SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
/ / Preliminary information Statement / / Confidential for use of
the Commission only
(as permitted by Rule
14c-5(d) (2))
/x/ Definitive information statement
PRIMEDIA INC.
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(Name of Registrant as Specified in Its Charter)
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0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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/ / Fee paid previously with preliminary materials.
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INFORMATION STATEMENT
PRIMEDIA INC.
745 FIFTH AVENUE
NEW YORK, NEW YORK 10151
This Information Statement is being mailed to the
stockholders of PRIMEDIA Inc. (the "Company"), commencing on or about
September 7, 2001, to all stockholders of record on August 24, 2001, in
connection with the approval by the board of directors of the Company and the
majority of the stockholders of the Company (the "Majority Stockholders") of
the corporate actions referred to below. Accordingly, all necessary corporate
approvals in connection with the matters referred to herein have been
obtained, and this Information Statement is furnished solely for the purpose
of informing stockholders, in the manner required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of these transactions.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
ACTIONS TAKEN
The Company, as authorized by the necessary approvals of the
board of directors and the Company's Majority Stockholders, of which two (the
"Investment Partnerships") are affiliates of Kohlberg Kravis Roberts & Co.
L.P. ("KKR"), has approved the following actions:
(1) the issuance by the Company of and the purchase by 1996 KKR
Fund, Inc. ("KKR 1996 Fund"), an affiliate of KKR, of 10,800,000 shares
of the Company's common stock, par value $0.01 per share (the "Common
Stock") at $4.70 per share for an aggregate purchase price of $50.76
million;
(2) the issuance by the Company of and the purchase by KKR 1996 Fund
of 15,795,745 shares of the Company's Series K Convertible Preferred
Stock (the "Series K Preferred Stock") at $4.70 per share for an
aggregate purchase price of $74.24 million, which shares are convertible
for an equal number of shares of Common Stock at $4.70 per share;
(3) the issuance to KKR 1996 Fund of warrants to purchase 1,250,000
shares of Common Stock (the "Commitment Warrants") at an exercise price
of $7 per share, subject to adjustment, warrants to purchase an
additional 2,620,000 shares of the Common Stock (the "Funding Warrants")
at an exercise price of $7 per share, subject to adjustment, and warrants
to purchase up to 4,000,000 shares of Common Stock (the "Preferred
Warrants" and together with the Commitment Warrants and the Funding
Warrants, the "Warrants") at an exercise price of $7 per share, subject
to adjustment;
(4) the issuance by the Company of and the purchase by KKR 1996 Fund
of 1,000,000 shares of Series J Convertible Exchangeable Preferred Stock
(the "Series J Preferred Stock"), at $125 per share for an aggregate
purchase price of $125 million, which is convertible at the option of the
holder into shares of Common Stock at a conversion price of $125 million
divided by $7 per share, subject to adjustment;
(5) the issuance and delivery of the Common Stock, pursuant to the
Warrants or the certificate of designations for the Series K Preferred
Stock and Series J Preferred Stock, as applicable.
TRANSACTIONS
On August 24, 2001, the Company acquired all of the
outstanding capital stock of EMAP Inc. from EMAP America Partners. The total
consideration paid by the Company was $505,000,000 in cash and a warrant to
acquire 2,000,000 shares of the Common Stock.
The Company has partially financed the acquisition of EMAP
Inc. by (1) issuing $125 million of the Series J Preferred Stock to KKR 1996
Fund, and (2) drawing upon its revolving credit facility in an amount of
approximately $255 million. In addition, KKR 1996 Fund purchased from the
Company $125 million of (a) Common Stock and (b) the Series K Preferred Stock,
both at a price per share equal to $4.70.
In connection with the equity financing by KKR 1996 Fund,
the Company paid KKR 1996 Fund a commitment fee consisting of the Commitment
Warrants and paid to KKR 1996 Fund the Funding Warrants as a funding fee for
the securities.
EFFECT OF THE TRANSACTIONS
After giving effect to the issuance of the Company's Common
Stock and the shares of Common Stock underlying the Series K Preferred Stock,
the Investment Partnerships will own approximately 64% of the Company's Common
Stock. As a result of their majority ownership, the Investment Partnerships
control the Company and have the power to elect all of the directors and
approve any action requiring stockholder approval, including adopting
amendments to the Company's certificate of incorporation and approving mergers
or sales of all or substantially all of the Company's assets. The Investment
Partnerships will also be able to prevent a change of control event in which
existing stockholders may have had the opportunity to sell shares at a premium
over prevailing market prices or cause a change of control at any time. The
interest of the Investment Partnerships may conflict with the interest of the
Company's other existing stockholders.
