http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9068231
QUESTIONS AND ANSWERS
The following are some questions that you, as a stockholder of either Dex One or SuperMedia, may have regarding the merger agreement, the transaction, the financing amendments, the prepackaged plans, and the special meetings of stockholders and the answers to those questions. Dex One and SuperMedia urge you to read the remainder of this document carefully because the information in this section does not provide all the information that might be important to you in determining how to vote on the various proposals. Additional important information is also contained in the appendices to, and the documents incorporated by reference into, this document.
General
Q: What is the transaction being proposed?
A: The transaction being proposed is a stock-for-stock merger between Dex One and SuperMedia under the terms of a merger agreement that is described in this document. First, the merger agreement provides for Dex One to merge with and into its direct, wholly owned subsidiary, Dex Media, with Dex Media surviving the merger. This merger is sometimes referred to in this document as the “Dex One merger.” Second, immediately following the consummation of the Dex One merger, the merger agreement provides for the merger of Spruce Acquisition Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Dex Media, with and into SuperMedia, with SuperMedia surviving the merger as a direct wholly owned subsidiary of Dex Media. This merger is sometimes referred to in this document as the “SuperMedia merger.” As a result of the mergers, SuperMedia will be a direct wholly-owned subsidiary of Dex Media. This series of mergers is referred to herein as the “mergers” or the “transaction.” A copy of the merger agreement is attached to this document as Appendix A.
Q: What are the financing amendments?
A: It is a condition to consummating the transaction in an out of court process that three of Dex One’s wholly owned subsidiaries, RHDI, DME and DMW, which are borrowers under their respective secured credit facilities, and SuperMedia obtain approval from their respective senior secured lenders to amend and restate their respective senior secured credit facilities. For the RHDI, DME and DMW secured credit facilities, the maturity dates will be extended from October 24, 2014 to December 31, 2016. The maturity date of the SuperMedia secured credit facility will be extended from December 31, 2015 to December 31, 2016. The interest rate spreads under the amended and restated credit facilities will be revised in accordance with the table below. For additional information regarding the various secured credit facilities, please refer to “Description of Certain Indebtedness.”
Credit Facility
Current Interest Rate Spreads
Amended and Restated Interest
Rate Spreads
DME Credit Facility Leverage
Ratio: ABR
Spread Eurodollar
Spread Eurodollar Spread: 3.00%
ABR Spread: 2.00%
³ 2.75x 1.50 % 2.50 %
³ 2.50x
but
<2.75x
1.25 % 2.25 %
<2.50x 1.00 % 2.00 %
DMW Credit Facility Leverage
Ratio: ABR
Spread Eurodollar
Spread Eurodollar Spread: 5.00%
ABR Spread: 4.00%
³ 2.75x 3.50 % 4.50 %
³ 2.50x but
<2.75x
3.25 % 4.25 %
<2.50x 3.00 % 4.00 %
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Credit Facility
Current Interest Rate Spreads
Amended and Restated Interest
Rate Spreads
RHDI Credit Facility Leverage
Ratio: ABR
Spread Eurodollar
Spread Eurodollar Spread: 6.75%
ABR Spread: 5.75%
³ 4.25x 5.25 % 6.25 %
<4.25x 5.00 % 6.00 %
SuperMedia Credit Facility
ABR
Spread
Eurodollar
Spread
Eurodollar Spread: 8.60%
ABR Spread: 7.60%
8.00 % 7.00 %
Q: What are the prepackaged plans?
A: The prepackaged plans are an alternative means by which to consummate the transaction, including the financing amendments, through Chapter 11 cases. In the event that either Dex One or SuperMedia is unable to obtain unanimous lender approval or the approval of holders of a majority of its common stock to consummate the transaction outside of court, Dex One or SuperMedia, as applicable, may seek confirmation of the prepackaged plans in Chapter 11 cases. At this time, neither Dex One nor SuperMedia has taken any action approving a bankruptcy filing. A copy of the Dex One prepackaged plan is attached to this document as Appendix F and a copy of the SuperMedia prepackaged plan is attached to this document as Appendix G. For a more detailed description of the prepackaged plans, see “The Prepackaged Plans.” A description of the votes required to accept the prepackaged plans is included later in this “Questions and Answers” section.
Q: What are the primary costs, disadvantages and advantages of consummating the transaction through the prepackaged plans rather than outside of court?
