Filed by Covista Communications, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
Subject Company: Capsule Communications, Inc.
Commission File No.: 0-30555
NEWS RELEASE
Contacts:
Thomas Gunning David Hurwitz
Chief Financial Officer President and Chief Executive Officer
Covista Communications, Inc. Capsule Communications, Inc.
Tel: (973) 812-1100 Tel: (215) 244-3433
Fax: (973) 237-6414 Fax: (215) 244-2443
Email: tgunning@covista.com Email: dhurwitz@capsulecom.com
FOR IMMEDIATE RELEASE
COVISTA COMMUNICATIONS, INC. OFFER TO EXCHANGE STOCK FOR CAPSULE
COMMUNICATIONS, INC. FILED WITH SEC
Little Falls, New Jersey and Bensalem, Pennsylvania, September 19, 2001 -
Covista Communications, Inc. (NASDAQ: CVST) today announced it had filed a
Registration Statement on Form S-4 under the Securities Act of 1933 with the
Securities Exchange Commission. The Registration Statement on Form S-4
contains the offer by CCI Acquisitions Corp., a newly-formed, wholly-owned
subsidiary of Covista, to exchange 0.1116 shares of Covista common stock for
each outstanding share of Capsule Communications, Inc. (OTC Bulletin Board:
CAPS.OB) common stock held by Capsule stockholders other than its controlling
stockholder, and 0.0838 shares of Covista common stock for each outstanding
share of Capsule common stock held by Henry G. Luken, III, the controlling
stockholder of Capsule, in each case subject to adjustment as provided in the
merger agreement. The adjustment mechanism is designed to ensure that the
minority stockholders of Capsule will not receive more than $0.6696 of Covista
common stock for each share of Capsule common stock, and that the majority
stockholder of Capsule will not receive more than $0.5028 of Covista common
stock for each share of Capsule common stock. The offer will be tendered to
the Capsule shareholders after the Registration Statement becomes effective.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD, NOR MAY OFFERS TO EXCHANGE BE ACCEPTED, PRIOR TO
THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO EXCHANGE
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH JURISDICTION.
ABOUT COVISTA:
Covista is a facilities-based long distance telecommunications, Internet and
data services provider with a substantial customer base in both the commercial
and wholesale market segments. Its products and services include a broad range
of voice, data and Internet solutions, including long distance and toll-free
services, calling card, frame relay, Internet access, VPN, directory
assistance and teleconferencing services. The wholesale division provides
domestic and international termination services to carriers worldwide at
competitive rates. Covista currently owns and operates switches in New York
City and Newark, New Jersey, and previously has announced plans to expand to
additional switch sites in Los Angeles, Chicago, Dallas and Chattanooga, as
well as to open a 200-seat call center in Chattanooga. An additional switch
site in the Philadelphia area is expected to be added when the previously-
announced acquisition of Capsule Communications is completed. The Company
previously announced that it has acquired access to nation-wide network
facilities comprising 2,822,400,000 DS-0 channel miles of telecommunications
capacity. Covista operates a Network Operations Center in Northern New Jersey
to monitor its switched network and to coordinate its various services.
Covista processes approximately 95% of all its call volume through its own
facilities. For information on becoming a Covista customer, please telephone
(888) 426-8478 or visit the Company's website at www.covista.com.
ABOUT CAPSULE
Capsule is a switch-based inter-exchange carrier providing local and long-
distance telephone communications services primarily to small- and medium-size
business customers as well as residential customers. Capsule provides inbound
long-distance services and local resale services as well as other
telecommunications services including calling cards, cellular, paging,
Internet service, dedicated access, data services, and carrier termination
services. Capsule uses its own switches and facilities to originate, transport
and terminate calls for customers generally located in the Mid-Atlantic region
and in California. For calls originating or terminating outside its own
network, Capsule utilizes services provided by other long-distance companies.
Capsule Communications is the successor corporation to US Wats, Inc. For more
information, please visit Capsule's website at www.capsulecom.com.
COMMENTS ON FORWARD-LOOKING STATEMENTS
This press release contains historical and forward-looking statements which
are made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Act of 1995, which may not be indicative of future results.
Investors are cautioned that forward-looking statements such as statements of
the Company's plans, objectives, expectations and intentions involve risks and
uncertainties. The cautionary statements made in this release should be read
as being applicable to all related statements wherever they appear. Statements
containing terms such as "believes," "does not believe," "no reason to
believe," "expects," "plans," "projects," "intends," "estimates,"
"anticipates," or similar terms, are considered to contain uncertainty and are
forward-looking statements. The actual results could differ materially from
those discussed. Factors that could contribute to such differences include the
following: a decline in either the growth of wireless communications or the
acceptance of CDMA technology; the demand for semiconductors for applications
such as optical networks and wireless communication and the performance of our
manufacturing facilities; our ability to successfully integrate the combined
company, our dependence on a few large customers; competitive products or
technologies that could reduce demand for our products such as direct
conversion or digital filtering technology; increased sales through
consignment agreements; our ability to successfully develop and bring new
products to market; our dependence on a limited number of suppliers for
certain key raw materials; risks associated with international sales;
declining selling prices for some of our key products; decreased manufacturing
yields; cancellation of purchase orders by our customers; our inability to
protect our intellectual property or if we infringe on the intellectual
property of others; increased competition from other suppliers; risks
associated with our Costa Rican operations; risk of natural disasters; and
other risks discussed in the SEC filings of the respective companies including
Form 10-K and Form 10-Q, which can be accessed at the SEC Web site at
www.sec.gov.
A reader of this release should understand that it is not possible to predict
or identify all such risk factors. Consequently, the reader should not
consider this list to be a complete statement of all potential risks or
uncertainties. We do not assume the obligation to update any forward-looking
statement.
OTHER LEGAL INFORMATION
In connection with the filing of a Registration Statement on Form S-4, each of
Covista and Capsule expects to mail a Joint Proxy Statement/Prospectus to its
respective stockholders containing information about the merger. Investors
and security holders are urged to read the Registration Statement and the
Joint Proxy Statement/Prospectus carefully when such documents are available.
The Registration Statement and the Joint Proxy Statement/Prospectus will
contain important information about Covista, Capsule, the merger and related
matters. Investors and security holders will be able to obtain free copies of
these documents through the website maintained by the U.S. Securities and
Exchange Commission at www.sec.gov. Copies of the Joint Proxy
Statement/Prospectus and the SEC filings that will be incorporated by
reference therein also can be obtained, without charge, by directing a request
to Covista Communications, Inc., 150 Clove Road, Little Falls, NJ 07424,
Attention: Thomas P. Gunning (973-812-1100), or to Capsule Communications,
Inc., Two Greenwood Square, 3331 Street Road, Suite 275, Bensalem, PA 19020,
Attention: David B. Hurwitz (215-244-3433).
Capsule, its directors, executive officers and certain members of management
and employees may be soliciting proxies from Capsule's shareholders in favor
of the adoption of the merger agreement. A description of any interests that
Capsule's directors and executive officers have in the merger will be
available in the Joint Proxy Statement/Prospectus.
Covista, its directors, executive officers and certain members of management
and employees may be soliciting proxies from Covista's shareholders in favor
of the issuance of Covista shares in connection with the merger. A
description of any interests that Covista's directors and executive officers
have in the merger will be available in the Joint Proxy Statement/Prospectus.
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