shares of Class A Common Stock
granted pursuant to the Company's 1994 Stock Option Plan that are
currently exercisable. Does not include options to purchase 53,125
shares of Class A Common Stock granted pursuant to the Company's 1994
Stock Option Plan that are not exercisable within 60 days. Includes
25,000 options to purchase shares of Class A Common Stock held in
custody for her children that are currently exercisable.
(5) Consists of 2,754,609 shares of Class B Common Stock owned directly by
Steven Price, 1,380,859 shares of Class B Common Stock held by Robert
Price and Steven Price, as joint tenants (see also footnote 2), 68,633
shares of Class A Common Stock owned directly by Steven Price and
options to purchase 153,320 shares of Class A Common Stock granted
pursuant to the Company's 1994 Stock Option Plan that are currently
exercisable. Includes 103,985 options to purchase shares of Class A
Common Stock held in custody for his daughter. Does not include
options to purchase 146,484 shares of Class A Common Stock granted
pursuant to the Company's 1994 Stock Option Plan that are not
exercisable within 60 days. Steven Price is the son of Robert Price.
(6) All of such shares of Class A Common Stock and Class B Common Stock
are owned by Spectrum and attributed to Brion B. Applegate, a General
Partner of Spectrum, pursuant to the definition of beneficial
ownership provided in footnote 1.
(7) All of such shares of Class A Common Stock are owned by The Thomas H.
Lee Company and attributed to Scott Sperling, a Managing Director of
The Thomas H. Lee Company, pursuant to the definition of beneficial
ownership provided in footnote 1.
(8) Consists of 3,925,781 shares of Class B Common Stock and 2,611,763
shares of Class A Common Stock.
(9) Consists of 3,994,945 shares of Class B Common Stock currently
outstanding and warrants to purchase 56,275 shares of Class B Common
Stock that are currently exercisable. The per share price at which
shares may be purchased pursuant to the warrants is $4.75 subject to
adjustment.
(10) Consists of 6,215,000 shares of Class A Common Stock currently
issuable (subject to adjustments) upon conversion of 54,728 shares of
the Company's Series A Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock") held by Thomas H. Lee Equity Fund III
L.P. and 5,272 shares of Convertible Preferred Stock held by THL-CCI
Investors Limited Partnership.
(11) Consists of 4,031,000 shares of Class A Common Stock issuable upon
conversion of the Company's outstanding 10 3/4% Senior Subordinated
Convertible Discount Notes due 2004 and 1,146,485 shares of Class A
Common Stock. Information with respect to the shares of Class A
Common Stock held is based on a Schedule 13G dated February 8, 1995,
which reflects the collective beneficial ownership of Marsh & McLennan
Companies, Inc., Putnam Investments, Inc. and its two wholly owned
registered investment advisers (Putnam Investment Management, Inc. and
The Putnam Advisory Company, Inc.) and the Putnam New Opportunities
Fund (the "Fund") (collectively, the "Putnam Entities"). According
to the Schedule 13G, none of the Putnam Entities have the sole power
to vote or dispose of any such shares of Class A Common Stock nor
(except the Fund with respect to 506,250 of such shares) the shared
power to vote any of such shares and all of the Putnam Entities have
the shared power to dispose of such shares.
(12) Consists of 214,844 shares of Class B Common Stock owned directly by
Ms. Farbman, 1,380,859 shares of Class B Common Stock held by Robert
Price and Eileen Farbman, as joint tenants (see also footnote 2),
761,719 shares of Class B Common Stock held by Eileen Farbman and Leo
Farbman, as joint tenants, 761,719 shares of Class B Common Stock held
by Eileen Farbman and Alexandra Farbman, as joint tenants and 761,719
shares of Class B Common Stock held by Eileen Farbman as custodian for
Leo Farbman UGTMA until age 21 and 761,719 shares of Class B Common
Stock held by Eileen Farbman as custodian for Alexandra Farbman UGTMA
until age 21 (see also footnotes 17 and 18). Eileen Farbman is the
daughter of Robert Price.
(13) Consists of 3,829,298 shares of Class A Common Stock.
(14) Consists of 2,055,989 shares of Class B Common Stock, 298,491 shares of
Class A Common Stock currently outstanding and 621,500 shares of Class A
Common Stock currently issuable upon conversion of 6,000 shares of the
Convertible Preferred Stock.
(15) Consists of 3,051,954 shares of Class A Common Stock currently issuable
upon conversion of 30,000 shares of the Convertible Preferred Stock.
