PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-23193
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 13, 1997)
[TEL-SAVE LOGO]
$300,000,000 AGGREGATE PRINCIPAL
AMOUNT OF 4 1/2% CONVERTIBLE
SUBORDINATED NOTES DUE 2002
12,185,834 SHARES
OF COMMON STOCK
This Prospectus Supplement and the accompanying Prospectus relate to the
offer and sale from time to time by the holders named herein and therein or by
their transferees, pledgees, donees, or successors (collectively, the "Selling
Holders") of up to $300,000,000 aggregate principal amount of 4 1/2%
Convertible Subordinated Notes due 2002 (the "Notes") of Tel-Save Holdings,
Inc. (the "Company") and up to 12,185,834 shares of common stock, par value
$.01 per share, of the Company (the "Common Stock"), issuable upon the
conversion of the Notes in full (the "Shares" and, together with the Notes, the
"Securities"). The Company will receive no part of the proceeds of the sales
made under this Prospectus Supplement or the accompanying Prospectus. On
September 15, 1998, the last reported sale price for the Common Stock on the
Nasdaq National Market was $13.
----------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED
UNDER "RISK FACTORS" BEGINNING ON PAGE 5 OF THE ACCOMPANYING PROSPECTUS.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus Supplement
is September 16, 1998.
<PAGE>
The information in this Prospectus Supplement is qualified in its entirety
by the more detailed information and consolidated financial statements and
notes thereto appearing or incorporated by reference in the accompanying
Prospectus. Prior to making an investment decision with respect to the
Securities offered by this Prospectus Supplement and the accompanying
Prospectus, prospective investors should consider carefully the information
contained and incorporated by reference in this Prospectus Supplement and the
accompanying Prospectus.
Capitalized terms used herein and not defined have the meaning assigned to
them in the accompanying Prospectus.
SELLING HOLDERS
The following table supplements the table appearing on pages 38 and 39 of
the accompanying Prospectus and sets forth information with respect to Selling
Holders not identified in the accompanying Prospectus. The name of each Selling
Holder identified below is accompanied by the amount of Notes beneficially
owned by such Selling Holder that may be offered pursuant to this Prospectus
Supplement and the accompanying Prospectus. Such information was obtained from
the Selling Holders between August 28, 1998 and the date hereof unless
otherwise noted. The Shares into which the Notes are convertible are also
offered pursuant to this Prospectus Supplement and the accompanying Prospectus,
and the formula for conversion is set forth in the accompanying Prospectus
under "DESCRIPTION OF THE NOTES -- Conversion." To the Company's knowledge,
except as noted below, none of the Selling Holders identified below has, or
within the past three years has had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates. Because
the Selling Holders may offer all or some portion of the Notes or Shares
issuable upon conversion thereof pursuant to this Prospectus Supplement and the
accompanying Prospectus, no estimate can be given as to the amount of the Notes
or Shares issuable upon conversion thereof that will be held by the Selling
Holders upon termination of any such sales. In addition, the Selling Holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their Notes, since the date on which they provided the information
regarding the Notes, in transactions exempt from the registration requirements
of the Securities Act.
