- Amended Statement of Ownership: Solicitation (SC 14D9/A)
19 November 2009 - 8:53AM
Edgar (US Regulatory)
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation
Statement under Section 14(d)(4) of the
Securities Exchange Act of 1934
Amendment
No. 3
iPCS, Inc.
(Name of Subject Company)
iPCS, Inc.
(Name of Person(s) Filing
Statement)
Common
Stock, par value $0.01 per share
(Title of Class of
Securities)
44980Y305
(CUSIP Number of Class of
Securities)
Brian J.
ONeil
Senior
Vice President, General Counsel and Secretary
1901
North Roselle Road
Schaumburg, Illinois 60195
(847)
885-2833
(Name, address and
telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
With
copies to:
Paul W.
Theiss, Esq.
William
R. Kucera, Esq.
Bruce F.
Perce, Esq.
Mayer
Brown LLP
71 South
Wacker Drive
Chicago,
Illinois 60606
(312)
782-0600
o
Check the box if the filing relates
solely to preliminary communications made before the commencement of a tender
offer.
This Amendment No. 3 to the
Solicitation/Recommendation Statement on Schedule 14D-9 (this Amendment),
filed with the Securities and Exchange Commission (the SEC) on November 18,
2009, amends and supplements the Solicitation/Recommendation Statement on
Schedule 14D-9 (as amended or supplemented from time to time, the Statement)
filed with the SEC on October 28, 2009 by iPCS, Inc. (the Company),
a Delaware corporation.
The Statement relates to the offer by Ireland
Acquisition Corporation (the Purchaser), a Delaware corporation and a wholly-owned
subsidiary of Sprint Nextel Corporation, a Kansas corporation (Sprint Nextel
or Parent), to purchase all of the issued and outstanding shares of Common
Stock, par value $0.01 per share, of the Company (each, a Share), for $24.00
per Share, in cash to the seller without interest and less any applicable
withholding taxes, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated October 28, 2009 (as amended or supplemented
from time to time, the Offer to Purchase), and in the related Letter of
Transmittal (the Letter of Transmittal which, together with the Offer to
Purchase, each as may be amended or supplemented from time to time,
collectively constitute the Offer). The Offer is further described in a
Tender Offer Statement on Schedule TO (as amended or supplemented from time to
time, the Schedule TO) filed by Parent and the Purchaser with the SEC on October 28,
2009. A copy of each of the Offer to Purchase and the Letter of Transmittal are
attached as Exhibit (a)(1)(A) and Exhibit (a)(1)(B),
respectively, to the Schedule TO, and each is incorporated herein by reference.
The information set forth in the Statement
remains unchanged and is incorporated herein by reference, except that such
information is hereby amended and supplemented to the extent specifically
provided herein. Capitalized terms used, but not defined, in this Amendment
have the meanings ascribed to them in the Statement.
Item 4.
The Solicitation or Recommendation.
Item 4
The Solicitation or Recommendation Opinions of the Companys Financial
Advisors Selected Companies Analysis of the Statement is hereby amended
and supplemented by adding the following after the fourth sentence in the
second paragraph thereof:
This
analysis indicated the following enterprise values and multiples for the
selected companies (with values reflected as nm being calculated multiples
that were deemed to be outliers, and/or not meaningful for purposes of
comparability):
|
|
Enterprise
Value
|
|
Enterprise Value as
Multiple of EBITDA
|
|
Enterprise Value as
Multiple of OpFCF
|
|
|
|
($mm)
|
|
2009E
|
|
2010E
|
|
2009E
|
|
2010E
|
|
Leap
Wireless International
|
|
3,243
|
|
7.0x
|
|
4.9x
|
|
nm
|
|
nm
|
|
MetroPCS
Communications, Inc.
|
|
5,093
|
|
5.7x
|
|
4.4x
|
|
nm
|
|
13.1x
|
|
NTELOS
Holdings Corp.
