SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 23, 1998
Davel Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-22610 59-3538257
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1429 Massaro Boulevard, Tampa, Florida 33619
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(Address of principal executive offices)
(813) 623-3545
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(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
Merger with Peoples Telephone Company, Inc.
On July 5, 1998, Davel Communications Group, Inc., an Illinois
corporation ("Old Davel"), and Old Davel's then wholly owned subsidiary, Davel
Holdings, Inc., a Delaware corporation formed for the purpose of completing a
business combination ("New Davel"), entered into an Agreement and Plan of Merger
(as amended, the "Merger Agreement") with Peoples Telephone Company, Inc., a New
York corporation ("Peoples"). The Merger Agreement was subsequently amended and
restated on October 22, 1998 primarily for the purpose of allowing Old Davel and
New Davel to enter into a reincorporation merger. The merger transactions
contemplated by the Merger Agreement (the "Transactions") were completed on
December 23, 1998. Pursuant to the Merger Agreement, New Davel and its wholly
owned subsidiary, Davel Financing Company, L.L.C., a Delaware limited liability
company ("Davel Finance Company"), acquired all of the issued and outstanding
shares of the common stock, par value $.01 per share, of Peoples (the "Peoples
Common Stock") through the issuance of 0.235 shares of the common stock, par
value $.01 per share, of New Davel (the "New Davel Common Stock") in exchange
for each outstanding share of Peoples Common Stock and the assumption of
Peoples' outstanding public debt of $100 million, which was simultaneously
retired through a cash tender offer for 100% of the outstanding debt. In
connection with the closing of the Transactions, New Davel entered into
Employment and Non-Competition Agreements with eight officers and directors of
Peoples, and New Davel and Peoples entered into Employment Agreements with two
officers of Peoples. Also in connection with the closing of the Transactions,
the New Davel Board of Directors elected Justin S. Maccarone, previously a
director of Peoples, to fill a vacancy on the New Davel Board of Directors.
Also pursuant to the Merger Agreement, New Davel and Davel Finance
Company acquired all of the issued and outstanding shares of the common stock,
no par value, of Old Davel (the "Old Davel Common Stock") through the issuance
of one share of New Davel Common Stock in exchange for each outstanding share of
Old Davel Common Stock.
In order to finance the Transactions, New Davel, Davel Finance Company
and certain of its subsidiaries entered into a credit agreement dated as of
December 23, 1998, with NationsBank, N.A., as Administrative Agent, BancBoston
Robertson Stephens Inc., as Syndication Agent, The Chase Manhattan Bank, as
Documentation Agent, and NationsBanc Montgomery Securities LLC, as lead
arranger, and other lenders (collectively, the "Lenders"), pursuant to which the
Lenders made available to New Davel an initial revolving loan commitment of $60
million and aggregate term loan commitments of $220 million.
In connection with the completion of the Transactions, New Davel
changed its name to "Davel Communications, Inc."
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Item 5. Other Events
Adoption of Stockholder Rights Plan
On December 15, 1998, the Board of Directors of New Davel authorized
the issuance of one preferred share purchase right (a "Right") for each
outstanding share of New Davel Common Stock. The distribution was payable to
the stockholders of record at the close of business on December 24, 1998 (the
"Record Date"), which was also the payment date, and with respect to all New
Davel Common Stock that become outstanding after the Record Date and prior to
the earliest of the Distribution Date (as defined below), the redemption of the
Rights, the exchange of the Rights, and the expiration of the Rights (and, in
certain cases, following the Distribution Date). Each Right entitles the
registered holder to purchase from New Davel one one-thousandth of a share of a
Junior Participating Preferred Stock, Series A, par value $0.01 per share, of
New Davel (the "Preferred Shares") at a price of $100.00 per one one-thousandth
of a Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights, and certain defined terms used herein, are
set forth in a Rights Agreement (the "Rights Agreement") between New Davel and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent"),
dated as of December 15, 1998.
