As filed with the Securities and Exchange Commission on March 7, 2002
Registration No. 333-69866
________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
POST-EFFECTIVE AMENDMENT NO. 1
ON FORM S-3
TO FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
________________
AIRGATE PCS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 58-2422929
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
________________
Harris Tower
233 Peachtree St. NE, Suite 1700
Atlanta, Georgia 30303
(404) 525-7272
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Barbara L. Blackford
Vice President, General Counsel and Secretary
Harris Tower
233 Peachtree Street NE, Suite 1700
Atlanta, Georgia 30303
(404) 525-7272
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
________________
With copies to:
Robert F. Wall, Esq.
R. Cabell Morris, Jr., Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
(312) 558-5600
________________
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined in
the light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
________________
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. Neither
we nor the selling stockholders may sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION - DATED MARCH 7, 2002
PROSPECTUS
[AirGate Logo]
8,345,824 Shares
Common Stock
______________
This prospectus relates to the public offering of up to 8,345,824 shares of
our common stock that are held by some of our current stockholders and may be
offered and sold from time to time by the selling stockholders following the
effective date of the registration statement of which this prospectus is a part.
The selling stockholders acquired their shares of our common stock in connection
with our merger with iPCS, Inc. which we completed on November 30, 2001. We will
not receive any of the proceeds from the sale of shares by the selling
stockholders.
Our common stock is listed on The Nasdaq National Market under the symbol
"PCSA."
The selling stockholders have not advised us of any specific plans for the
distribution of the shares covered by this prospectus. It is anticipated,
however, that the shares will be offered and sold by the selling stockholders
from time to time in transactions such as on The Nasdaq National Market, in the
over-the-counter market, in privately negotiated transactions, or by a
combination of such methods of sale, at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time of sale, or
at negotiated prices. The selling stockholders may effect such transactions by
selling the shares to or through broker-dealers or underwriters and such
broker-dealers or underwriters may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders or the
purchasers of the shares for whom such broker-dealers or underwriters may act as
agent or to whom they sell as principal or both. See "Plan of Distribution"
beginning on page 15.
Investing in our common stock involves certain risks. See "Investment
Considerations" beginning on page 2.
______________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
, 2002.
TABLE OF CONTENTS
Page Page
---- ----
Our Business ................ 1 Plan of Distribution .................. 15
Forward-Looking Statements .. 1 Legal Matters ......................... 17
Investment Considerations ... 2 Experts ............................... 17
Use of Proceeds ............. 12 Where You Can Find More Information ... 17
Selling Stockholders ........ 13 Incorporation by Reference ............ 17
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in or incorporated by reference in
this prospectus. The selling stockholders are offering securities and seeking
offers to buy our securities only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our securities.
ii
OUR BUSINESS
We are one of the largest Sprint PCS network partners in terms of covered
population. We market and provide digital wireless personal communications
services, or PCS, to a service territory of approximately 14.6 million residents
with current network coverage of approximately 11.3 million residents as of
December 31, 2001. Through our management agreements with Sprint Corporation, we
have the exclusive right to provide Sprint PCS products and services under the
Sprint and Sprint PCS brand names in our territories. Sprint, directly and
indirectly through network partners such as us, operates the largest
all-digital, all-PCS nationwide wireless network in the United States based on
covered population, covering nearly 244 million residents in more than 4,000
cities and communities across the United States, Puerto Rico and the U.S. Virgin
Islands.
On November 30, 2001, we acquired iPCS, Inc. by merging a wholly owned
subsidiary of ours with iPCS. In connection with the merger, we issued to the
former stockholders of iPCS approximately 12.4 million shares of our common
stock and assumed options and warrants to purchase approximately 1.1 million
shares of our common stock. The acquisition of iPCS increased the total resident
population in our markets from approximately 7.1 million to approximately 14.6
million. As required by the terms of our outstanding indebtedness, we conduct
our business operations through two separate entities: AirGate PCS, Inc. and its
wholly owned subsidiary, iPCS, Inc. Due to restrictions in AirGate's debt
instruments, AirGate is unable to provide direct or indirect credit support to
iPCS and is significantly limited in its ability to maintain or preserve iPCS'
financial condition or cause iPCS to achieve a specified level of operating
results. Likewise, iPCS is restricted under its debt instruments from paying
dividends or freely transferring money to AirGate.
Our Sprint PCS territories cover 58 basic trading areas, referred to as
markets, in parts of South Carolina, North Carolina, Georgia, Illinois,
Michigan, Iowa and Nebraska. Our major markets include:
. Grand Rapids, Michigan;
. Greenville-Spartanburg, South Carolina;
. Savannah, Georgia;
. Charleston, South Carolina;
. Columbia, South Carolina; and
. Saginaw-Bay City, Michigan.
As of December 31, 2001, we had 453,359 subscribers and total network
coverage of approximately 11.3 million residents, representing approximately 77%
of the resident population in our markets. For the twelve months ended September
30, 2001 and the three months ended December 31, 2001, we generated revenue of
approximately $259.2 million and $108.0 million, respectively, on a pro forma
basis.
Our principal executive offices are located at Harris Tower, 233 Peachtree
Street NE, Suite 1700, Atlanta, Georgia 30303, and our telephone number is (404)
525-7272.
FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus and the documents incorporated by
reference into this prospectus regarding expected financial results and other
planned events, including but not limited to, anticipated liquidity, churn
rates, average revenue per user, decreases in roaming rates, earnings before
interest, taxes, depreciation and
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amortization, capital expenditures and other statements that include words such
as "anticipate," "believe," "estimate," "expect," "intend," "plan," "seek",
"project" and similar expressions are forward-looking statements that involve
risk and uncertainties. Actual future events or results may differ materially
from these statements. Specific factors that could cause actual results to
differ from those contained in the forward-looking statements, include, but are
not limited to:
. the ability to successfully integrate the management of the businesses of
AirGate and iPCS;
. the competitiveness and impact of Sprint PCS pricing plans, products and
services;
. customer quality;
. the ability of Sprint to provide back office, customer care and other
services;
. customer purchasing patterns;
. potential fluctuations in quarterly results;
. an adequate supply of infrastructure and subscriber equipment;
. risks related to future growth and expansion;
. rates of penetration in the wireless industry;
. the potential need for additional sources of liquidity;
. anticipated future losses;
. our significant level of indebtedness;
. adequacy of bad debt and other reserves;
. the potential to experience a high rate of customer turnover; and
. the volatility of the market price of our common stock.
INVESTMENT CONSIDERATIONS
You should consider carefully the following investment considerations
before you decide to buy the shares of our common stock offered pursuant to this
prospectus by the selling stockholders. Please see the documents that we
subsequently file with the SEC for an update of the following investment
considerations.
Risks Related to Our Business, Strategy and Operations
We have a limited operating history and we may not achieve or sustain operating
profitability or positive cash flows, which may adversely affect our stock price
AirGate and iPCS have limited operating histories. Our ability to achieve
and sustain operating profitability will depend upon many factors, including our
ability to market Sprint PCS services and manage customer turnover rates. In
addition, a key factor in our operational performance following the merger
depends upon our ability to manage the growth of iPCS through the completion of
its network build-out and through implementing the combined company's best
practices to increase market penetration in iPCS' and AirGate's current and
future markets. iPCS will require additional expenditures for the continued
development, construction, testing, deployment and operation of its network.
These activities are expected to place demands on our managerial, operational
and financial resources. If we do not achieve and maintain positive cash flows
from operations when projected, our stock price may be affected.
