RCN 8-K
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): April 28, 2000
RCN Corporation
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(Exact name of Registrant as specified in its charter)
Delaware 0-22825 22-3498533
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(State of (Commission File No.) (IRS Employer
Incorporation) Identification Number)
105 Carnegie Center
Princeton, NJ 08540-6215
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(Address of principal executive offices, including zip code)
(609) 734-3700
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events
On December 12, 1999, RCN Corporation ("RCN") entered into an
Agreement and Plan of Merger (the "Merger Agreement"), among RCN, 21st
Holding Corp., a wholly owned subsidiary of RCN ("Sub"), and 21st Century
Telecom Group, Inc. ("21st Century") providing for the acquisition of 21st
Century by RCN in a transaction structured as a Merger (the "Merger") of
Sub with and into 21st Century, with 21st Century surviving the Merger and
becoming a wholly owned subsidiary of RCN. On April 28, 2000, RCN
completed the acquisition of 21st Century. The Merger Agreement provides
that the issued and outstanding shares of 21st Century's Voting and Non-
Voting Common Stock, no par value, and Class A Convertible 8% Cumulative
Preferred Stock, no par value, and outstanding warrants to acquire Company
Common Stock, will be converted into shares of RCN common stock.
The completion of the acquisition coincides with the expiration
of RCN's tender offer and consent solicitation for all of 21st Century's
outstanding 12-1/4% Senior Discount Notes due 2008 and its exchange offer
and consent solicitation for all of 21st Century's outstanding 13-3/4%
Subordinated Exchange Debentures due 2010, which expired at 12:00 midnight
on April 27, 2000. In those transactions, RCN received tenders and
consents from the holders of 100% of the outstanding Notes and over 99%
percent of the outstanding Debentures.
On April 28, 2000, and on May 1, 2000, RCN issued press releases
concerning the completion of the Merger, copies of which are attached
hereto as Exhibits 99.1 and 99.2 respectively, and are hereby incorporated
by reference.
Item 7. Financial Statements and Exhibits
99.1 Press Release of RCN, dated April 28, 2000.
99.2 Press Release of RCN, dated May 1, 2000.
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.
RCN Corporation
By: /s/ John J. Jones
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Name: John J. Jones
Title: Executive Vice President, General
Counsel, Corporate Secretary
Date: May 2, 2000
EXHIBIT INDEX
Exhibit
No. Description
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99.1 Press Release of RCN, dated April 28, 2000.
99.2 Press Release of RCN, dated May 1, 2000.
TYPE: EX-99
SEQUENCE: 2
DESCRIPTION: EXHIBIT 99.1 - PRESS RELEASE
Exhibit 99.1
Company Press Release
SOURCE: RCN Corporation
RCN Completes Acquisition of Chicago-Based 21st Century Telecom Group, Inc.
PRINCETON, N.J., April 28 /PRNewswire/ -- RCN Corporation (Nasdaq: RCNC -
news) announced today that it has completed the acquisition of 21st Century
Telecom Group, Inc., Chicago's only single-source, facilities-based
provider of bundled telecommunications services.
The completion of the acquisition coincides with RCN's tender offer and
consent solicitation for all of 21st Century's outstanding 12-1/4% Senior
Discount Notes due 2008 and its exchange offer and consent solicitation for
all of 21st Century's outstanding 13-3/4% Subordinated Exchange Debentures
due 2010, which expired at 12:00 midnight on April 27, 2000. In those
transactions, RCN received tenders and consents from the holders of 100% of
the outstanding Notes and over 99% percent of the outstanding Debentures.
About The RCN Network
RCN's Megaband(TM) Network is a unique broadband fiber-optic platform
capable of offering a full suite of communications services -- including
fully featured voice, video and high-speed Internet -- to residential
customers. The network employs SONET ring backbone architecture, and
localized nodes built to ensure RCN's state-of-the-art fiber optics travel
to within 900 feet of RCN customers, with fewer electronics and lower
maintenance costs than existing local networks.
RCN's high-capacity local fiber-optic networks target densely populated
areas comprising 44% of the US residential communications market spread
over just 6% of its geography.
