Filed by General Motors Corporation
Subject Company - General Motors Corporation
and Hughes Electronics Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission File No.: 001-00143
The following Q&A was published by Hughes Communications Corporation on November
8, 2001:
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors, and its directors and executive officers, and Hughes, and
certain of its officers, may be deemed to be participants in GM's solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Michael J. Gaines Corporate VP and CFO, Hughes
Mr. Devine beneficially owns approximately 119,094 GM $1-2/3 shares. Mr. Shaw
beneficially owns approximately 3,604 GM $1-2/3 shares and 1,415,915 GM Class H
shares. Ms. Austin beneficially owns approximately 2,804 GM $1-2/3 shares and
860,454 GM Class H shares. Mr. Hartenstein beneficially owns approximately 2,622
GM $1-2/3 shares and 1,138,899 GM Class H shares. Mr. Gaines beneficially owns
approximately 337 GM $1-2/3 shares and 165,329 GM Class H shares. The above
ownership information includes shares held under various trust arrangements and
shares that are purchasable under options that are exercisable, and shares held
through benefit plans (including restricted stock units) that are or will be
vested, within 60 days of October 15, 2001. In addition, Mr. Devine holds
options to acquire GM $1-2/3 shares that are not exercisable, and GM $1-2/3 and
Class H shares held through benefit plans that will not be vested, within 60
days of October 15, 2001, and each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and
Mr. Gaines holds options to acquire GM Class H shares that are not exercisable,
and GM Class H shares held through benefit plans that will not be vested, within
60 days of October 15, 2001.
Each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr. Gaines has a severance
agreement with Hughes that provides for severance in the event of an involuntary
termination after a change in control, and each also has a retention agreement
that provides for certain payments in the event of a change in control.
EchoStar and certain of its executive officers may be deemed to be
"participants" in GM's solicitation of consents from the holders of GM $1-2/3
and GM Class H shares in connection with the proposed transactions. Information
about the executive officers of EchoStar is set forth in the proxy statement for
EchoStar's 2001 annual meeting of shareholders. As of Oct. 28, 2001, EchoStar
held approximately 1,000 shares of GM $1-2/3 common stock and 185,000 shares of
GM Class H common stock. Mr. Ergen beneficially owns approximately 1,000 shares
of GM $1-2/3 common stock and approximately 10,000 of GM Class H common stock.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of
General Motors Corp. ("GM"), EchoStar Communications Corporation ("EchoStar"),
Hughes Electronics Corp. ("Hughes"), or a combined EchoStar and Hughes to differ
materially, many of which are beyond the control of EchoStar, Hughes or GM
include, but are not limited to, the following: (1) the businesses of EchoStar
and Hughes may not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected benefits and
synergies from the combination may not be realized within the expected time
frame or at all; (3) revenues following the transaction may be lower than
expected; (4) operating costs, customer loss and business disruption including,
without limitation, difficulties in maintaining relationships with employees,
customers, clients or suppliers, may be greater than expected following the
transaction; (5) generating the incremental growth in the subscriber base of the
combined company may be more costly or difficult than expected; (6) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (7) the effects of legislative
and regulatory changes; (8) an inability to obtain certain retransmission
consents; (9) an inability to retain necessary authorizations from the FCC; (10)
an increase in competition from cable as a result of digital cable or otherwise,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; (11) the introduction of new
technologies and competitors into the subscription television business; (12)
changes in labor, programming, equipment and capital costs; (13) future
acquisitions, strategic partnership and divestitures; (14) general business and
economic conditions; and (15) other risks described from time to time in
periodic reports filed by EchoStar, Hughes or GM with the Securities and
Exchange Commission. You are urged to consider statements that include the words
"may," "will," "would," "could," "should," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends," "continues,"
"forecast," "designed," "goal," or the negative of those words or other
comparable words to be uncertain and forward-looking. This cautionary statement
applies to all forward-looking statements included in this document.
ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
NOVEMBER 8, 2001
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This is the first update to employee questions and answers about the EchoStar
Transition. HUGHES Corporate Communications will publish regular updates as
employee questions arise on the HUGHESNet Transition News website,
http://hughesnet.hughes.com/transition/index.html. If you have a question,
please send it to employee.communications@hughes.com or call (888) 832-5306 or
(310) 662-5208 or FAX to (310) 647-6213. Thanks for all the questions sent in so
far, we will continue to work on getting answers for you in the weeks ahead.
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1. Please explain what happens to the Contributory Retirement Plan
during and after transition.
HUGHES Benefits Communications is developing an informational piece
about the effect of the EchoStar merger on the Contributory
Retirement Plan. This information will be mailed to all Contributory
Plan Participants within the next 2 weeks.
2. Please explain how my stock options will be converted?
All GMH stock options will be converted to stock options in the
combined company, which will be named EchoStar Communications
Corporation, on the same one-for-one basis as all other GMH stock.
For example:
If you hold 300 GMH stock options with a grant price of $14.5234 per
share, they would be converted to 300 stock options in EchoStar
Communications Corporation (the new combined company) with the same
grant price of $14.5234 per share.
You may have seen a reference to a conversion ratio of 1.3699 to 1 in
the GM Press Release or recent press coverage. That ratio refers to
EchoStar (DISH) stock converting to stock in the new combined
company, where 1 share of DISH will convert to 1.3699 shares of the
new company.
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STOCK CONVERSION AT-A-GLANCE
----------------------------
1 GMH share = 1 New Combined Company share
(one-for-one)
1 DISH share = 1.3699 New Combined Company shares
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
NOVEMBER 8, 2001
3. How much will my stock options be worth after they are converted to
stock options in the combined company?
Since this is a one-for one conversion, after the Closing Date, your
new EchoStar Communications Corporation stock option will have the
same grant price as your GMH stock option. Whether or not your vested
stock options are "in the money" or "under water" following the
conversion (after the Closing Date) depends completely on the stock
market price on any given day.
The current value of your stock options is based on the difference
between the stock market price of GMH shares and the grant price of
your stock options. After the Closing Date, the value of your stock
options will be based on the difference between the stock market
price of shares in the new EchoStar Communications Corporation and
the grant price of your converted stock options.
4. Will the unvested GMH matching shares in my 401(k) Savings Plan be
accelerated upon the Closing Date?
No. The only acceleration of vesting of the company match in the
HUGHES 401(k) Savings Plans occurs upon layoff, retirement or death.
5. The Employee Summary Sheet says, "Salaries and hourly rates will
continue unchanged for 12 months following the Closing Date. Merit
increases and promotional increases are permitted." Does that mean
that base pay is frozen now?
No. The intent of the agreement with EchoStar on employee
compensation is not to reduce base pay for one year after the Closing
Date. The agreement did not restrict salary increases that are
consistent with our past practice.
6. Please explain the transition process and timetable; in particular as
it relates to combining the EchoStar and DIRECTV workforce.
The initial transition phase is expected to take approximately 9 to
12 months, during which time both EchoStar and HUGHES will operate
their businesses separately, but will work jointly to complete
required steps to close the spin-off/merger transaction. One of the
most critical activities during this period will be to obtain all the
necessary approvals from regulatory agencies. Many aspects of the
transition, such as combining the EchoStar and DIRECTV workforces
into a consolidated entity, are likely to occur primarily in the
post-close transition period.
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
NOVEMBER 8, 2001
A four member panel has been established that includes two senior
executives each from EchoStar and HUGHES: EchoStar Chairman and CEO,
Charlie Ergen, and President, Michael Dugan, and HUGHES CEO, Jack
Shaw, and Senior Executive VP, Eddy Hartenstein. The executive panel
will establish and oversee the workforce transition process,
including evaluating the workforce needs and staffing for the new
organization. The members of the executive panel have not yet had an
opportunity to define the workforce transition process and timetable.
Specific decisions about work units, work locations or staffing have
not been made. No information is currently available about any of
these issues. We will share information with you as soon as
practicable, but it will probably take several months before any
details are available on the workforce transition process and
schedule.