(16) Consists of 1,715,000 shares of Class A Common Stock currently
outstanding and 1,819,585 shares of Class B Common Stock issuable
pursuant to warrants that are currently exercisable. See also
footnote 2. The per share price at which shares may be purchased
pursuant to the warrants is $5.01 subject to adjustment.
(17) Consists of 761,719 shares of Class B Common Stock held by Eileen Farbman
and Leo Farbman, as joint tenants and 761,719 shares of Class B Common
Stock held by Eileen Farbman as custodian for Leo Farbman UGTMA until age
21 (see also footnote 12). Leo Farbman is the son of Eileen Farbman and
grandson of Robert Price.
(18) Consists of 761,719 shares of Class B Common Stock held by Eileen Farbman
and Alexandra Farbman, as joint tenants and 761,719 shares of Class B
Common Stock held by Eileen Farbman as custodian for Alexandra Farbman
UGTMA until age 21 (see also footnote 12). Alexandra Farbman is the
daughter of Eileen Farbman and granddaughter of Robert Price.
</TABLE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
100,000,000 shares of Class A Common Stock, par value $.01 per share,
20,000,000 shares of Class B Common Stock, par value $.01 per share, and
10,000,000 shares of Preferred Stock, issuable in series. As of September 30,
1996, there were 18,856,750 shares of Class A Common Stock, 19,643,245 shares
of Class B Common Stock and 96,000 shares of Series A Cumulative Convertible
Preferred Stock outstanding. The following summary description of the capital
stock of the Company is qualified in its entirety by reference to the
Certificate of Incorporation and the Bylaws of the Company, copies of which
have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
Common Stock
Dividends
The holders of Common Stock will be entitled to receive
dividends when and as dividends are declared by the Board of Directors of the
Company out of funds legally available therefor, provided that, if any shares
of Preferred Stock are at the time outstanding, the payment of dividends on
the Common Stock or other distributions may be subject to the declaration and
payment of full cumulative dividends on outstanding shares of Preferred Stock.
Payment of cash dividends on the Common Stock is currently prohibited by
certain provisions in the Company's financing arrangements. Holders of Class
A Common Stock and Class B Common Stock will be entitled to share ratably, as
a single class, in any dividends paid on the Common Stock. No dividend may be
declared or paid in cash, property, Common Stock or Preferred Stock
convertible into Common Stock on either the Class A Common Stock or Class B
Common Stock unless a corresponding dividend is paid simultaneously on the
other class of Common Stock. If stock dividends are declared, holders of
Class A Common Stock will receive shares of Class A Common Stock and holders
of Class B Common Stock will receive shares of Class B Common Stock. See
"Price Range of Class A Common Stock and Dividend Policy".
Voting Rights
Except for matters where applicable law requires the approval
of one or both classes of Common Stock voting as separate classes and as
otherwise described below, holders of Class A Common Stock and Class B Common
Stock vote as a single class on all matters submitted to a vote of the
stockholders, including the election of directors. Holders of Class A Common
Stock are entitled to one vote per share and holders of Class B Common Stock
are entitled to ten votes per share. Under Delaware law, the affirmative vote
of the holders of a majority of the outstanding shares of Class A Common Stock
would be required to approve, among other matters, an adverse change in the
powers, preferences or special rights of the shares of Class A Common Stock.
Conversion Rights
Shares of Class B Common Stock are convertible into Class A
Common Stock on a one-to-one basis at any time at the option of the holders
thereof. See "--Transferability". In addition, in the event that any shares
of Class B Common Stock are transferred pursuant to an offering registered
under the Securities Act or pursuant to Rule 144 promulgated thereunder, then,
without any action on the part of the holder thereof, each such share of Class
B Common Stock will automatically convert into a share of Class A Common Stock.
Liquidation Rights
Upon any liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, any assets remaining after
the satisfaction in full of the prior rights of creditors, and the aggregate
liquidation preference of any Preferred Stock then outstanding will be
distributed to the holders of Class A Common Stock and Class B Common Stock,
ratably as a single class in proportion to the number of shares held by them.
Reorganization, Consolidation or Merger
In the event of a reorganization, consolidation or merger of
the Company, each holder of a share of Class A Common Stock shall be entitled
to receive the same kind and amount of property receivable by a holder of a
share of Class B Common Stock and each holder of a share of Class B Common
Stock shall be entitled to receive the same kind and amount of property
receivable by a holder of Class A Common Stock.
