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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): August 17, 1999
WORLD ACCESS, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-29782 58-2398004
(State of (Commission File No.) (I.R.S. Employer
Incorporation) Identification No.)
945 E. PACES FERRY ROAD, SUITE 2200
ATLANTA, GEORGIA 30326
(Address of principal executive offices, including zip code)
(404) 231-2025
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On August 17, 1999, World Access, Inc. ("World Access") entered into a
definitive merger agreement with FaciliCom International, Inc. ("FaciliCom").
FaciliCom, a privately owned company, is a leading facilities-based provider of
European and U.S. originated international long-distance voice, data and
Internet services. The combined company will have carrier grade switching and
transport network facilities located strategically throughout the U.S. and 13
European countries to facilitate entry into deregulating retail markets
worldwide.
Pursuant to the terms of the agreement, the shareholders of FaciliCom will
receive approximately $436 million in consideration, primarily in the form of
Convertible Preferred Stock, Series C ("Preferred Stock"). In addition, World
Access will assume $300 million of FaciliCom's 10.5% Senior Notes due 2008 (the
"FaciliCom Senior Notes").
The Preferred Stock bears no dividend and is convertible into shares of World
Access common stock at a conversion rate of $20.38 per common share (the
"Conversion Price"), subject to potential adjustment under certain
circumstances. If the closing trading price of World Access common stock exceeds
$20.38 per share for 60 consecutive trading days, the Preferred Stock will
automatically convert into a number of shares of common stock equal to the
number of shares of Preferred Stock subject to conversion multiplied by the
quotient of (i) $1,000 divided by (ii) the Conversion Price in effect on the
last trading day of such 60-day period. In addition, any shares of Preferred
Stock that have not been converted into common stock within three years
following the issue date of the Preferred Stock (the "Three Year Conversion
Date") will automatically be converted into a number of shares of common stock
equal to the number of shares of Preferred Stock subject to conversion
multiplied by the quotient of (i) $1,000 divided by (ii) the then current market
price as determined pursuant to the terms of the Certificate of Designation for
the Preferred Stock, subject to certain adjustments (the "Three Year Conversion
Price"). Notwithstanding the foregoing, (x) the Three Year Conversion Price may
not be less than $11.50, (y) if (A) the Three Year Conversion Price is less than
the market price on the issue date of the Preferred Stock and (B) the Nasdaq
Composite Index ("IXIC") on the close of business of the Three Year Conversion
Date is 85% or less than the IXIC on the close of business on the issue date of
the Preferred Stock (the difference between 100% and such percentage is referred
to as the "Market Correction Percentage"), then the Three Year Conversion Price
will be increased by a percentage equal to that portion of the Market Correction
Percentage in excess of 15%, and (z) the Three Year Conversion Price may not be
greater than the Conversion Price.
As long as at least 15% of the originally issued Preferred Stock is outstanding
(the "Minimum Preferred Stock Percentage"), the holders of the Preferred Stock
will be entitled to nominate and elect, voting as a separate series, four
directors to the World Access Board of Directors (the "Board") and shall not be
entitled to vote with respect to the election of any other directors.
Notwithstanding the foregoing, if (i) the common stock issuable upon conversion
of the Preferred Stock equals less than 20% of the outstanding shares of World
Access capital stock entitled to vote for the election of directors and (ii) the
outstanding Preferred Stock constitutes at least the Minimum Preferred Stock
Percentage, then the holders of Preferred Stock will have the right to elect,
voting as a separate series, such number of directors which, as a percentage of
the total number of members of the Board, is at least equal to the percentage of
all outstanding shares of World Access capital stock entitled to vote for the
election of directors held by such holders on an as converted basis.
If the Preferred Stock held by Armstrong International Telecommunications, Inc.,
Epic Interests, Inc., BFV Associates, Inc. and any of their respective
affiliates and initial transferees holding common stock issued upon such
conversion (collectively, the "Shareholders") is converted into World Access
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common stock, the Shareholders will be entitled to designate four persons to be
nominated and recommended by the Board for election to the Board, provided that,
on the record date, the Shareholders hold at least 15% of the common stock
issued upon conversion of the Preferred Stock (the "Minimum Common Stock
Percentage"). Notwithstanding the foregoing, if the shares of common stock held
by the Shareholders equals less than 20% of the total of all outstanding shares
of capital stock entitled to vote for the election of directors, then, so long
as the Minimum Common Stock Percentage is satisfied, the Shareholders will be
entitled to designate that number of persons to be nominated and recommended by
the Board for election to the Board so that the Shareholders would have,
assuming the election of such nominees, such number of persons nominated by them
which, as a percentage of the total number of members of the Board, is at least
equal to the percentage of all outstanding shares of capital stock entitled to
vote for the election of directors held by the Shareholders on the record date
for such vote. Except for certain other specified matters, the holders of the
Preferred Stock will vote on an as-converted basis with the holders of World
Access common stock.
The transaction is conditioned upon a majority of the holders of FaciliCom
Senior Notes allowing World Access to assume the FaciliCom Senior Notes, waive
any put rights triggered by the merger and make certain amendments thereto. The
merger is also subject to the approval of World Access stockholders and certain
regulatory agencies. Certain stockholders of World Access (including MCI
WorldCom, Brown Brothers Harriman and senior members of management) and the
Armstrong Group of Companies, FaciliCom's majority shareholder, have entered
into a Voting Agreement whereby they have committed to vote in favor of the
merger. The merger is expected to close in the fourth quarter of 1999 and will
be accounted for as a purchase transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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99 Press Release, issued August 17, 1999.
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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 behalf of the
undersigned hereunto duly authorized.
WORLD ACCESS, INC.
Date: August 19, 1999 By: /s/ MARTIN D. KIDDER
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Martin D. Kidder
Vice President and Controller
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99 Press Release, issued August 17, 1999
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