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)
May 1, 2003
EasyLink Services Corporation
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(Exact name of registrant as specified in its charter)
Delaware 000-26371 13-3787073
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
33 Knightsbridge Road
Piscataway, NJ 08854
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(Address of principal executive offices)
Registrant's telephone number, including area code (732) 652-3500
N/A
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Former Name or Former Address, if Changed Since Last Report
ITEM 5. OTHER EVENTS
Debt Reduction
EasyLink Services Corporation today announced that it has reduced its
outstanding debt by an additional $54.2 million in principal amount in exchange
for cash in the amount of $2.3 million and 22,134,855 shares of Class A common
stock. In addition, the Company issued 1,923,077 shares of Class A common stock
to Federal Partners, L.P. in exchange for $1 million to partially fund the cash
payments.
As a result of the additional debt reduction, EasyLink has eliminated
approximately $67 million in principal amount of indebtedness since June 30,
2002, representing over 80% of its outstanding indebtedness as of that date.
After giving effect to the additional $54.2 million of debt reduction, the
Company has $15.5 million principal amount of remaining indebtedness outstanding
as of today and approximately $2.6 million of accrued interest on this
indebtedness. Of the remaining indebtedness, approximately $3.2 million is
convertible into an aggregate of 811,927 shares of Class A common stock. All
other remaining indebtedness is not convertible.
On the remaining indebtedness, the Company will be required to pay approximately
$3.0 million of cash principal payments and $1.4 million in cash interest
payments during the remainder of 2003 and $4.2 million in cash principal
payments and $2.1 million in cash interest payments in 2004.
After giving effect to the debt reduction through today and the $1 million
financing, 41.7 million shares of Class A common stock and 1.0 million shares of
Class B common stock are outstanding.
The indebtedness that remains outstanding after today includes the promissory
note in the principal amount of $10 million and $2.6 million accrued interest
thereon held by AT&T Corp. On February 27, 2003, AT&T and PTEK Holdings, Inc.
("PTEK") entered into a Share Purchase Agreement regarding the sale of 1,423,980
shares to PTEK for $825,908 and a Note Purchase Agreement regarding the transfer
of the $10 million promissory note for $3,174,092 and a warrant to purchase
shares of PTEK Stock. As previously announced, on March 17, 2003, EasyLink
commenced an action against AT&T Corp., PTEK Holdings, Inc. and Xpedite Systems,
Inc. The suit seeks, among other things, to enjoin AT&T from selling the
promissory note held by AT&T to PTEK and to compel AT&T to participate in
EasyLink's current debt restructuring.
This filing may contain statements of a forward-looking nature relating to the
future events or the future financial results of EasyLink. Investors are
cautioned that such statements are only predictions and that actual events or
results may differ materially. In evaluating such statements, investors should
specifically consider the various factors which could cause actual events or
results to differ materially from those indicated from such forward-looking
statements. These include: historic and continuing losses; the need to raise
additional capital; the ability to service our remaining indebtedness; the risk
that we may have an unfavorable outcome in our lawsuit against AT&T and PTEK;
the ability to continue as a going concern being dependent upon the ability to
generate sufficient cash flow to meet our obligations on a timely basis, to
restructure our remaining outstanding debt on favorable terms and conditions, to
obtain additional financing or refinancing as may be required, and ultimately to
achieve profitable operations; significant leverage; the ability to attract
additional customers or to expand services sold to existing customers; the
ability to successfully implement our business strategy; significant
competition; the risks inherent in an acquisition strategy; the risks inherent
in integrating the STI and EasyLink businesses; and the risk of being delisted
from Nasdaq. These and other risks and uncertainties are described in more
detail in the Company's filings with the Securities and Exchange Commission.
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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.
Dated: May 2, 2003
EASYLINK SERVICES CORPORATION
By: /s/ Thomas Murawski
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Thomas Murawski, Chief Executive Officer
and President
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