Our stock price may be volatile and you may not be able to sell your shares at
the price you paid for them
The market price of our common stock could be subject to wide fluctuations
in response to factors such as the following, some of which are beyond our
control:
. quarterly variations in our operating results;
. operating results that vary from the expectations of securities analysts
and investors;
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. changes in expectations as to our future financial performance, including
financial estimates by securities analysts and investors;
. changes in our relationship with Sprint;
. announcements by Sprint concerning developments or changes in its business,
financial condition or results of operations, or in its expectations as to
future financial performance;
. announcements of technological innovations or changes to, or new products
and services by Sprint or our competitors;
. changes in the market perception about the prospects in the wireless
telecommunications industry and results of operations and market valuations
of other companies in the telecommunications industry in general and the
wireless industry in particular, including Sprint and its
PCS network partners and our competitors;
. changes in law and regulation;
. announcements by third parties of significant claims or proceedings against
us;
. announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments; and
. general economic and competitive conditions.
The integration of AirGate and iPCS following the merger will present
significant challenges that could adversely affect our results of operations
AirGate acquired iPCS with the expectation that it would result in expanding
AirGate's existing network and customer base and leveraging the best operating
practices of both organizations. Achieving the benefits of the merger will
depend in part on integrating the operations of the two businesses in an
efficient and timely manner. We cannot assure you that this will occur. To
realize the anticipated benefits of this combination, our management team must
develop strategies and implement a business plan that will successfully:
. manage our network and markets;
. maintain adequate focus on existing business and operations while working
to integrate the management of the two companies;
. combine two companies with limited operating histories;
. manage each company's cash and available credit lines for use in financing
future growth and working capital needs of such company;
. manage our marketing and sales;
. manage the transition of iPCS' senior management expertise to the combined
company; and
. retain and attract key employees of the combined company during a period of
transition.
We cannot assure you that combining the businesses of AirGate and iPCS, even
if achieved in an efficient, effective and timely manner, will result in
combined results of operations and financial conditions superior to those that
AirGate and iPCS could have achieved independently. The diversion of
management's attention from ongoing operations and any difficulties encountered
in the transition and integration process could have a material adverse effect
on our financial condition and results of operations.
Future sales of shares of our common stock, including sales of shares following
the expiration of "lock-up" arrangements, may negatively affect our stock price
As a result of the merger, the former iPCS securityholders received
approximately 12.4 million shares of our common stock and options and warrants
to purchase approximately 1.1 million shares of our common stock. The shares of
common stock issued in the merger represented approximately 47.5% of our common
stock, assuming the exercise of all outstanding warrants and options.
3
In connection with the merger, holders of substantially all of the
outstanding shares of iPCS common and preferred stock entered into "lock-up"
agreements with AirGate. The lock-up agreements impose restrictions on the
ability of such stockholders to sell or otherwise dispose of the shares of our
common stock that they received in the merger. The lock-up period commenced on
November 30, 2001 and extends for a minimum of 120 days and a maximum of 300
days after the effective time of the merger.
We have filed the registration statement of which this prospectus is a part
in order to allow the former iPCS stockholders to freely resell the shares of
our common stock that they received in the merger. In addition, we entered into
a registration rights agreement at the effective time of the merger with some of
the former iPCS stockholders. We completed an offering of 4,000,000 shares of
AirGate common stock held by former iPCS stockholders on December 19, 2001,
under the terms of the registration rights agreement. The Blackstone Group,
referred to as Blackstone, has an additional demand registration right
exercisable at any time after the first anniversary of the effective time of the
merger. In addition, the former iPCS stockholders, including Blackstone, have
incidental registration rights pursuant to which they can, in general, include
their shares of our common stock in any public registration we initiate, whether
or not for sale for our own account.
Sales of substantial amounts of shares of our common stock, or even the
potential for such sales, could lower the market price of our common stock and
impair our ability to raise capital through the sale of equity securities.
Parts of our territories have limited amounts of licensed spectrum, which may
adversely affect the quality of our service and our results of operations
Sprint has licenses covering 10 MHz of spectrum in our southeast territory.
While Sprint has licenses covering 30 MHz of spectrum throughout most of our
midwest territory, it has licenses covering only 10 MHz or 20 MHz in parts of
Illinois. As the number of customers in our territories increase, this limited
amount of licensed spectrum may not be able to accommodate increases in call
volume, may lead to increased dropped calls and may limit our ability to offer
enhanced services, all of which could result in increased customer turnover and
adversely affect our results of operations.
If we lose the right to install our equipment on certain wireless towers or are
unable to renew expiring leases or locate new sites for wireless towers on
favorable terms, our business and results of operations could be adversely
impacted
Many of our cell sites are co-located on leased tower facilities shared with
one or more wireless providers. In addition, a large portion of these leased
tower sites are owned by a few tower companies. If a master co-location
agreement with one of these tower companies were to terminate, or if one of
these tower companies were unable to support our use of its tower sites, we
would have to find new sites or we may be required to rebuild that portion of
our network. In addition, the concentration of our cell sites with a few tower
companies could adversely affect our results of operations if we are unable to
renew expiring leases with such tower companies on favorable terms.
The loss of the officers and skilled employees who we depend upon to operate our
business could adversely affect our results of operations
Our business is managed by a small number of executive officers. We believe
that our future success depends in part on our continued ability to attract and
retain highly qualified technical and management personnel. We may not be
successful in retaining our key personnel or in attracting and retaining other
highly qualified technical and management personnel. We currently have "key man"
life insurance for our chief executive officer. We do not have
4
long-term employment or change of control agreements with any of our executive
officers, and most of the options granted to senior management are at a strike
price below current market prices of our stock.
Expanding our territory includes numerous risks and our failure to overcome
these risks and any other problems encountered may have a material adverse
effect on our business and reduce the market value of our securities
As part of our continuing operating strategy, we may expand our territory
through the grant of additional markets from Sprint or through acquisitions of
other Sprint network partners. These transactions may require the approval of
Sprint and commonly involve a number of risks, including the:
. difficulty of assimilating acquired operations and personnel;
. diversion of management's attention;
. disruption of ongoing business;
. impact on our cash and available credit lines for use in financing
future growth and working capital needs;
. inability to retain key personnel;
. inability to successfully incorporate acquired assets and rights into
our service offerings;
. inability to maintain uniform standards, controls, procedures and
policies; and
. impairment of relationships with employees, customers or vendors.
Failure to overcome these risks or any other problems encountered in these
transactions could have a material adverse effect on our business. In connection
with these transactions, we also may issue additional equity securities, incur
additional debt or incur significant amortization expenses related to intangible
assets.
Because the former iPCS stockholders did not provide AirGate with any
indemnification following the merger, iPCS will be responsible for any
undisclosed prior liabilities of iPCS
iPCS made certain representations and warranties to AirGate in the merger
agreement concerning iPCS' business and operations. The merger agreement did not
provide AirGate with any contractual indemnification from the iPCS stockholders
for any breaches of the representations and warranties by iPCS or any failure of
iPCS to comply with its obligations under the merger agreement. As a result,
iPCS will be responsible for any of its prior undisclosed liabilities. Such
liabilities could materially impact our future consolidated results of
operations.
We may experience a higher rate of customer turnover in the future compared to
historical rates which would adversely affect our financial performance.
The wireless personal communications services industry in general and
Sprint in particular have experienced a higher rate of customer turnover,
commonly known as churn, as compared to cellular industry averages. This churn
rate has been driven higher in recent months due to the introduction of the
NDASL and Clear Pay programs as described elsewhere in this prospectus. In
addition, due to significant competition in our industry and general economic
conditions, among other things, our future rate of customer turnover may be
higher than our historical rate. Factors which may contribute to higher churn
include:
. our handset return policy that allows customers to return used handsets
within 14 days of purchase and receive a full refund;
. the attractiveness of our competitors' products and services;
. network performance;
. customer service;
. increased prices;
5
. any future changes by us in the products and services we offer, especially
to the Clear Pay Program; and
. customer mix and credit class, including those related to the NDASL program
and Clear Pay program, which accounted for 38% of our customers at December
31, 2001.
