As filed with the Securities and Exchange Commission on April 20, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PREMIER PARKS INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3995059
(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
(405) 475-2500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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copies to:
James M. Coughlin, Esq. Danal F. Abrams, Esq.
Premier Parks Inc. Thelen Reid & Priest LLP
122 East 42nd Street 40 West 57th Street
New York, New York 10168 New York, New York 10019
(212) 599-4690 (212) 603-2000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Aggregate Offering
Title of each Class of Securities to be Registered Price(1)(2) Amount of Registration Fee
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Debt Securities, Common Stock, Preferred Stock,
Warrants, Units.......................................... $1,000,000,000 $278,000
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(1) Such indeterminate number or amount of Debt Securities, Common Stock,
Preferred Stock, Warrants or Units as may from time to time be issued at
indeterminate prices.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest, if any.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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Information contained in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion dated April 20, 1999
PROSPECTUS
$1,000,000,000 [LOGO]
PREMIER PARKS INC.
Debt Securities, Common Stock,
Preferred Stock, Warrants, Units
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We will offer from time to time debt securities (including senior,
subordinated and convertible debt securities), common stock, preferred stock
(including convertible preferred stock), warrants or units. We will provide
specific terms of these securities in supplements to this prospectus. You should
read this prospectus and any prospectus supplement carefully before you invest.
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Our common stock is listed on the New York Stock Exchange under the trading
symbol "PKS". Any common stock sold pursuant to a prospectus supplement will be
listed on the New York Stock Exchange. We have not yet determined whether any of
the debt securities, preferred stock, warrants or units will be listed on any
exchange or the over-the-counter market. If we decide to seek listing of any
debt securities, preferred stock, warrants or units, the related prospectus
supplement will disclose such exchange or market.
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Consider carefully the Risk Factors beginning on Page 8 in this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is , 1999
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
TABLE OF CONTENTS
Page
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About This Prospectus........................................................ 3
Where You Can Find More Information.......................................... 3
Special Note on Forward-Looking Statements................................... 4
Premier Parks Inc............................................................ 5
Risk Factors................................................................. 8
Consolidated Ratio of Earnings to Fixed Charges and Consolidated
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................................ 15
Use of Proceeds.............................................................. 15
Unaudited Pro Forma Statement of Operations and Other Data................... 16
Description of Debt Securities............................................... 22
Description of Common Stock.................................................. 28
Description of Preferred Stock............................................... 30
Description of Warrants...................................................... 35
Description of Units......................................................... 37
Plan of Distribution......................................................... 37
Legal Matters................................................................ 38
Experts...................................................................... 39
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may, over the next two years, sell any combination
of the securities described in this prospectus in one or more offerings up to a
total dollar amount of $1,000,000,000.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described immediately
below under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov. Our Common
Stock is listed on the New York Stock Exchange. Our reports, proxy statements
and other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
This prospectus is part of a Registration Statement on Form S-3 filed with
the SEC under the Securities Act of 1933. This prospectus omits some of the
information contained in the Registration Statement. You should refer to the
Registration Statement for further information with respect to Premier Parks
Inc. and the securities offered by this prospectus. Any statement contained in
this prospectus concerning the provisions of any document filed as an exhibit to
the Registration Statement or otherwise filed with the SEC is not necessarily
complete, and in each case you should refer to the copy of the document filed
for complete information.
The SEC allows us to "incorporate by reference" the information we file
with it, which means we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities.
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
2. The audited financial statements of Six Flags Entertainment
Corporation as of December 28, 1997 and December 29, 1996 and for each
of the three years in the period ended December 28, 1997 contained in
our registration statement on Form S-3 (Registration No. 333-46897)
declared effective March 26, 1998.
3. The description of our Common Stock contained in our registration
statement on Form 8-A filed pursuant to Section 12 of the Securities
Exchange Act.
4. The description of the Rights relating to the shares of Common Stock
contained in our registration statement on Form 8-A filed pursuant to
Section 12 of the Securities Exchange Act.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Richard Kipf, Corporate Secretary
Telephone: (405) 475-2500
Looney Tunes, Bugs Bunny, Daffy Duck, Tweety Bird and Yosemite Sam are
copyrights and trademarks of Warner Bros., a division of Time Warner
Entertainment Company, L.P. ("TWE"). Batman and Superman are copyrights and
trademarks of DC Comics, a partnership between TWE and a subsidiary of Time
Warner Inc.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or state other
forward-looking statements, as this term is defined in the Private Securities
Litigation Reform Act. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying
them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies could cause
our actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including the following:
o the success or failure of our efforts to implement our business
strategy
o the other factors discussed under the heading "Risk Factors" and
elsewhere in this prospectus
We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. For a
discussion of important risks of an investment in our securities, including
factors that could cause actual results to differ materially from results
referred to in the forward-looking statements, see "Risk Factors." You should
carefully consider the information set forth under the caption "Risk Factors."
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in or incorporated by reference in this prospectus might not
occur.
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PREMIER PARKS INC.
General Description of Our Business
We are the largest regional theme park operator and the second largest
theme park company in the world, based on 1998 attendance of approximately 36.1
million. We operate 31 regional parks, including 15 of the 50 largest theme
parks in North America, based on 1998 attendance. Our theme parks serve 9 of the
10 largest metropolitan areas in the United States. We estimate that
approximately two-thirds of the population of the continental United States live
within a 150-mile radius of one of our theme parks.
Our 31 parks are located in geographically diverse markets across the
United States with concentrated populations, as well as in France, Belgium and
The Netherlands. In April 1998, we acquired all of the outstanding capital stock
of Six Flags Entertainment Corporation. In March 1998, we acquired a controlling
interest in Walibi, S.A. and now we own 97% of the outstanding capital stock of
Walibi, S.A. Prior to the these acquisitions, we operated nine regional theme
parks (seven of which include a water park component) and four water parks at
locations across the United States. The parks acquired in the Six Flags
acquisition consist of eight regional theme parks, as well as three separately
gated water parks and a wildlife safari park (each of which is located near one
of the theme parks). The Walibi parks include six regional theme parks, three
located in France, two in Belgium and one in The Netherlands.
Six Flags has operated regional theme parks under the Six Flags name for
over thirty years and has established a nationally recognized brand name. We
have worldwide ownership of the "Six Flags" brand name. To capitalize on this
name recognition, in the 1998 season we commenced use of the Six Flags name at
one of our other parks (Six Flags Kentucky Kingdom) and we are adding the name
to four additional parks for the 1999 season (Six Flags Elitch Gardens, Six
Flags America, Six Flags Darien Lake and Six Flags Marine World).
During the 1998 operating season our domestic parks drew, on average,
approximately 75% of their patrons from within a 100-mile radius, with
approximately 36% of visitors utilizing group and other pre-sold tickets and
approximately 23% utilizing season passes. Our parks are individually themed and
provide a complete family-oriented entertainment experience. Our theme parks
generally offer a broad selection of state-of-the-art and traditional "thrill
rides," water attractions, themed areas, concerts and shows, restaurants, game
venues and merchandise outlets. In the aggregate, our theme parks offer more
than 800 rides, including over 90 roller coasters, making us the leading
operator of thrill rides in the industry.
As part of our Six Flags acquisition, we obtained the exclusive license for
theme park usage throughout the United States (except the Las Vegas metropolitan
area) and Canada of certain Warner Bros. and DC Comics characters. These
characters include Bugs Bunny, Daffy Duck, Tweety Bird, Yosemite Sam, Batman,
Superman and others. Since 1991, Six Flags has used these characters to market
its parks and to provide an enhanced family entertainment experience. Our
license includes the right to sell merchandise featuring the characters at our
parks, and to use the characters in our advertising, as walk-around characters,
in theming for rides and attractions and in retail outlets. The license applies
to all of our current theme parks, as well as parks we may acquire that meet
certain criteria. Since the Six Flags acquisition, we have continued making
extensive use of these characters at the Six Flags parks and, commencing in
1999, we will add the characters at many of our other U.S. parks. We believe
using these characters promotes increased attendance, supports higher ticket
prices, increases lengths-of-stay and enhances in-park spending.
Since 1989, under our current management we have assumed control of 30
parks and have achieved significant internal growth. For example, for the 1998
operating season, the 13 parks which we controlled prior to the Six Flags and
Walibi acquisitions achieved same park growth in attendance, revenue and
park-level operating cash flow (representing all park operating revenues and
expenses without depreciation and amortization or allocation of corporate
overhead or interest expense) of 14.3%, 21.5% and 36.0%, respectively, as
compared to 1997.
We believe that our parks benefit from limited direct competition, since
the combination of a limited supply of real estate appropriate for theme park
development, high initial capital investment, long development lead-time and
zoning restrictions provides each of our parks with a significant degree of
protection from
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competitive new theme park openings. Based on our knowledge of the development
of other theme parks in the United States, we estimate that it would cost at
least $200 million and would take a minimum of two years to construct a new
regional theme park comparable to our largest parks.
Our senior and operating management team has extensive experience in the
theme park industry. Our nine senior executive officers have over 150 years
aggregate experience in the industry and our twenty-five general managers have
an aggregate of in excess of 440 years experience in the industry, including
in excess of 320 years at our parks.
Strategy
Our strategy for achieving growth includes pursuing internal growth
opportunities at existing parks, expanding our parks, and making selective
acquisitions.
We believe there are substantial opportunities for continued internal
growth at our parks. We seek to increase revenue by increasing attendance and
per capita spending, while also maintaining strict control of operating
expenses. The primary elements we use to achieve these objectives are:
o adding rides and attractions and improving overall park quality
o enhancing marketing and sponsorship programs
o increasing group sales, season passes and other pre-sold tickets
o using ticket pricing strategies to maximize ticket revenues and park
utilization
o adding and enhancing restaurants and merchandise and other revenue
outlets
o adding special events
Our approach is designed to exploit the operating leverage inherent in the
theme park business. Once parks achieve certain critical attendance levels,
operating cash flow margins increase because revenue growth through incremental
attendance gains and increased in-park spending is not offset by a comparable
increase in operating expenses, because a large portion of these expenses is
relatively fixed during any given year.
We have expanded several of our parks in order to increase attendance and
per capita spending. For example, for the 1998 season we constructed a hotel at
our Darien Lake park to supplement the existing campgrounds. In addition, in
1998 we purchased campgrounds and a hotel adjacent to Geauga Lake. In addition,
we own 400 acres adjacent to Adventure World (now Six Flags America) which are
zoned for entertainment, recreational and residential uses and are available for
complementary uses. We also own additional acreage which is suitable for
development at several of our other parks.
In the future, we may also expand certain of the Six Flags parks by adding
complementary attractions, such as campgrounds, lodging facilities, new water
parks and concert venues. For example, we are adding a water park to Six Flags
St. Louis for the 1999 season and plan to add a water park to Six Flags Great
Adventure for the 2000 season. In addition, Six Flags owns over 1,500
undeveloped acres adjacent to Six Flags Great Adventure (located between New
York City and Philadelphia) suitable for additional complementary purposes.
Additional acreage suitable for development exists at several other Six Flags
parks.
The U.S. regional theme park industry is highly fragmented. We believe that
there are numerous acquisition opportunities, both in the U.S. and abroad,
through which we can expand our business. Although we will continue to pursue
acquisitions of regional parks with annual attendance between 300,000 and 1.5
million, we will also consider acquisitions of larger parks or park chains.
