Section 1 Registrants Business and Operations
Item 1.01 Entry Into a Material Definitive Agreement.
Agreement and Plan of Merger
On July 9, 2017, Hawaiian Telcom Holdco, Inc. (the Company) entered into an Agreement and Plan of Merger (the Merger Agreement) with Cincinnati Bell Inc., an Ohio corporation (Parent), and Twin Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary of Parent (Merger Sub).
The Merger Agreement provides that, subject to the terms and conditions thereof, Merger Sub will be merged with and into the Company (the Merger) with the Company continuing as the surviving corporation in the Merger (the Surviving Corporation). At the effective time of the Merger (the Effective Time) each outstanding share of common stock of the Company (other than shares owned by the Company, Parent, Merger Sub or any direct or indirect wholly owned subsidiary of the Company or Parent, and shares whose holders seek appraisal and comply with all related statutory requirements of the General Corporation Law of the State of Delaware) will cease to be outstanding and will be converted into the right to receive any one of the following forms of consideration (in each case without interest and subject to any applicable tax withholding) (the Merger Consideration), the type of such Merger Consideration being at the election of the holder thereof: (a) 1.6305 fully paid and nonassessable common shares, par value $0.01 per share, of Parent (the Parent Common Shares) (the Share Consideration), (b) $0.6522 fully paid and nonassessable Parent Common Shares plus $18.45 in cash (the Mixed Consideration), or (c) $30.75 in cash (the Cash Consideration). Each holder of such common stock of the Company shall have the right, subject to the terms and conditions of the Merger Agreement, to specify the number of shares of stock with respect to which such holder will receive the Share Consideration, Mixed Consideration or Cash Consideration. Under the terms and conditions of the Merger Agreement, both the election to receive the Cash Consideration and the election to receive the Share Consideration will be subject to proration and adjustment procedures intended to ensure that the total amount of cash paid, and the total number of Parent Common Shares issued, in the Merger, as a whole, will equal as nearly as practicable the total amount of cash and number of Parent Common Shares that would have been paid and issued if all Company stockholders received the Mixed Consideration. Each share as to which the holder fails to make an election will be converted into the right to receive the Mixed Consideration.
Upon the consummation of the Merger, (a) restricted stock units granted on or after January 1, 2017 that do not provide for automatic vesting upon the consummation of the Merger (i.e., double trigger awards) will each be converted into a time-based restricted stock unit of Parent based on an exchange ratio derived from the Mixed Consideration in accordance with the terms of the Merger Agreement, and (b) all other restricted stock units (which shall all accelerate as a result of the Merger in accordance with their terms) (Cash-Out RSUs) will each be converted into the right to receive in respect of each share of common stock of the Company subject to such Cash-Out RSU (i) the Merger Consideration and (ii) a cash payment equal to any accrued dividend equivalents in respect of each such restricted stock unit, each in accordance with the terms of the Merger Agreement. Holders of Cash-Out RSUs will be entitled to elect the Share Consideration, Mixed Consideration or Cash Consideration with respect to each share of common stock of the Company subject to their Cash-Out RSUs. Each share of Company common stock subject to a Cash-Out RSU with respect to which no election is made will receive the Mixed Consideration.
The board of directors of the Company (the Board) approved, and declared to be advisable, fair to and in the best interests of the Companys stockholders, the Merger Agreement and the transactions contemplated thereby, including the Merger. Stockholders of the Company will be asked to vote on the adoption of the Merger Agreement at a special
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stockholders meeting that will be held on a date to be announced. The closing of the Merger is subject to the adoption of the Merger Agreement by the affirmative vote of a majority of the outstanding shares of common stock of the Company (the Stockholder Approval).
In addition to the Stockholder Approval condition, consummation of the Merger is subject to various conditions, including (a) the approval of the listing on the New York Stock Exchange of the common shares of Parent issuable as Merger Consideration, (b) the effectiveness of the Form S-4 filed by Parent with the Securities and Exchange Commission (the SEC) to register the common shares of Parent issuable as Merger Consideration, (c) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (d) the receipt of applicable consents, approvals or waivers (or the expiration of applicable waiting periods) from the Federal Communications Commission, state public service or state public utility commissions (including the Public Utilities Commission of the State of Hawaii), and certain governments of localities in connection with the provision of telecommunication and media services, (e) the absence of any order, injunction, law or action by a governmental entity preventing or prohibiting the consummation of the Merger, (f) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain materiality qualifiers), (g) performance of material obligations in the Merger Agreement in all material respects, and (h) the absence of a material adverse effect on the Company or Parent. Consummation of the Merger is not subject to a financing condition.
