UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
e.spire Communications, Inc.
(name of Issuer)
Common Stock, $.01 Par Value
(Title of Class of Securities)
Donna B. Charlton
c/o The Huff Alternative Income Fund, L.P.
67 Park Place
Morristown, N.J. 07960
(201) 984-1233
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 3, 2000
and September 19, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box. ___
Check the following box if a fee is being paid with the
statement. _____ (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see
the Notes).
Exhibit Index appears on Page 15.
<PAGE>
1 Name of Reporting Person
S.S or I.R.S. Identification No. of Above Person
The Huff Alternative Income Fund, L.P.
2 Check the Appropriate Box if a Member of a Group
(a) ____
(b) __X_
3 SEC Use Only
4 Source of Funds
WC
5 Check Box if Disclosure of Legal Proceedings is ___
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of -0-
Shares
Beneficially 8 Shared Voting Power
Owned By 25,394,489
Each
Reporting 9 Sole Dispositive Power
Person -0-
With
10 Shared Dispositive Power
25,394,489
11 Aggregate Amount Beneficially Owned by Each Reporting Person
25,394,489
12 Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares ____
13 Percent of Class Represented by Amount in Row (11)
38.5%
14 Type of Reporting Person
PN
<PAGE>
1 Name of Reporting Person
S.S or I.R.S. Identification No. of Above Person
WRH Partners, L.L.C.
2 Check the Appropriate Box if a Member of a Group
(a) ____
(b) __X_
3 SEC Use Only
4 Source of Funds
AF
5 Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) _____
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of -0-
Shares
Beneficially 8 Shared Voting Power
Owned By 25,394,489
Each
Reporting 9 Sole Dispositive Power
Person -0-
With
10 Shared Dispositive Power
25,394,489
11 Aggregate Amount Beneficially Owned by Each Reporting Person
25,394,489
12 Check Box if the Aggregate Amount in Row (11) _____
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
38.5%
14 Type of Reporting Person
OO
<PAGE>
1 Name of Reporting Person
S.S or I.R.S. Identification No. of Above Person
Paladin Court Co., Inc.
2 Check the Appropriate Box if a Member of a Group
(a) ____
(b) __X_
3 SEC Use Only
4 Source of Funds
AF
5 Check Box if Disclosure of Legal Proceedings is _____
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of -0-
Shares
Beneficially 8 Shared Voting Power
Owned By 25,394,489
Each
Reporting 9 Sole Dispositive Power
Person -0-
10 Shared Dispositive Power
25,394,489
11 Aggregate Amount Beneficially Owned by Each Reporting Person
25,394,489
12 Check Box if the Aggregate Amount in Row (11) ____
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
38.5%
14 Type of Reporting Person
CO
<PAGE>
1 Name of Reporting Person
S.S or I.R.S. Identification No. of Above Person
DBC II Corp.
2 Check the Appropriate Box if a Member of a Group
(a) _____
(b) X
3 SEC Use Only
4 Source of Funds
AF
5 Check Box if Disclosure of Legal Proceedings is _____
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of -0-
Shares
Beneficially 8 Shared Voting Power
Owned By 25,394,489
Each
Reporting 9 Sole Dispositive Power
Person -0-
With
10 Shared Dispositive Power
25,394,489
11 Aggregate Amount Beneficially Owned by Each Reporting Person
25,394,489
12 Check Box if the Aggregate Amount in Row (11) ____
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
38.5%
14 Type of Reporting Person
CO
<PAGE>
1 Name of Reporting Person
S.S or I.R.S. Identification No. of Above Person
William R. Huff
2 Check the Appropriate Box if a Member of a Group
(a) ____
(b) __X_
3 SEC Use Only
4 Source of Funds
AF
5 Check Box if Disclosure of Legal Proceedings is ____
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 218,999
Shares
Beneficially 8 Shared Voting Power
Owned By 218,999
Each
Reporting 9 Sole Dispositive Power
Person 118,999
With
10 Shared Dispositive Power
25,394,489
11 Aggregate Amount Beneficially Owned by Each Reporting Person
25,613,488
12 Check Box if the Aggregate Amount in Row (11) ____
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
38.6%
14 Type of Reporting Person
IN
<PAGE>
1 Name of Reporting Person
S.S or I.R.S. Identification No. of Above Person
Donna B. Charlton
2 Check the Appropriate Box if a Member of a Group
(a) _____
(b) ___X_
3 SEC Use Only
4 Source of Funds
AF
5 Check Box if Disclosure of Legal Proceedings is ____
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of -0-
Shares
Beneficially 8 Shared Voting Power
Owned By 25,394,489
Each
Reporting 9 Sole Dispositive Power
Person -0-
With
10 Shared Dispositive Power
25,394,489
11 Aggregate Amount Beneficially Owned by Each Reporting Person
25,394,489
12 Check Box if the Aggregate Amount in Row (11) _____
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
38.5%
14 Type of Reporting Person
IN
<PAGE>
The Statement on Amendment No. 1 to Schedule 13D dated April
15, 1997 is hereby amended to add the information set forth
below.