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We believe we have a number of competitive advantages in acquiring theme
parks. Operators of destination or large regional park chains, other than Cedar
Fair L.P., have not generally been actively seeking to acquire parks in recent
years. Additionally, as a multi-park operator with a track record of
successfully acquiring, improving and repositioning parks, we believe we have
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include our ability to:
o exercise group purchasing power (for both operating expenses
and capital assets)
o use the Six Flags brand name and the characters licensed from Warner
Bros. and DC Comics
o achieve administrative economies of scale
o attract greater sponsorship revenue and support from sponsors with
nationally- recognized brands and marketing partners
o recruit and retain superior management
o use our access to capital markets as well as our common stock as all
or a portion of future acquisition consideration
Address
Our executive offices are located at 11501 Northeast Expressway, Oklahoma
City, Oklahoma 73131, (405) 475-2500 and at 122 East 42nd Street, New York, New
York 10168, (212) 599-4690.
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RISK FACTORS
You should carefully consider each of the following risks and all of the
other information set forth in this prospectus before deciding to invest in our
securities. Some of the following risks relate principally to our business in
general and the industry in which we operate. Other risks relate principally to
the securities markets and ownership of our securities. The risks and
uncertainties described below are not the only ones facing our company.
Additional risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also adversely affect our business. If
any of the following risks and uncertainties develop into actual events, our
business, financial condition or results of operations could be materially
adversely affected.
Substantial Leverage -- Our high level of indebtedness and other monetary
obligations require that a significant part of our cash flow be used to pay
interest and fund these other obligations.
We have a high level of debt. As of December 31, 1998, Premier and its
subsidiaries owed a combined total of approximately $2,060.9 million (including
$182.9 million carrying value of notes which we will repay on or prior to
December 15, 1999 with funds already deposited in escrow). We have to pay total
interest on our debt in 1999 of approximately $145.9 million ($25.9 million of
which we will pay with funds already deposited in escrow). We also have to pay
annual dividends of $23.3 million on our mandatorily convertible preferred
stock, although we can pay these dividends either in cash or shares of common
stock. At December 31, 1998, we had approximately $400.6 million of cash and
cash equivalents to help meet our obligations.
In addition to making interest payments on debt and dividend payments on
our preferred stock, we must satisfy the following obligations with respect to
Six Flags Over Georgia and Six Flags Over Texas:
o We must make annual distributions to our partners in such parks, which
will amount to approximately $47.3 million in 1999 (of which we will
be entitled to receive $14.1 million due to our current ownership
interest in such parks) with similar amounts (adjusted for changes in
cost of living) payable in future years.
o We must spend a minimum of approximately 6% of each park's annual
revenues over specified periods for capital expenditures, which in
1999 is expected to be approximately $14.6 million.
o Each year we must offer to purchase partnership units from our
partners in such parks, which in 1999 would, if accepted in full,
amount to approximately $43.75 million.
We will use cash flow from the operations at these parks to satisfy the
first two obligations before we use any of our other funds. In addition, we have
deposited in escrow approximately $75.0 million which can be used to satisfy
these obligations. The obligations relating to Six Flags Over Georgia continue
until 2027 and those relating to Six Flags Over Texas continue until 2028.
Further, as a result of our purchase of Walibi, S.A., we have agreed to
invest approximately $38.0 million from 1999 through 2002 to expand the six
Walibi parks.
Our high level of debt and other obligations could have important negative
consequences to us and investors in the securities. These include:
o We may not be able to satisfy all of our obligations.
o We could have problems obtaining necessary financing in the future for
working capital, capital expenditures, debt service requirements,
refinancing or other purposes.
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o We will have to use a significant part of our cash flow to make
payments on our debt, to pay the dividends on preferred stock (if we
choose to pay them in cash), and to satisfy the other obligations set
forth above, which may reduce the capital available for operations and
expansion.
o Adverse economic or industry conditions may have more of a negative
impact on us.
We expect to be able to meet all of our obligations with existing cash,
cash generated from the parks, and our current lines of credit. We believe that
funds from these sources will be sufficient to meet our obligations and
operating needs for the next several years and beyond. However, our business is
subject to factors beyond our control, such as economic conditions, weather and
competition. We cannot be sure that income from our parks will be as high as we
expect. We may have to refinance all or some of our debt or secure new
financing. We can not be sure that we will be able to obtain such refinancing or
new loans on reasonable terms or at all. We have agreed in our loan agreements
and the indentures covering certain of our outstanding notes to limit the amount
of additional debt we will incur.
If we can not meet all of our obligations, the market value and
marketability of our common stock will likely be adversely affected. In
addition, if we become the subject of bankruptcy proceedings, our creditors and
preferred stockholders will be entitled to our assets before any distributions
are made to common stockholders.
Structural Subordination -- Our holding company structure subordinates our
creditors including holders of our debt securities.
Premier Parks Inc. is a holding company with limited assets, and we conduct
substantially all of our operations through our subsidiaries. Almost all of our
income is from our subsidiaries. The securities offered by this prospectus will
be solely the obligations of Premier Parks Inc. and no other entity will have
any obligation, contingent or otherwise, to make any payments in respect of the
securities. Accordingly, we will be dependent on dividends and other
distributions from subsidiaries to generate the funds necessary to meet our
obligations, including the payment of principal and interest on the debt
securities.
The ability of our subsidiaries to pay dividends to us is subject to, among
other things, the terms of the various debt instruments already issued by our
subsidiaries and which may in the future be issued by them, as well as by
applicable law. In particular, in order for us to receive cash flow from our
original thirteen Premier parks, we must obtain the consent of our senior bank
lenders, and distributions of cash flow from our Six Flags parks is
significantly restricted by covenants in debt instruments.
Claims of holders of the debt securities will be effectively subordinated
to the notes and other credit facility obligations of our subsidiaries
(approximately $1,326.9 million at December 31, 1998, excluding $182.9
million carrying value of notes which we will repay on or prior to
December 15, 1999 with funds already deposited in escrow). Consequently,
in the event of any insolvency, liquidation, reorganization, dissolution
or other winding up of our subsidiaries, the ability of our creditors, including
holders of the debt securities, to be repaid will be subject to the prior
claims of those entities' creditors, including trade creditors.
Restrictive Covenants -- Our financial and operating activities are limited by
restrictions contained in the terms of our prior financings.
The terms governing our and our subsidiaries' indebtedness impose
significant operating and financial restrictions on us. These restrictions may
significantly limit or prohibit us from engaging in certain transactions,
including the following:
o incurring additional indebtedness
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o creating liens on our assets
o paying dividends
o selling assets
o engaging in mergers or acquisitions
o making investments
Our failure to comply with the terms and covenants in our and our
subsidiaries' indebtedness could lead to a default under the terms of those
documents, which would entitle the lenders to accelerate the indebtedness and
declare all amounts owed due and payable. Moreover, the instruments governing
our indebtedness contain cross-default provisions so that a default under any of
our indebtedness will be considered a default under all other indebtedness. If a
cross-default occurs, the maturity of almost all of our indebtedness could be
accelerated and become immediately due and payable. If that happens, we would
not be able to satisfy all of our debt obligations, which would have a
substantial material adverse effect on the value of our common stock and our
ability to continue as a going concern. We cannot assure you that we will be
able to comply with these restrictions in the future or that our compliance
would not cause us to forego opportunities that might otherwise be beneficial to
us.
Further, certain of our subsidiaries are required to comply with specified
financial ratios and tests, including:
o interest expense
o fixed charges
o debt service
o total debt
We are currently in compliance with all of these financial covenants and
restrictions. However, events beyond our control, such as weather and economic,
financial and industry conditions, may affect our ability to continue meeting
these financial tests and ratios. The need to comply with these financial
covenants and restrictions could limit our ability to expand our business or
prevent us from borrowing more money when necessary.
Management of Growth Strategy -- We may not be able to manage our rapid growth
or integrate acquisitions.
We have experienced significant growth through acquisitions and will
continue to consider acquisition opportunities that arise. Such acquisitions
could place a future strain on our operations. Our ability to manage future
acquisitions will depend on our ability to evaluate new markets and investments,
monitor operations, control costs, maintain effective quality controls and
expand our internal management and technical and accounting systems.
To fund future acquisitions, we may need to borrow more money or assume the
debts of acquired companies. In taking on any debt, we must comply with the
restrictions described above with respect to our existing indebtedness. If we do
not receive necessary consents or waivers of such restrictions, we may be unable
to make additional acquisitions.
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In the past, in certain circumstances we have used shares of our common
stock to fund a portion of the price of acquisitions. In the future, we may
again fund all or part of acquisitions by issuing new shares of our common stock
or other securities which can be converted into common stock. Issuing such
additional shares or convertible securities may cause a decrease in the per
share market price of our common stock.
If we do purchase additional businesses, it may negatively affect our
earnings, at least in the short term. Further, we cannot guarantee that any
future acquisition will generate the earnings or cash flow we expect. As with
any expansion, unexpected liabilities might arise and the planned benefits may
not be realized.
Risk of Accidents -- There is the risk of accidents occurring at our parks which
may reduce attendance and earnings.
Almost all of our parks feature "thrill rides." While we carefully maintain
the safety of our rides, there are inherent risks involved with these
attractions. An accident or an injury at any of our parks may reduce attendance
at that and other parks, causing a drop in revenues.
On March 21, 1999, a raft capsized in the river rapids ride at Six Flags
Over Texas, resulting in one fatality and injuries to ten others. While the park
is covered by our existing insurance, the impact of this incident on our
financial position, operations or attendance at the park has not yet been
determined.
We maintain insurance of the type and in amounts that we believe is
commercially reasonable and that are available to businesses in our industry. We
maintain multi-layered general liability policies that provide for excess
liability coverage of up to $100.0 million per occurrence. We have no
self-insured retention, except that the self-insurance portion of claims arising
out of occurrences prior to July 1, 1998 at our U.S. parks owned prior to the
Six Flags acquisition is $50,000 per occurrence.
Factors Impacting Attendance -- Local conditions, disturbances, events and
natural disasters can adversely impact park attendance.
Lower attendance may also be caused by other local conditions or events.
For example:
o In 1994, fewer people attended our Six Flags Magic Mountain park
because of the Los Angeles County earthquake, and the earthquake also
significantly interrupted operation of the park.
o Six Flags Over Georgia suffered a drop in attendance in 1996 as a
result of the 1996 Summer Olympics.
In addition, since some of our parks are near major urban areas and appeal
to teenagers and young adults, there may be disturbances at one or more parks
which negatively affect our image. This may result in lower attendance at the
affected parks. We work with local police authorities on security-related
precautions to prevent such occurrences. We can make no assurance, however, that
these precautions will be able to prevent any such disturbances. We believe that
our ownership of many parks in different geographic locations reduces the
effects of such occurrences on our consolidated results.
Adverse Weather Conditions -- Bad weather can adversely impact attendance at our
parks; Our operations are seasonal.
Because most of the attractions at our theme parks are outdoors, attendance
at our parks is adversely affected by bad weather. The effects of bad weather on
attendance are more pronounced at our water parks. Bad weather and forecasts of
bad or mixed weather conditions can reduce the number of people who come to our
parks, which negatively affects our revenues. However, we believe that our
ownership of many parks in different geographic locations reduces the effect
that adverse weather can have on our consolidated results.
