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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): August 19, 1996
MIDCOM Communications Inc.
(Exact name of registrant as specified in its charter)
Washington
(State or other jurisdiction of incorporation or organization)
000-26118 91-1438806
(Commission File Number) (I.R.S Employer Identification No.)
1111 Third Avenue Seattle, Washington 98101
(Address of principal executive offices)
(206) 628-8000
(Registrant's telephone number, including area code)
Page 1 of 5 pages.
Exhibit Index at page 4.
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Item 5. Other Events
NOTICE OF UNREGISTERED OFFERING
On August 26, 1996 MIDCOM Communications Inc. (the "Company") issued a
press release under Securities and Exchange Commission Rule 135c giving notice
of the closing of an unregistered private offering of $85,000,000 principal
amount of convertible subordinated notes due in 2003. The text of that press
release is included with this report as Exhibit 99.1.
DISPUTES AND LITIGATION
On August 19, 1996 the Company was served with a complaint filed in the
U.S. District Court for the Eastern District of Michigan by Frontier Corporation
("Frontier"). This complaint names as defendants the Company and thirteen
individuals, all of whom are former employees of Frontier who resigned their
positions with Frontier at various times in the last year. These individuals
include William H. Oberlin, the President and Chief Executive Officer and a
director of the Company, Charles I. Gragg III, the Vice President-Marketing of
the Company, and nine other employees of the Company. The complaint alleges,
among other things, that: (i) certain of the individual defendants, with the
acquiescence and active assistance of the Company, have engaged in a systematic
strategy to hire key employees and independent contractors of Frontier in
violation of various written agreements; (ii) the individual defendants have
used confidential information belonging to Frontier in their new employment with
Midcom in violation of written agreements and fiduciary duties and (iii) Mr.
Oberlin has breached fiduciary duties as a former employee and officer of
Frontier and breached obligations under an employment agreement with Frontier.
The complaint further alleges that: (i) Midcom is in violation of a
non-disclosure agreement between Frontier and Midcom by virtue of its alleged
use of confidential information of Frontier obtained through employees hired
from Frontier and otherwise; (ii) Midcom has aided and abetted Mr. Oberlin's
alleged breaches of fiduciary duties and (iii) Midcom and the other defendants
have tortiously interfered in Frontier's contractual relationships with various
Frontier employees and contractors. The complaint seeks: (i) that the defendants
be preliminary and permanently enjoined from breaching their respective
agreements with Frontier; (ii) that Midcom be enjoined from aiding and abetting
certain alleged breaches of fiduciary duties; (iii) an order that the defendants
hold all profits which Midcom earns as a result of its hiring of the individual
defendants and other Frontier employees as constructive trustees for the benefit
of Frontier; (iv) an accounting of all profits realized by Midcom as a result of
its hiring of the defendants and other Frontier employees; (v) a declaratory
judgment on its various claims; (v) damages in an unspecified amount; (vi)
Frontier's costs, including reasonable attorney's fees, incurred in bringing the
action; and (vii) other appropriate relief. The Company is in the early stages
of reviewing Frontier's complaint and intends to vigorously defend this action.
Based on the Company's preliminary review of the allegations in the complaint
and the underlying facts, the Company believes that the ultimate outcome of this
matter will not have a material adverse effect on the Company's business,
financial condition, results of operations or liquidity. However, the outcome of
any litigation is uncertain and could result in substantial legal and other
costs and diversion of management efforts.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Press release dated August 26, 1996 issued under Securities
and Exchange Commission Rule 135c giving notice of the closing
of an unregistered offering of convertible subordinated notes.
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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.
MIDCOM COMMUNICATIONS INC.
Dated: August 26, 1996 By:/s/ Paul P. Senio
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Paul P. Senio
Vice President and General Counsel
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MIDCOM COMMUNICATIONS INC.
EXHIBIT INDEX
to Interim Report on Form 8-K
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99.1 Press release dated August 26, 1996 issued under Securities and
Exchange Commission Rule 135c giving notice of the closing of an
unregistered offering of convertible subordinated notes. 5
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Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT: Robert J. Chamberlain Paul Senio
Chief Financial Officer General Counsel
(206) 628-5174 (206) 628-4900
MIDCOM COMMUNICATIONS INC. ANNOUNCES
CLOSING OF $85,000,000 PRIVATE PLACEMENT
SEATTLE, WA - AUGUST 26, 1996 - MIDCOM Communications Inc. (NASDAQ: MCCI) today
announced the closing of its previously announced private offering for $85
million of convertible subordinated notes on August 22, 1996. The notes bear
interest at the rate of 8-1/4 percent and the principal amount of the notes, due
August 15, 2003, may be converted, at the option of the holder, into shares of
MIDCOM common stock at a conversion price of $14.0875 per share subject to
certain adjustments. The notes are redeemable, in whole or in part, at the
option of MIDCOM at any time after August 15, 2001.
The notes were offered on behalf of MIDCOM to qualified institutional
buyers under SEC Rule 144A, in private transactions to certain accredited
investors and under Regulation S in offshore transactions to certain non-U.S.
persons. The notes have not been registered under the Securities Act of 1933 and
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
Founded in 1989, MIDCOM provides a broad range of telecommunications
services to small and medium-sized businesses nationwide. The company is
headquartered in Seattle, Washington and has regional offices throughout the
nation. MIDCOM currently invoices approximately 125,000 customer locations per
month.
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