|
|
1,309
|
|
5.6x
|
|
5.3x
|
|
10.7x
|
|
9.0x
|
|
Shenandoah
Telecommunications Company
|
|
407
|
|
5.2x
|
|
4.8x
|
|
nm
|
|
8.3x
|
|
Sprint
Nextel Corporation
|
|
23,874
|
|
3.6x
|
|
3.7x
|
|
5.2x
|
|
6.5x
|
|
United
States Cellular Corporation
|
|
4,130
|
|
4.3x
|
|
4.5x
|
|
10.6x
|
|
10.9x
|
|
Item 4
The Solicitation or Recommendation Opinions of the Companys Financial
Advisors Selected Transactions Analysis of the Statement is hereby
amended and supplemented by deleting in its entirety the full text of such
section and replacing it with the following:
The Financial Advisors
reviewed transaction values for twenty selected transactions involving the
acquisitions of wireless telecommunications companies. The Financial Advisors
reviewed, among other things, transaction values in the selected transactions,
calculated as the purchase price paid for a target companys equity, plus debt
at book value, preferred stock at liquidation value and
2
minority interests at book value, less cash and
cash equivalents, as multiples of, to the extent publicly available, estimated
forward EBITDA. The Financial Advisors reviewed estimated forward EBITDA for
two periods, FY + 1 and FY + 2. For transactions announced during the first
half of a targets fiscal year, the Financial Advisors designated FY + 1 EBITDA
as the targets then-current fiscal years estimated EBITDA, and FY + 2
EBITDA as the subsequent fiscal years estimated EBITDA. For transactions
announced during the second half of a targets fiscal year, the Financial
Advisors designated FY + 1 EBITDA as the targets estimated EBITDA for the
subsequent fiscal year and FY + 2 EBITDA as the next succeeding fiscal years
estimated EBITDA. Because valuations of wireless telecommunications companies
have declined materially in the last two years, the Financial Advisors reviewed
selected transactions announced since the beginning of 2008 as well as selected
transactions announced since the beginning of 2004. The Financial Advisors then
compared these multiples derived for the selected transactions with
corresponding multiples implied for the Company based on the $24.00 per share
Offer Price. Multiples for the selected transactions were based on publicly
available information at the time of announcement of the relevant transaction.
Estimated financial data for the Company were based both on Company Management
Estimates and Company Wall Street Consensus Estimates. This analysis indicated
the following enterprise values and multiples for the following transactions:
Announcement
|
|
|
|
|
|
Enterprise
Value
|
|
EBITDA Multiple
|
|
Date
|
|
Target
|
|
Acquiror
|
|
($mm)
|
|
FY+1
|
|
FY+2
|
|
Recent Transactions (2008Present)
|
|
|
|
|
|
|
|
|
|
7/28/2009
|
|
Virgin Mobile
USA, Inc.
|
|
Sprint Nextel
Corporation
|
|
738
|
|
5.0x
|
|
4.9x
|
|
5/8/2009
|
|
Alltel Corporation
Divestitures
|
|
AT&T Inc.
|
|
2,350
|
|
na
|
|
na
|
|
11/7/2008
|
|
Centennial
Communications Corporation
|
|
AT&T Inc.
|
|
2,800
|
|
6.5
|
|
na
|
|
6/5/2008
|
|
Alltel Corporation
|
|
Cellco Partnership
d/b/a Verizon Wireless
|
|
28,100
|
|
8.3x
|
|
na
|
|
Other Transactions (Prior to 2008)
|
|
|
|
|
|
|
|
|
|
9/17/2007
|
|
SunCom Wireless
Holdings, Inc.
|
|
Deutsche Telekom AG
|
|
2,386
|
|
11.8x
|
|
9.9x
|
|
7/30/2007
|
|
Rural Cellular
Corporation
|
|
Cellco Partnership
d/b/a Verizon Wireless
|
|
2,670
|
|
9.5x
|
|
9.2x
|
|
6/29/2007
|
|
Dobson Communications
Corporation
|
|
AT&T Inc.
|
|
5,100
|
|
10.2x
|
|
9.3x
|
|
5/20/2007
|
|
Alltel Corporation
|
|
TPG Capital and GS
Capital Partners
|
|
27,500
|
|
9.3x
|
|
8.6x
|
|
4/20/2006
|
|
UbiquiTel Inc.
|
|
Sprint Nextel
Corporation
|
|
1,335
|
|
9.5x
|
|
8.4x
|
|
12/20/2005
|
|
Nextel
Partners, Inc.
|
|
Sprint Nextel
Corporation
|
|
10,000
|
|
13.2x
|
|
10.7x
|
|
11/21/2005
|
|
Alamosa
Holdings, Inc.
