==============================================================================
As filed with the Securities and Exchange Commission on February 4, 1997
Registration No. 33-91006
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
POST-EFFECTIVE AMENDMENT NO. 3
TO
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________
PRICELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3043811
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
(organization) 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 securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [ ]
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 February 4, 1997
PROSPECTUS
DATED
PriCellular
PriCellular Corporation
PriCellular Corporation ("PriCellular" or the "Company"), may
offer and sell, from time to time, (i) up to $25,000,000 initial offering
price of shares of its Class A common stock, par value $.01 per share ("Class
A Common Stock"), (ii) up to $75,000,000 initial offering price of shares of
its preferred stock, par value $.01 per share, issuable in series ("Preferred
Stock"), (iii) up to $100,000,000 initial offering price of unsecured
debentures, notes and other evidence of indebtedness ("Debt Securities" and,
collectively with Class A Common Stock, Preferred Stock and Debt Securities,
the "Securities"). The Securities may be offered by this Prospectus in
connection with acquisitions, as well as additional Shares of Class A Common
Stock which may be issuable upon conversion of Preferred Stock covered by this
Prospectus with a market price for such Class A Common Stock of up to
$75,000,000 in the aggregate as of the date of issuance of such Preferred
Stock and conversion of Debt Securities covered by this Prospectus with a
market price for such Class A Common Stock of up to $100,000,000 in the
aggregate as of the date of issuance of such Debt Securities. The Securities
or any combination of the Securities, either individually or as units
consisting of one or more of the Securities, shall be offered each on terms to
be determined at the time of sale. Such Securities may be issued in exchange
for shares of capital stock, partnership interests or other assets
representing an interest, direct or indirect, in other entities, in exchange
for assets used in or related to the business of such entities or otherwise
pursuant to agreements providing for such acquisitions, as well as additional
shares of Class A Common Stock which may be issuable upon conversion of any
convertible Securities covered by this Prospectus. The terms of such
acquisitions and of the issuance of any such Securities in connection
therewith will generally be determined by direct negotiations with the owners
of the business or assets to be acquired or, in the case of entities which are
more widely held, through exchange offers to stockholders or documents
soliciting the approval of statutory mergers, consolidations or sales of
assets. Underwriting discounts or commissions will generally not be paid by
the Company. However, under certain circumstances, the Company may issue
Securities covered by this Prospectus to pay brokers' commissions incurred in
connection with acquisitions.
This Prospectus, as amended or supplemented if appropriate, has
also been prepared for use by persons who receive Securities in acquisitions,
including Securities sold hereunder and shares of Class A Common Stock received
upon conversion of convertible Securities issued in acquisitions; provided,
however, that no such person is authorized to use this Prospectus to reoffer
any such Securities without first obtaining the Company's prior written
consent.
Specific terms of the Securities offered pursuant to this
Prospectus shall be set forth in an accompanying prospectus supplement
("Prospectus Supplement") together with the initial price thereof. The
Prospectus Supplement shall set forth with respect to such Securities, without
limitation, the following: (i) in the case of Debt Securities, whether senior
or subordinated debt securities, the specific designation, aggregate principal
amount, authorized denomination, maturity, rate (which may be fixed or
variable) or method of calculation of interest and dates for payment thereof,
and any exchangeability, conversion, redemption, prepayment or sinking fund
provisions and any listing on a securities exchange and (ii) in the case of
Preferred Stock, the designation, number of shares or fractional interests
therein, liquidation preference per security, initial public offering price,
dividend rate (or method of calculation thereof), dates on which dividends
shall be payable and dates from which dividends shall accrue, any voting
rights, any redemption or exchange provisions, any other rights, preferences,
privileges, limitations and restrictions relating to the Preferred Stock, and
any listing on a securities exchange. The Company's authorized capital stock
includes Class A Common Stock and Class B Common Stock, par value $.01 per
share ("Class B Common Stock"). The rights of Class A Common Stock and Class
B Common Stock are substantially identical, except that holders of the Class A
Common Stock are entitled to one vote per share and holders of Class B Common
Stock are entitled to 10 votes per share. Both classes will vote together as
one class on all matters generally submitted to a vote of stockholders,
including the election of directors. See "Description of Capital Stock." As
of the date of this Prospectus, holders of Class B Common Stock, if considered
together, own shares of Common Stock representing approximately 93.8% of the
voting power entitled to vote in matters affecting stockholders generally.
