Filed by PhoneTel Technologies, Inc. (OTCBB: PHTE.OB)
Subject Company - Davel Communications, Inc., PhoneTel Technologies, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
And Deemed File Pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Commission File No.: 000-16715
DAVEL COMMUNICATIONS, INC. PHONETEL TECHNOLOGIES, INC.
10120 Windhorst Road 1001 Lakeside Avenue
Tampa, FL 33619 Cleveland, Ohio 44114
(OTCBB: DAVL.OB) (OTCBB: PHTE.OB)
AT DAVEL AT PHONETEL AT FRB|WEBER SHANDWICK
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Bruce W. Renard John D. Chichester General Information:
President President & CEO Marilynn Meek
(813) 628-8000 (216) 241-2555 (212) 445-8400
FOR IMMEDIATE RELEASE
May 9, 2002
DAVEL AND PHONETEL FILE S-4 REGISTRATION STATEMENT;
ANNOUNCE PROPOSED NEW BOARD SLATE;
MAKE POST-MERGER HEADQUARTERS SITE SELECTION
TAMPA, FLORIDA & CLEVELAND, OHIO -- MAY 9, 2002 -- Davel Communications, Inc.
(OTCBB: DAVL.OB) and PhoneTel Technologies, Inc. (OTCBB: PHTE.OB) announced
today that Davel has filed a Registration Statement on Form S-4 with the
Securities and Exchange Commission, which includes a joint proxy
statement/prospectus of Davel and PhoneTel.
On February 21, 2002, Davel and PhoneTel announced the execution of a merger
agreement and related agreements under which (1) indebtedness of Davel in an
aggregate amount of approximately $218.8 million (plus interest accrued after
June 30, 2002) will be exchanged for 380,612,730 shares of Davel common stock;
(2) indebtedness of PhoneTel in an aggregate amount of approximately $33.2
million (plus interest accrued after June 30, 2002) will be exchanged for
112,246,511 shares of PhoneTel common stock; and (3) a wholly owned subsidiary
of Davel will merge with and into PhoneTel, with each share of PhoneTel common
stock (including the shares issued in exchange for PhoneTel indebtedness) being
converted into the right to receive 1.8233 shares of Davel common stock and
PhoneTel surviving as wholly owned subsidiary of Davel. The registration
statement filed today with the SEC seeks to register the 223,238,000 Davel
shares being delivered to PhoneTel stockholders in the merger.
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Upon completion of the SEC's review of the Registration Statement, Davel will
seek approval of the merger transactions at Davel's 2002 Annual Meeting. At that
time, PhoneTel will hold a Special Stockholders Meeting to seek approval of the
merger transactions by its stockholders.
In connection with the S-4 filing, the Companies also announced that Cleveland,
Ohio has been selected as Davel's corporate headquarters post-merger. It was
determined that Cleveland would best serve the combined organizations' business
objectives and most effectively facilitate the anticipated back-office
synergies. The closing of Davel's Tampa, Florida headquarters, which is expected
to occur in the third or fourth quarter of 2002, should result in significant
cost savings due to the elimination of redundant general and administrative
functions. Despite the headquarters move, Davel will continue to have a strong
presence in Florida following the merger, as the state will continue to have the
largest concentration of payphones for the combined organizations and Davel will
continue to operate its national payphone repair/refurbishment facility in
Tampa.
In conjunction with the S-4 filing, the companies have also announced the
composition of the proposed Board of Directors for the combined entity. Bruce
Renard, who joined Davel in December 1998 as Senior Vice President of Regulatory
& External Affairs and Associate General Counsel and was named President in July
of 2001, will step down as President of Davel following the merger and join the
new board of directors. It is also anticipated that Mr. Renard will continue to
consult with the Company on regulatory and industry issues post-merger.
John D. Chichester will become President and Chief Executive Officer of the
combined company, as well as a board member. Mr. Chichester has served as a
director of PhoneTel since November 1999 and was named President and Chief
Executive Officer of PhoneTel in March 1999.
The newly proposed outside directors are:
- - Andrew C. Barrett. Mr. Barrett has been a managing director of the Barrett
Group, a company providing consulting services to the telephone, media and
cable industries, since 1997. Prior to that time, Mr. Barrett served as a
commissioner with the Federal Communications Commission from 1989 to 1996 and
as a commissioner with the Illinois Commerce Commission from 1980 to 1989.
During his regulatory career, Mr. Barrett was a member of the National
Association of Regulatory Utility Commissioner's (NARUC) executive committee
and NARUC's committee on communications. He was also a chairman of NARUC's
Committee on Water. Mr. Barrett is currently a director of Telecommunications
Systems, Inc.
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- - James N. Chapman. Mr. Chapman is currently an independent capital markets and
strategic planning consultant for private and public companies across a broad
range of industries. Mr. Chapman has been involved in the investment banking
industry for 17 years and prior to forming his consulting practice in 2001 was
Vice President-Investment Banking at The Renco Group, Inc., a multi-billion
dollar private corporation. Mr. Chapman is presently a director of Coinmach
Laundry Corporation and several private companies.
