UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ X ] Preliminary Information Statement
[___] Confidential, for use of the Commission
only (as permitted by Rule 14c-5(d)(2)
[___] Definitive Information Statement
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CONVERGENCE COMMUNICATIONS, INC.
(Name of Registrant as Specified In Its Charter)
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Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[___] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[__] Fee paid previously with preliminary materials.
[__] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable
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(2) Form, Schedule or Registration Statement No.: Not Applicable
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(3) Filing Party: Not Applicable
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(4) Date Filed: Not Applicable
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GENERAL INFORMATION
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We are a facilities-based provider of high-quality, low-cost integrated
communications services through our own metropolitan area networks. We operate
in recently deregulated and high growth markets, principally Mexico, the Andean
region of South America and Central America.
This information statement is first being furnished on or about October
__, 2000, to our shareholders of record as of the close of business on September
15, 2000 in connection with the amendment of our Amended and Restated Articles
of Incorporation. The amendment, which is described in more detail below, will
increase the number of shares of our authorized preferred stock.
Our Board of Directors has approved, and a total of 10 of our
shareholders holding 9,544,271 shares of our common stock and 12,667,522 shares
of our Series C preferred stock (representing approximately 88.7% of our equity
securities on a voting basis) have consented in writing, to the amendment. That
approval and consent are sufficient under ss.ss. 78.320 and 78.565 of the Nevada
Revised Statutes, our bylaws and our articles to approve the amendment.
Accordingly, the amendment will not be submitted to our other shareholders for a
vote and this information statement is being furnished to you solely to provide
you with information concerning the amendment in accordance with the
requirements of the Securities Exchange Act of 1934, as amended, and the
regulations promulgated under that Act, including Regulation 14C.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US
ONE, WITH RESPECT TO THE AMENDMENT. WE ARE SENDING THIS INFORMATION STATEMENT TO
YOU ONLY FOR INFORMATIONAL PURPOSES. THE HOLDERS OF A MAJORITY OF THE VOTES OF
OUR OUTSTANDING CAPITAL STOCK HAVE ALREADY APPROVED THE AMENDMENT BY WRITTEN
CONSENT. A VOTE OF OUR REMAINING SHAREHOLDERS IS NOT NECESSARY.
For additional information about us, please refer to our Annual Report
on Form 10-KSB for the year ended December 31, 1999, and the other periodic
filings (including our quarterly reports on Form 10-QSB dated March 31, 2000 and
June 30, 2000, our information statement on Schedule 14C dated May 22, 2000, and
our periodic reports on Form 8-K dated January 13, 2000, January 21, 2000, May
5, 2000 and July 1, 2000) we have made with the Securities and Exchange
Commission, or SEC, which are incorporated herein by this reference. If you
would like copies of any of those documents, you can request (by phone or in
writing) copies of them by sending your request to our principal office:
Convergence Communications, Inc., 102 West 500 South, Suite 320, Salt Lake City,
Utah 84101, telephone (801) 328-5618, Attn: Anthony Sansone, Secretary. We will
not charge you for any of the copies. You can also obtain copies of those
documents from the electronic filing site maintained by the SEC on the
world-wide web (www.sec.gov/archives/edgar), from the SEC's office at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or the various
regional SEC offices.
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THE AMENDMENT
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Our authorized capital currently consists of 100,000,000 shares of
common stock, par value $.001 per share, and 15,000,000 shares of preferred
stock, par value $.001 per share. Under the terms of our articles and bylaws,
our Board of Directors has the authority to divide the shares of our preferred
stock into series, to establish and modify the preferences, limitations and
relative rights of each share of our preferred stock, and otherwise to impact or
modify our capitalization.
Our Board of Directors has determined that it would be in our best
interest to amend Article III, paragraph A of our articles to increase the
number of our authorized shares of preferred stock from 15,000,000 shares to
25,000,000 shares. After the amendment, that paragraph will read, in its
entirety, as follows:
A. Authorized Shares. The Corporation is authorized to issue two
classes of stock, to be designated, respectively, "Common Stock," and
"Preferred Stock." The total number of shares of stock the Corporation
is authorized to issue is 125,000,000, divided into 100,000,000 shares
of Common Stock, par value $.001 per share, and 25,000,000 shares of
Preferred Stock, par value $.001 per share. The preferences,
limitations and relative rights of the shares of each class of stock,
and the express grant of authority to the Board of Directors to amend
these Articles of Incorporation to divide the shares of preferred stock
into series, to establish and modify the preferences, limitations and
relative rights of each share of preferred stock, and otherwise to
impact the capitalization of the Corporation, are set forth below.