The Class A Common Stock is traded on the American Stock
Exchange under the symbol "PC." The reported last sale price of the Class A
Common Stock on the American Stock Exchange on February 3, 1997 was $9.25 per
share. As of the date of this Prospectus there were 96,000 shares of
Preferred Stock outstanding.
See "Risk Factors" beginning on page 9 for certain information
that should be considered by prospective investors.
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 NOR 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-4 (File No. 33-91006) under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities 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 (as amended on July 20, 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; (ix) the Company's Current Report on Form 8-K filed on May
14, 1996; (x) the Company's Current Report on Form 8-K filed on June 21,
1996; (xi) the Company's Current Report on Form 8-K filed on October 15,
1996; (xii) the Company's Current Report on Form 8-K filed on October 16,
1996; and (xiii) pages F-27 through F-59, F-82 through F-98 and F-131
through F-164 contained in the Prospectus included in the Company's
Registration Statement on Form S-4 (File No. 33-91006) at effectiveness.
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 into 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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM STUART B. ROSENSTEIN, CHIEF
FINANCIAL OFFICER OF THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES
AT 45 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020, TELEPHONE NUMBER (212)
459-0800. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY , 1997.
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) 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. See the Unaudited Pro Forma
Condensed Consolidated Financial Statements incorporated by reference herein.
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.
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>
Acquisition Strategy
The Company's strategy is to continue to expand its current
clusters through the acquisition of contiguous properties and, secondarily, to
target for purchase other small to mid-sized MSAs and strategic RSAs that it
believes are undervalued, underdeveloped or that possess traits indicative of
potentially high cellular usage and superior financial performance. The
operation of contiguous markets permits the Company to provide broad areas of
uninterrupted service and achieve certain economies of scale, including
certain centralized marketing, administrative and engineering functions. The
Company believes that smaller MSAs and certain RSAs often exhibit a
concentration of small businesses, longer commute times and well-traveled
roads, all indicators of strong cellular use. Many of these markets serve as
hubs for retail trading areas and as business, cultural or medical centers for
populations spread over wide geographic areas. In addition, management
believes that because its markets are less densely populated, they are less
likely to face the level of competition expected to be experienced in large
urban areas. The Company intends to pursue additional acquisitions consistent
with its growth strategy and is currently engaged in a variety of preliminary
discussions with respect to possible acquisitions. There can be no assurance
that the Company will seek to acquire or be successful in acquiring any of
such Systems.
Operating Strategy
Management believes that certain of its Systems and the Systems
to be acquired in the Pending Transactions are in the early stages of their
growth cycle and afford significant opportunities for improvements in
management and operating performance. Upon acquiring a cellular system, the
Company's operating strategy is to effect certain management, operational and
organizational changes in order to increase the number and quality of
subscribers and enhance operating cash flow, while controlling subscriber
acquisition costs and promoting superior customer service. The Company seeks
to accomplish these changes by employing the following practices:
Decentralized Management
The Company manages each of its Systems on a decentralized
basis, delegating direct responsibility for all hiring, marketing,
distribution, customer service, churn control, billing, roaming and other
day-to-day operating decisions to the general manager of each System. General
managers must strictly adhere to a budget designed to improve cash flow and
reduce churn and their compensation is linked to their ability to meet or
exceed their budgeted goals. The Company believes its decentralized management
structure fosters a strong sense of customer service and community spirit,
enables it to customize its marketing strategy to the needs of the local
market, and eliminates the need for a large corporate staff or for a
centralized multi-system customer service center that is located outside of
the local market. The Company believes that placing decision-making
responsibility in the hands of its general managers fosters the decisive
actions necessary to meet competitive challenges.
Aggressive Marketing and Promoting of Cellular Service
After selectively upgrading the engineering in its cellular
network, the Company implements aggressive marketing programs to increase
subscriber activations and reduce churn. Many of these programs are designed
to distinguish the Company as the local market's highest quality cellular
service provider, stressing its localized sales offices, customer service and
commitment to the community. These programs also include offering distinctive
rate plans and roaming rates to emphasize "value" and the "advantage" of the
Company's cellular service, launching targeted advertising campaigns aimed at
the most attractive cellular user segments, creating regional marketing
alliances with neighboring cellular carriers and taking an active, visible
role in community, government and charity organizations. Management believes
that the Company's positioning of its cellular system as the local service
provider often contrasts with its larger competitors, which frequently
centralize customer service and other functions outside the local market.
