Item 1.01 Entry into a Material Definitive Agreement.
1. Senior Secured Credit Facilities
On June 6, 2014
, in connection with the Merger (as defined below), NTS, Inc.
corporation ("NTS"), entered into a credit agreement and related security
and other agreements with Goldman Sachs BDC, Inc.
, as administrative agent and
collateral agent, that provides senior secured financing (the "Credit
Facilities") of up to $45 million
, consisting of (a) a term loan facility in an
aggregate principal amount of $40 million
, with a maturity of five years; and
(b) a revolving credit facility in an aggregate principal amount of up to $5
, with a maturity of five years. In addition, NTS may request one or more
incremental term loan facilities up to the sum of $20 million
, subject to
certain conditions and receipt of commitments by existing or additional lenders.
Proceeds of the term loans drawn on the closing date were used to consummate the
Merger (as defined below), to pay off NTS' existing credit facility and to pay
fees and expenses relating to the consummation of the Merger and the Credit
Facilities. The revolving facility was undrawn as of the closing date of the
Interest Rates and Fees
Borrowings under the Credit Facilities bear interest at a rate equal to (a) a
LIBOR rate determined by reference to the costs of funds for Eurodollar deposits
for the interest period relevant to such borrowing, adjusted for certain
additional costs, subject to a 1.25% floor in the case of term loans or (b) in
the event that a lender determines that changes in market conditions or law make
it impracticable to fund or maintain its portion or the loans at the LIBOR rate,
a base rate determined by reference to the highest of (i) 2.25%, (ii) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System
plus 0.50% and (iii) the "Prime Rate" as
published by the Wall Street Journal
, in each case plus an applicable margin.
The applicable margin for borrowings is (a) 9.0% with respect to Eurodollar rate
borrowings and 8.0% with respect to base rate borrowings under the term loan
facility and the revolving credit facility.
In addition to paying interest on outstanding principal under the Credit
Facilities, NTS is required to pay customary agency fees, closing fees and fees
on the unused portion of the revolving credit facility.
Amortization and Prepayments
The term loan will require scheduled quarterly payments of $100,000
with the fiscal quarter ending June 30, 2014
, with the balance paid at maturity.
In addition, NTS is required to prepay outstanding term loan borrowings, subject
to certain exceptions, with:
• 75% (which percentage will be reduced to 25% if NTS attains a certain leverage
ratio) of NTS' annual excess cash flow (as defined under the Credit
• 100% of the net cash proceeds of certain non-ordinary course asset sales,
dispositions of property or casualty events, in each case subject to certain
exceptions and provided that NTS may reinvest such proceeds within 360 days,
subject to certain conditions;
. . .
Item 1.02 Termination of a Material Definitive Agreement.
On June 6, 2014
, in connection with the closing of the Merger (as defined
below), NTS terminated the Term Loan, Guarantee and Security Agreement, dated as
of October 6, 2011
, by and among ICON Agent, LLC
(as agent for the lenders
signatory thereto), Xfone, Inc.
(as a guarantor), Xfone USA
, Inc., NTS
, Gulf Coast Utilities, Inc.
, ExPeTel Communications, Inc.
NTS Construction Company
, Garey M. Wallace Company, Inc.
, Midcom of Arizona,
, Communications Brokers, Inc.
, and NTS Management Company, LLC
borrower), and the other credit parties signatory thereto (the "Credit
Agreement"). In connection with such termination, the borrowers under the Credit
Agreement are required to pay a prepayment fee of 3% of the principal amount of
the loan thereunder.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On June 6, 2014
, T3 North Intermediate Holdings, Inc.
(f/k/a T3 North
Intermediate Holdings, LLC
, "Holdings"), an affiliate of Tower Three Partners
("Tower Three") completed the previously announced acquisition of NTS
through the merger of North Merger Sub, Inc.
