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 5, 2002
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McLEODUSA INCORPORATED
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-20763 42-1407240
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
McLeodUSA Technology Park
6400 C Street S.W., P.O. Box 3177
Cedar Rapids, IA 52406-3177
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 790-7800
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(Former Name or Former Address, if Changed Since Last Report)
Item 3. Bankruptcy or Receivership.
As previously reported, on January 31, 2002, McLeodUSA Incorporated (the
"Company") filed a petition for reorganization under Chapter 11 of the
United States Bankruptcy Code, Case No. 02-10288, in the U.S. Bankruptcy
Court for the District of Delaware located in Wilmington, DE (the "Court").
The filing involved only the parent company, which is a holding company
without any business operations of its own. None of the Company's direct or
indirect subsidiaries were parties to the Chapter 11 case or any related
bankruptcy, reorganization or liquidation proceedings. During the course of
the proceeding, the Company operated its business and managed its
properties and assets as a debtor in possession. On January 31, 2002, the
Company also filed its pre-negotiated plan of reorganization (as
subsequently amended and modified, the "Plan"). On March 28, 2002, the
Company announced that its pre-negotiated Plan had been accepted by all
classes entitled to vote on the Plan by a press release of the same date, a
copy of which is filed herewith as Exhibit 99.2 and is incorporated by
reference herein.
On April 5, 2002, the Court entered an order confirming the Plan. A copy of
the order confirming the Plan is filed herewith as Exhibit 2.1 (the
"Confirmation Order"). On April 5, 2002, the Company issued a press release
related to the foregoing and a copy is filed herewith as Exhibit 99.3 and
is incorporated by reference herein. On April 16, 2002, the Plan became
effective, and the Company emerged from Chapter 11 protection pursuant to
the terms of the Plan.
The Plan is incorporated herein by reference to Exhibit 2.2 filed herewith.
A description of the amended and modified Plan is set forth in the
Confirmation Order and the Disclosure Statement with Respect to Amended
Plan of Reorganization of McLeodUSA Incorporated (the "Disclosure
Statement"), a copy of which is included as Exhibit 99.1 to the Company's
Periodic Report on Form 8-K filed with the United States Securities and
Exchange Commisssion (the "Commission") on March 5, 2002. The principal
provisions of the Plan are as follows:
o Holders of the Company's senior notes received their pro rata share
of $670 million in cash, $175 million of new convertible preferred
stock ("New Series A Preferred Stock") which is convertible into
common stock representing 15% of the reorganized McLeodUSA common
stock, and 5-year warrants (the "New Warrants") to purchase an
additional 6% of common stock for $30 million. A description of the
terms of the New Series A Preferred Stock and a copy of the
Certificate of Designations relating to the New Series A Preferred
Stock are included in the Company's Registration Statement on Form
8-A filed with the Commission on April 15, 2002. A copy of the
Warrant Agreement, dated as of April 12, 2002, between the Company
and Wells Fargo Bank Minnesota, NA, as warrant agent, relating to
the New Warrants is filed herewith as Exhibit 4.2.
o Forstmann Little & Co. ("Forstmann Little") made a $175 million new
equity investment in the Company in exchange for (i) approximately
23% of the reorganized McLeodUSA common stock , (ii) New Warrants to
purchase an additional 6% of common stock for $30 million and (iii)
10 shares of the Company's Series B Preferred Stock (the "Series B
Preferred Stock"), which generally provides Forstmann Little with the
right to elect two members of the Board of Directors of the Company
and certain board observation rights, subject to certain conditions.
A copy of the Certificate of Designations with respect to the Series
B Preferred Stock is filed herewith as Exhibit 3.1.
o The Company entered into a $110 million revolving credit facility
(which may be increased to $160 million), expiring on May 31, 2007,
with a banking syndicate and J.P. Morgan Chase Bank, as agent, a copy
of which is filed herewith as Exhibit 4.1.
o The Company's old Series D and Series E preferred stock were
converted into approximately 35% of the reorganized McLeodUSA common
stock. The Company's old Series A preferred stock was converted into
approximately 10% of the reorganized McLeodUSA common stock.
o Holders of the Company's old Class A common stock and any allowed
securities claims are entitled to a pro rata distribution of shares
of new common stock representing approximately 17% of reorganized
McLeodUSA common stock.
