UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 23, 2005
MCLEODUSA INCORPORATED
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
0-20763 42-1407240
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(Commission File Number) (IRS Employer Identification No.)
McLeodUSA Technology Park
4200 C. Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
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(Address of Principal Executive Offices) (Zip Code)
(319) 364-0000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On May 23, 2005, McLeodUSA Incorporated ("the Company") issued a press release,
which is hereby incorporated by reference and attached hereto as Exhibit 99.1,
announcing that the Company and certain of its subsidiaries ("Subsidiary
Guarantors") had entered into a Second Forbearance Agreement on the same date,
among the Company, the Subsidiary Guarantors, certain of the Lenders (as
defined below), and JPMorgan Chase Bank, N.A. ("Agent"), as Administrative
Agent (the "Second Forbearance Agreement"), which is hereby incorporated by
reference and attached hereto as Exhibit 10.1. The Second Forbearance Agreement
relates to (1) the Credit Agreement dated as of May 31, 2000, as amended, among
the Company, the lenders party thereto and the Agent (the "Credit Agreement"),
(2) the Credit Agreement dated as of April 16, 2002, as amended, among the
Company, the lenders party thereto and the Agent (the "Exit Facility" and,
together with the Credit Agreement, the "Credit Facilities"; and the lenders
under each of the Credit Facilities, the "Lenders") and (3) the Subsidiary
Guarantee Agreement dated as of May 31, 2000, as amended and restated as of
April 16, 2002, among the Subsidiary Guarantors and the Agent. The Second
Forbearance Agreement was entered into upon the expiration on May 23, 2005, of
the initial Forbearance Agreement entered into as of March 16, 2005, and
extends the forbearance period to July 21, 2005.
Pursuant to the Second Forbearance Agreement, the Lenders have agreed to
forbear from exercising any remedies as a result of certain specified defaults
under the Credit Facilities anticipated by the Company during the forbearance
period, including, without limitation, the failure to make scheduled
amortization payments under the Credit Facilities and interest payments under
the Credit Agreement. In addition, the Company has agreed to subject certain
accounts to a control agreement and to place certain restrictions on the sale
of certain assets and on the use of cash obtained through the sale of certain
assets. The forbearance period, which is intended to allow the company to
continue to explore strategic alternatives as well as complete the negotiation
of a potential financial restructuring plan, runs through July 21, 2005.
Theodore J. Forstmann, director and stockholder of the Company, and a General
Partner in certain funds affiliated with Forstmann Little & Co. which
collectively hold a controlling interest in the Company's voting securities, is
a lender party to the Credit Agreement.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
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10.1 Second Forbearance Agreement, dated as of May 23, 2005, among
McLeodUSA Incorporated (the "Borrower"), each of the
Subsidiaries of the Borrower listed on Schedule I thereto (the
"Subsidiary Guarantors"), the financial institutions named on
the signature pages thereto (together with their respective
successors and assigns, the "Participant Lenders") and
JPMorgan Chase Bank, N.A., as agent for the Lenders (the
"Administrative Agent")
99.1 Press Release, dated May 23, 2005
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MCLEODUSA INCORPORATED
Dated: May 25, 2005 By: /s/ G. Kenneth Burckhardt
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Name: G. Kenneth Burckhardt
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Second Forbearance Agreement, dated as of May 23, 2005, among
McLeodUSA Incorporated (the "Borrower"), each of the
Subsidiaries of the Borrower listed on Schedule I thereto (the
"Subsidiary Guarantors"), the financial institutions named on
the signature pages thereto (together with their respective
successors and assigns, the "Participant Lenders") and
JPMorgan Chase Bank, N.A., as agent for the Lenders (the
"Administrative Agent")
99.1 Press Release, dated May 23, 2005