A high rate of customer turnover could adversely affect our competitive
position, liquidity, results of operations and our costs of, or losses incurred
in, obtaining new subscribers, especially because we subsidize some of the costs
of initial purchases of handsets by customers.
Our allowance for doubtful accounts may not be sufficient to cover uncollectible
accounts
On an ongoing basis, we estimate the amount of customer receivables that we
will not collect to reflect the expected loss on such accounts in the current
period. However, our allowance for doubtful accounts may underestimate actual
unpaid receivables for various reasons, including:
. adverse changes in our churn rate exceeding our estimates;
. adverse changes in the economy generally exceeding our expectations; or
. unanticipated changes in Sprint PCS' products and services.
If our allowance for doubtful accounts is insufficient to cover losses on
our receivables, our business, financial position or results of operations could
be materially adversely affected.
Risks Particular to Our Indebtedness
Both AirGate and iPCS have substantial debt that neither company may be able to
service; a failure to service such debt may result in the lenders under such
debt controlling AirGate's or iPCS' assets
The substantial debt of AirGate and iPCS will have a number of important
consequences for our operations and our investors, including the following:
. each company will have to dedicate a substantial portion of any cash flow
from its operations to the payment of interest on, and principal of, its
debt, which will reduce funds available for other purposes;
. we anticipate that each company has sufficient resources to finance its
currently projected business plan, but neither may be able to obtain
additional financing if the assumptions underlying the business plan are
not correct for unanticipated capital requirements, capital expenditures,
working capital requirements and other corporate purposes;
. some of each company's debt, including financing under each company's
senior credit facility, will be at variable rates of interest, which could
result in higher interest expense in the event of increases in market
interest rates; and
. due to the liens on substantially all of each company's assets and the
pledges of stock of each company's existing and future subsidiaries that
secure AirGate's and iPCS' respective senior debt and senior subordinated
discount notes, lenders or holders of such senior subordinated discount
notes may control AirGate's or iPCS' assets or the assets of the
subsidiaries of either company in the event of a default.
The ability of both AirGate and iPCS to make payments on their respective
debt will depend upon each company's future operating performance which is
subject to general economic and competitive conditions and to financial,
business and other factors, many of which neither company can control. If the
cash flow from either company's operating activities is insufficient, we may
take actions, such as delaying or reducing capital expenditures, attempting to
restructure or refinance our debt, selling assets or operations or seeking
additional equity capital. Any or all of these actions may not be sufficient to
allow us to service our debt obligations. Further, we may be unable to take
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any of these actions on satisfactory terms, in a timely manner or at all. The
credit facilities and indentures governing AirGate's and iPCS' respective debt
will limit our ability to take several of these actions. The failure of AirGate
or iPCS to generate sufficient funds to pay its debts or to successfully
undertake any of these actions could, among other things, materially adversely
affect the market value of AirGate's common stock.
If either AirGate or iPCS does not meet all of the conditions required under its
respective senior secured credit facility, such company may not be able to draw
down all of the funds it anticipates receiving from its senior lenders and we
may not be able to fund operating losses and working capital needs
As of December 31, 2001, AirGate had borrowed $105.3 million under its
senior credit facility and iPCS had borrowed $50.0 million under its senior
credit facility. The remaining $48.2 million available under AirGate's senior
credit facility and the remaining $90.0 million available under iPCS' senior
credit facility, a portion of which each company expects to borrow in the
future, is subject to the applicable company meeting all of the conditions
specified in its respective financing documents. We recently completed an
amendment to the iPCS senior credit facility, primarily to provide additional
relief under the minimum EDITDA covenant, which we anticipated not meeting in
future quarters. In addition, additional borrowings are subject to specific
conditions on each funding date, including the following:
. that the representations and warranties in such company's loan documents are
true and correct;
. that certain of such company's financial covenant tests are satisfied,
including leverage and operating performance covenants and, solely with
respect to iPCS, loss covenants relating to earnings before interest, taxes,
depreciation and amortization; and
. the absence of a default under such company's loan documents.
If either company does not meet these conditions at each funding date, such
company's senior lenders may not lend some or all of the remaining amounts under
such company's senior secured credit facility. If other sources of funds are not
available, neither company may be in a position to meet its operating cash
needs.
The ability of AirGate and iPCS to operate as a combined company will be limited
by the separate public debt indentures and senior secured credit facilities of
AirGate and iPCS
In order to assure continued compliance with the indenture governing
AirGate's senior subordinated discount notes, AirGate has designated iPCS as an
"unrestricted subsidiary." As a result, for purposes of their respective public
debt indentures, AirGate and iPCS will operate as separate business entities.
Due to restrictions in AirGate's indenture, AirGate is unable to provide direct
or indirect credit support to iPCS and is significantly limited in its ability
to maintain or preserve iPCS' financial condition or cause iPCS to achieve a
specified level of operating results. Likewise, iPCS is restricted under its
debt instruments from paying dividends or freely transferring money to AirGate.
These restrictions may hinder the combined company's ability to achieve the
anticipated benefits of the merger, react to developments in either company's
business or take advantage of business opportunities.
If either AirGate or iPCS fails to pay the debt under its respective senior
secured credit facility, Sprint has the option of purchasing such company's
loans, giving Sprint certain rights of a creditor to foreclose on such company's
assets
Sprint has contractual rights, triggered by an acceleration of the maturity
of the debt under AirGate's or iPCS' respective senior secured credit facility,
pursuant to which Sprint may purchase AirGate's or iPCS' obligations to its
respective senior lenders and obtain the rights of a senior lender. To the
extent Sprint purchases these obligations, Sprint's interests as a creditor
could conflict with our interests. Sprint's rights as a senior lender would
enable it to
7
exercise rights with respect to the related company's assets and continuing
relationship with Sprint in a manner not otherwise permitted under our Sprint
agreements.
Risks Particular to Our Relationship with Sprint
The termination of AirGate's or iPCS' affiliation with Sprint or Sprint's
failure to perform its obligations under the Sprint agreements would severely
restrict our ability to conduct our business
Neither AirGate nor iPCS owns the licenses to operate their wireless
network. The ability of AirGate and iPCS to offer Sprint PCS products and
operate a PCS network is dependent on their Sprint agreements remaining in
effect and not being terminated. The management agreements between Sprint and
each of AirGate and iPCS are not perpetual. Sprint can choose not to renew iPCS'
management agreement at the expiration of the 20-year initial term or any ten
year renewal term. AirGate's management agreement automatically renews at the
expiration of the 20-year initial term for an additional 10-year period unless
AirGate is in default. Sprint can choose not to renew AirGate's management
agreement at the expiration of the ten-year renewal term or any subsequent
ten-year renewal term. In any event, AirGate's and iPCS' management agreements
terminate in 50 years. In addition, each of these agreements can be terminated
for breach of any material term, including, among others, build-out and network
operational requirements. AirGate and iPCS also are dependent on Sprint's
ability to perform its obligations under the Sprint agreements. The non-renewal
or termination of any of the Sprint agreements or the failure of Sprint to
perform its obligations under the Sprint agreements would severely restrict our
ability to conduct business.
