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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): November 7, 1999
Crown Castle International Corp.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24737 76-0470458
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) Number)
510 Bering Drive
Suite 500
Houston, TX 77057
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (713) 570-3000
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This document includes "forward-looking" statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Other than statements of historical fact, all statements
regarding industry prospects, the completion of the transactions described in
this document and the expectations of the Company (as defined below) regarding
the future performance of its businesses and its financial position are
forward-looking statements. These forward looking statements are subject to
numerous risks and uncertainties.
Capitalized terms used but not defined herein shall have the meaning
assigned thereto in the Company's Registration Statement on Form S-3 (Reg. No.
333-83395), as amended and as supplemented by a prospectus supplement dated
August 5, 1999.
Item 5. Other Events
Crown Castle International Corp. ("CCIC" or the "Company") announced
that on November 7, 1999 it entered into an agreement (the "Formation
Agreement") with GTE Wireless Incorporated ("GTE Wireless") and certain
affiliates of GTE Wireless to form a joint venture (the "Joint Venture") to
own and operate a significant majority of the wireless communications towers
of GTE Wireless, valued at approximately $900 million. The Joint Venture will
be structured as three multi-tiered limited liability companies: (1) Crown
Castle GT Holding Company LLC ("Holdings"), (2) Crown Castle GT Holding Sub
Company LLC ("Holding Sub") and (3) Crown Castle GT Company LLC ("OpCo"). Upon
completion of the closings described below, it is expected that CCIC will own
approximately 75% of Holdings, and GTE Wireless and its affiliates will own
the remaining 25% . Holdings will in turn own 100% of Holding Sub, and Holding
Sub will own 99.999% of OpCo. The remaining 0.001% interest in OpCo will be
owned by GTE Wireless. The day-to-day operations of the Joint Venture will be
managed by CCIC. For financial reporting purposes, CCIC intends to consolidate
the Joint Venture's results of operations and financial condition with its
own.
The Formation Agreement contemplates multiple closings. At each
closing, affiliates of GTE Wireless will contribute to the Joint Venture
assets and liabilities relating to wireless communications towers, and CCIC
will contribute cash in exchange for interests in Holdings. The amount of
assets and liabilities contributed at a particular closing will depend on
whether GTE Wireless has obtained a sufficient amount of the requisite
consents for the transfer of towers grouped in geographic areas in accordance
with the Formation Agreement. The amount of cash to be contributed by CCIC at
a particular closing will in turn depend on the number of towers being
transferred at such closing. It is currently contemplated that up to 2,322
towers will be transferred . If all such towers are transferred, CCIC will
ultimately be required to contribute up to approximately $825 million to the
Joint Venture. Of this amount, $25 million will be retained by the Joint
Venture for working capital, all of which working capital contribution will be
made on the initial closing. The balance of CCIC's cash contribution will be
distributed to GTE Wireless. Following the contribution of 895 towers, up to
$100 million of CCIC's required contribution may be in the form of CCIC common
stock, valued at $18.655 per share. In addition, Holding Sub may borrow up to
$200 million of indebtedness, subject to certain limitations, which borrowing
will reduce CCIC's contribution requirement. Proceeds of any such borrowing
will be distributed to GTE Wireless. The initial closing is not expected to
occur prior to January 15, 2000, and the second closing is not expected to
occur prior to March 31, 2000. Additional towers above 2,322 will cause an
adjustment in GTE Wireless's and CCIC's interest in Holdings
in accordance with the Formation Agreement; however, in no event will the
contribution of additional towers result in CCIC's interest in the Joint
Venture falling below 50.1%.
In connection with the execution of the Formation Agreement, CCIC and
GTE Wireless entered into an Escrow Agreement dated November 7, 1999 (the
"Escrow Agreement") with Citibank, N.A., as escrow agent (the "Escrow Agent").
Pursuant to the Escrow Agreement, CCIC deposited $50 million on November 8,
1999 in an account with the Escrow Agent. In the event that any closing does
not occur as a result of CCIC's failure to deliver sufficient funds for such
closing, GTE Wireless may unilaterally terminate the Formation Agreement
following a 30-day cure period. Upon such termination, GTE Wireless will be
entitled to instruct the Escrow Agent to deliver the entire amount of proceeds
held by the Escrow Agent to it as a termination fee.
