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) October 15, 1998
(September 30, 1998)
CAI WIRELESS SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Connecticut 0-22888 06-1324691
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
18 CORPORATE WOODS BLVD., THIRD FLOOR, ALBANY, NY 12211
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 462-2632
(Former name or former address, if changed since last report)
Item 3. Bankruptcy or Receivership.
IN RE CAI WIRELESS SYSTEMS, INC. (98-01765 (JJF)). On July 30, 1998 (the
"Petition Date"), CAI Wireless Systems, Inc. ("CAI" or the "registrant") and
its wholly-owned subsidiary, Philadelphia Choice Television, Inc. ("PCT") each
filed a petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code, 11 U.S.C. <section><section> 101-1330, as amended (the
"Bankruptcy Code"), with the United States Bankruptcy Court for the District
of Delaware (the "Bankruptcy Court"). Prior to the Petition Date, CAI
disseminated, in accordance with section 1126(b) of the Bankruptcy Code, a
proposed plan of reorganization (the "Plan") and an accompanying disclosure
statement, as supplemented on July 15, 1998 (the "Prepetition Disclosure
Statement," and together with the Disclosure Statement and Summary of Plan
Distributions for Equity Security Holders and Holders of Securities Claims with
respect to the Joint Reorganization Plan of CAI Wireless Systems, Inc. and
Philadelphia Choice Television, Inc. dated August 10, 1998, the "Disclosure
Statements") to those Impaired creditors entitled to receive distributions
under the Plan, and solicited their votes to accept the Plan. See registrant's
Current Report on Form 8-K dated July 1, 1998 (filed July 2, 1998) and
registrant's Current Report on Form 8-K dated July 16, 1998. The Plan was
accepted by CAI's impaired creditors in sufficient number and amount to permit
confirmation of the Plan by the Bankruptcy Court. Simultaneously with the
filing of its Chapter 11 petition, CAI filed the Plan and Prepetition
Disclosure Statement, and moved the Bankruptcy Court to, among other things,
schedule hearings to consider approval of the Disclosure Statements and
confirmation of the Plan.
The Plan provides for various recoveries to certain classes of claims.
Recoveries for classes of prepetition claims are summarized in the following
chart:
DESCRIPTION OF CLAIMS OR INTEREST TREATMENT UNDER THE PLAN
DIP Facility Claims -- UNCLASSIFIED . (i) cash equal to the unpaid portion of such Allowed DIP
ESTIMATED AMOUNT $60,000,000 plus interest Facility or (ii) such other treatment as to which the Debtors
and fees and such holder shall have agreed upon in writing.
. ESTIMATED RECOVERY - 100%
Administrative Claims -- UNCLASSIFIED . (i) Cash equal to the unpaid portion of such Allowed
ESTIMATED AMOUNT: $5,000,000 Administrative Claim or (ii) such other treatment as to which
the Debtors and such holder will have agreed upon in writing;
PROVIDED, HOWEVER, that Allowed Administrative Claims with
respect to liabilities incurred in the ordinary course of
business during the Chapter 11 Case will be paid in the
ordinary course of business in accordance with the terms and
conditions of any agreements relating thereto.
. ESTIMATED RECOVERY -- 100%
Priority Tax claims - UNCLASSIFIED . (i) Cash equal to the unpaid portion of such Allowed Priority Tax
ESTIMATED AMOUNT: $160,000 Claim, (ii) such other treatment as to which the Debtors and such
holder will have agreed upon in writing, or (iii) at the Reorganized
Debtors' sole discretion, deferred Cash payments having a value, as
of the Consummation Date, equal to such Allowed Priority Tax Claim,
over a period not exceeding six years after the date of assessment
of such Allowed Priority Tax Claim.
. ESTIMATED RECOVERY -- 100%
Class CAI-1-Other Priority Claims - . (i) Cash equal to the amount of such Allowed Other Priority Claim or
UNIMPAIRED (ii) such other treatment as to which CAI or PCT, as the case may
ESTIMATED AMOUNT: DE MINIMIS be, and such holder will have agreed upon in writing.
-and-
Class PCT-1-Other Priority Claims -- ESTIMATED RECOVERY -- 100%
UNIMPAIRED
ESTIMATED AMOUNT: DE MINIMIS
Class CAI-2 - Secured Claims -- . at the sole discretion of CAI or PCT, as the case may be, (a) Cash
UNIMPAIRED in an amount equal to such Allowed Secured Claim, (b) Reinstatement,
ESTIMATED AMOUNT: $4,250,000 or (c) such other treatment as to which CAI or PCT, as the case may
-and- be, and such holder shall have agreed upon in writing.
Class PCT-2 - Secured Claims --
UNIMPAIRED . ESTIMATED RECOVERY -- 100%
ESTIMATED AMOUNT: DE MINIMIS
Class CAI-3 - General Unsecured Claims -- . (i) treatment that leaves unaltered the legal, equitable, and
UNIMPAIRED contractual rights to which such Allowed General Unsecured Claim
ESTIMATED AMOUNT: $5,000,000 entitles the holder of such Claim, (ii) treatment that (a) cures any
-and- such default that occurred before or after the Petition Date, other
Class PCT-3 - General Unsecured Claims - than a default of a kind specified in Section 365(b)(2) of the
UNIMPAIRED Bankruptcy Code, (b) reinstates the maturity of such Allowed General
ESTIMATED AMOUNT: Included in estimate Unsecured Claim as such maturity existed before such default, (c)
of Class CAI-3 General Unsecured compensates the holder of such Allowed General Unsecured Claim for
Claims any damages incurred as a result of any reasonable reliance by such
holder on such contractual provision or such applicable law, and (d)
does not otherwise alter the legal, equitable, or contractual rights
to which such Allowed General Unsecured Claim entitles the holder of
such Claim, or (iii) such other treatment as to which CAI or PCT, as
the case may be, and such holder shall have agreed upon in writing.