The amendment will be effected by filing an amendment to our articles
with the Secretary of State for the State of Nevada. The amendment will become
effective when the filing is accepted by the Secretary of State's office. We do
not intend to file the amendment with the Secretary of State's office until at
least 20 days after we mail this information statement to you.
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APPROVAL OF THE AMENDMENT
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On September 29, 2000, our Board of Directors approved the amendment by
unanimous written consent. In approving the amendment, our Board of Directors
considered a number of factors, including the fact that we have only a limited
number of shares of preferred stock authorized, that we have issued
substantially all of those shares, and that we may find it advisable or
desirable to issue shares of preferred stock to investors in the future.
We have also received written consents to the amendment from a total of
10 of our shareholders who own a total of 9,544,271 shares of our common stock
and 12,667,522 shares of our Series C preferred stock. Since our common stock
and Series C preferred stock generally votes as one class on matters, those
shares collectively represent approximately 88.7% of the votes that could be
cast at any meeting of our shareholders.
Under the provisions of the Nevada Revised Statutes and our articles,
any action required or permitted to be taken at a meeting of our shareholders
may be taken without a meeting if, before or after that action, a written
consent to the action is signed by shareholders holding at least a majority of
the votes represented by our outstanding equity securities. The Nevada Revised
Statutes also provide that, where action is taken by written consent, no
shareholder meeting with respect to that action need be called.
The actions described in this information statement will not afford our
shareholders the opportunity to dissent from the actions described herein, or to
receive an agreed or judicially determined value for their shares.
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TAX CONSEQUENCES
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The amendment of our articles as is described in this information
statement should not result in any taxable gain or loss to us or to you as a
shareholder. The tax basis for your shares should also not be affected by the
amendment, nor should the holding period for your shares. The federal income tax
discussion included in this section is included as general information only. You
are urged to consult with your own tax advisor to determine your tax effects, if
any, from the amendment.
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BENEFICIAL OWNERSHIP
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The following table sets forth certain information regarding the
beneficial ownership of our outstanding securities as of September 29, 2000 by
the following parties:
o all those persons or entities known by us to be beneficial owners of
5% or more of each class of our outstanding securities, or "5%
Shareholders"
o each director and each of our Chief Executive Officer and the next
four highest paid officers, or our Named Executive Officers
o all directors and our executive officers as a group
o parties that do not fall into any of the categories listed above,
but which approved the amendment.
The data presented are based on information provided to us by the parties
specified above and are being included in this information statement to provide
you with information regarding the relative ownership interests of the parties
who have consented in writing to the amendment and who hold management positions
with us.
Name of Number of Percentage of
Beneficial Owner Class Shares Class(1)
---------------- ----- ------ ------
TCW/CCI Holding LLC(2) Common -0- (*)
(5% Shareholder)** Series C Preferred 4,693,332 34.5%
Telematica EDC, C.A.(3) (5% Common -0- (*)
Shareholder) ** Series C Preferred 4,764,753 35.4%
FondElec Essential Services(4) Growth Common 2,729,015 22.9%
Fund, L.P. (5% Shareholder) ** Series C Preferred 666,666 5.0%
Raquel Emilse Oddone De Ostry (5) (5% Common 1,233,806 10.7%
Shareholder) ** Series C Preferred 664,455 5.0%
Norberto Priu(6) (5% Shareholder) ** Common 1,233,806 10.7%
Series C Preferred 1,235,125 9.2%
Jean D'Ambrosio(7) (5% Shareholder) ** Common 793,554 7.0%
Series C Preferred -0- (*)
International Finance Corporation(8) Common -0- (*)
(5% Shareholder) Series C Preferred 952,950 7.1%
Glacier Latin-America Ltd.(9)** Common -0- (*)
Series C Preferred 571,770 4.3%
Lance D'Ambrosio(10) Common 3,605,439 31.7%