Preemptive Rights
The holders of Class A Common Stock and Class B Common Stock
are not entitled to preemptive or subscription rights except for McCaw/AT&T
Wireless, which has been granted preemptive rights by the Company. Pursuant
to the Stockholders Agreement, subject to certain limitations, in the event
that the Company issues to a third party any stock, rights or instruments, as
defined in the agreement, McCaw/AT&T Wireless will have the right to purchase
stock, rights or instruments on the same terms as the third party so as to
maintain the same proportional interest of the fully diluted equity securities
of the Company as was held by McCaw/AT&T Wireless prior to the issuance of
such stock, rights or instruments.
Transferability
The Company's Amended and Restated Certificate of Incorporation
does not restrict the transfer of shares of Common Stock. Certain
stockholders of the Company, however, have granted certain other stockholders
rights of first refusal and co-sale rights. Shares of Class B Common Stock
may be converted into shares of Class A Common Stock and sold at any time
provided that either such shares have been registered in accordance with the
Securities Act or are sold pursuant to an applicable exemption from the
registration requirements of the Securities Act. See "--Conversion Rights".
The Company has granted each of the existing holders of Class B Common Stock
certain registration rights with respect to their shares of Common Stock.
Transfer Agent and Registrar of Common Stock
The transfer agent and registrar for the Common Stock is Harris
Trust Company of New York. The principal address of the transfer agent and
registrar is 77 Water Street, New York, New York 10005.
Preferred Stock
Pursuant to the Certificate of Incorporation, the Board of
Directors is authorized to establish and designate one or more series of
Preferred Stock, without further authorization of the Company's stockholders,
and to fix the number of shares, the dividend and the relative rights,
preferences and limitations of any such series. Thus, any series may, if so
determined by the Board of Directors, have full voting rights, be convertible
into Class A Common Stock or Class B Common Stock or another security of the
Company, and have such other relative rights, preferences and limitations as
the Board of Directors shall determine. As a result, any class or series of
Preferred Stock could have rights which would adversely affect the voting
power of the Common Stock. The shares of any Class or series of Preferred
Stock need not be identical.
Series A Cumulative Convertible Preferred Stock
The Board of Directors has designated 96,000 shares of Series A
Cumulative Convertible Preferred Stock. The holders of shares of the Series A
Cumulative Convertible Preferred Stock are entitled to receive cumulative
annual dividends, when, as and if declared by the Board of Directors out of
funds legally available therefor, at a rate of 6.25% per annum per share
calculated as a percentage of $1,000, compounded quarterly, from and including
the date of original issuance until the redemption or conversion of the series
A Cumulative Convertible Preferred Stock. Dividends on the Series A
Cumulative Convertible Preferred Stock will not be paid in cash but will
accrue and be cumulative.
In the event that the Company declares, orders, pays or makes a
dividend or other distribution on the Common Stock (subject to certain
exceptions), the holders of shares of the Series A Cumulative Convertible
Preferred Stock shall be entitled to receive the same dividend or
distribution. In addition to any voting rights provided by law, the holders
of shares of Series A Cumulative Convertible Preferred Stock shall be entitled
to vote on all matters voted on by holders of the capital stock of the Company
into which such shares of Series A Cumulative Convertible Preferred Stock is
convertible. With respect to any such vote, each share of Series A Cumulative
Convertible Stock shall entitle the holder thereof to cast the number of votes
equal to the number of votes which could be cast in such vote by a holder of
the shares of capital stock of the Company into which such share of Series A
Cumulative Convertible Preferred Stock is convertible on the record date for
such vote.
In the event that the trading price of the Class A Common Stock
equals or exceeds $14.72 per share for 10 trading days during any period of 15
consecutive trading days, the Company shall have the right to redeem all or a
portion of the outstanding shares of Series A Cumulative Convertible Preferred
Stock by paying therefor in cash $1,000 per share, plus all accrued and unpaid
dividends to the date of redemption and the "premium amount". Pursuant to the
certificate of designation, "premium amount", as of the date of conversion or
redemption, means an amount calculated to provide a holder of shares of the
Series A Cumulative Convertible Preferred Stock, as of such date, with a yield
of 6.25% on $1,000 per share of Series A Cumulative convertible Preferred
Stock, compounded quarterly, from the date of conversion or redemption to and
including the fifth anniversary of the date of the original issuance of the
Series A Cumulative Convertible Preferred Stock.
