SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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):
March 7, 2017 (March 6, 2017)
PARETEUM CORPORATION
(Exact name of registrant as specified in
Charter)
|
Delaware
|
001-35360
|
95-4557538
|
(State or other jurisdiction of
incorporation)
|
(Commission File Number)
|
(IRS Employer
Identification No.)
|
100 Park Avenue
New York, NY 10017
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including
area code: (212) 984-1096
(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 7.01.
|
Regulation FD Disclosure
|
On March 7, 2017, the
Company issued a press release announcing the transaction described under Item 8.01 below. A copy of the press release referred
to above is attached hereto as Exhibit 99.1.
The information contained
in this Item 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under
the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing. The furnishing of the information in this Item 7.01 of this Current Report on Form
8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the
information contained in this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly
available.
This Current Report
on Form 8-K and exhibits may contain these types of statements, which are “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995, and which involve risks, uncertainties and reflect the Registrant’s
judgment as of the date of this Current Report on Form 8-K. Forward-looking statements may relate to, among other things, operating
results and are indicated by words or phrases such as “expects,” “should,” “will,” and similar
words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially
from those anticipated at the date of this Current Report on Form 8-K. The Company disclaims any obligation to, and will not, update
any forward-looking statements to reflect events or circumstances after the date hereof. Investors are cautioned not to rely unduly
on forward-looking statements when evaluating the information presented within.
On March 6, 2017, Elephant
Talk Europe Holding B.V., an entity
organized under the laws of the Netherlands (the “Borrower”)
,
a
wholly owned subsidiary of Pareteum Corporation (the “Company”), as borrower, the Company, Pareteum North America Corp.,
a Delaware corporation, Elephant Talk Group International B.V., an entity organized under
the laws of the Netherlands, Corbin Mezzanine Fund I, L.P. (“Lender”) and Atalaya Administrative LLC, a New York limited
liability company, as administrative agent and collateral agent for the Lender, entered into a Letter Agreement
(the “Agreement”) to amend certain terms of the credit agreement among the parties, dated November 17, 2014, as has
been amended from time to time (as so amended, the “Amended and Restated Agreement”). Capitalized terms used herein
but not otherwise defined shall have the meaning as set forth in the Amended and Restated Credit Agreement.
Pursuant to the Agreement,
(i) the Maturity Date will be extended to December 31, 2018; (ii) the amortization schedule will be as follows: Q1-17: $1,500,000;
Q2-17: $1,500,000; Q3-17: $500,000; Q4-17: $500,000; Q1-18: $750,000; Q2-18: $750,000; Q3-18: $750,000; Q4-18: Balloon; (iii) a
new financial covenants package shall be agreed upon by the parties by April 30, 2017; and (iv) the Warrants will be amended as
follows: (a) the aggregate amount of shares of common stock underlying the Warrants will be increased to 1,446,000 (post-reverse
split); (b) the exercise price of the Warrants will be set at the lesser of (A) $3.25 per share (post-reverse split) or (B) a 13%
discount to the offering price of shares of common stock in an underwritten public offering (the “Equity Offering”)
of the Company; and (c) the anti-dilution sections (Sections 9(d) and 9(h)) of the Warrants shall be removed.
The terms of the
Agreement are subject to, and conditioned upon, among other things, the execution and delivery of a formal amendment to the
Amended and Restated Credit Agreement and Warrant, a reaffirmation of the Borrower and Guarantors’ obligations
thereunder, a reaffirmation of the security interests and guarantees granted by the Borrower and Guarantors in connection
therewith and the consummation of the Equity Offering.