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL AMOUNT OF
AMOUNT OF NOTES NOTES COVERED
BENEFICIALLY BY THIS
SELLING HOLDER NAME OWNED PROSPECTUS
- ----------------------------------------------------------- ----------------- --------------
<S> <C> <C>
AAM/Zazove Institutional Income Fund, L.P.(3)(6) .......... $ 300,000 $ 300,000
Aim Charter(3) ............................................ $13,000,000 $13,000,000
Aim VI Growth and Income(3) ............................... $ 2,000,000 $ 2,000,000
American Bible Society(1) ................................. $ 1,000,000 $ 1,000,000
Argent Classic Convertible Arbitrage Fund L.P.(8) ......... $ 3,000,000 $ 3,000,000
Arkansas PERS(2) .......................................... $ 1,265,000 $ 1,265,000
BancAmerica Robertson Stephens(3)(6) ...................... $ 1,000,000 $ 1,000,000
Black Diamond Ltd.(6)(10) ................................. $ 419,000 $ 419,000
Black Diamond Partners, L.P.(6)(10) ....................... $ 491,000 $ 491,000
BNP Arbitrage SNC(9) ...................................... $ 2,000,000 $ 2,000,000
BTI - Bankers Trust International(1) ...................... $ 9,000,000 $ 9,000,000
BZW Securities Limited(1) ................................. $ 6,500,000 $ 6,500,000
Chase Securities Inc(9) ................................... $16,000,000 $16,000,000
Continental Assurance
Company on behalf of its Separate Account (E)(1) ......... $ 2,600,000 $ 2,600,000
Continental Casualty Company(1) ........................... $ 3,900,000 $ 3,900,000
Delaware PERS(2) .......................................... $ 1,100,000 $ 1,100,000
Deutsche Morgan Grenfell, Inc.(3)(4) ...................... $ 8,305,000 $ 8,305,000
D.E. Shaw Investments, L.P.(2) ............................ $ 1,400,000 $ 1,400,000
D.E. Shaw Portfolios International, L.L.C.(2) ............. $ 1,150,000 $ 1,150,000
D.E. Shaw Securities, L.P.(2) ............................. $ 3,150,000 $ 3,150,000
Deeprock & Co. ............................................ $ 3,500,000 $ 3,500,000
Donaldson, Lufkin & Jenrette Sec. Corp.(3) ................ $11,000,000 $11,000,000
Forest Fulcrum Fund L.P.(3) ............................... $ 530,000 $ 530,000
Forest Global Convertible Fund Series A-5(1) .............. $ 450,000 $ 450,000
Forest Investment Management L.P.(3) ...................... $ 95,000 $ 95,000
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL AMOUNT OF
AMOUNT OF NOTES NOTES COVERED
BENEFICIALLY BY THIS
SELLING HOLDER NAME OWNED PROSPECTUS
- ---------------------------------------------------------------------- ----------------- --------------
<S> <C> <C>
Franklin Investors Securities Trust -- Convertible Securities Fund(9) $ 1,000,000 $ 1,000,000
General Motors Employee Domestic Group Pension Trust ................. $ 5,544,000 $ 5,544,000
General Motors Foundation ............................................ $ 203,000 $ 203,000
Goldman, Sachs & Co(8) ............................................... $ 1,002,000 $ 1,002,000
Gleneagles Fund Company(3) ........................................... $ 500,000 $ 500,00
Hawaiian Airlines Pension Plan -- IAM(2) ............................. $ 100,000 $ 100,000
Hawaiian Airlines Pension Plan for Salaried Employees(2) ............. $ 25,000 $ 25,000
Highbridge Capital Corporation(10) ................................... $ 5,114,000 $ 5,114,000
ICI America Holdings(2) .............................................. $ 450,000 $ 450,000
Kapiolani Medical Center(2) .......................................... $ 225,000 $ 225,000
MainStay Convertible Fund(3)(6) ...................................... $ 3,500,00 $ 3,500,000
MainStay Strategic Value Fund(3) ..................................... $ 500,000 $ 500,000
Massachusetts Mutual Life Insurance Company(1) ....................... $ 4,700,000 $ 4,700,000
MassMutual Corporate Investors(1) .................................... $ 1,000,000 $ 1,000,000
MassMutual Corporate Value Partners Limited(1) ....................... $ 1,000,000 $ 1,000,000
MassMutual High Yield Partners LLC(1) ................................ $ 3,000,000 $ 3,000,000
MassMutual Participation Investors(1) ................................ $ 500,000 $ 500,000
McMahan Securities Co., L.P.(8) ...................................... $ 250,000 $ 250,000
Merrill Lynch Pierce Fenner & Smith Inc.(8) .......................... $ 2,750,000 $ 2,750,000
Motors Insurance Corporation ......................................... $ 1,253,000 $ 1,253,000
Nalco Chemical Retirement(2) ......................................... $ 210,000 $ 210,000
NATWEST Securities Limited(2) ........................................ $ 35,800,000 $35,800,000
Orrington International Fund Limited(1) .............................. $ 350,000 $ 350,000
Orrington Investments L.P.(1) ........................................ $ 650,000 $ 650,000
Palladin Overseas Fund Limited(3) .................................... $ 250,000 $ 250,000
Palladin Partners I L.P.(3) .......................................... $ 250,000 $ 250,000
Paloma Securities L.L.C.(2) .......................................... $ 1,550.000 $ 1,550,000
PRIM Board(2) ........................................................ $ 1,725,000 $ 1,725,000
Q Investments, L.P.(8) ............................................... $ 3,575,000 $ 3,575,000
Retirement Plan for Pilots of Hawaiian Airlines(2) ................... $ 150,000 $ 150,000
R2 Investments, LDC(3) ............................................... $ 1,425,000 $ 1,425,000
Shepherd Investments International Ltd.(1) ........................... $ 25,800,000 $25,800,000
Silverton International Fund Limited(2) .............................. $ 800,000 $ 800,000
Smith Barney Inc.(3)(7) .............................................. $ 27,121,000 $27,121,000
Societe Generale Securities Corp.(1) ................................. $ 5,750,000 $ 5,750,000
Spruce Partners, L.P.(1) ............................................. $ 500,000 $ 500,000
Starvest Discretionary(2) ............................................ $ 500,000 $ 500,000
State of Oregon Equity(2) ............................................ $ 4,500,000 $ 4,500,000
Tribeca Investments, L.L.C.(9) ....................................... $ 7,000,000 $ 7,000,000
Worldwide Transactions Limited(5)(10) ................................ $ 93,000 $ 93,000
ZENECA Holdings(2) ................................................... $ 450,000 $ 450,000
</TABLE>
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(1) Information was provided by the Selling Holder prior to December 4, 1997.
