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): January 30, 1997
McLEOD, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20763 58-421407240
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
221 Third Avenue SE, Suite 500, Cedar Rapids, IA 52401
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 364-0000
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
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Acquisition of Digital Communications of Iowa, Inc.
On January 30, 1997, McLeod, Inc. (the "Company") acquired Digital
Communications of Iowa, Inc., an Iowa corporation ("Digital"), pursuant to the
terms of an Agreement and Plan of Reorganization, dated as of January 27, 1997
(the "Agreement"), by and among Digital, the Company and certain shareholders of
Digital. Pursuant to the Agreement, Digital was merged with McLeod 1997 Merging
Co. (a newly formed Iowa corporation which was organized as a wholly owned
subsidiary of the Company) in a reverse triangular merger (the "Merger"), with
Digital as the surviving corporation of the Merger, and the outstanding shares
of Digital Common Stock were converted into the right to receive shares of the
Company's Class A Common Stock. The shareholders of Digital received an
aggregate of 84,428 shares of the Company's Class A Common Stock (the "Offered
Shares") in the Merger in exchange for their shares of Digital Common Stock.
The aggregate value of the Offered Shares was approximately $2.3 million, based
on the average closing sales price of the Class A Common Stock on the Nasdaq
National Market at the time of the transaction. Digital sells, installs and
services telephone systems primarily to small businesses in eastern Iowa.
Clark E. McLeod, a director, executive officer and significant
stockholder of the Company, and Mary E. McLeod, a significant stockholder of the
Company, were significant shareholders of Digital. Mr. McLeod served as a
director of Digital. A Special Committee of the Board of Directors of the
Company, consisting of disinterested directors, approved the Merger as fair to,
and in the best interests of, the stockholders of the Company. Prior to January
30, 1997, the Company rented facilities and equipment and purchased maintenance
and installation services from Digital and paid Digital commission on local and
long distance sales to customers of Digital.
The foregoing description of the Agreement does not purport to be
complete and is qualified in its entirety by the terms and conditions of the
Agreement, which is filed as Exhibit 2 to this Current Report on Form 8-K and is
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incorporated herein by reference.
Proposed Private Debt Offering
On February 18, 1997, the Company issued a press release announcing
that it plans to raise approximately $200 million in a proposed private offering
of senior discount notes due 2007 (i) to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act of 1933), (ii) to a limited number
of institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) under the
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Securities Act of 1933) and (iii) pursuant to offers and sales that occur
outside the United States within the meaning of Regulation S under the
Securities Act of 1933. Enclosed as Exhibit 99 to this Current Report on
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Form 8-K is the text of the February 18, 1997 press release.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits.
2. Agreement and Plan of Reorganization, dated as of January 27, 1997, by
and among Digital Communications of Iowa, Inc., McLeod, Inc., and
certain shareholders of Digital Communications of Iowa, Inc.
99. Press Release, dated February 18, 1997, regarding the Company's intent
to raise up to $200 million in a proposed private offering of senior
discount notes due 2007.
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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.
Date: February 21, 1997 McLEOD, INC.
By: /s/ Stephen C. Gray
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Stephen C. Gray
President and Chief Operating
Officer
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EXHIBIT INDEX
Page Number in
Exhibit Number Exhibit Sequential Numbering System
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2. Agreement and Plan of Reorganization,
dated as of January 27, 1997, by and
among McLeod, Inc., Digital
Communications of Iowa, Inc., and
certain shareholders of Digital
Communications of Iowa, Inc.
99. Press Release, dated February 18, 1997,
regarding the Company's intent to raise
up to $200 million in a proposed
private offering of senior discount
notes due 2007.
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