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 PCS LOGO]
Presentation Regarding the
Acquisition of
[iPCS Logo]
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
Safe Harbor Provisions
Certain statements contained in this presentation, such as statements concerning
AirGate PCS', iPCS' or the combined company's anticipated performance, plans for
growth and anticipated financial results and other factors that could affect
future operations or performance and other non-historical facts, are forward
looking statements made pursuant to the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Since these forward looking statements
are based on factors that involve risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward looking
statements. Such factors include: the ability to successfully integrate the two
businesses, the competitiveness and financial impact of Sprint PCS pricing
plans, products and services; the ability of Sprint PCS to provide back office,
customer care and other services; consumer purchasing patterns; potential
fluctuations in quarterly results; an adequate supply of subscriber equipment;
risks related to our ability to compete with larger, more established
businesses; rapid technological and market change; risks related to future
growth and expansion; the ability to successfully complete the build-out of the
iPCS network, the potential need for additional capital, anticipated future
losses; the significant level of indebtedness of the combined companies and
volatility of AirGate PCS's stock price. For a detailed discussion of these and
other cautionary statements and factors that could cause actual results to
differ from those contained in this presentation, please refer to AirGate PCS's
and iPCS' filings with the Securities and Exchange Commission ("SEC"),
especially in the "investment considerations" section of AirGate PCS's Form 10-K
for the fiscal year ended September 30, 2000, AirGate PCS's Form 10-Q for the
fiscal quarter ended June 30, 2001, iPCS' Form 10-K for the fiscal year ended
December 31, 2000, iPCS' Form 10-Q for the fiscal quarter ended June 30, 2001,
and in subsequent filings with the SEC. In addition, EBITDA is a financial
measure used in the financial community. It is not, however, a measure of
financial performance under generally accepted accounting principles in the
United States. Neither company will undertake to update or revise any forward-
looking statement contained herein.
On January 8, 2001, the SEC declared effective iPCS' registration statement
relating to the resale of up to 300,000 warrants to purchase shares of its
common stock and the offer and sale of 2,929,699 shares of its common stock.
iPCS has filed a registration statement with the SEC for an initial public
offering of 8,333,333 shares of its common stock. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any state. Offers to sell these securities will be
made only by means of a prospectus.
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
Transaction Rationale
. Creates premier Sprint PCS affiliate
. Fully funded with a significant cash cushion
. EBITDA break-even calendar Q3 2002
. Importance to Sprint PCS
. iPCS markets have attractive characteristics
. Strong operating performance to date
. Proactive management of shareholder liquidity
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS Logo]
Transaction Summary
Transaction Value $900 million enterprise value
(based on PCSA close on 8/28/01)
Consideration 12.4 million common shares
1.1 million shares reserved for options and
warrants
$97 million assumed net debt(1)
POPs Added 7.4 million
Governance
CEO Thomas M. Dougherty
Board Seats iPCS will designate 3 Board seats (out of 9)
Structure Wholly-owned unrestricted subsidiary
Expected Closing End of February 2002
(1) Includes anticipated cash proceeds from the exercise of options and
warrants.
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[Sprint LOGO] [Sprint PCS LOGO]
[AIRGATE LOGO]
AirGate with iPCS
Airgate PCS, Inc. Current PCSA Stock
(Public Company) $300M Sr Disc Notes
(Operating Company) $153.5M Sr Credit Facility
(Lehman)
Unrestricted Subsidiary
AGW Leasing, Inc. AirGate Network Services iPCS, Inc. $300M
(Equipment Company) LLC (Softco) (Holding Company) Sr Disc Notes
100%
iPCS Wireless, Inc. $140M
(Operating Company) Sr Credit Facility
100%
iPCS Equipment, Inc.
