UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K/A
CURRENT REPORT Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest reported event): April 15, 2005
MOTIENT CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 0-23044 93-0976127
(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
300 Knightsbridge Pkwy.
Lincolnshire, IL 60069
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: 847-478-4200
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registration under any of
the following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Forward-Looking Statements
This Report on Form 8-K contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements regarding our
expected financial position and operating results, our business strategy, and
our financing plans are forward-looking statements. These statements can
sometimes be identified by our use of forward-looking words such as "may,"
"will," "anticipate," "estimate," "expect," "project," or "intend." These
forward-looking statements reflect our plans, expectations, and beliefs and,
accordingly, are subject to certain risks and uncertainties. We cannot guarantee
that any of such forward-looking statements will be realized.
Statements regarding factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements ("Cautionary
Statements") include, among others, those under the caption "Risk Factors" in
our annual report on Form 10-K for the year ended December 31, 2004. All of our
subsequent written and oral forward-looking statements (or statements that may
be attributed to us) are expressly qualified by the Cautionary Statements. You
should carefully review the risk factors described in our other filings with the
Securities and Exchange Commission (the "SEC") from time to time.
Our forward-looking statements are based on information available to us today,
and we undertake no obligation to update these statements. Our actual results
may differ significantly from the results discussed.
Item 1.01 Entry Into a Material Definitive Agreement
On April 15, 2005, Motient entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with approximately 40 purchasers under which
Motient sold 408,500 shares of non-voting Series A Cumulative Convertible
Preferred Stock, $0.01 par value in a private placement exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). Motient received cash net proceeds under such Securities
Purchase Agreement, before escrowing a portion of the proceeds as required under
the terms of the preferred stock as described in Item 3.02 of this Current
Report on Form 8-K, of approximately $391 million. The purchasers under the
Securities Purchase Agreement included most of the purchasers from Motient's
November 2004 private placement, as well as several new investors.
Pursuant to the Securities Purchase Agreement, Motient covenanted that it
intends to use part of the proceeds of this issuance to, among other things,
purchase newly issued common stock of TerreStar Networks Inc., a 97% owned
subsidiary of Mobile Satellite Ventures, LP. Motient anticipates that such
purchase of common stock would occur in connection with a spin-off of TerreStar
to the limited partners of MSV and would result in Motient gaining a majority
interest in TerreStar. TerreStar has the right, subject to regulatory approval,
to receive from one of MSV's investors certain S-band spectrum authorizations.
Motient and TerreStar Networks have not entered into definitive documents
regarding any such investment by Motient, and the consummation of this
2
transaction will not occur until the parties have, among other things, received
all applicable regulatory approvals and negotiated and executed definitive
documentation. Accordingly, Motient can provide no assurances that this
transaction will ever be consummated. The remaining proceeds (or all of the
proceeds, if the purchase of TerreStar common stock is never consummated) will
be used for a variety of purposes, including general corporate purposes.
In connection with the execution of the Securities Purchase Agreement, Motient
also entered into a Registration Rights Agreement (the "Registration Rights
Agreement") with the purchasers. Under this Registration Rights Agreement,
Motient is obligated to use its reasonable best efforts to cause a registration
statement on Form S-1 (or if available S-3) (the "Registration Statement")
relating to the resale by the purchasers of the Motient shares of common stock
issuable upon conversion or otherwise (the "Conversion Shares") under the
preferred stock and the warrants described below to be filed with the SEC on or
prior to June 24, 2005, and will use its best efforts to cause the Registration
Statement to become effective as soon as possible, but in no event later than
(i) August 8, 2005 if the Registration Statement is not reviewed by the
Securities and Exchange Commission (the "SEC")or (ii) September 7, 2005 if the
Registration Statement is reviewed by the SEC. The Registration Rights Agreement
is filed as Exhibit 10.2 to this Current Report on Form 8-K.
