Filed by AirGate PCS, Inc.
Pursuant to Rule 425 under the Securities Act of 1933, as amended
and deemed filed pursuant to Rule 14a-12(b) of the Securities Act of 1934
Subject Company: iPCS, Inc.
Commission File No. 333-47682; 333-47688
[AirGate Letterhead]
Wednesday, August 29, 2001
Dear Colleagues:
I am pleased to tell you that we announced today that AirGate PCS, Inc. and
iPCS, Inc. have agreed to combine in a stock transaction valued at $900 million.
iPCS is the Sprint PCS network partner in the midwestern United States serving a
total population of more than 7.4 million people in 37 markets located in
Illinois, Michigan, Iowa and eastern Nebraska. This transaction brings together
two leading Sprint PCS affiliates with superior subscriber growth to create the
premier Sprint PCS network partner.
With iPCS, we share a common culture and strategic approach to our markets. The
combined company currently includes more than 11 million covered POPs - making
it the largest Sprint PCS network partner, based on coverage. By leveraging our
joint operating expertise and the Sprint brand, we believe there is significant
potential for additional subscriber growth and market penetration.
The wireless communications industry continues to evolve and grow at an
unprecedented rate, and we expect this combination to create new opportunities
for our employees. We do not expect this transaction to result in a decrease in
the total number of employees for the combined company.
With your hard work, we successfully completed AirGate's build out plan in less
than 10 months - an industry record. Today we provide service to 82 percent of
our territory, including every major metropolitan area in our market. iPCS'
build out, which is fully funded, is expected to be completed by the end of the
year. By the end of the year, our combined network infrastructure will cover 12
million people in key markets throughout the southeastern and midwestern United
States.
Upon completion of the transaction, iPCS will become a wholly owned subsidiary
of AirGate. Barry Schiffman will remain Chairman, and I will remain President
and Chief Executive Officer of AirGate. Timothy Yager, President and Chief
Executive Officer of iPCS, will join the AirGate Board of Directors as one of
iPCS' three designated directors. After the merger the board will have nine
directors. AirGate will continue to be headquartered in Atlanta, Georgia.
We anticipate that the transaction will be completed by the end of February
2002. In the meantime, I want to thank you for your continued dedication. Your
efforts to provide the highest level of service to our customers has positioned
us as a leader in the wireless communications industry and enabled us to move
forward with iPCS to set new industry benchmarks.
Please join me for an employee teleconference this afternoon at 2:30 p.m. EDT.
The dial-in number is (XXX) XXX-XXXX.
More information about our combination with iPCS is included in the news release
that accompanies this letter. We will make additional information available to
you between now and the time of closing in a variety of ways including AirGate's
intranet, field meetings, and alternative communication vehicles.
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We believe that with our attractive markets, larger scale and the strong support
of Sprint PCS, as well as the efforts of our employees, we will have the formula
for success, creating enhanced growth and profit opportunities.
Sincerely,
/s/ Thomas M. Dougherty
Thomas M. Dougherty
President and Chief Executive Officer
AirGate/iPCS Employee Script
Tom Dougherty
Good morning to each of you and thanks for joining us.
We are very excited about our combination with iPCS, which will create what we
believe will be the premier Sprint PCS network partner.
As we announced in our press release earlier today, the boards of directors of
both AirGate and iPCS have unanimously approved an agreement under which AirGate
and iPCS will combine in a tax free stock-for-stock transaction. The transaction
has an enterprise value of approximately $900 million, based on our closing
stock price yesterday.
We believe that this is a unique opportunity to expand our existing network and
customer base and one that allows us to leverage our operating expertise across
iPCS' strong and attractive markets. For those of you unfamiliar with iPCS, it
is the fifth largest Sprint PCS affiliate. It has the exclusive right to provide
services under the Sprint PCS brand to over 7 million POPs in the Midwestern
United States, and, as of June 30th, had over 107,000 subscribers.
iPCS' top 15 markets include Grand Rapids - the largest market affiliated by
Sprint PCS - with over one million POPs. Other key markets include Cedar Rapids,
Champaign-Urbana, Peoria, the Quad Cities, Saginaw-Bay City, and Springfield.