11
Our operations are seasonal. More than 90% of our annual park attendance
occurs during the spring, summer and early autumn months. By comparison, most of
our expenses for maintenance and adding new attractions are incurred when the
parks are closed in the mid to late autumn and winter months. For this reason, a
quarter to quarter comparison is not a good indication of our performance or of
how we will perform in the future. However, the market price of our common stock
may still fluctuate significantly in response to changes in our quarterly
results of operations.
Competition -- The theme park industry competes with numerous entertainment
alternatives.
Our parks compete with other theme, water and amusement parks and with
other types of recreational facilities and forms of entertainment, including
movies, sports attractions and vacation travel. Our business is also subject to
factors that affect the recreation and leisure industries generally, such as
general economic conditions and changes in consumer spending habits. The
principal competitive factors of a park include location, price, the uniqueness
and perceived quality of the rides and attractions, the atmosphere and
cleanliness of the park and the quality of its food and entertainment.
Key Personnel -- The loss of key personnel could hurt our operations.
Our success depends upon the continuing contributions of our executive
officers and other key operating personnel, including Kieran E. Burke, our
Chairman and Chief Executive Officer, and Gary Story, our President and Chief
Operating Officer. The complete or partial loss of their services or the
services of other key personnel could adversely affect our business. Although we
have entered into employment agreements with Mr. Burke and Mr. Story (which end
on December 31, 1999), we cannot be certain that we will be able to retain
their services during that or any extension period. If we were to lose the
services of both Messrs. Burke and Story and are unable to replace them within
a specified period of time we would be in default under our credit
facilities.
International Operations -- Our international operations have additional risks.
Through our Walibi parks, we conduct some of our operations in Europe. We
also may make further acquisitions of parks in other international locations.
There are risks to which we are subject that are inherent in operating abroad.
Some examples of these risks can include:
o problems in staffing and managing foreign operations
o fluctuations in currency exchange rates
o political risks
o unexpected changes in regulatory requirements
o potentially detrimental tax consequences in many locations with
different tax laws
Shares Eligible for Future Sale -- The price of our common stock may decline due
to possible sales of shares.
As of March 1, 1999, there were 76,513,796 shares of our common stock
outstanding, all of which are transferable without restriction or further
registration under the Securities Act of 1933, except for any shares held by our
affiliates. In addition, we have reserved and registered under the Securities
Act approximately 5,000,000 shares for currently outstanding management-held
options, 5,550,000 shares for future option issuances, 9,550,000 shares issuable
pursuant to our mandatorily convertible preferred stock, and approximately
70,000 shares for currently outstanding consultant-held options.
Our officers, directors and their affiliates together hold approximately
17.9 million shares of common stock (including shares issuable upon exercise of
outstanding options and warrants and shares of outstanding restricted stock, in
each case subject to vesting). They can sell these securities in the public
market (subject, in certain cases, to the resale conditions imposed by Rule
144). In addition, other stockholders who own
12
approximately 7.5 million shares of common stock have the right to require us to
register their shares for sale under the Securities Act. If future revenues at
Kentucky Kingdom and Walibi reach certain levels, we are required to issue
additional shares of common stock. In that connection in 1999, as a result of
1998 revenue levels at that park, we issued approximately 211,065 shares of
common stock to the former owners of Kentucky Kingdom (excluding certain
escrowed shares). We may also issue additional shares of common stock to pay
quarterly dividend payments on our mandatorily convertible preferred stock
(which dividends total $46.6 million over two years). The sale or expectation
of sales of a large number of shares of common stock or securities convertible
into common stock in the public market at any time after the date of this
prospectus might negatively affect the market price of the common stock.
Anti-Takeover Provisions -- Anti-takeover provisions limit the ability of
stockholders to effect a change in control of Premier.
Certain provisions in our Certificate of Incorporation and in our debt
instruments and those of our subsidiaries may have the effect of deterring
transactions involving a change in control of Premier, including transactions in
which stockholders might receive a premium for their shares.
Our Certificate of Incorporation provides for the issuance of up to
5,000,000 shares of preferred stock with such designations, rights and
preferences as may be determined from time to time by our board of directors.
The authorization of preferred shares empowers our board of directors, without
further stockholder approval, to issue preferred shares with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of our common stock. If issued, the
preferred stock could be used to discourage, delay or prevent a change of
control of Premier. We have no current plans to issue any preferred stock,
except to the extent we may determine to do so under this prospectus.
In addition, we have a rights plan which gives each holder of our common
stock the right to purchase a share of junior preferred stock in certain events
which would constitute a change of control. The rights plan is designed to deter
third parties from attempting to take control of Premier.
In addition, we are subject to the anti-takeover provisions of the Delaware
General Corporation Law, which could have the effect of delaying or preventing a
change of control of Premier. Furthermore, upon a change of control, the holders
of substantially all of our outstanding indebtedness are entitled at their
option to be repaid in cash. These provisions may have the effect of delaying or
preventing changes in control or management of Premier. All of these factors
could materially adversely affect the price of our common stock.
As part of the Six Flags acquisition, we obtained the exclusive right to
use certain Warner Bros. and DC Comics characters in our theme parks in the
United States (except in the Las Vegas metropolitan area) and Canada. Warner
Bros. can terminate this license under certain circumstances, including the
acquisition of Premier by persons engaged in the movie or television industries.
This could deter certain parties from seeking to acquire Premier.
Dividends -- We are not likely to pay cash dividends on our common stock.
We have not paid dividends on our common stock during the last three years,
and we do not anticipate paying any cash dividends on such stock in the
foreseeable future. Our ability to pay cash dividends is restricted under the
indentures relating to our notes.
13
Year 2000 Issue -- Our operations could be adversely affected by data processing
failures after December 31, 1999.
Many computer systems, software applications and other electronics
currently in use worldwide are programmed to accept only two digits in the
portion of the date field which designates the year. The "Year 2000 problem"
arises because these systems and products cannot properly distinguish between a
year that begins with "20" and the familiar "19." If these systems and products
are not modified or replaced, many will fail or create erroneous results and/or
may cause other related systems to fail. Our failure to correct a material Year
2000 problem could result in an interruption in or failure of certain of our
normal business operations or activities. This could result in a system failure
or miscalculations causing disruptions of operations, including, but not limited
to, a temporary inability to process transactions.
Our Year 2000 Project (the "Project") is in process. We have undertaken
various initiatives intended to ensure that our computer equipment and software
will function properly with respect to dates in the Year 2000 and thereafter. In
planning and developing the Project, we have considered both our information
technology ("IT") and our non-IT systems. The term "computer equipment and
software" includes systems that are commonly thought of as IT systems, including
accounting, data processing, telephone systems, scanning equipment and other
miscellaneous systems. Those items not to be considered as IT systems include
alarm systems, fax machines, monitors for park operations or other miscellaneous
systems. Both IT and non-IT systems may contain embedded technology, which
complicates our Year 2000 identification, assessment, remediation and testing
efforts. Based upon our identification and assessment efforts to date, we are in
the process of replacing the computer equipment and upgrading the software it
currently uses to become Year 2000 complaint. In addition, in the ordinary
course of replacing computer equipment and software, we plan to obtain
replacements that are in compliance with Year 2000.
We have initiated correspondence with our significant vendors and service
providers to determine the extent such entries are vulnerable to Year 2000
issues and whether the products and services purchased from such entities are
Year 2000 compliant. We expect to receive a favorable response from such third
parties and it is anticipated that their significant Year 2000 issues will be
addressed on a timely basis.
We anticipate that the Project will be completed in November 1999.
As noted above, we are in the process of replacing certain computer
equipment and software because of the Year 2000 issue. We estimate that the
total cost of such replacements will be no more than $1.5 million. Substantially
all of the personnel being used on the Project are our employees. Therefore, the
labor costs of our Year 2000 identification, assessment, remediation and testing
efforts, as well as currently anticipated labor costs to be incurred by with
respect to Year 2000 issues of third parties, are expected to be less than $0.8
million.
We have not yet developed a most reasonably likely worst case scenario with
respect to Year 2000 issues, but instead have focused our efforts on reducing
uncertainties through the review described above. We have not developed Year
2000 contingency plans other than as described above, and do not expect to do so
unless merited by the results of our continuing review.
We presently do not expect to incur significant operational problems due to
the Year 2000 issue. However, if all Year 2000 issues are not properly and
timely identified, assessed, fixed and tested, there can be no assurance that
the Year 2000 issue will not materially impact our results of operations or
adversely affect our relationships with vendors or others. Additionally, there
can be no assurance that the Year 2000 issues of other entities will not have a
material impact on our systems or results of operations.
14
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND
CONSOLIDATED RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratio of earnings to fixed
charges and our consolidated ratio of earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
Years ended December 31,
--------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Ratio of earnings to fixed charges .......... 1.5x 2.3x 1.3x -- 1.1x
Ratio of earnings to combined fixed charges
and preferred stock dividends ............ 1.2x 2.3x 1.2x -- 1.1x
For the purpose of calculating the consolidated ratios of earnings to fixed
charges and of earnings to combined fixed charges and preferred stock dividends,
earnings consist of income (loss) before extraordinary loss and before income
taxes, minority interest in earnings, equity in operations of theme park
partnerships not distributed to Premier and fixed charges. Fixed charges consist
of interest expense, amortization of deferred financing costs and discount or
premium relating to indebtedness and the portion (approximately one-third) of
rental expense that management believes represents the interest component of
rent expense. Preferred Stock dividend requirements have been increased to an
amount representing the before-tax earnings which would have been required to
cover such dividend requirements. For the year ended December 31, 1995,
Premier's earnings were insufficient to cover fixed charges by $1,738,000 and
were insufficient to cover combined fixed charges and preferred stock dividends
by $2,620,000.
USE OF PROCEEDS
We will use the net proceeds from the sale of the securities for our
general corporate purposes, which may include repaying indebtedness, making
additions to our working capital, funding future acquisitions or any other
purpose we describe in the applicable prospectus supplement.
15
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
The following unaudited pro forma statement of operations and other data of
Premier is based upon and should be read in conjunction with the historical
financial statements of Premier and Six Flags, which are incorporated herein by
reference.
The unaudited pro forma statement of operations and other data for the year
ended December 31, 1998 gives effect to the acquisitions of Six Flags and Walibi
and the financings associated with the transactions (including the issuance of
mandatorily convertible preferred stock and common stock) as if they had
occurred on January 1, 1998 (except in the case of Six Flags, which was treated
as if it occurred December 29, 1997, the first day of the 1998 fiscal year of
Six Flags).
The pro forma statement of operations and other data is for informational
purposes only, has been prepared based upon estimates and assumptions deemed by
Premier to be appropriate and does not purport to be indicative of the results
of operations which would actually have been attained if the acquisitions had
occurred as presented in the statement or which could be achieved in the future.
16
Premier Parks Inc.
Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
Historical
Six Flags Historical
for Walibi for
Period Period
Prior to Prior to
Historical April 1, April 1, Combined Pro Forma Company
Premier 1998(1) 1998(2) Company Adjustments Pro Forma
--------- --------- --------- --------- ----------- ---------
Revenue:
Theme park admissions $ 423,461 $ 15,047 $ 883 $ 439,391 $ -- $ 439,391
Theme park food, merchandise
and other 390,166 8,356 624 339,146 -- 399,146
--------- --------- --------- --------- --------- ---------
Total revenue 813,627 23,403 1,507 838,537 -- 838,537
--------- --------- --------- --------- --------- ---------
Operating costs and expenses:
Operating expenses 297,266 56,307 4,626 358,199 (10,628)(3) 347,571
Selling, general and
administrative 126,985 54,711 3,407 185,103 (35,433)(3) 149,670
Noncash compensation 6,362 -- -- 6,362 -- 6,362
Costs of products sold 103,051 2,757 248 106,056 -- 106,056
Depreciation and amortization 109,841 17,629 3,214 130,684 6,440(4) 137,124
--------- --------- --------- --------- --------- ---------
Total operating costs
and expenses 643,505 131,404 11,495 786,404 (39,621) 746,783
Income (loss) from operations 107,122 (108,001) (9,988) 52,133 39,621 91,754
--------- --------- --------- --------- --------- ---------
Other income (expense):
Interest expense, net (115,849) (22,508) (889) (139,246) (16,655)(5) (155,901)
Equity in operations of theme
park partnerships 24,054 (13,152) -- 10,902 -- 10,902
Minority interest (960) -- -- (960) -- (960)
Other expense (1,023) -- (1) (1,024) -- (1,024)
--------- --------- --------- --------- --------- ---------
Total other income (expense) (93,778) (35,660) (890) (130,328) (16,655) (146,983)
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes 76,344 (143,661) (10,878) (78,195) 22,966 (55,229)
Income tax expense (benefit) 40,716 -- (4,786) 35,930 (38,038)(6) (2,108)
--------- --------- --------- --------- --------- ---------
Net income (loss) before
extraordinary loss $ 35,628 $(143,661) $ (6,092) $(114,125) $ 61,004 $ (53,121)
========= ========= ========= ========= ========= =========
Income (loss) applicable to common
stock $ 18,162 (7) (7) (7) $ (76,409)(7)
========= =========
Income (loss) per common share $ 0.27 (7) (7) (7) $ (1.01)(7)
========= =========
Weighted average shares 66,430 $ 75,617(7)
========= =========
Other Data:
EBITDA(8) $ 286,325 $ (90,372) $ (6,774) $ 189,179 $ 46,061 $ 235,240
========= ========= ========= ========= ========= =========
Adjusted EBITDA(9) $ 321,733 $(102,077) $ (6,774) $ 212,882 $ 46,061 $ 258,943
========= ========= ========= ========= ========= =========
Net cash provided by (used in)
operating activities $ 119,010 $ (54,779) $ (7,663) $ 56,568 $ 38,478 $ 95,046
========= ========= ========= ========= ========= =========
17
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
Basis of Presentation
The accompanying unaudited pro forma statement of operations and other data
for the year ended December 31, 1998 has been prepared based upon certain pro
forma adjustments to historical financial information of Premier and the
pre-acquisition historical financial information of Six Flags and Walibi.
Premier acquired Six Flags on April 1, 1998 and Walibi on March 26, 1998.
The unaudited pro forma statement of operations and other data for the year
ended December 31, 1998 has been prepared assuming the acquisitions and the
related financings (including the issuance of mandatorily convertible preferred
stock and common stock) occurred on January 1, 1998 (except in the case of Six
Flags, which was treated as if it was acquired on December 29, 1997, the first
day of the 1998 fiscal year of Six Flags). The unaudited pro forma statement of
operations should be read in conjunction with the financial statements of
Premier, which are incorporated herein by reference.
Pro Forma Adjustments
1. The results of Six Flags included herein represent the operations of Six
Flags for the period from December 29, 1997 to March 31, 1998, prior to
Premier's acquisition of Six Flags.
2. The results of Walibi included herein represent the operations of Walibi
for the period from January 1, 1998 to March 26, 1998, prior to Premier's
acquisition of Walibi. The results of Walibi are in Belgium Francs ("BEF")
and are accounted for using generally accepted accounting principles of
Belgium. The following table reflects the adjustment of the Walibi
statement of operations for the period January 1, 1998 to March 26, 1998 to
conform to U.S. generally accepted accounting principles and U.S. dollars
(using an average exchange rate for the period of 37.500 BEF to US$1):
18
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
Amount Accounting Adjusted Amount
(in BEF) Adjustments Amount (in US $)
-------- ----------- ------ ---------
Revenue:
Theme park admissions 33,122 -- 33,122 $ 883
Theme park food, merchandise and other 23,296 112 23,408 624
-------- -------- -------- --------
Total revenue 56,418 112 56,530 1,507
-------- -------- -------- --------
Operating costs and expenses:
Operating expenses 184,288 (10,800) 173,488 4,626
Selling, general and administrative 127,774 -- 127,774 3,407
Costs of products sold 9,310 -- 9,310 248
Depreciation and amortization 120,678 (149) 120,529 3,214
-------- -------- -------- --------
Total operating costs and expenses 442,050 (10,949) 431,101 11,495
-------- -------- -------- --------
Income (loss) from operations (385,632) 11,061 (374,571) (9,988)
-------- -------- -------- --------
Other income (expense):
Interest expense, net (33,324) -- (33,324) (889)
Other expense (14) -- (14) (1)
-------- -------- -------- --------
Total other expense (33,338) -- (33,338) (890)
-------- -------- -------- --------
Income (loss) before taxes (418,970) 11,061 (407,909) (10,878)
Income tax expense (benefit) (175,066) (4,398) (179,464) (4,786)
-------- -------- -------- --------
Net income (loss) (243,904) 15,459 (228,445) $ (6,092)
======== ======== ======== ========
3. Adjustments reflect the elimination of compensation expense associated with
stock option payments resulting from the acquisition of Six Flags that were
recognized during the pre-acquisition period from December 28, 1997 to
March 31, 1998.
4. Adjustment reflects the elimination of historical depreciation and
amortization of $20,819 for Six Flags and Walibi and the inclusion of
estimated pro forma depreciation of $14,647 and amortization of $12,612.
5. Adjustment reflects additional interest expense associated with debt
incurred by Premier in connection with the acquisitions, net of (a) the
elimination of the historical interest expense associated with Premier and
Six Flags credit facilities previously outstanding and the long term debt
of Walibi, and (b) the amortization of the fair value adjustments for Six
Flags long-term debt assumed as a result of the Six Flags acquisition.
Issuance costs associated with the borrowings are being amortized over
their respective terms. The components of the adjustments are as follows:
19
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
Interest expense on Premier credit facility for the period prior to April 1, 1998
(at an 8.0% interest rate) $ (4,400)
Interest expense on Six Flags credit facility for the period prior to April 1,
1998 (at an 8.0% interest rate) (8,200)
Interest expense on the Six Flags zero coupon notes for the period prior to
April 1, 1998 (at a 6.5% interest rate) (2,600)
Interest expense on the Six Flags Theme Parks Inc. 12 1/4% senior subordinated
notes (at a 10.3% interest rate) (7,337)
Interest expense on the Six Flags 8 7/8% senior notes for the period prior to
April 1, 1998 (at an 8 7/8% interest rate) (3,772)
Interest expense on Premier 10% senior discount notes prior to April 1, 1998
(at a 10% interest rate) (6,293)
Interest expense on Premier 9 1/4% senior notes prior to April 1, 1998 (at a
9 1/4% interest rate) (6,475)
Interest expense from the amortization of issuance costs
(1,570)
Interest expense from commitment fees on Premier and Six Flags credit
facilities (773)
Interest expense on Walibi indebtedness (1,570)
Elimination of historical interest expense - Premier 2,785
Elimination of historical interest expense - Six Flags 22,661
Elimination of historical interest expense - Walibi 889
--------
$(16,655)
========
6. Adjustment reflects the application of income taxes to the pro forma
adjustments and to the pre-acquisition operations of Six Flags and Walibi,
after consideration of permanent differences, at a rate of 38%.
7. Net income (loss) applicable to common stockholders is adjusted to reflect
$5,822 of additional dividends payable to the holders of Premier's 7 1/2%
mandatorily convertible preferred stock for the period prior to issuance on
April 1, 1998.
Net income (loss) per common share and weighted average common share data
are not presented for Six Flags and Walibi as the information is not
meaningful.
The calculation of pro forma weighted average shares outstanding for the
year ended December 31, 1998 is as follows:
20
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
Pro forma weighted average number of common shares outstanding
excluding Premier's April 1, 1998 common stock offering
and the Walibi acquisition 38,020,000
Common shares issued in Premier's April 1, 1998 common stock offering,
as if issued on January 1, 1998 36,800,000
Common shares issued as partial consideration for
the Walibi acquisition, as if issued on
January 1, 1998 797,000
----------
Pro forma weighted average number of common shares outstanding 75,617,000
==========
8. EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization, equity in operations of
theme park partnerships, minority interest, and noncash compensation.
Premier has included information concerning EBITDA because it is used by
certain investors as a measure of Premier's ability to service and/or incur
debt. EBITDA is not required by GAAP and should not be considered in
isolation or as an alternative to net income, net cash provided by
operating, investing and financing activities or other financial data
prepared in accordance with GAAP or as an indicator of Premier's operating
performance. This information should be read in conjunction with the
Statement of Cash Flows contained in the financial statements incorporated
by reference.
9. Adjusted EBITDA includes Premier's share of the EBITDA from the three
partnership parks which are not consolidated - Six Flags Over Texas, Six
Flags Over Georgia and Six Flags Marine World.
21
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities (the "Debt Securities"). The prospectus supplement will describe the
specific terms of the Debt Securities offered through that prospectus supplement
and any differences in such Debt Securities from the terms described below. The
Debt Securities will be issued under an indenture (the "Indenture") between
Premier and one or more commercial banks to be selected as trustees
(collectively, the "Trustee").
We have summarized certain terms and provisions of the Indenture. The
summary is not complete. If we refer to particular provisions of the Indenture,
the provisions, including definitions of certain terms, are incorporated by
reference as a part of this summary. A copy of the form of Indenture is filed as
an exhibit to the registration statement of which this prospectus is a part, and
is incorporated by reference. You should refer to the Indenture for the
provisions which may be important to you. The Indenture is subject to and
governed by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
General
The Indenture will not limit the amount of Debt Securities which we may
issue. We may issue Debt Securities up to an aggregate principal amount as we
may authorize from time to time. The applicable prospectus supplement will
describe the terms of any Debt Securities being offered, including:
o the designation, aggregate principal amount and authorized
denominations;
o the maturity date;
o the interest rate, if any, and the method for calculating the interest
rate;
o the interest payment dates and the record dates for the interest
payments;
o any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability or convertability provisions;
o the place where principal and interest will be payable;
o if other than denominations of $1,000 or multiples of $1,000, the
denominations the Debt Securities will be issued in;
o whether the Debt Securities will be issued in the form of Global
Securities (as defined below) or certificates;
o additional provisions, if any, relating to the defeasance of the Debt
Securities;
22
o the currency or currencies, if other than the currency of the United
States, in which principal and interest will be payable;
o whether the Debt Securities will be issuable in registered form or
bearer form ("Bearer Securities") or both and, if Bearer Securities
are issuable, any restrictions applicable to the exchange of one form
for another and the offer, sale and delivery of Bearer Securities;
o any applicable United States federal income tax consequences;
o the dates on which premium, if any, will be payable;
o the right, if any, of Premier to defer payment of interest and the
maximum length of such deferral period;
o any listing on a securities exchange;
o the initial public offering price; and
o other specific terms, including any additional events of default or
covenants provided for with respect to the Debt Securities.
