SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):October 10, 1996
ON COMMAND CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 00-21315 77-0435194
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
3301 Olcott Street
Santa Clara, California 95054
(Address of principal executive offices)
(408) 496-1800
(Registrant's telephone number, including area code)
Page 1 of 12 pages. The Exhibit Index appears on page 7.
Item 2. Acquisition or Disposition of Assets
Acquisition of the Assets and Certain Liabilities of SpectraVision,
Inc. by On Command Corporation.
On October 10, 1996, On Command Corporation ("On Command") and its parent
corporation, Ascent Entertainment Group, Inc. ("Ascent"), consummated the
previously announced acquisition (the "Acquisition") of the assets and
properties (including, but not limited to, copyrights, patents, personal
property, real property, equipment and records) and certain liabilities of
SpectraVision, Inc. ("SpectraVision"), with an effective date of October 8, 1996
(the "Closing Date"). The Acquisition was consummated pursuant to an Acquisition
Agreement dated August 13, 1996, among Ascent, On Command, SpectraVision and the
other parties named therein (the "Acquisition Agreement"). Prior to the Closing
Date, On Command Video Corporation ("OCV"), formerly an 84% owned subsidiary of
Ascent (approximately 79% owned on a fully diluted basis), was merged (the
"Merger") into a subsidiary of On Command and became a wholly owned subsidiary
of On Command pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") by and among On Command, OCV and On Command Merger Corporation dated
August 13, 1996. The Acquisition Agreement and the Merger Agreement were entered
into to effect the terms of the Agreement dated April 19, 1996 entered into
among Ascent, OCV and the other parties named therein and to effectuate the
transactions contemplated thereby. The terms of the Acquisition, Acquisition
Agreement, Merger and Merger Agreement are described more fully in the
Corporation's Registration Statement on Form S-4, Registration No. 333-10407 (as
amended and supplemented, the "Registration Statement), with respect to the
shares of the Corporation's common stock, par value $.01, ("On Command Common
Stock"), and warrants to purchase On Command Common Stock which were issued in
the Merger pursuant to the Merger Agreement and in the Acquisition pursuant to
the Acquisition Agreement. The Registration Statement, including specifically
the Information Statement/Prospectus contained therein, is incorporated herein
by reference.
As of the Closing Date, Ascent and the minority stockholders of OCV received
21,750,000 shares of On Command common stock (72.5% of the initial outstanding
shares of On Command Common Stock). Additionally, 208,382 shares of On Command
Common Stock were held in reserve in connection with a possible adjustment based
upon a preliminary determination that SpectraVision had negative working capital
on the Closing Date (the "Reserve Stock"), which depending upon the final
calculation of SpectraVision's negative working capital, will either be
distributed to Ascent and the OCV minority stockholders or to the SpectraVision
bankruptcy estate for the benefit of SpectraVision's creditors.
In connection with the Acquisition and the Merger, On Command also issued
warrants representing the right to purchase a total of 7,500,000 shares of On
Command Common Stock (20% of the initial outstanding shares of On Command Common
Stock, after exercise of the warrants) pursuant to a Warrant Agreement between
On Command and The Bank of New York dated October 8, 1996. The warrants have a
term of 7 years and an exercise price of $15.27 per share of On Command Common
Stock. Series A Warrants to purchase on a cashless basis an aggregate of
1,425,000 shares of On Command Common Stock were issued to the former OCV
stockholders, of which Ascent received warrants to purchase 1,124,325 shares;
Series B Warrants to purchase for cash an aggregate of 2,625,000 shares of On
Command Common Stock were issued to the SpectraVision bankruptcy estate for
distribution to creditors; and Series C Warrants were issued to Gary Wilson
Partners to purchase for cash an aggregate of 3,450,000 shares of On Command
Common Stock in consideration of certain investment banking and advisory
services provided in connection with the transactions.
In addition to the issuance of stock and warrants, On Command made
approximately $92 million in payments in connection with the Acquisition and
Merger as follows: (i) $40 million to Foothill Capital Corporation to pay off
obligations of SpectraVision and its affiliated debtors ("Debtors"); (ii)
approximately $43.6 million to pay off intercompany obligations of OCV to Ascent
and other On Command obligations; and (iii) approximately $8.4 million to pay
certain administrative claims and other bankruptcy costs of the Debtors. The
source of these payments was a $125 million credit facility which On Command
entered into with NationsBank of Texas, N.A. (the "On Command Credit Facility")
consisting of (i) a 364-day revolving credit and competitive advance facility
which, subject to certain conditions, will be renewable for four 364-day
periods, and (ii) a five year revolving credit and competitive advance facility;
provided, however, that any amounts borrowed under the five year facility will
reduce the amount available under the 364 day facility.
