Attached files
| file | filename |
|---|---|
| EX-2.1 - EXHIBIT 2.1 - ARBINET Corp | v202001_ex2-1.htm |
| EX-99.1 - EXHIBIT 99.1 - ARBINET Corp | v202001_ex99-1.htm |
| EX-99.3 - EXHIBIT 99.3 - ARBINET Corp | v202001_ex99-3.htm |
| EX-99.2 - EXHIBIT 99.2 - ARBINET Corp | v202001_ex99-2.htm |
| EX-99.4 - EXHIBIT 99.4 - ARBINET Corp | v202001_ex99-4.htm |
| EX-99.5 - EXHIBIT 99.5 - ARBINET Corp | v202001_ex99-5.htm |
UNITED
STATES
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): November 10, 2010
ARBINET
CORPORATION
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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0-51063
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13-3930916
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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460
Herndon Parkway, Suite 150
Herndon, Virginia 20170
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20170
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: 703-456-4100
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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x
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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Item
1.01 Entry into a Material Definitive
Agreement.
On November 10, 2010, Arbinet
Corporation (the “Arbinet”) entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with Primus Telecommunications Group,
Incorporated (“Primus”) and PTG Investments, Inc., a direct
wholly owned subsidiary of Primus (“Merger Sub”), pursuant to which Primus will acquire
Arbinet in a stock transaction. The Merger Agreement provides that,
upon the terms and subject to the conditions set forth in the Merger Agreement,
Merger Sub will merge with and into Arbinet with Arbinet continuing as the surviving corporation
and a wholly-owned subsidiary of Primus (the “Merger”). The Merger Agreement
was unanimously approved by the Board of Directors of Arbinet based upon the recommendation of the
Special Committee of the Board of Directors that was established to evaluate Arbinet’s strategic alternatives, and remains
subject to the approval of the stockholders of Arbinet.
At the effective time of the Merger,
subject to the other provisions of the Merger Agreement, each share of
Arbinet common stock (excluding certain shares)
shall be converted into the right to receive the number of Primus common stock
equal to the exchange ratio. The Merger Agreement provides that the
exchange ratio is equal to the quotient of (x) the quotient of (A)
$28,000,000 (the
“Transaction Amount”),
subject to certain potential upward adjustments, divided by (B) the number of
shares of Arbinet common stock issued and outstanding immediately prior
to the effective time of the Merger plus those shares that may become issuable
as Primus common stock at or after the effective time of the Merger pursuant to
the provisions of the Merger Agreement that address the treatment of Arbinet
equity awards, divided by (y) $9.5464, and rounded to the nearest
ten-thousandth. Based upon the capitalization of Arbinet and Primus at the time
of signing the Merger Agreement and if the closing of the Merger were to have
occurred at the time of signing, the exchange ratio would be expected to result
in each share of Arbinet common stock being exchanged for approximately 0.5259
shares of Primus common stock. Equity awards for Arbinet common stock
outstanding as of the effective time shall be assumed by Primus and converted
into an equity award for Primus common stock, after being adjusted by the
exchange ratio. The parties anticipate that the Merger will be treated as
a tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended. Based on the companies’
capitalization at the timing of signing the Merger Agreement, Arbinet
stockholders would be expected to own approximately 23% of Primus and Primus
stockholders would be expected to own approximately 77% of Primus upon the
closing of the transaction.
The
Merger Agreement contains a “go-shop” provision under which Arbinet may solicit
alternative proposals from third parties during the 45 calendar days beginning
on November 10, 2010 and ending at 11:59 p.m, Eastern time, on December 25,
2010. During the go-shop period, Arbinet and its representatives may initiate,
solicit and/or encourage alternative acquisition proposals from third parties,
provide non-public information and participate in discussions and negotiate with
third parties with respect to alternative acquisition proposals. Upon
the expiration of the go-shop period, Arbinet will be prohibited from soliciting alternative
acquisition proposals from third parties and/or providing information to or
engaging in discussions with third parties regarding alternative acquisition
proposals. The no-shop restrictions, however, are subject to customary
“fiduciary-out” provisions which allow Arbinet under certain circumstances,
prior to the time that Arbinet receives approval of the Merger from its
stockholders, to (i) provide information to, and participate in discussions
with, third parties with respect to unsolicited alternative acquisition
proposals that the Board of Directors of Arbinet has determined would or could
reasonably be expected to, if consummated, result in a transaction more
favorable to Arbinet’s stockholders, and that not taking such action would be
inconsistent with its fiduciary duties and (ii) change the Board of Directors’ recommendation to approve the Merger
(an “Arbinet Recommendation Change”) in
connection with such acquisition proposal or as a result of an unforeseeable
intervening event if not
changing its recommendation would be inconsistent with its fiduciary
duties.