The Merger Agreement contains a no-shop provision whereby, subject to certain exceptions, the Company will generally be prohibited from (a) directly or indirectly soliciting, initiating or knowingly encouraging, inducing or facilitating, or participating in any discussions or negotiations with respect to, or providing non-public information in connection with, any acquisition proposal or any inquiry or proposal that may reasonably be expected to lead to an acquisition proposal, (b) withdrawing (or modifying in any manner adverse to Parent), or proposing publicly to withdraw (or to modify in any manner adverse to Parent), the approval or recommendation of the Board that the Companys stockholders adopt the Merger Agreement, and (c) adopting, recommending or declaring advisable, or proposing publicly to adopt, recommend or declare advisable, any acquisition proposal or agreement relating to an acquisition proposal. The no-shop provision is subject to a fiduciary out provision that allows the Company, under certain circumstances and in compliance with certain obligations, to provide non-public information and engage in discussions and negotiations with respect to an acquisition proposal that would reasonably be expected to lead to a superior proposal and, until Stockholder Approval is obtained, to change the recommendation of the Board. If the Board changes its recommendation, the Company will, unless Parent terminates the Merger Agreement, be required to submit the Merger Agreement to a vote of stockholders at the Company stockholders meeting notwithstanding the Boards change of recommendation.
The Merger Agreement contains certain termination rights for both the Company and Parent, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company may be required to pay Parent a termination fee in the amount equal to $11.94 million. In addition, subject to certain exceptions and limitations, either party may terminate the Merger Agreement if the Merger is not consummated by October 9, 2018, subject to possible extension until January 9, 2019 to allow for the completion of certain regulatory approvals or if the Stockholder Approval has not yet been obtained.
The Company has made certain representations, warranties and covenants in the Merger Agreement, including, among others, covenants (a) to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time, (b) not to engage in certain types of transactions during this period unless agreed to in writing by Parent, (c) to convene and hold a meeting of its stockholders for the purpose of obtaining the Stockholder Approval and (d) to use its reasonable best efforts to obtain certain regulatory approvals.
Concurrently with the execution of the Merger Agreement, Parent and Twin Haven (as defined below) entered into a voting agreement pursuant to which, among other things, Twin Haven agreed to vote in favor of adoption of the Merger Agreement the lesser of (a) 25% of the outstanding shares of common stock of the Company or (b) the total number of shares of common stock of the Company then held by Twin Haven. The voting agreement will terminate on the earlier of (i) the conclusion of the meeting at which the Merger Agreement is submitted to a vote of the Companys stockholders and at which Twin Haven votes its shares as specified in the voting agreement and (ii) the termination of the Merger Agreement in accordance with its terms. The Company is not a party to such voting agreement.
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The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts (such disclosures include information that has been included in the Companys public disclosures, as well as additional non-public information), and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.
Investors are not third-party beneficiaries under the Merger Agreement (except for the right of holders of common stock of the Company to receive the Merger Consideration from and after the consummation of the Merger) and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures.
A copy of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference thereto. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement.
Amendments to Nomination, Standstill and Support Agreement
On July 9, 2017, the Company entered into Amendment No. 1 to Nomination, Standstill and Support Agreement (the Twin Haven Amendment) with Twin Haven Special Opportunities Fund III, L.P., Twin Haven Special Opportunities Partners III, L.L.C., Twin Haven Special Opportunities Fund IV, L.P., Twin Haven Special Opportunities Partners IV, L.L.C. and Twin Haven Capital Partners, L.L.C. (collectively, Twin Haven). The Twin Haven Amendment amends the Nomination, Standstill and Support Agreement, dated as of Mach 14, 2016, to provide that, with respect to the transactions contemplated by the Merger Agreement and Twin Havens voting agreement with Parent, (a) the obligation of Twin Haven and its affiliates to vote in accordance with the recommendation of the Board shall apply only with respect to the lesser of (i) all of the voting securities owned by Twin Haven and its affiliates, directly or indirectly, or (ii) the portion of such voting securities equal to not more than 25% of the aggregate voting securities then issued and outstanding, (b) Twin Haven will not be required to vote in accordance with the recommendation of the Board to the extent doing so would violate the terms of its voting agreement with Parent and (c) entry into and compliance with the voting agreement with Parent will not be deemed to violate the terms and conditions of Twin Havens Nomination, Standstill and Support Agreement. The Twin Haven Amendment also provides that the Company will reimburse Twin Havens reasonable and documented costs and expenses, up to a maximum of $50,000, incurred in connection with entering into the voting agreement with Parent, the Twin Haven Amendment and the transactions contemplated thereby.
A copy of the Twin Haven Amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference thereto. The foregoing description of the Twin Haven Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement.
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