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 October
17, 2001, to our shareholders of record as of the close of business on October
10, 2001 in connection with the amendment of our Amended and Restated Articles
of Incorporation. The amendments, which are described in more detail below, will
(i) increase the maximum number of members of our Board of Directors (the
"Board") from 10 to 12, and (ii) require at least 75% of our Board to approve
certain equity offerings.
Our Board has approved, and a total of 12 of our shareholders holding
55,450,886 shares of our common stock (representing approximately 95.1% of our
equity securities on a voting basis) have consented in writing to the
amendments. 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 amendments. Accordingly, the amendments 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 Form 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 AMENDMENTS
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Article IV of our Amended and Restated Certificate of Incorporation, or
the Certificate, contains a number of sections dealing with the organization and
operation of our Board. Section B.1 of that Article currently provides that the
maximum number of persons that may sit on our Board is ten, and Section B.7 of
that Article provides the general rule that decisions by our Board may be taken
by a majority vote at any meeting where there is a quorum of directors present.
The proposed amendments will increase the maximum number of directors
on our Board from 10 persons to 12 persons, and will modify the approval
requirements at the Board level for certain types of equity financings that we
engage in through December 31, 2007. The first amendment will be accomplished by
amending Section B.1 of Article IV of the Certificate to read, in it's entirety,
as follows:
1. Number. The number of directors of the Corporation shall be
set by the Bylaws, but shall not be less than three (3) nor
more than twelve (12).
The second amendment will be accomplished by amending Section B.7 of
Article IV of the Certificate, to read in its entirety as follows:
7. Quorum; Action at Meeting. A majority of the directors at
any time in office shall constitute a quorum for the
transaction of business. If at any meeting of the directors
there shall be less than such a quorum, a majority of those
present may adjourn the meeting. Every decision by a majority
of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the Board of
Directors unless a greater number is required by law, by the
Bylaws of the Corporation, by these Articles of Incorporation,
or unless the decision in question relates to the approval of
any offering by the Corporation of its equity securities
("Equity Financing") through December 31, 2007 other than (a)
pursuant to the Corporation's management incentive plans, (b)
to fund acquisitions by the Corporation of assets or
operations using securities of the Corporation in lieu of cash
payment therefor, or (c) pursuant to any agreement of the
Corporation existing as of September 17, 2001. Any Equity
Financing shall require the approval of at least 75% of the
directors in office at the time that the approval of any such
Equity Financing is considered.
The amendments will be effected by filing an amendment to our articles
with the Secretary of State for the State of Nevada. The amendments 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 AMENDMENTS
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On September 6, 2001, our Board approved the amendments by unanimous
written consent. In approving the amendments, our Board considered a number of
factors, including the current composition of our Board of Directors, the number
of Directors who historically participated in Board meetings, the likelihood
that we would need to engage in equity financings prior to December 31, 2007,
and our contractual obligations under the terms of a private placement we
recently completed with two accredited individuals under which we agreed to
propose the amendments to our Board of Directors and shareholders for
consideration and approval.
We have also received written consents to the amendments from a total
of 12 of our shareholders who own a total of 55,450,886 shares of our common
stock. Those shares collectively represent approximately 95.1% 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 October 10, 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 amendments.
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)
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TCW/CCI Holding LLC and TCW/CCI Holding II LLC Common 7,950,657 13.7%
(5% Shareholder)(2)*
AES Telecom Americas, Inc. Common 11,764,705 20.2%
(5% Shareholder)(3)*
Telematica EDC, C.A. Common 8,599,901 14.7%
(5% Shareholder)(4)*
FondElec Essential Services Common 2,437,229 4.2%
Growth Fund, L.P.*
Norberto Priu Common 14,976,247 25.7%
(5% Shareholder)(5)*
Raquel Emilse Oddone Common 2,515,193 4.3%
de Ostry(6)*
Jean D'Ambrosio* Common 793,554 1.4%
International Finance Common 1,191,087 2.0%
Corporation(7)*
Lance D'Ambrosio Common 3,605,439 6.2%
(5% Shareholder/ Chairman)(8)*
Troy D'Ambrosio Common 638,542 1.1%
(Sr. V.P./Director)(9)*
Anthony Sansone Common 165,555 +
(V.P., Treasurer and Secretary)(10)*
Glacier Latin America, Ltd.(11)* Common 880,411 1.5%
All directors and officers as a group (19 Common 5,393,202 9.1%
persons)(12)
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*Party that approved the amendments.