Consummation of the Merger is subject to
customary conditions, including, among others: (i) certain approvals related to the Merger
by the holders of a majority of the outstanding shares of Arbinet common stock
and Primus common stock, respectively; (ii) the absence of any law, order
or injunction prohibiting
the consummation of the Merger or the other transactions contemplated by the
Merger Agreement; (iii) the receipt of specified Federal Communications
Commission regulatory approvals; (iv) the number of appraisal shares for which demands for appraisal
have been made and not been withdrawn shall not exceed 10% of the outstanding
shares of Arbinet common stock immediately prior to the
closing of the Merger, and (v) the absence of any change in the condition
(financial or otherwise), operations, business or properties of Arbinet and
Arbinet subsidiaries that constitutes or is reasonably likely to constitute
an Arbinet material adverse effect. Among other
things, it will be considered an Arbinet material adverse effect if the sum of
the cash and cash equivalents of Arbinet and Arbinet subsidiaries on a
consolidated basis and the marketable securities owned thereby, as of the Determination Date
(defined below), less (x) all indebtedness then outstanding and (y) all unpaid
transaction costs, fees and expenses and gross tax liabilities attributable to
any sale or spin-off of Arbinet’s patentsas contemplated by the Merger Agreement, is less than $9,500,000 (provided that
such $9,500,000 shall be reduced by the actual transaction costs, fees and
expenses and gross tax liabilities attributable to any sale or spin-off of
Arbinet’s patents that have been incurred and actually paid, provided in no
event shall more than $350,000 be subtracted from such $9,500,000), excluding
all costs incurred by Arbinet in connection with the Merger and the transactions
contemplated by the Merger Agreement. “Determination Date” means the last business day of
the preceding month if the third trading day prior to the closing of the Merger
falls between the 1st and the 15th of any calendar month, and as of the 14th day
of the calendar month if the third trading day prior to the closing of the
Merger falls between the 16th and the
last day of the relevant calendar month. Moreover, each party’s obligation to
consummate the Merger is subject to certain other conditions, including the
accuracy of the other party’s representations and warranties (subject to
customary qualifications) and the other party’s material compliance with its
covenants and agreements contained in the Merger Agreement.
2
Arbinet and Primus has each made
customary representations, warranties and covenants in the Merger Agreement,
including, among others, covenants to conduct its businesses in the ordinary
course between the execution and delivery of the Merger Agreement and the
consummation of the Merger and not to engage in certain kinds of transactions or
take certain actions during such period. Notwithstanding the foregoing, the
Merger Agreement permits specific actions to be taken between signing
of the Merger Agreement
and the closing of the
Merger.
The Merger Agreement also provides that,
prior to the consummation of the Merger, Arbinet may either spin-off to its
stockholders, or sell to a third party for cash, Arbinet’s patents and any
rights arising from such patents, subject to certain conditions. If
Arbinet meets the conditions set forth in the Merger Agreement relating to the
potential patent sale, Arbinet may elect that the net proceeds from such sale
will be distributed to its stockholders prior to the closing of the Merger or
added, dollar for dollar, to the Transaction Amount.
The Merger Agreement contains certain
termination rights for both Arbinet and Primus. Upon termination of the Merger
Agreement in the event of an Arbinet Recommendation Change due to a superior
proposal, Arbinet is obligated to pay Primus break-up fees of $1,250,000. In
addition, if the Merger Agreement is terminated by either party due to Arbinet’s
stockholders’ rejection of the Merger, or by
Primus due to Arbinet’s breach, and Arbinet enters into another acquisition
agreement within 18 months of such termination, Arbinet is obligated to pay
Primus break-up fees of $1,250,000. If the Merger Agreement is terminated due
to Arbinet’s stockholders’ rejection of the Merger, or due
to Arbinet’s breach, then Arbinet is obligated to reimburse Primus’s expenses up
to $750,000, in addition to break-up fees, if applicable. If the Merger
Agreement is terminated due to Primus’s breach, then Primus is
obligated to reimburse Arbinet’s expenses up to $750,000.
The foregoing description of the Merger
Agreement is qualified in its entirety by reference to the full text of the
Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto, and is incorporated
by reference into this Current Report on Form 8-K.
