0000909518-01-500396.txt : 20011107
0000909518-01-500396.hdr.sgml : 20011107
ACCESSION NUMBER: 0000909518-01-500396
CONFORMED SUBMISSION TYPE: 425
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011102
GROUP MEMBERS: HUGHES ELECTRONICS CORPORATION
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: GENERAL MOTORS CORP
CENTRAL INDEX KEY: 0000040730
STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711]
IRS NUMBER: 380572515
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 425
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-00143
FILM NUMBER: 1774256
BUSINESS ADDRESS:
STREET 1: 300 RENAISSANCE CTR
STREET 2: MAIL CODE: 482-C34-D71
CITY: DETROIT
STATE: MI
ZIP: 48265-3000
BUSINESS PHONE: 3135565000
MAIL ADDRESS:
STREET 1: 300 RENAISSANCE CTR
STREET 2: MAIL CODE: 482-C34-D71
CITY: DETROIT
STATE: MI
ZIP: 48265-3000
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: GENERAL MOTORS CORP
CENTRAL INDEX KEY: 0000040730
STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711]
IRS NUMBER: 380572515
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 425
BUSINESS ADDRESS:
STREET 1: 300 RENAISSANCE CTR
STREET 2: MAIL CODE: 482-C34-D71
CITY: DETROIT
STATE: MI
ZIP: 48265-3000
BUSINESS PHONE: 3135565000
MAIL ADDRESS:
STREET 1: 300 RENAISSANCE CTR
STREET 2: MAIL CODE: 482-C34-D71
CITY: DETROIT
STATE: MI
ZIP: 48265-3000
425
1
a11-2gm425_3.txt
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 email was sent to GM executives and was made available to all
employees on GM's intranet site.
From: GM Leadership Communications on 10/29/2001 07:13 AM
To: GMNA Executive Leadership-h
Subject: Message from Steve Harris: GM's Hughes Electronics to merge with
EchoStar Communications
Dear GM Leader:
General Motors Corp. and its subsidiary Hughes Electronics (NYSE: GM, GMH)
together with EchoStar Communications Corporation (NASDAQ: DISH), have announced
the signing of definitive agreements that provide for the spin-off of Hughes
from GM and the merger of Hughes with EchoStar.
The combined company would use the EchoStar name and adopt the DIRECTV brand for
its services and related products. The merger would create the nation's
second-largest pay television platform with more than 16.7 million subscribers,
of which 1.8 million subscribers are National Rural Telecommunications
Cooperative (NRTC) and affiliates, and 14.9 million subscribers are
owned-and-operated by the combined company. Cable TV companies presently control
more than 80 percent of the U.S. pay television market, while a combined
EchoStar-Hughes would provide service to about 17 percent of the market.
As you know, this has been a long process, receiving at times intense scrutiny
from the media and investment community. This transaction provides significant
benefits to Hughes, EchoStar, millions of present and future DIRECTV customers,
and shareholders of both GM and EchoStar. We've said all along that we wanted to
structure an agreement that would provide continued strong growth at Hughes and
maximum value for both GM and GM Class H shareholders. This transaction achieves
these objectives.
This transaction offers substantial financial benefits now and over the long
term for GM $1-2/3 and GM Class H shareholders. GM Class H shareholders would
receive a significant premium on their investment. For GM $1-2/3 shareholders,
GM expects to receive $4.2 billion in cash, and would retain a significant
investment in the merged company.
Please see the following press release for additional information. Expect to
hear more about this transaction in the days and weeks to follow.
Steve Harris
GM'S HUGHES ELECTRONICS TO MERGE WITH ECHOSTAR COMMUNICATIONS Stockholders and
Consumers Benefit As Combined Hughes-EchoStar Provides Meaningful Competitor To
Cable TV Companies
NEW YORK -- General Motors Corp. and its subsidiary Hughes Electronics
(NYSE: GM, GMH) together with EchoStar Communications Corporation (NASDAQ:
DISH), today announced the signing of definitive agreements that provide for the
spin-off of Hughes from GM and the merger of Hughes with EchoStar.
The combined company would use the EchoStar name and adopt the DIRECTV brand
for its services and related products. The merger would create the nation's
second-largest pay television platform with more than 16.7 million subscribers,
of which 1.8 million subscribers are National Rural Telecommunications
Cooperative (NRTC) and affiliates, and 14.9 million subscribers are
owned-and-operated by the combined company. Cable TV companies presently
control more than 80 percent of the U.S. pay television market, while a combined
EchoStar-Hughes would provide service to about 17 percent of the market.