As described in each prospectus supplement relating to any particular
series of Debt Securities being offered, the Indenture may contain covenants
limiting:
o the incurrence of additional debt (including guarantees) by Premier
and certain of its subsidiaries and affiliates;
o the making of certain payments by Premier and certain of its
subsidiaries and affiliates;
o business activities of Premier and certain of its subsidiaries and
affiliates;
o the issuance of preferred stock of certain of its subsidiaries and
affiliates;
o certain asset dispositions;
o certain transactions with affiliates;
o a change of control of Premier;
o the incurrence of liens; and
o certain mergers and consolidations involving Premier and its
subsidiaries.
Book-Entry System
Unless otherwise specified in a prospectus supplement, Debt Securities of
any series may be issued under a book-entry system in the form of one or more
global securities (each, a "Global Security"). Each Global Security will be
deposited with, or on behalf of, a depositary, which will be The Depository
Trust Company, New York, New York (the "Depositary"). The Global Securities will
be registered in the name of the Depositary or its nominee.
23
The Depositary has advised Premier that it is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. The Depositary
was created to hold securities of its participants ("Direct Participants") and
to facilitate the clearance and settlement of securities transactions among its
Direct Participants through electronic book-entry changes in accounts of the
Direct Participants, thereby eliminating the need for physical movement of
securities certificates. The Depositary's Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations, a number of which (and/or their representatives) own the
Depositary, together with the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depositary's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants" and, together with Direct Participants, the
"Participants").
When a Global Security is issued in registered form, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by each Global Security to
the accounts of Direct Participants. The underwriters, dealers or agents, if
any, will designate the accounts to be credited, or Premier, if Debt Securities
are offered and sold directly by Premier. Ownership of beneficial interests in
the Global Security will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in the Global
Security will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by Participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form, which may impair the ability to
transfer beneficial interests in a Global Security.
So long as the Depositary or its nominee is the owner of record of a Global
Security, the Depositary or its nominee will be considered the sole owner or
holder of the Debt Securities represented by such Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have the Debt Security
represented by a Global Security registered in their names, and will not receive
or be entitled to receive physical delivery of Debt Securities in definitive
form and will not be considered the owners or holders of the Debt Securities.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of the Depositary. Beneficial owners must rely on the
procedures of the Participant through which it owns its interest in order to
exercise any rights of a holder of record of the Debt Securities. Premier
understands that under existing industry practices, if Premier requests any
action of holders or if any owner of a beneficial interest in a Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary would authorize the Direct Participants
holding the relevant beneficial interests to give or take such action, and the
Direct Participants would in turn authorize beneficial owners owning through
them to give or take such action or would otherwise act upon the instruction of
beneficial owners holding through them.
Payments of principal of, premium, if any, and interest on Debt Securities
represented by a Global Security registered in the name of the Depositary or its
nominee will be made to the Depositary or nominee as the registered owner of
such Global Security. None of Premier, the Trustee or any other agent of Premier
or agent of the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in such Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Premier has been advised by the Depositary that the Depositary will credit
Direct Participants' accounts with payments of principal, premium, if any, or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary. Premier expects that payments by
Participants to owners of beneficial interests in the Global security held
through such Participants will be governed by standing instructions and
customary practices, as is
24
now the case with securities held for the accounts of customers registered in
"street name," and will be the responsibility of such Participants.
A Global Security may not be transferred except as a whole by the
Depositary to a nominee or successor of the Depositary or by a nominee of the
Depositary to another nominee of the Depositary. A Global Security representing
all but not part of an offering of Debt Securities is exchangeable for Debt
Securities in definitive form of like tenor and terms if:
o the Depositary notifies Premier that it is unwilling or unable to
continue as depositary for the Global Security or if at any time the
Depositary is no longer eligible to be or in good standing as a
clearing agency registered under the Exchange Act, and a successor
depositary is not appointed by Premier within 90 days after Premier
receives notice; or
o Premier in its sole discretion at any time determines not to have all
of the Debt Securities represented in an by a Global Security and
notifies the Trustee.
If a Global Security is exchangeable, then it is exchangeable for Debt
Securities registered in the names and in authorized denominations as the
Depositary directs.
Payments of Principal and Interest
The applicable prospectus supplement will describe how the payment of
principal of, premium, if any, and interest on the Debt Securities will rank
with respect to outstanding indebtedness of Premier.
Events of Default
The Indenture will provide that each of the following constitutes an Event
of Default with respect to any series of Debt Securities: (i) default for 30
days in the payment when due of interest on the Debt Securities; (ii) default in
payment when due of the principal of or premium, if any, on the Debt Securities;
(iii) default in the performance or breach of certain covenants after any notice
or applicable grace period; (iv) the failure by Premier or any Restricted
Subsidiary (as defined in the Indenture) to pay Indebtedness (as defined in the
Indenture) within any applicable grace period after final maturity or the
acceleration of any Indebtedness by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated at any time exceeds
$10.0 million; (v) failure by Premier or any of its Restricted Subsidiaries to
pay final judgments aggregating at any time in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; and (vi)
certain events of bankruptcy or insolvency with respect to Premier, any
Restricted Subsidiary that constitutes a Significant Subsidiary (as defined in
the Indenture) or any group of Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
The applicable prospectus supplement will describe any additional Events of
Default.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Debt
Securities of a series may declare all Debt Securities of such series to be due
and payable immediately. Notwithstanding the foregoing, in the case of an Event
of Default arising from certain events of bankruptcy or insolvency with respect
to Premier, any Restricted Subsidiary of Premier that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries of Premier that, taken
together, would constitute a Significant Subsidiary, all outstanding Debt
Securities will become due and payable without further action or notice. Holders
of the Debt Securities may not enforce the Indenture or the Debt Securities
except as provided in the Indenture. Subject to certain limitations, holders of
a majority in principal amount of the then outstanding Debt Securities may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders of the Debt Securities notice of any continuing Default or
Event of Default (except a Default or Event
25
of Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the Debt
Securities then outstanding by notice to the Trustee may on behalf of the
holders of all of the Debt Securities of such series waive any existing Default
or Event of Default and its consequences under the Indenture, except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Debt Securities.
Modification and Waiver
From time to time, Premier, when authorized by resolutions of its Board of
Directors, and the Trustee, without the consent of the holders of Debt
Securities of any series, may amend, waive or supplement the Indenture and the
Debt Securities of such series for certain specified purposes, including, among
other things:
o curing ambiguities, defects or inconsistencies,
o to provide for the assumption of Premier's obligations to holders of
the Debt Securities of such series in the case of a merger or
consolidation,
o to make any change that would provide any additional rights or
benefits to the holders of the Debt Securities of such series,
o to add Guarantors with respect to the Debt Securities of such series,
o to secure the Debt Securities of such series,
o to maintain the qualification of the Indenture under the Trust
Indenture Act, or
o to make any change that does not adversely affect the rights of any
holder.
Other amendments and modifications of the Indenture or the Debt Securities
issued thereunder may be made by Premier and the Trustee with the consent of the
holders of not less than a majority of the aggregate principal amount of the
outstanding Debt Securities of each series affected thereby (each series voting
as a separate class); provided, that no such modification or amendment may,
without the consent of the holder of each outstanding Debt Security affected
thereby:
(1) reduce the principal amount of, or extend the fixed maturity of
the Debt Securities, or alter or waive the redemption provisions of the
Debt Securities (other than, subject to clause (7) below, provisions
relating to repurchase of Debt Securities upon the occurrence of an Asset
Sale (as defined in the Indenture) or a Change of Control (as defined in
the Indenture));
(2) change the currency in which any Debt Securities or any premium or
the accrued interest thereon is payable;
(3) reduce the percentage in principal amount outstanding of Debt
Securities of any series which must consent to an amendment, supplement or
waiver or consent to take any action under the Indenture or the Debt
Securities of such series;
(4) impair the right to institute suit for the enforcement of any
payment on or with respect to the Debt Securities;
(5) waive a default in payment with respect to the Debt Securities or
any Guarantee;
26
(6) reduce the rate or extend the time for payment of interest on the
Debt Securities;
(7) following the occurrence of an Asset Sale or a Change of Control,
alter the obligation to purchase the Debt Securities of any series as a
result thereof in accordance with the Indenture or waive any default in the
performance thereof;
(8) adversely affect the ranking of the Debt Securities of any series;
or
(9) release any Guarantor from any of its obligations under its
guarantee or the Indenture, except in compliance with the terms of the
Indenture.
Merger, Consolidation or Sale of Assets
The Indenture will provide that Premier may not consolidate or merge with
or into (whether or not Premier is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) Premier is the surviving corporation or
the entity or the Person formed by or surviving any such consolidation or merger
(if other than Premier) or to which such sale, assignment, transfer, conveyance
or other disposition shall have been made is a corporation organized or existing
under the law of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than Premier) or the entity or Person to which
such sale, assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of Premier under the Debt Securities and the
Indenture pursuant to supplemental indentures in forms reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of Premier with or into
a Wholly Owned Restricted Subsidiary (as defined in the Indenture) of Premier,
Premier or the entity or Person formed by or surviving any such consolidation or
merger (if other than Premier), or to which such sale, assignment, transfer,
lease conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth (as defined in the Indenture) immediately after the
transaction equal to or greater than the Consolidated Net Worth of Premier
immediately preceding the transaction and (B) will, both at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the applicable debt
incurrence test.
Legal Defeasance and Covenant Defeasance
Premier may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Debt Securities ("Legal
Defeasance"), except for (i) the rights of Holders of outstanding Debt
Securities to receive payments in respect of the principal of, premium, if any,
and interest on such when such payments are due from the trust referred to
below, (ii) Premier's obligations with respect to the Debt Securities concerning
issuing temporary Debt Securities, registration of Debt Securities, mutilated,
destroyed, lost or stolen Debt Securities and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and Premier's
obligations in connection therewith, and (iv) the Legal Defeasance provisions of
the Indenture. In addition, Premier may, at its option and at any time, elect to
have the obligations of Premier released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
failure to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Debt Securities. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Debt Securities.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Premier must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Debt Securities, cash in U.S. dollars, non-callable
27
Government Securities (as defined in the Indenture), or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest on the outstanding Debt Securities, on the stated maturity
date, and Premier must specify whether the Debt Securities are being defeased to
maturity or to a particular redemption date; (ii) in the case of Legal
Defeasance, Premier shall have delivered to the Trustee an opinion of counsel in
the United States reasonably acceptable to such Trustee confirming that (A)
Premier has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the date of the Indenture, there has been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the holders
of the outstanding Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, Premier shall have delivered
to the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that the holders of the outstanding Debt Securities,
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which Premier or
any of its Restricted Subsidiaries is a party or by which Premier or any of its
Restricted Subsidiaries is bound; (vi) Premier must have delivered to the
Trustee an opinion of counsel to the effect that after the 91st day following
the deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (vii) Premier must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by Premier with the intent of
preferring the holders of Debt Securities over the other creditors of Premier
with the intent of defeating, hindering, delaying or defrauding creditors of
Premier or others; and (viii) Premier must deliver to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
DESCRIPTION OF COMMON STOCK
General
The following summary of certain provisions of Premier's common stock (the
"Common Stock") does not purport to be complete and is subject to, and qualified
in its entirety by the provisions of Premier's Certificate of Incorporation,
which is included as an exhibit to the registration statement of which this
prospectus is a part, and by the provisions of applicable law.