In addition to the right of redemption of the Company described
above, any holder of shares of Series A Cumulative Convertible Preferred Stock
may require the Company to redeem, by paying therefor cash as described in the
preceding paragraph, any or all of the shares of Series A Cumulative
Convertible Preferred Stock held by such holder in the event of a "change in
control" (as defined below); provided, however, that if the change in control
is the result of a tender offer, exchange offer, merger, reorganization,
consolidation or other similar transaction where the holders of the Common
Stock are entitled to receive consideration for their shares of Common Stock
over 50% of the fair market value of which consideration consists of cash,
then the redemption price shall be an amount in cash per share at the election
of the holder either (i) as described in the preceding paragraph or (ii) equal
to the closing price of the Common Stock at such time multiplied by the number
of shares of Class A Common Stock into which such share of Series A Cumulative
Convertible Preferred Stock is then convertible. Pursuant to the certificate
of designation, "change in control" means, among other things, the acquisition
by a person (other than the Company or related persons) of beneficial
ownership of 50% or more of the combined voting power of the Company.
Each share of the Series A Cumulative Convertible Preferred
Stock may, at the option of the holder thereof, be converted at any time
into a number of shares of Class A Common Stock equal to the quotient
obtained by dividing the "conversion value" by the conversion price of
$8.83 subject to adjustment. Pursuant to the certificate of designation,
"conversion value" per share of Series A Cumulative Convertible Preferred
Stock shall be an amount equal to $1,000 plus accrued and unpaid dividends
thereon to the date of conversion and the premium amount; provided,
however, that in the event of a conversion during the periods specified
below and which conversion is not (i) as a result of the Company exercising
its optional redemption or in connection with a change of control or
liquidation, (ii) at such time when the Company owns less than 90% of the
voting securities of PriCellular Wireless Corporation or (iii) at such time
as certain of the existing stockholders have the power to vote securities
of the company which represent 50% or more of the combined voting power of
the Company, the conversion value with respect to each share of Series A
Cumulative Convertible Preferred Stock then being converted shall be
reduced by the "premium amount" plus the amount set forth below:
Conversion Date Reduction to Conversion Value
---------------- -----------------------------
December 28, 1996 through December 28, 1997 $100.00
December 28, 1997 through December 28, 1998 $ 66.67
In the event of any liquidation, dissolution or winding-up of
the Company, no distribution shall be made to the holders of junior
securities, unless prior thereto, the holders of the shares of Series A
Cumulative Convertible Preferred Stock shall have received in cash the greater
of (x) $1,000 per share plus all accrued and unpaid dividends to the date of
such payment and the "premium amount", if any, or (y) such amount per share as
would have been payable had each such share been converted into Class A Common
Stock immediately prior to such liquidation, dissolution or winding-up.
Business Combination Statute
Section 203 of the Delaware General Corporation Law ("DGCL")
prohibits certain transactions between a Delaware corporation and an
"interested stockholder," which is defined as a person who, together with any
affiliates and/or associates of such person, beneficially owns, directly or
indirectly, 15% or more of the outstanding voting shares of a Delaware
corporation. Due to the timing of ownership of the Company's securities by
members of the Price Family, McCaw/AT&T Wireless and Harvard Private Capital,
none of such holders will be an "interested stockholder" under Section 203.
This provision prohibits certain business combinations (defined broadly to
include mergers, consolidations, sales or other dispositions of assets having
an aggregate value in excess of 10% of the consolidated assets of the
corporation, and certain transactions that would increase the interested
stockholder's proportionate share ownership in the corporation) between an
interested stockholder and a corporation for a period of three years after the
date the interested stockholder acquired its stock, unless (i) the business
combination is approved by the corporation's board of directors prior to the
date the interested stockholder acquired shares; (ii) the interested
stockholder acquired at least 85% of the voting stock of the corporation in
the transaction in which it became an interested stockholder; or (iii) the
business combination is approved by a majority of the board of directors and
by the affirmative vote of two-thirds of the votes entitled to be cast by
disinterested stockholders at an annual or special meeting.
SELLING STOCKHOLDER
Horizon is the beneficial owner of 1,948,052 shares of Class A
Common Stock, representing approximately 4.8% of the outstanding Common Stock
of the Company as of the date of this Prospectus. Horizon acquired these
shares pursuant to an Asset Acquisition Agreement dated as of October 15,
1996, pursuant to the Kentucky Cluster Acquisition. Horizon has advised the
Company that it proposes to offer for sale from time to time pursuant to this
Prospectus up to 1,948,052 shares of Class A Common Stock.