(Equipment Company)
Current Indenture Current Indenture
(Existing Operations) (Existing Operations)
[SPRINT LOGO] [SPRINT PCS LOGO]
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[AirGate PCS LOGO]
Valuation
. Acquisition implies a 20% discount to AirGate's enterprise value / total POP
(in millions, except per POP) AirGate iPCS
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Total POPs 7.1 7.4
Fully Diluted Shares Outstanding 14.9 13.5
Equity Value $ 887 $803
Enterprise Value $1,076 $900
Enterprise Value / Total POP $ 151/1/ $121/1/
/1/ Based on PCSA closing price of $59.47 on August 28, 2001
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[Sprint LOGO] [Sprint PCS LOGO]
[AIRGATE LOGO]
Overview of AirGate
[Map of AirGate PCS and Sprint PCS markets in Tennessee, North Carolina, South
Carolina and Georgia]
. 6th largest Sprint PCS affiliate
-- 7.1 million total POPs
-- 6.2 million planned covered POPs
-- over 179,000 subscribers (6/30/01)
. Contiguous to Sprint PCS major
Southeastern Markets
-- Atlanta
-- Charlotte
. Sprint Local Exchange carrier presence in 30% of territory
. Attractive demographics
-- High POP density
-- Tourist destinations
[sprint LOGO]
[Sprint PCS LOGO]
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[AIRGATE PCS LOGO]
Strong Operational Performance
Network Coverage
Cell Sites On Air
9/30/99 0
3/31/00 190
9/30/00 567
3/31/00 633
9/30/01 690-720 (Forecast)
3Q FY 2001 Distribution
Sprint 20%
B2B 13%
Third Party Retailers 28%
Company Stores 38%
Productivity 3Q FY 2001
Net Adds/1000,000 Pops/week
AirGate 39
Triton 34
Sprint PCS 32
Alamosa 27
iPCS 25
US Unwired 22
Ubiquitel 20
Telecorp 15
Costs Under Control
3Q FY 2001 CPGA
iPCS $320
US Unwired $340
Sprint PCS $340
Alamosa $361
AirGate $377
Triton $437
Telecorp $491
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[Sprint LOGO] [Sprint PCS LOGO]
[AIRGATE LOGO]
No Deposit ASL Controls
. Reduced acquisition costs
-Limited handset choice
-Collect activation and initiation fees
-Extend commissions chargeback period
. Minimum $49.99 rate plan
. Do not offer in B2B channel
. Customer additions exclude fraudulent subscribers
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[Sprint LOGO] [Sprint PCS LOGO]
[AIRGATE LOGO]
And Financial Performance is Exceeding Expectations
12/31/00 3/31/01 6/30/01
-------- -------- --------
Net new subscribers 46.7 40.1 35.9
(000)
ARPU $ 54 $ 58 $ 59
($)
Net roaming margin $ 3.8 $ 3.5 $ 6.1
($millions)
EBITDA/1/ $(20.4) $ (13.6) $ (8.3)
($millions)
CapEx $ 10.6 $ 12.1 $ 17.9
($millions)
/1/ Excluding non-cash stock option compensation expenses
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
Overview of iPCS
[Map of various counties in Wisconsin, Michigan, Indiana, Missouri, Illinois,
Iowa and Nebraska]
. 5th largest Sprint PCS affiliate
- 7.4 million total POPs
- 5.9 million planned covered POPs
- over 107,000 subscribers (6/30/01)
. Contiguous to Sprint PCS major
Midwestern markets
- Chicago
- Detroit
- Des Moines
- Indianapolis
- St. Louis
. 30 MHz of spectrum in most markets
. Less competitive markets
. Attractive demographics
- high POP density
- major corporate headquarters
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
Key Market Demographics/1/
Total POP Median HH Traffic Coverage
Markets POPs Density Income Density Percentage
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Grand Rapids 1,060,600 209 $31,711 30,722 90%
Saginaw - Bay City 634,100 89 27,554 20,719 73%
Peoria 464,600 95 33,611 16,981 81%
Davenport - Moline 430,500 138 34,948 16,340 94%
Springfield 267,200 103 34,673 21,385 89%
Cedar Rapids 285,700 75 34,256 23,707 78%
Bloomington 234,100 71 40,438 16,843 91%
Champaign - Urbana 221,100 94 36,102 17,058 92%
Decatur - Effingham 247,600 60 32,110 13,835 79%
Traverse City 241,000 53 28,422 0 74%
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Average - Top 10 Markets 408,650 121 $32,562 20,622 85%
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(1) Data per Paul Kagan's 2001 Wireless Telecom Atlas & Databook. Averages are
POP-weighted averages.