Common Stock
Premier's authorized capital stock includes 150,000,000 shares of Common
Stock, par value $0.025 per share. As of March 1, 1999, there were 76,513,796 of
Common Stock outstanding. Each share of Common Stock entitles the holder thereof
to one vote. Holders of the Common Stock have equal ratable rights to dividends
from funds legally available therefor, when, as and if declared by the Board of
Directors and are entitled to share ratably, as a single class, in all of the
assets of Premier available for distribution to holders of Common Stock upon the
liquidation, dissolution or winding up of the affairs of Premier. Holders of
Common Stock do not have preemptive, subscription or conversion rights. However,
each outstanding share of Common Stock currently has attached to it one right (a
"Right") issued pursuant to an Amended and Restated Rights Agreement (the
"Rights Agreement"). Each Right entitles its registered holder to purchase one
one-thousandth of a share of a
28
junior participating series of Preferred Stock designated to have economic and
voting terms similar to those of one share of Common Stock, as described under
"-Rights Plan" below.
The outstanding shares of Common Stock are listed on the New York Stock
Exchange under the symbol "PKS". Bank One Trust Company, N.A., Oklahoma City,
Oklahoma, is the transfer agent and registrar for the Common Stock.
Rights Plan
Each outstanding share of Common Stock currently has attached to it one
Right issued pursuant to the Rights Agreement. Each Right entitles its
registered holder to purchase one one-thousandth of a share of a junior
participating series of Preferred Stock designated to have economic and voting
terms similar to those of one share of Common Stock, for $250.00, subject to
adjustment (the "Rights Exercise Price"), but only after the earlier to occur of
(i) the tenth day following a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 15% or
more of the outstanding voting stock of Premier (an "Acquiring Person"), or (ii)
the tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person becomes an Acquiring Person) after
the date (the "Flip-in Date") of the commencement or announcement of a person's
or group's intention to commence a tender or exchange offer whose consummation
will result in the ownership of 15% or more of Premier's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer) (in
either case, the "Separation Time"). The Rights will not trade separately from
the shares of Common Stock unless and until the Separation Time occurs.
The Rights Agreement provides that an Acquiring Person does not include (A)
Premier, (B) any subsidiary of Premier, (C) any employee benefit plan or
employee stock plan of Premier, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the terms of
any such plan, or (D) any person whose ownership of 15% or more of the shares of
voting stock of Premier then outstanding results solely from (i) any action or
transaction approved by the Board of Directors before such person acquires such
15% beneficial ownership, or (ii) a reduction in the number of issued and
outstanding shares of voting stock of Premier pursuant to a transaction or
transactions approved by the Board of Directors; provided, however, that any
person that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon his acquisition of any additional 1%
of Premier's voting stock unless such acquisition of additional voting stock
will not result in such person becoming an Acquiring Person by reason of such
clause (i) or (ii).
The Rights will not be exercisable until the business day following the
Separation Time. The Rights will expire on the earlier of (i) the close of
business on December 10, 2007, and (ii) the date on which the Rights are
redeemed or terminated as described below. The Rights Exercise Price and the
number of Rights outstanding, or in certain circumstances the securities
purchasable upon exercise of the Rights, are subject to adjustment upon the
occurrence of certain events.
Once any person becomes an Acquiring Person, unless the Rights are earlier
redeemed or exchanged as described below, if
(i) Premier were to be merged into or consolidated with another entity
(whether or not related to a 15% stockholder),
(ii) Premier were to merge with another entity (whether or not related
to a 15% stockholder) and be the surviving corporation, but any shares of
Premier's Common Stock were changed into or exchanged for other securities or
assets, or
(iii) more than 50% of Premier's assets or earning power were to be
sold in one or a series of related transactions,
29
each Right then outstanding would "flip-over" and would require that its holder
be entitled to buy, at the Rights Exercise Price, that number of shares of
common stock of the acquiring company which at the time of the merger or sale
would have a market value of two times the Exercise Price of the Right (i.e., a
discount of 50%). Any business combination not providing for the issuance of
common stock of the acquiring company in compliance with such provisions would
be prohibited.
Unless the Rights are earlier redeemed or exchanged as described below, if
a person or group becomes the beneficial owner of 15% or more of Premier's
voting stock, each Right not owned by such stockholder would become exercisable,
at the Rights Exercise Price, for that number of shares of Preferred Stock which
at the time of such transaction would have a market value of two times the
Rights Exercise Price.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
voting stock of Premier and before the acquisition by a person or group of 50%
or more of the outstanding voting stock of Premier, the Board of Directors may
elect to cause Premier to exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Premier's Common Stock per Right, subject to adjustment.
The Rights are redeemable by Premier by a vote of a majority of the Board
of Directors at a price of $0.01 per Right at any time prior to the close of
business on the Flip-in Date (or at such later date as may be authorized by the
Board of Directors and a majority of the Continuing Directors (as defined in the
Rights Agreement)). The Rights may be redeemed after the time that any person
has become an Acquiring Person only if approved by a majority of the Continuing
Directors. The Rights have no voting rights, and they are not entitled to
dividends.
The Rights will not prevent a takeover of Premier. The Rights, however, may
cause substantial dilution to a person or group that acquires 15% or more of the
Common Stock unless the Rights are first redeemed or terminated by the Board of
Directors of Premier. Nevertheless, the Rights should not interfere with a
transaction that, in the judgment of the Board of Directors, is in the best
interests of Premier and its stockholders because the Rights can be redeemed, as
hereinabove described, before the consummation of such transaction.
The complete terms of the Rights are set forth in the Rights Agreement. The
Rights Agreement is incorporated by reference as an exhibit to the registration
statement of which this prospectus is a part, and the foregoing description is
qualified in its entirety by reference thereto. A copy of the Rights Agreement
can be obtained upon written request to the Company.
DESCRIPTION OF PREFERRED STOCK
General
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
prospectus supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any prospectus supplement will be described in such
prospectus supplement. The description of certain provisions of the Preferred
Stock set forth below and in any prospectus supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to
Premier's Certificate of Incorporation and the certificate of designations
relating to each series of the Preferred Stock which will be filed with the
Securities and Exchange Commission and incorporated by reference in the
registration statement of which this prospectus is a part at or prior to the
time of the issuance of such series of the Preferred Stock.
30
Premier has authority to issue 5,000,000 shares of Preferred Stock, $1.00
par value per share. As of December 31, 1998, Premier had 11,500 shares of
Preferred Stock outstanding.
Preferred Stock
Prior to issuance of shares of each series, the Board of Directors is
required by the Delaware General Corporation Law (the "GCL") and the Certificate
of Incorporation to adopt resolutions and file a certificate of designation with
the Secretary of State of the State of Delaware, fixing for each such class or
series the designations, powers, preferences and rights of the shares of such
class or series and the qualifications, limitations or restrictions thereon,
including, but not limited to, dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences as are permitted by the GCL. The Board of Directors could authorize
the issuance of shares of Preferred Stock with terms and conditions which could
have the effect of discouraging a takeover or other transaction which holders of
some, or a majority, of such shares might believe to be in their best interests
or in which holders of some, or a majority, of such shares might receive a
premium for their shares over the then-market price of such shares.
Subject to limitation prescribed by the GCL, the Certificate of
Incorporation and the Bylaws of Premier, the Board of Directors is authorized
without further stockholder action to provide for the issuance of up to
5,000,000 shares of Preferred Stock of Premier, in one or more series, with such
voting powers, full or limited, and with such designations, preferences and
relative participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in the resolution or
resolutions providing for the issuance of a series of such stock adopted, at any
time or from time to time, by the Board of Directors (as used herein the term
"Board of Directors" includes any duly authorized committee thereof).
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a prospectus
supplement relating to a particular series of the Preferred Stock. Reference is
made to the prospectus supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including (i) the
designation and stated value per share of such Preferred Stock and the number of
shares offered; (ii) the amount of liquidation preference per share; (iii) the
initial public offering price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which dividends shall
be payable, the form of dividend payment and the dates from which dividends
shall commence to cumulate, if any; (v) any redemption or sinking fund
provisions; (vi) any conversion or exchange rights; and (vii) any additional
voting, dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of the
Preferred Stock will be subordinate to those of Premier's general creditors.
Dividend Rights
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, out of funds of Premier
legally available therefor, cash or payment in kind dividends on such dates and
at such rates as set forth in, or as are determined by the method described in,
the prospectus supplement relating to such series of the Preferred Stock. Such
rate may be fixed or variable or both. Each such dividend will be payable to the
holders of record as they appear on the stock books of Premier on such record
dates, fixed by the Board of Directors, as specified in the prospectus
supplement relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
prospectus supplement relating to such series of Preferred Stock. If the Board
of Directors fails to declare a dividend payable on a dividend payment date on
any series of Preferred Stock for which dividends are noncumulative, then the
right to receive
31
a dividend in respect of the dividend period ending on such dividend payment
date will be lost, and Premier will have no obligation to pay any dividend for
such period, whether or not dividends on such series are declared payable on any
future dividend payment dates. Dividends on the shares of each series of
Preferred Stock for which dividends are cumulative will accrue from the date on
which Premier initially issues shares of such series.
Unless otherwise specified in the applicable prospectus supplement, so long
as the shares of any series of the Preferred Stock are outstanding, unless (i)
full dividends (including if such Preferred Stock is cumulative, dividends for
prior dividend periods) have been paid or declared and set apart for payment on
all outstanding shares of the Preferred Stock of such series and all other
classes and series of preferred stock of Premier (other than Junior Stock (as
defined below)), and (ii) Premier is not in default or in arrears with respect
to any mandatory or optional redemption or mandatory repurchase or other
mandatory retirement of, or with respect to any sinking or other analogous funds
for, any shares of Preferred Stock of such series or any shares of any other
preferred stock of Premier of any class or series (other than Junior Stock),
Premier may not declare any dividends on any shares of Common Stock of Premier
or any other stock of Premier ranking as to dividends or distributions of assets
junior to such series of Preferred Stock (the Common Stock and any such other
stock being herein referred to as "Junior Stock"), or make any payment on
account of, or set apart money for, the purchase, redemption or other retirement
of, or for a sinking or other analogous fund for, any shares of Junior Stock or
make any distribution in respect thereof, whether in cash or property or in
obligations of stock of Premier, other than in Junior Stock which is neither
convertible into, nor exchangeable or exercisable for, any securities of Premier
other than Junior Stock.