|
|
Sprint Nextel
Corporation
|
|
4,330
|
|
10.0x
|
|
9.0x
|
|
11/18/2005
|
|
Midwest Wireless
Holdings, LLC
|
|
Alltel Corporation
|
|
1,075
|
|
8.7x
|
|
na
|
|
8/30/2005
|
|
IWO Holdings Inc.
|
|
Sprint Nextel
Corporation
|
|
427
|
|
8.5x
|
|
na
|
|
8/30/2005
|
|
Gulf Coast Wireless LP
|
|
Sprint Nextel Corporation
|
|
288
|
|
8.1x
|
|
na
|
|
7/11/2005
|
|
US Unwired Inc.
|
|
Sprint Nextel
Corporation
|
|
1,323
|
|
10.9x
|
|
9.2x
|
|
3/17/2005
|
|
Horizon PCS, Inc.
|
|
iPCS, Inc.
|
|
297
|
|
na
|
|
na
|
|
1/10/2005
|
|
Western Wireless
Corporation
|
|
Alltel Corporation
|
|
6,018
|
|
8.1x
|
|
7.6x
|
|
12/15/2004
|
|
Nextel Communications, Inc.
|
|
Sprint Corporation
|
|
45,143
|
|
7.8x
|
|
7.0x
|
|
12/7/2004
|
|
AirGate PCS, Inc.
|
|
Alamosa
Holdings, Inc.
|
|
630
|
|
8.0x
|
|
na
|
|
2/17/2004
|
|
AT&T Wireless
Services, Inc.
|
|
Cingular Wireless, LLC
|
|
45,711
|
|
9.6x
|
|
8.7x
|
|
This analysis
indicated the following implied high, median, mean and low multiples for the
selected transactions, as compared to corresponding multiples implied for the
Company:
3
|
|
Implied
Multiples
for Selected Transactions
|
|
Implied
Multiples for
the Company Based on
$24.00 Per Share Offer Price:
|
|
|
|
High
|
|
Median
|
|
Mean
|
|
Low
|
|
Company
Management
Estimates
|
|
Company
Wall
Street
Consensus
Estimates
|
|
Transaction
Value as Multiple of
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions 2008Present
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA FY + 1
|
|
8.3x
|
|
6.5x
|
|
6.6x
|
|
5.0x
|
|
6.8x
|
|
6.6x
|
|
EBITDA FY + 2
|
|
4.9x
|
|
4.9x
|
|
4.9x
|
|
4.9x
|
|
6.3x
|
|
6.2x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions 2004Present
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA FY + 1
|
|
13.2x
|
|
9.0x
|
|
9.0x
|
|
5.0x
|
|
|
|
|
|
EBITDA FY + 2
|
|
10.7x
|
|
8.8x
|
|
8.5x
|
|
4.9x
|
|
|
|
|
|
Item 4
The Solicitation or Recommendation Litigation Relating to the Offer and
Merger of the Statement is hereby amended and supplemented by adding the
following words after the word respectively in the first sentence
thereof: (collectively, the Circuit Court
Actions).
Item 4 The Solicitation or
Recommendation Litigation Relating to the Offer and Merger of the
Statement is hereby amended and supplemented by adding the following new
paragraph after the last sentence thereof:
On November 17, 2009, the parties to the
Circuit Court Actions executed a Memorandum of Understanding (the Memorandum)
reflecting their agreement to settle the claims asserted in the Circuit Court
Actions, subject to the execution of a Stipulation of Settlement, notice to the
Companys stockholders and approval by the Circuit Court of Cook County,
Illinois. The Memorandum provides, among other things, that the Company shall
make the supplemental disclosures to the Statement that are set forth in this
Amendment. This summary of the Memorandum does not purport to be a complete
description of the terms and conditions thereof and is qualified in its
entirety by reference to the Memorandum, which is filed as Exhibit (e)(50)
to the Statement and is incorporated herein by reference.
Item 5.
Persons/Assets Retained,
Employed, Compensated or Used.
Item 5
Persons/Assets
Retained, Employed, Compensated or Used
of the Statement is hereby
amended and supplemented by deleting the first sentence of the second paragraph
thereof and replacing such sentence with the following:
Under
the terms of UBS engagement letter dated October 16, 2009, the Company
agreed to pay UBS for its financial advisory services in connection with the
transaction an aggregate fee currently calculated to be approximately $4.9
million, $1,000,000 of which was payable in connection with UBS opinion and
the remainder of which is contingent upon consummation of the tender offer.