Strong Retail and Direct Sales Effort
A key element of the Company's positioning in its markets is
its use of local retail stores, as well as a local direct sales force. A
retail location complemented by a direct sales force provides the Company with
more control over the sales process than if it were to rely exclusively on
independent agents. The Company has aggressively opened its own retail stores
and currently operates in excess of 60 retail locations. Management believes
that this local presence enhances its ability to provide higher quality
customer service and that on average customers who purchase cellular service
directly from the Company through its retail stores and direct sales force
tend to have fewer complaints and higher usage than subscribers who activate
with independent agents or independent retailers.
Dedication to Customer Service
The Company strives to maintain a high level of customer
satisfaction through a variety of techniques, including tying sales
commissions to subscriber retention, outbound telemarketing to subscribers on
a regular basis, maintaining 24-hour customer service and active ongoing
contact with new customers. The Company believes that its emphasis on superior
customer service has helped reduce its average monthly churn rate. For
example, the Company's average monthly churn rate for the nine months ended
September 30, 1996 was 1.6%.
System Development and Expansion
The Company develops or builds out its cellular service areas
by adding channels to existing cell sites and by building new cell sites with
an emphasis on improving coverage for hand-held phones in heavily-trafficked
areas. Such development is done for the purpose of increasing capacity and
improving coverage in response to projected subscriber demand and in response
to competitive factors. Projected subscriber demand is calculated for each
cellular service area on a cell-by-cell basis. These projections involve a
traffic analysis of usage by existing subscribers, coverage quality analysis
and an estimate of the number of additional subscribers in each such area. In
calculating projected subscriber demand, the Company builds into its design
assumptions a maximum call "blockage" rate of 2% (percentage of calls that are
not connected on first attempt at peak usage time during the day). After
calculating projected subscriber demand, the Company determines the most cost-
efficient manner of meeting such projected demand. The Company has
historically met such demand through a combination of augmenting channel
capacity in existing cell sites and building new cell sites.
Cell site expansion is expected to enable the Company to
continue to add subscribers, enhance use of the systems by existing
subscribers, increase roamer traffic due to the larger geographic area covered
by the cellular network and further enhance the overall efficiency of the
network.
Strategic Relationships
The Company has formed a strategic alliance with McCaw/AT&T
Wireless which allows the Company to take advantage of McCaw/AT&T Wireless'
acquisition experience, certain vendor discounts and certain services provided
by McCaw/AT&T Wireless including a variety of centralized "back office"
functions. The Company believes that purchasing cellular telephones at the
volume discounts afforded by the McCaw/AT&T Wireless relationship allows the
Company to minimize one of the major costs associated with new subscriber
additions. The volume discounts also permit the Company to reduce the capital
expenditures required for the Company's system development and expansion. In
connection with its initial investment in the Company, McCaw/AT&T Wireless
contributed a Northern Telecom digital supernode switch and approximately 100
cell sites to the Company. The Company believes that the proximity of three
of its operating clusters to McCaw/AT&T Wireless' Systems affords significant
opportunities for joint marketing, promotions and other programs. The
Company's Upper Midwest Cluster is contiguous to McCaw/AT&T Wireless' Systems
serving the Minneapolis/St. Paul, MN MSA and the St. Cloud, MN MSA. The
Company's Mid-Atlantic Cluster borders the Pittsburgh, PA, Steubenville, OH
and Wheeling, WV MSAs, which are owned by McCaw/AT&T Wireless. The Company's
New York Cluster abuts the northern border of McCaw/AT&T Wireless' New York
City MSA, including Westchester and Rockland counties. The New York Cluster is
also adjacent to three MSAs owned by Southwestern Bell, with whom the Company
has a joint venture in Illinois and Texas.
