SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR SECTION 13(e)(1)OF
THE SECURITIES EXCHANGE ACT OF 1934
Rare Medium Group, Inc.
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(Name of Subject Company (Issuer))
AP/RM Acquisition, LLC
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(Name of Filing Persons (Offeror)
Common Stock, Par Value $0.01 Per Share
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(Title of Class Securities)
75382N109
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(CUSIP Number of Class of Securities)
Michael D. Weiner
AP/RM Acquisition, LLC
Two Manhattanville Road
Purchase, New York 10577
(914) 694-8000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
With a copy to:
Paul A. Belvin, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036
(202) 887-4000
CALCULATION OF FILING FEE
Transaction Valuation Amount of Filing Fee
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Not Applicable Not Applicable
|_| Check the box if any part of the fee is offset as provided by Rule 0-11 (a)
(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: : N/A
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Form or Registration No.: N/A Date Filed: : N/A
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|X| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer. Check the appropriate boxes
below to designate any transactions to which the statement relates:
|X| third-party tender offer subject to Rule 14d-1.
|_| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: |_|
Rare Medium Group, Inc. Contact:
44 W. 18th St., 6th Floor Craig Chesser
New York, New York 10011 Senior Vice President, Finance & Treasurer
646-638-1306
FOR IMMEDIATE RELEASE info@raremedium.com
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RARE MEDIUM ANNOUNCES
SETTLEMENT OF CLASS ACTION LITIGATION, PROPOSED
REVERSE STOCK SPLIT AND RIGHTS OFFERING
New York, NY April 3, 2002 - Rare Medium Group, Inc. (NASDAQ: RRRR) announced
today an agreement to settle outstanding class action litigation pending in the
Delaware Court of Chancery in which the law firm of Milberg Weiss Bershad Hynes
& Lerach LLP serves as lead counsel to the class action plaintiffs. In
connection with the settlement, the Company also announced its intention to
effect a one for ten reverse stock split and to commence a rights offering which
will allow stockholders to purchase shares of common stock of the Company at a
discount to the market price. The reverse stock split and rights offering are
subject to stockholder approval.
The reverse stock split is intended to assist the Company in meeting The Nasdaq
National Market's minimum closing bid price requirement of $1.00 per share.
"We believe it is in the best interests of the stockholders and the Company to
remain listed on a national trading market such as Nasdaq and are, therefore,
proposing a reverse stock split to our stockholders," said Glenn S. Meyers,
Chairman and CEO of Rare Medium.
In the proposed rights offering, common stockholders of Rare Medium will receive
non-transferable rights to purchase one additional share of common stock of the
Company for each share held as of a record date to be established. The price at
which the additional shares may be purchased will represent a 15% discount to
the market price of the Company's common stock at the time the rights offering
is commenced, but will be no more than $0.33 per share and no less than $0.18
per share. All stockholders who fully exercise their subscription rights will
also have an over-subscription right to acquire any shares which are not
purchased by other stockholders, subject to a pro rata limitation in the event
the rights offering is oversubscribed. The rights offering is expected to
commence within 60 days, promptly following registration of the shares subject
to the offering.
If approved by stockholders, it is expected that the reverse stock split will be
effected promptly following the closing of the rights offering. Accordingly,
there will be no adjustment to the subscription price in the rights offering as
a result of the reverse stock split.
The owners of Rare Medium's outstanding preferred stock, Apollo Investment Fund
IV, L.P., Apollo Overseas Partners IV, L.P. and AIF IV/RRRR LLC, (the "Preferred
Stockholders"), who also own 12,709,499 shares of common stock, have purchased
in advance 38,765,848 shares of non-voting common stock which equals the number
of shares of voting common stock that they would otherwise have been entitled to
purchase in the rights offering. The Preferred Stockholders paid $0.255 per
share for an aggregate amount of $9,885,291. This purchase price will be
adjusted to the subscription price established at the commencement of the
offering for other stockholders who will have the right to purchase voting
common stock. Any shares issued to the Preferred Stockholders in connection with
their advance purchase or pursuant to their over-
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subscription rights will consist of non-voting common stock and will therefore
not increase the current 29.9% voting percentage of the Preferred Stockholders.
Subject to stockholder approval, the Preferred Stockholders may exchange the
non-voting common stock for voting common stock in connection with limited
transfers to third parties or to maintain their 29.9% voting percentage if it
would otherwise be reduced below 29.9%.
In connection with the rights offering and the settlement of the Company's
outstanding class action litigation, the Preferred Stockholders have agreed,
subject to court approval of the settlement agreement, to cancel 20% of the
warrants to purchase common stock held by them and to elect to receive dividends
on their preferred stock in the form of additional shares of preferred stock, in
lieu of cash, through June 30, 2004. Such dividends would have otherwise become
payable in cash at the option of the Preferred Stockholders beginning with the
quarter ended September 30, 2002.