A: Consummating the transaction through the prepackaged plans adds extra costs and uncertainties inherent in the bankruptcy process. The costs of the bankruptcy process could be material and could include both direct costs, including fees paid to attorneys and professionals, and indirect costs, such as adverse impacts on customer relations. In addition, there can be no assurance that the Bankruptcy Court will confirm the prepackaged plans.
On the other hand, consummating the transaction through the prepackaged plans provides several benefits to Dex One and SuperMedia’s stockholders, including the ability to consummate the transaction without obtaining unanimous lender approval of the financing amendments.
Q: Why am I receiving this document?
A: You are receiving this document because you were a stockholder of record of Dex One or SuperMedia on the record date for the Dex One or SuperMedia special meeting, as applicable, and therefore entitled to vote on the transaction and the applicable prepackaged plan. Dex One stockholders and SuperMedia stockholders are requested to (1) approve and adopt the merger agreement and the transactions it contemplates and (2) accept the prepackaged plans to permit the transaction to be consummated even if unanimous lender approval or majority stockholder approval is not obtained.
This document contains important information about the transaction, the financing amendments, the prepackaged plans, the solicitation of votes on the various proposals and the meetings of the respective stockholders of Dex One and SuperMedia, and you should read it carefully and in its entirety. Dex One and SuperMedia will hold separate special meetings. The enclosed proxy and ballot, which includes detailed instructions for completing the proxy and ballot, allows you to vote your shares without attending your respective special meeting in person.
Your vote is important. We encourage you to vote as soon as possible and, in any case, you must submit your proxy and ballot so that it is received no later than the voting deadline.
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Dex One’s and SuperMedia’s boards of directors unanimously recommend that you vote “FOR” the proposals to approve and adopt the merger agreement and vote to “ACCEPT” the applicable prepackaged plan.
Q: What will I receive in the transaction?
A: If the transaction is completed, whether completed out of court or through Chapter 11 cases, (a) Dex One stockholders will receive 0.2 shares of Dex Media common stock for each share of Dex One common stock that they hold at the effective time of the Dex One merger (the “Dex One Exchange Ratio”), and (b) SuperMedia stockholders will receive 0.4386 shares of Dex Media common stock for each share of SuperMedia common stock that they hold at the effective time of the SuperMedia merger (the “SuperMedia Exchange Ratio”). The quotient of the SuperMedia Exchange Ratio and the Dex One Exchange Ratio is referred to herein as the “exchange ratio.” We anticipate that Dex One stockholders will hold approximately 60% and SuperMedia stockholders will hold approximately 40% of Dex Media’s common stock issued and outstanding immediately after the completion of the transaction. Dex One and SuperMedia stockholders will also be entitled to any dividends declared and paid by Dex Media with a record date after the effective time of the transaction after their shares of Dex One common stock have been converted or after their shares of SuperMedia common stock have been converted or their certificates representing shares of SuperMedia common stock have been surrendered, as applicable.
Q: What is the value of the merger consideration?
A: Dex Media will issue 0.2 shares of Dex Media common stock for each share of Dex One common stock and 0.4386 shares of Dex Media common stock for each share of SuperMedia common stock whether the transaction is consummated out of court or in Chapter 11 cases. Therefore, the value of the merger consideration that Dex One and SuperMedia stockholders receive will depend on the price per share of Dex Media common stock, at and after the effective time of the transaction. That price will not be known at the time of the special meetings (the voting deadline) and may be less than the current price of Dex One or SuperMedia common stock or the price of such stock at the time of the special meetings. We urge you to obtain current market quotations for Dex One common stock and SuperMedia common stock. See “Risk Factors.”
The following table shows the closing sale prices of Dex One common stock and SuperMedia common stock as reported on the NYSE or NASDAQ, respectively, on August 20, 2012, the last trading day before we announced the transaction, and on February 6, 2013, the last practicable trading day before the distribution of this document. This table also shows the implied value of the transaction consideration proposed for each share of Dex One common stock and SuperMedia common stock.
