CHICAGO, Aug. 8, 2011 /PRNewswire/ -- Telephone and Data
Systems, Inc. (NYSE: TDS, TDS.S) today announced that its Board of
Directors has unanimously approved several amendments to the TDS
certificate of incorporation that it believes will provide
significant advantages to TDS and its shareholders. The amendments
include a share consolidation amendment, to reclassify its Common
Shares and Special Common Shares into a single class of
publicly-traded Common Shares on a one-for-one basis, and a vote
amendment, which will set the Series A Common Shares voting rights
at current levels. Both amendments are subject to shareholder
approval as discussed below and both must be approved for either to
be effective.
"After a great deal of analysis and consideration, we believe
the proposed amendments will simplify TDS' capital structure,
benefit our shareholders by improving liquidity and visibility, and
give TDS greater financial flexibility," said Kenneth R. Meyers, executive vice president and
CFO. "We feel strongly that this is the right step for TDS,
and we will seek approval of the share consolidation and vote
amendments by the unaffiliated holders of Common and Special Common
shares -- voting separately as classes -- so these shareholders
will ultimately determine if this transaction should be
implemented."
The reclassification of the Special Common Shares as Common
Shares will eliminate the discount in the market price of the
Special Common Shares compared to the Common Shares. TDS believes
that the reclassification will result in greater public float and
increased market liquidity, and reduce complexity, which could
broaden TDS' investor base and reduce the negative impact on TDS'
market valuation of having two relatively less liquid classes of
publicly-traded common stock.
TDS views these proposed amendments as providing the financial
flexibility expected from the initial distribution of Special
Common Shares in 2005. The share consolidation and vote amendments
together will allow TDS to use its equity for acquisitions and
benefit plans without the current economic dilution from the
discounted Special Common Shares.
Share Consolidation Amendment
The proposed share consolidation amendment would reclassify
outstanding Special Common Shares as Common Shares on a one-for-one
basis in recognition of the substantially identical economic rights
of the two classes today, including equal rights with respect to
dividends and in the event of various corporate transactions.
The Common Shares are currently listed on the New York Stock
Exchange ("NYSE") under the symbol "TDS" and the Special Common
Shares are currently listed on the NYSE under the symbol "TDS.S".
If the reclassification is approved and becomes effective, the
Special Common Shares will cease to be outstanding and cease to
trade and will be reclassified into Common Shares, which will
continue to trade on the NYSE under the symbol "TDS".
Vote Amendment
The proposed amendment to the TDS certificate of incorporation
would set the percentage voting power, in matters other than the
election of directors, of the non-publicly-traded Series A Common
Shares and newly-consolidated publicly-traded Common Shares. The
newly-consolidated publicly-traded Common Shares will continue to
elect four of twelve directors on the TDS board.
Following the reclassification, for matters other than the
election of directors, the aggregate voting power of the Series A
Common Shares and Common Shares, respectively, will be set at the
aggregate voting power that the Series A Common Shares and Common
Shares had immediately prior to the effective time of the
reclassification. Based on the shares outstanding as of
June 30, 2011, the aggregate voting
power of the Series A Common Shares and Common Shares, in matters
other than the election of directors, was approximately 56.7
percent and 43.3 percent. These percentages would be subject to
adjustment for changes in the outstanding Series A Common Shares,
except that the percentage voting power of the Series A Common
Shares could not increase above the percentage voting power that
they have immediately prior to the reclassification (which was 56.7
percent based on shares outstanding on June
30, 2011). The purpose of this vote amendment is to retain
the current relative voting power of the shares held by the
publicly-traded shares and the Series A Common Shares. However, the
voting power of the TDS Voting Trust in matters other than the
election of directors would increase by 2.7 percent from 53.6
percent to 56.3 percent (based on shares outstanding on
June 30, 2011) due to the
reclassification of its Special Common Shares into Common
Shares.
Shareholder Approvals
As mentioned above, in addition to required statutory votes, the
share consolidation and vote amendments will be subject to the
approval of a majority of the unaffiliated holders of Common Shares
and Special Common Shares, each voting separately as a class at a
special meeting of shareholders. For purposes of this vote,
unaffiliated holders will not include the TDS Voting Trust, members
of the Carlson family that are TDS shareholders, or directors or
executive officers of TDS. Accordingly, the proposed transactions
will require substantial support from unaffiliated public
shareholders to be approved.
The trustees of the TDS Voting Trust have indicated that they
support the proposed transactions.
Ancillary Amendment
As part of the transactions, TDS will also seek to amend various
obsolete and inoperative provisions in its certificate of
incorporation to simplify TDS' capital structure, including
removing all references to tracking stock, which TDS has never
issued and does not plan to issue.