7. If DIRECTV employees are laid off because of efficiencies gained in
the merger, will they be eligible for the special severance benefit
described in the Employee Summary Sheet?
Up to 24 months following the Closing Date, anyone laid off for
reasons directly related to the Change in Control for the EchoStar
transaction will be offered the special severance benefit. Decisions
regarding whether or not a layoff is directly related to Change in
Control will be made by the HUGHES Executive Committee prior to the
Closing Date, and by the new company's Executive Compensation
Committee (composed of members of the Board of Directors, a majority
of whom will be independent directors) after the Closing Date.
8. Please describe the current employee benefits and compensation
programs at EchoStar.
EchoStar currently provides medical, dental, vision and a 401(k)
Savings Plan for their employees, as well as a number of incentive
compensation programs. These current plans may or may not be the same
as the ones that EchoStar will have by the time current HUGHES
employees transition to EchoStar plans, so this is not necessarily an
indication of what employees may be provided in the future. All
HUGHES employees will continue to have their existing health and
welfare benefits for 12 months following the Closing Date. After
that, it will be up to management in the new company to determine the
employee benefits programs that will be provided.
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
NOVEMBER 8, 2001
9. Is the hiring freeze still in effect for DIRECTV and other HUGHES
subsidiaries? And if so, how does that affect transfers between
subsidiaries?
The headcount freeze at DIRECTV continues. Growth and replacement
positions will be considered on a case by case basis. A compelling
business need must be established before a position can be created or
filled.
DIRECTV Latin America has suspended all recruiting activities. All
internal requests for additions to staff or replacements are limited
to highly critical positions only. This process will continue
indefinitely.
Transfers between subsidiaries may be arranged when the hiring
organization has approval to fill a particular position and an
internal candidate is selected.
NOTE: Many of you have submitted questions related to severance and the special
severance plan. In the coming weeks we will answer your inquiries as information
becomes available. Thank you for your patience with this process.
--------------------------------------------------------------------------------
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors and its directors and executive officers, Hughes and certain of
its officers, and EchoStar and certain of its executive officers may be deemed
to be participants in GM's solicitation of proxies or consents from the holders
of GM $1-2/3 common stock and GM Class H common stock in connection with the
proposed transactions. Information regarding the participants and their interest
in the solicitation of proxies or consents from the holders of GM $1-2/3 common
stock and GM Class H common stock in connection with the proposed transactions
was filed pursuant to Rule 425 with the Securities and Exchange Commission by
each of GM and Hughes on November 8, 2001.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Materials included in this communication contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
4
ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
NOVEMBER 8, 2001
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of
General Motors Corp., EchoStar, Hughes, or a combined EchoStar and Hughes to
differ materially, many of which are beyond the control of EchoStar, Hughes or
GM include, but are not limited to, the following: (1) the businesses of
EchoStar and Hughes may not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected; (2) expected benefits
and synergies from the combination may not be realized within the expected time
frame or at all; (3) revenues following the transaction may be lower than
expected; (4) operating costs, customer loss and business disruption including,
without limitation, difficulties in maintaining relationships with employees,
customers, clients or suppliers, may be greater than expected following the
transaction; (5) generating the incremental growth in the subscriber base of the
combined company may be more costly or difficult than expected; (6) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (7) the effects of legislative
and regulatory changes; (8) an inability to obtain certain retransmission
consents; (9) an inability to retain necessary authorizations from the FCC; (10)
an increase in competition from cable as a result of digital cable or otherwise,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; (11) the introduction of new
technologies and competitors into the subscription television business; (12)
changes in labor, programming, equipment and capital costs; (13) future
acquisitions, strategic partnership and divestitures; (14) general business and
economic conditions; and (15) other risks described from time to time in
periodic reports filed by EchoStar, Hughes or GM with the Securities and
Exchange Commission. You are urged to consider statements that include the words
"may," "will," "would," "could," "should," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends," "continues,"
"forecast," "designed," "goal," or the negative of those words or other
comparable words to be uncertain and forward-looking. This cautionary statement
applies to all forward-looking statements included in this filing.
5