As of March 29, 2002, there were 627,742,961 shares of the Company's old
common stock ,1,149,375 shares of the Company's old series A preferred
stock, 275,000 shares of the Company old Series D preferred stock and
125,000 shares of the Company's old Series E preferred stock issued. Under
the provisions of the Plan, the outstanding pre-Chapter 11 common stock and
preferred stock and all of the Company's senior notes were canceled, and
the Company made the distributions described in its press release dated
April 17, 2002, a copy of which is filed herewith as Exhibit 99.4 and
incorporated by reference herein. As described in such press release,
McLeodUSA is not allowed to make any distribution to holders of the
Company's old common stock under the Plan until the purported securities
claims are resolved or the Court establishes a reserve for a portion of the
available shares and permits the distribution of the remainder. The purpose
of such a reserve is to retain new common stock in an amount equal to 100%
of the distribution to which disputed claims would be entitled if their
claim was allowed in full. In proofs of claims filed with the Court, the
securities claimants allege their claims exceed $300 million. On April 12,
2002, McLeodUSA filed a motion to establish a reserve for the securities
claims. That motion will be heard by the Court on April 29, 2002. Because
McLeodUSA believes the securities class action claims are without merit,
the motion seeks to set the reserve at zero. In the alternative, the motion
seeks to have the Court establish a minimal reserve of between 1.5 million
to 4.6 million shares of the 54,775,663 shares of new common stock to be
distributed to holders of the Company's old Class A common stock and any
allowed securities claims. An additional 65,173,797 shares of the new
common stock have been reserved for issuance pursuant to options to
purchase new common stock granted under the Company's new management
incentive plan adopted pursuant to the Plan.
The Company's new common stock and New Series A Preferred Stock are listed
on the Nasdaq National Market.
A statement of the assets and liabilities of the Company on a historical
cost basis is contained in the Disclosure Statement which is incorporated
by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
DESCRIPTION
(c) Exhibits.
2.1 Findings of Fact, Conclusions of Law, and Order Confirming
Plan of Reorganization of McLeodUSA Incorporated.
2.2 First Amended Plan of Reorganization of McLeodUSA Incorporated
dated April 4, 2002.
3.1 Series B Preferred Stock Certificate of Designation.
4.1 Credit Agreement, dated as of April 16, 2002, by and
among McLeodUSA Incorporated, a Delaware corporation, the
lenders party thereto and JPMorgan Chase Bank, as Agent.
4.2 Warrant Agreement, dated as of April 12, 2002, between
McLeodUSA Incorporated and Wells Fargo Bank Minnesota, NA,
as warrant agent.
99.1 Disclosure Statement With Respect to Amended Plan of
Reorganization of McLeodUSA Incorporated (incorporated by
reference to Exhibit 99.1 to the Company's Periodic
Report on Form 8-K dated March 5, 2002).
99.2 Press Release issued by McLeodUSA Incorporated on March 28, 2002.
99.3 Press Release issued by McLeodUSA Incorporated on April 5, 2002.
99.4 Press Release issued by McLeodUSA Incorporated on April 17, 2002.
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.
Date: April 22, 2002 McLEODUSA INCORPORATED
By: /s/ RANDALL RINGS
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Randall Rings
Group Vice President-Law
EXHIBIT INDEX
2.1 Findings of Fact, Conclusions of Law, and Order Confirming
Plan of Reorganization of McLeodUSA Incorporated.
2.2 First Amended Plan of Reorganization of McLeodUSA Incorporated
dated April 4, 2002.
3.1 Series B Preferred Stock Certificate of Designation.
4.1 Credit Agreement, dated as of April 16, 2002, by and
among McLeodUSA Incorporated, a Delaware corporation, the
lenders party thereto and JPMorgan Chase Bank, as Agent.
4.2 Warrant Agreement, dated as of April 12, 2002, between
McLeodUSA Incorporated and Wells Fargo Bank Minnesota,
NA, as warrant agent.
99.2 Press Release issued by McLeodUSA Incorporated on March 28, 2002.
99.3 Press Release issued by McLeodUSA Incorporated on April 5, 2002.
99.4 Press Release issued by McLeodUSA Incorporated on April 17, 2002.