A copy of the Agreement
is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The description of the material
terms of the Agreement is qualified in its entirety by reference to Exhibit 10.1.
|
Exhibit No.
|
|
Description
|
|
|
|
|
10.1
|
|
Letter Agreement, dated as of March 6, 2017, by and among Elephant Talk Europe Holding B.V., as the Borrower, Pareteum Corporation, as the Parent and Guarantor, the other Subsidiaries of the Parent, from time to time party hereto as Guarantors, the Lenders from time to time party hereto and Atalaya Administrative LLC, as Administrative Agent and Collateral Agent.
|
|
|
|
|
|
99.1
|
|
Press Release dated March 7, 2017
|
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.
|
Dated:
March 7, 2017
|
PARETEUM CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alexander Korff
|
|
|
|
Name: Alexander Korff
|
|
|
Title: General Counsel & Secretary
|
Exhibit 10.1
LETTER AGREEMENT
This Letter Agreement
(the “Letter”) is entered into by and between ELEPHANT TALK EUROPE HOLDING B.V., a
besloten vennootschap met beperkte
aansprakelijkheid
organized under the laws of the Netherlands (the “Borrower”), PARETEUM CORPORATION (formerly
known as Elephant Talk Communications Corp.), a Delaware corporation (the “Parent”), any Subsidiaries of Parent party
hereto that are Guarantors or become Guarantors hereunder, the lenders from time to time party hereto (each a “Lender”
and, collectively, the “Lenders”), ATALAYA ADMINISTRATIVE LLC, a New York limited liability company (“Atalaya”),
as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative
Agent”) and Atalaya, as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns
in such capacity, the “Collateral Agent”, and together with the Administrative Agent, collectively, the “Agents”
and each an “Agent”). The purpose of this Letter is to outline the terms of an agreement in principle, subject to the
conditions described herein, to amend that certain Amended and Restated Credit Agreement and to the Warrants issued thereunder.
Capitalized terms used herein but not otherwise defined shall have the meaning as set forth in the Amended and Restated Credit
Agreement.
WHEREAS
, the
Borrower, Parent, the Guarantors party hereto, the Lenders, Administrative Agent and Collateral Agent are parties to that certain
Credit Agreement dated as of November 17, 2014, as amended by that certain Joinder to Credit Agreement dated as of January 30,
2015, by that certain Letter Agreement dated as of June 19, 2015, by that certain First Amendment to Credit Agreement and Waiver
dated as of July 7, 2015, by that certain Letter Agreement dated as of January 19, 2016, by that certain Second Amendment to Credit
Agreement and Waiver dated as of August 15, 2016, by that certain Letter Agreement dated as of September 30, 2016 and by that Amended
and Restated Credit Agreement dated December 27, 2016, and as may have otherwise been amended from time to time (as so amended,
the “Amended and Restated Credit Agreement”); and
WHEREAS
, the
Borrower, Parent, the Guarantors party hereto, the Lenders, Administrative Agent and Collateral Agent desire to enter into this
Letter to set forth the terms of the proposed amendment to the Amended and Restated Credit Agreement and Warrants, to be made subject
to the terms and conditions outlined herein.
NOW THEREFORE
,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
|
|
1.
|
Amendments to the Amended and Restated Credit Agreement
.
|
Subject to the execution of definitive
Amendment Documents and other conditions described under Section 2, the parties anticipate that the following amendments will be
made to the Amended and Restated Credit Agreement and the Warrants issued thereunder:
|
|
(a)
|
The Maturity Date will be extended to December 31, 2018.
|
|
|
(b)
|
The amortization schedule will be as follows:
|
Quarter ending:
Q1-17: $1,500,000
Q2-17: $1,500,000
Q3-17: $500,000
Q4-17: $500,000
Q1-18: $750,000
Q2-18: $750,000
Q3-18: $750,000
Q4-18: Balloon
|
|
(c)
|
New financial covenants package shall be agreed between
the parties by April 30, 2017.
|
|
|
(d)
|
The Warrants will be amended as follows:
|
|
|
1.
|
The aggregate amount of shares of common stock underlying the Warrants will be increased to 1,446,000
(post split);
|
|
|
2.
|
The exercise price of the Warrants will be set at the lesser of (a) $3.25 per share (post-split)
or (b) a 13% discount to the offering price of shares of common stock in the Parent’s previously announced underwritten public
offering (the “Equity Offering”); and
|
|
|
3.
|
The anti-dilution sections (Sections 9(d) and 9(h)) of the Warrants shall be removed.
|
2.