DESCRIPTION OF SECURITIES
The Series K Preferred Stock is non-voting but otherwise the
economic equivalent of Common Stock. It ranks pari passu with the Common
Stock. In the event of a liquidation, the holders of shares of the Series K
Preferred Stock are entitled to receive any assets of the Company as such
holders would have received had their Series K Preferred Stock already been
converted into Common Stock. The holders of the Series K Preferred Stock
participate ratably with the holders of Common Stock as if the shares of
Series K Preferred Stock had been converted into Common Stock in all
dividends, when and if paid on the Common Stock. There is no option to
repurchase or redeem the Series K Preferred Stock as the shares of Series K
Preferred Stock will be automatically converted into an equal number of shares
of Common Stock upon receipt of approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR"), for KKR 1996 Fund to acquire
additional Common Stock and 20 days after the Company sends out this
information statement.
The Series J Preferred Stock is non-voting. The Series J
Preferred Stock is perpetual and ranks pari passu with the Company's existing
series of outstanding preferred stock. In the event of a liquidation, the
holders of shares of the Series J Preferred Stock are entitled to be paid out
of the assets of the Company available for distribution to its stockholders,
an amount in cash equal to $125 for each share outstanding, plus an amount in
cash equal to accrued but unpaid dividends. Dividends on the Series J
Preferred Stock accrue at an annual rate of 12.5% and are payable quarterly in
kind. The Company has the option to redeem any or all of the shares of Series
J Preferred Stock at any time for cash at 100% of the liquidation preference
of each share being redeemed. The Series J Preferred Stock may be converted
into shares of Common Stock at any time after the first anniversary of the
issue date at a conversion price of $125 million divided by $7 per share,
subject to adjustments. On any dividend payment date, the Company has the
option to exchange the Series J Preferred Stock into 12.5% Class J
Subordinated Notes ("Class J Notes") at an exchange rate of $1,000,0000
principal amount of the Class J Notes for each $1,000,000 of liquidation
preference of Series J Preferred Stock. The Company's ability to redeem or
exchange the Series J Preferred Stock into debt is subject to the approval of
a majority of independent directors.
The Commitment Warrants and the Funding Warrants may be
exercised after the first anniversary of the grant date. If the Series J
Preferred Stock is outstanding for three, six, nine or 12 months from the date
of issuance, KKR 1996 Fund will receive Preferred Warrants to purchase
250,000, 1 million, 1.25 million and 1.5 million shares of Common Stock,
respectively. The exercise price of the Commitment Warrants and the Funding
Warrants will be adjusted depending on certain events such as, but not limited
to, stock dividends, subdivisions and combinations, the issuance of additional
shares of Common Stock and the issuance of convertible securities, warrants or
other rights.
NO DISSENTERS' RIGHTS
The corporate actions and transactions described in this
Information Statement will not afford to stockholders the opportunity to
dissent from the actions described herein or to receive an agreed or
judicially appraised value for their shares.
INTEREST OF CERTAIN PERSONS IN THE ACTIONS DESCRIBED HEREIN
Four directors of the Company may be deemed to have a
substantial interest in the issuance of the securities described herein to KKR
1996 Fund because these directors serve as members of the limited liability
company that controls KKR 1996 Fund, which shall, after these transactions,
own substantially more voting stock of the Company.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We incorporate by reference into this Information Statement
the following documents filed with the Securities and Exchange Commission:
(a) our annual report on Form 10-K for the fiscal year ended
December 31, 2000;
(b) our quarterly reports on Form 10-Q for the quarters ended March
31, 2001 and June 30, 2001; and
(c) About.com, Inc.'s consolidated financial statements and
accompanying notes as of and for the year ended December 31, 2000 and our
unaudited pro forma consolidated financial statements and accompanying
notes giving effect to the About.com merger included in our current
report on Form 8-K/A dated April 26, 2001.
The Company will provide, without charge, to each person to
whom this Information Statement is delivered, upon written or oral request of
such person and by first class mail or other equally prompt means within one
business day of receipt of such request, a copy of any and all of the
information that is incorporated by reference in this Information Statement
(other than exhibits to such documents that are not specifically incorporated
by reference in such documents). Requests for such copies should be directed
to PRIMEDIA Inc., 745 Fifth Avenue, New York, New York, attention: Christopher
Fraser, Vice President and Deputy General Counsel; telephone number (212)
745-0628.
Beverly C. Chell
Vice Chairman and Secretary
September 7, 2001