1
EXHIBIT 8.2
September 11, 2000
World Access, Inc.
Resurgens Plaza, Suite 2210
945 East Paces Ferry Road
Atlanta, Georgia 30326
RE: LONG-FORM TAX OPINION
Ladies and Gentlemen:
We have acted as counsel to World Access, Inc. ("World Access") in
connection with the merger of Communication TeleSystems International d/b/a
WorldxChange Communications ("WorldxChange") with and into WorldxChange
Communciations, Inc. f/k/a CTI Merger Co. ("Merger Sub"), a wholly-owned
subsidiary of World Access, pursuant to the Agreement and Plan of Merger (the
"Agreement") dated as of February 11, 2000, by and among such parties. On May
23, 2000, the parties amended the Agreement (the "Amended Agreement"). Unless
otherwise indicated herein, capitalized terms used herein have the meaning
ascribed to them in the Amended Agreement. The terms and conditions of the
Amended Agreement are set forth in the Joint Proxy Statement/Prospectus
initially dated May 24, 2000 which, as subsequently amended through the date
hereof ("Joint Proxy Statement/Prospectus"), is included in the Registration
Statement, as amended on Form S-4 (Reg. No. 333-37750), filed by World Access
with the Securities and Exchange Commission (the "Registration Statement"). You
have requested our opinion as to the material federal income tax consequences of
the WorldxChange merger. This opinion is being delivered at your request in
connection with the filing of the Registration Statement.
In rendering our opinion, we have examined and relied upon the accuracy
and completeness of the facts, information, covenants and representations
contained in originals or copies, certified or otherwise identified to our
satisfaction, of the Amended Agreement, the Joint Proxy Statement/Prospectus
filed as part of the Registration Statement, and such other documents as we have
deemed necessary or appropriate. In our examination and with your consent, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such documents.
We have also assumed, with your consent, that: (i) the Merger and the related
transactions described in the Amended Agreement (and all exhibits thereto) will
be consummated as described in the Amended Agreement (and all exhibits thereto)
and
2
World Access, Inc.
September 11, 2000
Page 2
the Joint Proxy Statement/Prospectus; (ii) the respective parties thereto and
all parties referred to therein will act in all respects at all relevant times
in conformity with the requirements and provisions of such documents; and (iii)
none of the terms and conditions contained therein has been or will be waived or
modified in any respect prior to the closing of the Merger. We have further
assumed with your consent that all statements, facts and representations made in
such documents are true, complete and correct (without regard to any knowledge
or other qualifications set forth therein and without undertaking to verify such
statements, facts and representations by any independent investigation or review
thereof), and that all covenants contained in the Amended Agreement (and all
exhibits thereto) are performed without waiver or breach of any material
provision thereof. To the extent that this opinion addresses the federal income
tax consequences to holders of CTI Capital Stock, we assume that all such
holders hold their CTI Capital Stock as a "capital asset" within the meaning of
Section 1221 of the Code. In addition, the conclusions set forth in this opinion
may not be fully applicable to holders of CTI Capital Stock subject to special
treatment for federal income tax purposes, as listed under the caption "Material
federal income tax consequences of the WorldxChange merger" in the Joint Proxy
Statement/Prospectus.
Our opinion is based upon our understanding that the facts and
representations set forth in the Amended Agreement and the Joint Proxy
Statement/Prospectus are true, complete and correct as of the date hereof and
will remain true, complete and correct at all times up to and including the
Effective Time of the Merger and thereafter where relevant. If the Merger and
the related transactions described in the Amended Agreement and the Joint Proxy
Statement/Prospectus are not consummated in accordance with the terms of such
documents or if all of the information, representations or assumptions upon
which we relied are not true, complete and correct at all relevant times, our
opinion might be adversely affected and may not be relied upon.
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), proposed,
temporary and final Treasury regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the Internal Revenue Service
("IRS") and such other authorities as we have considered relevant. We caution
that statutes, regulations, judicial decisions and administrative
interpretations are subject to change at any time and, in some circumstances,
with retroactive effect. Any change in the authorities upon which our opinion is
based could affect the conclusions stated herein. In this regard, this opinion
represents only counsel's best legal judgment, has no official status of any
kind, is not binding on the IRS or the courts, and is not a guarantee that the
IRS will not assert a contrary position with respect to such issue or that a
court will not sustain such a contrary position if asserted by the IRS. This
opinion is expressed as of the date hereof and we disclaim any responsibility to
advise you of any subsequent changes in the matters stated, represented or
assumed herein, or of any subsequent changes in applicable law.
3
World Access, Inc.
September 11, 2000
Page 3
We have expressed no opinion as to how the shares of WAXS Common Stock
received that are or could be attributed to accrued but undeclared and unpaid
dividends on CTI Preferred Stock (the "Dividend Related Shares") will be
characterized for federal income tax purposes. Our inability to opine on this
matter is due to the inherently factual nature of this determination, coupled
with the lack of legislative, judicial or IRS authority as to how the receipt of
the Dividend Related Shares should be characterized for federal income tax
purposes. If it is determined by the IRS or the courts that the Dividend Related
Shares should be treated as part of the overall stock-for-stock exchange in the
Merger, then receipt of the Dividend Related Shares would be tax-free to the
recipient WorldxChange shareholders under Section 354 of the Code. If instead,
the IRS or the courts were to treat the Dividend Related Shares as the actual or
deemed payment of dividends, then the receipt of the Dividend Related Shares
would be taxable as "dividends," subject to the provisions of Sections 301 and
316 of the Code.