+Less than 1%
(1) Based on 58,312,075 outstanding shares of common stock, which does not
inclue 572,468 shares of common stock held by our wholly-owned indirect
subsidiary, WCI Cayman Inc. 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
October 10, 2001.
(2) Includes 5,228,452 shares of the total 7,950,657 shares noted that are
held by TCW/CCI Holding LLC and 2,722,205 shares of the total 7,950,657
shares noted that are held by TCW/CCI Holding II LLC. TCW/CCI Holding
LLC and TCW/CCI Holding II LLC are affiliate funds sponsored by
TCW/Latin America Partners LLC. Does not include up to 4,195,656 shares
of common stock that may be acquired under the terms of a 60-day option
issued to TCW/Latin America Partners LLC on September 11, 2001 which is
assignable to certain affiliates of that entity, including the named
stockholders. If the holder of the option exercises that option, we
have the right to repurchase one-half of the same number of shares as
are exercised under the option from each of two other shareholders on
the same purchase terms. See footnotes 3 and 5 below. Also does not
include 1,626,953 shares of common stock that may be acquired under a
one-year option granted one of the named stockholders on September 11,
2001.
(3) Includes up to 2,097,828 shares of common stock that may be acquired
under the terms of an option issued to one of our stockholders on
September 11, 2001 which gives that stockholder the right to purchase
up to 4,195,656 shares from us and which then gives us the right to
purchase one half of the shares so acquired (up to 2,097,828 shares)
from the named stockholder. See footnote 2 above. Telematica EDC, C.A.
is an affiliate of AES Telecom Americas, Inc.
(4) AES Telecom Americas, Inc. is an affiliate of Telematica EDC, C.A. Does
not include 1,626,953 shares of common stock that the named stockholder
may acquire under a one-year option we granted it on September 11,
2001.
(5) Includes up to 2,997,828 common shares that are subject to options
granted two other stockholders on September 11, 2001, including the
option described in the first sentence of footnote 3 and the option
described in footnote 7. Upon any exercise of those options, we have
the right to acquire shares of common stock from the named stockholder.
Does not include 276,581 shares of common stock that the named
stockholder can acquire under a one-year option we granted him on
September 11, 2001. Includes 8,817 shares subject to options we granted
to certain members of our Board of Directors under our Director Stock
Plan, but which were assigned to the named stockholder under the terms
of the designees' arrangements with the named stockholder.
(6) Does not include 211,502 shares of common stock that the named
stockholder can acquire under a one-year option we granted him on
September 11, 2001. Includes options to acquire 8,817 common shares
which were granted to the named stockholder's designees to our Board of
Directors under our Director Stock Plan, but which were assigned to the
named stockholder under the terms of the designees' arrangements with
the named stockholder.
(7) Does not include 900,000 shares that the named stockholder can acquire
under the terms of an option we granted it on September 11, 2001. If
the named stockholder exercises the option, we have the right to
acquire an equal number of shares from another stockholder. Se footnote
5 above.
(8) Includes shares held in the name of the named stockholder and held in
the name of entities over which the named stockholder has voting and/or
beneficial control and for which he does not disclaim beneficial
ownership. Also includes shares held by an entity jointly controlled by
the named stockholder and Troy D'Ambrosio.
(9) Includes shares held by an entity that is controlled jointly by
the named stockholder and Lance D'Ambrosio.
(10) Shares shown are held by a limited liability company for which the
named stockholder acts as the managing member. The named stockholder
does not disclaim beneficial ownership of such shares. Also includes
options to acquire 50,000 common shares.
(11) Does not include 130,155 shares of common stock that may be acquired
under the terms of a one-year option issued to the stockholder on
September 11, 2001.
(12) Assumes the matters set forth in notes 1 through 10. Includes options
to acquire 800,333 common shares. Includes the shares held by Lance
D'Ambrosio as a "5% Shareholder," Mr. D'Ambrosio also serves as a
director.
* * *
By Order of the Directors
/s/Anthony Sansone
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Anthony Sansone
Secretary
Dated: October 17, 2001