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Attachment 1
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): July 1,
2009
CenturyTel,
Inc.
(Exact
name of registrant as specified in its charter)
|
Louisiana
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1-7784
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72-0651161
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|
(State
or other jurisdiction
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(Commission
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(IRS
Employer
|
|
of
incorporation)
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File
Number)
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Identification
No.)
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100
CenturyTel Drive
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|
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Monroe,
Louisiana
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71203
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|
(Address
of principal executive offices)
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(Zip
Code)
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(318)
388-9000
(Registrant’s
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
In
this current report on Form 8-K, references to “CenturyTel,” “we,” “us” and
“our” refer to CenturyTel, Inc.
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Item
2.01.
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Completion
of Acquisition or Disposition of
Assets.
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On
July 1, 2009, pursuant to the terms and conditions of the Agreement and
Plan of Merger, dated as of October 26, 2008 (the “Merger Agreement”), among
Embarq Corporation (“Embarq”), CenturyTel and Cajun Acquisition Company, a
wholly owned subsidiary of CenturyTel (“Merger Sub”), Merger Sub merged with and
into Embarq, with Embarq continuing as the surviving corporation and as a wholly
owned subsidiary of CenturyTel (the “Merger”).
As a
result of the Merger, each outstanding share of Embarq common stock was
converted into the right to receive 1.37 shares of our common stock (“CTL common
stock”), with cash paid in lieu of fractional shares. As a result of the Merger,
we will deliver approximately $6.0 billion in CTL common stock to Embarq
stockholders, based on the number of Embarq shares outstanding as of
June 30, 2009 and the closing price of the CTL common stock on
June 30, 2009.
As
previously announced, we plan to begin conducting business under the brand name
CenturyLink in conjunction with consummating the Merger. We plan to
formally change our name to “CenturyLink, Inc.” upon receipt of shareholder
approval, which we expect to solicit in May 2010.
The
foregoing description does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, which is incorporated by
reference as Exhibit 2.1 to this current report on Form 8-K and is incorporated
by reference herein. Copies of press releases announcing the receipt
of the final required regulatory approval and the completion of the Merger are
attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this
current report on Form 8-K and are incorporated by reference
herein.
The
Merger Agreement contains representations and warranties made by and to the
parties thereto as of specific dates. The statements embodied in those
representations and warranties were made for purposes of that contract between
the parties and are subject to qualifications and limitations agreed upon by the
parties, which are not necessarily reflected in the Merger Agreement, in
connection with negotiating the terms of that contract. In addition, certain
representations and warranties were made as of a specified date, may be subject
to a contractual standard of materiality different from those generally
applicable to investors, or may have been used for the purpose of allocating
risk between the parties rather than establishing matters as facts.
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Item
3.03.
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Material
Modifications to Rights of Security
Holders.
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The
information described under Item 5.03 below is incorporated by reference
herein.
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Item
5.01.
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Changes
in Control of the Registrant.
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As a
result of the Merger, former Embarq stockholders held approximately 66% of the
outstanding CTL common stock immediately following the Merger.
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Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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Appointment of New
Directors. Effective upon completion of the Merger, we
expanded the size of our Board of Directors from 12 to 15 members. At
such time, pursuant to the Merger Agreement, our Board appointed the individuals
set forth below (each of whom served as a director of Embarq prior to the
effective time of the Merger) to the respective classes and principal committees
of the Board specified below:
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Name
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Class
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Principal
Committee(s)
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Term
Expires
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|||
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William
A. Owens
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I
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Nominating
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2010
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|||
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Stephanie
M. Shern
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I
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Audit,
Compensation
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2010
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|||
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Peter
C. Brown
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II
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Audit,
Risk Evaluation
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2011
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|||
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Richard
A. Gephardt
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II
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Nominating
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2011
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|||
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Thomas
A. Gerke
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II
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--
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2011
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|||
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Steven
A. Davis
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III
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Risk
Evaluation
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2012
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|||
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Laurie
A. Siegel
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III
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Compensation
(Chair)
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2012
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In
connection with their appointments as outside directors, each of the new
directors listed above will receive a grant of 3,161 restricted
shares of our common stock on July 2, 2009. With respect to each
such restricted share award, the shares of restricted stock will vest upon the
earlier of (i) one-third per year on each of May 15, 2010, May 15,
2011 and May 15, 2012, (ii) the date the director dies or becomes disabled,
or (iii) the occurrence of a change of control, all as described further in our
directors stock plan. In addition, these shares of restricted stock
will have such other terms as are set forth in our directors stock plan and in
the form of restricted stock agreement to be entered into with each
director.