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 January 1997. 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 (earnings before depreciation and amortization,
interest expense, interest income, and gains on sales of cellular properties)
to total interest expense would have been 0.7 and 0.4, respectively, the
Company's deficiency of earnings to fixed charges would have been $29.7
million and $56.2 million, respectively, and the Company's deficiency of
earnings to combined fixed charges and accrued preferred stock dividends would
have been $34.5 million and $62.3 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 Transactions
The information appearing herein is presented assuming the
consummation of the Pending Transactions. There can be no assurances that the
Company will be successful in consummating any or all of 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.
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 July 1996, the Company disposed of a stand-alone
wireline System in Alabama considered by management to be non-strategic, and
in October 1996, the Company disposed of the MI-2 RSA.
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.
USE OF PROCEEDS
The sale of shares of Class A Common Stock, shares of Preferred
Stock and Debt Securities will be used by the Company in connection with
acquisitions of cellular Systems and related cellular interests. See
"Business--Business Strategy" in the 1995 10-K.
PRICE 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.
<TABLE>
<CAPTION>
Period High Low
------ ---- ----
<S> <C> <C>
1994:
Fourth quarter (since initial public offering on December 15, 1994)............... $4.99 $4.61
1995:
First quarter..................................................................... $5.06 $3.33
Second quarter.................................................................... $4.86 $3.65
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 February 3)................................................ $11.38 $ 9.13
</TABLE>
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 January 1997. 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 147
debt, 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)
Ratio of earnings to
fixed charges(1)................. 1.1 22.7
========= ====== ======== ======== ======= ======== ========
<FN>
- ---------------
(1) The ratio of earnings to fixed charges is determined by dividing the
sum of earnings before extraordinary items and accounting changes,
interest expense, taxes and a portion of rent expense representative of
interest by the sum of interest expense and a portion of rent expense
representative of interest. The ratio of earnings to fixed charges is
not meaningful for periods that result in a deficit. For the nine
months ended September 30, 1996 and the years ended December 31, 1995,
1994, 1992 and 1991 the deficit of earnings to fixed charges was
$13,243, $7,711, $1,440, $2,565, and $4,914, respectively. For the
nine months ended September 30, 1996 (the only period for which
dividends were accrued on preferred stock), the deficit of earnings to
combined fixed charges and accrued preferred stock dividends was
$17,849.
</TABLE>
<TABLE>
<CAPTION>
As of
September 30,
1996 Years Ended December 31,
------------ ---------------------------------------------------------
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>
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. For a description of the other Securities offered
hereby, see "Offered Securities--Description of Debt Securities" and
"--Preferred Stock".
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 29, 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.
OFFERED SECURITIES
The Securities which may be offered from time to time by this
Prospectus consist of (i) up to $25,000,000 initial offering price of shares
of Class A Common Stock, (ii) up to $75,000,000 initial offering price of
shares of Preferred Stock and (iii) up to $100,000,000 initial offering price
of Debt Securities. The Company proposes to issue and sell the Securities in
connection with acquisitions, as well as additional shares of Class A Common
Stock which may be issuable upon conversion of Preferred Stock covered by this
Prospectus with a market price for such Class A Common Stock of up to
$75,000,000 in the aggregate as of the date of issuance of such Preferred
Stock and conversion of Debt Securities covered by this Prospectus with a
market price for such Class A Common Stock of up to $100,000,000 in the
aggregate as of the date of issuance of such Debt Securities. The Securities
or any combination of the Securities, either individually or as units
consisting of one or more of the Securities, shall be offered each on terms to
be determined at the time of sale. Such Securities may be issued in exchange
for shares of capital stock, partnership interests or other assets
representing an interest, direct or indirect, in other entities, in exchange
for assets used in or related to the business of such entities or otherwise
pursuant to agreements providing for such acquisitions, as well as additional
shares of Class A Common Stock which may be issuable upon conversion of any
convertible securities covered by this Prospectus. The consideration for any
acquisition may consist of equity securities, cash, indebtedness, assumption
of liabilities or a combination thereof. The terms of such acquisitions and of
the issuance of any such Securities in connection therewith will generally be
determined by direct negotiations with the owners of the business or assets to
be acquired or, in the case of entities which are more widely held, through
exchange offers to stockholders or documents soliciting the approval or
statutory mergers, consolidations or sales of assets. Underwriting discounts
or commissions will generally not be paid by the Company. However, under
certain circumstances, the Company may issue Securities covered by the
Prospectus to pay brokers' commissions incurred in connection with
acquisitions. For a description of the Company's Class A Common Stock and
Preferred Stock, see "Description of Capital Stock."