Definitive
Agreement and Other Conditions
. The terms of amendment contemplated herein will be subject to, and conditioned upon, among
other things:
(a) the
execution and delivery of a formal amendment to the Amended and Restated Credit Agreement and Warrant, a reaffirmation of the Borrower
and Guarantors’ obligations thereunder and a reaffirmation of the security interests and guarantees granted by Borrower and
Guarantors in connection therewith (collectively, the “Amendment Documents”);
(b) consummation
of the Equity Offering;
(c) the
absence of any Default or Event of Default both before after giving effect to the Amendment Documents;
(c) the
representations and warranties set forth in the Loan Documents shall be true and correct in all material respects (except to the
extent already qualified by materiality, in which case, they shall be true and correct in all respects);
(d) no
Material Adverse Effect shall have occurred or reasonably be expected to occur; and
(e) Agent
and Lenders shall have received updated management projections through the Maturity Date, which shall have been based on reasonable
assumptions and represent management’s best estimates of the projected performance of the Borrower and Guarantors.
For the avoidance of doubt, the failure
by Parent to consummate the Equity Offering on or before March 31, 2017, shall relieve the Administrative Agent and Lenders of
any obligation under this Letter to negotiate or execute any definitive Amendment Documents.
3.
Authorization
.
The undersigned Borrower and Guarantor represents that they have full corporate power and authority to execute this Letter and
that they are authorized to take the actions set forth herein without the consent or approval of any other third party (including
the shareholders of Parent).
4.
No
Other Amendments.
Except as specifically contemplated by this Letter or otherwise agreed by the parties, there shall be no
other amendments to the Amended and Restated Credit Agreement, which shall otherwise remain unmodified and in full force and effect.
5.
Governing
Law.
This Letter shall be governed by and construed in accordance with the laws of the State of New York.
6.
Fees
.
By executing this Letter, Parent confirms that it will bear the reasonable legal fees and other out-of-pocket expenses of Atalaya
and the Lenders with respect to the transaction.
7.
Counterparts;
Signature
. This Letter may be executed in one or more counterparts. In the event that any signature is delivered by facsimile
transmission or any other form of electronic delivery, such signature shall have the same force and effect as if such signature
page were an original thereof.
[Signature Page Follows]
IN WITNESS WHEREOF,
the parties have executed this Letter as of March 6, 2017.
|
|
BORROWER
:
|
|
|
|
|
|
|
|
|
ELEPHANT TALK EUROPE HOLDING B.V.
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Yves van Sante
|
|
|
|
|
Name: Yves van Sante
|
|
|
|
|
Title: Director
|
|
|
|
|
|
|
|
|
GUARANTORS
:
|
|
|
|
|
|
|
|
|
PARETEUM CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Turner
|
|
|
|
|
Name: Robert H. Turner
|
|
|
|
|
Title: Executive Chairman
|
|
|
|
|
|
|
|
|
PARETEUM NORTH AMERICA CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Turner
|
|
|
|
|
Name: Robert H. Turner
|
|
|
|
|
Title: Executive Chairman
|
|
|
|
|
|
|
|
|
ELEPHANT TALK GROUP INTERNATIONAL B.V.
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Yves van Sante
|
|
|
|
|
Name: Yves van Sante
|
|
|
|
|
Title: Director
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
:
|
|
|
|
|
|
|
|
ATALAYA ADMINISTRATIVE LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert Flowers
|
|
|
|
|
Name: Robert Flowers
|
|
|
|
|
Title: Authorized Signatory
|
|
|
|
LENDERS
:
|
|
|
|
|
|
|
|
|
CORBIN MEZZANINE FUND I, L.P.
|
|
|
|
|
|
|
|
By:
|
Corbin Capital Partners Management, LLC,
its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Daniel Friedman
|
|
|
|
|
Name: Daniel Friedman
Title: General Counsel
|
|
Exhibit 99.1
Pareteum to Restructure Senior Secured
Debt Obligation, Extending Maturity Date
to December 31, 2018
Proposed Amendment Also Includes New
Quarterly Amortization Schedule and Increases Amount of Common Shares Underlying Warrants
NEW YORK, NEW YORK, March 7, 2017 -
Pareteum Corporation (NYSE MKT: TEUM) (“Pareteum” or the "Company")
, a leading international provider
of mobile networking software and services to the Mobile Network and Internet of Things markets, today announced it has entered
into a letter agreement with Atalaya Capital Management (“Atalaya”), its senior secured lender, to amend certain terms
of the credit agreement among the parties, dated November 17, 2014, as has been amended from time to time (as so amended, the “Amended
and Restated Agreement”), including, among others, to extend the maturity date of amounts owed to December 31, 2018, to increase
the amount of shares of common stock underlying the related warrants (the “Warrants”) and to remove any anti-dilution
features related to the Warrants.
