SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
TCI MUSIC, INC.
(Name of Issuer)
SERIES A CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE
(Title of Classes of Securities)
87229N 20 0
(CUSIP Number)
John G. Igoe, Esq.
Edwards & Angell
250 Royal Palm Way
Palm Beach, FL 33480
(561) 833-7700
(Name, address and telephone number of person authorized
to receive notices and communications)
DECEMBER 16, 1997
(Date of Event which requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box: ______
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CUSIP No. 87229N 20 0
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
CEA Investors Partnership II, Ltd.
Employer I.D. No.: 59-2881170
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
00
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Florida
Number of Shares Beneficially Owned 7. Sole Voting Power
By Each Reporting Person With 315,484
8. Shared Voting Power
-0-
9. Sole Dispositive Power
315,484
10. Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
315,484
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13. Percent of Class Represented by Amount in Row (11)
18.1%
14. Type of Reporting Person*
PN (Limited)
<PAGE>
CUSIP No. 87229N 20 0
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
CEA Investors, Inc.
Employer I.D. No.: 59-2827410
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
00
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Florida
Number of Shares Beneficially Owned 7. Sole Voting Power
By Each Reporting Person With 315,484-
8. Shared Voting Power
-0-
9. Sole Dispositive Power
315,484
10. Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
315,484
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13. Percent of Class Represented by Amount in Row (11)
18.1%
14. Type of Reporting Person*
CO
<PAGE>
CUSIP No. 87229N 20 0
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
J. Patrick Michaels, Jr.
Social Security No.: ###-##-####
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
00
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
United States
Number of Shares Beneficially Owned 7. Sole Voting Power
By Each Reporting Person With 320,496
8. Shared Voting Power
883
9. Sole Dispositive Power
320,496
10. Shared Dispositive Power
883
11. Aggregate Amount Beneficially Owned by Each Reporting Person
321,379
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13. Percent of Class Represented by Amount in Row (11)
18.4%
14. Type of Reporting Person*
IN
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D relates to the Series A Convertible Preferred
Stock, $.01 par value per share (the "Series A Preferred Stock"), of TCI Music,
Inc., a Delaware corporation (the "Company"). The Company's principal executive
offices are located at 8101 East Prentice Avenue, Suite 500, Englewood, CO
80111.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is jointly filed by CEA Investors Partnership II, Ltd., CEA
Investors, Inc., and J. Patrick Michaels, Jr. (collectively, the "Filing
Persons"), pursuant to the Joint Filing Agreement filed as Exhibit 99.0.1
hereto.
CEA Investors Partnership II, Ltd. ("CEA II") is a Florida limited partnership,
the principal business of which was, until December 16, 1997, to serve as a
general partner of StarNet/CEA II Partners, a now-dissolved general partnership
that was formed for the purpose of holding shares of the capital stock of The
Box Worldwide, Inc. (formerly known as Video Jukebox Network, Inc.) (the "Box").
Since December 16, 1997, the principal business of CEA II has been to hold title
to and otherwise deal with the assets distributed by StarNet/CEA II Partners
pursuant to its dissolution.
CEA Investors, Inc. ("CEA Investors") is a Florida corporation. The principal
business of CEA Investors is serving as the sole general partner of CEA II.
J. Patrick Michaels, Jr. ("Michaels") is a U.S. citizen and the sole director
and President of CEA Investors. Michaels is the sole trustee of The J. Patrick
Michaels, Jr. Family Trust, the sole stockholder of CEA Investors. The principal
business occupation of Michaels is Chairman of the Board and Chief Executive
Officer of Communications Equity Associates, Inc., a Florida corporation,
engaged in brokerage, investment banking, mergers and acquisitions in the
communications industry. The principal business address of Communications Equity
Associates, Inc. is 101 East Kennedy Boulevard, Suite 3300, Tampa, FL 33602.
In addition to the Filing Persons, David Burns ("Burns") is a person
enumerated in Instruction C to this Schedule as to which the information called
for in Items 2 through 6 of this Schedule must be given. Burns is a U.S. citizen
and the Executive Vice President of CEA Investors. The principal business
occupation of Burns is as Executive Vice President and Chief Operating Office of
Communications Equity Associates, Inc.
The principal office and address of the principal business of each of the Filing
Persons and Burns is 101 East Kennedy Boulevard, Suite 3300, Tampa, FL 33602.
During the last five years, none of the Filing Persons or Burns (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
In August 1993, CEA II and StarNet Interactive Entertainment, Inc. formed
StarNet/CEA II Partners, a Delaware general partnership, to acquire a
controlling interest in the outstanding common stock of the Box and to exercise
control over the Box's management. For information regarding the Filing Persons'
original acquisition of the beneficial ownership of shares of the common stock
of the Box, and subsequent transactions with respect to such shares, see the
Statement on Schedule 13D filed by the Filing Persons with respect the Box on
July 27, 1993, as amended to date by Amendment Nos. 1 through 23 thereto.