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from any sales of
Class A Common Stock pursuant to this Prospectus. Shares of Class A Common
Stock may be sold from time to time to purchasers directly by Horizon.
Alternatively, from time to time Horizon may offer shares of Class A Common
Stock through underwriters, brokers, dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the seller and/or the purchasers for whom they may act as
agent. Horizon and any such underwriters, dealers or agents that
participate in the distribution of the Class A Common Stock may be deemed
to be underwriters and any profits on the sale of Class A Common Stock by
them and any associated discounts, commissions or concessions that are
received may be deemed to be underwriting compensation under the Securities
Act. To the extent Horizon may be deemed to be an underwriter, it may be
subject to certain statutory liabilities under the Securities Act,
including but not limited to Sections 11 and 12 of the Securities Act. If
required at the time a particular offering is made, a Prospectus Supplement
will be distributed that will set forth the aggregate number of shares of
Class A Common Stock being offered and the terms of the offering, including
the name or names of any underwriters, any discounts, commissions and other
items constituting compensation from Horizon and any discounts, commissions
or concessions allowed or reallowed or paid to dealers. Such Prospectus
Supplement, and, if necessary, a post-effective amendment to the
Registration Statement, will be filed with the Commission to reflect the
disclosure of additional information with respect to the distribution of
the Class A Common Stock.
Shares of the Class A Common Stock may be sold from time to
time in one or more transactions at a fixed offering price, which may be
changed or at varying prices determined at the time of sale or at negotiated
prices. Such prices will be determined by Horizon or by agreement between
Horizon and underwriters or dealers. Horizon also may, from time to time,
authorize dealers, acting as Horizon's agents, to solicit offers to purchase
the Class A Common Stock upon the terms and conditions set forth in any
Prospectus Supplement.
Horizon and any other person participating in a sale or
distribution of the Class A Common Stock will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Rules 10b-5, 10b-6 and 10b-7, which provisions
may limit the timing of purchases and sales of any of the Class A Common Stock
by Horizon and any other such person.
The Class A Common Stock is listed on the American Stock
Exchange (symbol: "PC").
The Company has agreed to pay all expenses incident to the
Registration Statement and the sale of the Class A Common Stock hereunder to
the public, other than commissions, fees and discounts of underwriters,
dealers or agents. In addition, Horizon and any underwriters, agents, dealers
and brokers participating in the distribution of the Class A Common Stock,
will be indemnified by the Company against certain civil liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Class A Common Stock offered hereby will be
passed upon by Davis Polk & Wardwell.
EXPERTS
The consolidated balance sheets of PriCellular Corporation and
subsidiaries as of December 31, 1994 and 1995 and the related consolidated
statements of operations, stockholder's equity and cash flows for the three
years ended December 31, 1995, incorporated by reference in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon incorporated by reference
herein and in the Registration Statement and are incorporated by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The combined financial statements of Illinois RSA 4 and 6 for
the year ended December 31, 1994 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated by
reference therein and incorporated herein by reference. Such financial
statements have been incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated balance sheets of Cellular Information
Systems, Inc. and subsidiaries as of December 31, 1993 and 1992 and September
30, 1994 and the related consolidated statements of operations, stockholders'
deficit and cash flows for the years ended December 31, 1993, 1992 and 1991
and for the nine months ended September 30, 1994 incorporated by reference in
this Prospectus have been audited by Coopers & Lybrand L.L.P., independent
accountants, as stated in their reports incorporated by reference herein. The
report on Cellular Information Systems Inc. includes explanatory paragraphs
discussing reorganization of CIS and certain of its subsidiaries under Chapter
11 of the United States Bankruptcy Code and the acquisition of CIS by
PriCellular Corporation. The financial statements referred to above are
incorporated by reference in this Prospectus and the Registration Statement in
reliance upon the report of Coopers & Lybrand L.L.P. given upon the authority
of that firm as experts in accounting and auditing.
The balance sheet of Great Seal Cellular Limited Partnership as
of December 31, 1993 and 1994 and the related statements of operations,
partners' deficit and cash flows for the two years ended December 31, 1994
incorporated by reference in this Prospectus and Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto and is incorporated by
reference in reliance upon the authority of such firm as experts in accounting
and auditing in giving said reports.
The balance sheet of USCOC of Ohio RSA #7, Inc., as of
December 31, 1994 and the related statements of operations, retained
earnings and cash flows for the year ended December 31, 1994, incorporated
by reference in this Prospectus and Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto and is incorporated by
reference in reliance upon the authority of such firm as experts in
accounting and auditing in given said reports.
