UNITED STATES
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) December 7, 2004
Global Signal Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-32168 65-0652634
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
301 North Cattlemen Road, Suite 300, Sarasota, Florida 34232
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (941) 364-8886
(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
The descriptions of the Mortgage Loan (defined below) and the Management
Agreement (defined below) set forth in Item 2.03 of this report are
incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On December 7, 2004, one of Global Signal Inc.'s (the "Company's")
operating subsidiaries, Pinnacle Towers Acquisition Holdings LLC and five of
its direct and indirect subsidiaries (collectively, the "Borrowers") entered
into an Amended and Restated Loan and Security Agreement, by and between
Pinnacle Towers Acquisition Holdings LLC, the other Borrowers and Towers Finco
II LLC, pursuant to which they borrowed $293,825,000 made payable to a newly
formed trust (the "Mortgage Loan"). The trust simultaneously issued
$293,825,000 in commercial mortgage pass-through certificates with terms
identical to the Mortgage Loan. The proceeds from the Mortgage Loan were used
primarily to repay the $181.7 million of then outstanding borrowings under the
Company's credit facility and to partially fund a reserve account to be used to
acquire additional wireless communications sites. As of December 7, 2004, the
weighted average fixed interest rate of the various tranches of the Mortgage
Loan was approximately 4.74%. The Borrowers are jointly and severally liable
for repayment of the Mortgage Loan.
The Mortgage Loan is secured by, among other things, (1) mortgage
liens on the Borrowers' interests (fee, leasehold or easement) in substantially
all of their wireless communications sites, (2) a security interest in
substantially all of the Borrowers' personal property and fixtures and (3) a
pledge of the capital stock (or equivalent equity interests) of each of the
Borrowers (including a pledge of the capital stock of Pinnacle Towers
Acquisition Holdings LLC from its direct parent, Global Signal Holdings III
LLC).
The Borrowers are required to make monthly payments of interest on the
Mortgage Loan. Subject to certain limited exceptions described below, no
payments of principal will be required to be made prior to the monthly payment
date in December 2009, which is the final maturity date. However, if the debt
service coverage ratio, defined as the net cash flow for the sites for the
immediately preceding twelve calendar month period (with certain adjustments
for recently acquired sites) divided by the amount of interest that the
Borrowers will be required to pay over the succeeding twelve months on the
Mortgage Loan, as of the end of any calendar quarter, falls to 1.30 times or
lower, then all cash flow in excess of amounts required to make debt service
payments, to fund required reserves, to pay management fees and budgeted
operating expenses and to make other payments required under the loan
documents, referred to as excess cash flow, will be deposited into a reserve
account instead of being released to the Borrowers. The funds in the reserve
account will not be released to the Borrowers unless the debt service coverage
ratio exceeds 1.30 times for two consecutive calendar quarters. If the debt
service coverage ratio falls below 1.15 times as of the end of any calendar
quarter, then an "amortization period" will commence and all funds on deposit
in the reserve account will be applied to prepay the Mortgage Loan. As of
December 7, 2004, the debt service coverage ratio was 2.20.
On the closing date, the Borrowers deposited approximately $120.7
million (including $112.1 million of the proceeds from the Mortgage Loan with
the remaining $8.6 million from working capital) into a reserve account
referred to as the site acquisition reserve. The Borrowers are permitted to use
amounts on deposit in the site acquisition reserve to acquire additional
wireless communications sites during a period not to exceed six months
following the closing date (referred to as the site acquisition period),
subject to the satisfaction of certain conditions under the loan documents,
including:
o after giving effect to the acquisition, the yield on the sites
owned, leased or managed by the Borrowers will be not less than
7.65%;
o the Borrowers execute mortgages on all new sites that are capable
of being encumbered by mortgages; and
o for all properties acquired pursuant to purchase agreements
executed after November 12, 2004, after giving effect to the
acquisition, at least 80% of the revenue generated by the new sites
(taken as a whole) comes from telephony tenants and the average
remaining term of the ground leases for the new sites (taken as a
whole) is equal to or greater than 15 years.