In addition, certain compensation plans would be amended as a
result of these amendments to the TDS certificate of
incorporation.
Board Recommendation
The TDS Board of Directors, including all independent members,
has unanimously approved the proposed amendments, believes the
adoption of such proposals is in the best interests of TDS and its
shareholders, and unanimously recommends that shareholders vote
"FOR" such proposals.
The Board has also directed that the proposed transactions be
submitted to TDS shareholders for consideration at a special
meeting of shareholders. The record date of the special meeting has
been set for August 18, 2011. The
date of the special meeting has not yet been set by the Board.
Timing and Process
TDS is filing a preliminary proxy statement with the Securities
and Exchange Commission ("SEC") in connection with the proposed
transactions. TDS expects to hold the special meeting as soon as
practicable after the definitive proxy statement is available.
Additional information is included in the preliminary proxy
statement and will be included in the definitive proxy statement
after it is filed with the SEC.
The proposed transactions are expected to take place shortly
after the special meeting, subject to TDS shareholder approval and
certain other conditions. The transactions are intended to be
tax-free to TDS and its shareholders.
Citigroup Global Markets Inc. ("Citi") is acting as financial
advisor to TDS in connection with the foregoing proposals.
In addition, Credit Suisse is acting as financial advisor to the
independent directors on the TDS Board in connection with the
foregoing proposals.
Conference Call Information
TDS will hold a conference call today at 7:30 a.m. CDT to discuss its second quarter
earnings and the proposed transactions.
Access the live call on the Investor Relations page of
www.teldta.com or at
http://www.videonewswire.com/event.asp?id=81248
Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
Before the call, certain information to be discussed during the
call will be posted to the Conference Calls page of www.teldta.com.
The call will be archived on the Conference Calls page of
www.teldta.com.
IMPORTANT INFORMATION: This press release is not a solicitation
of a proxy from any TDS shareholder. Additional information
relating to the foregoing proposals to be submitted to TDS
shareholders is included in TDS' preliminary proxy statement and
will be included in TDS' definitive proxy statement when it becomes
available. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ SUCH
DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Shareholders and other investors may access
such documents without charge when they become available at the
SEC's web site (www.sec.gov) and on the TDS web site
(www.teldta.com) in the Investor Relations section on the SEC
filing page. In addition, shareholders may obtain a free copy of
the definitive proxy statement when it is available by contacting
MacKenzie Partners at (800) 322-2885.
TDS and its executive officers, directors and nominees may be
deemed to be participants in the solicitation of proxies from TDS
shareholders in connection with the foregoing proposals.
Information regarding the security ownership and other interests of
TDS' executive officers and directors is included in TDS'
preliminary proxy statement and will be included in TDS' definitive
proxy statement when it is available.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 500® company,
provides wireless, local and long-distance telephone and broadband
services to approximately 7.1 million customers in 36 states
through its business units, U.S. Cellular (wireless) and TDS
Telecom (wireline). Founded in 1969 and headquartered in
Chicago, TDS employed 12,300
people as of June 30, 2011.
Visit www.teldta.com for comprehensive financial information,
including earnings releases, quarterly and annual filings,
shareholder information and more.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995: All information set forth in this news
release, except historical and factual information, represents
forward-looking statements. This includes all statements about the
company's plans, beliefs, estimates and expectations. These
statements are based on current estimates, projections and
assumptions, which involve certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. Important factors that may affect these
forward-looking statements include, but are not limited to: the
ability of the company to successfully grow its markets; the
overall economy; competition; the access to and pricing of
unbundled network elements; the ability to obtain or maintain
roaming arrangements with other carriers; the state and federal
telecommunications regulatory environment; the value of assets and
investments; adverse changes in the ratings afforded TDS and U.S.
Cellular debt securities by accredited ratings organizations;
industry consolidation; advances in telecommunications technology;
uncertainty of access to the capital markets; pending and future
litigation; changes in income tax rates, laws, regulations or
rulings; acquisitions/divestitures of properties and/or licenses;
and changes in customer growth rates, average monthly revenue per
unit, churn rates, roaming revenue and terms, the availability of
handset devices, or the mix of products and services offered by
U.S. Cellular and TDS Telecom. Investors are encouraged to consider
these and other risks and uncertainties that are discussed in the
Form 8-K used by TDS to furnish this press release to the SEC,
which are incorporated by reference herein.
For more information about TDS and its subsidiaries, visit our
web sites at:
TDS: www.teldta.com
TDS Telecom: www.tdstelecom.com
USM: www.uscellular.com
SOURCE Telephone and Data Systems, Inc.