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): January 28, 2005
LEUCADIA NATIONAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
NEW YORK
(State or Other Jurisdiction of Incorporation)
1-5721 13-2615557
(Commission File Number) (IRS Employer Identification No.)
315 PARK AVENUE SOUTH, NEW YORK, NEW YORK 10010
(Address of Principal Executive Offices) (Zip Code)
212-460-1900
(Registrant's Telephone Number, Including Area Code)
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:
|_| 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.
Item 8.01. Other Events.
On January 31, 2005, SBC Communications Inc. ("SBC") announced that it would buy
AT&T Corp., thereby obtaining control of AT&T's telecommunications network. SBC
also announced that it intends to migrate its IP-based and long distance
services to the AT&T network. SBC indicated that it expects to close the
acquisition in the first half of 2006.
SBC currently is the largest customer of the Company's telecommunications
subsidiary, WilTel Communications Group, Inc. ("WilTel") under several preferred
provider agreements between WilTel and SBC. If SBC migrates its business from
WilTel's network to the AT&T network, SBC will be required to pay to WilTel up
to $200,000,000 for all costs WilTel incurs in connection therewith, including
increased costs of the network facilities remaining with WilTel due to the loss
of SBC traffic (defined as "Transition Costs" in the provider agreements).
WilTel anticipates that an orderly migration of services from its network to
AT&T would require some period of time after SBC's acquisition of AT&T is
approved and consummated.
Pursuant to the terms of WilTel's credit agreement, the SBC announcement is
considered a "material adverse effect" as defined in the facility and as a
result WilTel can no longer access its $25 million revolving credit facility.
WilTel does not foresee needing the $25 million revolving credit facility to
meet its present requirements. The announcement does not have any impact on the
$360 million of term loans under WilTel's credit agreement. However, should
SBC's acquisition of AT&T be consummated and, as a result, the SBC preferred
provider agreements are terminated, such a termination would be an event of
default under WilTel's credit agreement, unless the default is waived by
WilTel's lenders.
Prior to announcing the intended acquisition of AT&T, on January 28, 2005, SBC
reached an agreement with WilTel to extend to April 1, 2005 the existing
transport rate structure in effect during the "pricing period" as specified in
Amendment No. 2 to Master Alliance Agreement and Amendment No. 4 to Transport
Services Agreement, dated December 31, 2003, amending the (a) Master Alliance
Agreement, effective as of February 8, 1999, as amended, by and between WilTel
Communications, LLC ("WCL"), and SBC and (b) Transport Services Agreement,
effective as of February 8, 1999, as amended, by and among WCL, SBC Operations,
Inc., and Southwestern Bell Communications Services Inc. The existing pricing
period had been scheduled to expire on January 31, 2005.
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WilTel anticipates that it will have negotiations with SBC with respect to
future transport rate pricing and other matters regarding their relationship in
light of the AT&T announcement. The Company will also evaluate on an ongoing
basis the impact of SBC's intended acquisition of AT&T on WilTel's operations
and financial condition, including the potential adverse impact on the carrying
values of WilTel's assets.
WilTel also will undertake to modify its operations in light of the anticipated
loss of its major customer, including expanding its customer base and evaluating
opportunities for consolidation. To the extent that WilTel is not successful in
these efforts, the adverse impact of losing SBC's business will be materially
greater.
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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.
Date: February 1, 2005
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph A. Orlando
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Name: Joseph A. Orlando
Title: Vice President and Chief
Financial Officer
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