0000930661-01-502156.txt : 20011101
0000930661-01-502156.hdr.sgml : 20011101
ACCESSION NUMBER: 0000930661-01-502156
CONFORMED SUBMISSION TYPE: 425
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011031
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: 1771092
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
d425.txt
FORM 425
Filed by General Motors Corporation (GM)
Subject Company - General Motors Corporation,
EchoStar Communications 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 Act of 1934
Commission File No.: 001-00143
Subject: Announcing the GM/EchoStar Agreement
October 28, 2001
To HUGHES Employees:
Over the weekend, General Motors and EchoStar signed an agreement to merge
HUGHES with EchoStar. After looking at all possible alternatives the HUGHES and
GM leadership decided that a merger with EchoStar offered the greatest
shareholder return and the best future growth opportunity for our businesses.
With more than 16 million subscribers in the U.S. and 1.5 million in Latin
America, and a 100% digital nationwide platform, this new company will provide
fierce competition to cable providers and will help bridge the digital divide in
the vast areas of our country that have no access to wired broadband
communications. With this merger we will have the growth potential to
strategically position all our assets for the future of broadband communication.
I would like to thank all of you for your patience, perseverance and fortitude
during the many months of negotiations on this deal. GM and HUGHES conducted a
detailed process to ensure that this agreement provides the best possible future
for HUGHES and EchoStar. I am confident that we will all benefit from this
merger.
The months ahead will be filled with preparations for closing this transaction.
There are many steps to complete before Close: GM and GMH shareholders must
approve the deal, U.S. government agencies will review it, and we will do the
work necessary to separate HUGHES from GM in preparation for merging with
EchoStar. During this time, we need to keep our business goals foremost. We must
continue to build momentum and value in our company by meeting and exceeding the
promises we have made. And above all, we must continue to compete as vigorously
and aggressively as we know how to compete.
You are the very best at what you do and I know you will work your hardest to
keep us on course during the months ahead. This transaction represents a huge
opportunity to build value for our company and our stock. The combination of
HUGHES and EchoStar creates massive synergies and opportunities for employees to
thrive in a growth environment. Enterprise and consumer satellite-delivered
communication services will be strategic assets, positioning the new company for
the future of broadband communication. All the HUGHES companies now have an
opportunity to grow. This is the time to perform your best, demonstrate your
excellence and build a bright future for everyone. Together, let's make this
crown jewel shine.
Sincerely,
Jack A. Shaw
Chief Executive Officer, HUGHES
Attachments:
------------
Press Release
Employee Q&A
# # #
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors, and its directors and executive officers, and Hughes, and
certain of its officers, may be deemed to be participants in GM's solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Michael J. Gaines Corporate VP and CFO, Hughes
Mr. Devine beneficially owns 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.
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
1EchoStar, 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.
Employee Questions & Answers - EchoStar
--------------------------------------------------------------------------------
A. Explaining the Transaction/Overview
--------------------------------------------------------------------------------
1. Can you explain the highlights of the transaction?
GM, HUGHES and EchoStar Communications Corporation have agreed to merge
HUGHES and EchoStar, creating the nation's largest multichannel competitor
to cable. The combined company will have an enterprise value of more than
$32 billion.
2. Why did GM/HUGHES pursue this transaction?
In the past couple of years, it became apparent that GM was not realizing
the full value of HUGHES in the share price of the GM $1-2/3 stock, and
that the value of HUGHES needed to be unlocked from the GM structure. In
addition, GM wanted to focus on its core automotive business and use its
available resources to help it fund its core business growth. Combining
HUGHES with EchoStar pays our shareholders an immediate premium and builds
a business that is a much better fit for the future needs of HUGHES and
will enable continued growth and increasing shareholder value.
3. How does this transaction benefit HUGHES?
This transaction provides our Class H shareholders with a generous premium
and creates massive opportunities for synergy and economies of scale by
combining EchoStar with DIRECTV. With more than 16 million subscribers in
the U.S. and 1.5 million in Latin America, and a 100% digital nationwide
platform, our merged company will be in a strong growth position, providing
fierce competition to large U.S. cable/broadband providers. HNS will play a
strategic part in the growth of satellite-delivered broadband, and continue
its set-top box manufacturing business. As part of the merged company, all
the HUGHES businesses will be part of a dynamic, powerful enterprise
focused on growth.
4. What are the strengths of the new combined company?
Led by a strong management team with proven success, the new combined
company will have economies of scale and a large reduction in redundant
costs, leading to improved revenue per subscriber (ARPU) and reduced
subscriber acquisition costs (SAC). Competitive pricing and increased
offerings are expected to lead to reduced customer churn and more
incremental subscribers. In addition, the combined company will be better
able to utilize the broadcast spectrum for meeting must-carry requirements.