About RCN Corporation
RCN Corporation (Nasdaq: RCNC - news) is the nation's first and largest
single-source facilities-based provider of bundled local and long distance
phone, cable television and high-speed Internet services to the densest
residential markets in the country. RCN is currently delivering broadband
services over its Megaband(TM) Network or designing and building its
network on both the East and West coasts as well as Chicago. In addition,
RCN is a leading Internet Service Provider in its markets. Additional
information can be found at rcn.com.
SOURCE: RCN Corporation
TYPE: EX-99
SEQUENCE: 3
DESCRIPTION: EXHIBIT 99.2 - PRESS RELEASE
Exhibit 99.2
Company Press Release
SOURCE: RCN Corporation
RCN Completes Acquisition of Chicago-Based Bundled Provider, 21st Century
Telecom Group, Inc.
With Acquisition, RCN Remains Fully Funded Into 2002; Company Expands
Operations to Third Largest US City
PRINCETON, N.J., May 1 /PRNewswire/ -- RCN Corporation (Nasdaq: RCNC -
news) announced today that it has completed the acquisition of 21st Century
Telecom Group, Inc., Chicago's only single-source, facilities-based
provider of bundled telecommunications services. The acquisition of 21st
Century enables RCN to expand operations into a new, high-density Midwest
market with over 8.6 million people and 3.1 million homes.
"21st Century is a unique acquisition for RCN, one that adheres to our core
values as a company -- having enough capital on hand to bring all our
markets to profitability, building in high-density markets and delivering
bundled services over a new, high-capacity network. In addition to the
great assets we are acquiring, we are very fortunate to add a very talented
management team and employee base, trained and experienced in how to
operate in a competitive market," said David C. McCourt, Chairman and Chief
Executive Officer. "Bob Currey, CEO of 21st Century, will remain at RCN.
He is an outstanding leader and executive who will continue to add
significant value to our Chicago operations. Bob previously served as the
Group President and Board member of Telecommunications Services for
McLeodUSA and as President and Chief Executive Officer of Consolidated
Communications, and we welcome such a great talent to RCN."
RCN and 21st Century share a common business philosophy -- the delivery of
phone, cable and Internet services, with the capacity to add additional
broadband services in the future. Like RCN, 21st Century has a
residentially focused plan, and operates in one of the most densely
populated markets in the US. It also has a brand new network designed to
carry all the services demanded by consumers today. The acquisition of 21st
Century has positioned RCN to be the leading competitive provider in the
high-density Chicago metropolitan area with a bundled package of phone,
cable and high-speed Internet services.
RCN is acquiring a company with solid operations and a thriving business in
Chicago, the third largest US city. 21st Century has 100,000 marketable
homes, 35,000 on-net connections and 650 employees.
With the acquisition of 21st Century, RCN is currently operating in, or has
begun building in, seven of the top ten US cities as measured by population
density -- Boston, New York, Philadelphia, Washington DC, San Francisco,
Los Angeles and Chicago. RCN has expanded in areas that meet its population
density criteria of 150 homes per mile, five times the national average.
This allows RCN to leverage the value of its brand new, high capacity
network that has, under its current configuration, 85% additional capacity
to carry additional broadband services beyond the known services it carries
today -- local and long distance phone, cable and high-speed Internet
access. In addition, due to the flexibility of its design, and the
additional conduit available to house additional fiber, RCN has the ability
to expand its network capacity by upgrading its network with minimal cost.
Terms of the Completed Acquisition
In the transaction, which was announced on December 13, 1999, a wholly
owned subsidiary of RCN will be merged with 21st Century, and 21st Century
will become a wholly owned subsidiary of RCN. In this transaction, RCN
issued approximately 6.5 million shares. The completion of the acquisition
coincides with RCN's tender offer and consent solicitation for all of 21st
Century's outstanding 12-1/4% Senior Discount Notes due 2008 and its
exchange offer and consent solicitation for all of 21st Century's
outstanding 13-3/4% Subordinated Debentures due 2010, which expired at
12:00 midnight on April 27, 2000. In those transactions, RCN received
tenders and consents from the holders of 100% of the outstanding Notes and
over 99% of the outstanding Debentures.
RCN Remains Fully Funded Into 2002
RCN has pre-funded the build of its high-capacity network to five million
homes passed. Currently, RCN has $3.6 billion in available cash that, under
its current plan, will fund operations into 2002. RCN is servicing today
nearly one million connections and had over 700,000 homes passed at the end
of the fourth quarter.