This Prospectus, as amended or supplemented if appropriate, has
also been prepared for use by persons who receive Securities in acquisitions,
including Securities sold hereunder and Securities received upon conversion of
convertible Securities issued in acquisitions ("Selling Stockholders");
provided, however, that no Selling Stockholder is authorized to use this
Prospectus to reoffer any such shares without first obtaining the Company's
prior written consent. Resales may be made pursuant to this Prospectus, as
amended or supplemented, pursuant to Rule 145(d) under the Act or pursuant to
an exemption from the Act. Profits realized on resales by Selling Stockholders
under certain circumstances may be regarded as underwriting compensation under
the Act.
Resales by Selling Stockholders may be made directly to
investors or through a securities firm acting as an underwriter, broker or
dealer. When resales are to be made through a securities firm, such securities
firm may be engaged to act as the Selling Stockholder's agent in the sale of
the Securities by such Selling Stockholder, or such securities firm may
purchase Securities from the Selling Stockholders as principal and thereafter
resell such Securities from time to time. The fees earned by or paid to such
securities firm may be the normal stock exchange commission or negotiated
commissions or underwriting discounts to the extent permissible. In addition,
such securities firm may effect resales through other securities dealers, and
customary commissions or concessions to such other dealers may be allowed.
Sales of Securities may be at negotiated prices, at fixed prices, at market
prices or at prices related to market prices then prevailing. Any such sales
may be made on the American Stock Exchange or other exchange on which such
Securities are traded, in the over-the-counter market, by block trade, in
special or other offerings, directly to investors or through a securities firm
acting as agent or principal, or a combination of such methods. Any
participating securities firm may be indemnified against certain liabilities,
including liabilities under the Act. Any participating securities firm may be
deemed to be an underwriter within the meaning of the Act, and any commission
earned by such firm may be deemed to be underwriting discounts or commissions
under the Act.
A prospectus supplement, if required, will be filed under Rule
424(b) under the Act, disclosing the name of the Selling Stockholder, the
participating securities firm, if any, the number of Securities involved and
other details of such resale to the extent appropriate.
Description of Debt Securities
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may not
apply to the Debt Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities.
Senior Debt Securities ("Senior Debt Securities") are to be
issued under an Indenture dated as of , 1997 (the "Senior
Indenture"), between the Company and Bank of Montreal Trust Company, as
trustee (the "Trustee"). Subordinated Debt Securities ("Subordinated Debt
Securities") are to be issued under a separate indenture dated as of
, 1997 (the "Subordinated Indenture"), between the Company and the Trustee.
The Senior Indenture and the Subordinated Indenture are sometimes referred to
collectively as the "Indentures." Copies of the Senior Indenture and the
Subordinated Indenture will be filed as exhibits to the Registration
Statement. The following summaries of certain provisions of the Senior Debt
Securities, the Subordinated Debt Securities and the Indentures do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indentures applicable to a particular
series of Debt Securities, including the definitions therein of certain terms.
Capitalized terms not otherwise defined herein shall have the meaning given in
the Indentures.
The Indentures do not limit the aggregate principal amount of
Debt Securities which may be issued thereunder and each Indenture provides
that Debt Securities may be issued thereunder from time to time in one or more
series. Unless otherwise specified in the Prospectus Supplement, the Senior
Debt Securities when issued will be unsecured and unsubordinated obligations
of the Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
when issued will be subordinated in right of payment to the prior payment in
full of all Senior Debt of the Company, as described in the Prospectus
Supplement applicable to an offering of Subordinated Debt Securities.
