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, Venezuela
and Central America.
This information statement is first being furnished on or about June
29, 2001, to our shareholders of record as of the close of business on June 26,
2001 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 13 of our
shareholders holding 9,475,462 shares of our common stock, 13,620,472 shares of
our Series C preferred stock and 2,559,136 shares of our Series D preferred
stock (representing approximately 91% 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, 2000, and the other periodic
filings (including our quarterly reports on Form 10-QSB dated March 31, 2001 and
our periodic reports on Forms 10-QSB and 8-K) 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 25,000,000 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 25,000,000 shares to
75,000,000 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 175,000,000, divided into 100,000,000 shares of Common Stock,
par value $.001 per share, and 75,000,000 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 June 28, 2001, 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
13 of our shareholders who own a total of 9,475,462 shares of our common stock,
13,620,472 shares of our Series C preferred stock and 2,559,136 of our Series D
preferred stock. Since our common stock, Series C preferred stock and Series D
preferred stock generally vote as one class on matters, those shares
collectively represent approximately 91% 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 June 26, 2001 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 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 Common -0- (*)
(5% Shareholder)[2]o Series C Preferred 4,227,119 31.0%
Series D Preferred -0- (*)
TCW/CCI Holding II LLC Common -0- (*)
(5% Shareholder) [3]o Series C Preferred 537,634 3.9%
Series D Preferred 1,075,268 40.7%
Telematica EDC, C.A. Common 572,468 4.8%
(5% Shareholder)[4]o Series C Preferred 4,764,753 35.0%
Series D Preferred 1,075,268 40.7%
FondElec Essential Services Common 1,583,661 12.7%
Growth Fund, L.P. Series C Preferred 666,666 4.9%
(5% Shareholder)[5]o Series D Preferred -0- *
Norberto Priu Common 1,235,434 10.2%
(5% Shareholder)[6]o Series C Preferred 1,235,125 9.1%
Series D Preferred 182,795 6.9%
Raquel Emilse Oddone Common 1,230,617 10.2%
de Ostry Series C Preferred 664,455 4.9%
(5% Shareholder)[7]o Series D Preferred 139,784 5.3%
Jean D'Ambrosio Common 793,554 6.7%
(5% Shareholder)o Series C Preferred -0- (*)
Series D Preferred -0- (*)
International Finance Common -0- (*)
Corporation Series C Preferred 952,950 7.0%
(5% Shareholder)[8]o Series D Preferred -0- (*)
Lance D'Ambrosio Common 3,605,439 30.2%
(5% Shareholder/Chairman)[9]o Series C Preferred -0- (*)
Series D Preferred -0- (*)
Troy D'Ambrosio Common 638,542 5.4%
(Sr. V.P./Director)[10]o Series C Preferred -0- (*)
Series D Preferred -0- (*)
Anthony Sansone Common 165,555 (*)
(V.P., Treasurer and Series C Preferred -0- (*)
Secretary)[11]o Series D Preferred -0-
Glacier Latin America, Ltd.[12]o Common -0- (*)
Series C Preferred 571,770 4.2%
Series D Preferred 86,021 3.3%
WCI Cayman Inc.[13]o Common 572,484 4.8%
Series C Preferred -0- (*)
Series D Preferred -0- (*)
All directors and officers as a group Common 5,478,048 42.8%
(19 persons)[14] Series C Preferred 10,000 (*)
Series D Preferred -0- (*)
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*Less than 1%
oParty that approved the amendments.
(1) Based on 11,921,094 outstanding shares of common stock (including
125,237 shares of common stock issued in connection with the automatic
conversion of our existing series B preferred stock in August 2000),
13,620,472 outstanding shares of series C preferred stock and 2,643,636
outstanding shares of series D preferred stock. 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 those 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 stock options or warrants held by that person that are
currently exercisable or that become exercisable within 60 days after
June 25, 2001.
(2) Does not include 776,057 shares of common stock that may be acquired
under the terms of a warrant issued to the stockholder in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events.