The spin-off of Hughes from GM would result in current holders of Class H
common stock receiving one share of new Hughes Class C common stock in exchange
for each share of Class H stock held prior to the spin-off. The merger of
Hughes and EchoStar would result in Hughes being the surviving entity and taking
the name EchoStar Communications Corp. Holders of Class A EchoStar common stock
prior to the merger would receive 1.3699 shares of the new EchoStar in exchange
for each share of Class A EchoStar common stock held prior to the merger. Based
on the closing price of EchoStar common stock of $25.26 on Oct. 26, 2001, the
transaction would provide a value of approximately $18.44 per GMH share,
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representing a 20-percent premium. As of Oct. 26, 2001, the implied market
capitalization of Hughes was approximately $21.3 billion and the market
capitalization of EchoStar was approximately $12.1 billion.
The transaction is expected to require approximately $5.5 billion of total
financing, which EchoStar expects to fund in the capital markets prior to
closing. Completion of this financing has been backstopped by a bridge
commitment of approximately $2.75 billion from Deutsche Bank, and a bridge
commitment of approximately $2.75 billion from General Motors, the latter of
which the parties plan to replace with a commitment from one or more other
leading financial institutions in the near future. The GM bridge commitment is
secured by a pledge of $2.75 billion of EchoStar stock held by a trust
controlled by EchoStar Chairman and Chief Executive Officer Charles Ergen.
The transaction is subject to a number of conditions, including approval by
a majority of each class of GM shareholders - GM $1-2/3 and GM Class H - voting
both separately as distinct classes, and also together as a single class.
Approval of the majority of EchoStar's voting shares has already been given by
written consent. The proposed transaction also is subject to regulatory
clearance under the Hart-Scott-Rodino Act and approval by the Federal
Communications Commission. The transaction is also contingent upon the receipt
of a favorable ruling from the Internal Revenue Service that the separation of
Hughes from GM will qualify as a tax-free spin-off for U.S. Federal Income Tax
purposes. The transaction is currently expected to close in the second half of
2002.
This transaction provides significant benefits to Hughes, EchoStar,
millions of present and future DIRECTV customers, and shareholders of both GM
and EchoStar, said GM President and Chief Executive Officer Rick Wagoner.
We've said all along that we wanted to structure an agreement that would
provide continued strong growth at Hughes and maximum value for both GM and GM
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Class H shareholders. This transaction achieves these objectives."
Strong Growth Prospects and Significant Synergies
"This is an extremely compelling combination for GM, GMH and EchoStar
shareholders," Ergen said. "The combination of EchoStar and Hughes is expected
to generate very substantial synergies utilizing the advantages of
direct-broadcast satellite television, cost savings from the elimination of
costly duplicate satellite bandwidth and infrastructure, and strong management
offering more effective fundamental business practices. The new company would
also have enhanced scale to compete more effectively against the dominant U.S.
cable and broadband providers - a critical factor given increasing consolidation
in the cable industry."
"U.S. consumers also would benefit from the combined company's ability to
increase significantly the number of markets served with local channels via
satellite, provide additional channel offerings, increase high-definition TV
(HDTV) offerings and accelerate the introduction of next-generation high-speed
Internet services, Ergen continued. Together, EchoStar's DISH Network and
Hughes' DIRECTV also can provide a range of services that would bridge the
`digital divide' - providing high-speed broadband solutions to consumers and
businesses. Importantly, these services would be available in rural areas
otherwise far from the information superhighway at rates which the company is
prepared to assure regulators would be competitive.
Hughes and its operating companies would be well positioned to thrive as
part of this merged company, said Jack A. Shaw, chief executive officer of
Hughes. DIRECTV would enjoy significant cost efficiencies and better use of
its assets. Hughes Network Systems would play a key strategic part in the
growth of satellite-delivered broadband. PanAmSat would have continued growth
opportunities. And DIRECTV Latin America would benefit from the synergies of
the larger combined company, Shaw said.
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The new company, which would retain the EchoStar name but would use the
DIRECTV brand for consumer offerings, would be based in Littleton, Colo., and
would employ approximately 20,000 people and serve more than approximately 14.9
million direct-broadcast satellite TV customers. EchoStar and Hughes have
pledged that the merger would not cause disruption of service or additional
expense to existing customers of either DIRECTV or DISH Network service.
The new EchoStar would be led by Ergen as chairman and chief executive
officer. The board of directors would consist of nine members, five of whom
would be independent directors.