Liquidation Preferences
Unless otherwise specified in the applicable prospectus supplement, in the
event of any liquidation, dissolution or winding up of Premier, whether
voluntary or involuntary, the holders of each series of the Preferred Stock will
be entitled to receive out of the assets of Premier available for distribution
to stockholders, before any distribution of assets is made to the holders of
Common Stock or any other shares of stock of Premier ranking junior as to such
distribution to such series of the Preferred Stock, the amount set forth in the
prospectus supplement relating to such series of the Preferred Stock. If, upon
any voluntary or involuntary liquidation, dissolution or winding up of Premier,
the amounts payable with respect to the Preferred Stock of any series and any
other shares of Preferred Stock of Premier (including any other series of the
Preferred Stock) ranking as to any such distribution on a parity with such
series of the Preferred Stock are not paid in full, the holders of the Preferred
Stock of such series and of such other shares of preferred stock of Premier will
share ratably in any such distribution of assets of Premier in proportion to the
full respective preferential amounts to which they are entitled. After payment
to the holders of the Preferred Stock of each series of the full preferential
amounts of the liquidating distribution to which they are entitled, unless
otherwise provided in the applicable prospectus supplement, the holders of each
such series of the Preferred Stock will be entitled to no further participation
in any distribution of assets by Premier.
Redemption
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of Premier, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the prospectus supplement
relating to such series. Shares of the Preferred Stock redeemed by Premier will
be restored to the status of authorized but unissued shares of Preferred Stock
of Premier.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) or by any other method as
may be determined by Premier in its sole discretion to be equitable. From and
after the redemption date (unless default is made by Premier in providing for
the payment of the redemption price plus accumulated and unpaid dividends,
32
if any) dividends will cease to accumulate on the shares of the Preferred Stock
called for redemption and all rights of the holders thereof (except the right to
receive the redemption price plus accumulated and unpaid dividends, if any) will
cease.
Unless otherwise specified in the applicable prospectus supplement, so long
as any dividends on shares of any series of the Preferred Stock or any other
series of preferred stock of Premier ranking on a parity as to dividends and
distribution of assets with such series of the Preferred Stock are in arrears,
no shares of any such series of the Preferred Stock or such other series of
preferred stock of Premier will be redeemed (whether by mandatory or optional
redemption) unless all such shares are simultaneously redeemed, and Premier will
not purchase or otherwise acquire any such shares; provided, however, that the
foregoing will not prevent the purchase or acquisition of such shares pursuant
to a purchase or exchange offer made on the same terms to holders of all such
shares outstanding.
Conversion and Exchange Rights
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted into shares of Common Stock, another series of
Preferred Stock or any other security of Premier will be set forth in the
prospectus supplement relating thereto. Such terms may include provisions for
conversion, either mandatory, or at the option of the holder or at the option of
Premier, in which case the number of shares of Common Stock, the shares of
another series of Preferred Stock or the amount of any other securities to be
received by the holders of Preferred Stock would be calculated as of a time and
in the manner stated in the prospectus supplement.
Voting Rights
Except as indicated below or in the prospectus supplement relating to a
particular series of Preferred Stock, or except as expressly required by the
laws of the State of Delaware or other applicable law, the holders of the
Preferred Stock will not be entitled to vote. Except as indicated in the
prospectus supplement relating to a particular series of Preferred Stock, each
such share will be entitled to one vote on matters on which holders of such
series of the Preferred Stock are entitled to vote. However, as more fully
described below under "Depositary Shares," if Premier elects to issue Depositary
Shares representing a fraction of a share of a series of Preferred Stock, each
such Depositary Share will, in effect, be entitled to such fraction of a vote,
rather than a full vote. Because each full share of any series of Preferred
Stock shall be entitled to one vote, the voting power of such series, on matters
on which holders of such series and holders of other series of preferred stock
are entitled to vote as a single class, shall depend on the number of shares in
such series, not the aggregate liquidation preference or initial offering price
of the shares of such series of Preferred Stock.
Depositary Shares
General. Premier may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, Premier will issue to the public receipts for Depositary
Shares, each of which will represent a fraction (to be set forth in the
prospectus supplement relating to a particular series of Preferred Stock) of a
share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between Premier and a bank or trust company selected by Premier having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Depositary Bank"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
33
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. If Depositary
Shares are issued, copies of the forms of Deposit Agreement and Depositary
Receipt will be incorporated by reference in the Registration Statement of which
this prospectus is a part, and the following summary is qualified in its
entirety by reference to such documents.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary Bank may, upon the written order of Premier, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts,will be
exchangeable for definitive Depositary Receipts at Premier's expense.
Withdrawal of Preferred Stock. Upon surrender of the Depositary Receipts to
the Depositary Bank, the owner of the Depositary Shares evidenced thereby is
entitled to delivery at such office of the number of whole shares of Preferred
Stock represented by such Depositary Shares. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Preferred
Stock to be withdrawn, the Depositary Bank will deliver to such holder at the
same time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Owners of Depositary Shares will be entitled to receive only whole
shares of Preferred Stock. In no event will fractional shares of Preferred Stock
(or cash in lieu thereof) be distributed by the Depositary Bank. Consequently, a
holder of a Depositary Receipt representing a fractional share of Preferred
Stock would be able to liquidate his position only by sale to a third party (in
a public trading market transaction or otherwise), unless the Depositary Shares
are redeemed by Premier or converted by the holder.
Dividends and Other Distributions. The Depositary Bank will distribute all
cash dividends or other cash distributions received in respect of the Preferred
Stock to the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary Bank will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary Bank determines that it is not feasible
to make such distribution, in which case the Depositary Bank may, with the
approval of Premier, sell such property and distribute the net proceeds from
such sale to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock represented
by Depositary Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary Bank resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary Bank. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of Preferred Stock. Whenever Premier redeems shares of Preferred
Stock held by the Depositary Bank, the Depositary Bank will redeem as of the
same redemption date the number of Depositary Shares representing the shares of
Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or pro
rata as may be determined by the Depositary Bank.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of Preferred Stock are entitled to vote, the Depositary Bank will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder of
such Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Depositary
Bank as to the exercise of the voting rights pertaining to the amount of
Preferred Stock represented by such holder's Depositary Shares. The Depositary
Bank will endeavor, insofar as practicable, to vote the amount of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and Premier will agree to take all action that may be deemed
necessary by the Depositary Bank in order to enable
34
the Depositary Bank to do so. The Depositary Bank may abstain from voting shares
of Preferred Stock to the extent it does not receive specific instructions from
the holders of Depositary Shares representing such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between Premier and
the Depositary Bank. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
Premier or the Depositary Bank only if (i) all outstanding Depositary Shares
have been redeemed, or (ii) there has been a final distribution in respect of
the Preferred Stock in connection with any liquidation, dissolution or winding
up of Premier and such distribution has been distributed to the holders of
Depositary Receipts.
Charges of Depositary Bank. Premier will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. Premier will pay charges of the Depositary Bank in connection with
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges, including any fee for the
withdrawal of shares of Preferred Stock upon surrender of Depositary Receipts,
as are expressly provided in the Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary Bank will forward to holders of Depository
Receipts all reports and communications from Premier that are delivered to the
Depositary Bank and that Premier is required to furnish to the holders of
Preferred Stock.
Neither the Depositary Bank nor Premier will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Premier and the
Depositary Bank under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares or
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Receipts
or other persons believed to be competent and on documents believed to be
genuine.
Resignation and Removal of Depositary Bank. The Depositary Bank may resign
at any time by delivering to Premier notice of its election to do so, and
Premier may at any time remove the Depositary Bank, any such resignation or
removal to take effect upon the appointment of a successor Depositary Bank and
its acceptance of such appointment. Such successor Depositary Bank must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF WARRANTS
General
Premier may issue Warrants to purchase Debt Securities ("Debt Warrants")
and/or Warrants to purchase Preferred Stock or Common Stock ("Equity Warrants")
(together, the "Warrants"). Warrants may be issued independently or together
with any securities and may be attached to or separate from such Securities. The
Warrants are to be issued under warrant agreements (each, a "Warrant Agreement")
to be entered into between Premier and a bank or trust company, as warrant agent
(the "Warrant Agent"), all as shall be set forth in the
35
prospectus supplement relating to Warrants being offered pursuant thereto. A
copy of the proposed form of Warrant Agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part.
Debt Warrants
The applicable prospectus supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the Debt Warrant certificates representing such Debt Warrants ("Debt Warrant
Certificates"), including the following: (1) the title of such Debt Warrants;
(2) the aggregate number of such Debt Warrants; (3) the price or prices at which
such Debt Warrants will be issued; (4) the designation, aggregate principal
amount and terms of the Debt Securities purchasable upon exercise of such Debt
Warrants, and the procedures and conditions relating to the exercise of such
Debt Warrants; (5) the designation and terms of any related Debt Securities with
which such Debt Warrants are issued, and the number of such Debt Warrants issued
with each such Debt Security; (6) the date, if any, on and after which such Debt
Warrants and the related Debt Securities will be separately transferable; (7)
the principal amount of Debt Securities purchasable upon exercise of each Debt
Warrant; (8) the date on which the right to exercise such Debt Warrants will
commence, and the date on which such right will expire; (9) the maximum or
minimum number of such Debt Warrants which may be exercised at any time; (10)
information with respect to book-entry procedures, if any; (11) a discussion of
any material federal income tax considerations; and (12) any other terms of such
Debt Warrants and terms, procedures and limitations relating to the exercise of
such Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the prospectus supplement. Prior to the exercise of their Debt Warrants, holders
of Debt Warrants will not have any of the rights of holders of the Debt
Securities purchasable upon such exercise and will not be entitled to payment of
principal of or any premium, if any, or interest on the Debt Securities
purchasable upon such exercise.
Equity Warrants
The applicable prospectus supplement will describe the following terms of
Equity Warrants offered thereby: (1) the title of such Equity Warrants; (2) the
securities (i.e., Preferred Stock or Common Stock) for which such Equity
Warrants are exercisable; (3) the price or prices at which such Equity Warrants
will be issued; (4) if applicable, the designation and terms of the Preferred
Stock or Common Stock with which such Equity Warrants are issued, and the number
of such Equity Warrants issued with each such share of Preferred Stock or Common
Stock; (5) if applicable, the date on and after which such Equity Warrants and
the related Preferred Stock or Common Stock will be separately transferable; (6)
if applicable, a discussion of any material federal income tax considerations;
and (7) any other terms of such Equity Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Equity Warrants.
Holders of Equity Warrants will not be entitled, by virtue of being such
holders, to vote, consent, receive dividends, receive notice as stockholders
with respect to any meeting of stockholders for the election of directors of
Premier, or any other matter, or to exercise any rights whatsoever as
stockholders of Premier.
The exercise price payable and the number of shares of Common Stock or
Preferred Stock purchasable upon the exercise of each Equity Warrant will be
subject to adjustment in certain events, including the issuance of a stock
dividend to holders of Common Stock or Preferred Stock or a stock split, reverse
stock split, combination, subdivision or reclassification of Common Stock or
Preferred Stock. In lieu of adjusting the number of shares of Common Stock or
Preferred Stock purchasable upon exercise of each Equity Warrant, Premier may
elect to adjust the number of Equity Warrants. No adjustments in the number of
shares purchasable upon exercise of the Equity Warrants will be required until
cumulative adjustments require an adjustment of at least 1% thereof. Premier
may, at its option, reduce the exercise price of the Equity Warrants at any
time. No fractional shares will be issued upon exercise of Equity Warrants, but
Premier will pay the cash value of any
36
fractional shares otherwise issuable. Notwithstanding the foregoing, in case of
any consolidation, merger, or sale or conveyance of the property of Premier as
an entirety or substantially as an entirety, the holder of each outstanding
Equity Warrant shall have the right to the kind and amount of shares of stock
and other securities and property (including cash) receivable by a holder of the
number of shares of Common Stock of Preferred Stock into which such Equity
Warrant was exercisable immediately prior thereto.