(3) Does not include 57,276 shares of common stock that may be acquired
under the terms of a warrant issued to the stockholder in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events. Also does not include 322,580 shares of
common stock and 674,143 shares of series D Stock that may be acquired
under the terms of warrants issued to the stockholder in February 2001,
but which may not be exercised until the occurrence of certain
specified corporate events.
(4) Does not include 833,333 shares of common stock that may be acquired
under the terms of a warrant issued to the stockholder in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events. Does not include 322,580 shares of common
stock and 674,143 shares of series D Stock that may be acquired under
the terms of warrants issued to the stockholder in February 2001, but
which may not be exercised until the occurrence of certain specified
corporate events.
(5) Includes 508,006 common shares under warrants granted to the
stockholder 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 stockholder in October 1999, but which may not be exercised until
the occurrence of certain specified corporate events.
(6) Includes 141,322 common shares under warrants granted to the
stockholder's predecessor-in-interest prior to October 1999. Also
includes options to acquire 8,817 common shares which were granted to
Internexus' designees to our Board of Directors under our Director
Stock Plan, but which were assigned to Internexus under the terms of
the designees' arrangements with Internexus. Does not include 296,114
shares of common stock that may be acquired under the terms of warrants
issued to the stockholder's predecessor-in-interest in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events. Also does not include 54,838 shares of
common stock and 114,604 shares of series D Stock that may be acquired
under the terms of warrants issued to the stockholder in February 2001,
but which may not be exercised until the occurrence of certain
specified corporate events.
(7) Includes 141,322 common shares under warrants granted to the
stockholder's predecessor-in-interest prior to October 1999. Also
includes options to acquire 8,817 common shares which were granted to
Internexus' designees to our Board of Directors under our Director
Stock Plan, but which were assigned to Internexus under the terms of
the designees' arrangements with Internexus. Does not include 296,114
shares of common stock that may be acquired under the terms of warrants
issued to the stockholder's predecessor-in-interest in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events. Also does not include 41,934 shares of
common stock and 87,636 shares of series D Stock that may be acquired
under the terms of warrants issued to the stockholder in February 2001,
but which may not be exercised until the occurrence of certain
specified corporate events.
(8) Does not include 166,666 shares of common stock that may be acquired
under the terms of warrants issued to the stockholder in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events.
(9) 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. Also
includes shares held by an entity that is jointly controlled by Mr.
D'Ambrosio and Troy D'Ambrosio.
(10) Includes shares held by an entity that is controlled jointly by Mr.
D'Ambrosio and Lance D'Ambrosio.
(11) Shares shown are held by a limited liability company for which Mr.
Sansone managing member. Mr. Sansone does not disclaim beneficial
ownership of such shares. Also includes options to acquire 50,000
common shares.
(12) Does not include 100,000 shares of common stock that may be acquired
under the terms of warrants issued to the stockholder in October 1999,
but which may not be exercised until the occurrence of certain
specified corporate events. Also does not include 25,806 shares of
common stock and 53,932 shares of series D Stock that may be acquired
under the terms of warrants issued to the stockholder in February 2001,
but which may not be exercised until the occurrence of certain
specified corporate events.
(13) WCI Cayman Inc. is our wholly-owned, indirect subsidiary. WCI Cayman
Inc. acquired the shares noted in connection with the sale of its
interest in an entity that conducted telecommunications operations in
El Salvador. The purchaser of the El Salvadoran company interest was
one of our principal shareholders, and the shareholder paid for the
interest using shares of our common stock. For additional information
regarding this transaction, see our report on Form 8-K dated July 3,
2001.
(14) Assumes the matters set forth in notes 1 through 10. Includes options
to acquire 884,833 common shares. Includes the shares held by Lance
D'Ambrosio as a "5% Shareholder," who also serves as a director.
* * *
By Order of the Directors
/s/Anthony Sansone
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Anthony Sansone
Secretary
Dated: July 3, 2001