In connection with its contribution of assets and liabilities to the
Joint Venture, GTE Wireless is making certain representations and warranties
concerning the contributed assets and liabilities, breaches of which will in
general be indemnifiable by GTE Wireless until June 30, 2001. However, GTE
Wireless's indemnification obligations are subject to a number of significant
limitations including a per occurrence deductible of $25,000, an aggregate
deductible of $12 million and an absolute cap of $310 million.
The formation of the Joint Venture and each closing is subject to a
number of significant conditions. These conditions include, but are not
limited to:
o accuracy of the representations and warranties of GTE Wireless
and the Company;
o compliance with the Formation Agreement;
o absence of threatened or pending litigation in connection with
the Formation Agreement;
o receipt of regulatory approvals and third party consents; and
o receipt of certain environmental studies.
The obtaining of financing is not a condition to any closing. Although
the Joint Venture is expected to be formed during the first quarter of 2000,
and all the closings are expected to occur during 2000, each of the closings
under the Formation Agreement is subject to a number of significant
conditions. There can be no assurance that any of the closings will occur.
Concurrently with the formation of the Joint Venture, GTE Wireless and
OpCo will enter into a master build-to-suit agreement (the "Build-to-Suit
Agreement"). Pursuant to the Build-to-Suit Agreement and subject to certain
conditions, GTE Wireless and OpCo have agreed that the next 500 towers to be
built for GTE Wireless's wireless communications business will be constructed
and owned by OpCo. GTE Wireless is required to submit these 500 site proposals
to OpCo during the five-year period following the formation of the Joint
Venture; however, the five-year period will be extended for additional
one-year periods, until 500 site proposals are submitted to OpCo. OpCo will be
required to build towers in the general vicinity of the locations proposed by
GTE Wireless. Upon completion of a tower, it will become subject to the Global
Lease as described below. Space not leased by GTE Wireless or its affiliates
on each tower is available for lease by OpCo to third parties. The obligations
with respect to the 500 tower sites under the Build-to-Suit can be satisfied
by CCIC in several ways, including
by completing build-to-suit towers in excess of 700 for Bell Atlantic Mobil
and by leasing future CCIC towers to GTE Wireless.
In addition, concurrently with the formation of the Joint Venture, GTE
Wireless and OpCo will enter into a global lease (the "Global Lease"). All of
the approximately 2,322 towers to be acquired by the Joint Venture from GTE
Wireless and its affiliates pursuant to the Formation Agreement, and all
towers constructed by OpCo pursuant to the Build-to-Suit Agreement, will be
governed by the Global Lease. The average monthly rent on the 2,322 towers
contributed to the Joint Venture by GTE Wireless will be approximately $1,400,
subject to adjustments specified in the Global Lease, including a 4% per year
increase for the initial 10 year period. For all sites, the initial lease term
is 10 years. GTE Wireless has the right to extend any lease for four
additional five-year terms. Space not leased by GTE or its affiliates on each
tower is available for lease by OpCo to third parties. The parties may also
enter services agreements to ensure a smooth transition of the business to the
Joint Venture.
In connection with the formation of the Joint Venture, limited
liability company operating agreements will be established that govern the
limited liability companies comprising the Joint Venture. The business and
affairs of the Joint Venture will be managed by its managers under the
supervision of a board of representatives. Members of the board of
representatives will be selected by each of GTE Wireless and CCIC generally in
proportion to their ownership interests. The managers will operate the Joint
Venture on a day-to-day basis. In general, the managers will have the power
and authority to take all necessary or appropriate actions to conduct the
Joint Venture's business in accordance with its then current business plan.
Actions requiring the approval of the board of representatives generally will
be authorized upon the affirmative vote of a majority of the members of the
board of representatives. However, the following actions, among others, will
require the mutual consent of GTE Wireless and CCIC (or their respective
affiliates):
o entry into contracts that (1) restrict the business activities
of the Joint Venture in any geographic area, (2) contain
exclusivity provisions, (3) are inconsistent with any of the
agreements entered into in connection with the formation of
the Joint Venture or (4) provide for the purchase or sale of
goods or services involving an amount in excess of $10.0
million per year;
o engaging in any business, other than owning, acquiring,
constructing, leasing and operating communications towers, or
the making of any investment in, or the acquisition of any
equity securities of, any person;
o taking any voluntary action that would cause the Joint Venture
to be insolvent or voluntarily entering into a bankruptcy
proceeding;
o the Joint Venture directly or indirectly, remaining liable,
creating, incurring, assuming, guaranteeing or otherwise
becoming or remaining liable with respect to any indebtedness,
except for the indebtedness of Holding Sub described above;
o incurring any liens, except for liens securing the
indebtedness of Holding Sub described above;
o issuing any additional equity interests in the Joint Venture;
o mergers or consolidations;
o sales of assets outside the ordinary course;
o entry into contracts with affiliates except in the ordinary
course and on an arm's-length basis; and
o approval of the business plan.