Combined with iPCS, we will have approximately 11 million covered POPs - making
AirGate the largest Sprint PCS network partner based on coverage - and we
currently serve over 300,000 subscribers.
1
iPCS' service territory is adjacent to several major metropolitan areas that are
operated by Sprint PCS, including Chicago, Detroit, Des Moines, Indianapolis and
St. Louis, thereby offering us additional sources for roaming revenues.
iPCS' territory is rich in population density and has strong demographics. For
instance, the territory includes the headquarters of a number of large companies
such as State Farm Insurance, Archer Daniels Midland, Dow Chemical, John Deere
and Caterpillar, as well as over 90 colleges and universities. By leveraging our
joint operating expertise and the Sprint brand, we believe there is significant
potential for additional subscriber growth and market penetration in our
combined territory.
We are also proud to say, that the combined company will also boast a subscriber
growth rate among the highest in the industry.
As you can see, this transaction brings together two outstanding companies to
create a formidable competitor and an outstanding service provider, while
creating significant value for shareholders and staying aligned with our
expansion strategy.
Together with iPCS, we will be well positioned to capture the growing
opportunities in the wireless communications industry. The wireless
communications industry continues to evolve and grow at an unprecedented rate,
and we expect this combination to create new opportunities for our employees. We
do not expect this transaction to result in any significant workforce
reductions.
2
As you know, infrastructure and funding is a competitive differentiator within
our industry. With your hard work, AirGate has already completed its network
buildout. In fact, we successfully completed AirGate's buildout plan in less
than 10 months - an industry record. iPCS expects its buildout to be completed
by the end of this year. Importantly, both companies are fully funded, with a
significant cash cushion to finance further growth.
Together, by year-end, our network infrastructure will cover 12 million people
in key markets throughout the southeastern and midwestern United States. With
iPCS, AirGate will cover more than 80 percent of the POPs in our combined
territory. We believe that with our attractive markets, larger scale and the
strong support of Sprint PCS, we will have the formula for success, creating
enhanced growth and profit opportunities.
Upon completion of the transaction, iPCS will become a wholly owned subsidiary
of AirGate. Barry Schiffman will remain Chairman of AirGate and I will remain
President and CEO. Alan Catherall will also remain CFO of AirGate. Tim Yager,
iPCS' President and CEO, will continue in that position until the transaction
closes. Tim will then join the AirGate Board of Directors as one of iPCS' three
designated directors. When all is said and done, AirGate's board will be
expanded to 9 members. AirGate will also continue to be headquartered in
Atlanta, Georgia.
We will need customary regulatory review, and approvals by the shareholders of
AirGate, both companies' senior secured lenders, and Sprint PCS. A majority of
the shareholders of iPCS have already agreed to vote their shares in favor of
the merger. We believe that all of our constituencies will recognize the merits
of this
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combination and that approvals can be obtained quickly. We expect the
transaction to close by the end of February 2002.
As you know, AirGate has some of the best operating metrics among the Sprint
affiliates. To ensure that we continue to bring value to shareholders and
customers alike, we have been disciplined in our expansion. With iPCS, we are
confident that we have found the right partner to build value, while also
creating a true leader within the wireless communications industry. Like
AirGate, iPCS has strong relationships with its customers, densely populated
territories, attractive market demographics, and a fully funded business plan.
Undoubtedly, this is the right transaction at the right time.
I want to thank each of you for your continued dedication. Your efforts to
provide the highest level of service to our customers has positioned us as a
leader in the wireless communications industry and enabled us to move forward to
set new industry benchmarks with this combination. AirGate's expanded footprint
will now stretch from Nebraska to the Atlantic and from Northern Michigan down
to Georgia. We are excited to be the largest Sprint PCS affiliate and we look
forward to working with iPCS's talented management team and employees.
And now, if you have any questions, I would be happy to address them.
Operator...