(2) Information was provided by the Selling Holder between December 4, 1997 and
December 23, 1997.
(3) Information was provided by the Selling Holder between December 24, 1997
and January 22, 1998.
(4) Deutsche Morgan Grenfell, Inc. and its affiliated companies and/or
individuals may, from time to time, own, have positions in, or options in
the Company's securities and also may perform advisory services and/or have
lending or other credit relationships with the Company. Specifically,
Deutsche Morgan Grenfell, Inc. was an Initial Purchaser of the Notes.
(5) The Prospectus dated November 13, 1997 incorrectly identified the Selling
Holder of certain of these Notes as Carlson Capital, L.P. and not Worldwide
Transactions Limited.
(6) The Notes listed here are in addition to those listed in the Prospectus
dated November 13, 1997.
(7) Salamon Brothers Inc, which merged with Smith Barney Inc. in December 1997,
was an Initial Purchaser of the Notes and has provided advisory services
for, and had credit relationships with, the Company.
(8) Information was provided by the Selling Holder between January 23, 1998 and
March 5, 1998.
(9) Information was provided by the Selling Holder between March 6, 1998 and
July 10, 1998.
(10) Information was provided by the Selling Holder between July 11, 1998 and
August 27, 1998.
S-3
<PAGE>
The foregoing list of Selling Holders, and the list of Selling Holders
pages 38 and 39 of the accompanying Prospectus, may not include holders of
additional aggregate principal amount of Notes which have been registered for
future sale under the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus are parts. Additional Selling
Holders will be identified, together with the amount of Securities to be
offered by such holders, in one or more additional supplements to the
accompanying Prospectus. Any such supplement will be circulated with the
accompanying Prospectus and will be deemed to be a part thereof as of the date
of such supplement. Only the Selling Holders listed in the accompanying
Prospectus or any supplement thereto, including this Prospectus Supplement, (or
the transferees, pledgees or donees of such Selling Holders, or their
successors) will be entitled to offer their Securities by means of the
accompanying Prospectus, as supplemented from time to time.
S-4
<PAGE>
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NO DEALER, SALESPERSON OR OTHER
INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN $300,000,000 AGGREGATE PRINCIPAL
CONNECTION WITH THE OFFERING MADE BY AMOUNT OF 4 1/2% CONVERTIBLE
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUBORDINATED NOTES DUE 2002
SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF
ITS AGENTS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION 12,185,834 SHARES
THAT THERE HAS BEEN NO CHANGE IN THE OF COMMON STOCK
AFFAIRS OF THE COMPANY SINCE THE DATE
AS OF WHICH INFORMATION IS GIVEN IN
THIS PROSPECTUS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE [TEL-SAVE LOGO]
SUCH SOLICITATION.
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TABLE OF CONTENTS
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PAGE
----- PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT --------------------------
Selling Holders ................. S-2
PROSPECTUS
Available Information ........... 2
Incorporation of Certain
Documents by Reference ........ 3
Risk Factors .................... 5
The Company ..................... 15
Description of Capital Stock .... 15
Description of the Notes ........ 15
Book-Entry System; Delivery and
Form .......................... 29
Certain U.S. Federal Income Tax
Consequences .................. 33
Use of Proceeds ................. 37 Dated September 16, 1998
Selling Holders ................. 37
Plan of Distribution ............ 40
Legal Matters ................... 40
Experts ......................... 40
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