SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 1, 1996
MASTEC, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-3797 59-1259279
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8600 N.W. 36th Street, Miami, Florida 33166
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(305) 599-1800
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
On April 1, 1996, a wholly-owned subsidiary of MasTec, Inc. (the
"Company" or "MASTEC") entered into an agreement (the "Agreement") with
Telefonica de Espana, S.A. ("Telefonica"), presently the sole provider of
public-switched telephony in Spain, to purchase 100% of the capital stock of
Sistemas e Instalaciones de Telecomunicacion, S.A. ("Sintel"), Telefonica's
wholly-owned telecommunications construction services subsidiary. The purchase
price for the Sintel shares is Spanish Pesetas ("Pesetas") 4.9 billion (US$39.5
million at an exchange rate of 124 Pesetas to one U.S. dollar, the exchange rate
used throughout this Form 8-K Current Report) (the "Purchase Price"). An initial
payment of Pesetas 650 million (US$5.2 million) will be due at closing
(presently scheduled for April 30, 1996), a second payment of Pesetas 650
million (US$5.2 million) is due December 31, 1996 and the balance of the
purchase price, Pesetas 3.6 billion (US$29.1 million), is due to be paid in two
equal installments at year-end 1997 and 1998. In addition, on April 1, 1996, the
Company issued a press release announcing the execution of the agreement, a copy
of which press release is attached as Exhibit 99.1 and is incorporated herein by
reference.
The Company or its representatives from time to time may make or may
have made certain forward-looking statements, whether orally or in writing,
including without limitation any such statements made herein. Among such
statements may be comments regarding: further growth in the Company's revenues
and earnings from the acquisition of Sintel and expansion of the Company's
operations in Spain and Latin America; plans for entering new product and
geographic markets, particularly in Spain and Latin America; improvements in
operating efficiencies; and the Company's leadership position in the
telecommunications construction services industry. Such statements are qualified
in their entirety by reference to and are accompanied by the following
discussion of certain important factors that could cause actual results to
differ materially from those projected in such forward-looking statements. In
the discussion below, forward-looking statements and factors which could cause
actual results to differ materially shall be deemed equally applicable to the
Company and Sintel and references to the "Company" shall be deemed to refer
collectively to Sintel and the Company. Such factors should be considered by
anyone evaluating the proposed acquisition of Sintel by the Company as well as
the prospects of MASTEC, Sintel and the combined entities.
The Company cautions the reader that this list of factors may not be
exhaustive. The Company operates in a rapidly changing industry, and new risk
factors emerge from time to time. Management cannot predict such risk factors,
nor can it assess the impact, if any, of such risk factors on the Company's
business or the extent to which any factor, or combination of
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factors, may cause actual results to differ materially from those projected in
any forward-looking statements. Accordingly, forward-looking statements should
not be relied upon as a prediction of actual results.
Conditions to Closing
The proposed acquisition is subject to the fulfillment of several
conditions to closing, including among others, satisfactory results of a due
diligence investigation. There can be no assurance that these conditions will be
met or that the transaction will not fail to close for other reasons not
currently contemplated.
Historical Results of Sintel
During 1995, Sintel suffered a net loss of US$14.1 million, resulting
at least in part from a US$27.9 million charge for restructuring its operations
and reducing personnel. The ability of the Company to meet its obligations under
the Agreement as well as its ability to make payments on its other obligations
will be dependent on the Company's future operating performance, which is
dependent on a number of factors, some of which are set forth herein and are not
within the Company's control. Greater than anticipated reductions in demand or
prices for Sintel's services from Telefonica, Sintel's principal customer, or
greater than anticipated increases in labor costs could materially adversely
affect the Company's business, financial condition, results of operations,
liquidity and business prospects.
Labor Relations
A portion of Sintel's work force is unionized. Work stoppages or
strikes could have a material, adverse effect on the Company's business,
financial condition, results of operations, liquidity and business prospects.
Dependence on Key Customers
Sintel has derived substantially all of its revenue from the provision
of telecommunication construction services to Telefonica in Spain and Latin
America. As such, the Company anticipates that Sintel will continue to be
dependent on Telefonica as a key customer in Spain and Latin America in the
future.
Currency Exchange and Other Risks of Investment in Foreign
Operations
Sintel publishes its financial statements in Spanish Pesetas in
accordance with Spanish generally accepted accounting principles and will
continue to do so if the transaction is
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consummated. (Accounting principles generally accepted in Spain vary in certain
respects from principles generally accepted in the United States). The Latin
America subsidiaries of Sintel publish their financial statements in the local
currencies of their home countries, in accordance with generally accepted
accounting principles applied in each such Latin American country. (Such
accounting principles also vary in certain respects from U.S. generally accepted
accounting principles). Accordingly, the Company may experience economic loss
and a negative impact on earnings with respect to its foreign operations and
investments solely as a result of foreign currency exchange rate fluctuations
and devaluations against the U.S.
dollar.
In addition, the Company's current and future operations and
investments in certain foreign countries are generally subject to the risks of
political, economic or social instability, including the possibility of
expropriation, confiscatory taxation or other adverse regulatory or legislative
developments, or limitations on the repatriation of investment income, capital
and other assets.
Risks of Increased Leverage
The consummation of the transaction will, on a consolidated basis,
result in an increased debt burden to the Company, as Sintel's debt, following
the acquisition, will be approximately US$63 million. The Company's total debt,
not including Sintel or any debt incurred due to the acquisition, as of December
31, 1995, was approximately US$72.1 million.
Additional Risk Factors
Additional factors which could cause actual results to differ
materially from those projected in forward-looking statements result primarily
from the telecommunications industry in which the Company operates and factors
regarding the Company itself. Telecommunications industry factors include (i)
the high level of regulation of the industry in the U.S., Spain and Latin
America, where the Company operates and which may affect demand for the
Company's services, (ii) the active level of actual and potential competition
from independent third parties in most of the markets in which the Company
operates and (iii) the rapid technological changes occurring in the
telecommunications industry, which may adversely impact the future need for the
Company's services. Factors regarding the Company itself include the Company's
dependence on certain key customers and dependence on its senior management
team. Reference is made to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 for additional information regarding the Company's
business.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated April 1, 1996.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
Dated: April 1, 1996
/s/ Edwin D. Johnson
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Edwin D. Johnson
Senior Vice President-
Chief Financial Officer
(Principal Financial Officer
and Authorized Officer)
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99.1 Press release dated April 1, 1996.