The balance sheets of Cellular of Upstate New York, Inc. as of
December 31, 1995 and 1994 and the statements of income and retained earnings,
and cash flows for the years then ended, incorporated by reference in this
Registration Statement have been incorporated by reference herein in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on
the authority of that firm as experts in accounting and auditing.
CERTAIN TERMS
Interests in cellular markets that are licensed by the Federal
Communications Commission (the "FCC") are commonly measured on the basis of
the population of the market served, with each person in the market area
referred to as a "Pop". The number of Pops or Net Pops owned is not
necessarily indicative of the number of subscribers or potential subscribers.
As used in this Prospectus, unless otherwise indicated, the term "Pops" means
the estimate of the 1995 population of a Metropolitan Statistical Area ("MSA")
or Rural Service Area ("RSA"), as derived from the 1995 Donnelley Market
Information Service population estimates. The term "Net Pops" means the
estimated population with respect to a given service area multiplied by the
percentage interest that the Company owns in the entity licensed in such
service area, all of the estimated population of which is included. MSAs and
RSAs are also referred to as "markets". The term "wireline" license refers to
the license for any market initially awarded to a company or group that was
affiliated with a local landline telephone carrier in the market, and the term
"non-wireline" license refers to the license for any market that was initially
awarded to a company, individual or group not affiliated with any landline
carrier. The term "System" means an FCC-licensed cellular telephone system.
The term "CTIA" means the Cellular Telecommunications Industry Association.
==================================== ====================================
No person has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus in
connection with the offering herein,
and, if given or made, such 1,948,052 Shares
information or representations
must not be relied upon as having
been authorized by the Company or
any other person. This Prospectus
does not constitute an offer to sell
or solicitation of an offer to PriCellular Corporation
buy any securities other than
those specifically offered hereby
in any jurisdiction to any person
to whom it is unlawful to make such
offer or solicitation in such Class A Common Stock
jurisdiction. Neither the (par value $.01 per share)
delivery of this Prospectus
nor any sale made hereunder shall,
under any circumstances, create
any implication that the
information herein is correct
as of any time subsequent to its date.
----------------
TABLE OF CONTENTS PROSPECTUS
----------------
Page
----
Additional Information............2
Incorporation of Certain
Documents by
Reference.........................2
Prospectus Summary................3
Risk Factors......................6
Use of Proceeds..................11
Price Range of Class A Common
Stock and January , 1997
Dividend Policy .................11
Selected Financial Data..........12
Acquisitions and Dispositions....14
Principal Stockholders...........17
Description of Capital Stock.....21
Selling Stockholder..............25
Plan of Distribution.............25
Legal Matters....................26
Experts..........................26
Certain Terms....................27
==================================== ====================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Expenses.
The following is a statement of estimated expenses to be paid
by the Registrant in connection with the issuance an distribution of the
securities being registered.
SEC registration fee............................... $6,529
American Stock Exchange listing fee................ 17,500
Printing and engraving............................. 5,000
Legal fees......................................... 75,000
Accountants' fees.................................. 25,000
Miscellaneous...................................... 5,971
--------
Total........................................... $135,000
========
Item 15. Indemnification of Directors and Officers.
Reference is made to Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), which enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director for violations of the director's fiduciary
duty, except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
the unlawful payment of dividends or unlawful stock purchases or redemptions)
or (iv) for any transaction from which a director derived an improper personal
benefit.
Section 145 of the DGCL empowers the Company to indemnify,
subject to the standards set forth therein, any person in connection with any
action, suit or proceeding brought before or threatened by reason of the fact
that the person was a director, officer, employee or agent of such company, or
is or was serving as such with respect to another entity at the request of
such company. The DGCL also provides that the Company may purchase insurance
on behalf of any such director, officer, employee or agent.
The Company's Amended and Restated Certificate of Incorporation
provides in effect for the indemnification by the Company of each director and
officer of the Company to the fullest extent permitted by applicable law.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1)
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file during any period in which 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) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
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 and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement; provided, however, that clauses
(1)(i) and (1)(ii) do not apply if the information required to be included
in a post-effective amendment by those clauses 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
are incorporated by reference in the 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 offered therein,
and the offering of such securities at that time shall 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 being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes 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 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant 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 Registrant 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 whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form
of prospectus 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
New York, on the 6th day of January, 1997.