Reference is made to the Prospectus Supplement relating to the
particular Debt Securities offered thereby (the "Offered Debt Securities")
which shall set forth whether the Offered Debt Securities shall be Senior Debt
Securities or Subordinated Debt Securities, and shall further set forth the
following terms of the Offered Debt Securities: (i) the title of the Offered
Debt Securities; (ii) any limit on the aggregate principal amount of the
Offered Debt Securities; (iii) the Person to whom any interest on the Offered
Debt Securities will be payable, if other than the Person in whose name such
Offered Debt Securities are registered on any Regular Record Date; (iv) the
date or dates on which the principal of the Offered Debt Securities will be
payable; (v) the rate or rates per annum (which may be fixed, floating or
adjustable) at which the Offered Debt Securities will bear interest, if any,
or the formula pursuant to which such rate or rates shall be determined, the
date or dates from which such interest will accrue and the dates on which such
interest, if any, will be payable and the Regular Record Dates for such
interest payment dates; (vi) whether the Offered Debt Securities will be
secured; (vii) the place or places where principal of (and premium, if any)
and interest, if any, on Offered Debt Securities will be payable; (viii) if
applicable, the price at which, the periods within which and the terms and
conditions upon which the Offered Debt Securities may be redeemed or defeased
at the option of the Company pursuant to a sinking fund or otherwise; (ix) if
applicable, any obligation of the Company to redeem or purchase Offered Debt
Securities pursuant to any sinking fund or analogous provisions or at the
option of a Holder thereof, and the period or periods within which, the price
or prices at which and the terms and conditions upon which the Offered Debt
Securities will be redeemed or purchased, in whole or in part; (x) if
applicable, the terms of any right to convert or exchange the Offered Debt
Securities into other securities or property of the Company; (xi) if other
than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Offered Debt Securities will be issuable; (xii) if
the amount of payments of principal of (or premium, if any) or interest, if
any, on the Offered Debt Securities may be determined with reference to one or
more indices, the manner in which such amounts will be determined; (xiii) the
portion of the principal amount of the Offered Debt Securities, if other than
the principal amount thereof, payable upon acceleration of maturity thereof;
(xiv) whether all or any part of the Offered Debt Securities will be issued in
the form of a Global Security or Securities and, if so, the depositary for,
and other terms relating to, such Global Security or Securities; (xv) any
event or events of default applicable with respect to the Offered Debt
Securities in addition to those provided in the Indentures; (xvi) any other
covenant or warranty included for the benefit of the Offered Debt Securities
in addition to (and not inconsistent with) those included in the Indentures
for the benefit of Debt Securities of all series, or any other covenant or
warranty included for the benefit of the Offered Debt Securities in lieu of
any covenant or warranty included in the Indentures for the benefit of Debt
Securities of all series, or any provision that any covenant or warranty
included in the Indentures for the benefit of Debt Securities of all series
shall not be for the benefit of the Offered Debt Securities, or any
combination of such covenants, warranties or provisions; (xvii) any
restriction or condition on the transferability of the Offered Debt
Securities; (xviii) any authenticating or paying agents, registrars,
conversion agents or any other agents with respect to the Offered Debt
Securities; and (xix) any other terms of the Offered Debt Securities.
Unless otherwise indicated in the Prospectus Supplement
relating thereto, the Offered Debt Securities are to be issued as registered
securities without coupons in denominations of $1,000 or any integral multiple
of $1,000. No service charge will be made for any transfer or exchange of such
Offered Debt Securities, but the Company or the Trustee may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Debt Securities may be issued under the Indentures as Original
Issue Discount Securities to be sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other
considerations applicable thereto will be described in the Prospectus
Supplement relating hereto.
Since the Company is a holding company, the rights of the
Company, and hence the right of creditors of the Company (including the
Holders of Debt Securities), to participate in any distribution of the assets
of any subsidiary upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary,
except to the extent that claims of the Company itself as a creditor of the
subsidiary may be recognized.
The Indentures do not contain any provisions that limit the
ability of the Company or any Subsidiary to incur indebtedness or that afford
Holders of the Debt Securities protection in the event of a highly leveraged
or similar transaction involving the Company or any Subsidiary.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed
upon for the Company 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.
The balance sheet of Dominion Cellular Inc., as of September
30, 1995 and the related statements of operations, accumulated deficit and
cash flows for the year then ended incorporated by reference in this
Prospectus and Registration Statement have been audited by Elliot H. Goldberg,
CPA, P.C., independent auditor, as set forth in his report thereon
incorporated by reference herein and in the Registration Statement and is
included in reliance upon such report given upon the authority of such person
as an expert in accounting and auditing.
The balance sheet of Hudson Cellular Limited Partnership as of
December 31, 1995 and the related statements of operations, cash flows and
changes in partners' capital for the year then ended incorporated by reference
in this Prospectus and Registration Statement have been audited by Arthur
Anderson 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 Dutchess County Cellular Telephone
Company, Inc. as of December 31, 1995 and the related statements of
operations, cash flows and retained earnings for the year then ended
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.