For example, both companies currently devote considerable spectrum to local
channels: going forward, the redundancy of local channel carriage will be
eliminated. This will enable increased local service and the addition of
more and new programming services. HNS will continue to be a strategic
asset in satellite-delivered broadband capability, as well as set-top box
manufacturing.
1
5. What are the benefits to consumers?
The combined company will be the number two multichannel provider in the
U.S. By combining EchoStar and DIRECTV, consumers will receive more
channels and better service, including increased local to local service,
more HDTV, video on demand and pay per view offerings. For consumers in
rural areas who have no access to wired broadband communication, we will
help bridge the digital divide by providing increased broadband
availability and assure government regulators of competitive pricing.
6. What happened to other alternatives for HUGHES, such as a stand-alone
spin-off, or other deals, e.g., New Corp.?
In evaluating all possible alternatives, HUGHES and GM leadership came to
the conclusion that a merger with EchoStar offered the greatest potential
for shareholder value, growth of the business, and the strongest
competitive position against the dominant cable industry.
GM and HUGHES were in talks with News Corporation for more than a year on a
proposal to merge certain New Corp. assets with HUGHES, creating a company
tentatively named Sky Global Networks. However, in the final analysis, the
economic benefits of the EchoStar transaction outweighed the benefits of
the News Corp. proposal.
7. If this transaction fails to be completed, what happens to HUGHES?
HUGHES will continue as a viable company regardless of the outcome of this
transaction. The entire leadership team at HUGHES and its operating
companies is committed to increasing the business performance, market value
and momentum of the enterprise regardless of a potential transaction.
8. Why did it take so long to reach agreement on this deal?
This transaction was extremely complicated due to the nature of HUGHES'
relationship with GM, the Class H common stock of GM and the related
complexity of legal and tax issues. However, the process to reach agreement
has resulted in all parties having a high degree of confidence that this
transaction is best for GM, HUGHES and EchoStar.
9. How will employee compensation and benefits programs (including severance
packages) be handled by EchoStar?
Details on employee compensation and benefits issues for U.S employees
following the Closing Date are described in the "Employee Summary Sheet on
Benefits, Compensation and Other Programs" that is applicable for your
business. There are no specific provisions in the transaction documents
that address, in any way, the compensation and benefits plans for
international employees, therefore, they remain unchanged.
10. What will the new company be called? (What will happen to the HUGHES name?)
The new company will be called EchoStar Communications Corporation. DIRECTV
will be the DBS brand for the combined company. The HUGHES name will
continue as part of HUGHES Network Systems and various other subsidiaries.
2
11. Where will the new company's headquarters be located?
EchoStar Communications Corp. will be headquartered in Littleton, Colorado.
No other decisions regarding company locations have been made at this time.
12. Please explain the new organization structure. Who will head the
organization(s)?
Charlie Ergen will be Chairman of the Board and CEO of the merged company.
The board of directors will consist of nine members, five of whom will be
independent directors not affiliated with either GM or EchoStar. Harry
Pearce, Jack Shaw and Peter Lund (who is a current HUGHES outside director)
would be directors of the company.
Beyond that, no organizational announcements regarding the leadership of
the new company or the operating companies acquired as part of the HUGHES
transaction have been made.
13. When will the transaction be consummated?
It is difficult to predict a timeframe for closure on this transaction
because many steps and other entities will become involved before the
transaction can close. A "best guess" is that the transaction will close in
9 -12 months, roughly the second half of 2002.
14. What process will be followed to gain closure on this transaction?
Next steps to gain closure on this transaction include:
------------------------------------------------------
1. Government approvals in US (U.S. antitrust and Federal Communications
Commission).
2. IRS ruling that the transaction is tax-free to GM, HUGHES and GM
shareholders for U.S. Federal income tax purposes.
3. GM and GMH Shareholder approval.
15. Will this deal require approval of the GMH shareholders and the GM $1-2/3
shareholders?
Yes. The shareholders must approve it by a majority vote of each separate
class of shareholders and both classes voting together.
16. Are we competing with EchoStar until this transaction is completed?
Yes. Until the transaction is complete, DIRECTV and all of the HUGHES
businesses will operate as separate companies. Information should not be
shared with EchoStar beyond what would have been shared in the normal
course of business prior to this agreement. In daily business matters we
are obligated to operate as competitors until the Closing Date. However,
HUGHES will consult with the management of EchoStar on material items
specified in the merger agreement.
3
--------------------------------------------------------------------------------
B. Impact on Stock
--------------------------------------------------------------------------------
17. What will happen to GMH stock?
All GMH stock will be exchanged for HUGHES common stock and HUGHES will be
re-named EchoStar Communications Corporation after the current EchoStar has
merged into HUGHES.