Proceeds from the rights offering will be used to supplement the Company's cash
resources, to satisfy the Company's ongoing cash requirements, including its
general and administrative expenses, and to take advantage of business
opportunities, including maintaining or increasing the Company's stake in the
Mobile Satellite Ventures joint venture. Depending on the subscriptions received
pursuant to the rights offering, the Company may, based on current market
prices, raise up to $23 million pursuant to the advance purchase and the rights
offering.
"We believe that a rights offering is a cost-effective way to raise capital,
which will allow all of our shareholders to participate in the Company's future.
We are also pleased with the advance purchase by the Preferred Stockholders,
which we view as a cornerstone to ensuring the success of the rights offering,"
said Mr. Meyers.
The Company also announced that, as part of a settlement of the outstanding
class action litigation, AP/RM Acquisition, LLC, an affiliate of the Preferred
Stockholders, has agreed to commence promptly a cash tender offer for up to
15,002,909 shares, or approximately 23%, of Rare Medium's common stock, at a
price of 105% of the average closing prices of the common stock for the five
trading days prior to the commencement of the tender offer, but in no event
greater than $0.33 per share or less than $0.23 per share. The tender offer is
intended to provide additional liquidity for Rare Medium's common stockholders
and, thereby, provide near term support for the market price of the Company's
common stock. The tender offer will be concluded prior to commencement of the
rights offering. The Board of Directors will not be making any recommendation
with respect to the tender offer, and stockholders are urged to make their own
decision with respect to the tender offer. The Preferred Stockholders have
agreed that all tendered shares which would otherwise collectively entitle them
and their affiliates to more than 29.9% of the voting power of the Company will
be voted pro rata with all votes cast by holders of common stock.
Rare Medium also announced that, in connection with the transactions announced
today, it has agreed to settle all outstanding claims relating to the pending
stockholder class action lawsuits. The settlement agreement will be subject to
court approval which will be sought promptly. As part of the settlement, Rare
Medium has agreed with counsel for the plaintiffs to pay $100,000 in cash and
issue shares of its common stock with a value of $1,000,000 based on the tender
offer price as plaintiffs' counsels' fees and expenses.
In accordance with applicable law and the rules of the NASD, the reverse stock
split and the rights offering are subject to stockholder approval. The Preferred
Stockholders have committed to vote their shares in favor of the reverse stock
split and the rights offering at the special
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stockholders' meeting to be called to consider these matters. Rare Medium
expects to file a proxy statement and registration statement with the Securities
and Exchange Commission shortly.
* * *
A registration statement relating to the securities mentioned in this press
release will be filed with the Securities and Exchange Commission. The
securities mentioned in the press release may not be sold nor may offers to buy
be accepted prior to the time the registration statement becomes effective. This
press release shall not constitute an offer to sell or the solicitation of any
offer to buy nor shall there be any sale of the securities mentioned in the
press release in any state in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the securities laws of
any such state.
Stockholders should read AP/RM Acquisition, LLC's tender offer statement and the
Company's recommendation statement regarding AP/RM Acquisition, LLC's tender
offer when they become available because they will contain important
information. AP/RM Acquisition, LLC's tender offer statement and the Company's
recommendation statement and other filed documents will be available for free at
the Securities and Exchange Commission website, www.sec.gov. The recommendation
statement and the registration statement relating to the securities mentioned in
this press release will also be available for free from the Company; and AP/RM
Acquisition, LLC's tender offer statement mentioned in this press release will
also be available for free from AP/RM Acquisition, LLC.
This document includes certain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, including statements
relating to the consummation of the proposed transactions described above. These
statements are based on management's current expectations and are subject to
uncertainty and changes in circumstances. Actual results may differ materially
from these expectations due to changes in global economic conditions,
competition, regulatory approvals necessary for Mobile Satellite Ventures to
develop a business combining satellite operations with terrestrial base stations
and the liquidity of XM Satellite Radio common stock. Important factors that
could cause actual results to differ materially from those expressed or implied
by these forward-looking statements are detailed in the documents filed by Rare
Medium with the Securities and Exchange Commission including but not limited to
those contained under the Risk Factors section of the Annual Report on Form 10-K
filed by the Company with the Securities and Exchange Commission on March 20,
2002. The Company assumes no obligation to update these forward-looking
statements to reflect actual results, changes in risks, uncertainties or
assumptions underlying or affecting such statements or for prospective events
that may have a retroactive effect.
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