Until the earlier to occur of (i) the expiration of New Davel's
redemption rights following the date of public disclosure that a person or group
other than certain Exempt Persons (an "Acquiring Person"), together with persons
affiliated or associated with such Acquiring Person (other than those that are
Exempt Persons), has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding New Davel Common Stock (the "Stock
Acquisition Date") or (ii) the tenth business day after the date of commencement
or public disclosure of an intention to commence a tender offer or exchange
offer by a person other than an Exempt Person if, upon consummation of the
offer, such person could acquire beneficial ownership of 15% or more of the
outstanding New Davel Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by New Davel Common Stock
certificates and not by separate certificates. The Rights Agreement provides
that, until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the New Davel
Common Stock. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), New Davel Common Stock certificates will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights)
the surrender for transfer of any certificate for New Davel Common Stock, with
or without such notation or a copy of a summary of the Rights being attached
thereto, will also constitute the transfer of the Rights associated with the New
Davel Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the New Davel
Common Stock as of the close of business on the Distribution Date, and such
separate Right Certificates alone will evidence the Rights.
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The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on December 23, 2008 (the "Expiration Date"), unless earlier redeemed
or exchanged by New Davel as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities, cash or other property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights, options or warrants to subscribe for
Preferred Shares or securities convertible into Preferred Shares at less than
the current market price of the Preferred Shares or (iii) upon the distribution
to holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained earnings)
or of subscription rights or warrants (other than those referred to above). In
addition, the Purchase Price payable and the number of Preferred Shares
purchasable on exercise of a Right is subject to adjustment in the event that
New Davel should (i) declare or pay any dividend on the New Davel Common Stock
payable in New Davel Common Stock or (ii) effect a subdivision or combination of
the New Davel Common Stock into a different number of New Davel Common Stock.
In the event that, at any time following public disclosure that an
Acquiring Person has become such, New Davel is involved in a merger or other
business combination transaction where New Davel is not the surviving
corporation or where shares of New Davel Common Stock are changed or exchanged
or in a transaction or transactions wherein 50% or more of its consolidated
assets or earning power are sold, proper provision would be made so that each
holder of a Right (other than such Acquiring Person and certain related persons
or transferees) shall thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiring company or New Davel, as the case may be, which
at the time of such transaction would have a market value of two times the
exercise price of the Right. In the event that there is public disclosure that
an Acquiring Person has become such, proper provision would be made so that each
holder of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person and certain related persons and transferees (which will
thereafter be void), on or after the earlier of the Distribution Date and the
first public disclosure that an Acquiring Person has become such, will
thereafter have the right to receive upon exercise that number of shares of New
Davel Common Stock (or other securities) having at the time of such transaction
a market value of two times the exercise price of the Right. In addition, New
Davel's Board of Directors has the option of exchanging all or part of the
Rights (excluding void Rights) for an equal number of shares of New Davel Common
Stock in the manner described in the Rights Agreement.
No fractional Preferred Shares will be issued (other than fractions
which are integral multiples of one one-thousandth of a Preferred Share, which
may, at the election of New Davel, be evidenced by depositary receipts) and in
lieu thereof, an adjustment in cash will be made based on the market price of
the Preferred Shares on the last trading date prior to the date of exercise.
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At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of New Davel may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the "Redemption Price"), payable
in cash, shares (including fractional shares) of New Davel Common Stock or any
other form of consideration deemed appropriate by the Board of Directors.
At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of New Davel may amend or supplement the
Rights Agreement without the approval of the Rights Agent or any holder of the
Rights. Thereafter, the Board of Directors of New Davel may amend or supplement
the Rights Agreement without such approval only to cure ambiguity, correct or
supplement any defective or inconsistent provision or change or supplement the
Rights Agreement in any manner which shall not adversely affect the interests of
the holders of the Rights (other than an Acquiring Person or an affiliate or
associate thereof). Immediately upon the action of the Board of Directors
providing for any amendment or supplement, such amendment or supplement will be
deemed effective.
The Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000 times
the dividend declared per share of Common Stock. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment equal to the greater of $100 per share and 1,000 times the
payment made per New Davel Common Stock. Each Preferred Share will have 1,000
votes per share, voting together with the New Davel Common Stock. In the event
of any merger, consolidation or other transaction in which shares of New Davel
Common Stock are exchanged, each Preferred Share will be entitled to receive
1,000 times the amount received per share of New Davel Common Stock.
Exempt Persons include (i) New Davel, (ii) any Subsidiary of New
Davel, (iii) Mr. David R. Hill, a principal stockholder of New Davel ("Mr.
Hill"), (iv) Samstock, L.L.C., a Delaware limited liability company and a
principal stockholder of New Davel ("Samstock"), (v) any employee benefit plan
of New Davel or of any Subsidiary of New Davel, and (vi) any Person holding New
Davel Common Stock for any such employee benefit plan or for employees of New
Davel or of any Subsidiary of New Davel pursuant to the terms of any such
employee benefit plan.
