Metromedia International Group, Inc. To Acquire PLD Telekom Inc. in Merger
NEW YORK--(BUSINESS WIRE)--May 18, 1999--
Upon Completion of Merger, Revenues from Communications Group
Expected to More Than Double
Metromedia International Group, Inc. (AMEX:MMG), a global communications company, and PLD Telekom Inc. (NASDAQ:PLDI) announced today that the two companies have entered into an agreement and plan of merger in which MMG will acquire the stock of PLD Telekom. Pursuant to the agreement, PLD Telekom would merge with a newly formed subsidiary of Metromedia International Group, Inc. Both the Merger and the Merger Agreement have been unanimously approved by the Boards of Directors of Metromedia International Group, Inc. and PLD Telekom and each Board is recommending approval by their respective shareholders.
In connection with the Merger Agreement, News America Incorporated, a wholly owned subsidiary of News Corporation Limited, which owns approximately 38% of PLD Telekom's Common Stock, has entered into an agreement with Metromedia International Group, Inc. to vote its Common Stock in favor of the Merger Agreement and not to support any other transaction involving PLD Telekom. Upon completion of the merger, News America will own approximately 9% of MMG Common Stock.
Under the terms of the transaction, when the merger is consummated, PLD Telekom will become a wholly owned subsidiary of Metromedia International Group, Inc. The holders of PLD Telekom stock will receive shares of MMG Common Stock on the basis of an exchange ratio that values each share of PLD Telekom Common Stock at $3.50 provided that the average MMG price per share is between $5.25 and $6.25 at closing. If the average price of MMG Common Stock exceeds $6.25 each PLD Telekom share will be exchanged for .56 shares of MMG Common Stock, not to exceed $4.48 per share of MMG Common Stock. If the average price of MMG Common Stock is less than $5.25 per share, each share of PLD Telekom shall be exchangeable for .6667 shares of MMG Common Stock, subject to certain termination and "top-up" rights.
John W. Kluge, Chairman of Metromedia International Group, said, "This is an important day for Metromedia International Group in executing our strategy of building a global communications company. We are taking a giant step forward in merging with PLD Telekom. The combination of their telephony assets with our cable and telephony services will enable us to provide the communications links to deliver voice, data and video services in these emerging markets."
Stuart Subotnick, President and Chief Executive Officer, continued, "Metromedia International Group's vast experience operating in the former Soviet Union, Eastern Europe and China convinces us that the demand for viable, modern communications infrastructure and services remains strong. Even in countries experiencing economic downturns, telecommunications services are essential and we have seen increased subscribers despite these challenging times.
"PLD Telekom has strong operating businesses that employ state of the art technology and they are known for providing high quality products and excellent customer service. There are tremendous synergies between our two companies and we look forward to joining forces and creating new opportunities to expand our Company," Mr. Subotnick concluded.
Commenting on the announcement, Rupert Murdoch, Chairman and Chief Executive Officer of News Corporation Limited, said, "News Corp. is pleased to be a part of the merger between two companies poised to capitalize on the growth of telecommunications and cable services in Eastern Europe, China and the republics of the former Soviet Union."
James Hatt, Chairman and Chief Executive Officer of PLD Telekom, said, "This merger is a tremendous opportunity for PLD Telekom's shareholders. The combination of Metromedia International Group and PLD Telekom will form a company with attractive assets, working capital and a talented management team with the vision to create a global telecommunications company for the next millennium."
In addition, holders of PLD Telekom Senior and Convertible Notes have agreed to an exchange for new Metromedia Notes, which includes a reduction in interest rate and interest payments accreting for 2 1/2 years. Further, the holders of PLD Telekom's Revolving Credit Notes have agreed to restructure these short-term debt obligations.
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