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 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 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
jurisdiction. Neither the 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
Page
Additional Information.................................2
Incorporation of Certain Documents by
Reference.............................................2
Prospectus Summary.....................................4
The Company............................................4
Risk Factors...........................................9
Acquisitions and Dispositions.........................14
Use of Proceeds.......................................17
Price Range of Class A Common Stock and
Dividend Policy .....................................17
Selected Financial Data...............................18
Description of Capital Stock..........................20
Offered Securities....................................24
Legal Matters.........................................26
Experts...............................................26
Certain Terms.........................................27
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PriCellular Corporation
---------------------
PROSPECTUS
---------------------
, 1997
========================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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 21. Exhibits and Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1)
Item 22. 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 the 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 end 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 a 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 hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) 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 Post-Effective Amendment No. 3 to the
Registration Statement be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, New York, on the 4th
day of February, 1997.
PRICELLULAR CORPORATION
By:/s/ Stuart B. Rosenstein
-------------------------------
Stuart B. Rosenstein
Senior Vice President,
Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 to the Registration Statement has been signed
by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* Director and President February 4, 1997
- ------------------------ (Principal Executive
Robert Price Officer)
/s/ Stuart B. Rosenstein Senior Vice President, Chief February 4, 1997
- ------------------------ Financial Officer and
Stuart B. Rosenstein Treasurer (Principal
Financial and Accounting
Officer
* Director, Vice President and February 4, 1997
- ------------------------ Secretary
Kim I. Pressman
/s/ Steven Price Director and Senior Vice February 4, 1997
- ------------------------ President
Steven Price
* Director February 4, 1997
- ------------------------
Brion B. Applegate
* Director February 4, 1997
- ------------------------
Scott Sperling
*By /s/ Stuart B. Rosenstein
--------------------------
Stuart B. Rosenstein
Attorney-in-Fact
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Numbered Page
------------ ----------- -------------
<S> <C> <C>
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).(3)
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).(3)
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).(2)
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).(3)
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 12 1/4% Senior Subordinated Notes due 2003 among the Company,
PriCellular Wireless Corporation and Bank of Montreal Trust Company, as
Trustee (including form of Note).(2)
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).(2)
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).(6)
4.5 Form of Senior Indenture dated as of , 1997, between the Company and
Bank of Montreal Trust Company, as Trustee.(4)
4.6 Form of Subordinated Indenture dated as of , 1997, between the Company
and Bank of Montreal Trust Company, as Trustee.(4)
5.1 Opinion of Davis Polk & Wardwell regarding the validity of the Securities being
registered.(4)
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges and
Computation of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.(4)
23.1 Consent of Ernst & Young LLP relating to the financial statements of the
Company.(4)
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.(4)
23.4 Consent of Coopers & Lybrand L.L.P. relating to the financial statements of
Cellular Information Systems, Inc.(4)
23.5 Consent of Arthur Andersen LLP relating to the financial statements of Great Seal
Cellular Limited Partnership.(4)
23.6 Consent of Arthur Andersen LLP relating to the financial statements of USCOC
of Ohio RSA #7.(4)
23.7 Consent of Coopers & Lybrand L.L.P. relating to the financial statements of
Cellular of Upstate New York, Inc.(4)
23.8 Consent of Elliot H. Goldberg, CPA, P.C. relating to the financial statements of
Dominion Cellular, Inc.(4)
23.9 Consent of Arthur Andersen LLP relating to the financial statements of Hudson
Cellular Limited Partnership.(4)
23.10 Consent of Arthur Anderson LLP relating to the financial statements of Dutchess
County Cellular Telephone Company.(4)
24.1 Powers of Attorney. (4)
25.1 Statement of Eligibility of Trustee. (4)
<FN>
- --------------------
(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 Corporation's Registration
Statement on Form S-1, No. 33-98156.
(3) Incorporated herein by reference to PriCellular Wireless Corporation's
Registration Statement on Form S-1, No. 33-95834.
(4) Previously filed.
(5) Incorporated herein by reference to PriCellular Corporation's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1996.
(6) Incorporated herein by reference to PriCellular Wireless Corporation's
Registration Statement on Form S-4, No. 333-17067.
</TABLE>