For purposes of the foregoing, "yield" means the quotient of (i) the net
operating income for all sites (including any new sites acquired pursuant to
purchase agreements executed after November 12, 2004 that meet certain
conditions specified in the loan documents) divided by (ii) the sum of the
total acquisition costs incurred by the Borrowers for the sites owned, leased
or managed by them as of the closing date plus all amounts that (giving effect
to the acquisition) will have been withdrawn from the site acquisition reserve
to fund acquisitions; provided that, in calculating yield, operating revenues
from non-telephony sources will be limited to 25% of the aggregate operating
revenues used in calculating net operating income.
If any funds remain in the site acquisition reserve at the end of
the site acquisition period, such amounts will be applied to the repayment of
principal of the Mortgage Loan instead of being released to the Borrowers.
The Borrowers may not prepay the Mortgage Loan in whole or in part at
any time prior to December 7, 2006, except in limited circumstances (such as
the occurrence of certain casualty and condemnation events relating to the
wireless communications sites securing the Mortgage Loan). Thereafter,
prepayment is permitted provided it is accompanied by any applicable prepayment
consideration. If the prepayment occurs within three months of the final
maturity date, no prepayment consideration is due.
The loan documents include covenants customary for mortgage loans
subject to rated securitizations. Among other things, the Borrowers are
prohibited from incurring other indebtedness for borrowed money or further
encumbering their assets. The organizational documents of the Borrowers were
amended to limit their purposes and to add provisions consistent with rating
agency securitization criteria for special purpose entities, including the
requirement that the Borrowers maintain at least two independent directors.
In connection with the Mortgage Loan, the Borrowers entered into a
management agreement (the "Management Agreement") with Global Signal Services
LLC ("GS Services") to manage all of the Borrowers' wireless communications
sites. GS Services is also a subsidiary of the Company. This Management
Agreement supersedes in its entirety the existing management agreement dated as
of September 25, 2003, as amended by that certain Assignment and Assumption of
Management Agreement dated as of February 5, 2004, and that certain First
Amendment to Management Agreement dated as of May 13, 2004.
Pursuant to the Management Agreement, GS Services performs, on the
Borrowers' behalf, those functions reasonably necessary to maintain, market,
operate, manage and administer the Borrowers' communications sites. GS Services
also performs administrative and support services for the Borrowers, including
services relating to accounting, litigation management, finance, the
maintenance of books and records and the preparation of all financial
statements, reports, notices and other documents required to be delivered by
the Borrowers under the terms of the Mortgage Loan. GS Services acts as the
Borrowers' exclusive agent with regard to the services described in the
Management Agreement. In such capacity, GS Services has the authority to
negotiate, execute, and implement, for and on the Borrowers' behalf, all tenant
leases, ground leases, easements, contracts, permits, licenses, registrations,
approvals, amendments and other documents as GS Services deems necessary or
advisable.
GS Services arranges for the payment of all operating expenses and the
funding of all capital expenditures out of amounts on deposit in one or more
operating accounts maintained on the Borrowers' behalf. For each calendar
month, GS Services is entitled to receive a management fee equal to 10% of the
Borrowers' operating revenues for the immediately preceding calendar month.
The preceding summaries of certain provisions of the Mortgage Loan and
the Management Agreement are qualified in their entirety by reference to the
complete Mortgage Loan and the Management Agreement filed as exhibits 10.1 and
10.2 hereto, respectively, and incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Amended and Restated Loan and Security Agreement, dated as of
December 7, 2004, by and between Pinnacle Towers Acquisition
Holdings LLC, other Borrowers (as defined therein) and Towers
Finco II LLC.
10.2 Management Agreement, dated as of December 7, 2004, between
Pinnacle Towers Acquisition Holdings LLC, the Subsidiaries
thereof, and Global Signal Services LLC.
SIGNATURE
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.
GLOBAL SIGNAL INC.
(Registrant)
/s/Greerson G. McMullen
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Greerson G. McMullen
Executive Vice President,
General Counsel & Secretary
Date: December 13, 2004
EXHIBIT INDEX
Exhibit Number Exhibit
10.1 Amended and Restated Loan and Security Agreement, dated as of
December 7, 2004, by and between Pinnacle Towers Acquisition
Holdings LLC, other Borrowers (as defined therein) and Towers
Finco II LLC.
10.2 Management Agreement, dated as of December 7, 2004, between
Pinnacle Towers Acquisition Holdings LLC, the Subsidiaries
thereof, and Global Signal Services LLC.