SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): DECEMBER 23, 2002
TALK AMERICA HOLDINGS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 000-26728 23-2827736
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(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
TALK AMERICA HOLDINGS, INC.
12020 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(703) 391-7500
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
ITEM 5. OTHER EVENTS
On December 23, 2002, by letter agreement, Talk America Holdings, Inc. (the
"Company") and America Online, Inc. ("AOL") amended certain provisions of the
Restructuring and Note Agreement, dated September 19, 2001 (the "Restructuring
Agreement"), between them (the "Amendment"). Pursuant to the Amendment, the
maturity date for the Convertible Notes (the "8% Convertible Notes") issued
under the Restructuring Agreement was advanced to September 19, 2006 from 2011,
and the Company's right to elect to pay a portion of the interest on the 8%
Convertible Notes in kind rather than in cash was eliminated.
In addition, certain limitations on the Company's purchase of its
outstanding subordinated indebtedness ("Sub Debt") and common stock were
amended, to permit the Company, through September 30, 2003, to: (i) repurchase
outstanding Sub Debt provided it does not pay more than 80% of the face amount
and, for every dollar used to repurchase Sub Debt, it prepays $.50 of principal
amount of 8% Convertible Notes; and (ii) purchase shares of its common stock,
provided it purchases the shares at or below market value and it concurrently
purchases an equal number of shares of the common stock from AOL. The aggregate
amount that the Company may utilize with respect to both the repurchase of Sub
Debt and of common stock cannot exceed $10 million.
As a consequence of the Amendment, the Company expects to record an
extraordinary non-cash gain of approximately $25.4 million from the decrease in
the future accrued interest relating to the 8% Convertible Notes which will be
reflected as a $25.4 million reduction in long-term debt. As a further
consequence, the Company will begin recording the interest expense associated
with the 8% Convertible Notes on its income statement. As of December 23, 2002
and reflecting the Amendment, the Company had $100.9 million in total debt
outstanding, including $30.1 million principal amount of the 8% Convertible
Notes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBITS.
10.1 Letter Agreement, dated as of December 23, 2002, between Talk America
Holdings, Inc. and America Online, Inc. (filed herewith).
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.
TALK AMERICA HOLDINGS, INC.
Date: December 23, 2002 By: /s/ Aloysius T. Lawn, IV
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Name: Aloysius T. Lawn, IV
Title: Executive Vice President -
General Counsel and Secretary
EXHIBIT INDEX
Exhibit Number Description
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10.1 Letter Agreement, dated as of December 23, 2002, between Talk America
Holdings, Inc. and America Online, Inc. (filed herewith).