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)
January 28, 2001
EasyLink Services Corporation
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(Exact name of registrant as specified in its charter)
Delaware 000-26371 13-3787073
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
399 Thornall Street, 6th Floor
Edison, NJ 08837
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(Address of principal executive offices)
Registrant's telephone number, including area code (732) 906-2000
N/A
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Former Name or Former Address, if Changed Since Last Report
ITEM 5. OTHER EVENTS
Proposed Debt Restructuring
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EasyLink Services Corporation ("EasyLink" or the "Company") today announced that
it is seeking to restructure substantially all of approximately $86.2 million of
outstanding indebtedness, including approximately $10.7 million of capitalized
future interest obligations. The Company is currently in discussions with
holders of its debt relating to the proposed restructuring. To date, the holders
of approximately 70% of this debt have expressed interest in completing a
restructuring on the terms discussed.
Management seeks to restructure substantially all of the debt. If all of the
debt were successfully eliminated on the currently proposed terms, the Company
would pay approximately $2.0 million in cash and issue up to 35 million shares
of its Class A common stock, including the shares issued to fund the cash
payment. The number of shares to be exchanged for each class of debt was
determined based on a deemed per share price of between $2.00 and $3.00.
The completion of the restructuring is subject to the satisfaction of certain
conditions, including raising the capital necessary for the cash restructuring
payments; completing the restructuring by March 31, 2003 unless extended;
restructuring a minimum of 85% of the $86.2 million of debt on terms similar
within each class of debt; complying with applicable Nasdaq stock market rules
in connection with the shares to be issued pursuant to the restructuring; and
entering into definitive agreements with the creditors holding the debt subject
to this restructuring. The Company is also requesting creditors to which it owes
approximately $775,000 in cash interest payments to defer these payments pending
completion of the restructuring.
NASDAQ Listing
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In order to meet Nasdaq listing requirements, EasyLink must add a third
independent director to the audit committee of its board of directors on or
before March 31, 2003 and the bid price of the Company's Class A common stock
must close at $1.00 per share or more for a minimum of 10 consecutive trading
days by March 24, 2003. If EasyLink does not meet these conditions by these
dates, the Company will seek an extension or further relief from Nasdaq's Staff
or appeal to Nasdaq's Listing Qualifications Panel.
Other - Legal Matters
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In connection with the termination of an agreement to sell the portal operations
of the Company's discontinued India.com business, the Company brought suit
against a broker that it had engaged in connection with the proposed sale of the
portal operations alleging, among other things, breach of contract and
misrepresentation. The broker brought a counterclaim against the Company for a
brokerage fee that would have been payable on the closing of the proposed sale.
The court entered a judgment in the amount of $931,000 against the Company. The
Company has filed a motion to alter the judgment and intends to appeal the
decision.
This Form 8-K may contain statements of a forward-looking nature relating to the
future events or the future financial results of EasyLink Services Corporation.
Investors are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such statements,
investors should specifically consider the various factors that could cause
actual events or results to differ materially from those indicated from such
forward-looking statements. These include: the risk that we will be unable to
complete the proposed restructuring of our outstanding debt on favorable terms
and conditions or at all; historic and continuing losses; the need to raise
additional capital; the ability to continue as a going concern is dependent upon
the ability to generate sufficient cash flow to meet our obligations on a timely
basis, to obtain additional financing or refinancing as may be required, and
ultimately to achieve profitable operations; significant leverage; the ability
to attract additional customers or to expand services sold to existing
customers; the ability to maintain and grow revenues among existing and future
customers; the ability to successfully implement our business strategy;
significant competition; the risks of international operations, including
regulatory uncertainties; the risks inherent in an acquisition strategy; the
risks inherent in integrating the STI and EasyLink businesses; and the risk of
being delisted from Nasdaq. These and other risks and uncertainties are
described in more detail in the Company's most recent prospectus filed with the
Securities and Exchange Commission and in subsequent filings with the Securities
and Exchange Commission.
SIGNATURE
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.
Dated: January 28, 2003
EASYLINK SERVICES CORPORATION
By s/Thomas Murawski
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Thomas Murawski, Chief Executive Officer
and President