Item 2. Identity and Background
Item 2(a) is amended and restated to read as follows:
This statement is filed by: (i) The Huff Alternative Income Fund,
L.P., a Delaware limited partnership (the "Fund"), with respect
to 14,086,957 shares of Common Stock (the "Regular Shares") and,
in addition, certain "Derivative Securities" (as defined below),
which entitle the Fund to acquire, in the aggregate, 1,033,180
shares of Common Stock (the "Shares Underlying the Derivative
Securities"), shares of "Series A Convertible Preferred Stock"
(as defined below), which entitle the Fund to acquire, in the
aggregate, 5,864,349 shares of Common Stock and New Warrants (as
defined below), which entitle the Fund to acquire, in the
aggregate, 4,410,000 shares of Common Stock, (ii) WRH Partners,
L.L.C., a Delaware limited liability company ("WRH") and General
Partner of the Fund, with respect to securities held by the Fund;
(iii) Paladin Court Co., Inc., a Delaware corporation ("Paladin")
and a General Manager of WRH, with respect to the securities held
by the Fund; (iv) DBC II Corp., a Delaware corporation ("DBC")
and a General Manager of WRH, with respect to the securities held
by the Fund; and (v) each of William R. Huff ("Huff") and Donna
B. Charlton ("Charlton"), the sole shareholders of Paladin and
DBC, respectively, with respect to the securities held by the
Fund and, in the case of Huff, an additional 118,999 shares of
Common Stock he beneficially owns.
The Fund, WRH, Paladin, DBC, Huff and Charlton are sometimes
referred to collectively in this statement as the "Reporting
Persons."
As used in this statement, the term "Derivative Securities"
means, collectively, (i) a warrant expiring on June 26, 2005,
which is exercisable at the option of the holder, at any time, to
purchase from the Company, for $1.79 a share, up to 100,000
shares of Common Stock, subject to antidilution adjustments; (ii)
a warrant expiring on June 26, 2005, which is exercisable at the
option of the holder, at any time, to purchase from the Company,
for $2.50 a share, up to 100,000 shares of Common Stock, subject
to antidilution adjustments; (iii) 10,000 warrants expiring on
January 1, 2004, which are exercisable at the option of the
holder at any time to purchase from the Company, for $7.15 per
share, up to 80.318 shares of Common Stock for each Warrant,
subject to an increase of 22.645 shares for each Warrant in the
event the Company fails to raise net proceeds of at least $50
million through the issue and sale of its "Qualified Stock" (as
defined in Item 3 below), other than preferred stock, on or
before December 31, 1998, and also subject to antidilution
protection; and (iv) 30,000 warrants expiring on June 30, 2003,
which are exercisable, at the option of the holder, at any time,
to purchase from the Company, for $21.50 per share, up to 30,000
shares of Common Stock.
As used in this statement the term "Series A Convertible
Preferred Stock" means shares of Series A Convertible Preferred
Stock of the Company initially convertible, at the option of the
holder, into 126.42225 shares of Common Stock at a conversion
price of $7.91 per share (subject to antidilution protection) and
accruing dividends (payable solely in shares of Common Stock) on
a daily basis at a rate per annum (computed on the basis of a
360-day year of twelve 30-day months), compounded quarterly, of
7.0% of the stated value thereof, subject to adjustment upon the
occurrence (or failure to occur) of certain events, including (x)
a change in control of the Company, (y) the failure of the
Company to timely file and maintain the effectiveness of a shelf
registration statement with respect to the Series Convertible
Preferred Stock and (z) the failure of the Company to obtain any
necessary Stockholder Approval.
The term "New Warrants" means warrants dated March 1, 2000, each
such warrant exercisable by the holder at any time prior to 5:00
pm on March 1, 2010 to purchase 44.1 shares of Common Stock
(subject to antidilution protection) at an initial exercise price
of $9.89 per share.
In order to comply with the rules of the Nasdaq Stock Market, the
Issuer has scheduled a special meeting of its stockholders to
seek their approval of the issuance of up to $138.6 million of
Series A Convertible Preferred Stock, including up to $79.2
million to be purchased by the Fund, and the issuance of Common
Stock payable as dividends on the Series A Convertible Preferred
Stock.
The Issuer's stockholders also will be asked to approve the
issuance of up to $124.3 million each of (i) Common Stock
("Additional Common Stock") at a price per share (the "Formula
Price") equal to the lesser of $3.37 per share and 80% of the
market price at the time of issuance; (ii) convertible preferred
stock ("Convertible Preferred Stock")in one or more series,
convertible into Common Stock at the Formula Price at the time of
issuance (and which will otherwise have essentially the same
terms as the Series Convertible Preferred Stock); and (iii)
warrants ("Additional Warrants") to purchase Common Stock at the
Formula Price.