Ergen added, "I think it is significant that EchoStar and Hughes have agreed
to a fair and balanced process for identifying the most qualified people from
both companies in order to select the best person for every job, regardless
where they worked prior to the merger. This is a key provision that Hughes
management felt strongly about and to which EchoStar readily agreed."
A transition team made up of Shaw and DIRECTV Chairman and CEO Eddy
Hartenstein from Hughes, as well as Ergen and EchoStar President Michael Dugan
will assure a smoother and orderly process.
Significant Proceeds for GM
As part of the transaction, General Motors would receive up to $4.2 billion
in cash for redemption of part of its economic interest in Hughes. Pro forma
for the cash redemption (assuming illustratively a price of $18.44 based on the
implied deal value), GM Class H shareholder would own approximately 53 percent
of the combined company, EchoStar's shareholders would own approximately 36
percent, and GM would own approximately 11 percent. In addition, prior to the
transaction, GM would seek to exchange up to 100 million shares of GM Class H
common stock (or after the transaction 100 million shares of EchoStar common
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stock) for GM outstanding debt, which would further improve GM's net liquidity
position.
This transaction offers substantial financial benefits now and over the
long term for GM $1-2/3 and GM Class H shareholders, Wagoner said. GM Class H
shareholders would receive a significant premium on their investment. For GM
$1-2/3 shareholders, GM expects to receive $4.2 billion in cash, and would
retain a significant investment in the merged company.
GM intends to file a registration statement in connection with the
transaction and mail a proxy statement/prospectus to both GM and GM Class H
stockholders in connection with the transaction. Investors are urged to read the
proxy statement/prospectus when it becomes available because it will contain
important information about GM, Hughes and the transaction.
EchoStar Communications Corp. and its DISH Network provide state-of-the-art
direct-broadcast satellite TV service that is capable of offering over 500
channels of digital video and CD-quality audio programming, as well as advanced
satellite TV receiver hardware and installation. EchoStar is included in the
Nasdaq-100 Index (NDX). DISH Network currently serves over 6.43 million
customers. For more information, visit www.dishnetwork.com.
HUGHES is the world's leading provider of digital television entertainment,
broadband services, satellite-based private business networks and global video
and data broadcasting.
Hughes Network Systems, a unit of Hughes Electronics Corporation, is the
world's leading provider of broadband satellite network solutions for businesses
and consumers, with over 400,000 one- and two-way systems installed in more than
85 countries. Headquartered in Germantown, Maryland, USA, HNS maintains sales
and support offices worldwide. To learn more about HNS and DIRECWAY, please
visit www.hns.com or www.direcway.com.
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DIRECTV is the nation's leading digital satellite television service
provider with more than 10 million customers. DIRECTV and the Cyclone Design
logo are trademarks of DIRECTV, Inc., a unit of Hughes Electronics Corporation.
Visit DIRECTV on the World Wide Web at DIRECTV.com.
General Motors, the world's largest vehicle manufacturer, designs, builds
and markets cars and trucks worldwide. In 2000, GM earned $5 billion on sales of
$183.3 billion, excluding special items. It employs about 372,000 people
globally. GM also operates one of the largest and most successful financial
services companies, General Motors Acceptance Corp. (GMAC), which offers
automotive, mortgage and business financing and insurance services to customers
worldwide. GM is investing aggressively in digital technology and e-business
within its global automotive operations and through such initiatives as e-GM, GM
BuyPower, and OnStar. More information on General Motors can be found at
www.gm.com.
# # #
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:
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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 139,204.80 GM $1-2/3 shares and 27,177 GM Class
H shares. Mr. Shaw beneficially owns 3,604 GM $1-2/3 shares and 1,415,915 GM
Class H shares. Ms. Austin beneficially owns 2,804 GM $1-2/3 shares and 860,454
GM Class H shares. Mr. Hartenstein beneficially owns 2,622 GM $1-2/3 shares and
1,138,899 GM Class H shares. Mr. Gaines beneficially owns 337 GM $1-2/3 shares
and 165,329 GM Class H shares. The above ownership information includes shares
that are purchasable under options that are exercisable within 60 days of
October 15, 2001. In addition, Mr. Devine holds options to acquire shares of GM
$1-2/3 common stock that are not exercisable within 60 days of October 15, 2001,
and each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr. Gaines holds options
to acquire shares of GM Class H common stock that are not exercisable 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.
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Materials included in this filing 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 filing.
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