Also in connection with the Securities Purchase Agreement and the Registration
Rights Agreement, Motient granted warrants (the "Warrants") exercisable for an
aggregate of 154,109 shares of Motient common stock (the "Warrant Shares") to
the purchasers. The Warrants have a term of five years and an exercise price
equal to $26.51 per share. Each Warrant shall become exercisable if the
registration statement registering the resale of the Warrant Shares is not filed
or declared effective in accordance with the time limits described above in the
Registration Rights Agreement or if the Registration Statement is filed and
declared effective but shall thereafter cease to be effective (without being
succeeded immediately by an additional registration statement filed and declared
effective) or usable for the offer and sale of the Conversion Shares and Warrant
Shares registered thereby for a period of time that shall exceed 30 days in the
aggregate in any twelve-month period. Each Warrant will vest as to 1/365th of
the Warrant Shares for (i) each day after June 24, 2005 on which the
Registration Statement has not yet been filed, (ii) each day after August 8,
2005 or September 7, 2005, as applicable, that the Registration Statement has
not been declared effective or (iii) each day after the Registration Statement
first becomes effective that Motient is unable to keep it effective in
accordance with the time periods and terms described above. A form of Warrant is
filed as Exhibit 10.3 to this Current Report on Form 8-K.
Item 3.02 Unregistered Sales of Equity Securities
On April 15, 2005, Motient issued and sold 408,500 shares of non-voting Series A
Cumulative Convertible Preferred Stock, $0.01 par value (the "Series A
Preferred"), for $1,000 per share. Motient paid commissions of $17.2 million in
connection with such sale. The sale of these shares of preferred stock was not
registered under the Securities Act and the shares may not be sold in the United
States absent registration or an applicable exemption from registration
requirements. The shares were offered and sold pursuant to the exemption from
registration afforded by Rule 506 under the Securities Act and/or Section 4(2)
3
of the Securities Act as a sale not involving any public offering, under which
offers and sales were made to Qualified Institutional Buyers as such term is
defined under the rules and regulations under the Securities Act. In connection
with such sale of preferred stock, Motient also issued, for no separate
consideration, warrants to purchase up to 154,109 shares of Motient common
stock.
The rights, preferences and privileges of the Series A Preferred are contained
in a Certificate of Designations of the Series A Cumulative Convertible
Preferred Stock that is filed as Exhibit 4.1 to this Current Report on Form 8-K.
The following is a summary of these rights, preferences and privileges:
o The Series A Preferred Stock has voting rights limited to those listed
below, or except as required by applicable law. Upon (a) the
accumulation of accrued and unpaid dividends on the outstanding shares
of Series A Preferred for two or more six month periods, whether or
not consecutive; (b) the failure of the Corporation to properly redeem
the Series A Preferred Stock, or (c) the failure of the Corporation to
comply with any of the other covenants or agreements set forth in the
Certificate of Designations for the Series A Preferred Stock, and the
continuance of such failure for 30 consecutive days or more after
receipt of notice of such failure from the holders of at least 25% of
the Series A Preferred then outstanding then the holders of at least a
majority of the then-outstanding shares of Series A Preferred, with
the holders of shares of any parity securities issued after April 15,
2005 upon which like voting rights have been conferred and are
exercisable, voting as a single class, will be entitled to elect two
directors to Motient's Board of Directors for successive one-year
terms until such defect listed above has been cured. In addition,
Motient must obtain the approval of the holders of a majority of the
then outstanding shares of Series A Preferred to modify the rights,
preferences or privileges of the Series A Preferred in a manner
adverse to the holders of Series A Preferred.
o From April 15, 2005 to April 15, 2007, Motient is required to pay
dividends in cash at a rate of 5.25% per annum (the "Cash Rate") on
the shares of Series A Preferred. Motient was required to place the
aggregate amount of these cash dividends, $42,892,500, in an escrow
account. These cash dividends will be paid to the holders of Series A
Preferred from this escrow account in four semi-annual payments,
unless earlier paid pursuant to the terms described below.
o From April 15, 2007 to April 15, 2010, Motient is required to pay
dividends on each share of Series A Preferred either in cash at the
Cash Rate or in shares of Motient common stock at a rate of 6.25% per
annum.
o If any shares of Series A Preferred remain outstanding on April 15,
2010, Motient is required to redeem such shares for an amount equal to
the purchase price paid per share plus any accrued but unpaid
dividends on such shares.
o Each holder of shares of Series A Preferred shall be entitled to
convert their shares into shares of Motient common stock at any time.