Exercise of Warrants
Each Warrant will entitle the holder to purchase such principal amount of
the underlying securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the prospectus supplement relating
to the Warrants offered thereby. Warrants may be exercised at any time up to the
close of business on the expiration date set forth in the prospectus supplement
relating to the Warrants offered thereby. After the close of business on the
expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the prospectus supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
warrant certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the prospectus
supplement, Premier will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented by
such warrant certificate are exercised, a new warrant certificate will be issued
for the remaining Warrants.
DESCRIPTION OF UNITS
Premier may issue Units consisting of two or more other constituent
securities, which Units may be issuable as, and for the period of time specified
therein may be transferable as, a single security only, as distinguished from
the separate constituent securities comprising such Units. Any such Units will
be offered pursuant to a prospectus supplement which will (i) identify and
designate the title of any series of Units; (ii) identify and describe the
separate constituent securities comprising such Units; (iii) set forth the price
or prices at which such Units will be issued; (iv) describe, if applicable, the
date on and after which the constituent securities comprising the Units will
become separately transferable; (v) provide information with respect to
book-entry procedures, if any; (vi) discuss applicable United States Federal
income tax considerations relating to the Units; and (vii) set forth any other
terms of the Units and their constituent securities.
PLAN OF DISTRIBUTION
Premier may sell the securities in or outside the United States in any of
three ways (or in any combination thereof): (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser; or
(iii) through agents. The prospectus supplement with respect to any securities
will set forth the terms of the offering of such securities, including (a) the
name or names of any underwriters, dealers or agents and the respective amounts
of such securities underwritten or purchased by each of them, (b) the initial
public offering price of such securities and the proceeds to Premier and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
and (c) any securities exchanges on which such securities may be listed. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any securities, such securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Such securities may be either offered to the public through
underwriting syndicates represented by managing underwriters, or
37
directly by underwriters. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase such
securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all of such securities if any are purchased.
The securities may be sold directly by Premier or through agents designated
by Premier from time to time. Any agent involved in the offer or sale of the
securities in respect of which a prospectus supplement is delivered will be
named, and any commissions payable by Premier to such agent will be set forth,
in the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best effort basis for the period
of its appointment.
If so indicated in the applicable prospectus supplement, Premier will
authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase the securities from Premier at the public offering price
set forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth the commission payable
for solicitation of such contracts.
Some or all of the securities may be new issues of securities with no
established trading market. Any underwriters to whom securities are sold by
Premier for public offering and sale may make a market in such securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any securities.
In order to facilitate the offering of the securities, any underwriters or
agents, as the case may be, involved in the offering of such securities may
engage in transactions that stabilize, maintain or otherwise affect the price of
such securities or any other securities the prices of which may be used to
determine payments on such securities. Specifically, the underwriters or agents,
as the case may be, may overallot in connection with the offering, creating a
short position in such securities for their own account. In addition, to cover
overallotments or to stabilize the price of such securities or any such other
securities, the underwriters or agents, as the case may be, may bid for, and
purchase, such securities or any such other securities in the open market.
Finally, in any offering of such securities through a syndicate of underwriters,
the underwriting syndicate may reclaim selling concessions allotted to an
underwriter or a dealer for distributing such securities in the offering if the
syndicate repurchases previously distributed securities in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the securities
above independent market levels. The underwriters or agents, as the case may be,
are not required to engage in these activities, and may end any of these
activities at any time.
Agents and underwriters may be entitled under agreements entered into with
Premier to indemnification by Premier against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Certain agents and underwriters may be customers of, engage in
transactions with, or perform services for Premier in the ordinary course of
business.
LEGAL MATTERS
Our counsel, Thelen Reid & Priest LLP of New York, New York, will issue an
opinion to us on certain legal matters relating to the securities.
38
EXPERTS
The consolidated financial statements of Premier Parks Inc. and
subsidiaries as of December 31, 1998 and 1997 and for each of the years in the
three-year period ended December 31, 1998, have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon authority of said firm
as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Six Flags Entertainment Corporation as of December 28, 1997 and
December 29, 1996 and for each of the three years in the period ended December
28, 1997 included in our Registration Statement on Form S-3 (File No.
333-46897), as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Six Flags
Entertainment Corporation's financial statements are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Premier Parks Inc. will pay all expenses related to the offering and sale
to the public of the securities being registered. Such expenses are set forth
in the following table. All the amounts shown are estimates, except the SEC
registration fee.
SEC Registration Fee......................... $ 278,000
Accounting Fees and Expenses.................
Legal Fees and Expenses......................
Miscellaneous................................
----------
Total........................................
==========
Item 15. Indemnification of Directors and Officers
The Certificate of Incorporation of Premier Parks Inc. ("Premier") provides
that it will to the fullest extent permitted by the General Corporation Law of
the State of Delaware (the "GCL"), as amended from time to time, indemnify all
persons whom it may indemnify pursuant to the GCL. Premier's By-laws contain
similar provisions requiring indemnification of Premier's directors and officers
to the fullest extent authorized by the GCL. The GCL permits a corporation to
indemnify its directors and officers (among others) against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any action, suit or proceeding
brought (or threatened to be brought) by third parties, if such directors or
officers acted in good faith and in a manner they reasonably believe to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. In a derivative action, i.e., one by or in the right of Premier,
indemnification may be made for expenses (including attorneys' fees) actually
and reasonably incurred by directors and officers in connection with the defense
or settlement of such action if they had acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of
Premier, except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged liable to
Premier unless and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses. The GCL further provides that, to the extent any director or officer
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in this paragraph, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. In addition, Premier's Certificate of Incorporation contains a
provision limiting the personal liability of Premier's directors for monetary
damages for certain breaches of their fiduciary duty. Premier has
indemnification insurance under which directors and officers are insured against
certain liability that may incur in their capacity as such. Section 145 of the
GCL which covers the indemnification of directors, officers, employees and
agents of a corporation is hereby incorporated herein by reference.
Item 16. Exhibits
See Exhibit Index
II-1
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) under the Securities Act of
1933 if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act (and, where applicable, each filing
of any employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 (other than the
provisions relating to insurance), or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on April 19, 1999.
Premier Parks Inc.
By: /s/ Kieran E. Burke
-----------------------------------------
Kieran E. Burke
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
under the heading "Signatures" constitutes and appoints Kieran E. Burke, Gary
Story and James F. Dannhauser, each as his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) and supplements to this Registration
Statement and any related Registration Statement filed pursuant to Rule 462(b)
of the Securities Act of 1933, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and to perform each and every act and thing
requisite and necessary to be done in connection with the above premises, as
fully for all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Kieran E. Burke Chairman of the Board and Chief
- ----------------------------- Executive Officer (Principal
Kieran E. Burke Executive Officer) April 19, 1999
/s/ Gary Story President, Chief Operating Officer
- ----------------------------- and Director April 19, 1999
Gary Story
/s/ James F. Dannhauser Chief Financial Officer and Director
- ----------------------------- (Principal Financial and Accounting
James F. Dannhauser Officer) April 19, 1999
/s/ Paul A. Biddelman Director
- -----------------------------
Paul A. Biddelman April 19, 1999
/s/ Michael E. Gellert Director
- -----------------------------
Michael E. Gellert April 19, 1999
/s/ Sandy Gurtler Director
- -----------------------------
Sandy Gurtler April 19, 1999
/s/ Charles R. Wood Director
- -----------------------------
Charles R. Wood April 19, 1999
II-3
Exhibit Index
The following exhibits are filed as a part of this Registration Statement:
Exhibit No.: Description
- ------------ -----------
*1.1: Form of Underwriting Agreement.
3.1: Certificate of Incorporation of Premier Parks Inc.
(a) Certificate of Incorporation of Registrant dated March 24, 1981
-- incorporated by reference from Exhibit 3 to Form 10-Q of
Registrant for the quarter ended June 30, 1987.
(b) Plan and Agreement of Merger of Registrant and Tierco, a
Massachusetts business trust, dated March 31, 1981 --
incorporated by reference from Exhibit 3 to Form 10-Q of
Registrant for the quarter ended June 30, 1987.
(c) Certificate of Amendment of Certificate of Incorporation of
Registrant dated April 14, 1985 -- incorporated by reference from
Exhibit 3 to Form 10-Q of Registrant for the quarter ended June
30, 1987.
(d) Certificate of Amendment of Certificate of Incorporation of
Registrant dated May 8, 1987 -- incorporated by reference from
Exhibit 3 to Form 10-Q of Registrant for the quarter ended June
30, 1987.
(e) Certificate of Amendment of Certificate of Incorporation of
Registrant dated June 11, 1987 -- incorporated by reference from
Exhibit 3 to Form 10-Q of Registrant for the quarter ended June
30, 1987.
(f) Certificate of Amendment of Certificate of Incorporation of
Registrant dated April 30, 1991 -- incorporated by reference from
Exhibit 3(f) to Form 10-K of Registrant for the year ended
December 31, 1991.
(g) Certificate of Amendment of Certificate of Incorporation of
Registrant dated June 30, 1992 -- incorporated by reference from
Exhibit 3(g) to Form 10-K of Registrant for the year ended
December 31, 1992.
(h) Certificate of Amendment of Certificate of Incorporation of
Registrant dated June 23, 1993 -- incorporated by reference from
Exhibit 3(a) to Form 10-Q of Registrant for the quarter ended
June 30, 1993.
(i) Certificate of Amendment to Certificate of Incorporation dated
October 7, 1994 -- incorporated by reference from Exhibit 3(i) to
Form 10-K of Registrant for the year ended December 31, 1994.
(j) Certificate of Designation of Series A Junior Preferred Stock of
Registrant -- incorporated by reference from Exhibit 2(1.C) to
Registrant's Registration Statement on Form 8-A dated January 21,
1998.
(k) Certificate of Amendment to Certificate of Incorporation dated
June 16, 1997 -- incorporated by reference from Exhibit 3(n) to
Form 10-k of Registrant for year ended December 31, 1997.
(l) Certificate of Designation, Rights and Preferences for 7 1/2%
Mandatorily Convertible Preferred Stock of Registrant --
incorporated by reference from Exhibit 4(s) to Registrant's
Registration Statement on Form S-3 (No. 333-45859) declared
effective on March 26, 1998.
(m) Certificate of Amendment of Certificate of Incorporation of
Registrant dated July 24, 1998 incorporated by reference from
Exhibit 3(p) to Form 10-K of -- Registrant for the year ended
December 31, 1998.
*4.1: Form of Indenture related to Debt Securities issued hereunder.
*4.2 Form of Warrant Agreement
II-4
4.3 Amended and Restated Rights Agreement between Premier Parks Inc. and
Bank One Trust Company, as Rights Agent -- incorporated by reference
from Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated
December 15, 1997, as amended.
*5.1: Opinion of Thelen Reid & Priest LLP.
12.1: Statement re: computation of ratios.
12.2 Statement re: computation of ratios.
23.1: Consent of KPMG LLP.
23.2 Consent of Ernst & Young LLP
*23.3: Consent of Thelen Reid & Priest LLP (included in Exhibit 5.1).
*24.1: Power of Attorney (included on the signature page hereto).
- ------------------------
* To be filed supplementally.
II-5