Sprint may make business decisions that are not in our best interests, which may
adversely affect our relationships with customers in our territory, increase our
expenses and/or decrease our revenues
Sprint, under the Sprint agreements, has a substantial amount of control
over the conduct of our business. Accordingly, Sprint may make decisions that
adversely affect our business, such as the following:
. Sprint could price its national plans based on its own objectives and could
set price levels or other terms that may not be economically sufficient for
our business;
. Sprint could develop products and services or establish credit policies,
such as NDASL, which could adversely affect our results of operations;
. Sprint could raise the costs for Sprint to perform back office services or
reduce levels of services;
. Sprint could prohibit us from selling non-Sprint approved PCS equipment;
. Sprint could, subject to limitations under our Sprint agreements, alter its
network and technical requirements or request that we build out additional
areas within our territories, which could result in increased equipment and
build-out costs;
. Sprint could make decisions which could adversely affect the Sprint and
Sprint PCS brand names, products or services; and
. Sprint could decide not to renew the Sprint agreements or to no longer
perform its obligations, which would severely restrict our ability to
conduct business.
The occurrence of any of the foregoing could adversely affect our
relationship with customers in our territories, increase our expenses and/or
decrease our revenues.
Change in Sprint PCS products and services may reduce customer additions
The competitiveness of Sprint PCS products and services is a key factor in
our ability to attract and retain customers. Under the Sprint PCS service plans,
customers who do not meet certain credit criteria can nevertheless
8
select any plan offered subject to an account spending limit, referred to as
ASL, to control credit exposure. Account spending limits range from $125 to $200
depending on the credit quality of the customer. Prior to May 2001, all of these
customers were required to make a deposit ranging from $125 to $200 that could
be credited against future billings. In May 2001, the deposit requirement was
eliminated on certain, but not all, credit classes ("NDASL"). As a result, a
significant amount of our new customer additions have been under the NDASL
program (38% of our customer base at December 31, 2001). Sprint has replaced the
NDASL program with the "Clear Pay Program" without reinstating the deposit
requirement. The Clear Pay Program is substantially similar to the NDASL program
but with an increased emphasis on payment of outstanding amounts. Under the
Clear Pay Program, customers who do not meet certain credit criteria can select
any plan offered, subject to an account spending limit. The NDASL program had
the effect of increasing churn and bad debt expense. Sprint has the right to end
or materially change the terms of the Clear Pay Program. If Sprint chooses to
eliminate the Clear Pay Program or alter its features, the growth rate we expect
to achieve may decrease. We have requested and received effective February 24,
2002 reinstatement of the deposit in our territory for customers with poor or
inadequate payment histories. We believe that reinstatement of the deposit will
reduce the number of potential new customers.
The inability of Sprint to maintain high quality back office services, or our
inability to use Sprint's back office services and third party vendors' back
office systems, could lead to customer dissatisfaction, increased churn or
otherwise increase our costs
We rely on Sprint's internal support systems, including customer care,
billing and back office support. Our operations could be disrupted if Sprint is
unable to maintain and expand its internal support systems in a high quality
manner, or to efficiently outsource those services and systems through third
party vendors. The rapid expansion of Sprint's PCS business is expected to
continue to pose a significant challenge to its internal support systems.
Additionally, Sprint has relied on third party vendors for a significant number
of important functions and components of its internal support systems and may
continue to rely on these vendors in the future. The combined company will
depend on Sprint's willingness to continue to offer these services and to
provide these services effectively and at competitive costs. Our Sprint
agreements provide that, upon nine months' prior written notice, Sprint may
elect to terminate any of these services. The inability of Sprint to maintain
high quality back office services, or our inability to use Sprint back office
services and third party vendors' back office systems, could lead to customer
dissatisfaction, increase churn or otherwise increase our costs.
If Sprint does not complete the construction of its nationwide PCS network, we
may not be able to attract and retain customers
Sprint currently intends to cover a significant portion of the population of
the United States, Puerto Rico and the U.S. Virgin Islands by creating a
nationwide PCS network through its own construction efforts and those of its
network partners. Sprint is still constructing its nationwide network and does
not offer PCS services, either on its own network or through its roaming
agreements, in every city in the United States. Sprint has entered into
management agreements similar to ours with companies in other markets under its
nationwide PCS build-out strategy. Our results of operations are dependent on
Sprint's national network and, to a lesser extent, on the networks of Sprint's
other PCS network partners. Sprint's network may not provide nationwide coverage
to the same extent as its competitors, which could adversely affect our ability
to attract and retain customers.
Certain provisions of the Sprint agreements may diminish the value of AirGate's
common stock and restrict the sale of our business
Under limited circumstances and without further stockholder approval,
Sprint may purchase the operating assets of AirGate or iPCS at a discount. In
addition, Sprint must approve any change of control of the ownership of AirGate
9
or iPCS and must consent to any assignment of their Sprint agreements. Sprint
also has a right of first refusal if AirGate or iPCS decides to sell its
operating assets to a third party. Each of AirGate and iPCS also is subject to a
number of restrictions on the transfer of its business, including a prohibition
on the sale of AirGate or iPCS or their operating assets to competitors of
Sprint or Sprint PCS. These restrictions and other restrictions contained in the
Sprint agreements could adversely affect the value of our common stock, may
limit our ability to sell our business, may reduce the value a buyer would be
willing to pay for our business and may reduce the "entire business value," as
described in our Sprint agreements.
We may have difficulty in obtaining an adequate supply of certain handsets from
Sprint, which could adversely affect our results of operations
We depend on our relationship with Sprint to obtain handsets. Sprint orders
handsets from various manufacturers. We could have difficulty obtaining specific
types of handsets in a timely manner if:
. Sprint does not adequately project the need for handsets for itself, its
Sprint PCS network partners and its other third party distribution channels,
particularly in transition to new technologies; such as "one time radio
transmission technology," or "1XRTT;"
. we do not adequately project our need for handsets;
. Sprint modifies its handset logistics and delivery plan in a manner that
restricts or delays our access to handsets; or
. there is an adverse development in the relationship between Sprint and its
suppliers or vendors.
The occurrence of any of the foregoing could disrupt our customer service
and/or result in a decrease in our subscribers, which could adversely affect our
results of operations.
Non-renewal or revocation by the Federal Communications Commission of the Sprint
PCS licenses would significantly harm our business
PCS licenses are subject to renewal and revocation by the Federal
Communications Commissions, referred to as the FCC. Sprint PCS licenses in our
territories will begin to expire in 2007 but may be renewed for additional ten
year terms. There may be opposition to renewal of Sprint's PCS licenses upon
their expiration, and the Sprint PCS licenses may not be renewed. The FCC has
adopted specific standards to apply to PCS license renewals. Any failure by
Sprint or us to comply with these standards could cause revocation or forfeiture
of the Sprint PCS licenses for our territories. If Sprint loses any of its
licenses in our territory, we would be severely restricted in our ability to
conduct business.
If Sprint does not maintain control over its licensed spectrum, the Sprint
agreements may be terminated, which would result in our inability to provide
service
The FCC requires that licensees like Sprint maintain control of their
licensed spectrum and not delegate control to third-party operators or managers.
Although the Sprint agreements with AirGate and iPCS reflect an arrangement that
the parties believe meets the FCC requirements for licensee control of licensed
spectrum, we cannot assure you that the FCC will agree. If the FCC were to
determine that the Sprint agreements need to be modified to increase the level
of licensee control, AirGate and iPCS have agreed with Sprint to use their best
efforts to modify the Sprint agreements to comply with applicable law. If we
cannot agree with Sprint to modify the Sprint agreements, they may be
terminated. If the Sprint agreements are terminated, we would no longer be a
part of the Sprint PCS network and would be severely restricted in our ability
to conduct business.