Except for transfers to affiliates in accordance with the Formation
Agreement, neither GTE Wireless nor CCIC may transfer its interest in Holdings
to a third party unless it first offers its interest to the other on terms and
conditions, including price, no less favorable than the terms and conditions
on which it proposes to sell its interest to the third party. In addition, if
GTE Wireless or CCIC wishes to transfer its interest in Holdings to a third
party, the other party will have the right to require the third party, as a
condition to the sale, to purchase a proportionate share of its interest in
Holdings on the same terms and conditions, including price.
GTE Wireless and CCIC have agreed that upon a dissolution of Holdings,
in satisfaction of their respective interests, CCIC will receive all the
assets and liabilities of Holdings, other than any shares of CCIC common stock
held by Holdings that were contributed by CCIC as part of its contribution
described above, all of which would be distributed to GTE Wireless. In
exchange, CCIC will pay to GTE Wireless the fair market value of GTE
Wireless's interests in Holdings transferred to CCIC. A dissolution of
Holdings may be triggered (1) by GTE Wireless at any time following the third
anniversary of the formation of Holdings and (2) by CCIC at any time following
the fourth anniversary of its formation. GTE Wireless would continue to retain
its 0.001% interest in OpCo. For so long as it retains such interest, the
operations of OpCo will remain subject to the operating restrictions described
above.
GTE Wireless and CCIC also entered into a letter agreement dated
November 7, 1999 (the "Future Towers Letter Agreement"), whereby GTE Wireless
(or its affiliates) has the right to contribute additional towers on terms
substantially similar to the Formation Agreement. These additional towers are
either (1) currently owned towers not contributed pursuant to the Formation
Agreement (the "Currently Owned Towers"), (2) towers subsequently acquired in
cellular or PCS markets east of the Mississippi River (the "Subsequently
Acquired Towers") or (3) towers acquired by GTE Wireless recently from
Ameritech Corp. (the "Ameritech Towers"). Conversely, OpCo also has the right
to require the Ameritech Towers to be contributed by GTE Wireless to OpCo in a
manner that is substantively identical to GTE Wireless's right to contribute
the Ameritech Towers described above.
Consideration paid for these additional towers will be in the form of
cash and additional ownership interests for GTE Wireless in Holdings in the
proportions specified under the Formation Agreement. The Ameritech Towers are
limited to no more than 600
towers, and the consideration per tower is $390,000. The Currently Owned
Towers and the Subsequently Acquired Towers are limited to 100 towers in any
twelve month period, and the consideration is $275,000 per tower. The rights
of CCIC and GTE Wireless with respect to the Ameritech Towers must be
exercised no later than May 1, 2000 with a definitive agreement to be entered
into no later than June 30, 2000. The Future Towers Letter Agreement
terminates, with respect to the Currently Owned Towers and the Subsequently
Acquired Towers, 18 months after the final closing under the Formation
Agreement. All of these towers are subject to the Global Lease.
A copy of the press release issued by CCIC and GTE on November 8, 1999
with respect to the Joint Venture is attached hereto as Exhibit 99.1 and is
incorporated herein by reference. A copy of the Formation Agreement and the
Future Towers Letter Agreement are also attached hereto as Exhibit 99.2 and
99.3, respectively, and are incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
- Not applicable
(b) Pro forma financial information
- Not applicable
(c) Exhibits
Exhibit No. Description
99.1 Press Release dated November 8, 1999
99.2 Formation Agreement dated November 7,
1999 relating to the formation of
Crown Castle GT Company LLC, Crown
Castle GT Holding Sub LLC, and Crown
Castle GT Holding Company LLC.
99.3 Letter Agreement dated November 7,
1999 re: Future Tower Contributions.
SIGNATURES
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.
Crown Castle International Corp.,
By: /s/ E. Blake Hawk
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Name: E. Blake Hawk
Title: Executive Vice President and
General Counsel
Date: November 12, 1999
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated November 8, 1999
99.2 Formation Agreement dated November 7, 1999 relating to the
formation of Crown Castle GT Company LLC, Crown Castle GT
Holding Sub LLC, and Crown Castle GT Holding Company LLC.
99.3 Letter Agreement dated November 7, 1999 re: Future Tower
Contributions.