PRICELLULAR CORPORATION
By: /s/ Stuart B. Rosenstein
------------------------------
Stuart B. Rosenstein
Senior Vice President, Chief
Financial Officer and Treasurer
The Registrant and each person whose signature appears below constitutes
and appoints Robert Price and Stuart B. Rosenstein, and any agent for service
named in this Registration Statement and each of them, his, her or its true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him, her or it and in his, her or its name, place and
stead, in any and all capacities, to sign and file (i) any and all amendments
(including post-effective amendments) to this Registration Statement, with all
exhibits thereto, and other documents in connection therewith, and (ii) a
registration statement, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act
of 1933, 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 things requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he, she or it
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their 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 and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert Price Director and President January 6, 1997
- ------------------------- (Principal
Robert Price Executive Officer)
/s/ Stuart B. Rosenstein Senior Vice President, January 6, 1997
- ------------------------- Chief Financial
Stuart B. Rosenstein Officer and Treasurer
(Principal Financial
and Accounting Officer
/s/ Kim I. Pressman Director, Vice President January 6, 1997
- ------------------------- and Secretary
Kim I. Pressman
/s/ Steven Price Director January 6, 1997
- -------------------------
Steven Price
- ------------------------- Director January 6, 1997
Brion B. Applegate
/s/ Scott Sperling Director January 6, 1997
- -------------------------
Scott Sperling
EXHIBIT INDEX
Exhibit Sequentially
No. Description Numbered Page
- ------- ----------- -------------
2.1 Form of Purchase and Sale Agreement relating to
the CIS Acquisition.(1)
2.2 Contribution Agreement by and among Texas/Illinois
Cellular Limited Partnership, a Delaware limited
partnership, Southwestern Bell Mobile Systems, Inc.,
a Delaware and Virginia corporation, the Company,
Cellular Information Systems of Laredo, Inc., a
Texas corporation, dated as of April 10, 1995
(certain schedules have been omitted but will be
furnished supplementally to the Commission upon
request).(2)
2.3 Acquisition Agreement, dated as of July 31, 1995,
by and among Cellular of Upstate New York, Inc.,
Alexandra Cellular Corporation, the Company and
PriCellular Wireless Corporation (certain exhibits
and schedules have been omitted but will be
furnished supplementally to the Commission
upon request).(2)
2.4 Asset Purchase Agreement dated as of September 27,
1995 by and among Seven Cellular Corporation,
PriCellular Wireless Corporation, USCOC of Ohio
RSA #7, Inc. and United States Cellular Corporation
(certain exhibits and schedules have been omitted
but will be furnished supplementally to the
Commission upon request).(3)
2.5 Acquisition Agreement dated as of June 28, 1995 by
and among Great Seal Cellular Limited Partnership,
the Company and Chill Cellular Corporation (certain
exhibits and schedules have been omitted but
will be furnished supplementally to the Commission
upon request).(2)
4.1 Indenture to 14% Senior Subordinated Discount Notes
due 2001 among the Company, PriCellular Wireless
Corporation and Bank of Montreal Trust Company,
as Trustee (including form of Note).(1)
4.2 Indenture to 121/4% Senior Subordinated Notes due
2003 among the Company, PriCellular Wireless
Corporation and Bank of Montreal Trust Company,
Trustee (including form of Note).(3)
4.3 Indenture to 10 3/4% Senior Subordinated Convertible
Discount Notes due 2004 between the Company and Bank of
Montreal Trust Company, as Trustee (including
form of Note).(3)
4.4 Indenture to 10 3/4% Senior Notes due 2004
between PriCellular Wireless Corporation and
Bank of Montreal Trust Company, as Trustee
(including form of Note).(4)
5.1 Opinion of Davis Polk & Wardwell regarding
the validity of the securities being registered.
23.1 Consent of Ernst & Young LLP relating to the
financial statements of the Company.
23.2 Consent of Davis Polk & Wardwell (see exhibit 5.1).
23.3 Consent of Ernst & Young LLP relating to the
financial statements of Illinois RSA 4 and 6.
23.4 Consent of Coopers & Lybrand L.L.P. relating
to the financial statements of Cellular
Information Systems, Inc.
23.5 Consent of Arthur Andersen LLP relating to the
financial statements of Great Seal Cellular
Limited Partnership.
23.6 Consent of Arthur Andersen LLP relating to the
financial statements of USCOC of Ohio RSA #7.
23.7 Consent of Coopers & Lybrand L.L.P. relating
to the financial statements of Cellular of
Upstate New York, Inc.
