UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Viatel, Inc.
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(Name of Issuer)
Common Stock, $.01 par value per share
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(Title of Class of Securities)
925529 20 8
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(CUSIP Number)
Talbert Navia, Esq.
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, NY 10112
(212) 408-5100
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
See Item 4
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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 |_|
*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).
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SCHEDULE 13D
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CUSIP No. 925529 20 8 Page 2 of 9 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Martin Varsavsky
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |x|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK 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
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES 5,369,666 shares (see Item 6)
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY - 0 -
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,369,666 shares
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10 SHARED DISPOSITIVE POWER
PERSON
- 0 -
WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,369,666 shares
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|x|
Excludes an aggregate of 2,140,539 shares of Common Stock owned by
COMSAT International Inc. as to which Mr. Varsavsky disclaims
beneficial ownership.
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.2%
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14 TYPE OF REPORTING PERSON*
IN
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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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CUSIP No. 925529 20 8 Page 3 of 9 Pages
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To the extent set forth below, Mr. Martin Varsavsky (the
"Reporting Person" or "Varsavsky") hereby amends his Statement on Schedule 13D
originally filed on December 4, 1996 (the "Schedule 13D") relating to his
beneficial ownership of shares of common stock, $0.01 par value per share (the
"Common Stock"), of Viatel, Inc., a Delaware corporation (the "Company" or
"Viatel").
Item 2. Identity and Background.
------------------------
Item 2 of the Schedule 13D is hereby amended by replacing it
in its entirety with the following:
(a-f) This Amendment No. 1 to the Schedule 13D ("Amendment No.
1") is being filed on behalf of Martin Varsavsky. The present principal
occupation or employment of the Reporting Person is President and Chairman of
the Board of Jazz Telecom, S.A., a telecommunications service provider in Spain.
The business address of the Reporting Person and Jazz Telecom, S.A. is Paseo de
la Castellana 60, 8 Planta, 28046 Madrid, Spain.
During the last five years, the Reporting Person has not been
(i) convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which proceeding he
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. The
Reporting Person is a citizen of the United States.
Item 4. Purpose of Transaction.
-----------------------
Item 4 of the Schedule 13D is hereby amended by
replacing it in its entirety with the following:
Varsavsky and five executive officers of the Company entered
into an agreement providing for the payment of certain fees to those executive
officers in connection with the sale by Varsavsky of his shares of Common Stock.
In lieu of payment of any fee or commission by Varsavsky to such executive
officers in connection with the sale by Varsavsky of any of such shares, on
October 2, 1998 Varsavsky transferred 16,000 shares to each of the executive
officers (80,000 shares in the aggregate) as provided for in a settlement
agreement dated August 30, 1998.
The Reporting Person is holding his shares of Common Stock for
investment purposes. Since the filing of the Schedule 13D, in addition to the
transfer of the 80,000 shares referred to in the prior paragraph, the Reporting
Person has disposed of 613,501 of his shares of Common Stock in market
transactions. Subject to the restrictions of the Mutual Cooperation Agreement,
discussed in Item 6 herein, the Reporting Person will continue to acquire or
dispose of the Common Stock from time to time based upon factors including,
among others he may deem relevant, the Company's business, prospects and
financial condition, the market for the Common Stock, general economic
conditions and his need for funds. The Reporting Person expressly reserves the
right to increase or decrease his
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CUSIP No. 925529 20 8 Page 4 of 9 Pages
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holdings in the Common Stock on such terms or at such times as he may determine.
Any purchase or sale may be executed in the open market or in privately
negotiated transactions.
In addition, the Reporting Person's Common Stock may be sold
from time to time pursuant to the provisions of a margin loan ("Margin Loan")
with Credit Suisse First Boston. See Item 6 below.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
Item 5 of the Schedule 13D is hereby amended by supplementing
it with the following:
(a-b) As of the close of business on October 9, 1998, the
Reporting Person owned and had sole voting and dispositive power with respect to
5,369,666 shares of Common Stock, or approximately 23.2% of the Common Stock
(based on the number of shares (23,171,305) reported by the Company to be
outstanding as of August 12, 1998). The foregoing excludes an aggregate of
2,140,539 shares of Common Stock owned by COMSAT International, Inc.
("COMSAT") as to which Varsavsky disclaims beneficial ownership. See Item 6
below.
(c) Except as set forth in Item 4 above, no transactions in
the Issuer's securities by the Reporting Person has been effected during the
past sixty (60) days.
