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Filed pursuant to Rule 424(b)(3)
Registration Number 333-45915
PROSPECTUS SUPPLEMENT NO. 1
(to Prospectus Dated July 7, 1998)
GLOBAL TELESYSTEMS GROUP, INC.
U.S. $144,787,000
8.75% SENIOR SUBORDINATED CONVERTIBLE BONDS DUE 2000
7,239,350 SHARES OF COMMON STOCK
This Prospectus Supplement (this "Supplement") amends and supplements
certain information contained in the Prospectus, dated July 7, 1998 (as amended
by this Supplement, the "Prospectus"), relating to the potential sale from time
to time of up to an $144,787,000 aggregate principal amount of 8.75% Senior
Subordinated Convertible Bonds due 2000 (the "Bonds") of Global TeleSystems
Group, Inc. (the "Company") and the Common Stock issuable upon conversion
thereof by the Selling Holders. This Supplement is not complete without, and
may not be delivered or utilized except in connection with, the Prospectus,
including any amendment or supplements thereto. The Prospectus is hereby
amended by the terms of this Supplement and the matters addressed herein
supersede any contrary statements contained in the Prospectus. Capitalized
terms used herein and not otherwise defined shall have the meaning ascribed to
such terms in the Prospectus.
Unless otherwise noted, all information provided in this Supplement is
as of July 14, 1998.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JULY 14, 1998
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The table set forth in the Prospectus under the caption "Selling
Holders" shall be deleted in its entirety and replaced with the following:
Principal Percentage
Amount of Shares of of Common
Bonds Held Percentage Common Stock
Prior to the of Bonds Stock That Outstanding
Offering That Out- May Be After the
Selling Holder May Be Sold standing(1) Sold(2) Offering(3)
-------------- ----------- ----------- ------- -----------
1. Halcyon Distressed Securities, L.P. (4) . . $1,940,000 1.3% 97,000 *
2. Halcyon Special Situations, L.P. (4) . . . 222,000 * 11,100 *
3. Halcyon Private Paper, L.P. (4) . . . . . . 438,000 * 21,900 *
4. Halcyon SFMT 1994, L.P. (4) . . . . . . . . 200,000 * 10,000 *
5. Halcyon SFMT 1994 II, L.P. (4) . . . . . . 100,000 * 5,000 *
6. John M. Bader (4) . . . . . . . . . . . . . 87,000 * 4,350 *
7. Kevah Konner (4) . . . . . . . . . . . . . 20,000 * 1,000 *
8. Alexandra Global Investment Fund I, Ltd.(5) 18,655,000 12.9 932,750 1.7%
9. Aristeia International Limited . . . . . . 750,000 * 37,500 *
10. Banque Cantonale Vaudoise . . . . . . . . 300,000 * 15,000 *
11. Cassa Di Risparmio Di Firenze Spa (6) . . 2,735,000 1.9 136,750 *
12. CFW-C, L.P. . . . . . . . . . . . . . . . 3,300,000 2.3 165,000 *
13. Credit Suisse First Boston Corporation (7) 1,870,000 1.3 93,500 *
14. Daiwa Europe Ltd. (8) . . . . . . . . . . 3,025,000 2.1 151,250 *
15. Deutsche Morgan Grenfell Inc.(7) . . . . . 250,000 * 12,500 *
16. Donaldson, Lufkin & Jenrette Securities
Corporation (7) . . . . . . . . . . . . 4,625,000 3.2 231,250 *
17. Goldman, Sachs & Co. (7) . . . . . . . . . 5,300,000 3.7 265,000 *
18. Global Bermuda Limited Partnership . . . . 8,300,000 5.7 415,000 *
19. Highbridge International LLC . . . . . . . 3,500,000 2.4 175,000 *
20. KA Management . . . . . . . . . . . . . . 2,663,239 1.8 133,162 *
21. KA Trading . . . . . . . . . . . . . . . . 1,311,761 * 65,588 *
22. Lakeshore International, Ltd. . . . . . . 2,915,000 2.0 145,750 *
23. Merrill Lynch International Limited (7) . 10,855,000 7.5 542,750 1.0
24. Oz Master Fund, Ltd. . . . . . . . . . . . 3,500,000 2.4 175,000 *
25. Palladin Overseas Fund Limited . . . . . . 500,000 * 25,000 *
26. Ponderosa Value Partners, L.P. (9) . . . . 200,000 * 10,000 *
27. Sage Capital . . . . . . . . . . . . . . . 100,000 * 5,000 *
28. Salomon Brothers Capital Structure
Arbitrage Fund - LT . . . . . . . . . . . 300,000 * 15,000 *
29. Salomon Brothers Diversified Arbitrage
Strategies Fund . . . . . . . . . . . . . 1,150,000 * 57,500 *
30. Salomon Brothers Equity Arbitrage Finance
Limited I . . . . . . . . . . . . . . . . 550,000 * 27,500 *
31. Santander Merchant Bank, Ltd. . . . . . . 600,000 * 30,000 *
32. SBC Warburg Dillon Read Inc. (7) . . . . . 650,000 * 32,500 *
33. The American High Income Trust . . . . . . 7,500,000 5.2 375,000 *
34. The Bond Fund of America, Inc. . . . . . . 7,500,000 5.2 375,000 *
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35. The Gleneagles Fund Company . . . . . . . 500,000 * 25,000 *
36. Tribeca Investments L.L.C. . . . . . . . . 5,110,000 3.5 255,500 *
37. Ziff Asset Management, L.P. . . . . . . . 10,000,000 6.9 500,000 *
38. Unnamed holders of Bonds or any future
transferees, pledgees, donees or
successors of or from any such unnamed
holders (10) . . . . . . . . . . . . . . . $33,265,000 23.0% 1,663,250 2.9%
___________________
* Less than 1%.