“At the end of 2016 we successfully
reached a new agreement with our senior lender under which we were granted more flexible terms and lower interest rates as a result
of the progress we have made to restructure the business to support future growth. After meeting with management and further reviewing
our strategic plan, we believe today’s amendments to that agreement demonstrate additional confidence in the execution of
our turnaround and the growing opportunities we are now positioned to capitalize on,” said Hal Turner, Pareteum's Executive
Chairman. “We wish to thank our lender which continues to work with the Company and look forward to further demonstrating
the underlying improvements in the business and the value we are creating for our customers, shareholders and other stakeholders.”
“We continue to be impressed by the
progress Hal and his team are making at Pareteum including its relationship with Vodafone, its largest customer, and the new partners,
customers and additional management talent they have attracted in such a short amount of time,” said Ivan Zinn of Atalaya.
“We believe today’s amendments will help support the business’ ongoing turnaround and are pleased by the evidence
of growing marketplace demand for its technology, creating interest that will assist the Company in continuing to build shareholder
value.”
Pursuant to the terms of the proposed amendment,
the Amended and Restated Agreement would be amended as follows: (i) a new maturity date on the $10.1 million of outstanding principal
and premiums of the previously disclosed Amended and Restated Agreement of December 31, 2018; (ii) a new quarterly amortization
schedule commencing at the end of Q1 2017 through Q4 2018; and (iii) a new financial covenants package which shall be agreed upon
by the parties by April 30, 2017. Additionally, the Warrants will be amended as follows: (i) the aggregate amount of shares of
common stock underlying the Warrants will be increased to 1,446,000 (post-reverse split); (ii) the exercise price of the Warrants
will be set at the lesser of (a) $3.25 per share (post-reverse split) or (b) a 13% discount to the offering price of shares of
common stock in an underwritten public offering of the Company; and (iii) the anti-dilution sections of the Warrants shall be removed.
The terms of the letter agreement are subject
to, and conditioned upon, among other things, the execution and delivery of a formal amendment to the Amended and Restated Credit
Agreement and Warrants, a reaffirmation of the parties’ obligations thereunder, a reaffirmation of the security interests
and guarantees granted by certain parties in connection therewith and the consummation of an equity offering.
About Pareteum Corporation:
Pareteum Corporation and its subsidiaries
provide a complete mobility cloud platform, utilizing messaging and security capabilities for the global Mobile, MVNO, Enterprise,
SaaS and IoT markets. Mobile Network Operator (MNO) customers include Vodafone, the world’s second largest mobile operator
by customer count, Zain, the 4th largest mobile operator in the world in terms of geographical presence and other Tier 1 operators,
MVNO customers such as Lebara and Lowi, and partners including Cleartech and Expeto. For more information please visit: www.pareteum.com.
Forward-Looking Statements:
Certain statements contained herein constitute
"forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements
may include, without limitation, statements with respect to Pareteum's plans and objectives, projections, expectations and intentions.
These forward-looking statements are based on current expectations, estimates and projections about Pareteum's industry, management's
beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees
of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such
statements involve risks and uncertainties, the actual results and performance of Pareteum may differ materially from the results
expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. Unless otherwise required by law, Pareteum also disclaims any obligation to update its view
of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here.
Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those
projected or suggested in Pareteum's filings with the Securities and Exchange Commission, copies of which are available from the
SEC or may be obtained upon request from Pareteum Corporation.
Shareholder Contact:
Steve Gersten
(813) 926-8920
InvestorRelations@Pareteum.com
Investor Relations Contact:
Jon Cunningham
(407) 712-8969
Jon@RedChip.com