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 Arbinet. The representations, warranties and
covenants contained in the Merger Agreement were made only for purposes of the
Merger Agreement and as of specified dates, were solely for the benefit of the
parties to the Merger Agreement, and may be subject to limitations agreed upon
by the contracting parties, including being qualified by confidential
disclosures exchanged between the parties in connection with the execution of
the Merger Agreement. The representations and warranties may have been made for
the purposes of allocating contractual risk between the parties to the Merger
Agreement instead of establishing these matters as facts, 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 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 Arbinet, Primus or Merger Sub or any of their
respective subsidiaries or affiliates. Moreover, information concerning the
subject matter of the representations and warranties may change after the date
of the Merger Agreement, which subsequent information may or may not be fully
reflected in Arbinet’s disclosures.
3
Concurrently
with the execution of the Merger Agreement, a significant stockholder of both
Arbinet and Primus has entered into a Stockholder Support and Voting Agreement
with each of Primus and Arbinet, respectively (the “Voting
Agreements”). Pursuant to the Voting Agreement with Primus, the
stockholder has agreed, in its capacity as a stockholder of Arbinet, to, among
other things, vote its shares of Arbinet common stock in favor of the Merger and
the Merger Agreement. Pursuant to the Voting Agreement with Arbinet, the
stockholder has agreed, in its capacity as a stockholder of Primus, to, among
other things, vote its shares of Primus common stock in favor of the issuance of
shares of Primus common stock in the Merger. The shares subject to the Voting
Agreement with Arbinet represent an aggregate of approximately 9.6% of the
Primus common stock outstanding as of November 9, 2010, and the shares subject
to the Voting Agreement with Primus represent an aggregate of approximately
23.2% of the Arbinet common stock outstanding as of November 9, 2010.
Item
2.02 Results of Operations and Financial
Condition.
On November 11, 2010, Arbinet issued a
press release announcing its financial results for the third quarter ended
September 30, 2010. A copy of the press release is being furnished as
part of this Current Report on Form 8-K as Exhibit 99.2 and is
incorporated herein by reference. The information set forth in the
press release shall not be deemed to be “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
otherwise subject to the liability of that section, and shall not be
incorporated by reference into any registration statement or other document
filed under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such
filing.
Item
8.01 Other Events.
A copy of the press release, issued
November 11, 2010, announcing the execution of the Merger Agreement is attached
as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by
reference.
On November 11, 2010, Arbinet made
available to its employees an email containing information relating to the
Merger Agreement, a copy of which is attached hereto as Exhibit 99.3 and
incorporated herein by reference.
On November 11, 2010, Arbinet made
available to its employees a memorandum addressing frequently asked questions
(FAQs) relating to the Merger Agreement, a copy of which is attached hereto as
Exhibit 99.4 and incorporated herein by reference.
On November 11, 2010, Arbinet made
available to its customers a letter containing information relating to the
Merger Agreement, a copy of which is attached hereto as Exhibit 99.5 and
incorporated herein by reference.
Important
Information and Where to Find It
In
connection with the proposed acquisition, Primus Telecommunications Group,
Incorporated (“Primus”) will file with the Securities and Exchange Commission
(“SEC”) a Registration Statement on Form S-4 that will include a preliminary
proxy statement of Primus and Arbinet Corporation (“Arbinet”) that also
constitutes a preliminary prospectus of Primus. A definitive joint
proxy statement/prospectus will be sent to security holders of both Arbinet and
Primus seeking their approval with respect to the proposed
acquisition. Primus and Arbinet also plan to file other documents
with the SEC regarding the proposed transaction. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders may obtain a free copy of the joint proxy statement/prospectus
(when it becomes available) and other documents filed by Primus and Arbinet with
the SEC, without charge, at the SEC’s web site at www.sec.gov. Copies of the
joint proxy statement/prospectus, once available, and each company’s SEC filings
that will be incorporated by reference in the joint proxy statement/prospectus
may also be obtained for free by directing a request to: (i) Primus tel:
+1.703.748.8050, or (ii) Arbinet via Andrea Rose or Jed Repko at Joele Frank,
Wilkinson Brimmer Katcher tel: +1.212.355.4449.
4
Participants
in the Solicitation
Arbinet,
Primus, and their respective directors, executive officers and other members of
their management and employees may be deemed to be “participants” in the
solicitation of proxies from their respective security holders in connection
with the proposed acquisition. Investors and security holders may obtain
information regarding the names, affiliations and interests of Primus’s
directors, executive officers and other members of its management and employees
in Primus’s Annual Report on Form 10-K for the year ended December 31, 2009,
which was filed with the SEC on April 5, 2010, and amended in a Form 10-K/A
filed with the SEC on April 28, 2010, Primus’s proxy statement for its 2010
annual meeting, which was filed with the SEC on June 14, 2010, and any
subsequent statements of changes in beneficial ownership on file with the
SEC. Investors and security holders may obtain information regarding
the names, affiliations and interests of Arbinet’s directors, executive officers
and other members of their management and employees in Arbinet’s Annual Report
on Form 10-K for the year ended December 31, 2009, which was filed with the SEC
on March 17, 2010, Arbinet’s proxy statement for its 2010 annual meeting, which
was filed with the SEC on April 30, 2010, and any subsequent statements of
changes in beneficial ownership on file with the SEC. These documents
can be obtained free of charge from the sources listed above. Additional
information regarding the interests of these individuals will also be included
in the joint proxy statement/prospectus regarding the proposed transaction when
it becomes available.
