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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _______)*
PSINET, INC.
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(Name of Issuer)
Common Stock, $.01 per share par value
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(Title of Class of Securities)
74437C101
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(CUSIP Number)
Jeffrey C. Smith with a copy to:
IXC Communications, Inc. Karen C. Goodin, Esq.
1122 Capital of Texas Highway South Riordan & McKinzie
Austin, Texas 695 Town Center Drive, Suite 1500
(512) 328-1112 Costa Mesa, California 92626
(714) 433-2655
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
February 25, 1998
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(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 [ ].
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 copes 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).
Page 1 of 7
Exhibit Index appears on Page 7
SEC 1746 (91)
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SCHEDULE 13D
CUSIP NO. 74437C 10 1 PAGE 2 OF 6 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
IXC INTERNET SERVICES, INC. 74-2865665
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00 (SEE ITEM 3)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES 10,229,789
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,229,789
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 10,229,789
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PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,229,789
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,229,789
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.1%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, par value $.01, CUSIP No.
74437C101 (the "Common Stock"), of PSINet, Inc., a Delaware corporation (the
"Issuer"), having its principal executive offices at 510 Huntmar Park Drive,
Herndon, Virginia, 22070.
Item 2. Identity and Background.
This Schedule 13D is filed by and on behalf of IXC Internet Services,
Inc. ("Internet" or the "Filing Person"), a Delaware corporation having its
principal address and principal office at 1122 Capital of Texas Highway South,
Austin, Texas 78746. Internet is an indirect wholly owned subsidiary of IXC
Communications, Inc., a leading provider of telecommunications services to long
distance and other telecommunications companies.
During the last five years, the Filing Person has not been convicted in
a criminal proceeding (excluding traffic violations and similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Internet acquired the Issuer's Common Stock on February 25, 1998
pursuant to an IRU and Stock Purchase Agreement entered into between Internet
and PSINet on July 22, 1997, as amended (the "Purchase Agreement"). Under the
terms of the Purchase Agreement, Internet will provide to PSINet noncancellable,
indefeasible rights of use ("IRUs") in (i) two fibers in specified portions of
IXC's fiber optic telecommunications system of up to 10,000 equivalent route
miles of OC-48 bandwidth and in (ii) capacity of up to 10,000 equivalent route
miles of OC-48 bandwidth in such fibers on the Available System. In
consideration of the grant of the IRUs, the Issuer issued to Internet 10,229,778
shares of the Issuer's Common Stock.
Item 4. Purpose of Transaction.
The Issuer's Common Stock has been acquired solely for investment in
consideration of the grant of the IRUs, as described in Item 3.
(a) Pursuant to the Purchase Agreement, if the fair market value of
the Issuer's Common Stock as of the earlier to occur of (i) the
first anniversary of the date on which 100% of the bandwidth
corresponding to the IRU is accepted by the Issuer or (ii) the
fourth anniversary of the closing is not equal to or greater
than $240 million, the Issuer will be obligated to deliver to
Internet (1) additional shares of Common Stock or, at the
Issuer's sole option, (2) cash, or, (3) a combination thereof,
equal to the shortfall.
(b) Not applicable.
(c) Not applicable.
(d) Pursuant to the Purchase Agreement, so long as Internet owns 95%
of the Common Stock of the Issuer issued under such agreement at
the closing, the Issuer's Chairman shall recommend that (i) the
Issuer's Board of Directors elect Ralph J. Swett, IXC's current
Chairman, to the Issuer's Board effective as of the closing, for
a term to expire in 1998 or later and that such person be
nominated to stand for election with the other nominated Board
members at the Issuer's 1998 annual meeting (or later annual
meeting associated with the expiration of his term) for a term
expiring no earlier than 2000 and for reelection thereafter at
the applicable annual meetings of the Issuer. At such time as
Internet shall cease to own the requisite amount of the Issuer's
Common Stock, a resignation letter will be executed
Page 3 of 6 pages.
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by such individual and he shall immediately cease to serve as a
member of the Issuer's Board of Directors.
(e) See (a) above.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
Item 5. Interest in Securities of The Issuer.
(a) Internet is the beneficial owner of 10,229,789 shares, or 20.1% of
the Issuer's outstanding Common Stock.
(b) Internet has sole voting and sale dispositive power with respect to
all 10,229,789 shares of the Issuer's Common Stock.
(c) No other transactions by the Filing Persons with respect to the
Common Stock of the Issuer were effected during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Pursuant to the Purchase Agreement, Internet and IXC have agreed that
they shall not and shall not permit any of IXC's controlled affiliates to,
without the prior approval of the Issuer's Board of Directors, (i) acquire or
make any proposal to acquire, directly or indirectly, any securities of the
Issuer or its subsidiaries; (ii) propose a tender offer; (iii) directly or
indirectly solicit proxies or consents or become a participant in a
solicitation; (iv) form, join or in any way participate in a group with respect
to any of the Issuer's voting securities or (v) deposit any voting securities in
a voting trust or subject any voting securities to any arrangement or agreement
with respect to the voting securities. Internet and the Issuer have also entered
into a registration rights agreement, pursuant to which the Issuer has agreed to
register the Issuer's Common Stock issued under the terms of the Purchase
Agreement, upon the occurrence of certain conditions.
Item 7. Material to Be Filed as Exhibits.
The Filing Person files as exhibits the following:
Exhibit 1: IRU and Stock Purchase Agreement, as amended, dated as of
July 22, 1997 between IXC Internet Services, Inc. and PSINet, Inc. (incorporated
by reference to IXC Communications, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 filed with the Commission on November 14, 1997,
as amended by Amendment No. 1 to Form 10-Q/A filed with the Commission on
December 12, 1997).
Exhibit 2: Form of Registration Rights Agreement dated as of February
25, 1998 between IXC Internet Services, Inc. and PSINet, Inc. (Exhibit N to IRU
and Stock Purchase Agreement, as amended, dated as of July 22, 1997 between IXC
Internet Services, Inc. and PSINet, Inc., incorporated by reference to IXC
Communications, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 filed with the Commission on November 14, 1997, as amended
by Amendment No. 1 to Form 10-Q/A filed with the Commission on December 12,
1997).
Page 4 of 6 pages.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 9, 1998 IXC INTERNET SERVICES, INC.
By: /s/ JEFFREY C. SMITH
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Jeffrey C. Smith
Its: Senior Vice President
General Counsel and Secretary
Page 5 of 6 pages.
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
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<C> <S> <C>
1. IRU and Stock Purchase Agreement, as amended, dated
as of July 22, 1997 between IXC Internet Services,
Inc. and PSINet, Inc. (incorporated by reference to
IXC Communications, Inc.'s Quarterly Report on Form
10-Q for the quarter ended September 30, 1997 filed
with the Commission on November 14, 1997, as amended
by Amendment No. 1 to Form 10-Q/A filed with the
Commission on December 12, 1997)
2. Form of Registration Rights Agreement dated as of
February 25, 1998 between IXC Internet Services,
Inc. and PSINet, Inc. (Exhibit N to IRU and Stock
Purchase Agreement, as amended, dated as of July
22, 1997 between IXC Internet Services, Inc. and
PSINet, Inc., incorporated by reference to IXC
Communications, Inc.'s Quarterly Report on Form
10-Q for the quarter ended September 30, 1997
filed with the Commission on November 14, 1997,
as amended by Amendment No. 1 to Form 10-Q/A
filed with the Commission on December 12, 1997).
</TABLE>
Page 6 of 6 pages.
