Prospectus Supplement filed under Rule 424(b)(3)
in connection with Registration No. 333-49379
PROSPECTUS SUPPLEMENT DATED March 5, 1999 (To
Prospectus Dated April 15, 1998)
INTELECT COMMUNICATIONS, INC.
1,487,626 Common Shares, par value $0.01 (Supplement
to the 3,082,171 shares of Common Stock
originally set forth in the Prospectus)
This Prospectus Supplement supplements information contained in that
certain Prospectus, dated April 15, 1998, as amended or supplemented (the
"Prospectus"), relating to the offer and sale by certain Selling Stockholders of
up to 1,487,626 shares of common stock, par value $0.01 per share, (the "Common
Stock") of Intelect Communications, Inc. (the "Company"). This Prospectus
Supplement is issued in connection with and reflects the transfer of the
Company's Series C Convertible Preferred Stock, par value $0.01 (the "Series C
Preferred Stock") by the original purchasers to the Selling Stockholders listed
herein, effective as of the date hereof. The 1,487,626 shares set forth in this
Prospectus Supplement are offered in addition to the 3,082,171 shares of Common
Stock originally set forth in the Prospectus and are issuable upon conversion of
the Series C Preferred Stock issued in a private placement to certain purchasers
on February 9, 1998. In accordance with Rule 416 under the Act, this Prospectus
Supplement also covers such presently indeterminate number of additional shares
as may be issuable upon conversion of the Company' Series C Preferred Stock as
may become issuable as a result of stock splits, stock dividends and
antidilution provisions (including decreases in the conversion price of the
Series C Preferred Stock). This Prospectus Supplement is not complete without,
and may not be delivered or utilized except in connection with, the Prospectus,
including any amendments or supplements thereto. Capitalized terms used herein
but not defined have the meanings assigned to such terms in the Prospectus. The
following table, as it applies to the listed stockholders, amends, supplements
and supersedes the information set forth in the Prospectus under the caption
"Selling Stockholders" with respect to such listed Selling Stockholders:
Number of Shares Number of Shares
of Common Stock of Common Stock
Beneficially Owned Number of Shares Beneficially
as of March 5, of Common Stock Owned After
Name of Selling Stockholder 1999 (1) Offered Hereby Offering (4)
- ------------------------------------------------ ----------------------- ---------------------- ----------------------
HFTP Investment LLC............................. 1,161,666 (2) 744,217 (3) 417,449
Leonardo, L.P. (5).............................. 773,905 (2) 495,606 (3) 278,299
GAM Arbitrage Investments, Inc. (5)............. 76,428 (2) 49,238 (3) 27,190
AG Super Fund International Partners, L.P. (5) . 77,228 (2) 49,238 (3) 27,990
Raphael, L.P. (5)............................... 78,035 (2) 50,045 (3) 27,990
Ramius Fund, Ltd. (5)........................... 155,233 (2) 99,283 (3) 55,950
- ------------------------------------------------ ----------------------- ---------------------- ----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities and includes any securities
which the person has the right to acquire within 60 days of March 5, 1999
through the conversion or exercise of any security or other right.