(d) Subject to the Margin Loan, no other person is known to
have the right to receive or the power to direct the receipt of dividends from,
or any proceeds from the sale of shares of Common Stock owned by, the Reporting
Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer.
--------------------------------------------
Item 6 of the Schedule 13D is hereby amended by replacing it
in its entirety with the following:
Shareholders' Agreement dated as of September 30, 1993
On September 30, 1993, the Reporting Person and S-C V-Tel
Investments, L.P. ("S-C V-Tel") entered into a shareholders' agreement, which,
as amended, provides that, in certain instances, if either or both of the
Reporting Person and Juan Manuel Aisemberg ("Aisemberg") propose to sell 20.0%
or more of the Common Stock owned by them, they shall cause S-C V-Tel and
certain other of the Company's stockholders to have the right to sell their
shares of Common Stock in such a transaction on a pro rata basis, for the same
consideration per share and on the same terms as Varsavsky and Aisemberg.
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CUSIP No. 925529 20 8 Page 5 of 9 Pages
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Shareholders' Agreement dated as of April 5, 1994.
On April 5, 1994, the Reporting Person, Aisemberg and COMSAT
entered into a shareholders' agreement, which, as amended, provides that, so
long as COMSAT owns at least 10.0% of the issued and outstanding shares of
Common Stock on a fully diluted basis (subject to certain adjustments)(the
"Minimum Equity"), COMSAT is entitled to representation on the Company's Board
of Directors in proportion to its ownership interest of Common Stock, subject to
a minimum of one seat, and to designate one member of the Board of Directors'
Executive Committee, if any such committee is established. The Reporting Person
and Aisemberg also agreed to vote, so long as COMSAT owns the Minimum Equity,
the shares of Common Stock beneficially owned by them so as to elect to the
Board the number of individuals nominated by COMSAT and to cause one of the
COMSAT nominees to serve on the Executive Committee of the Company's Board of
Directors, if established. In addition, in certain instances, if either or both
of the Reporting Person and Aisemberg propose to sell 20.0% or more of the
Common Stock owned by them, they shall cause COMSAT and certain other of the
Company's shareholders to have the right to sell their shares of Common Stock in
such a transaction on a pro rata basis, for the same consideration per share and
on the same terms as the Reporting Person and Aisemberg.
Margin Loan
5,200,000 shares of the Common Stock have been pledged to
secure the Reporting Person's obligations under the Margin Loan with Credit
Suisse First Boston ("CSFB"). The aggregate amount that may be borrowed under
the Margin Loan is $15 million and at October 28, 1998 $12,923,340.30 aggregate
principal amount was outstanding under the Margin Loan. Pursuant to the Margin
Loan, CSFB is permitted to sell every three months the maximum amount of shares
of Common Stock pursuant to Rule 144 and apply the net cash proceeds from such
sales to reduce the outstanding principal amount under the Margin Loan. In
addition, CSFB has the right to sell the Common Stock under certain other
instances and apply the net proceeds therefrom to reduce the principal amount.
Mutual Cooperation Agreement
On June 3, 1998, the Reporting Person and the Company entered
into a mutual cooperation agreement (the "MC Agreement") which, among other
things, contains a lock-up provision (the "Lock-up") restricting the Reporting
Person's ability to sell his shares of Common Stock. The following describes the
terms of the relevant sections of the MC Agreement:
Subject to certain exceptions, Varsavsky agreed
with Viatel that he will not offer, sell,
transfer or otherwise dispose or contract to
offer, sell, transfer or otherwise dispose of,
directly or indirectly, or pledge or encumber
(except to the extent existing at the time of
the MC Agreement) or announce an offering of,
any of the Reporting Person's shares of Common
Stock for a period of twelve (12) months after
the date of execution of the MC Agreement. In
order to enforce the foregoing covenant, Viatel
may impose stop-transfer instructions with
respect to the Reporting Person's shares of
Common Stock and may require that such shares
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CUSIP No. 925529 20 8 Page 6 of 9 Pages
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bear an appropriate legend. In addition, Viatel
shall have the right to seek injunctive relief
to prevent a sale of the Reporting Person's
shares of Common Stock which is in violation of
the MC Agreement. Varsavsky shall provide Viatel
with written notice of any contemplated sale of
such shares, whether or not prohibited by the
terms of the MC Agreement.