4
Employee Questions
1. What are the benefits of this merger?
This is a unique opportunity for AirGate to expand its existing network and
customer base and to leverage our operating expertise across iPCS' strong
and attractive markets. We believe AirGate's combination with iPCS will
create the premier Sprint PCS network partner. The combined company will:
. Be fully funded and have a significant cash cushion;
. Include approximately 11 million covered POPs - making it the largest
Sprint PCS network partner based on coverage;
. Serve over 300,000 subscribers;
. Control distribution that spans attractive territory in seven states,
including important markets such as Grand Rapids, Michigan; Charleston,
Columbia, and Greenville-Spartanburg, South Carolina; Champaign-Urbana
and Springfield, Illinois; and the Quad Cities;
. Boast among the industry's highest subscriber growth rates; and
. Cover more than 80 percent of its POPs. AirGate has already completed
its network buildout, and iPCS expects its buildout to be completed by
the end of this year.
Additionally, with iPCS, our expanded territory is adjacent to 30 million
POPs in major cities operated by Sprint PCS, including Atlanta, Charlotte,
Chicago, Detroit and St. Louis.
2. How will employees benefit from the merger?
This transaction brings together two leading organizations, both of which
have enjoyed superior subscriber growth. We share a common culture and
strategic approach to our markets. Together, our company will be a
formidable competitor and outstanding service provider. We believe that
with our attractive markets, larger scale and the strong support of Sprint
PCS, we will have the formula for success, creating enhanced growth and
profit opportunities.
3. Who will manage the new company?
Barry Schiffman will remain Chairman of AirGate, Thomas Dougherty will
remain president and chief executive officer, and Alan Catherall will
remain chief financial officer of AirGate. Timothy Yager, president and
chief executive officer of iPCS, will continue in that position until the
transaction closes, and Mr. Yager will then join the AirGate Board of
Directors as one of iPCS' three designated directors out of a nine member
board. A representative of The Blackstone Group LP, which through its
affiliated funds is a significant shareholder of iPCS, and another
independent director to be agreed upon by both AirGate and iPCS will also
be added to the Board.
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4. What will the combined company be named and where will it be headquartered?
The new company will maintain the AirGate name and will be headquartered in
Atlanta, Georgia.
5. Will any jobs be eliminated?
We do not expect this transaction to result in a decrease in the total
number of employees for the combined company. The wireless communications
industry continues to evolve and grow at an unprecedented rate, and we
expect this combination to create new opportunities and enhance the need
for qualified employees.
6. Will any stores or field offices be closed?
We do not expect to close any stores or field offices as a result of this
merger. However, we will always evaluate our operations and organizational
structure to make sure that we are operating efficiently and will make
adjustments when required.
7. How many employees will the combined company have?
The new company will have approximately 750 employees in seven states in
the Southeastern and Midwestern United States.
8. What happens to my current benefits and compensation? Will the matching for
my 401K remain the same?
We will continue to offer benefits and compensation programs that are
competitive to attract and retain the best employees. We will review the
plans of both companies and we will provide you with detailed information
as benefit decisions are made.
9. What happens to my stock options?
For iPCS employees, options will vest when the transaction closes. There
will be no change in the vesting schedule for AirGate employees.
10. When will the merger be completed? What approvals are needed?
The transaction is expected to close by the end of February 2002. The
transaction is subject to customary regulatory review, and approvals by the
shareholders of AirGate, both companies senior secured lenders, and Sprint
PCS. A majority of the shareholders of iPCS have agreed to vote their
shares in favor of the merger.
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11. What can employees expect in the interim? What should I do?
Continue to do your job well. Over the next few weeks and months we will be
working with iPCS to identify the best practices of each company and ensure
a rapid completion of the transaction and a smooth transition. You should
continue to focus on executing our business plan. We will update you as
events progress.
12. When and where can I get answers to my questions about the merger?
We will make additional information available to you between now and the
time of closing in a variety of ways including our AirGate intranet, our
regular company publications and through other direct communications to all
company employees. You can also address questions to your supervisor.
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