Dex One
Common
Stock SuperMedia
Common
Stock Implied Value of
One Share of
Dex One
Common Stock(1) Implied Value of
One Share of
SuperMedia
Common Stock(2)
At August 20, 2012
$ 1.24 $ 2.58 $ 1.24 $ 2.72
At February 6, 2013
1.77 3.91 1.77 3.88
(1) As a result of the Dex One merger, for each share of Dex One common stock, each Dex One stockholder will receive one-fifth of a share of Dex Media common stock. Consequently, the implied value of a share of Dex Media common stock for any given day is calculated as five times the closing price of Dex One common stock on such day ($6.20 at August 20, 2012 and $8.85 at February 6, 2013, which reflects a 1-for-5 reverse stock split of Dex One common stock). While the implied value of a share of Dex Media is five times the implied value of a share of Dex One common stock, Dex One stockholders will receive one-fifth of a share of Dex Media common stock, so it is estimated that the mergers will have no economic effect on a holder of Dex One common stock.
(2) Calculated by multiplying the implied value of Dex Media common stock ($6.20 at August 20, 2012 and $8.85 at February 6, 2013) by 0.4386 (the exchange ratio for SuperMedia common stock).
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Q: When and where will the special meetings be held?
A: The Dex One special meeting will be held at Dex One’s corporate headquarters, 1001 Winstead Drive, Cary, North Carolina 27513, on March 13, 2013 at 1:00 p.m., local time.
The SuperMedia special meeting will be held at SuperMedia’s corporate headquarters, 2200 West Airfield Drive, D/FW Airport, Texas 75261, on March 13, 2013 at 12:00 p.m., local time.
Q: Who is entitled to vote?
A: The record date for the Dex One special meeting is January 25, 2013. Only record holders of shares of Dex One common stock at the close of business on such date are entitled to notice of the Dex One special meeting or any adjournment or postponement of the Dex One special meeting and to vote for or against the Dex One out of court proposal and to accept or reject Dex One prepackaged plan. If the Dex One special meeting is adjourned, the voting deadline will automatically be moved to the time that is 30 minutes after the Dex One special meeting is reconvened.
The record date for the SuperMedia special meeting is January 25, 2013. Only record holders of shares of SuperMedia common stock at the close of business on such date are entitled to notice of the SuperMedia special meeting or any adjournment or postponement of the SuperMedia special meeting and to vote for or against the SuperMedia out of court proposal and the SuperMedia bankruptcy proposal. If the SuperMedia special meeting is adjourned, the voting deadline will automatically be moved to the time that is 30 minutes after the SuperMedia special meeting is reconvened.
Q: When is the deadline to submit my proxy and ballot to ensure that my vote regarding the Dex One prepackaged plan or SuperMedia prepackaged plan, as applicable, is counted?
A: The voting deadline to vote to accept or reject each of the prepackaged plans is 1:30 p.m. prevailing Eastern Time, on March 13, 2013. After the voting deadline has passed, all votes will be collected by Epiq, who will count the votes regarding each prepackaged plan.
Q: What constitutes a quorum at the special meetings?
A: A majority of the votes entitled to be cast by the shares entitled to vote must be present or represented by proxy to constitute a quorum for action on the matters to be voted upon at the Dex One special meeting. All shares of Dex One common stock represented at the Dex One special meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Dex One special meeting. For the avoidance of doubt, stockholders may submit their proxy and ballot to vote on the matters to be presented at the Dex One special meeting in advance of the Dex One special meeting.
A majority of the votes entitled to be cast by the shares entitled to vote must be present or represented by proxy to constitute a quorum for action on the matters to be voted upon at the SuperMedia special meeting. All shares of SuperMedia common stock represented at the SuperMedia special meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the SuperMedia special meeting. For the avoidance of doubt, stockholders may submit their proxy and ballot to vote on the matters to be presented at the SuperMedia special meeting in advance of the SuperMedia special meeting.
Q: If my shares are held in street name by my broker, will my broker vote my shares for me?
A:
If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee (that is, in street name), you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your bank or broker. Please note that you may not
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vote shares held in street name by returning a proxy and ballot directly to Dex One or SuperMedia or Epiq or by voting in person at your special meeting unless you provide a “legal proxy,” which you must obtain from your bank or broker. Further, brokers who hold shares of Dex One or SuperMedia common stock on behalf of their customers may not give a proxy to Dex One or SuperMedia to vote those shares on the proposals unless they have received voting instructions from their customers.