In
connection with being appointed Chairman of the Board in accordance with the
Merger Agreement, William A. Owens will receive an additional grant
of 6,321 restricted shares of our common stock on July 2,
2009. These shares of restricted stock granted to Mr. Owens have the
same terms as the above-described grants of restricted stock to the new outside
directors, except that all of his shares of restricted stock will vest upon the
earlier of (i) May 15, 2010, (ii) the date he dies or becomes disabled, or
(iii) the occurrence of a change of control, all as described further in our
directors stock plan.
In
connection with consummating the Merger, our Board authorized a new form of
indemnification agreement for our directors and officers. These
agreements are intended to supersede the existing indemnity agreements between
us and each of our directors and officers. Our new form of
indemnification agreement is attached hereto as Exhibit 99.3 to this
current report on Form 8-K and is incorporated by reference herein.
Members
of our Board are subject to our Corporate Governance Guidelines, which, among
other things, prohibit a director from serving on more than two additional
unaffiliated public company boards. In addition to serving on our
Board, Richard A. Gephardt, William A. Owens and Stephanie M. Shern serve on the
board of directors of more than two unaffiliated public companies. In
connection with appointing each of them to the Board, the Board waived
compliance by each such individual with the above-described service limitation,
subject to the understanding that this waiver permits such individuals to serve
only on the boards of the unaffiliated companies on which they are currently
serving, unless and until the individual is permitted to accept a new
directorship under our Corporate Governance Guidelines then in effect due to any
future reductions in the number of the individual’s directorships, any future
changes in such guidelines, or any future additional waivers granted by the
Board.
Resignation of
Directors. Effective immediately prior to the completion of
the Merger, each of William R. Boles, Jr., Calvin Czeschin, James B. Gardner and
Jim D. Reppond retired from our Board of Directors.
Other Changes in
Management. For information on additional changes in
management made in connection with the Merger, see Item 8.01 below.
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Item
5.03.
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Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
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On
July 1, 2009, in connection with the Merger Agreement and as approved by
our shareholders on January 27, 2009, we filed Amended and Restated
Articles of Incorporation to (i) eliminate our time-phase voting structure,
which previously entitled persons who beneficially owned shares of our common
stock continuously since May 30, 1987 to ten votes per share, and (ii)
increase the authorized number of shares of our common stock from 350 million to
800 million. As so amended and restated, our Articles of
Incorporation provide that each share of CTL common stock is entitled to one
vote per share with respect to each matter properly submitted to shareholders
for their vote, consent, waiver, release or other action, and authorize the
issuance of up to 800 million shares of CTL common stock. These
amendments reflect changes contemplated or necessitated by the Merger Agreement
and are described in detail in our joint proxy statement-prospectus dated
December 22, 2008.
Effective
July 1, 2009, we amended our bylaws to effect a variety of changes,
including the following:
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•
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We
amended Sections 1.1, 1.2 and 2.2 of Article I of our bylaws to
(i) clarify the management positions that we are required or permitted to
maintain, (ii) eliminate various references to succession planning, (iii)
provide for the possibility of electing more than one vice chairman and
electing non-executive chairman or vice chairman, (iv) revise the scope of
the powers of the Chairman and the Vice Chairmen, (v) authorize the Board
to periodically designate certain officers as our executive officers, (vi)
authorize multiple assistant secretaries and (vii) make clarifying changes
to the powers and responsibilities of certain
officers.
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•
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Pursuant
to our obligations under the Merger Agreement, we added Article I,
Section 3, of our bylaws to provide that William A. Owens will serve
as our Chairman, and to provide that if he ceases to be Chairman at any
time before July 1, 2010, his replacement will be chosen from among
Peter C. Brown, Steven A. Davis, Richard A. Gephardt, Thomas A. Gerke,
Stephanie M. Shern or Laurie A.
Siegel.
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•
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We
amended Sections 3.1 and 3.2 of Article II of our bylaws to (i)
provide that special board meetings may be called by the Chief Executive
Officer, as well as the Chairman, and (ii) shorten the notice periods for
calling special board meetings.
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•
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We
amended Article II, Section 10, of our bylaws to conform our
indemnification bylaw to the terms of the form of indemnification
agreement described above under
Item 5.02.
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•
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We
amended Article III, Section 1, of our bylaws to eliminate the
Executive Committee of the Board.