Notwithstanding the above restrictions, (i)
Varsavsky is permitted to sell his shares in a
private placement to any financial institution
that is a "qualified institutional buyer," as
such term is defined in Rule 144A promulgated
under the Securities Act of 1933, as amended
(the "Act"), or certain individuals who have
sufficient net worth and sophistication to allow
a purchase of the Reporting Person's shares of
Common Stock in a transaction exempt from
registration under the Act and (ii) Credit
Suisse First Boston shall be entitled to
foreclose upon such shares pledged as security
for the Margin Loan between it and Varsavsky
after an event of default by Varsavsky, but
solely after applicable notice and grace
periods.
Varsavsky agreed with Viatel that during the
Lock-up period he shall not borrow more then an
additional U.S. $5.0 million under the Margin
Loan (the "Permissible Borrowing") until such
time as the market price of the Common Stock is
at least equal to the market price of such stock
at the date the Margin Loan was incurred, at
which point, the Permissible Borrowing shall be
the amount available for borrowing under the
Margin Loan, provided however, that Varsavsky may
borrow only additional amounts under the Margin
Loan or increase or refinance the Margin Loan
subject to the approval of Viatel, which approval
shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, (i) in the event
the price per share of the Common Stock equals or
exceeds U.S. $10.00 per share, the Permissible
Borrowing shall be increased to U.S. $7.0 million
(ii) the Permissible Borrowing shall be reduced
by an amount equal to the net cash proceeds
received from the sale of any of Varsavsky's
shares of Common Stock to executive officers of
Viatel for a price per share equal to the average
closing price of the Common Stock for the ten
(10) business days prior to the date of the MC
Agreement.
The Company agreed that if (i) within twelve (12)
months from the date of the MC Agreement, the
closing stock price of the Common Stock is at
least equal to $12.00 per share on the Nasdaq/NMS
for at least twenty (20) consecutive business
days and (ii) Viatel's investment bank, currently
Morgan Stanley, determines in its reasonable
discretion, that a secondary offering of the
Reporting Person's shares of Common Stock is
feasible, then Viatel shall be required to
register such shares for sale in a registered
offering (the "Registration"). The
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CUSIP No. 925529 20 8 Page 7 of 9 Pages
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MC Agreement provides that Viatel and Varsavsky
shall reach an understanding relating any other
investment bank with respect to the underwriting
for the Reporting Person's shares of Common
Stock.
Varsavsky agreed that he would sell at least 3.5
million of his shares of Common Stock in the
Registration, or such lesser amount as may be
required by the lead underwriter.
If the Company files a registration statement in
respect of Common Stock (other than a
registration statement on Form S-4 or Form S-8 or
under the Registration) whether on behalf of the
Company or other stockholders of the Company,
then Varsavsky will be entitled to "piggy back"
rights with respect to such registration
statement, subject to standard pro rata "cutback"
requirements in the sole discretion of the lead
underwriter for such offering.
Varsavsky agreed to pay all expenses incurred in
connection with the Registration, including
without limitation, all registration, filing and
qualification fees, printers' and accounting
fees, fees and disbursements of counsel for the
Company, to the extent that such expenses are
allocable to the Reporting Person's shares
determined on a pro rata basis.
Except as permitted pursuant to the Lock-up or as
part of his registration rights, Varsavsky agreed
that he shall not, for at least 12 months after
the effective date of a registration statement,
to the extent requested by Viatel, directly or
indirectly, offer, sell, transfer or otherwise
dispose or contract to offer, sell, transfer or
otherwise dispose of, directly or indirectly, or
further pledge or encumber or announce an
offering of, any of his shares of Common Stock.
Item 7. Material to be filed as Exhibits.
---------------------------------
Item 7 of the Schedule 13D is hereby amended by adding the
following thereto:
Exhibit A Shareholders' Agreement, dated as of September
30, 1993, as amended as of December 9, 1993, and
as further amended as of April 5, 1994, November
22, 1994 and December 21, 1994 by and among the
Reporting Person, the Company and S-C V-Tel
Investments, L.P. (incorporated herein by
reference to Exhibit 10.21 to the Company's
Registration Statement on Form S-4, File No.
33-92696, filed on May, 24, 1995).
Exhibit B Mutual Cooperation Agreement, dated as of June
3, 1998, by and between the Company, Jazz
Telecom, S.A. and Varsavsky (incorporated herein
by reference to Exhibit
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CUSIP No. 925529 20 8 Page 8 of 9 Pages
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10.16 to the Company's Form 8-K, File No.
000-21261, filed on June 9, 1998).
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CUSIP No. 925529 20 8 Page 9 of 9 Pages
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SIGNATURES
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.
Date: November 9, 1998
By: /s/ Martin Varsavsky
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Name: Martin Varsavsky