Certain of the assets acquired by On Command pursuant to the Acquisition
Agreement constitute equipment previously used by SpectraVision in its business
of providing pay per view movies and other services to hotel guests. On Command
currently intends to continue the use of such assets in its business of
providing pay per view movies and other services to hotel guests; however, if On
Command determines that certain of such equipment is obsolete or unnecessary
because of On Command's own equipment, such equipment will not be used in the
provision of such services.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
(1) The following financial statements of SpectraVision are
incorporated by reference from Amendment No. 3 to the On
Command Registration Statement on Form S-4, commission file
no. 333-10407, filed with the Commission on October 7, 1996:
Audited Financial Statements for the years ended December 31,
1995, 1994 and 1993
Independent Auditors' Report
Consolidated Statements of Financial Position at December 31,
1995 and 1994
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Deficit for the years
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Unaudited Interim Financial Statements for the six months ended
June 30, 1996 and 1995
Condensed Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995
Condensed Consolidated Statements of Operations for the six
months ended June 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
(2) The following financial statements of OCV are incorporated
by reference from Amendment No. 3 to the On Command
Registration Statement on Form S-4, commission file no.
333-10407, filed with the Commission on October 7, 1996:
Audited Financial Statements for the years ended December 31,
1995, 1994 and 1993
Report of Deloitte & Touche LLP
Report of Ernst & Young LLP, Independent Auditors
Balance Sheets at December 31, 1995 and 1994
Statements of Income for the years ended December 31, 1995,
1994 and 1993
Statements of Stockholders' Equity for the years ended December
31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
Unaudited Interim Financial Statements for the six months ended
June 30, 1996 and 1995
Condensed Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995
Condensed Consolidated Statements of Income for the six months ended
June 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
(b) Pro Forma Financial Information
(1) The following unaudited pro forma financial statements of On Command
are incorporated by reference from Amendment No. 3 to the On Command
Registration Statement on Form S-4, commission file no. 333-10407, filed
with the Commission on October 7, 1996:
Unaudited Pro Forma Combined Balance Sheet at June 30, 1996
Unaudited Pro Forma Combined Statement of Operations for the
six months ended June 30, 1996
Unaudited Pro Forma Combined Statement of Operations for the
year ended December 31, 1995
Notes to Unaudited Pro Forma Combined Financial Statements
(c) Exhibits (listed according to the number assigned in Item
601 of Regulation S-K)
Exhibit No. Description
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20 Press release by On Command dated
October 10, 1996 reporting the consummation
of the Acquisition and Merger
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Ernst & Young LLP
23(c) Consent of KPMG Peat Marwick LLP
SIGNATURES
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.
On Command Corporation
By:
/s/ Arthur M. Aaron
Arthur M. Aaron
Vice President, Acting General Counsel and Secretary
Date:
October 25, 1996
EXHIBIT INDEX
Exhibit No. Description Sequential
Page Number
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20 Press Release by On Command 8
dated October 10, 1996 reporting
the consummation of the
Acquisition and the Merger
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23(a) Consent of Deloitte & Touche LLP 10
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23(b) Consent of Ernst & Young LLP 11
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23(c) Consent of KPMG Marwick LLP 12
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Exhibit 20
On Command Corporation Completes Acquisition of SpectraVision
New Public Company Lists On NASDAQ As "ONCO" Combining On Command
Video and SpectraVision Creates World's Leading Hotel Video Provider
& Resolves SpectraVision, Inc.'s Bankruptcy Case
For Immediate Release
October 10, 1996
Contact Paul E. Jacobson Karen Amrhine
On Command Sard, Verbinnen & Co.
303.626.7060 212.687.8080
Santa Clara, Calif. -- On Command Corporation, a new public company, has
concluded its acquisition of SpectraVision, Inc., making On Command the world's
largest provider of in-room entertainment and information services to the hotel
industry. On Command Corporation combines the SpectraVision assets with On
Command Video Corporation to create a hotel video distribution system of more
than 900,000 rooms and 100 million annual viewers. The company will trade on the
NASDAQ exchange under the ticker symbol "ONCO."