We have also expressed no opinion as to whether the acceleration of the
vesting of specific WorldxChange options and the making of certain payments by
World Access to WorldxChange employees following the Merger will result in
"excess parachute payments" to "disqualified individuals" within the meaning of
Section 280G of the Code. Our inability to opine on this matter results from the
fact that the calculation of whether such amounts may be determined to be excess
parachute payments cannot be made until the Effective Time of the Merger or
thereafter. If any such amounts are determined to be excess parachute payments,
then World Access will not be entitled to a tax deduction for amounts which are
excess parachute payments, thereby increasing World Access' taxable income (or
reducing its taxable loss, if applicable) by the amount of any excess parachute
payments.
Based on the foregoing and subject to the qualifications and
limitations set forth herein, we are of the opinion that:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code;
(ii) World Access, WorldxChange and Merger Sub will each be a
"party to the reorganization" within the meaning of Section
368(b) of the Code;
(iii) no gain or loss will be recognized by WorldxChange
shareholders upon the exchange of all their CTI Common Stock
and CTI Preferred Stock for solely WAXS Common Stock in the
Merger, except for the (A) receipt of cash in lieu of a
fractional share interest in WAXS Common Stock, and (B) the
portion of the WAXS Common Stock received that are or could be
attributed to accrued but undeclared and unpaid dividends on
the Dividend
4
World Access, Inc.
September 11, 2000
Page 4
Related Shares (as defined above) that is treated by the IRS
as "dividends," subject to the provisions of Sections 301 and
316 of the Code;
(iv) the aggregate tax basis of the WAXS Common Stock received by
WorldxChange shareholders in the Merger (including the WAXS
Common Stock comprising the Expense Fund and the Escrow Fund)
will be the same as the aggregate tax basis of the shares of
CTI Capital Stock (and if such shareholder holds both CTI
Common Stock and CTI Preferred Stock, the aggregate tax basis
of all such shares) surrendered in exchange (less any portion
of such basis allocable to any fractional share interest in
WAXS Common Stock for which cash is received);
(v) the holding period for the WAXS Common Stock received in the
Merger will include the holding period during which the
WorldxChange Capital Stock was held, provided such stock were
held as a capital asset as of the Effective Time of the
Merger;
(vi) no gain or loss will be recognized by WorldxChange
shareholders upon the return to World Access of shares of WAXS
Common Stock in satisfaction of escrow claims made against
WorldxChange pursuant to the Escrow Agreement;
(vii) dividends paid by World Access to WorldxChange shareholders on
WAXS Common Stock received in the Merger but held pursuant to
either the Expense Fund or the Escrow Agreement will be
treated as if such WorldxChange shareholders held such shares
of WAXS Common Stock directly;
(viii) no gain or loss nor any imputed interest income (either
pursuant to Section 453 or Sections 1271 through 1275 of the
Code) will be recognized by WorldxChange shareholders as a
result of the distribution to them of any of the WAXS Common
Stock held under either the Escrow Agreement or the Expense
Fund;
(ix) pursuant to Rev. Rul. 74-515, 1974-2 C.B. 118, and assuming no
WorldxChange shareholder exercising appraisal rights owns WAXS
Common Stock after giving effect to the constructive ownership
rules of Section 318 of the Code, each dissenting shareholder
will recognize capital gain or loss on the receipt of cash in
connection with exercising appraisal rights equal to the
difference between the amount of cash received and such
shareholder's adjusted tax basis in the CTI Common
5
World Access, Inc.
September 11, 2000
Page 5
Stock, which will be long-term capital gain or loss if such
dissenting shareholder's CTI Common Stock was held for more
than one year as of the Effective Time of the Merger;
(x) the WorldxChange "loss group" (within the meaning of Treas.
Reg. Section 1.1502-91(c)(1)) will undergo an "ownership
change" within the meaning of Section 382 of the Code as a
result of the WorldxChange merger; and
(xi) no gain or loss will be recognized by World Access or the
World Access stockholders solely as a result of the
WorldxChange merger.
The discussion set forth in the Joint Proxy Statement/Prospectus under
the caption "Material federal income tax consequences of the WorldxChange
merger" (the "Discussion") is not a complete analysis of all aspects of federal
income taxation that may be relevant to a particular WorldxChange shareholder.
Because the federal income tax consequences of the Merger to a WorldxChange
shareholder will depend on that shareholder's particular situation, we express
no opinion as to the completeness of the Discussion as applied to any particular
WorldxChange shareholder.
In addition, we consent to the reference to Long Aldridge & Norman LLP
in the Joint Proxy Statement/Prospectus under the caption "Legal Matters" and
"Material federal income tax consequences of the WorldxChange merger" and to the
filing of this opinion as an exhibit to the Registration Statement. In giving
this consent, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission.
Except as expressly set forth above in this opinion, we express no
opinion as to the tax consequences to any holder of WorldxChange Capital Stock,
whether federal, state, local or foreign, of the Merger or of transactions
consummated before or after the Effective Time of the Merger.
6
World Access, Inc.
September 11, 2000
Page 6
Except as set forth herein, this opinion may not be used, circulated,
quoted or otherwise relied upon for any purpose without our express prior
written consent.
Very truly yours,
LONG ALDRIDGE & NORMAN LLP
By: /s/ Mark S. Lange
---------------------------------
Mark S. Lange,
a Partner