(Chairman of the Board)** Series C Preferred -0- (*)
Douglas Jacobs(11) Common 200,000 1.7%
(CEO) Series C Preferred -0- (*)
Brian Reynolds(12) Common 183,333 1.6%
(Pres. and COO) Series C Preferred -0- (*)
Jerry Slovinski(13) Common 175,000 1.5%
(Sr. VP and CFO) Series C Preferred -0- (*)
Troy D'Ambrosio(14) Common 638,542 5.6%
(Sr. VP/Director) ** Series C Preferred -0- (*)
Thomas Burgos(15) Common -0- (*)
(Sr. VP) Series C Preferred -0- (*)
Tony Read(16) Common -0- (*)
(CIO and Sr. VP) Series C Preferred -0- (*)
Luis de la Fuente(17) Common 34,000 (*)
(Sr. VP) Series C Preferred -0- (*)
Jose Miguel Padron(18) Common 34,000 (*)
(VP/CEO of Central America) Series C Preferred -0- (*)
Mario Vasquez(19) Common -0- (*)
(CEO of Mexico) Series C Preferred -0- (*)
Maritza Escalona(20) Common -0- (*)
(CEO Venezuela) Series C Preferred -0- (*)
Amaury Rivera(21) Common -0- (*)
(VP Marketing) Series C Preferred -0- (*)
Anthony Sansone(22) Common 165,555 1.4%
(Vice President Series C Preferred -0- (*)
Treasurer/Secretary)**
Ron Bouganim(23) Common 66,666 (*)
(VP Bus. Dev.) Series C Preferred -0- (*)
Gaston Acosta-Rua(24) Common 4,000 (*)
(Director) Series C Preferred -0- (*)
Jorge Fucaraccio(25) Common -0- (*)
(Director) Series C Preferred -0- (*)
Mario Baeza(26) Common -0- (*)
(Director) Series C Preferred 10,000 (*)
Norberto Corredor(27) Common -0- (*)
(Director) Series C Preferred -0- (*)
George Sorenson(28) Common 10,724 (*)
(Director) Series C Preferred -0- (*)
Peter Schiller(29) Common -0- (*)
(Director) Series C Preferred -0- (*)
Katherine Ostry(30) Common -0- (*)
(Director) Series C Preferred -0- (*)
Alfonso Bahamonde(31) Common -0- (*)
(Director) Series C Preferred -0- (*)
All directors and officers as a group Common 5,117,259 42.1%
(21 persons)(32) Series C Preferred 10,000 (*)
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* Less than 1%
** Indicates a party that has delivered a written consent to the
amendment.
1. Based on 11,389,191 outstanding shares of common stock and 13,620,472
outstanding shares of Series C preferred stock. We also have 29,521 shares
of Series B preferred stock outstanding, but have not included that stock in
this chart. The inclusion of any shares as "beneficially owned" does not
constitute an admission of beneficial ownership (which has a broad
definition under the securities laws) of these shares. Unless otherwise
indicated, each person listed has sole investment and voting power with
respect to the shares listed. Also, each person is deemed to beneficially
own any shares issuable on exercise of options or warrants held by that
person that are currently exercisable or that become exercisable within 60
days after September 29, 2000.
2. Does not include 833,333 shares of common stock that may be acquired under
the terms of a warrant issued to the shareholder in October 1999, but which
may not be exercised until the occurrence of certain specified corporate
events. Does not include 71,421 shares of Series C preferred stock held by
certain persons affiliated with TCW/CCI Holding, LLC and its affiliates,
over which TCW/CCI Holding, LLC disclaims beneficial ownership. See also
footnote 26.
3. Does not include 833,333 shares of common stock that may be acquired under
the terms of a warrant issued to the shareholder in October 1999, but which
may not be exercised until the occurrence of certain specified corporate
events.
4. Includes 508,424 shares of common stock under warrants granted to the
shareholder prior to October 1999. Does not include 426,666 shares of common
stock that may be acquired under the terms of warrants issued to the
shareholder in October 1999, but which may not be exercised until the
occurrence of certain specified corporate events.
5. Represents one half of the capital stock beneficially held by Internexus
S.A., an Argentine corporation, as of December 31, 1999. Internexus S.A.
transferred the beneficial ownership of its capital stock and related
interests to Raquel Emilse Oddone De Ostry and Norberto Priu (see footnote 6
below), equally, effective December 31, 1999. Includes 141,322 shares of
common stock under warrants granted to the predecessor in interest to the
shareholder prior to October 1999. Also includes options to acquire 7,189
shares of common stock which were granted to the shareholder's designees to
our Board of Directors under our Director Stock Plan, but which were
assigned to the shareholder under the terms of the designees' arrangements
with the shareholder. Does not include 296,114 shares of common stock that
may be acquired under the terms of warrants issued to the predecessor in
interest in October 1999, but which may not be exercised until the
occurrence of certain specified corporate events.