10
Risks Particular to Our Industry
Significant competition in the wireless communications services industry may
result in our competitors offering new or better products and services or lower
prices, which could prevent us from operating profitably
Competition in the wireless communications industry is intense. We
anticipate that competition will cause the market prices for two-way wireless
products and services to decline in the future. Our ability to compete will
depend, in part, on our ability to anticipate and respond to various competitive
factors affecting the telecommunications industry.
Our dependence on Sprint to develop competitive products and services and
the requirement that we obtain Sprint's consent to sell non-Sprint approved PCS
equipment may limit our ability to keep pace with competitors on the
introduction of new products, services and equipment. Some of our competitors
are larger than us, possess greater resources and more extensive coverage areas,
and may market other services, such as landline telephone service, cable
television and Internet access, with their wireless communications services.
Furthermore, there has been a recent trend in the wireless communications
industry towards consolidation of wireless service providers through joint
ventures, reorganizations and acquisitions. We expect this consolidation to lead
to larger competitors over time. We may be unable to compete successfully with
larger companies that have substantially greater resources or that offer more
services than we do. In addition, we may be at a competitive disadvantage since
we may be more highly leveraged than some of our competitors.
Increased penetration rates could limit or decrease our rate of new customer
additions
Intense competition in the wireless communications industry could cause
prices for wireless products and services to decline. If prices drop, then our
rate of net customer additions will take on greater significance in improving
our financial condition and results of operations. However, as our and our
competitor's penetration rates in our markets increases over time, our rate of
adding net customers could decrease. If this decrease were to happen, our
business and financial results could be materially adversely affected.
Alternative technologies and current uncertainties in the wireless market may
reduce demand for PCS
The wireless communications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades in
existing analog wireless systems, evolving industry standards, ongoing
improvements in the capacity and quality of digital technology, shorter
development cycles for new products and enhancements and changes in end-user
requirements and preferences. Technological advances and industry changes could
cause the technology used on our network to become obsolete. Sprint may not be
able to respond to such changes and implement new technology on a timely basis,
or at an acceptable cost.
If Sprint is unable to keep pace with these technological changes or changes
in the wireless communications market based on the effects of consolidation from
the Telecommunications Act of 1996 or from the uncertainty of future government
regulation, the technology used on our network or our business strategy may
become obsolete. In addition, wireless carriers are seeking to implement an
upgrade to "one times radio transmission technology," or "1XRTT," as well as
"third generation," or "3G," technology throughout the industry. The 3G
technology promises high-speed, always-on Internet connectivity and high-quality
video and audio. We cannot assure you that Sprint or the combined company can
implement 1XRTT or 3G technology successfully or on a cost-effective basis.
We are a consumer business and a recession in the United States involving
significantly lowered spending could negatively affect our results of operations
11
Our primary customer base is individual consumers and our accounts
receivable represent unsecured credit. In the event that the economic downturn
that the United States and our territories have recently experienced becomes
more pronounced or lasts longer than currently expected and spending by
individual consumers drops significantly, our business may be negatively
affected.
Regulation by government and taxing agencies may increase our costs of providing
service or require us to change our services, either of which could impair our
financial performance
Our operations and those of Sprint may be subject to varying degrees of
regulation by the FCC, the Federal Trade Commission, the Federal Aviation
Administration, the Environmental Protection Agency, the Occupational Safety and
Health Administration and state and local regulatory agencies and legislative
bodies. Adverse decisions or regulation of these regulatory bodies could
negatively impact our operations and our costs of doing business. For example,
changes in tax laws or the interpretation of existing tax laws by state and
local authorities could subject us to increased income, sales, gross receipts or
other tax costs or require us to alter the structure of our current relationship
with Sprint.
Use of hand-held phones may pose health risks, which could result in the reduced
use of wireless services or liability for personal injury claims
Media reports have suggested that certain radio frequency emissions from
wireless handsets may be linked to various health problems, including cancer,
and may interfere with various electronic medical devices, including hearing
aids and pacemakers. Concerns over radio frequency emissions may discourage use
of wireless handsets or expose us to potential litigation. Any resulting
decrease in demand for wireless services, or costs of litigation and damage
awards, could impair our ability to achieve and sustain profitability.
Regulation by government or potential litigation relating to the use of wireless
phones while driving could adversely affect our results of operations
Some studies have indicated that some aspects of using wireless phones while
driving may impair drivers' attention in certain circumstances, making accidents
more likely. These concerns could lead to potential litigation relating to
accidents, deaths or serious bodily injuries, or to new restrictions or
regulations on wireless phone use, any of which also could have material adverse
effects on our results of operations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our common stock by the
selling stockholders.
12
SELLING STOCKHOLDERS
The following table sets forth information with respect to beneficial
ownership of our common stock by the selling stockholders, as of March 7, 2002
and as adjusted to reflect the sale of the shares offered hereby. Except as
provided in the footnotes to the table or in the discussion below, none of the
selling stockholders has had a material relationship with us within the past
three years.
Beneficial Ownership Number of Beneficial Ownership
Prior to the Offering/(1)/ Shares After the Offering/(1)/
--------------------- ------------------
Name and Address Shares Percentage Offered Shares Percentage
---------------- ------ ---------- ------- ------ ----------
Geneseo Communications, Inc./(2), (3)/ ............. 2,115,253 8.2% 2,115,253 - -
Cambridge Telcom, Inc./(2)/ ........................ 1,863,074 7.2 1,863,074 - -
The Blackstone Group/(4), (5)/ ..................... 2,578,379 10.0 2,494,374 84,005 *
Cass Communication Management, Inc./(2)/ ........... 504,358 2.0 504,358 - -
Technology Group, LLC/(2)/ ......................... 554,358 2.2 554,358 - -
Montrose Mutual PCS, Inc./(2)/ ..................... 529,358 2.1 529,358 - -
Gridley Enterprises, Inc./(6)/ ..................... 210,287 * 210,287 - -
Timothy M. Yager/(7), (8)/ ......................... 234,130 * 74,762 159,368 *
---------
Total Shares Offered ...................... 8,345,824
=========
________________________
* Less than 1%
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, as amended. A person is deemed to be the
beneficial owner of common stock if such person has or shares the right to
vote or dispose of such common stock, or has the right to acquire
beneficial ownership at any time within 60 days of the date of this table.
(2) This stockholder, together with other investors, formed Illinois PCS, LLC
(the predecessor to iPCS, Inc.). In exchange for its capital contribution,
the stockholder received membership interests in Illinois PCS, LLC. Such
entity was then reorganized as a corporation on July 12, 2000 when the
stockholder's limited liability company interests were converted into iPCS
common stock.
(3) Geneseo Communications, Inc. leases T-1 lines and provides other
telecommunication services to iPCS.
(4) This stockholder, together with certain of its affiliates, purchased a
majority of an aggregate of $120.0 million of iPCS convertible preferred
stock in July and December 2000. Such iPCS convertible preferred stock was
automatically converted into iPCS common stock immediately prior to the
effective time of the merger, and then exchanged into our common stock at
the effective time. Also, please see the discussion below under "Merger
with iPCS, Inc." and "Public Offering; Registration Rights" for additional
information regarding material relationships involving us and Blackstone.
(5) Of the 2,578,379 shares, 1,153,648 are held by Blackstone Communications
Partners I L.P. ("BCOM"), 992,328 are held by Blackstone iPCS Capital
Partners L.P. ("BICP"), 348,398 are held by Blackstone/iPCS L.L.C.
