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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) APRIL 27, 2000
EQUALNET COMMUNICATIONS CORP.
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(Exact Name of Registrant as Specified in its Charter)
TEXAS 0-25482 76-0457803
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1250 Wood Branch Park Drive, Houston, TX 77079
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (281) 529-4600
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 27, 2000, Equalnet Communications Corp. (the "Registrant")
entered into a definitive agreement (the "Stock Purchase Agreement") to acquire
all of the outstanding shares of Max-Tel Communications, Inc., a privately held
corporation ("MTC"). The total consideration payable by Registrant to the
shareholders of MTC may range from $3 million to $6 million in cash and from 5
million to 12 million restricted shares of common stock of Registrant. The
shareholders of MTC have the right to elect to receive restricted shares of
common stock of the Registrant in lieu of cash. In the event that the MTC
shareholders make such an election the amount of the cash consideration will be
reduced but will not be reduced below $3 million. The number of shares of the
Registrant to be issued in such event will be increased but will not be
increased to an amount in excess of 12 million shares. The market price of the
common stock of the Registrant will also affect the number of its shares of
common stock to be issued to the shareholders of MTC. MTC is a prepaid
competitive local exchange carrier providing prepaid dial tone to subscribers
who typically do not meet the credit criteria imposed by the incumbent local
exchange carriers.
The acquisition of MTC by the Registrant is subject, among other
things, to Registrant's satisfactory completion of its due diligence, obtaining
required regulatory approvals, and Registrant's financing of the cash component
of the transaction consideration. Registrant has received a preliminary
commitment from a lender to provide the financing necessary to consummate the
transaction.
On May 2, 2000 the Registrant issued a press release (the "Press
Release") announcing the signing of the Stock Purchase Agreement. Further
details concerning the acquisition of MTC by Registrant are contained the
Registrant's Press Release, which is filed herewith.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit number Description
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99.1 Press Release of May 2, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUALNET COMMUNICATIONS CORP.
By: /s/ Mitchell H. Bodian
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Mitchell H. Bodian
President & Chief Executive Officer
Date: May 5, 2000
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EXHIBIT INDEX
Exhibit number Description
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99.1 Press Release of May 2, 2000
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
EQUALNET ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE MAX-TEL COMMUNICATIONS, INC.,
PREPAID COMPETITIVE LOCAL EXCHANGE CARRIER
HOUSTON--MAY 2, 2000 -- Equalnet Communications Corp. (OTC BB: ENET) announced
today that it had entered into a definitive agreement to acquire Max-Tel
Communications, Inc., a prepaid competitive local exchange carrier (CLEC), for
total consideration of up to $6 million in cash and up to 12 million shares of
restricted Equalnet common stock. Completion of the transaction is subject to
Equalnet's satisfactory completion of its due diligence, obtaining required
regulatory approvals, and Equalnet's financing of the cash component of the
transaction consideration. Equalnet has received a preliminary commitment from
a lender to provide the financing necessary to consummate the transaction.
Equalnet anticipates that the transaction will close within 90 days.
Max-Tel's core business is providing prepaid dial tone to subscribers who
typically do not meet the credit criteria imposed by the incumbent local
exchange carriers. Based in Alvord, Texas, Max-Tel has approximately 18,000
subscribers and has regulatory approval to provide CLEC services in over 20
states. Max-Tel has applications pending to provide CLEC services in additional
states. Max-Tel has interconnect agreements with 6 incumbent local exchange
carriers. Its current annualized revenue is approximately $12 million. Max-Tel
advised Equalnet that for calendar 1999 it had pre-tax income of approximately
$1.4 million.
Mitchell Bodian, Equalnet's President and CEO, commented, "The prepaid CLEC
market is a relatively new, under-served, and rapidly growing telecom segment
without any clearly dominant competitors. We believe this presents an
attractive and potentially highly profitable niche market for Equalnet. Some
industry studies predict that the number of prepaid dial tone subscribers will
double between this year and next. Max-Tel has had success serving this market
and we expect it to provide us with a firm foundation upon which we can build a
leading prepaid CLEC operation." Bodian added, "Our infrastructure and
facilities should permit us to capitalize on Max-Tel's strengths and maximize
the benefits of combining the operations of Max-Tel and Equalnet."
This press release includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934. Although Equalnet believes its expectations
are based on reasonable assumptions it can give no assurance such assumptions
will materialize. These statements are based on current
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expectations subject to risks and uncertainties. Actual results will vary
because of factors such as customer attrition, increased competition, results of
due diligence, availability of financing, litigation, and other issues discussed
in the Company's Form 10-K and other filings of the Company with the S.E.C.
Contact: Mitchell H. Bodian, Equalnet Communications Corp. (281) 529-4602
