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
August 19, 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)
Item 5. Other Events
On August 19, 1999, the Registrant (i) entered into a joint venture with various
co-investors to purchase telephone access lines in Wisconsin from an affiliate
of GTE Corporation ("GTE") and (ii) entered into a preliminary letter of intent
to purchase additional telephone access lines in Wisconsin from GTE.
Purchase by Joint Venture Company. The Registrant and its co-investors have
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organized a new company, named Telephone USA of Wisconsin, LLC (the "JV
Company"), for the purpose of purchasing telephone access lines from GTE in
exchange for $170 million cash, subject to certain adjustments described below.
Subject to various conditions, in exchange for an 89% equity interest, the
Registrant has agreed to invest approximately $37.8 million cash in the JV
Company, which will be used to partially fund the $170 million GTE purchase
price. The JV Company anticipates paying the remainder of the purchase price
principally through funds to be borrowed from the Registrant or a third party
lender. The Registrant will elect two of the JV Company's five directors, will
have voting power with respect to significant transactions, and will provide
operational, financial and managerial support services to the JV Company.
The assets to be purchased by the JV Company will include all telephone access
lines (which numbered approximately 61,600 as of December 31, 1998) and related
property and equipment comprising GTE's local exchange operations in 35
exchanges in predominantly rural and suburban markets throughout Wisconsin,
substantially all of which are adjacent to properties currently owned by the
Registrant. 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. The JV Company 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. The purchase price will be adjusted to, among other things, (i) reimburse
GTE for certain pre-closing costs and (ii) compensate the JV Company if GTE
fails to attain certain specified pre-closing capital expenditure targets. The
aggregate effect of these adjustments in not expected to be material.
Consummation of the JV Company's acquisition is subject to, among other things,
(i) the receipt of approvals from the Federal Communications Commission and the
Public Service Commission of Wisconsin, (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. On behalf of the JV
Company, the Registrant has posted a letter of credit that will entitle GTE to
receive approximately $8.5 million if the acquisition is not consummated under
certain specified conditions, including the JV Company's incapacity to finance
the transaction.
Purchase by the Registrant. Under a preliminary letter of intent dated August
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19, 1999, the Registrant has agreed in principal to purchase from GTE telephone
access lines in Wisconsin in exchange for $195 million, subject to certain
adjustments described below. The assets to be purchased by the Registrant will
include all telephone access lines (which numbered approximately 64,800 as of
December 31, 1998) and related property and equipment comprising GTE's local
exchange operations in 42 exchanges in predominantly rural and suburban markets
throughout Wisconsin, substantially all of which are adjacent to properties
currently owned and operated by the Registrant.
Under the preliminary letter of intent, the parties have agreed to use good
faith efforts to negotiate and enter into a definitive asset purchase agreement
substantially similar to the agreement dated June 29, 1999 between the
Registrant and affiliates of GTE Corporation (which is filed as Exhibit 99 to
the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999, and which is referred to hereinafter as the "June Agreement").
Each party is entitled to terminate the letter of intent under certain
circumstances, including the right of the Registrant to terminate the letter of
intent if the Registrant does not timely receive reasonably satisfactory
schedules. Assuming the parties are able to reach agreement on a final
definitive agreement substantially similar to the June Agreement, (i)
consummation of the acquisition would be subject to the receipt of the approvals
outlined above under the heading "Purchase by Joint Venture Company," (ii) the
$195 million purchase price would be subject to adjustments similar to those
outlined above under such heading, and (iii) the Registrant would be committed
directly or indirectly to pay GTE approximately $9.75 million if the acquisition
is not consummated under conditions substantially similar to those referenced in
the June Agreement, including the Registrant's incapacity to finance the
transaction.
Additional Information. Additional information regarding the above-described
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transactions is set forth in the Registrant's press release dated August 19,
1999, which is filed as Exhibit 99.1 hereto and is incorporated in its entirety
(including all cautionary statements relating to the Registrant's
forward-looking statements) by reference herein.
SIGNATURE
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 thereunto duly authorized.
CENTURYTEL, INC.
By: /s/ Neil A. Sweasy
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Neil A. Sweasy
Vice President and Controller
Dated: August 25, 1999