(2) Beneficial ownership is determined as of March 5, 1999 and is based on a
Conversion Price of the Series C Preferred Stock and the Series D
Convertible Preferred Stock (the "Series D Preferred Stock") equal to
$1.2917 (which is 83.5% of the average of the two lowest closing bid
prices of the Common Stock for the forty (40) consecutive trading days
ended March 4, 1999). The number of shares of Series C Preferred Stock
held by each Selling Stockholder is as follows: HFTP Investment LLC -- 922
shares, Leonardo, L.P. -- 614 shares, GAM Arbitrage Investments, Inc. --
61 shares, AG Super Fund International Partners, L.P. -- 61 shares,
Raphael, L.P. -- 62 shares, and Ramius Fund, Ltd. -- 123 shares. The
actual number of shares of Common Stock issuable upon conversion of the
Series C Preferred Stock and the Series D Preferred Stock is that number
of shares of Common Stock equal to the quotient of (i) the aggregate
stated value of the Preferred Shares (i.e., $1,000 per share), plus any
accrued and unpaid premium of 4.00% per annum divided by (ii) the
Conversion Price. Subject to certain antidilution provisions, the
Conversion Price for the Series C Preferred Stock is the lesser of (a)
$9.082 per share, or (b) as of the date hereof, 83.5% of the Market Price
of the Common Stock, where the Market Price is the average of the two
lowest closing bid prices for the Common Stock for the forty (40)
consecutive trading days immediately preceding such date of determination
(the "Variable Price"). Subject to certain antidilution provisions, the
Conversion Price for the Series D Preferred Stock is the lesser of (a)
$2.998 per share, or (b) the Variable Price. Pursuant to the
aforementioned antidilution provisions, in the event that the Company
issues securities which have a conversion price or exercise price which
varies with the market price and the terms of such variable price are more
favorable than the variable conversion price in the Series C Preferred
Stock and the Series D Preferred Stock, the Selling Stockholders may elect
to substitute the more favorable variable price when making conversions of
the Series C Preferred Stock and the Series D Preferred Stock. Effective
as of the date hereof, the Company issued in a transaction exempt from
registration under the Securities Act of 1933 shares of a new series of
Series E Convertible Preferred Stock, par value $0.01 (the "Series E
Preferred Stock"). The variable conversion price in the Series E Preferred
Stock is 83.5% of the average of the two lowest closing bid prices of the
Common Stock in the forty (40) trading days prior to the conversion date.
Accordingly, the variable conversion price of the Series C and D Preferred
Stock which was 97% of the average of the three lowest closing bid prices
in the ten (10) consecutive trading days prior to the date of
determination, will become the Variable Price at the holder's option
when submitting a conversion notice. No holder of shares of the Series C
Preferred Stock or the Series D Preferred Stock is entitled to convert or
exercise such securities to the extent that the shares to be received by
such holders upon such conversion or exercise would cause such holders in
the aggregate to beneficially own more than 5% of the Common Stock of the
Company (other than shares deemed to be beneficially owned through
ownership of the Series C Preferred Stock or the Series D Preferred
Stock), except upon 61 days prior notice to the Company.
(3) Represents the allocation among the Selling Stockholders of the number of
shares of Common Stock issuable, as of March 5, 1999, upon conversion of
the 1,843 shares of the Series C Preferred Stock held by the Selling
Stockholders which shares of Common Stock the Company has registered
pursuant to the Registration Rights Agreement between the Company and the
Selling Stockholders. The number of shares of Common Stock registered
pursuant to the Registration Statement on behalf of the Selling
Stockholders holding Series C Preferred Stock and the number of Conversion
Shares offered hereby by such holders have been determined by agreement
between the Company and such Selling Stockholders. Because the number of
shares that will ultimately be issued upon conversion of the Series C
Preferred Stock is dependent, subject to certain limitations, upon the
average of certain closing bid prices of the Common Stock prior to
conversion, as described in footnote (2) above, and certain antidilution
adjustments, such number of shares (and therefore the number of shares of
Common Stock offered hereby) cannot be determined at this time. The number
of shares of Common Stock being offered by the Selling Stockholders
holding Series C Preferred Stock, in accordance with Rule 416 under the
Securities Act, also includes such presently indeterminate number of
additional Shares as may be issuable upon conversion of the Series C
Preferred Stock, based upon fluctuations in the conversion price of the
Series C Preferred Stock and future antidilution adjustments in accordance
with the terms of the Series C Preferred Stock.
(4) Gives effect to the conversion of all shares of Series C Preferred Stock
and sale of all the shares of Common Stock upon conversion of the Series C
Preferred Stock. Also assumes that there is no change in the number of
shares of Common Stock beneficially held due to the holding of Series D
Preferred Stock. Following the offering, excluding the limitations on
beneficial ownership described in footnote (2) above, all of the Selling
Stockholders will own less than 1% of the Common Stock of the Company
except as follows: HFTP Investment LLC 1.20%, based on 34,907,976 shares
outstanding as of March 5, 1999.
(5) Angelo, Gordon & Co., L.P. is the trading manager of Leonardo, L.P., GAM
Arbitrage Investments, Inc., AG Super Fund International Partners, L.P.,
Raphael, L.P. and Ramius Fund, Ltd. (collectively, the "Angelo Gordon
Entities") and consequently has voting control and investment discretion
over securities held by the Angelo Gordon Entities.
This Prospectus Supplement is dated March 5, 1999.