("BLLC"), 4,780 are shares issuable to Blackstone Management Partners III
L.L.C. pursuant to options that vested at the effective time of our merger
with iPCS, 71,302 are shares issuable upon exercise of warrants by
Blackstone Mezzanine Partners L.P. ("BMP") and 7,923 are shares issuable
upon exercise of warrants by Blackstone Mezzanine Holdings L.P. ("BMH").
Blackstone Communications Management Associates I L.L.C. is the general
partner of BCOM. Blackstone Media Management Associates III L.L.C. is the
general partner of BICP. Blackstone Media Management Associates III L.L.C.
is the manager of BLLC. Blackstone Mezzanine Associates L.P. is the general
partner of BMP and BMH. Messrs. Peter G. Peterson and Stephen A. Schwarzman
are the founding members of Blackstone, and as such may also be deemed to
share beneficial ownership of the shares held by each of these entities.
(6) Gridley Enterprises, Inc. leases a switching location to iPCS.
(7) As of February 29, 2000, the members of Illinois PCS, LLC agreed to admit
Mr. Yager as a new member owning a 1.5% interest, and to reduce their
membership interests in aggregate by 1.5%. Mr. Yager agreed to
13
cancel his management agreement with Illinois PCS, LLC in exchange for his
1.5% membership interest and certain other consideration. For the year
ended December 31, 2000, iPCS has recorded non-cash compensation in the
amount of approximately $8.5 million resulting from the issuance of this
membership interest to Mr. Yager. Also, please see the discussion below
under "Merger with iPCS, Inc." and "Public Offering; Registration Rights"
for additional information regarding material relationships involving us
and Mr. Yager.
(8) Information presented includes 53,631 shares held by the Kelly Yager 2001
Trust established by Mr. Yager's wife, 21,131 shares held by the Timothy
Yager 2001 Trust established by Mr. Yager, and 159,368 shares issuable to
Mr. Yager pursuant to currently vested options. Mr. Yager disclaims
beneficial ownership of shares of our common stock owned by the Kelly Yager
2001 Trust.
Merger with iPCS, Inc.
In connection with AirGate's merger with iPCS, the selling stockholders
received the following amounts of shares of our common stock (including shares
issuable upon exercise of warrants and options): the Blackstone affiliates
(4,253,397 shares), Geneseo Communications, Inc. (2,465,253 shares), Cambridge
Telcom, Inc. (2,113,074 shares), Cass Communications Management, Inc. (704,358
shares), Technology Group, LLC (704,358 shares), Montrose Mutual PCS, Inc.
(704,358 shares), Gridley Enterprises, Inc. (352,179 shares) and Timothy M.
Yager (266,630 shares). In accordance with the merger agreement, the Blackstone
affiliates designated Michael S. Chae and iPCS designated Mr. Yager to serve on
our board of directors at the effective time of the merger. Mr. Yager was the
President and Chief Executive Officer and a director of iPCS from its formation
in early 1999 until resigning from such positions at the effective time of the
merger. Mr. Chae, who currently serves as a Principal of the Principal
Investment Group of The Blackstone Group, LP, served as a director of iPCS from
August 2000 until resigning from such position at the effective time of the
merger. The former iPCS stockholders also have the right, subject to our
approval, to designate an independent member to our board of directors. Such
designation has occurred and our board of directors is considering such nominee.
Upon the completion of the merger, Mr. Yager's employment with iPCS
terminated and he received a severance payment from iPCS in the amount of
$1,094,535 in accordance with the terms of his employment agreement with iPCS.
The severance payment included an amount sufficient to pay (1) the parachute
excise tax that Mr. Yager will have to pay as a result of his severance payment
and (2) the income and related employment taxes that Mr. Yager will have to pay
with respect to the reimbursement to him of the parachute excise tax. Pursuant
to the terms of Mr. Yager's employment agreement with iPCS, subject to the
reasonable request of the board of directors of iPCS, Mr. Yager will provide up
to 80 hours per calendar month of consulting services relating to his expertise
in the wireless communication industry. Mr. Yager will be entitled to an annual
consulting fee of $400,000 during the period beginning on the date of his
termination of employment and ending on December 31, 2004.
Public Offering; Registration Rights
In connection with the closing of the iPCS merger, we entered into a
registration rights agreement with certain of the former iPCS stockholders. On
December 19, 2001, we completed an underwritten public offering of 4,000,000
shares of our common stock by such stockholders following the exercise of a
demand registration right by the Blackstone affiliates in accordance with the
registration rights agreement. In the public offering, the selling stockholders
sold the following amounts of shares of our common stock: the Blackstone
affiliates (1,675,018 shares), Geneseo Communications, Inc. (350,000 shares),
Cambridge Telcom, Inc. (250,000 shares), Cass Communications Management, Inc.
(200,000 shares), Technology Group, LLC (150,000 shares), Montrose Mutual PCS,
Inc. (175,000 shares), Gridley Enterprises, Inc. (141,892 shares), Mr. Yager
(25,000 shares) and a charitable foundation established by Mr. Yager (7,500
shares). The public offering price was $50.00 per share less underwriting
discounts and commissions of $2.25 per share that the former iPCS stockholders
paid. The registration rights agreement requires us
14
to pay all of the fees and expenses of the former iPCS stockholders in
connection with the December public offering, other than the underwriting
discounts and commissions. We estimate our fees and expenses, which consisted
primarily of attorneys' and accountants' fees, SEC filing fees and printing
expenses, to be approximately $740,000.
The registration rights agreement also gives certain of the former iPCS
stockholders, upon the request of the Blackstone affiliates, the right to demand
that we undertake an underwritten public offering of their shares of our common
stock after the one-year anniversary of the completion of the merger. The number
of shares of our common stock to be sold in a public offering following exercise
of this demand right by such stockholders is subject to market conditions and
depends upon the number of shares of our common stock that the selling
stockholders request to be included in such offering. Generally, 75% of the
shares included in the offering would be shares owned by the Blackstone
affiliates and 25% would be shares owned by the founding iPCS stockholders. We
have no obligation, however, to complete an underwritten public offering unless
the sale of shares of our common stock requested to be included in such offering
would result in initial aggregate proceeds of at least $40 million. The
registration rights agreement prohibits us from undertaking a separate public
sale or distribution of our common stock during a period of 90 days after the
completion of an underwritten offering following exercise of a demand right by
the selling stockholders. In the event we decide to register additional equity
securities under the Securities Act of 1933, as amended, the registration rights
agreement also gives the former iPCS stockholders limited rights to include
their shares of our common stock in such a registration.
In accordance with a registration rights agreement dated as of July 12,
2000, as amended, certain affiliates of The Blackstone Group, LP requested on
November 20, 2001 that iPCS register the resale of the $50 million in aggregate
principal amount of iPCS' 14% senior discount notes due 2010 that such
Blackstone affiliates hold. The Blackstone affiliates obtained their notes on
July 12, 2000 in connection with a private offering by iPCS. On December 20,
2001, iPCS filed a registration statement relating to the resale of such notes,
which registration statement the Securities and Exchange Commission has declared
effective.