Led by former AT&T and Creative Artists Agency new media executive Bob Kavner
as its president and CEO, On Command Corporation will offer a variety of
interactive video entertainment and information services primarily to business
and luxury class guest rooms, including video-on-demand, Sony PlayStationTM
video games, DSSTM digital satellite service and the Bell Atlantic InfoTravelTM
interactive concierge. It is based in Santa Clara, California.
"On Command's advanced technology, large viewing audience and superior
demographics give it the scale and resources to provide hotel guest room viewers
the programming they want and need today," said Kavner. "On Command is
positioned to be in the vanguard of interactive programming developments --
offering breakthrough new media applications to hotel guests before they reach
large scale residential markets."
As the head of On Command Corporation, Kavner will focus on the integration
of the two companies and developing a long-term strategic plan that will enhance
On Command's leadership position in on-demand programming by developing new
products and services targeted at the hotel industry and other multi-unit
environments, such as apartments. Before joining On Command in mid-September,
Kavner headed his own consulting firm specializing in broadband and Internet
on-demand ventures. Prior to that he spearheaded Creative Artist Agency's
communications industries consulting practice and served as CEO of AT&T's
MultiMedia Products and Services Group.
As of June 30, 1996, On Command Video served approximately 419,000 hotel
rooms and SpectraVision, Inc. served approximately 495,000 hotel rooms.
A registration statement filed with the SEC for On Command Corporation became
effective Monday, October 7.
On Command Corporation was created by Ascent Entertainment Group, Inc., a
Denver-based media and entertainment company (NASDAQ: GOAL) that owned
approximately 80 percent of On Command Video Corporation. Ascent will continue
to own approximately 57.2 percent of the new On Command Corporation. The
SpectraVision bankruptcy estate will receive 27.5 percent of On Command
Corporation's common stock, distributed through the court-approved bankruptcy
plan to SpectraVision's creditors and resolving claims of approximately $600
million. On Command Corporation will issue warrants, equal to 20 percent on a
fully-diluted basis, to shareholders of On Command Corporation which will be
traded on the NASDAQ exchange under the ticker symbol "ONCO."
Ascent Entertainment Group's principal business is providing pay-per-view
entertainment and information services through its majority-owned On Command
Corporation. Ascent owns and operates additional entertainment-related
businesses, including the NHL Stanley Cup Champion Colorado Avalanche, NBA
Denver Nuggets and Beacon Communications, a motion picture and television
production company.
Exhibit 23(a)
DELOITTE & TOUCHE LLP CONSENT
We consent to the incorporation by reference in this Current Report on Form 8-K
of On Command Corporation dated October 10, 1996 of our reports dated September
19, 1996 and October 3, 1996, related to the financial statements of On Command
Video Corporation as of December 31, 1995 and 1994, appearing in Amendment No. 3
to Registration Statement No. 333-10407 of On Command Corporation.
Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
San Jose, California
October 21, 1996
Exhibit 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration (Form S-4 No.
333-10407) of On Command Corporation and in the related Prospectus of our report
dated January 26, 1994 with respect to the financial statements and schedule of
On Command Video Corporation for the year ended December 31, 1993 incorporated
by reference in this On Command Corporation Form 8-K.
Ernst & Young LLP
/s/ Ernst & Young LLP
San Jose, California
October 24 , 1996
Exhibit 23(c)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
On Command Corporation:
We consent to the incorporation by reference herein of our reports dated March
1, 1996, except as to the second paragraph of Note 7, which is dated as of March
22, 1996, related to the consolidated statements of financial position of
SpectraVision, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' deficit and cash
flows for each of the years in the three-year period ended December 31, 1995,
and the related consolidated financial statement schedule, which reports are
included in the On Command Corporation Registration Statement on Amendment No. 3
on Form S-4 filed with the Securities and Exchange Commission on October 7, 1996
(No. 333-10407).
Our reports contain explanatory paragraphs that state that SpectraVision's
filing under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court on June 8, 1995 and its expected noncompliance with
certain covenants related to its debtor-in-possession financing raise
substantial doubt about SpectraVision's ability to continue as a going concern.
The consolidated financial statements and the consolidated financial statement
schedule do not include any adjustments that might result from the outcome of
this uncertainty.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Dallas, Texas
October 21, 1996