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
July 8, 1999
Date of Report (Date of earliest event reported)
CENTURYTEL, INC.
(Exact name of Registrant as specified in its charter)
LOUISIANA 1-7784 72-0651161
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
100 Century Park Drive
Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
(318) 388-9O00
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Item 5: Other Events
On July 8, 1999, CenturyTel, Inc. entered into a strategic partnership
with various co-investors to purchase telephone access lines from an affiliate
of GTE Corporation ("GTE") in Missouri. Financial terms were not disclosed.
Subject to various conditions, CenturyTel will invest approximately $55
million in the preferred equity of a new company named Spectra Communications
Group, LLC ("Spectra"), and will receive approximately 57% of Spectra's fully
diluted equity (subject to certain adjustments at closing). The remainder of the
GTE purchase price payable by Spectra will be funded through the equity
investments of CenturyTel's co-investors and credit facilities. CenturyTel will
elect two board members, will participate in significant management decisions
and will provide operational, financial and managerial support services to
Spectra.
The assets to be purchased by Spectra will include all telephone access
lines (which numbered approximately 116,000 as of December 31, 1998) and related
property and equipment comprising GTE's local exchange operations in 107
exchanges in predominantly rural and suburban markets throughout Missouri. The
assets to be purchased will not include (i) GTE's cellular, PCS, inter-LATA long
distance or internet operations, (ii) GTE's inter-LATA fiber optic network
assets or (iii) any rights under GTE's billing and collection contracts and
certain other agreements. Spectra will not assume any liabilities of GTE other
than those associated with contracts, employees, customer deposits and certain
other assets transferred in connection with the sale.
CenturyTel expects that at closing (which is currently anticipated to
occur in the first quarter of 2000) Spectra's acquired properties will comprise
approximately 125,000 access lines, will generate approximately $88.3 million in
annual revenues and approximately $47 million in annualized cash flow. Spectra
is expected to realize approximately $108 million of goodwill in connection with
the acquisition, and to incur capital expenditures of approximately $10 million
per annum in the initial years of operations. CenturyTel anticipates that the
financial effect of its investment in Spectra will be neutral or slightly
accretive to CenturyTel's consolidated earnings per share during the first year
of operations.
Consummation of Spectra's acquisition is subject to, among other things,
(i) the receipt of approvals from the Federal Communications Commission and the
Missouri Public Service Commission, (ii) compliance with the notification and
waiting period requirements under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, (iii) the receipt of various third party consents, including
releases from GTE bondholders terminating liens on the transferred assets, and
(iv) various other customary closing conditions. Spectra has agreed to pay GTE
approximately $14.5 million if the acquisition is not consummated under certain
specified conditions, including Spectra's incapacity to finance the transaction.
Additional information regarding the acquisition is set forth in the
Registrant's press release announcing the transaction, which is filed as Exhibit
99.1 hereto and is incorporated in its entirety by reference herein.
In addition to historical information, this report includes certain
forward-looking statements that are subject to uncertainties that could cause
CenturyTel's actual results to differ materially from such statements. Such
uncertainties include but are not limited to: changes in prevailing interest
rates or in the capital markets; the effects of ongoing deregulation in the
telecommunications industry; the effects of greater than anticipated competition
in CenturyTel's markets; possible changes in the demand for CenturyTel's
products and services; CenturyTel's ability to successfully introduce new
offerings on a timely and cost-effective basis; the risks inherent in rapid
technological change; CenturyTel's ability to effectively manage its growth,
including integrating newly acquired properties into CenturyTel's operations;
the success and expense of the remediation efforts of CenturyTel and its vendors
in achieving year 2000 compliance; any similar efforts, changes or other factors
impacting the GTE properties to be acquired by Spectra; and the effects of more
general factors such as changes in overall market or economic conditions or in
legislation, regulation or public policy. These and other uncertainties related
to CenturyTel's business are described in greater detail in CenturyTel's Annual
Report on Form 10-K for the year ended December 31, 1998.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CENTURYTEL, INC.
By: /S/ R. Stewart Ewing, Jr.
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R. Stewart Ewing, Jr.
Executive Vice President and
Chief Financial Officer
Dated: July 8, 1999