PLAN OF DISTRIBUTION
For purposes of this prospectus, selling stockholders include partners,
donees, pledgees, transferees or other successors-in-interest from time to time
selling shares received from a named selling stockholder as a gift, pledge,
partnership distribution or other non-sale transfer. We will not receive any
proceeds from the sale of shares of our common stock held by the selling
stockholders pursuant to this prospectus. The selling stockholders may offer and
sell their shares of our common stock from time to time in one or more of the
following transactions:
.. on The Nasdaq National Market or any exchange or market on which shares of
our common stock are listed or quoted;
.. in the over-the-counter market;
.. in privately negotiated transactions;
.. for settlement of short sales, or through long sales, options or hedging
transactions involving cross or block trades;
.. by pledge to secure debts and other obligations;
.. block transactions (which may involve crosses) in which a broker-dealer may
sell all or a portion of the shares as agent but may position and resell
all or a portion of the block as a principal to facilitate the transaction;
.. purchases by one or more underwriters on a firm commitment or best efforts
basis;
15
.. purchases by a broker-dealer as principal and resale by the broker-dealer
for its own account pursuant to a prospectus supplement;
.. a special offering, an exchange distribution or a secondary distribution in
accordance with the applicable rules of The Nasdaq National Market or of
any stock exchange on which shares of our common stock may be listed; or
.. through a combination of any of these transactions.
The selling stockholders may sell their shares of our common stock at any
of the following prices:
.. fixed prices which may be changed;
.. market prices prevailing at the time of sale;
.. prices related to prevailing market prices; or
.. privately negotiated prices.
The selling stockholders may use broker-dealers to sell their shares of our
common stock. In connection with such sales the broker-dealers may either
receive discounts, concessions or commissions from the selling stockholders, or
they may receive commissions from purchasers of shares of our common stock for
whom they acted as agents. In order to comply with the securities laws of
certain states, the selling stockholders may only sell their shares of our
common stock through registered or licensed broker-dealers.
The selling stockholders and any agents or broker-dealers that the selling
stockholders use to sell their shares of our common stock may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any discount, concession or commission received by them and any profit on the
resale of shares as principal may be deemed to be underwriting discounts or
commissions under the Securities Act. Because the selling stockholders may be
deemed to be underwriters, the selling stockholders may be subject to the
prospectus delivery requirements of the Securities Act.
The selling stockholders and any other person participating in the
distribution of their shares of our common stock described in this prospectus
and/or any applicable prospectus supplement will be subject to applicable
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, including, without limitation, the anti-manipulation
provisions of Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of such shares by the selling stockholders or any
other person. Furthermore, Regulation M may restrict the ability of any person
engaged in the distribution of the shares offered by the selling stockholders
pursuant to this prospectus and/or any applicable prospectus supplement to
engage in market-making activities with respect to the particular shares being
distributed. All of the foregoing may affect the marketability of the shares
offered by the selling stockholders pursuant to this prospectus and/or any
applicable prospectus supplement and the ability of any person or entity to
engage in market-making activities with respect to such shares.
We may, if so indicated in the applicable prospectus supplement, agree to
indemnify any underwriters and the selling stockholders against certain civil
liabilities, including liabilities under the Securities Act.
The registration contemplated hereby is being effected under the
requirements of the merger agreement. We will pay substantially all of the
expenses incident to the registration of the shares of our common stock offered
by the selling stockholders. The selling stockholders will pay all brokerage
fees, selling commissions or underwriting discounts incident to the offering and
sale of the shares by the selling stockholders.
16
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us
and the selling stockholders by Winston & Strawn, Chicago, Illinois. Legal
matters will be passed upon for the underwriters, dealers or agents by counsel
which we will name in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements and schedule of AirGate PCS, Inc. and
subsidiaries as of September 30, 2001 and 2000, and for the years ended
September 30, 2001 and 2000, and the nine month period ended September 30, 1999,
have been incorporated by reference herein and in the registration statement in
reliance upon the reports of KPMG LLP, independent accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of iPCS, Inc. and Subsidiaries and
Predecessor as of September 30, 2001 and December 31, 2000, and for the nine
months ended September 30, 2001, for the year ended December 31, 2000 and for
the period from January 22, 1999 (date of inception) through December 31, 1999,
incorporated by reference from the Current Report on Form 8-K of AirGate PCS,
Inc. filed with the Commission on November 30, 2001, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room located at 450 5th Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at: http://www.sec.gov. Reports, proxy statements and other information
pertaining to us may also be inspected at the offices of The Nasdaq National
Market, which is located at 1735 K. Street, N.W., Washington, D.C. 20006.
We have filed a registration statement to register with the SEC the
securities offered by this prospectus. This prospectus is a part of that
registration statement. As allowed by SEC rules, this prospectus does not
contain all of the information you can find in our registration statement or the
exhibits to the registration statement.
You should rely only on the information or representations provided in this
prospectus or any prospectus supplement. We have not authorized anyone else to
provide you with different information. Neither we nor the selling stockholders
may make an offer of our securities in any state where the offer is not
permitted. The delivery of this prospectus does not, under any circumstances,
mean that there has not been a change in our affairs since the date of this
prospectus. It also does not mean that the information in this prospectus is
correct after this date.
Our address on the world wide web is http://www.airgatepcsa.com. The
information on our web site is not a part of this document.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
17
considered to be part of this document, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
Filings Period or Date Filed
------- --------------------
Annual Report on Form 10-K Year ended September 30, 2001
Quarterly Report on Form 10-Q Quarter ended December 31, 2001
Current Reports on Form 8-K November 30, 2001, December 20, 2001
and February 22, 2002
The description of our common stock set forth
on Form 8-A (File No. 0-27455) September 24, 1999
We incorporate by reference additional documents that we may file with the
SEC between the date of this document and the date of the completion of the
offering of the securities described in this prospectus. These documents include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document from us, or from the SEC through the SEC's Internet world wide web site
at the address described above. Documents incorporated by reference are
available from us without charge, excluding any exhibits to those documents,
unless the exhibit is specifically incorporated by reference as an exhibit in
this document. You can obtain documents incorporated by reference in this
document by requesting them in writing or by telephone from us at the following
address:
AirGate PCS, Inc.
Harris Tower
233 Peachtree Street NE, Suite 1700
Atlanta, Georgia 30303
Attention: Edie Dorris
(404) 525-7272
E-mail: edorris@airgatepcsa.com
Any statement contained in a document incorporated or deemed incorporated
herein by reference shall be deemed to be modified or superseded for the purpose
of this prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is, or is deemed to be, incorporated
herein by reference modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meaning assigned to them in the Prospectus which forms
a part of this Registration Statement.
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the common stock being registered. The Securities and Exchange
Commission registration fee was paid by the registrant in connection with
initial filing of this Registration Statement on September 21, 2001.
Legal fees and expenses $20,000
Accounting fees and expenses 10,000
Blue sky fees and expenses 5,000
Miscellaneous 10,000
-------
Total $45,000
=======
Item 15. Indemnification of Directors and Officers.
In accordance with the General Corporation Law of the State of Delaware
(being chapter 1 of Title 8 of the Delaware code), the registrant's Certificate
of Incorporation provides as follows:
The registrant shall indemnify any person who was or is a party or is
threatened to be made a party to, or is otherwise involved in, any action, suit
or proceeding by reason of the fact that such person is or was a director or an
officer of the registrant, whether the basis for such action or proceeding is an
alleged action in an official capacity as an officer or director or in any other
capacity while such person was serving as a director or officer of the
registrant. The registrant shall indemnify such person to the fullest extent
allowed by the Delaware law against all expense, liability and loss (including
attorney's fees, judgments, fines, ERISA excise tax, or penalties and amounts
paid in settlement) reasonably incurred or suffered by the indemnitee in
connection with such action or suit. The registrant's Certificate of
Incorporation also empowers the indemnitee to recover unpaid amounts of a claim
for indemnification by bringing suit against the registrant to recover any
unpaid amount of a claim.
The right of indemnification includes the right of the indemnitee to be paid
by the registrant for the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, that if Delaware law
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer will be made only upon delivery to the
registrant of an undertaking, by or on behalf of such indemnitee, to repay all
amounts advanced if it shall ultimately be determined by final judicial
decision, from which there is no further right to appeal, that such indemnitee
is not entitled to be indemnified for such expenses.