If you are a Dex One or SuperMedia stockholder that holds shares in street name and you do not instruct your broker on how to vote your shares, your broker may not vote your shares, which will have the same effect as not voting on the Dex One prepackaged plan or SuperMedia prepackaged plan, as applicable; voting against the proposal to approve and adopt the merger agreement and the transactions it contemplates; and voting against the other proposals.
Notwithstanding the foregoing, if your bank or nominee elects to provide you with a “pre-validated” proxy and ballot you should vote by signing and returning the enclosed proxy and ballot to Epiq in the postage-paid envelope provided by the voting deadline.
Q: How do I vote to approve the consummation of the transaction outside of court, or through Chapter 11 cases, if I am a stockholder of record?
A: If you do not hold your stock in street name and instead are a stockholder of record of Dex One as of the record date for the Dex One special meeting or a stockholder of record of SuperMedia as of the record date for the SuperMedia special meeting, you may vote in person by attending your special meeting and submitting your proxy and ballot to Epiq, the voting agent. Alternatively, you may vote by signing and returning the enclosed proxy and ballot to Epiq in the postage-paid envelope provided. In either case, your proxy and ballot must be actually received by Epiq by the voting deadline.
If you hold Dex One shares or SuperMedia shares in the name of a bank or broker, please see the discussion above.
Q: How many votes do I have?
A: With respect to each proposal to be presented at the Dex One special meeting, holders of Dex One common stock are entitled to one vote for each share of Dex One common stock owned at the close of business on the Dex One record date. At the close of business on the Dex One record date, there were 51,309,809 shares of Dex One common stock outstanding and entitled to vote at the Dex One special meeting.
With respect to each proposal to be presented at the SuperMedia special meeting, holders of SuperMedia common stock are entitled to one vote for each share of SuperMedia common stock owned at the close of business on the SuperMedia record date. At the close of business on the SuperMedia record date, there were 15,664,432 shares of SuperMedia common stock outstanding and entitled to vote at the SuperMedia special meeting.
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Q: What vote is required to approve each proposal?
A: The votes required, as well as the effects of abstentions/shares present but not voted and broker non-votes for each of the proposals, at the special meetings of both Dex One stockholders and SuperMedia stockholders, are detailed in the following chart:
Proposal
Required Stockholder Vote
Effect of Abstentions/
Shares Present but not Voted
Effect of Broker Non-Votes
Merger Agreement Proposal (No. 1) Majority of outstanding
shares of common stock
eligible to vote Same effect as a vote
against the proposal Same effect as a vote
against the proposal
Golden Parachute Proposal (No. 2) Majority of shares of
common stock
represented at the
special meeting and
entitled to vote Same effect as a vote
against the proposal No effect
Adjournment Proposal (No. 3) Majority of shares of
common stock
represented at the
special meeting and
entitled to vote Same effect as a vote
against the proposal No effect
Q: What vote is required for stockholders to accept the prepackaged plans?
A: The votes required, as well as the effects of abstentions/failures to vote and broker non-votes, for stockholders to accept the prepackaged plans are detailed in the following chart:
Required Stockholder Vote
Effect of Abstentions/
Failures to Vote
Effect of Broker Non-Votes
At least 2/3 in amount of common stock that vote to either “accept” or “reject” the applicable prepackaged plan No effect No effect
Notwithstanding the required stockholder vote, under the “cram down” provisions of the Bankruptcy Code, a plan may be confirmed even if stockholders do not vote to accept the plan if the Bankruptcy Court finds that the plan otherwise satisfies the statutory requirements and does not discriminate unfairly and is fair and equitable regarding each class of claims and interests that is impaired under, and has not accepted, the plan. Accordingly, if Dex One senior secured lenders vote to accept the Dex One prepackaged plan but Dex One stockholders do not vote to accept such plan, Dex One may still seek to confirm the plan under the “cram down” provisions of the Bankruptcy Code. SuperMedia may seek to do the same regarding the SuperMedia prepackaged plan if SuperMedia senior secured lenders vote to accept such plan but SuperMedia stockholders do not vote to accept the plan.
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Q: What vote is required for Dex One’s and SuperMedia’s senior secured creditors to accept the prepackaged plans?