In approximately 6 months all GM shareholders will receive a detailed
information statement regarding the transaction soliciting their approval
of the transaction.
--------------------------------------------------------------------------------
C. Impact on HUGHES Companies
--------------------------------------------------------------------------------
18. How will this impact the HUGHES companies? Will any units be sold? Will
units be restructured? Describe.
It is too early to answer this question. As with any transaction of this
magnitude, we can expect there to be some level of impact at all of our
business units. Decisions about future business strategy and direction will
be made by the new leadership team, and we can reasonably expect a review
of all parts of the business.
19. Will staffing be affected?
It is too early to tell how staffing across all the HUGHES companies might
be affected. Workforce reductions are anticipated, but to what degree, we
don't yet know. As with any transaction, it takes time for leaders to
assess a business and determine what changes, if any, are needed to fit
with business strategies.
A process will be put in place to evaluate the new organization's needs,
identify available candidates, and place the most qualified candidates into
available positions, regardless of which company they worked for prior to
the merger. A four member panel, including Jack Shaw, Eddy Hartenstein,
Charlie Ergen and EchoStar President Michael Dugan will have oversight of
this process.
20. How will this merger impact the business operations of DIRECTV?
All the direct-to-home services supplied through the new company will
benefit by being part of one of the nation's leading multimedia digital
entertainment companies. Best practices from both DIRECTV and EchoStar will
be used to address issues such as technology leadership, expanded
programming, accelerating broadband and interactive capacity and improving
customer satisfaction. The end result will be a better product for our
customers and a fierce competitor for digital cable.
. How will this impact DIRECTV Broadband (formerly Telocity)?
DIRECTV Broadband will become part of the new company, as a unit of
DIRECTV.
21. What's the impact on DIRECTV Latin America's business?
DIRECTV Latin America is a leader in its markets, with good growth
potential. As with all other aspects of the business, the new leadership
will review the DIRECTV Latin America business and decide how it best fits
with the overall business strategy.
DIRECTV Latin America can benefit in the newly merged company by access to
synergies of the combined company.
4
22. How will this impact the business operations of Hughes Network Systems (and
its subsidiaries)?
We believe it will continue to play a strategic role in the growth of
satellite-delivered broadband. The HNS enterprise services business has a
strong customer base and solid business model, as well.
. What does it mean for DIRECWay and DirecPC? Spaceway?
We think that the DIRECWay and DirecPC satellite services will provide
significant value on both the enterprise and consumer fronts and that
Spaceway will be an enormous strategic competitive advantage over the next
several years. Ultimately, the decision on these technologies and new
services and how aggressively they are deployed -- or not deployed -- will
be the new management's decision.
. What happens to the 4 subsidiaries in India? These will be part of the new
company, as subsidiaries of HNS.
. What does this mean for One Touch?
One Touch will be part of the new company, as a subsidiary of HNS.
23. How will this impact PanAmSat's business?
HUGHES' 81% interest in PanAmSat will become part of the new company at the
Closing Date. If the merger does not close due to regulatory complications,
EchoStar has agreed to acquire HUGHES' interest in PanAmSat. Future
decisions would be made by management and the Board of Directors.
24. What will happen to HUGHES Global Services?
HUGHES put HGS up for sale several months ago and intends to continue
exploration of that potential divestiture. If it is part of HUGHES at the
close of the transaction, it will become part of the new company, which may
or may not want to continue the plan to sell it.
25. How will this impact HUGHES Corporate?
It is too early to tell the exact impact on the HUGHES Corporate workforce.
Overlaps between HUGHES and EchoStar's corporate functions will be
identified and it is likely that workforce reductions will occur.
--------------------------------------------------------------------------------
D. Additional Questions
--------------------------------------------------------------------------------
26. Will my membership in the Kinecta Credit Union (formerly Hughes Aircraft
Employees Federal Credit Union) continue?
Yes. Once you are a member of the credit union, you may retain your
membership indefinitely.
5
27. How do we find out more about this transaction?
Additional information will be communicated to you through the established
company communication systems, and posted on the HUGHESNet web site. You
will also receive a Transition News newsletter and/or e-mails with more
information as it becomes available.
28. Who can answer additional questions?
If you have additional questions, you should ask your manager or your local
Human Resources representative. You may e-mail, FAX or telephone your
questions to HUGHES Employee Communications:
. employee.communications@hughes.com
. FAX: (310) 647-6213
. Telephone: (888) 832-5306 or (310) 662-5208
Questions that are of general interest will be answered and posted on the
HUGHESNet web site. In some cases, highly specific questions will be
answered directly.
The Employee Assistance Program (EAP) is also available to discuss personal
concerns you may have regarding changes that are occurring:
. Corporate, DIRECTV in California: Jody Dean (310) 662-9908 or e-mail
any questions to jody.dean@hughes.com, emergency number: (310)
662-9832.
