SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
___________
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): May 17, 2000
CFW Communications Company
(Exact Name of Registrant as Specified in Charter)
Virginia 0-16751 54-1443350
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
P. O. Box 1990
Waynesboro, Virginia 22980
(Address of principal executive offices)
(540) 946-3500
(Registrant's telephone number, including area code)
Item 5. Other Events.
Merger with R&B Communications
On May 17, 2000, CFW Communications Company, a Virginia corporation
("CFW"), entered into a binding letter agreement with R&B Communications, Inc.
("R&B") providing for the merger of R&B with CFW. Under the letter agreement,
CFW will exchange 3.7 million shares of its common stock for all of R&B's
capital stock. The merger is subject to execution of a definitive agreement,
regulatory and shareholder approvals and other customary closing conditions.
CFW's board of directors will be expanded to include two current directors from
R&B.
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Acquisition of PrimeCo's Virginia Assets
On May 17, 2000, on behalf of Virginia RSA 6 Cellular Limited Partnership
("RSA 6"), CFW, as general partner of RSA 6, entered into a definitive asset
exchange agreement with PrimeCo PCS, L.P. ("PrimeCo") providing for the exchange
of certain PrimeCo licenses and assets in Richmond and Norfolk, Virginia for a
cash payment of $407 million, assumption of $20 million in lease obligations and
exchange of CFW's ownership interest and assets in two cellular properties. The
transaction is subject to the consummation of the Bell Atlantic-GTE merger and
regulatory approvals and other customary closing conditions.
In connection with the asset exchange agreement, each of Welsh, Carson,
Anderson & Stowe ("WCAS") and Morgan Stanley Dean Witter ("MSDW") have entered
into commitment letters to make certain equity investments in CFW. WCAS has
committed to purchase 100,000 shares of Senior Cumulative Convertible Preferred
Stock, Series B for $100.0 million, and MSDW has agreed to purchase 12,500
shares of Series B Preferred Stock for $12.5 million. The Series B Preferred
Stock is entitled to receive dividends at an annual rate of 8.5% of the stated
value and is convertible into shares of CFW common stock at any time at the
option of the holders at a conversion rate equal to the stated value divided by
$41.00. In connection with the issuance of the Series B Preferred Stock, CFW is
issuing to WCAS and MSDW warrants to purchase an aggregate of 500,000 shares of
common stock at an exercise price of $50.00 per share. The purchase of the
Series B Preferred Stock is subject to regulatory approvals and other customary
closing conditions.
WCAS also has committed to purchase 42,222 shares of Senior Cumulative
Convertible Preferred Stock, Series C for $42.2 million and 57,778 shares of
Senior Cumulative Convertible Preferred Stock, Series D for $57.8 million, and
MSDW has agreed to purchase 5,278 shares of Series C Preferred Stock for $5.3
million and 7,222 shares of Series D Preferred Stock for $7.2 million. The
Series C Preferred Stock is entitled to receive dividends at an annual rate of
8.5% of the stated value and is convertible into shares of CFW common stock at
the option of the holders at a conversion rate equal to the stated value divided
by $43.00. The Series D Preferred Stock is entitled to receive dividends at an
annual rate of 18.0% of the stated value and will be automatically converted
into shares of Series C Preferred Stock upon CFW shareholder approval of such
conversion. Upon such approval, the dividend rate on the Series C Preferred
Stock will decrease to 5.5%, and the conversion price will increase to $45.00.
The purchase of the Series C and Series D Preferred Stock is subject to the
closing of the acquisition of PrimeCo and customary closing conditions. The
proceeds of the sale of the Series C and Series D Preferred Stock will be used
to fund a portion of the purchase price of PrimeCo.
The holders of a majority of the Series B Preferred Stock are entitled to
elect in the aggregate two of CFW's directors and for so long as they are
entitled to do so, CFW's board will consist of no more than 11 directors. The
holders of the Series B and Series C Preferred Stock will be entitled to vote
with the holders of CFW common stock on an as-converted basis. Until CFW's
shareholders approve full voting rights, WCAS will exercise voting rights only
with respect to shares representing less than 20% of the issued and outstanding
shares of CFW common stock at the time of any such vote, and will vote any
remaining shares in the same proportion as CFW's other shareholders. The Series
D Preferred Stock will be non-voting.