A: For each of Dex One’s and SuperMedia’s senior secured credit facilities, the votes required to accept the prepackaged plans are detailed in the following chart:
Credit Facility
Required Vote to Accept the Prepackaged Plans
DME Credit Facility
DMW Credit Facility
RHDI Credit Facility
SuperMedia Credit Facility
Number: For each credit facility, creditors
holding more than 1/2 in number of the
allowed claims under such facility that are
held by creditors that vote on the plan
and
Amount: For each credit facility, creditors
holding at least 2/3 in amount of the allowed
claims under such facility that are held by
creditors that vote on the plan
Lenders holding more than half in number and at least 2/3 in amount of (but not all) claims under each of the Dex One credit facilities and the SuperMedia credit facility have become consenting lenders to the support agreements (as described below). As a result, the number and amount of Dex One credit facilities claims and SuperMedia credit facility claims held by lenders contractually obligated to support the Dex One prepackaged plan and the SuperMedia prepackaged plan, respectively, exceed the thresholds required for approval of such prepackaged plans by each class of Dex One credit facilities claims and SuperMedia credit facility claims respectively, under applicable bankruptcy law.
Q: What are the support agreements?
A: On December 5, 2012, each of Dex One and SuperMedia entered into a Support and Limited Waiver Agreement (the “support agreements”) with certain of their respective senior secured lenders. The support agreements set forth the obligations and commitments of the parties with respect to the transaction. Specifically, the lenders party to the support agreements (“consenting lenders”) have agreed to support the consummation of the mergers and financing amendments whether effectuated outside of court or through Chapter 11 cases. The support agreements provide for termination events if certain milestones are not achieved by certain dates. See “The Support Agreements.” Lenders holding more than half in number and at least 2/3 in amount of (but not all) claims under each of the Dex One credit facilities and the SuperMedia credit facility have become consenting lenders. As a result, the number and amount of Dex One credit facilities claims and SuperMedia credit facility claims held by lenders contractually obligated to support the Dex One prepackaged plan and the SuperMedia prepackaged plan, respectively, exceed the thresholds required for approval of such prepackaged plans by each class of Dex One credit facilities claims and SuperMedia credit facility claims, respectively, under applicable bankruptcy law. Additional consenting lenders may join the support agreements in the future. A copy of the form of the Dex One support agreement is attached as Appendix K to this document, and a copy of the form of the SuperMedia support agreement is attached as Appendix L to this document.
Q: Can the transaction be consummated if the financing amendments are not approved even if stockholders approve the transaction or, in the alternative, approve the prepackaged plans?
A:
No, if Dex One’s or SuperMedia’s senior secured creditors do not approve the financing amendments (including pursuant to the prepackaged plans), the transaction will not be consummated. Approval of the financing amendments out of court requires unanimous senior secured lender consent. Approval of the financing amendments through the prepackaged plans requires the affirmative vote of holders of a majority of the senior secured creditors, including holders of 2/3 of the aggregate principal amount, respectively, of
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each of Dex One’s and SuperMedia’s debt that vote to “accept” or “reject” the prepackaged plans. Dex One and SuperMedia are soliciting the votes of their respective senior secured creditors on the financing amendments out of court as well as the prepackaged plans concurrently with this solicitation of stockholders.
Q: How does the Dex One board of directors recommend that the Dex One stockholders vote?
A: The Dex One board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of Dex One and its stockholders. Accordingly, the Dex One board of directors unanimously recommends that the Dex One stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to Dex One’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the Dex One special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the Dex One prepackaged plan.
Q: How does the SuperMedia board of directors recommend that the SuperMedia stockholders vote?
A: The SuperMedia board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of SuperMedia and its stockholders. Accordingly, the SuperMedia board of directors unanimously recommends that the SuperMedia stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the SuperMedia special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the SuperMedia prepackaged plan.
Q: What will happen if I fail to vote or I abstain from voting?
A: If you are a Dex One or SuperMedia stockholder of record and fail to vote or abstain from voting on the proposal to approve and adopt the merger agreement and the transactions it contemplates, it will have the same effect as a vote against the proposal.
If you are a Dex One or SuperMedia stockholder of record and fail to vote or abstain from voting on either the Dex One golden parachute proposal or the SuperMedia golden parachute proposal, as applicable, your abstention from voting or failure of your broker, bank or other holder of record to vote will have no effect on the proposal.