, a Nevada
corporation and a
wholly-owned subsidiary of Holdings ("Merger Sub"), with and into NTS (the
"Merger"), with NTS continuing as the surviving corporation and becoming a
direct wholly owned subsidiary of Holdings, pursuant to the Agreement and Plan
of Merger, dated as of October 20, 2013
, by and among Holdings, NTS and Merger
Sub (as amended, the "Merger Agreement"). The Merger Agreement was approved and
adopted by NTS' stockholders at a special meeting held on February 26, 2014
On the terms and subject to the conditions set forth in the Merger Agreement:
(1) each share of common stock, par value $0.001
per share, of NTS (the "NTS
Common Stock") issued and outstanding immediately prior to the effective time of
the Merger (other than the Rollover Shares (as defined below), shares of NTS
Common Stock owned by NTS or any of its subsidiaries as treasury stock or shares
of NTS Common Stock owned directly by Holdings, Merger Sub or any affiliate of
Holdings) was cancelled and ceased to have any rights except the right to
per share in cash without interest and less any applicable tax
withholding; (2) each option to acquire NTS Common Stock outstanding and
unexercised immediately prior to the effective time of the Merger was cancelled
and extinguished and converted into the right to receive cash consideration
equal to the product of (a) the total number of shares of NTS Common Stock
previously subject to such option, and (b) the excess, if any, of $2.00
share over the exercise price per share of NTS Common Stock previously subject
to such option, less any applicable tax withholding; and (3) all warrants to
purchase NTS Common Stock outstanding immediately prior to the effective time of
the Merger were cancelled, and extinguished and converted into the right to
receive cash consideration equal to the product of (x) the total number of
shares of NTS Common Stock previously subject to such warrant, and (y) the
excess, if any, of $2.00
per share over the exercise price per share of NTS
Common Stock previously subject to such warrant, less any applicable tax
Pursuant to the terms of a rollover agreement entered into in connection with
the execution of the Merger Agreement, certain shares of NTS Common Stock
beneficially owned by Guy Nissenson
, the Company's President and Chief Executive
Officer (the "Rollover Shares") were, prior to the effective time of the Merger,
exchanged by Mr. Nissenson
for shares of capital stock of an affiliate of
Trading in NTS Common Stock on the NYSE MKT LLC
(f/k/a NYSE Amex LLC
, the "NYSE
MKT") has been suspended as of the close of trading on June 6, 2014
. Trading in
NTS Common Stock on the Tel Aviv Stock Exchange Ltd.
will be suspended as of the
opening of trading on June 8, 2014
The foregoing description of the Merger Agreement and the Merger does not
purport to be complete and is qualified in its entirety by reference to the full
text of the Merger Agreement. A copy of the Merger Agreement was filed as
Exhibit 2.1 to NTS's Current Report on Form 8-K filed with the Securities and
(the "SEC") on October 21, 2013
. The first amendment to the
. . .
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
The information set forth in Item 2.01 is incorporated herein by reference.
On June 6, 2014
, in connection with the Merger, NTS notified the NYSE MKT that
the Merger had been completed and requested that trading of NTS Common Stock on
the NYSE MKT be suspended as of the close of trading on June 6, 2014
. NTS also
requested that the NYSE MKT file with the SEC
an application on Form 25 to
delist NTS Common Stock and deregister NTS Common Stock under Section 12(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). NTS
intends to file with the SEC
a Form 15 to suspend NTS's reporting obligations
under Sections 13 and 15(d) of the Exchange Act as promptly as practicable.
Item 3.03 Material Modifications to Rights of Security Holders.
The information set forth in Items 2.01 and 5.03 is incorporated by reference
Effective upon the closing of the Merger, NTS's stockholders immediately prior
to the effective time of the Merger ceased to have any rights as stockholders of
NTS (other than their right to receive the applicable merger consideration).
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
In connection with the Merger, each of the following members of the board of
directors of NTS resigned from the board of directors of NTS, and all committees
thereof: Guy Nissenson
, Shemer S. Schwarz
, Arie Rosenfeld
, Timothy M. Farrar
Alan L. Bazaar
, Don Carlos Bell III
, Andrew J. MacMillan
, Jeffrey E. Eberwein
and Richard K. Coleman
, Jr. As of the effective time of the Merger, Holdings, as
the sole stockholder of NTS, elected William D. Forrest
as the sole member of
NTS' board of directors.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Effective upon the closing of the Merger, the articles of incorporation and
bylaws of NTS were amended and restated in their entirety. The Amended and
Restated Articles of Incorporation and the Amended and Restated Bylaws of NTS
are attached hereto as Exhibits 3.1 and 3.2, respectively, and are incorporated
by reference herein.
Item 9.01 Financial Statements and Exhibits.
3.1 Amended and Restated Articles of Incorporation of NTS, Inc.
3.2 Amended and Restated Bylaws of NTS, Inc.
*Incorporated by reference.