. Hughes Network Systems: (888) 935-5964
. PRIMESTAR by DIRECTV and Boise Call Center: (888) 935-5964
. DIRECTV Latin America: Larry Billion, Ph.D., (561) 895-0027 or (888)
395-0108.
PanAmSat provides counseling services through Value Behavior Health, (800)
284-9863.
29. When will more information be available?
More information will be available on an ongoing basis, as soon as
practicable.
# # #
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors, and its directors and executive officers, and Hughes, and
certain of its officers, may be deemed to be participants in GM's solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
6
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.
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.
7
[LOGO]
Through more than 20 years of operation, EchoStar has grown from a small
business distributing satellite dishes in Colorado to become the nation's
fastest-growing Direct Broadcast Satellite (DBS) television provider. This
evolution has been achieved in the face of stiff competitive, technological and
regulatory challenges, and is representative of the drive, vision and
determination of the company's management and employees.
. EchoStar Communications Corporation was founded in 1980, distributing
large backyard satellite dish antennas for rural homes in Colorado
where few thought television would flourish.
. By 1985 the Company had become a profitable, multi-million dollar
vertically integrated business by designing, manufacturing and
distributing large dish antennas and digital equipment.
. With the vision to see the enormous potential of satellite television,
Ergen knew he also needed to be a distributor of programming. Starting
in 1987, EchoStar filed for and won licenses with the FCC to own
orbital spectrum and become a nationwide direct broadcast satellite
provider.
. EchoStar I, the company's first high-powered, digital satellite was
successfully launched in 1995 and the DISH Network began operations in
early 1996.
. Today, EchoStar has six satellites in orbit with three additional
high-powered satellites scheduled to launch in the near future DISH
Network is capable of providing more than 500 channels to consumers,
including high definition TV, foreign language channels and
interactive television services. The Company's unique organization has
six wholly-owned Call Centers with over 8,000 agents and its own
nationwide installation and service network.
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Bringing Benefits to Customers, Shareholders and the Industry
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EchoStar's determination to compete against powerful cable operators, combined
with the vision to deliver low cost, high quality television services, has
brought significant benefits to U.S. consumers while delivering strong returns
for shareholders.
Delivering Better Services at Lower Cost
. Charlie Ergen realized that a satellite could reach any part of the
U.S. more easily than a cable network or traditional local broadcast
signals and by 1996 EchoStar had launched DISH Network capable of
providing service to every home in the U.S.
. Today, DISH Network provides more than 6 million households in both
urban as well as underserved rural markets with hundreds of popular TV
networks (as well as local stations), and added approximately 5,000
net new customers each day in 2000.
. EchoStar's next goal is to bridge the `digital divide' - by providing
HDTV and two-way, high-speed internet access via satellite to all
regions in the U.S., rural and urban, alike.
. EchoStar has remained competitive and won customers by slashing
customer start-up prices and signing up new subscribers for DISH
Network at groundbreaking speed - effectively forcing its cable
competitors to compete on terms more agreeable to consumers.
Fighting on Behalf of Consumers
. For true competition to exist in the MVPD (Multi-channel Video Program
Distributor) television business, appropriate legislation allowing
rebroadcast of local signals - a right that cable providers already
enjoyed - was crucial. EchoStar led the way for the legislation to
secure these local rebroadcast rights, lobbying intensely for this
cause.
Creating Competition within the MVPD Television Industry
. EchoStar also shocked the industry in 1996 by slashing satellite
television equipment prices from $699 to $199, forcing other DBS
providers to follow suit. Cable TV companies, which have a monopoly
within their markets, actually increased prices by almost 2.5 times
the rate of inflation from 1990 to 20001.
. EchoStar's philosophy of setting high-quality standards for DBS and
pricing the product within reach of most homeowners has created
significant competition against cable operators.
Creating Value Along the Way
. Since its inception, EchoStar's revenues have grown at a 93.3%
compound annual growth rate, while customers have increased at an
88.5% compound annual growth rate.
. DISH stock has grown 1,354% since January 1, 1998. A hundred dollars
invested on Jan. 1, 1998, would be worth approximately $1,500 as of
Aug. 3, 2001.
. DISH's nine "strong buy" and five "buy" recommendations provide
compelling evidence of Wall Street analysts' belief in Charlie Ergen
and EchoStar.
______________________
/1/ Source: NCTA, Paul Kagan Associates, Cable TV Financial Databook, Bureau of
Labor Statistics
# # #
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors, and its directors and executive officers, and Hughes, and
certain of its officers, may be deemed to be participants in GM's solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Michael J. Gaines Corporate VP and CFO, Hughes
Mr. Devine beneficially owns 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.
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.