In the event that at either the Dex One or SuperMedia special meeting there is an adjournment proposal properly brought before the meeting, if you are a stockholder of record and fail to vote or abstain from the effect of your abstention from voting or failure of your broker, bank or other holder of record to vote will depend on whether a quorum exists. If a quorum exists, the meeting may be adjourned by the affirmative vote of holders of at least a majority of the shares of Dex One common stock or SuperMedia common stock, as applicable, present in person or by proxy at the special meeting and voting on the proposal. Under such circumstances, a stockholder’s abstention from voting or the failure of a stockholder’s broker, bank or other holder of record to vote will have no effect on the proposal. If a quorum does not exist, an adjournment will require the affirmative vote of holders of at least a majority of the shares of Dex One or SuperMedia, as applicable, present in person or by proxy at the special meeting and entitled to vote on the proposal. Under such circumstances, a stockholders’ abstention from voting will have the same effect as a vote against the proposal, and the failure of a stockholder’s broker, bank or other holder of record to vote will have no effect on the proposal.
If you are a Dex One or SuperMedia stockholder of record and fail to vote or abstain from voting on the prepackaged plans, it will have the same effect as voting neither to accept nor to reject the prepackaged plans.
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Q: What will happen if I return my proxy and ballot without indicating how to vote?
A: Except with respect to the prepackaged plans, if you return your signed proxy and ballot without indicating how to vote on any particular proposal, the shares of Dex One or SuperMedia common stock represented by your proxy will be voted in accordance with management’s recommendation on that proposal.
If you return your proxy and ballot without indicating how you would like to vote on the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, the shares of Dex One or SuperMedia common stock represented by your ballot will not be voted either to accept or to reject the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable.
Q: Can I change my vote after I have returned a proxy and ballot?
A: Yes. For the proposals that can be voted on by proxy, you can change your vote at any time before your proxy is voted at your respective special meeting. If you are a stockholder of record, you can do this in one of two ways:
•
you can send a signed notice of revocation or a new valid proxy; or
•
you can attend your special meeting and submit your proxy and ballot in person, which will automatically cancel any proxy previously given, but simply attending the special meeting without voting will not revoke any proxy that you have previously given or change your vote.
If you choose the first method, your notice of revocation or your new signed proxy must be received by the Corporate Secretary of Dex One or SuperMedia, as applicable, no later than the beginning of the applicable special meeting. If your shares are held in street name by your bank or broker, you should contact your broker to change your vote.
For the proposals regarding the prepackaged plans, you may, prior to the voting deadline, revoke or change a vote contained within your proxy and ballot. If you want to withdraw your vote and you do not want to submit another vote in its place, you must deliver a written notice of revocation or withdrawal to the voting agent prior to the voting deadline. To change your vote, you may submit a new proxy and ballot prior to the voting deadline and your previously submitted proxy and ballot will be revoked and superseded.
Q: When do you expect the transaction to be completed?
A: Dex One and SuperMedia hope to complete the transaction as soon as reasonably possible. The transaction is, however, subject to the satisfaction or waiver of conditions, and it is possible that factors outside the control of Dex One and SuperMedia could result in the transaction being completed at a later time or not at all. Consummating the transaction out of court is expected to require less time than consummating the transaction through Chapter 11 cases.
Q: Do I have dissenter’s rights or appraisal rights?
A: No. Under Delaware law, neither holders of Dex One common stock nor holders of SuperMedia common stock are entitled to appraisal rights in connection with the transaction, whether completed out of court or through Chapter 11 cases.
Q: What are the material U.S. federal income tax consequences of the transaction?
A: If the transaction is consummated, either out of court or through Chapter 11 cases, the Dex One merger will qualify as a “reorganization” within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the “Code”). Therefore, a holder or other beneficial owner of Dex One common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such person’s shares of Dex One common stock for shares of Dex Media common stock pursuant to the Dex One merger. Additionally, such a person will not recognize any gain or loss for U.S. federal income tax purposes on account of the implied reverse stock split of shares of Dex One common stock when they are exchanged for shares of Dex Media common stock pursuant to the Dex One merger.