. ESTIMATED RECOVERY -- 100%
Class CAI-4 - Intercompany Claims -- . (i) treatment that leaves unaltered the legal, equitable, and
UNIMPAIRED contractual rights to which such Allowed Intercompany Claim entitles
ESTIMATED AMOUNT: DE MINIMIS the holder of such Claim, (ii) Reinstatement, or (iii) such other
-and- treatment as to which CAI or PCT, as the case may be, and such
Class PCT-4 - Intercompany Claims - holder shall have agreed upon in writing.
UNIMPAIRED
ESTIMATED AMOUNT: $17,411,000 ESTIMATED RECOVERY -- 100%
Class CAI-5 - Senior Note Claims -- . Pro Rata share of (a) the New Senior Discount Notes and (b) ninety-
IMPAIRED four percent (94%) of the New Common Stock to be issued under the
ESTIMATED AMOUNT: $275,000,000 plus Plan. In addition, on the Distribution Date, the holder of an
accrued interest through the Petition Allowed Senior Note Claim against CAI will receive the Pro Rata
Date share of the balance of the Senior Note Escrow that otherwise would
have been payable to such holder on September 1, 1998 in accordance
with the terms of the Senior Notes Indenture.
. Estimated Recovery -- 84.4%
Class CAI-6 - Subordinated Note . Pro Rata share of six percent (6%) of the New Common Stock to be
Claims - IMPAIRED issued under the Plan. In consideration of the treatment afforded
ESTIMATED AMOUNT: $32,793,000 plus its Class CAI-6 Subordinated Note Claim, the holder of the 12%
accrued interest through the Petition Subordinated Note will provide a release of all obligations under
Date the 12% Subordinated Note to each Obligor Subsidiary.
-and-
Class PCT-5 - Subordinated Note fully and finally satisfied by the satisfaction of the applicable
Claims -- IMPAIRED Class CAI-6 Subordinated Note Claim..
ESTIMATED AMOUNT: $32,793,000 plus
accrued interest through the Petition
Date . ESTIMATED RECOVERY -- 39.9%
Class CAI-7 - Securities Claims -- . will not receive or retain any property under the Plan on account of
IMPAIRED such Claims.
ESTIMATED AMOUNT: Contingent and
unliquidated . ESTIMATED RECOVERY -- 0%
Class CAI-8 - Equity Securities . will not receive or retain any property under the Plan on account of
Interests - IMPAIRED such Equity Securities Interests.
. ESTIMATED RECOVERY -- 0%
Class PCT-6 - Equity Securities . Each Allowed Equity Securities Interests in PCT will be Reinstated.
Interests -- UNIMPAIRED
. ESTIMATED RECOVERY -- 100%
The Plan was confirmed by the Bankruptcy Court on September 30, 1998
and consummated October 14, 1998 (the "Consummation Date"). In connection
with the consummation of the Plan, CAI has issued and outstanding
15,000,000 shares of common stock, par value $.01 per share (the "Common
Stock"), and has reserved 1,575,000 shares of Common Stock for issuance
upon the exercise of certain options granted to management and warrants
issued to BT Alex. Brown Incorporated, CAI's financial advisor, pursuant to
the Plan.
Item 5. Other Events.
Simultaneously with the consummation of the Plan, the registrant also
consummated an $80,000,000 senior secured credit facility (the "Exit
Facility") provided by Merrill Lynch Global Allocation Fund, Inc. ("MLGAF").
Approximately $64,047,000 of the proceeds from the Exit Facility
were used to repay principal, interest and fees on registrant's $60,000,000
short-term debtor-in-possession credit facility and fees associated with the
Exit Facility. The Exit Facility is a two-tier credit facility maturing on
October 14, 2000. Tier A of the Exit Facility is evidenced by a $30,000,000
senior secured promissory note (the "Senior Secured A Note"). The registrant
granted a first lien and security interest in and to all of its assets to
secure repayment of the Senior Secured A Note. Tier B is evidenced by a
$50,000,000 senior secured promissory note (the "Senior Secured B Note"). The
registrant granted a second lien on and security interest in and to all of its
assets to secure repayment of the Senior Secured B Note. All of the
registrant's obligations under the Senior Secured A Note and Senior Secured B
Note are guaranteed by certain of registrant's wholly-owned subsidiaries.
In connection with the Exit Facility, the Company issued 2,241,379 shares
of Common Stock to MLGAF. The Note Purchase Agreement, the Senior Secured A
Note and the Senior Secured B Note are filed as exhibits with this Current
Report.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
2.1 Joint Reorganization Plan of CAI Wireless Systems, Inc.
and Philadelphia Choice Television, Inc. dated June 30,
1998
4.1 Indenture dated as of October 14, 1998 governing the terms
of registrant's 13% Senior Notes due 2004
4.2 Note Purchase Agreement dated as of October 14, 1998 by and
between registrant and Merrill Lynch Global Allocation
Fund, Inc.
4.3 Senior Secured A Note in the principal amount of
$30,000,000 due October 14, 2000
4.4 Senior Secured B Note in the principal amount of
$50,000,000 due October 14, 2000
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.
CAI WIRELESS SYSTEMS, INC.
By: /S/ JARED E. ABBRUZZESE
Jared E. Abbruzzese
Chairman and CEO
Date: October 15, 1998