24.1 Powers of Attorney (included on signature page).
___________
(1) Incorporated herein by reference to PriCellular Corporation's Registration
Statement on Form S-1, No. 33-85678.
(2) Incorporated herein by reference to PriCellular Wireless Corporation's
Registration Statement on Form S-1, No. 33-95834.
(3) Incorporated herein by reference to PriCellular Corporation's Registration
Statement on Form S-1, No. 33-98156.
(4) Incorporated herein by reference to PriCellular Wireless Corporation's
Registration Statement on Form S-4, No. 333-17067.
Exhibit 5.1
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
212-450-4343
January 6, 1997
PriCellular Corporation
45 Rockefeller Plaza
New York, New York 10020
Ladies and Gentlemen:
We have acted as counsel to PriCellular Corporation (the
"Company") in connection with the Company's Registration Statement on Form S-3
(No. 333- ) (the "Registration Statement") filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), for the registration of 1,948,052 shares of the Company's Class A
Common Stock, par value $.01 per share (the "Shares").
We have examined originals or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary for the purposes of rendering this opinion.
On the basis of the foregoing and assuming the due execution and
delivery of certificates representing the Shares, we are of the opinion that
the Shares have been duly authorized and, when issued and delivered against
payment of the agreed consideration therefor in accordance with the terms of
the Asset Acquisition Agreement referred to in the prospectus that is part of
the Registration Statement, will be validly issued, fully paid and
non-assessable.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. We also consent to the reference to us under the
caption "Legal Matters" in the prospectus.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other
purpose or relied upon by or furnished to any other person without our
prior written consent.
Very truly yours,
/s/ Davis Polk & Wardwell
--------------------------
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement on Form S-3 and related Prospectus of
PriCellular Corporation (the "Company") to be filed on or about January 7,
1997 for the registration of 1,948,052 shares of the Company's Class A Common
Stock and to the incorporation by reference therein of our reports dated
January 24, 1996 with respect to the consolidated financial statements and
schedules of the Company included in its Annual Report on Form 10-K for the
year ended December 31, 1995, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
---------------------
New York, New York
January 3, 1997
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3) and the related
Prospectus of PriCellular Corporation to be filed on or about January 7,
1997 for the registration of 1,948,052 shares of Class A Common Stock owned
by Horizon Cellular Telephone Company of Central Kentucky, L.P. and to the
incorporation by reference therein of our report dated April 19, 1995, with
respect to the combined financial statements of Illinois RSA 4 and 6 for
the year ended December 31, 1994 included in the Form S-4 No. 33-91006
previously filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
San Antonio, Texas
January 6, 1997
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of PriCellular Corporation on Form S-3 (File No.
333- ) of our reports, which include an explanatory paragraph discussing
the reorganization of Cellular Information Systems and certain of its
subsidiaries under Chapter 11 of the United States Bankruptcy Code, dated
October 1, 1994 and December 12, 1994, on our audits of the consolidated
financial statements of Cellular Information Systems, Inc. and
Subsidiaries. In addition, our report dated December 12, 1994, includes an
explanatory paragraph discussing the acquisition of Cellular Information
Systems, Inc. and Subsidiaries by PriCellular Corporation. We also consent
to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
----------------------------
New York, New York
January 3, 1997
Exhibit 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated March 3, 1995 (except with respect to the matters
discussed in Notes 1 and 7, as to which the date is June 28, 1995) (and to
all references to our firm) included in or made a part of PriCellular
Corporation's Form S-3 shelf registration statement.
/s/ Arthur Andersen LLP
_______________________
Atlanta, Georgia
January 3, 1997
Exhibit 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated February 3, 1995 on the
financial statements of USCOC of Ohio RSA #7, Inc. as of December 31, 1994,
and for the year then ended, (and to all references to our firm) included in
or made a part of PriCellular Corporation's Form S-3 registration statement of
Class A Common Stock.
/s/ Arthur Andersen LLP
-----------------------
Chicago, Illinois
January 3, 1997
Exhibit 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of PriCellular Corporation on Form S-3 (File No. 333- ) of our
report dated January 25, 1996 on our audits of the financial statements of
Cellular of Upstate New York, Inc. as of December 31, 1995 and 1994 and for
the years then ended. We also consent to the reference to our firm under the
caption "Experts."
/s/ Coopers & Lybrand L.L.P.
----------------------------
Albany, New York
January 2, 1997