Forward-Looking
Statements
This
Current Report on Form 8-K includes “forward-looking statements” as defined by
the Securities and Exchange Commission. All statements, other than statements of
historical fact, included herein that address activities, events or developments
that Arbinet or Primus expects, believes or anticipates will or may occur in the
future, including anticipated benefits and other aspects of the proposed
acquisition, are forward-looking statements. These forward-looking statements
are subject to risks and uncertainties that may cause actual results to differ
materially. Risks and uncertainties that could affect forward-looking
statements include, but are not limited to, the following: the risk that the
acquisition of Arbinet may not be consummated for reasons including that the
conditions precedent to the completion of the acquisition may not be satisfied;
the possibility that the expected synergies from the proposed acquisition will
not be realized, or will not be realized within the anticipated time period; the
risk that Primus’s and Arbinet’s businesses will not be integrated successfully;
the possibility of disruption from the acquisition making it more difficult to
maintain business and operational relationships; any actions taken by either of
the companies, including, but not limited to, restructuring or strategic
initiatives (including capital investments or asset acquisitions or
dispositions); the ability to service substantial indebtedness; the risk factors
or uncertainties described from time to time in Arbinet’s filings with the
Securities and Exchange Commission; and the risk factors or uncertainties
described from time to time in Primus’s filings with the Securities and Exchange
Commission (including, among others, those listed under captions titled
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Liquidity and Capital Resources — Short- and Long-Term Liquidity
Considerations and Risks;” “— Special Note Regarding Forward-Looking
Statements;” and “Risk Factors” in Primus’s annual report on Form 10-K and
quarterly reports on Form 10-Q) that cover matters and risks including, but not
limited to: (a) a continuation or worsening of global recessionary economic
conditions, including the effects of such conditions on our customers and our
accounts receivables and revenues; (b) the general fluctuations in the exchange
rates of currencies, particularly any strengthening of the United States dollar
relative to foreign currencies of the countries where we conduct our foreign
operations; (c) the possible inability to raise additional capital or refinance
indebtedness when needed, or at all, whether due to adverse credit market
conditions, our credit profile or otherwise; (d) a continuation or worsening of
turbulent or weak financial and capital market conditions; (e) adverse
regulatory rulings or changes in the regulatory schemes or requirements and
regulatory enforcement in the markets in which we operate and uncertainty
regarding the nature and degree of regulation relating to certain services; and
(f) successful implementation of cost reduction efforts. Readers are
cautioned not to place undue reliance on forward-looking statements, which speak
only as of their dates. Except as required by law, neither Arbinet nor Primus
intends to update or revise its forward-looking statements, whether as a result
of new information, future events or otherwise.
5
Item
9.01 Financial Statements and
Exhibits.
(d)
Exhibits
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Exhibit
Number
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Description
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2.1+
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Agreement and Plan of Merger dated
November 10, 2010 between Arbinet, Primus Telecommunications
Group, Incorporated, and PTG Investments, Inc.
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99.1
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Press
release dated November 11, 2010 announcing the merger
transaction.
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99.2*
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Press
release dated November 11, 2010 announcing earnings for the third quarter
2010.
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99.3
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Email
to employees of Arbinet dated November 11, 2010 regarding the merger
transaction.
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99.4
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Frequently
asked questions (FAQs) for employees and customers of Arbinet dated
November 11, 2010 regarding the merger transaction.
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99.5
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Letter
to customers of Arbinet dated November 11, 2010 regarding the merger
transaction.
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____________________________________
* Furnished
herewith.
+ Certain
exhibits and schedules to the Agreement and Plan of Merger have been omitted
pursuant to Item601(b)(2) of Regulation S-K. Arbinet will furnish the
omitted exhibits and schedules to theSecurities and Exchange Commission upon
request by the Commission.
6
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.
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Arbinet
Corporation
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By:
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/s/
Christie A. Hill
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Name:
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Christie
A. Hill
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Title:
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General
Counsel and Secretary
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Date:
November 12, 2010
7