The right to indemnification and to the advancement of expenses provided for
by the Certificate of Incorporation is not exclusive of any other right to which
the indemnitee may have or hereinafter acquire. Moreover, the registrant may
purchase and maintain insurance, at its expense, to protect itself and any
director or officer of the registrant against any liability asserted against him
or her in any such capacity, or arising out of such person's status as such,
whether or not the registrant would have the power to indemnify him against such
liabilities under the laws of Delaware.
In addition to indemnification provided to the registrant's officers and
directors in the Certificate of Incorporation and under the laws of Delaware,
the registrant has entered into indemnification agreements with certain officers
and
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directors to provide them with further assurances and protection from liability
that they may incur in their respective positions and duties in connection with
any public offering to any fiduciary obligation owed with respect to the
registrant and its stockholders. The registrant has agreed to indemnify and hold
harmless, to the extent permitted under Delaware law, each person and affiliated
person (generally, any director, officer, employee, controlling person, agent,
or fiduciary of the indemnified person), provided that the indemnified person
was acting or serving at the registrant's request in his capacity as either an
officer, director, employee, controlling person, fiduciary or other agent or
affiliate of the registrant. Under the indemnification agreements, each person
is indemnified against any and all liabilities (described below) that occur in
connection with any threatened, pending or completed action, suit, proceeding,
alternative dispute resolution mechanism or hearing, inquiry or investigation
that such indemnitee in good faith believes may lead to the institution of any
such action whether civil, criminal, administrative or other. As a condition to
receiving indemnification, indemnities are required to give notice in writing to
the registrant of any claim for which indemnification may be sought under such
agreement.
The agreement provides that an indemnitee may receive indemnification
against any and all (1) expenses (including attorney's fees and other costs,
expenses and obligations incurred), judgments, fines and penalties; (2) amounts
paid in settlement (if such settlement is approved by the registrant); (3) any
federal, state, local or foreign taxes imposed on an indemnitee as a result of
the receipt of any payments under the indemnification agreement; and (4) all
interest, assessments and other charges paid or payable in connection with such
expenses. An indemnified person will be indemnified against expenses to the
extent that he is successful on the merits or otherwise, including dismissal of
an action without prejudice, in defense of any action, suit, proceeding, inquiry
or investigation. Expenses that the indemnified person has or will incur in
connection with a suit or other proceeding may be received in advance within 10
days of written demand to the registrant.
Prior to receiving indemnification or being advanced expenses, a committee,
consisting of either members of the board of directors or any person appointed
by the board of directors, must not have determined the indemnified person would
not be permitted to indemnification under Delaware law and, in the case of
advanced expenses, that the registrant will be entitled to be reimbursed by the
indemnitee. If there is a change in control (as defined in the indemnification
agreement) that occurs without majority approval of the board of directors, then
the committee will consist of independent legal counsel selected by the
indemnified person and approved by the registrant to render a written opinion as
to whether and to what extent the indemnitee would be permitted to
indemnification under applicable law. Under the indemnification agreement, an
indemnified person may appeal a determination by the committee not to grant
indemnification or advance expenses by commencing a legal proceeding. Failure of
the committee to make an indemnification determination or the termination of any
claim by judgment, order, settlement, plea of nolo contendere, or conviction
does not create a presumption that either (1) the indemnified person did not
meet a particular standard of conduct or belief or (2) that the court has
determined that indemnification is not available.
Under the indemnification agreement, an indemnitee is entitled to
contribution from the registrant for losses, claims, damages, expenses or
liabilities as well as other equitable considerations upon the determination of
a court of competent jurisdiction that indemnification provided for under the
agreement is not available. The amount contributed by the registrant will be in
proportion, as appropriate, to reflect the relative benefits received by the
registrant and the indemnitee or, if such contribution is not permitted under
Delaware law, then the relative benefit will be considered with the relative
fault of both parties in the action or inaction which resulted in such
liability. In connection with the registration of the registrant's securities,
the relative benefits received by the registrant and indemnified person will be
deemed to be in the same respective proportions of the net proceeds from the
offering (less expenses) received by the registrant and the indemnified person.
The relative fault of the registrant and the indemnified person is determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the registrant or the indemnified person and their relative intent,
knowledge, access to information and opportunity to correct such statement or
omission.
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Contribution paid takes into account the equitable considerations, if any,
instead of a pro rata or per capital allocation. In connection with the offering
of the registrant securities, an indemnified person will not be required to
contribute any amount in excess of (1) the proportion of the total of such
losses, claims, damages, or liabilities indemnified against equal to the
proportion of the total securities sold under the registration statement sold by
the indemnified person or (2) the proceeds received by the indemnified person
from the sale of securities under the registration statement. No person found
guilty of fraudulent misrepresentation, as defined in the agreement, shall be
entitled to contribution from any person who was not found guilty of such
fraudulent representation.
In the event that the registrant is obligated to pay the expenses of a claim
and upon written notice to the indemnified person, the registrant is entitled to
assume defense of the claim and select counsel which is approved by the
indemnified person. Upon receipt of the indemnitee's approval, the registrant
will directly incur the legal expenses and as a result will have the right to
conduct the defense as it sees fit in its sole discretion, including the right
to settle any claim against any indemnified party, without consent of the
indemnified person.
Item 16. Exhibits.
Exhibit
Number Description
------ -----------
5.1 Opinion of Winston & Strawn
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of KPMG LLP
23.3 Consent of Deloitte & Touche LLP
*24.1 Powers of Attorney (set forth on the signature page to this
Registration Statement)
-------------
*Previously filed.
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Item 17. Undertakings
The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933,
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement, notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement, and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that clauses (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
clauses is contained in periodic reports filed with or furnished to the
commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and this
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
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appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and this offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
The registrant hereby undertakes to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the Securities and Exchange Commission under Section
305(b)(2) of the Act.
The registrant hereby undertakes to deliver or cause to be delivered with
the prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amended
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on the 7th day of
March, 2002.
AIR GATE PCS, INC.
By: /S/ BARBARA L. BLACKFORD
---------------------------
Barbara L. Blackford
Vice President, General Counsel
and Corporate Secretary
Pursuant to the requirements of the Securities Act of 1933, this amended
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* President, Chief Executive March 7, 2002
Officer and Director (Principal
Executive Officer)
----------------------------------------------
Thomas M. Dougherty
* Chief Financial Officer March 7, 2002
(Principal Financial and
Accounting Officer)
----------------------------------------------
Alan B. Catherall
* Director March 7, 2002
----------------------------------------------
Bernard A. Bianchino
/S/ MICHAEL S. CHAE Director March 7, 2002
----------------------------------------------
Michael S. Chae
* Director March 7, 2002
----------------------------------------------
Robert A. Ferchat
* Director March 7, 2002
----------------------------------------------
Sidney E. Harris
/S/ TIMOTHY M. YAGER Director March 7, 2002
----------------------------------------------
Timothy M. Yager
* Director March 7, 2002
----------------------------------------------
Barry J. Schiffman
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*/S/ BARBARA L. BLACKFORD
--------------------------------------
With Authority Pursuant
to a Power-of-Attorney Previously
Filed with this Registration Statement
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EXHIBIT INDEX
The following documents are filed herewith or incorporated herein by reference.
Exhibit
Number Description
------ -----------
5.1 Opinion of Winston & Strawn
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of KPMG LLP
23.3 Consent of Deloitte & Touche LLP
*24.1 Powers of Attorney (set forth on the signature page to this
Registration Statement)
-------------
*Previously filed.
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