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If the transaction is consummated, either out of court or through Chapter 11 cases, the parties intend that the SuperMedia merger also be treated as a reorganization, and provided that it so qualifies, a holder or other beneficial owner of SuperMedia common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such person’s shares of SuperMedia common stock for shares of Dex Media common stock pursuant to the SuperMedia merger. However, as discussed in more detail below in this document, it is possible that the SuperMedia merger would not be treated as a reorganization, as a result of which a holder or other beneficial owner of SuperMedia common stock would recognize gain or loss in the amount of the difference between the fair market value of the shares of Dex Media common stock received pursuant to the SuperMedia merger and such person’s adjusted tax basis in the shares of SuperMedia common stock exchanged therefor.
No opinion from legal counsel has been given regarding whether the Dex One or SuperMedia merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and neither Dex One nor SuperMedia have requested, nor do they intend to request, a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the transaction. You should read “Material United States Federal Income Tax Consequences of the Transaction” for a more complete discussion of the U.S. federal income tax consequences of the transaction. Tax matters can be complicated and the tax consequences of the transaction to you will depend on your particular tax situation. We urge you to consult your tax advisor to determine the tax consequences of the transaction to you.
Q: If I hold any physical stock certificates, should I send them in now?
A: Dex One Stockholders : No. Dex One shares are held in book-entry form. If the transaction is consummated out of court, after the transaction is completed, Dex Media’s exchange agent will send former Dex One stockholders a letter of transmittal explaining what they must do to exchange their shares of Dex One common stock into book-entry form for the transaction consideration payable to them. If the transaction is consummated through Chapter 11 cases, the Dex Media common stock will be distributed as set forth in the Dex One prepackaged plan. The shares of Dex Media common stock that Dex One stockholders receive in the transaction will be issued in book-entry form.
SuperMedia Stockholders : No. SuperMedia stockholders should keep any SuperMedia stock certificates they hold both now and after the transaction is completed. If the transaction is consummated out of court, after the transaction is completed, Dex Media’s exchange agent will send former SuperMedia stockholders a letter of transmittal explaining what they must do to exchange their shares of SuperMedia common stock into book-entry form in order to receive the transaction consideration payable to them. If the transaction is consummated through Chapter 11 cases, the Dex Media common stock will be distributed as set forth in the SuperMedia prepackaged plan. The shares of Dex Media common stock that SuperMedia stockholders receive in the transaction will be issued in book-entry form.
Q: What happens if I sell my shares of Dex One or SuperMedia common stock before the voting deadline?
A: The voting record date, which is also the record date for the Dex One special meeting and the SuperMedia special meeting, is earlier than the voting deadline, which is also the date of the Dex One special meeting and the SuperMedia special meeting, respectively. If you transfer your shares of Dex One common stock after the Dex One record date but before the Dex One special meeting, you will retain your right to vote on the proposals, unless you have transferred your shares with a proxy, but will have transferred the right to receive the merger consideration in the transaction. Similarly, if you transfer your shares of SuperMedia common stock after the SuperMedia record date but before the SuperMedia special meeting, you will retain your right to vote on the proposals, unless you have transferred your shares with a proxy, but will have transferred the right to receive the merger consideration in the transaction. In order to receive the merger consideration, you must hold your shares through the effective date of the transaction.
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Q: What if I hold shares of common stock in both Dex One and SuperMedia?
A: If you are both a Dex One stockholder and a SuperMedia stockholder, you will receive two separate packages of proxy materials. A vote cast as a Dex One stockholder will not count as a vote cast as a SuperMedia stockholder, and a vote cast as a SuperMedia stockholder will not count as a vote cast as a Dex One stockholder. Therefore, please submit a proxy and ballot for your shares of each of Dex One and SuperMedia common stock.
The Prepackaged Plans
Q: Why are Dex One and SuperMedia soliciting votes on the prepackaged plans if the transaction can be consummated out of court?
A:
Dex One and SuperMedia have prepared the prepackaged plans as an alternative method of consummating the transaction if the closing conditions contained in the merger agreement are not met or waived or Dex One and SuperMedia do not obtain majority stockholder approval of the transaction from their respective stockholders on an out of court basis. Dex One and SuperMedia may consummate the transaction through Chapter 11 cases if they receive the affirmative vote of a majority of their respective senior secured creditors, including the holders of 2/3 of the aggregate principal amount (counting only those that vote) of each of their respective senior secured credit facilities, that vote on the prepackaged plans and the Bankruptcy Court confirms the prepackaged plans. The Bankruptcy Code also permits the Bankruptcy Court to approve, and for Dex One and SuperMedia to consummate, the respective prepackaged plans even if 2/3 of each of Dex One’s and SuperMedia’s respective shareholders that cast votes do not vote to accept the respective prepackaged plan. If these “cram-down” provisions of the Bankruptcy Code are invoked, the approval of the stockholders to the prepackaged plan will not be required if the Bankruptcy Court confirms such plan. See “Risk Factors— Risks Related to the Prepackaged Plans and Other Bankruptcy Law Considerations”.
