SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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)
March 28, 2000
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IDT CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-27898 22-3415036
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Commission File Number (IRS Employer Identification No.)
190 Main Street
Hackensack, New Jersey 07601
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(Address of Principal Executive Offices) (Zip Code)
(201) 928-1000
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On March 28, 2000, IDT Corporation entered into an agreement with AT&T
Corp. pursuant to which IDT will sell, and AT&T through a newly formed business
entity ("Holdo") will purchase, 14.9 million shares of Class A Common Stock, par
value $0.01 per share, of Net2Phone, Inc. ("Class A Stock"), at a price of $75
per share. In addition, Holdco will purchase four million newly-issued shares of
Class A Stock from Net2Phone at a price of $75 per share. Following these
transactions, Holdco will have a 39 percent voting stake and a 32 percent
economic stake in Net2Phone for a total cash investment of approximately $1.4
billion.
In addition, Holdco and IDT have reached an agreement that gives Holdco
the right of first refusal to purchase IDT's remaining stake of 10 million
shares of Class A Stock. If this right is exercised, Holdco will have a 59
percent voting interest and a 48 percent economic interest in Net2Phone. Holdco
will also receive the option to convert IDT's remaining 10 million shares of
Class A Stock into shares of Common Stock, par value $0.01 per share, of
Net2Phone ("Common Stock"). Shares of Class A Stock have two votes per share,
while shares of Common Stock have one vote per share.
On March 3, 2000, AT&T entered into an agreement with IDT granting IDT
an option, for a period of 180 days, to cause AT&T to purchase 2,040,817 shares
of Class B Common Stock of IDT for an aggregate purchase price of approximately
$75,000,000. The Class B Common Stock will carry 1/10 of a vote per share. IDT
previously announced on March 27, 2000 that Liberty Media Group had agreed to
purchase approximately 9.9% of the equity of IDT, equal to 3,775,000 shares of
IDT's common stock exchangeable for shares of Class B Common Stock, for an
aggregate purchase price of approximately $130,000,000.
For a period of 18 months, if Holdco buys shares of Class A Stock from
another holder of shares of Class A Stock, IDT will have the option to cause
Holdco to purchase up to 5 million additional shares of its Class A Stock on the
same terms and conditions.
AT&T and IDT have agreed to enter into definitive arrangements whereby
for a period of three years:
o each party will become a preferred supplier to the other with
respect to all services and products they offer;
o AT&T will supply at most favored customer prices two-thirds of
IDT's domestic telephony service needs, long distance, data, IP
and local service, subject to existing commitments and provided
that IDT will, as a result, experience cost savings;
o AT&T will provide fibre or OC-X service to IDT on a most favored
customer basis;
o AT&T will sublease 40,000 square feet (with options to eventually
sublease an additional 160,000 square feet) at IDT's facilities
in Newark, New Jersey;
o AT&T and IDT will work together to reach an agreement for
co-location at each other's facilities; and
o AT&T and IDT will enter into arrangements with respect to the
purchase of international services.
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In addition, AT&T will use its reasonable best efforts to cause Concert
to enter into a series of commercial arrangements with IDT providing for:
o Concert and IDT to become preferred suppliers to each other with
respect to all products and services offered by them;
o for a period of three years, to work together to purchase from
each other services at preferred leading edge pricing structures;
o to work together to partner in building or jointly purchasing
international fibre networks or swapping capacity on each other's
networks; and
o to negotiate in good faith with respect to mutually beneficial
co-location arrangements.
Holdco shall have the right to nominate three members to the Board of
Directors of Net2Phone. Until August 1, 2003 Holdco and IDT will agree to vote
their shares in favor of mutually acceptable nominees to the Board of Directors
of Net2Phone.
Net2Phone will also grant each of AT&T and IDT a license to use
Net2Phone's technologies in their own communications services.
The transaction has been approved by the board of directors of AT&T,
IDT and Net2Phone and is expected to close by the third quarter 2000. A special
meeting of stockholders must approve amendments to the certificate of
incorporation of Net2Phone authorizing an increase in the number of authorized
shares of Class A Stock and an increase to the size of the Board of Directors.
The transaction is also subject to the receipt of regulatory approvals and
certain other conditions.
The foregoing description is qualified in its entirety by reference to
the option agreement, the subscription agreement and the letter agreements,
which are attached as exhibits hereto and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
See "Index of Exhibits."
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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 hereunto duly authorized.
IDT CORPORATION
By: /s/ JAMES A. COURTER
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Name: James A. Courter
Title: President and Vice Chairman
of the Board of
Directors
Date: March 31, 2000
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INDEX OF EXHIBITS
Exhibit No. Name
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2.1 Option Agreement, dated as of March 3, 2000, between IDT
Corporation and AT&T Corp.
2.2 Subscription Agreement, dated as of March 24, 2000, between
IDT Corporation and Liberty Media Corporation.
2.3 Letter Agreement, dated as of March 28, 2000, between IDT
Corporation and AT&T Corp.
2.4 Letter Agreement, dated as of March 30, 2000, between IDT
Corporation, AT&T Corp. and Net2Phone, Inc.