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•
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We
amended Article III, Section 5, of our bylaws to eliminate the
power of the Chairman to fill committee vacancies when the Board is not in
session, and instead empowered the Nominating and Corporate Governance
Committee to fill any committee vacancy that is not filled by the Board
within 30 days (subject to a provision that requires, for a one-year
period ending on July 1, 2010, any vacancy relating to a committee
position previously held by a director who served CenturyTel or Embarq
immediately prior to the Merger to be filled by another director who
previously served CenturyTel or Embarq,
respectively).
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|
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•
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We
amended Article IV, Section 3, of our bylaws to provide that
special shareholder meetings may be called only by the Board or, as
previously provided, the holders of a majority of the total voting
power.
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•
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We
amended Article IV, Section 6.1, of our bylaws to reduce the
quorum required to organize our shareholder
meetings.
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•
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We
amended Article V of our bylaws to authorize us to issue
uncertificated shares of stock.
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•
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We
amended Article VIII of our bylaws to authorize executive officers,
as well as the Board, to designate officers with authority to sign checks,
drafts and notes on our behalf.
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Our
Amended and Restated Articles of Incorporation and Amended and Restated Bylaws
are incorporated by reference as Exhibits 3.1 and 3.2, respectively, to
this current report on Form 8-K and are incorporated by reference
herein.
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Item
8.01.
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Other
Events.
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Change in Committee
Responsibilities of Continuing Directors. In connection with
the Merger, eight of our incumbent directors will continue to serve as
directors, each in the same class of directorship to which they were allocated
immediately prior to the Merger. Listed below are the new principal
committee positions of these eight incumbent directors:
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Name
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Principal
Committee(s)
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||
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Virginia
Boulet
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Compensation,
Nominating (Chair)
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W.
Bruce Hanks
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Audit
(Chair), Risk Evaluation
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Gregory
J. McCray
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Nominating,
Risk Evaluation
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C.
G. Melville, Jr.
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Nominating,
Risk Evaluation (Chair)
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Fred
R. Nichols
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Audit,
Compensation
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Harvey
P. Perry
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Compensation
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Glen
F. Post, III
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―
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||
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Joseph
R. Zimmel
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Audit
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Change in Responsibilities
of Executive Officers. Glen F. Post, III and Karen A. Puckett
continue to serve as our principal executive officer and principal operating
officer, respectively. Effective upon completion of the Merger, Mr.
Post now serves as our Chief Executive Officer and President, and Ms. Puckett
now serves as our Executive Vice President and Chief Operating
Officer.
Mike
Maslowski, age 61, has announced his intention to retire later this
year. Prior to then, Mr. Maslowski will assist our management team
with merger integration activities. Mr. Maslowski served as one of
our executive officers between 1999 and the effective date of the
Merger.
R.
Stewart Ewing, Jr., Stacey W. Goff and David D. Cole continue to serve as
executive officers with titles and responsibilities substantially similar to
their titles and responsibilities prior to the effective date of the
Merger.
Appointment of New
Executive
Officers. Effective upon completion of the Merger, we
appointed three former executives of Embarq as executive officers of
CenturyTel.
We have
appointed Thomas A. Gerke as Executive Vice Chairman with supervisory
responsibility for all of our human resource functions and all of our state and
federal regulatory activities. From March 3, 2008 until the
effective time of the Merger, Mr. Gerke served as President and Chief Executive
Officer of Embarq, after serving in the same role in an interim capacity since
December 2007. Mr. Gerke previously served as General Counsel – Law
and External Affairs for Embarq from May 2006 until December 2007, and had
additional responsibility for Embarq’s Wholesale Markets business unit from
January 2007 to December 2007. Prior to then, Mr. Gerke served from
August 2005 until May 2006 as General Counsel – Law and External Affairs for the
local telecommunications division of Sprint Nextel Corporation, Embarq’s former
parent company. From May 2003 until August 2005, Mr. Gerke served as
Executive Vice President–General Counsel and External Affairs of Sprint
Corporation. Mr. Gerke is 53 years of age.
We have
also appointed Dennis G. Huber as Executive Vice President – Network and
Information Technology. From July 2008 until the effective time of
the Merger, Mr. Huber served as Chief Technology Officer of
Embarq. Mr. Huber served as Senior Vice President, Corporate Strategy
and Development for Embarq from December 2007 through June 2008 and as Senior
Vice President of Product Development for Embarq from October 2006 until
December 2007. Mr. Huber served as Senior Vice President of Wireless
Solutions for Embarq from August 2006 until October 2006. From
January 2003 to August 2005, Mr. Huber served as President of Sprint North
Supply Company, an affiliate of Embarq’s former parent company. Mr.
Huber is 49 years of age.
In
addition, we have appointed William E. Cheek as President – Wholesale
Operations. From May 2006 until the effective time of the Merger, Mr.
