UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): December 1, 2022
ADTRAN Holdings, Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware | 001-41446 | 87-2164282 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
901 Explorer Boulevard Huntsville, Alabama | 35806-2807 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (256) 963-8000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of exchange on which registered | ||
Common Stock, Par Value $0.01 | ADTN | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
Item 1.01 | Entry into a Material Definitive Agreement |
As previously disclosed by ADTRAN Holdings, Inc. (the “Company”), on October 18, 2022, the Board of Directors of the Company and the management board of ADVA Optical Networking SE, a company organized and existing under the laws of Germany (“ADVA”), agreed on a final draft of a domination and profit and loss transfer agreement (the “ DPLTA”) between the Company, as the controlling company, and ADVA, as the controlled company. On December 1, 2022, the Company and ADVA signed the DPLTA after the approval of the DPLTA by ADVA’s shareholders at an extraordinary meeting of shareholders held on November 30, 2022. The Company held approximately 65.34% of ADVA’s outstanding shares as of November 30, 2022.
The effectiveness of the DPLTA remains subject to the registration of the DPLTA with the commercial register (Handelsregister) of the local court (Amtsgericht) at the registered seat of ADVA, with effectiveness to occur no earlier than January 1, 2023. While the Company plans to apply for registration of the DPLTA without undue delay, registration may be delayed considerably pending potential shareholder litigation, if any, in Germany.
Under the DPLTA, when effective and subject to certain limitations pursuant to applicable law, (i) the Company will be entitled to issue binding instructions to the management board of ADVA, (ii) ADVA will transfer all of its annual profits to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will generally absorb all annual losses incurred by ADVA. Additionally, under the DPLTA, the Company will offer, at the election of each shareholder of ADVA (other than the Company), (i) to acquire the shares of such shareholder for a compensation of EUR 17.21 per share pursuant to Section 305 of the German Stock Corporation Act (Aktiengesetz, “AktG”) (“Exit Compensation”), or (ii) to pay such shareholder a fixed annually recurring compensation payment pursuant to Section 304 of the AktG in an amount of EUR 0.59 per share (EUR 0.52 net under the current taxation regime) (the “Annual Recurring Compensation”). The amount of the Annual Recurring Compensation payment of EUR 0.59 per share (EUR 0.52 net) was determined on the basis of a rounded annuity interest rate of 3.00%. This corresponds to the amount as previously agreed between ADVA and the Company in the final draft of the DPLTA on October 18, 2022. An adjustment of the amount of the Annual Recurring Compensation payment due to certain changes in borrowing costs and the annuity interest rate was not required. The adequacy of both forms of compensation may be challenged by minority shareholders of ADVA via court-led appraisal proceedings under German law, and it is possible that the courts in such appraisal proceedings may adjudicate a higher Exit Compensation or Annual Recurring Compensation (in each case, including interest thereon) than agreed upon in the DPLTA. Such court-led appraisal proceedings will not delay the registration of the DPLTA with the relevant commercial register (i.e., the effectiveness of the DPLTA).
The foregoing description of the DPLTA does not purport to be complete and is qualified in its entirety by reference to the DPLTA, a non-binding English translation of which is attached as Exhibit 10.1 to this Current Report on Form 8-K.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits. The following exhibits are filed with this report:
Exhibit | Description | |
10.1 | Domination and Profit and Loss Transfer Agreement between ADTRAN Holdings, Inc. and ADVA Optical Networking SE, dated November 30, 2022. | |
104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document. |
CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS
Certain statements contained in this document regarding matters that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). They are generally identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions, which forward-looking statements reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including: (i) risks and uncertainties related to the continued impact of the SARS-CoV-2 coronavirus/COVID-19 global pandemic (including variants of the SARS-CoV-2 coronavirus), including with respect to continued manufacturing and supply chain constraints; (ii) risks and uncertainties related to the completed business combination between the Company, ADTRAN, Inc. (“ADTRAN”) and ADVA, and, if the DPLTA becomes effective, the impact of the DPLTA on the Company; the ability to successfully integrate ADTRAN’s and ADVA’s businesses; risks related to disruption of management time from ongoing business operations due to integration efforts following the business
combination; the risk that either the business combination or the DPLTA could have adverse effects on the market price of the Company’s common stock or ADVA’s common shares or the ability of the Company, ADTRAN, and ADVA to retain customers, retain or hire key personnel, maintain relationships with their respective suppliers and customers, and on their operating results and businesses generally; the risk that the Company may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; the risk of fluctuations in revenue due to lengthy sales and approval process required by major and other service providers for new products; the risk posed by potential breaches of information systems and cyber-attacks; the risks that ADTRAN, ADVA or the Company may not be able to effectively compete, including through product improvements and development; (iii) risks and uncertainties related to the DPLTA, including the risk that its effectiveness may be delayed as a result of litigation or otherwise or may not occur, the risk that it may be terminated, and risks associated with any appraisal proceedings; and (iv) other risks set forth in ADVA’s annual and interim financial reports made publicly available and ADTRAN’s and the Company’s public filings made with the Securities and Exchange Commission, including ADTRAN’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company’s Form 10-Q for the quarterly period ended September 30, 2022. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this filing.
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.
Date: December 5, 2022 | ADTRAN Holdings, Inc. | |||||
By: | /s/ Michael Foliano | |||||
Michael Foliano | ||||||
Chief Financial Officer |