- - Kevin P. Genda. Mr. Genda has served as a Managing Director of Cerberus
Capital Management, L.P. since 1995 and Senior Vice President--Chief Credit
Officer of Ableco Finance LLC, an affiliate of Cerberus, since Ableco's
founding four years ago. Mr. Genda oversees Cerberus' asset-based lending
activities. Prior to joining Cerberus and Ableco in 1995, Mr. Genda was Vice
President for New Business Origination and Evaluation at Foothill Capital
Corporation, where he was active in loan origination and distressed investing.
Mr. Genda previously worked at Huntington Holdings, a $300 million leveraged
buyout firm, and at The CIT Group/Business Credit, Inc. as an analyst for new
investments and credits.
Mr. Chichester commented: "With the filing of the S-4, we are taking a
significant step forward in completing the consolidation that began in the 3rd
quarter of 2001, under a mutual servicing agreement that has already allowed the
companies to achieve significant field operations cost savings in anticipation
of finalizing the merger. Because this merger is so vital to both companies and
their stakeholders, we are now focused on completing this final approval stage
of the consolidation process in a timely manner. With the selection of our new
board slate and the corporate headquarters location, we are poised to move ahead
positively and aggressively with our business combination. Once we receive SEC
clearance and final shareholder approval, Davel will be ready to hit the ground
running as a vibrant competitor in the domestic public communications arena. We
will be working diligently to bring about these approvals as quickly and
effectively as possible."
Mr. Renard commented: "Davel is pleased to be entering into the final phases of
its merger transaction with PhoneTel and looks forward to a positive SEC review
process and prompt shareholder approval. It has been an honor to serve as
Davel's President during this important period in the Company's history. In
working with all of the dedicated and hard working members of the Davel team,
real progress has been made in putting the Company in a position to return to
profitability and in facilitating the beneficial combination with PhoneTel that
is now before us. Once the merger is concluded, I will look forward to serving
on the new Davel board and continuing to assist the Company in capitalizing on
the significant regulatory and industry consolidation opportunities ahead."
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PhoneTel Technologies, Inc. is a leading independent provider of pay telephones
and related services in the United States, operating as of March 31, 2002
approximately 30,000 payphones in 45 states and the District of Columbia.
Founded in 1979, Davel Communications, Inc. is the largest independent payphone
provider in the United States, operating as of March 31, 2002 approximately
52,000 payphones in 44 states and the District of Columbia.
In connection with the proposed transactions, Davel and PhoneTel intend to file,
or have filed, relevant materials with the Securities and Exchange Commission,
including the Registration Statement on Form S-4 filed today that contains a
prospectus and joint proxy statement. Because those documents contain important
information, holders of Davel's common stock and holders of PhoneTel's common
stock are urged to read them. The Registration Statement is available for free
at the SEC's website, www.sec.gov. Information on how to obtain
transaction-related documents for free from Davel and PhoneTel is set forth in
the Registration Statement.
Davel and its directors and executive officers and PhoneTel and its directors
and executive officers may be deemed to be participants in the solicitation of
proxies from the holders of Davel's common stock and/or PhoneTel's common stock
in connection with the proposed transactions. On February 21, 2002, information
regarding the participants and their interests in the solicitation was filed
pursuant to Rule 425 with the SEC by each of Davel and PhoneTel. To Davel's
knowledge, as of May 9, 2002, neither PhoneTel nor any of its executive officers
held any share of Davel's common stock. Investors may obtain additional
information regarding the interests of the participants by reading the final
prospectus and joint proxy statement if and when it becomes available.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of
Davel, PhoneTel, or a combined Davel and PhoneTel, to differ materially, many of
which are beyond the control of Davel or PhoneTel, include, but are not limited
to, the following: (1) the businesses of Davel and PhoneTel may not be
integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected benefits and synergies from
the combination may not be realized within the expected time frame or at all;
(3) revenues following the transaction may be lower than expected; (4) operating
costs, customer loss and business disruption, including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (5)
generating incremental growth in the customer base of the combined company may
be more costly or difficult than expected; (6) the effects of legislative and
regulatory changes; (7) the tax treatment of the proposed transactions; (8) an
inability to retain necessary authorizations from the FCC and state utility or
telecommunications authorities; (9) an increase in competition from cellular
phone and other wireless products and wireless service providers; (10) the
introduction of new technologies and competitors into the telecommunications
industry; (11) changes in labor, telephone line service, equipment and capital
costs; (12) future acquisitions, strategic partnerships and divestitures; (13)
general business and economic conditions; and (14) other risks described in the
Annual Reports on Form 10-K for the year ended December 31, 2001 and other
periodic reports filed by Davel and PhoneTel with the Securities and Exchange
Commission. You are urged to consider statements that include the words "may,"
"will," "would," "could," "should," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends," "continues,"
"forecast," "designed," "goal," or the negative of those words or other
comparable words, to be uncertain and forward-looking. This cautionary statement
applies to all forward-looking statements included in this document.
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