SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
JUNE 4, 2001
Date of Report (date of Earliest Event Reported)
I-LINK INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 0-17973 59-2291344
(State or Other Jurisdiction of (Commission File No.) (I.R.S. Employer
Incorporation or Organization) Identification No.)
13571 SOUTH WADSWORTH PARK DRIVE, SUITE 200, DRAPER, UTAH 84020
(Address of principal executive offices and zip code)
(801) 576-5000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed from last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 4, 2001, I-Link Incorporated through it's wholly-owned
subsidiary WorldxChange Corp., (f/k/a PT-1 Counsel, Inc., a/k/a PT-I Long
Distance, Inc.), (the "Subsidiary") (collectively, the "Buyer"), entered into a
Multi-Party Agreement (the "Agreement") with Counsel Corporation, a Canadian
corporation ("Counsel"), WorldxChange Communications, Inc., the
debtor-in-possession (the "Debtor"), George Farley, in his capacity as Trustee
of the D&K Grantor Retained Annuity Trust, a holder in due course of a security
interest in the Purchased Assets (as the term is defined below) (the "Trust"),
and with the consent as to specified provisions of the Official Committee of
Unsecured Creditors. Under the terms and provisions of the Agreement, Counsel
designated the Buyer, its affiliate, to assume all of Counsel's rights and
responsibilities with respect to the Debtor's assets purchased by Counsel at an
auction conducted under the supervision of the United States Bankruptcy Court
for the Northern District of Illinois, Eastern Division (the "Bankruptcy
Court"), in the matter known as IN RE: WORLD ACCESS, INC., ET AL., held on May
24, 2001 (the "Purchased Assets"). An Order Approving Auction Sale was entered
by the Bankruptcy Court on May 25, 2001.
The Purchased Assets included all of the assets employed in the
Debtor's operations in the United States and consisted of the Debtor's
equipment, inventory, retail long distance business, accounts receivable,
authorizations, software programs and related technology. On June 4, 2001 (the
"Closing"), the Trust received $13,000,000 consideration paid by Counsel for its
acquisition of the Purchased Assets. (The cash consideration represents an
advance to the Subsidiary of funds necessary to purchase the Purchased Assets
under that certain Term Loan extended by Counsel to the Subsidiary, and
discussed in detail hereinbelow).
Under the terms of the Agreement, the Buyer has the right to cause the
Debtor to assume or reject, at Buyer's election, each of the Debtor's
telecommunications equipment leases, carrier and service agreements and other
executory contracts. On June 4, 2001, the Buyer executed a Letter Agreement with
Telecommunications Finance Group (Siemens Carrier Networks LLC) ("Siemens"), in
which Siemens indicated its intent to lease to the Buyer all telecommunications
equipment previously leased to the Debtor. The terms and provisions of the
underlying lease agreements, however, are subject to certain revisions,
including but are not limited to changes in lease terms, lease rates, lease
payments. Specifically, for the first six months of the lease term the monthly
payments will be $150,000 per month plus applicable sales tax. The remaining
forty two monthly lease payments will be $231,361 per month plus applicable
sales tax. The leased equipment value will be $9,000,000. However, the foregoing
agreement by Siemens is contingent upon (i) approval of its Board of Directors,
(ii) Counsel's unconditional guaranty to pay any and all payments under the
outstanding leases, (iii) execution and delivery of the underlying lease and
related documents.
The Buyer also has an exclusive right to retain the first $2,700,000 of
any sums collected on the Debtor's wholesale accounts receivable. Any sums over
and above the sum of $2,700,000 collected on the Debtor's wholesale accounts
receivable will be remitted by the Buyer to the Trust, as those sums are
received.
FINANCING AND PAYMENT OF CONSIDERATION
Counsel has agreed to provide a secured term loan to I-Link in the
aggregate amount of $15,000,000 (the "Term Loan"), $13,000,000 of which proceeds
were disbursed and utilized to fund the acquisition of the Purchased Assets. The
terms and provisions of the Term Loan were described in the June 3, 2001
non-binding term sheet by and between I-Link and Counsel (the "Term Sheet").
The Term Loan is to be secured against all assets of I-Link and the
Subsidiary and guaranteed by I-Link. Outstanding balances (including any accrued
and unpaid interest) under the Term Loan bear interest of 10% per cent per annum
and are payable quarterly in arrears and in cash on the last business day of
each quarter. The payment of cash interest by the Subsidiary or I-Link may be
waived by Counsel. The Term Loan will mature one year after the Closing, which
maturity date may be extended upon mutual agreement of both Counsel and I-Link.
The Term Loan may be prepaid at any time prior to the maturity, without penalty.
At Closing, I-Link will issue to Counsel warrants to purchase 5,000,000
shares of common stock of I-Link at an exercise price of $0.60 per share. If the
Term Loan is not repaid within three months of the Closing, I-Link will issue to
Counsel warrants to purchase an additional 5,000,000 shares of common stock of
I-Link at an exercise price of $0.60 per share. Similarly, if the Subsidiary
does not repay the Term Loan within the six months of the Closing, I-Link will
issue to Counsel warrants to purchase an additional 5,000,000 shares of common
stock of the Company at an exercise price of $0.60 per share. The warrants
issuable to Counsel will be in a customary warrant form and acceptable both to
I-Link and Counsel.
In any event, the Subsidiary must make compulsory prepayments from the
following proceeds:
o 100% of the net proceeds from the funding of an accounts
receivable lending facility or future debt issuance by the
Subsidiary; or
o 100% of the net proceeds from asset sales by the Subsidiary or
I-Link in excess of an amount to be determined ; or
o 50% of the net proceeds from the future issuance of equity or
equity-linked securities by I-Link, excluding net proceeds
used to make acquisitions and net proceeds used to fund any
approved expanded business plan.
The foregoing is a summary description of the terms of the Agreement,
the Term Loan and a Warrant Agreement by and between Counsel and I-Link and by
its nature is incomplete. These agreements are subject to more complete
descriptions set forth in the respective agreements. The Agreement is attached
hereto as Exhibit 2.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The submission of financial statements of the business
acquired within the 15-day period as required by the
Securities Exchange Act of 1934, as amended, is impracticable.
The Company expects to file the required financial information
with a Current Report on Form 8-K no later than August 18,
2001.
(b) PRO FORMA FINANCIAL INFORMATION.
The submission of pro forma financial information of the
business acquired within the 15-day period as required by the
Securities Exchange Act of 1934, as amended, is impracticable.
The Company expects to file the required financial information
with a Current Report on Form 8-K no later than August 18,
2001.
(c) EXHIBITS.
2.1 Multi-Party Agreement by and between WorldxChange
Corp., f/k/a PT-1 Counsel, Inc., a/k/a PT-I Long
Distance, Inc., a Delaware corporation and a
wholly-owned subsidiary of I-Link Incorporated, a
Florida corporation, Counsel Corporation, a Canadian
corporation, WorldxChange Communications, Inc., a
Delaware corporation and debtor-in-possession, George
Farley, in his capacity as Trustee of the D&K Grantor
Retained Annuity Trust, and with the consent as to
specified provisions of the Official Committee of
Unsecured Creditors, dated as of June 4, 2001.
2.2 Loan Agreement by and between I-Link and Counsel - to
be filed by amendment.
2.3 Warrant Agreement by and between I-Link and Counsel -
to be filed by amendment.
[THE SIGNATURE PAGE FOLLOWS.]
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
I-LINK INCORPORATED
Date: June 19, 2001 By: /s/ Gary J. Wasserson
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President, Chief Executive Officer