Subject to certain exceptions and Permitted Acquisitions, each of Mr.
Hill and Samstock is allowed to acquire additional New Davel Common Stock in an
amount not to exceed the sum of (i) 1% and (ii) his or its beneficial ownership
of New Davel Common Stock on the Record Date, as such beneficial ownership of
New Davel Common Stock may be increased as a result of certain subsequent events
such as an acquisition of New Davel Common Stock by New Davel or any Subsidiary
or as a result of acquiring New Davel Common Stock as a result of the operation
of the Rights Agreement.
"Permitted Acquisition" means, with respect to Mr. Hill and Samstock,
(i) any acquisition by way of any stock dividend, stock split, reorganization,
recapitalization, merger,
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consolidation, rights offering or other like distribution made available to
holders of New Davel Common Stock generally or under the Rights Agreement (as
the same may be amended, restated or supplemented from time to time) or any
other shareholder rights agreement, and (ii) any acquisition pursuant to any
employee benefit plan, executive compensation plan, management agreement,
director, executive, management or employee stock option plan, or any other
officer or employee incentive award, benefit, bonus or similar plan, agreement,
system or arrangement.
The Rights may have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group (except as described above with
respect to an Exempt Person) that attempts to acquire New Davel on terms not
approved by the Board, except pursuant to an offer conditioned on a substantial
number of Rights being acquired. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors prior to
the time a person or group other than an Exempt Person has acquired beneficial
ownership of 15% or more of the New Davel Common Stock, because until such time
the Rights may generally be redeemed by New Davel at $.01 per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of New Davel, including, without limitation, the right
to vote or to receive dividends.
This summary description of the Rights does not purport to be complete
and is quali fied in its entirety by reference to the Rights Agreement, which
is incorporated by reference as Exhibit 4.1 to this Current Report on Form 8-K.
The Rights Agreement and accompanying Rights are substantially similar
to, and replace in their entirety, the rights agreement and accompanying rights
that had been in effect with respect to Old Davel Common Stock immediately prior
to the Transactions.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
None.
(b) Pro Forma Financial Information
The required pro forma financial information has not been filed
with this Current Report on Form 8-K, but will be filed under
cover of Form 8-K/A as soon as it becomes available, but in no
event later than 60 days after the date hereof.
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(c) Exhibits
4.1 Rights Agreement, dated as of December 15, 1998, between
Davel Communications, Inc. and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, including the form of
Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A attached thereto as
Exhibit A, the form of Rights Certificate attached thereto
as Exhibit B and the Summary of Rights attached thereto as
Exhibit C (incorporated by reference to the Company's
Registration Statement on Form 8-A, filed with the
Commission on December 23, 1998).
10.1 Credit Agreement, dated as of December 23, 1998, among
Davel Financing Company, L.L.C., as Borrower, Davel
Communications, Inc., the Domestic Subsidiaries of the
Borrower and Davel Communications, Inc., as Guarantors, the
Lenders identified therein, NationsBank, N.A., as
Administrative Agent, BancBoston Robertson Stephens Inc., as
Syndication Agent, The Chase Manhattan Bank, as
Documentation Agent, and NationsBanc Montgomery Securities,
LLC, as Lead Arranger.
10.2 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and Scott K. Ambler.
10.3 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and David A. Arvizu.
10.4 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and William A. Baum.
10.5 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and Neil N. Snyder III.
10.6 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and E. Craig Sanders.
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10.7 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and C. Keith Pressley.
10.8 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and Robert E. Lund.
10.9 Employment and Non-Competition Agreement, dated as of
December 23, 1998, by and between Davel Communications, Inc.
and Alan C. McFarland.
10.10 Employment Agreement, dated as of December 30, 1998, by
and between Peoples Telephone Company, Inc., Davel
Communications, Inc. and its subsidiaries, and Bruce W.
Renard.
10.11 Employment Agreement, dated as of December 21, 1998, by
and between Peoples Telephone Company, Inc., Davel
Communications, Inc. and its subsidiaries, and Lawrence T.
Ellman.
99.1 Press Release, dated December 23, 1998, issued by the
Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Davel Communications, Inc.
By: /s/ Michael E. Hayes
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Michael E. Hayes
Senior Vice President and
Chief Financial Officer
Dated: January 6, 1999
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