(1) The information set forth in this column is based upon $144,787,000
aggregate principal amount of Bonds originally issued.
(2) Assumes conversion of the full amount of Bonds held by such Holder at the
conversion rate of $20 in principal amount of Bonds per share of Common
Stock. The conversion rate and the number of shares of Common Stock
issuable upon conversion of the Bonds is subject to adjustment under
certain circumstances. See "Description of the Bonds - Conversion."
Accordingly, the number of shares of Common Stock issuable upon conversion
of the Bonds may increase or decrease from time to time. Under the terms
of the Indenture, fractional shares will not be issued upon conversion of
the Bonds; cash will be paid in lieu of fractional shares, if any.
(3) Based upon 54,841,140 shares of Common Stock outstanding, as adjusted to
give effect to the Offerings, as of March 31, 1998, treating as
outstanding the total number of shares of Common Stock shown as being
issuable upon the assumed conversion by the named Selling Holder of the
full amount of such Selling Holder's Bonds but not assuming the conversion
of the Bonds of any other Selling Holder.
(4) Halcyon Distressed Securities, L.P., Halcyon Special Situations, L.P.,
Halcyon Private Paper, L.P., Halcyon SFMT 1994, L.P. and Halcyon SFMT 1994
II, L.P. (the "Halcyon Partnerships") are all managed by Halcyon/Alan B.
Slifka Management Company LLC, of which Alan B. Slifka, the Chairman of
the Board of Directors of GTS, is the Managing Principal. Kevah Konner
and John M. Bader are Principals of Halcyon/Alan B. Slifka Management
Company LLC. Alan B. Slifka and affiliates beneficially owned 5,564,325
shares of Common Stock, representing 10.6% of the outstanding shares of
Common Stock and warrants to purchase Common Stock prior to the Stock
Offerings. See "Principal Stockholders." Such number of shares of Common
Stock includes 2,514,284 shares of Common Stock owned by Mr. Slifka,
49,500 shares of Common Stock held in trust for a minor child and options
to purchase 225,000 shares of Common Stock; 2,563,041 shares of Common
Stock owned by the Halcyon Partnerships and over which Mr. Slifka
disclaims beneficial ownership; 67,500 shares of Common Stock held by GTS
1995 Partners, LP; and 145,000 shares of Common Stock issuable upon the
conversion of Convertible Bonds held by various Halcyon Partnerships which
are managed by Halcyon/Alan B. Slifka Management Company LLC, over which
Mr. Slifka disclaims beneficial ownership. Furthermore, the Company has
agreed to register all of the Common Stock owned by such holders, other
than the Conversion Shares registered hereby and shares sold in the Stock
Offerings, pursuant to a shelf registration statement in consideration of
the undertaking by Mr. Slifka and certain funds and partnerships
affiliated with him not to sell such shares thereunder for specified
periods of time after the consummation of the Stock Offerings. Certain
limited partners of partnerships affiliated with Alan B. Slifka and
currently in dissolution may, upon advance notice to the Company, withdraw
some or all of their shares of Common Stock from registration under the
shelf registration statement and from the Restrictions. The number of
shares of Common Stock subject to this withdrawal may not exceed the total
of 726,953 shares of Common Stock minus the number of shares sold by such
members in the Stock Offerings. See "Shares Eligible for Future Sale."
(5) This Selling Holder has already converted aggregate principal amount of
Bonds equal to $5,155,000 into Conversion Shares, leaving a remaining
aggregate principal amount of Bonds of $13,500,000.
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(6) This Selling Holder has already converted aggregate principal amount of
Bonds equal to $2,735,000 into Conversion Shares.
(7) Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Deutsche
Morgan Grenfell, Inc. and Merrill Lynch, Pierce, Fenner and Smith
Incorporated ("Merrill Lynch") acted as Managers in the Original Offering,
pursuant to a Subscription Agreement dated July 9, 1997. DLJ was also an
Initial Purchaser of HER Notes. DLJ, Merrill Lynch, Credit Suisse First
Boston Corporation, Goldman Sachs & Co. and SBC Warburg Dillon Read Inc.,
among others, acted as underwriters in the IPO, and DLJ and Merrill Lynch
acted as underwriters in the Company's offering of its 9 7/8% Notes. In
addition, DLJ, Merrill Lynch and Goldman, Sachs & Co., among others, are
acting as underwriters in the Offerings. Each of the entities named above
or their affiliates have provided, and may provide in the future,
investment banking services to the Company, for which they received, or
will receive, customary fees. Deutsche Morgan Grenfell, Inc. may also
perform lending or other credit services to the Company, for which they
will receive customary fees. Merrill Lynch International Limited has
already converted aggregate principal amount of Bonds equal to $9,805,000
into Conversion Shares, leaving a remaining aggregate principal amount of
Bonds of $1,050,000.
(8) This Selling Holder has already converted aggregate principal amount of
Bonds equal to $3,025,000 into Conversion Shares.
(9) An affiliate of this holder acted as a consultant to the Company in
connection with the Original Offering, the IPO and the offering of HER
Notes.
(10) Assumes that the unnamed holders of the Bonds or any future transferees,
pledgees, donees or successors of or from any such unnamed holders do not
beneficially own any Common Stock other than the Common Stock issuable upon
conversion of the Bonds at the conversion rate of $20. No such unnamed
holder may offer Bonds pursuant to this Prospectus until such unnamed
holder is included as a Selling Holder in a supplement to this Prospectus
in accordance with the Registration Rights Agreement.