"We have over $12 per share in net cash on our balance sheet which gives us
the luxury of continuing to be opportunistic in the capital markets. With
the recent downturn in the market, our business plan remains completely
intact and does not prevent us from continuing our aggressive expansion. We
continue to seek to bring all the markets we enter to profitability by
pre-funding them," said Timothy Stoklosa, RCN's Chief Financial Officer.
RCN has successfully accessed the capital markets and has raised $4.6
billion in the past few years through various sources including strategic
investors, equity, high-yield bonds and bank debt. Paul Allen's Vulcan
Ventures is one of RCN's largest strategic investors with a 28% ownership
position, having invested $1.65 billion in RCN. The Vulcan investment
remains the single-largest investment in a company not owned or controlled
by Vulcan. In addition to the substantial financial resources that Vulcan
has provided RCN, the companies are pursuing, among other things, the
development of a broadband portal with several other Vulcan companies. RCN
also has the backing of Level 3 Communications (32.8%) and Hicks Muse Tate
and Furst (7.8%).
RCN is Building a Valuable Asset -- A High-Capacity, Multiple Use Network
with Low Operating Costs
The core of RCN's value is the asset it is building, its high-capacity
broadband network, designed and built around the consumer's need for
capacity. RCN is facilities-based and building from scratch, a brand new,
fiber-rich residential network with enough capacity to serve the needs of
consumers who are looking for one provider to deliver access to all their
communications and data services. RCN has a significant head start over
incumbents in delivering multiple services because the company is not
retrofitting an existing network designed for one service to deliver more.
Most important, building a new network enables RCN to maintain lower
operating costs than existing providers.
"Ninety cents of every dollar goes into the network we are building. Based
on the results we have achieved to date, we know we are building the right
network in the right markets at the right cost. We are very careful in our
capital deployment initiatives and never enter any new market unless we
have the capital on hand to bring it to profitability. That is a core value
at RCN and critical to the success of our business plan. It is a value we
will not violate as we seek to expand our reach to new markets," added
McCourt.
RCN's two-way network provides lifeline telephone services, cable
television with up to 150 analog and digital channels, 40 additional
channels of music choice as well as high-speed Internet access with a
minimum 1 Megabit connection to consumers. The current network
configuration of 150 homes per node enables RCN to provide ample capacity
to the home for all the services it delivers. In many markets, RCN offers
its ResiLink bundled service packages allowing consumers to choose from
four flat-rate pricing plans for all their communication needs. This
innovative product has enabled RCN to achieve significantly higher
penetration rates than in markets where it offers a-la-carte plans in
addition to higher revenues per subscriber.
About The RCN Network
RCN's Megaband(TM) Network is a unique broadband fiber-optic platform
capable of offering a full suite of communications services -- including
fully featured voice, video and high-speed Internet -- to residential
customers. The network employs SONET ring backbone architecture, and
localized nodes built to ensure RCN's state-of-the-art fiber optics travel
to within 900 feet of RCN customers, with fewer electronics and lower
maintenance costs than existing local networks.
RCN's high-capacity local fiber-optic networks target densely populated
areas comprising 44% of the US residential communications market spread
over just 6% of its geography.
About RCN Corporation
RCN Corporation (Nasdaq: RCNC - news) is the nation's first and largest
single-source facilities-based provider of bundled local and long distance
phone, cable television and high-speed Internet services to the densest
residential markets in the country. RCN is currently delivering broadband
services over its Megaband(TM) Network or designing and building its
network on both the East and West coasts as well as Chicago. In addition,
RCN is a leading Internet Service Provider in its markets.
Some of the statements made by RCN in this press release are
forward-looking in nature. Actual results may differ materially from those
projected in forward-looking statements as a result of a number of
factors. RCN believes that the primary factors include, but are not
limited to uncertainties relating to economic conditions, acquisitions and
divestitures, government and regulatory policies, the pricing and
availability of equipment, materials, inventory and programming, RCN's
ability to develop and penetrate existing and new markets, technological
developments and changes in the competitive environment in which RCN
operates. Additional information concerning these and other important
factors can be found in RCN's filings with the Securities and Exchange
Commission. Statements in this release should be evaluated in light of
these important factors.
SOURCE: RCN Corporation |