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS Logo]
iPCS Spectrum Distribution
- Average of 25 MHz spectrum across territory
MHz No. of Mkts Total POPs % of Total
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10 MHz 8 1,641,200 22%
20 MHz 3 398,600 8%
30 MHz 26 5,405,900 70%
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Total 37 7,445,700 100%
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[Sprint LOGO] [Sprint PCS LOGO]
[Logo of AirGate PCS]
Competition
. iPCS' markets have on average between 3 and 4 competitors
Operational in iPCS' Markets
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# of iPCS' % of iPCS' # of iPCS' % of iPCS'
Markets Markets Covered POPs Covered POPs
Carrier (of 37) (of 37) (of 5,908,452) (of 5,908,452) Service
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Verizon Wireless 23 62.2% 4,669,129 79.0% Cellular
Nextel 16 43.2% 4,232,110 71.6% ESMR
VoiceStream 10 27.0% 2,832,051 47.9% PCS
USCellular 11 29.7% 1,876,024 31.8% Cellular
CenturyTel 5 13.5% 1,866,798 31.6% Cellular
Cingular Wireless 16 43.2% 1,839,045 31.1% Cellular
Iowa Wireless 7 18.9% 1,282,430 21.7% PCS
AT&T Wireless/ TeleCorp PCS 5 13.5% 1,003,150 17.0% PCS
PrimeCo 5 13.5% 965,253 16.3% PCS
America Wireless 4 10.8% 849,168 14.4% PCS
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
AirGate Pro Forma Footprint
[Map of AirGate's and iPCS' combined markets]
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS logo]
Pro Forma Ownership
iPCS Ownership
AirGate Shares % Ownership
Blackstone Group 4,169,250 14.6%
Geneseo Communications, Inc. 2,465,168 8.6%
Cambridge Telecom, Inc. 2,113,002 7.4%
TCW 1,042,313 3.7%
Cass Communications 704,334 2.5%
Technology Group, LLC 704,334 2.5%
Montrose Mutual PCS, Inc. 704,334 2.5%
Gridley Enterprises 352,167 1.2%
Timothy M. Yager 107,259 0.4%
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12,362,161 43.4%
iPCS Option/Warrant Holders
Employee Option Holders 478,928 1.7%
High Yield Warrant Holders 475,334 1.7%
Sprint Warrants 183,577 0.6%
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1,137,839 4.0%
Total Fully Diluted Shares 13,500,000
Pro Forma Fully Diluted Combined Company Ownership 47.4%
*Implied exchange ratio 0.1594 shares of AirGate for every share of iPCS
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
Pro Forma Statistics
(data in millions, except subscribers) AirGate iPCS Combined
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Market Information(1):
Licensed POPs (mm) 7.1 7.4 14.5
Planned Covered POPs (mm) 6.1 5.9 12.0
Subscribers 179,403 107,412 286,815
2nd Calendar Quarter Financial Information (Ended June 30, 2001):
Total Revenue $47.6 $25.6 $73.2
EBITDA (before non-cash comp) (8.3) (7.7) (16.0)
EBITDA (pre-marketing and selling) 10.4 2.2 12.6
Fully Diluted Shares Outstanding 14.9 13.5 28.4
(1) As of June 30, 2001.
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[Sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS]
Summary
. Acquisition at a discount
. iPCS build out substantially complete at the end of calendar 2001
. Excellent demographics and growth
. Spectrum
. Pro forma company is fully funded
. EBITDA breakeven delayed by just one quarter
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[sprint LOGO] [Sprint PCS LOGO]
[AirGate PCS LOGO]
Additional Information
In connection with the proposed merger, AirGate PCS, Inc. will file a proxy
statement/prospectus with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO
CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION
WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. The
proxy statement/prospectus will be filed with the SEC by AirGate PCS, Inc.
Investors and security holders may obtain a free copy of the proxy
statement/prospectus (when it is available) and other documents containing
information about AirGate PCS, Inc. and iPCS, Inc., without charge, at the SEC's
web site at www.sec.gov. Copies of the proxy statement/prospectus and the SEC
filings that will be incorporated by reference in the proxy statement/prospectus
may also be obtained for free by directing a request to: Investor Relations,
AirGate PCS, Inc., 233 Peachtree St. NE, Harris Tower Suite 1700, Atlanta,
Georgia 30303,Phone: 404 525-7272, Fax: 404 525-7922.
In addition, the identity of the persons who, under SEC rules, may be considered
"participants in the solicitation" of AirGate PCS shareholders in connection
with the proposed transaction, and any description of their direct or indirect
interests, by security holdings or otherwise, is available in an SEC filing
under Schedule 14A made by AirGate PCS on December 20, 2000.
This communication is not an offer to purchase shares of iPCS, Inc., nor is it
an offer to sell shares of AirGate PCS, Inc. common stock which may be issued in
any proposed merger with iPCS, Inc. Any issuance of AirGate PCS, Inc. common
stock in any proposed merger with iPCS, Inc. would have to be registered under
the Securities Act of 1933, as amended and such AirGate, PCS, Inc. common stock
would be offered only by means of a prospectus complying with the Act.
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