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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): July 13, 2001
Global TeleSystems, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 0-23717 94-3068423
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
4121 Wilson Boulevard
7th Floor
Arlington, VA 22203
(Address of principal executive offices, including zip code)
(703) 258-3401
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On July 13, 2001, Global TeleSystems, Inc. (the "Company") announced
that it had entered into agreements to exchange (i) 8,165,000 shares of its
common stock, par value $.10, ("Common Stock") for $35.5 million aggregate
principal amount of its 5.75% Senior Subordinated Debentures due 2010
("Debentures") and (ii) 21,704,750 shares of Common Stock for 4,340,950 of its
Depository Shares, each representing 1/100 of a share of the Company's 7.25%
Cumulative Convertible Preferred Stock. Following completion of these
transactions, approximately $326.9 million of the Debentures and 5.7 million of
the Depository Shares will remain outstanding. These transactions are consistent
with the Company's ongoing recapitalization program.
The Company also announced that the holders of publicly-traded notes
issued by its Global TeleSystems (Europe) Ltd. subsidiary, formerly known as
Esprit Telecom Group plc ("Esprit Telecom"), have approved Esprit Telecom's
Scheme of Arrangement under Part XIII of the UK Companies Act of 1985 (the
"Scheme") to restructure the terms of their notes. One-hundred percent of
bondholder votes cast were in favor of the scheme. Final approval of the scheme
by the High Court (the "Court") of England and Wales is expected in the coming
weeks.
Pursuant to this restructuring, the basic terms of which were announced
on March 28, 2001, the company's obligation to repay approximately $500 million
of the debt represented by the notes will be exchanged for the holders'
receiving a 90% ownership interest in a new company that will own Esprit Telecom
as well as the other GTS subsidiaries providing principally voice services to
businesses in Western Europe. GTS will own through a subsidiary the remaining
10% of the equity in the new company, and will hold warrants to acquire an
additional 10% of the new company.
The restructuring of the Esprit Telecom bonds is consistent with GTS's
overall program to recapitalize its balance sheet by eliminating or reducing its
publicly-held debt obligations and preferred stock. Consistent with these plans,
GTS also announced that its Global TeleSystems Europe B.V. subsidiary has
elected not to make the cash interest payments due on July 15, 2001 on its
10.375% Senior Notes due 2009 and its 10.375% Senior Notes due 2006. The company
is currently engaged in restructuring negotiations with representatives of the
holders of these notes. The non-payment of cash interest on these bonds will not
constitute an event of default under the applicable indentures unless interest
is not paid by August 14, 2001, and Deutsche Bank, Dresdner Bank and Bank of
America (the "Bank Group"), which are providing financing to GTS' Global
TeleSystems Europe Holdings B.V. subsidiary, have agreed to waive until July 31,
2001 any defaults under that subsidiary's credit facility caused by the failure
to make these July 15 interest payments.
The press releases concerning these matters are included as exhibits to
this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press release regarding the exchanges
99.2 Press release regarding the approval of Esprit Telecom bondholders and
default on Global Telesystems Europe B.V. bonds
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Global TeleSystems, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
GLOBAL TELESYSTEMS, INC.
Date: July 13, 2001 By: /s/ Grier C. Raclin
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Name: Grier C. Raclin
Title: Executive Vice President; Chief
Administrative Officer; General Counsel;
and Secretary
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release regarding the exchanges
99.2 Press release regarding the approval of Esprit Telecom
bondholders and default on Global TeleSystems Europe
B.V. bonds