Each share of Series A Preferred will initially be convertible into 30
shares of Motient common stock. Upon conversion, any accrued but
unpaid dividends on such shares will also be issued as shares of
common stock, in a number of shares determined by dividing the
aggregate value of such dividend by $33.33. In addition, if the
conversion takes place prior to April 15, 2007 (or if any amounts
remain in the escrow account on such date), the converting holder will
be entitled to the portion of the escrow account per share of Series A
Preferred Stock equal to $105.00 minus all dividends that have been
paid on such share from the escrow account (such amount, the "Escrow
Portion"). Upon conversion, all amounts paid to holders of Series A
Preferred will be paid in shares of Motient common stock.
o Upon a change in control of Motient, each holder of Series A Preferred
shall be entitled to require Motient to redeem such holder's shares of
Series A Preferred for an amount in cash equal to $1,080 per share
plus all accrued and unpaid dividends on such shares. In addition if
the change in control takes place prior to April 15, 2007 (or if any
amounts remain in the escrow account on such date), the holder
electing to have such shares redeemed will be entitled to the Escrow
Portion remaining as to such share.
4
The Warrants described in Item 1.01 above may be exercised as to any vested
shares at any time until April 15, 2010 at an exercise price of $26.51 per share
of common stock. A description of the vesting terms as to such shares is
described in Item 1.01 above.
Item 3.03 Material Modifications to Rights of Security Holders
Please see Item 3.02 above for a description of Motient Corporation's newly
issued Series A Cumulative Convertible Preferred Stock.
Pursuant to the terms of the Series A Preferred, no dividends may be declared or
paid, and no funds shall be set apart for payment, on shares of Motient common
stock, unless (i) written notice of such dividend is given to each holder of
shares of Series A Preferred not less than 15 days prior to the record date for
such dividend and (ii) a registration statement registering the resale of the
Conversion Shares has been filed with the SEC and is effective on the date
Motient declares such dividend.
Upon the liquidation, dissolution or winding up of Motient, the holders of
Series A Preferred are entitled to receive, prior and in preference to any
distributions to holders shares of Motient common stock, an amount equal to
$1,000 per share plus all accrued and unpaid dividends on such shares. In
addition if the liquidation, dissolution or winding up takes place prior to
April 15, 2007 (or if any amounts remain in the escrow account on such date),
the holder of each share of Series A Preferred will be entitled the Escrow
Portion remaining as to such share.
Item 5.03 - Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On April 15, 2005, Motient Corporation filed a Certificate of Designations of
the Series A Cumulative Convertible Preferred Stock, with the Secretary of State
of the State of Delaware.
Item 7.01 - Regulation FD Disclosure
Motient Corporation issued a press release, dated April 18, 2005, which is
attached hereto as Exhibit 99.1. This exhibit is furnished, not filed, pursuant
to Regulation FD.
Item 9.01 - Financial Statements and Exhibits
(c) Exhibits
*3.1 Certificate of Designations of the Series A Cumulative Convertible
Preferred Stock
3.2 Certificate of Corrections
*10.1 Securities Purchase Agreement dated April 15, 2005 by and among the
Registrant and the Purchasers listed on Schedule 1 thereto
*10.2 Registration Rights Agreement dated April 15, 2005 by and among the
Registrant and the Purchasers listed on Schedule 1 thereto
*10.3 Form of Common Stock Purchase Warrant
*99.1 Press release dated April 18, 2005
* Previously filed
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MOTIENT CORPORATION
By: /s/ Christopher W. Downie
-------------------------------
Christopher W. Downie
Executive Vice President and
Chief Operating Officer
Date: August 2, 2005