Item 5
Persons/Assets
Retained, Employed, Compensated or Used
of the Statement is hereby
further amended and supplemented by adding after the words its engagement
letter in the first sentence in the third paragraph thereof the words: dated October 16, 2009.
Item 8.
Additional Information.
Item 8
Additional Information Projected Financial Information of the Statement
is hereby amended and supplemented by deleting the second sentence in the first
paragraph thereof and replacing such sentence with the following:
4
In
addition, the Company provided projected financial information to its financial
advisors, UBS and Morgan Stanley, which information was used by UBS and Morgan
Stanley in performing the discounted cash flow analysis and other financial
analyses described under the caption Item 4 The Solicitation or
Recommendation Opinions of the Companys Financial Advisors.
Item 8
Additional Information Projected Financial Information of the Statement
is hereby further amended and supplemented by deleting in its entirety the
fourth paragraph thereof and replacing such paragraph with the following
paragraph:
The inclusion of the financial projections herein
should not be deemed an admission or representation by the Company, Parent or
the Purchaser that they are viewed by the Company, Parent or the Purchaser as
material information of the Company, and in fact the Company views the
financial projections as non-material because of the inherent risks and
uncertainties associated with such long range forecasts. These financial projections
assume, among other things, that Parent stabilizes its base business in the
near-term, that the Company has access to 4G services (and related capital
investment), whether obtained through the Clearwire litigation or otherwise,
that the Companys monthly service fee per subscriber (CCPU) will remain at or
near current levels and that there are no changes in the iDEN competitive
landscape, whether or not Parent complies with the iDEN Order. These financial
projections also assume no additional net earnings attributable to the use of
the Companys network by customers of Parent or its other PCS affiliates and
use of the networks of Parent or its PCS affiliates by customers of the Company
(data travel), no additional earnings attributable to the termination of Parents
practice of providing free or discounted service on the Companys network to
employees or customers of Parent or its affiliates and no potential benefits
from the Company having a prepaid offering.
Item 8
Additional Information Projected Financial Information of the Statement
is hereby further amended and supplemented by deleting the table and footnotes
following the last paragraph thereof and replacing such table and footnotes
with the following:
Projected
Financial Information
|
|
Fiscal Year Ending December 31,
|
|
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
|
|
(in millions)
|
|
Service
revenue
|
|
$
|
541
|
|
$
|
573
|
|
$
|
612
|
|
$
|
637
|
|
$
|
666
|
|
$
|
690
|
|
$
|
712
|
|
$
|
731
|
|
$
|
747
|
|
Adjusted
EBITDA(1)
|
|
106
|
|
121
|
|
137
|
|
148
|
|
162
|
|
175
|
|
184
|
|
193
|
|
201
|
|
OpFCF(2)
|
|
69
|
|
71
|
|
92
|
|
73
|
|
87
|
|
125
|
|
134
|
|
142
|
|
148
|
|
Unlevered
CF(3)
|
|
35
|
|
36
|
|
60
|
|
40
|
|
48
|
|
81
|
|
86
|
|
91
|
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted EBITDA represents earnings
before interest, taxes, depreciation and amortization, after adding back Sprint
Nextel litigation related expenses.
Adjusted EBITDA as presented in this Statement includes stock based
compensation expenses.
(2)
OpFCF represents Adjusted EBITDA less
capital expenditures.
(3)
Unlevered
CF represents after-tax earnings, plus interest, depreciation and amortization
and Sprint Nextel litigation related expenses, less capital expenditures, less
any increase (or plus any decrease) in working capital.
Item 9.
Exhibits.
Item 9
|
Exhibits
is hereby amended and supplemented by adding the following exhibits:
|
|
|
|
(a)(13)
|
Press Release issued by
the Company on November 18, 2009 (incorporated herein by reference to
Exhibit 99.1 of the Current Report on Form 8-K filed by the Company
on November 18, 2009)
|
|
|
|
(e)(50)
|
Memorandum of
Understanding, dated November 17, 2009, among the parties to the Circuit
Court Actions
|
5
SIGNATURE
After due inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this Amendment is true,
complete and correct.
|
iPCS, Inc.
|
|
|
|
|
Date:
November 18, 2009
|
|
|
By:
|
/s/
Brian J. ONeil
|
|
Name:
|
Brian
J. ONeil
|
|
Title:
|
SVP,
General Counsel and Secretary
|
6
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