6. Represents one half of the capital stock beneficially held by Internexus
S.A. as of December 31, 1999. Internexus S.A. has notified us that it
transferred the beneficial ownership of its capital stock and related
interests to Raquel Emilse Oddone De Ostry and Norberto Priu (see footnote 5
above), equally, effective December 31, 1999. Includes 141,322 shares of
common stock under warrants granted to the predecessor in interest to the
shareholder prior to October 1999. Also includes options to acquire 7,189
shares of common stock which were granted to the shareholder's designees to
our Board of Directors under our Director Stock Plan, but which were
assigned to the shareholder under the terms of the designees' arrangements
with the shareholder. Does not include 296,114 shares of common stock that
may be acquired under the terms of warrants issued to the predecessor in
interest in October 1999, but which may not be exercised until the
occurrence of certain specified corporate events.
7. Jean D'Ambrosio is the mother of Lance D'Ambrosio and Troy D'Ambrosio. Lance
D'Ambrosio and Troy D'Ambrosio disclaim beneficial ownership of the shares
held by Jean D'Ambrosio.
8. Does not include 166,666 shares of common stock that may be acquired under
the terms of warrants issued to the shareholder in October 1999, but which
may not be exercised until the occurrence of certain specified corporate
events.
9. Does not include 100,000 shares of common stock that may be acquired under
the terms of warrants issued to the shareholder in October 1999, but which
may not be exercised until the occurrence of certain specified corporate
events.
10. Includes shares held in the name of Mr. D'Ambrosio and held in the name of
entities over which Mr. D'Ambrosio has voting and/or beneficial control and
for which he does not disclaim beneficial ownership. Does not include the
shares of common stock held by Jean D'Ambrosio or Troy D'Ambrosio, over
which Lance D'Ambrosio disclaims beneficial ownership.
11. Includes options to acquire 200,000 shares of common stock.
12. Includes options to acquire 183,333 shares of common stock.
13. Includes options to acquire 175,000 shares of common stock.
14. Does not include the shares of common stock held by Jean D'Ambrosio or Lance
D'Ambrosio, over which Troy D'Ambrosio disclaims beneficial ownership.
15. Employee has been granted options to acquire shares of our common stock, but
none of those options has yet vested.
16. Employee has been granted options to acquire shares of our common stock, but
none of those options has yet vested.
17. Includes options to acquire 34,000 shares of common stock.
18. Includes options to acquire 34,000 shares of common stock.
19. Employee has been granted options to acquire shares of our common stock, but
none of those options has yet vested.
20. Employee has been granted options to acquire shares of our common stock, but
none of those options has yet vested.
21. Employee has been granted options to acquire shares of our common stock, but
none of those options has yet vested.
22. Shares shown are held by a limited liability company for which Mr. Sansone
acts as the managing member. Mr. Sansone does not disclaim beneficial
ownership of such shares. Also includes options to acquire 50,000 shares of
common stock.
23. Includes options to acquire 66,666 shares of common stock.
24. Mr. Acosta-Rua is a principal of FondElec and certain of its affiliates. Mr.
Acosta-Rua disclaims beneficial interest in the shares held by FondElec and
its affiliates. Also includes options to acquire 4,000 shares common stock.
25. Mr. Fucaraccio is an officer of an affiliate of Internexus. Mr. Fucaraccio
disclaims beneficial interest in the shares held by Internexus, or its
affiliates.
26. Mr. Baeza is a principal of TCW/CCI Holding or its affiliates, and is an
officer and sole member of a company that is a member of an entity that
controls TCW/CCI Holding. The shares of Series C preferred stock shown for
Mr. Baeza reflect his indirect interest in TCW/CCI Holding's stock. Mr.
Baeza disclaims beneficial interest in the shares held by TCW/CCI Holding
except to the extent of that indirect interest.
27. Mr. Corredor is an officer of Telematica or its affiliates. Mr. Corredor
disclaims beneficial interest in the shares held by Telematica except to the
extent shown.
28. Mr. Sorenson is a principal of FondElec. Mr. Sorenson disclaims beneficial
interest in the shares held by FondElec. Also includes options to acquire
10,378 shares of common stock.
29. Mr. Schiller is an officer of one or more affiliates of Internexus. Mr.
Schiller disclaims beneficial interest in the shares held by Internexus and
its affiliates.
30. Ms. Ostry is an officer of an affiliate of Telematica. Ms. Ostry disclaims
beneficial interest in the shares held by Telematica.
31. Mr. Bahamonde is a principal of an affiliate of TCW/CCI Holding. Mr.
Bahamonde disclaims beneficial interest in the shares held by TCW/CCI
Holding.
32. Assumes the matters set forth in notes 1 through 32. Includes options to
acquire 757,377 shares of common stock.
* * *
By Order of the Directors
/s/Anthony Sansone_
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Anthony Sansone
Secretary
Dated: October 3, 2000