The Additional Common Stock, Convertible Preferred Stock or
Additional Warrants, if stockholder approval is obtained, may be
issued pursuant to a Purchase Agreement, dated September 19,
2000, between the Issuer and the Fund and Separate Purchase
Agreements of the same date between the Fund and other parties
(the "Purchase Agreements"). The purchasers, including the Fund,
have the option to determine the class or series of securities
("Junior Securities") that they will purchase under the Purchase
Agreements, including debt securities, and may purchase the
securities for cash or in exchange for exchangeable preferred
stock ("Exchangeable Preferred Stock") issued to them on
September 19, 2000. The Fund acquired $28.6 million of
Exchangeable Preferred Stock on that date.
The Issuer's stockholders also will be asked to approve the
issuance to the Fund and the other purchasers warrants
("Transaction Fee Warrants") to purchase Common Stock at an
exercise price of $0.01 in an amount equal to 60,000 divided by
the market price of the Common Stock time of any closing under
the Purchase Agreements (less $0.01) per million dollars of
Additional Common Stock, Convertible Preferred Stock, Additional
Warrants or debt securities at the closing. The Fund, subject to
obtaining the stockholder approval, is entitled to receive at
least 510,714 Transaction Fee Warrants as the result of its
purchase of $28.6 million of Exchangeable Preferred Stock.
Item 3. Source and Amount of Funds and Other Consideration
Item 3 is amended by adding the following:
Pursuant to a Purchase Agreement dated March 1, 2000 between the
Fund and the Company (the "Convertible Preferred Stock Purchase
Agreement"), the Fund acquired 46,387 shares of Series A
Convertible Preferred Stock and New Warrants representing rights
to acquire 10,274,349 shares of Common Stock in the aggregate.
When aggregated with the shares of Common Stock that were
acquired by the other investors, these securities represented in
the aggregate, 19.9% of the outstanding shares of Common Stock of
the Company (on a fully diluted basis), at a purchase price of
$792.29 per share of Series A Convertible Preferred Stock and
$207.71 per New Warrant. The Fund funded its purchase of the
Initial Securities from working capital.
Pursuant to the Purchase Agreements, dated September 19, 2000, if
the required stockholder approval is obtained, the Fund may
acquire Junior securities or Additional Common Stock, Preferred
Stock or Additional warrants and additional Transaction Fee
Warrants described in the response to Item 2. The Fund also may
acquire up to an aggregate of $28.6 million in Additional Common
Stock, Convertible Preferred Stock or Additional Warrants in
exchange for its exchangeable preferred stock.
Item 4. Purpose of the Transaction
Item 4 is amended by adding the following:
Pursuant to the Convertible Preferred Stock Purchase Agreement,
the Fund purchased the Series A Convertible Preferred Stock and
New Warrants and may acquire the other securities described in
the response to Items 2 and 3, for investment purposes.
Item 5. Interest in Securities of the Issuer
Percentage: The percentages used in item 5
are calculated based upon the shares of
Common Stock stated by the Company to be
issued and outstanding as of September 19,
2000 (54,683,057).
The information on pages 3 through 8 of this
Amendment is incorporated herein by
reference.
In addition, Christopher L. Rafferty, a director of the Issuer
and an employee of WRH, owns 10,999 shares of Common Stock
directly. Mr. Rafferty disclaims beneficial ownership of any
securities held by the Fund.
Item 7. Material to Be Filed as Exhibits
Item 7 is amended by adding the following:
Exhibit L - Purchase Agreement, dated March 1, 2000, between the
Issuer and the Fund.
Exhibit M - Purchase Agreement, dated September 19, 2000, between
the Issuer and the Fund.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge
and belief, the undersigned certify that the information set
forth in this statement is true, complete and correct.
Dated: November __, 2000
THE HUFF ALTERATIVE INCOME FUND, L.P.
By: WRH Partners, L.L.C.
General Partner
By: DBC II Corp.
General Manager
By: /s/ Donna B. Charlton
Donna B. Charlton
President
WRH Partners, L.L.C.
By: DBC II Corp.
General Manager
By: /s/ Donna B. Charlton
Donna B. Charlton
President
By: /s/ Donna B. Charlton
Donna B. Charlton
Individually
Paladin Court Co., Inc.
By: /s/ William R. Huff
William R. Huff
President
/s/William R. Huff
William R. Huff,
Individually
<PAGE>
INDEX TO EXHIBITS
Exhibit Page No.
Exhibit L - Purchase Agreement,
dated March 1, 2000, between the
Issuer and the Fund
Exhibit M - Purchase Agreement,
dated September 19, 2000, between
the Issuer and the Fund
