The information set forth in the Offer to Purchase under the heading Special
FactorsSection 2Interests of Certain Persons in the Offer is hereby amended and restated in its entirety to read as follows:
The information set forth in the Schedule
14D-9
filed by the Company, as may be amended from time
to time, is incorporated herein by reference.
Effects of the Offer and the Merger on the Bidders
Although WC SACD, Parent and Purchaser may be deemed affiliates of the Company pursuant to Rule
13e-3
under the Exchange Act for purposes of the transactions contemplated herein as a result of certain of the agreements entered into by such persons in connection with the Merger Agreement (and in the case of WndrCo, iSubscribed and the GC Funds
because of their equity investment in WC SACD), prior to the Expiration Date, none of the Bidders will hold any Shares. As a result, the Bidders have no financial or other interest in the net book value and net earnings of the Company.
Immediately following the consummation of the Merger, the direct interest of WndrCo in the net book value and net earnings or loss of the
Company will be approximately 42.4%, which represents its pro forma beneficial ownership in WC SACD immediately following the consummation of the Merger. The Companys net book value as of December 31, 2017 was $594,000 and the Companys
net loss for the fiscal year ended December 31, 2017 was $14,324,000. Based on the foregoing, assuming the Merger had been consummated on December 31, 2017, the interest of WndrCo in the Companys net book value would have been $251,856,
and WndrCos interest in the Companys net loss would have been $6,073,376 for the fiscal year ended December 31, 2017. Immediately following the consummation of the iSub Contribution, the direct interest of WndrCo in the net book value
and net earnings or loss of the Company will be approximately 32.0%, which represents its pro forma beneficial ownership in the Company once the Company becomes an indirect subsidiary of WC SACD and iSubscribed. Based on the foregoing, assuming the
Merger and the iSub Contribution had been consummated on December 31, 2017, the interest of WndrCo in the Companys net book value would have been $190,080, and WndrCos interest in the Companys net loss would have been
$4,583,680 for the fiscal year ended December 31, 2017.
Immediately following the consummation of the Merger, the direct interest of
iSubscribed in the net book value and net earnings or loss of the Company will be approximately 6.3%, which represents its pro forma beneficial ownership in WC SACD immediately following the consummation of the Merger. Based on the foregoing,
assuming the Merger had been consummated on December 31, 2017, the interest of iSubscribed in the Companys net book value would have been $37,422, and iSubscribeds interest in the Companys net loss would have been $902,412 for
the fiscal year ended December 31, 2017. Immediately following the consummation of the iSub Contribution, the direct interest of iSubscribed in the net book value and net earnings or loss of the Company will be approximately 4.8%, which
represents its pro forma beneficial ownership in the Company once the Company becomes an indirect subsidiary of WC SACD and iSubscribed. Based on the foregoing, assuming the Merger and the iSub Contribution had been consummated on December 31,
2017, the interest of iSubscribed in the Companys net book value would have been $28,512, and iSubscribeds interest in the Companys net loss would have been $687,552 for the fiscal year ended December 31, 2017.
Immediately following the consummation of the Merger, the direct interest of the GC Funds in the net book value and net earnings or loss of the
Company will be approximately 16.7%, which represents its pro forma beneficial ownership in WC SACD immediately following the consummation of the Merger. Based on the foregoing, assuming the Merger had been consummated on December 31, 2017, the
interest of the GC Funds in the Companys net book value would have been $99,198, and the GC Funds interest in the Companys net loss would have been $2,392,108 for the fiscal year ended December 31, 2017. Immediately following
the consummation of the iSub Contribution, the direct interest of the GC Funds in the net book value and net earnings or loss of the Company will be approximately 12.6%, which represents its pro forma beneficial ownership in the Company once the
Company becomes an indirect subsidiary of WC SACD and iSubscribed. Based on the foregoing, assuming the Merger and the iSub Contribution had been consummated on December 31, 2017, the interest of the GC Funds in the Companys net book
value would have been $74,844, and the GC Funds interest in the Companys net loss would have been $1,804,824 for the fiscal year ended December 31, 2017.
To the extent the Company ceases to be a public reporting company as a result of the Offer and the Merger, there will be a reduction of the
costs and administrative burdens associated with operating the Company as a publicly traded company, including the costs associated with preparing periodic reports, listing of shares on the public exchanges, fees to be paid to directors, auditors,
the transfer agent, and rating agencies, as well as reduced premiums for directors and officers liability insurance. Based on figures from the most recent fiscal year, such costs that would be reduced as a result of the Company no longer being
publicly listed are estimated to be $1.8 million per year. If the Merger is consummated, the Bidders will become the indirect beneficiaries of such cost savings which are expected to be realized on an annual recurring basis.
Primary Benefits and Detriments of the Offer and the Merger
The primary benefits of the Offer and the Merger to the Companys stockholders who are not deemed affiliates under
Rule 13e-3
under the Exchange Act (the
Unaffiliated Stockholders
) include, without limitation, the following:
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the receipt by such Unaffiliated Stockholders of the Offer Price, which represents a 112.7% premium to the
closing price of the Shares on October 30, 2018, the day before Purchaser made public its offer to acquire the Shares; a 104.4% premium to the trailing average closing price of the Shares for the
30-day
period ended on October 30, 2018; and a 111.4% premium to the trailing average closing price of the Shares for the
90-day
period ended on October 30, 2018;
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the increased liquidity and financial predictability of such Unaffiliated Stockholders investments given
(i) the historical volatility in the trading price of the Shares and (ii) the distressed state of the Companys financial position and business operations (as previously disclosed in the Companys public filings with the SEC) by
offering such Unaffiliated Stockholders
all-cash
payments for their Shares; and
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the avoidance of the risk associated with any possible decrease in the Companys future revenues and free
cash flow, growth or value, and the risks related to successfully executing its strategic business plan in a highly competitive industry, following the Merger.
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The primary detriments of the Offer and the Merger to the Unaffiliated Stockholders include, without limitation, the following:
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the Unaffiliated Stockholders will cease to have an interest in the Company and, therefore, will no longer
benefit from possible increases in the future revenues and free cash flow, growth or value of the Company or payment of dividends on the Shares, if any; and
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in general, the receipt of cash pursuant to the Offer and the Merger or through the exercise of appraisal rights
will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under other applicable tax laws as more fully described in The OfferSection 5Certain Material U.S. Federal Income Tax
Consequences.
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The primary benefits of the Offer and the Merger to the Company and the Bidders include, without
limitation, the following:
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if the Company successfully executes its business strategies, the value of the equity investment of the Bidders
in the Company could increase because of possible increases in future revenues and free cash flow, increases in the underlying value of the Company or the payment of dividends, if any, that will accrue to the Bidders;
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the Company will have more flexibility to change its capital spending strategy, deploy new services and/or change
its pricing strategies to attract customers without public market scrutiny or the pressure to meet quarterly forecasts set by analysts. In contrast, as a publicly traded company, the Company currently faces pressure from public shareholders and
investment analysts to make decisions that may produce better short term results, but which may not over the long-term lead to a maximization of its equity value;
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the Company will have more freedom to focus on execution of its long-term strategic business plan in a highly
competitive industry; and
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