Q: How would the prepackaged plans be implemented?
A: The prepackaged plans consist of plans of reorganization under Chapter 11 of the Bankruptcy Code that, if confirmed by the Bankruptcy Court, would effect the transaction, including the financing amendments, as further described in “The Prepackaged Plans.”
Q: What vote is needed for the Bankruptcy Court to confirm the prepackaged plans?
A: For the prepackaged plans to be confirmed by the Bankruptcy Court without invoking the “cram-down” provisions of the Bankruptcy Code, each class of creditor claims against Dex One and SuperMedia (“Claims”) and each claim of stockholder interests in Dex One and SuperMedia (“Interests”) that is impaired must vote to accept the prepackaged plans. An impaired class of Claims is presumed to accept a plan of reorganization if the holders of at least 2/3 in amount and a majority in number of the Claims in such class who actually cast votes accept the plan. An impaired class of Interests is presumed to accept a plan of reorganization if the holders of at least 2/3 in amount of such class who actually cast votes accept the plan. If the prepackaged plans are confirmed by the Bankruptcy Court and become effective, the prepackaged plans will bind all holders of Claims against and Interests in Dex One or SuperMedia, as applicable, regardless of whether they voted to accept or reject the prepackaged plans and regardless of whether they voted at all on the prepackaged plans. As more fully discussed in the prepackaged plans, only secured creditors and stockholders are impaired classes. Neither the holders of the Dex One’s 12%/14% Senior Subordinated Notes due 2017 (the “Dex One senior subordinated notes”) nor any other classes are impaired under the prepackaged plans.
The confirmation and effectiveness of the prepackaged plans are subject to conditions that may not be satisfied. There can be no assurance that all requirements for confirmation and effectiveness of the
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prepackaged plans will be satisfied or that the Bankruptcy Court will conclude that the requirements for confirmation and effectiveness of the prepackaged plans have been satisfied. See “The Prepackaged Plans—The Dex One Prepackaged Plan—Confirmation of the Dex One Prepackaged Plan” and “The Prepackaged Plans—The SuperMedia Prepackaged Plan—Confirmation of the SuperMedia Prepackaged Plan.”
If either Dex One or SuperMedia does not receive the requisite acceptances from their respective senior secured creditors to allow the prepackaged plans to be confirmed under the Bankruptcy Code, the prepackaged plans will not be confirmed or become effective.
If the “cram-down” provisions of the Bankruptcy Code are invoked, the acceptance of the stockholders of the prepackaged plan will not be required if the Bankruptcy Court confirms such plan. See “Risk Factors— Risks Related to the Prepackaged Plans and Other Bankruptcy Law Considerations”.
Neither Dex One nor SuperMedia has at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, neither Dex One nor SuperMedia will commence a bankruptcy proceeding to consummate the respective prepackaged plan.
Q: When is the deadline for submitting your proxy and ballot to vote on the applicable prepackaged plan?
A: All proxy and ballots must be received by Epiq by March 13, 2013 by 1:30 p.m., prevailing Eastern Time, unless extended by Dex One and SuperMedia. If this voting deadline is extended, Dex One and SuperMedia will notify the tabulation agent and send a notice to stockholders and the senior secured creditors or issue a press release or other public announcement no later than 9:00 a.m., prevailing Eastern Time, on the next business day after the scheduled voting deadline. If either special meeting is adjourned, then the voting deadline for the company that adjourns its meeting will be automatically moved to the time that is 30 minutes after the special meeting is reconvened.
Answering Additional Questions
Q: Who can help answer my questions?
A: Dex One or SuperMedia stockholders who have questions about the transaction or the other proposals or who desire additional copies of this document or additional proxy and ballots should contact:
Epiq Systems
FDR Station, P.O. Box 5014
New York, New York, 10150-5014
(866) 734-9393 (telephone)
(646) 282-2501 (fax)
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