Cheek served as President, Wholesale Markets for Embarq. Mr. Cheek
served in this role at the local telecommunications division of Sprint Nextel
Corporation from August 2005 until May 2006 and as Assistant Vice President,
Strategic Sales and Account Management in Sprint Business Solutions from January
2004 until July 2005. Mr. Cheek is 53 years of age.
Announcement of Completion
of Merger. On June 25, 2009, we issued a press release
announcing the receipt of the final regulatory approval required to complete the
Merger, and on July 1, 2009, we issued a press release announcing the
completion of the Merger and related events. Copies of these press
releases are attached as Exhibit 99.1 and Exhibit 99.2, respectively,
to this current report on Form 8-K and are incorporated by reference
herein.
|
Item
9.01.
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Financial
Statements and Exhibits.
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(a)
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Financial
statements of business acquired.
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The
consolidated financial statements of Embarq Corporation for the quarterly
periods ended March 31, 2009 and 2008 and the years ended December 31,
2008, 2007 and 2006 are attached as Exhibit 99.4 to this current report on
Form 8-K.
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(b)
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Pro
forma financial information.
|
CenturyTel
intends to file unaudited pro forma combined condensed financial information
reflecting the Merger no later than 71 calendar days after the date that this
current report on Form 8-K is required to be filed.
|
(d)
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Exhibits
|
The
exhibits to this current report on Form 8-K are listed in the Exhibit
Index, which appears at the end of this report and is incorporated by reference
herein.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this current report to be signed on its behalf by the undersigned
hereunto duly authorized.
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CENTURYTEL,
INC.
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:
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By:
/s/ Neil A. Sweasy
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Neil
A. Sweasy
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Vice
President and Controller
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Dated: July
1, 2009
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EXHIBIT
INDEX *
|
Exhibit
No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger, dated as of October 26, 2008, among CenturyTel,
Inc., Embarq Corporation and Cajun Acquisition Company (incorporated by
reference to Exhibit 99.1 of our Current Report on Form 8-K filed on
October 30, 2008).
|
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3.1
|
Amended
and Restated Articles of Incorporation of CenturyTel, Inc. (incorporated
by reference to Exhibit 3.1 of Amendment No. 3 to our
Registration Statement on Form 8-A filed on July 1,
2009).
|
|
3.2
|
Amended
and Restated Bylaws of CenturyTel, Inc. (incorporated by reference to
Exhibit 3.2 of Amendment No. 3 to our Registration Statement on
Form 8-A filed on July 1, 2009).
|
|
23.1
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Consent
of KPMG LLP, independent registered public accounting firm for Embarq
Corporation.
|
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99.1
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Press
release dated June 25, 2009, announcing the receipt of the final
regulatory approval required to complete the Merger.
|
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99.2
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Press
release dated July 1, 2009, announcing the completion of the
Merger.
|
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99.3
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Form
of Indemnification Agreement entered into by CenturyTel, Inc. and its
directors.
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99.4
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For
the quarterly periods ended March 31, 2009 and 2008, the following
consolidated financial statements of Embarq Corporation are filed
herewith:
|
|
a).
Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
(Unaudited)
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|
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b).
Consolidated Statements of Operations and Comprehensive Income for the
Quarterly Periods Ended March 31, 2009 and 2008 (Unaudited)
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c).
Consolidated Statements of Cash Flows for the Quarterly Periods Ended
March 31, 2009 and 2008 (Unaudited)
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d).
Consolidated Statement of Stockholders’ Equity for the Quarterly Period
Ended March 31, 2009 (Unaudited)
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e).
Condensed Notes to Consolidated Financial Statements
(Unaudited)
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For
the years ended December 31, 2008, 2007 and 2006, the following
consolidated financial statements of Embarq Corporation (retrospectively
reclassified for all periods and dates to report the financial results of
Embarq’s logistics business as discontinued operations) are filed
herewith:
|
|
|
a).
Report of KPMG LLP, Independent Registered Public Accounting
Firm
|
|
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b).
Consolidated Balance Sheets as of December 31, 2008 and
2007
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|
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c).
Consolidated Statements of Operations and Comprehensive Income (Loss) for
the Years Ended December 31, 2008, 2007 and 2006
|
|
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d).
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2008, 2007 and 2006
e).
Consolidated Statements of Stockholders’ Equity for the Years Ended
December 31, 2008, 2007 and 2006
|
|
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f).
Notes to Consolidated Financial
Statements.
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* Each
exhibit listed above is filed herewith, except for Exhibits 2.1, 3.1 and
3.2.