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Morgan Stanley Senior Funding, Inc., an affiliate of MSDW ("Morgan
Stanley"), has committed to provide senior, secured credit facilities through a
syndicate of lenders headed by Morgan Stanley. These facilities comprise a $100
million revolving credit facility and $225 million in term loans and term loan
commitments, divided into a $75 million Term Loan A and a $150 million Term Loan
B. Term Loan B is expected to be used to finance, in part, the PrimeCo
acquisition. Borrowings under Term Loan A are available for one year after the
closing date under the credit agreement. These borrowings and borrowings under
the revolving credit facility may be used to refinance CFW's existing senior
debt and debt of the Virginia and West Virginia PCS Alliances (collectively, the
"Alliances"), as well as for working capital and general corporate purposes of
CFW and the Alliances (up to a limit of $250 million in total provided by CFW to
the Alliances). The revolving credit facility will be repayable in a single
payment on the seventh anniversary of closing. Amounts outstanding under Term
Loan A at the end of year one will be repayable beginning the fourth year after
closing in increasing quarterly installments, with a final maturity on the
seventh anniversary of closing. Term Loan B will be repayable beginning in the
third year after closing in quarterly installments equal to approximately 1% per
year of principal during each year through the seventh year, with the entire
balance of Term Loan B repayable between the seventh and eighth anniversaries of
closing. CFW may choose to have interest accrue on loans outstanding under the
senior credit facilities at the prime rate or the London interbank offered rate
(fully reserve adjusted), in either case, plus a margin. Depending on CFW's
operating results from time to time, the margins on revolving credit loans and
Term Loan A loans are expected initially to be 2% over prime or 3% over LIBOR.
Margins on Term Loan B loans are 0.5% higher than the margins on the other
loans.
CFW will seek to raise an additional $375 million in the private debt
markets in connection with the PrimeCo acquisition. Morgan Stanley & Co.
Incorporated (an affiliate of MSDW and Morgan Stanley) and WCAS have committed
to provide bridge financing in the form of $280 million of senior bridge notes
and $95 million of subordinated debt, respectively, in the event CFW does not
complete its private debt financing prior to the closing of the PrimeCo
acquisition.
Sale of Subsidiary to Telegate
On May 17, 2000, CFW also entered into a definitive stock purchase
agreement with Telegate AG ("Telegate"). Pursuant to the stock purchase
agreement, Telegate will acquire, through a wholly-owned subsidiary, 100% of the
outstanding capital stock of CFW Information Services, Inc., a wholly-owned
subsidiary of CFW, for a purchase price of $32 million in cash and $3.5 million
in Telegate stock. CFW will retain ownership of its three call center buildings
and lease the facilities to Telegate. The consummation of the transaction is
subject to regulatory approvals and customary closing conditions.
FORWARD-LOOKING STATEMENTS MADE BY CFW ARE BASED ON A NUMBER OF
ASSUMPTIONS, ESTIMATES AND PROJECTIONS. THESE STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES AND ANY SIGNIFICANT
DEVIATIONS FROM THESE ASSUMPTIONS COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS. CFW UNDERTAKES NO
OBLIGATION TO REVISE OR UPDATE SUCH STATEMENTS TO REFLECT CURRENT EVENTS OR
CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith in accordance with the provisions
of Item 601 of Regulation S-K.
(10.1) Letter Agreement, dated May 17, 2000, between CFW and R&B
Communications, Inc.
(10.2) Asset Exchange Agreement, dated May 17, 2000, between RSA 6
Cellular Limited Partnership and PrimeCo PCS, L.P.
(10.3) Stock Purchase Agreement, dated May 17, 2000, between CFW and
Telegate AG.
(99.1) Press Release dated May 18, 2000.
(99.2) Press Release dated May 18, 2000
SIGNATURES
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.
CFW Communications Company
(Registrant)
By: /s/ Michael B. Moneymaker
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Michael B. Moneymaker
Senior Vice President and Chief Financial
Officer, Treasurer and Secretary
Date: May 24, 2000