The Company, TCI Music Acquisition Sub, Inc., a Florida corporation and a wholly
owned subsidiary of the Company ("Acquisition Sub"), and the Box entered into an
Agreement and Plan of Merger dated August 12, 1997 (the "Merger Agreement").
Pursuant to the Merger Agreement, Acquisition Sub was to merge with and into the
Box, with the Box becoming the surviving corporation (the "Merger"). At a
Special Meeting of Stockholders of the Box held on December 16, 1997, the
stockholders of the Box approved and adopted the Merger Agreement, and the
Merger was thereafter consummated. Upon consummation of the Merger, each share
of Box common stock outstanding immediately prior to the Merger, including the
shares of Box common stock beneficially owned by the Filing Persons, was
converted into the right to receive (i) a fraction of a share of Series A
Convertible Preferred Stock, equal to the quotient (calculated to the nearest
hundredth) of $1.50 divided by three times the average of the average daily
closing bid and asked prices of one share of the Company's Series A Common
Stock, par value $.01 per share ("Series A Common Stock"), for a period of
twenty consecutive trading days ending on the third trading day prior to the
closing of the Merger, as quoted on the Nasdaq SmallCap Market. Cash was paid in
lieu of fractional shares of Series A Convertible Preferred Stock. As a result
of the Merger, the Box became a wholly owned subsidiary of the Company and the
Filing Persons became the beneficial owners of Series A Convertible Preferred
Stock of the Company.
The foregoing summary of the Merger is qualified in its entirety by reference to
the complete terms, provisions and conditions thereof set forth in the
Prospectus of the Company and the Proxy Statement of the Box filed on November
12, 1997 (the "Prospectus/Proxy Statement"), by such parties as part of a
Registration Statement on Form S-4 (No. 333-39943). The Registration Statement
and Prospectus/Proxy Statement are incorporated herein by reference and are so
filed herewith as Exhibit 99.0.2 to this Statement.
<PAGE>
ITEM 4. PURPOSE OF THE TRANSACTION
The foregoing acquisitions of the Common Stock of the Company were made for
investment purposes. None of the Filing Persons has any present plans or
intention which would result in or relate to any of the transactions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Each of the Filing Persons, however, expects to evaluate on an ongoing basis the
Company's financial condition, business, operations and prospects, the market
price of the Series A Convertible Preferred Stock and Series A Common Stock,
conditions in the securities markets generally, general economic and industry
conditions and other factors. The Filing Persons may purchase additional shares
of Series A Convertible Preferred Stock or Series A Common Stock or may sell
such shares from time to time in public or private transactions (subject to any
applicable limitations imposed on the sale of any of their shares by the
Securities Act of 1933, as amended).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Each of CEA II and CEA Investors beneficially owns 315,484 shares of Series
A Convertible Preferred Stock. Michaels beneficially owns 321,379 shares of
Series A Convertible Preferred Stock. Based on information set forth in the
Prospectus/Proxy Statement, 14,896,648 shares of Series A Common Stock,
62,500,000 shares of Series B Common Stock and 1,742,483 shares of Series A
Convertible Preferred Stock were outstanding upon consummation of the Merger
effective December 16, 1997. Based on the foregoing, (i) each of CEA II and CEA
Investors beneficially own 18.1% of the Series A Convertible Preferred Stock,
and (ii) Michaels beneficially owns 18.4% of the Series A Convertible Preferred
Stock.
The Series A Convertible Preferred Stock is initially convertible at the option
of the holder into three shares of Series A Common Stock, subject to certain
adjustments and rights. Each share of Series A Convertible Preferred Stock will
be entitled to vote on all matters submitted to a vote of the holders of the
Series A Common Stock and to the number of votes equal to the number of shares
of Series A Common Stock into which such share is convertible as of the record
date for the matter to be voted upon. Each share of Series A Common Stock
entitles the holder to one vote and each share of Series B Common Stock, $.01
par value ("Series B Common Stock") entitles the holder to ten votes on each
matter voted upon by the Company's stockholders. The Series B Common Stock is
convertible at any time at the option of the holder into Series A Common Stock
on a one-for-one basis.
Assuming conversion of all shares of Series A Convertible Preferred Stock
beneficially owned by the Filing Persons into Series A Common Stock on a
one-for-three basis, (i) each of CEA II and CEA Investors would beneficially own
5.9% of the Series A Common Stock, calculated in accordance with Rule
13d-3(d)(1), and (ii) Michaels would beneficially own 6.0% of the Series A
Common Stock, calculated in accordance with Rule 13d-3(d)(1). However, the
voting equity securities of the Company beneficially owned by each of the Filing
Persons is approximately (i) 1.2% of the voting power of the Company's
outstanding equity securities, assuming conversion of all of the Series B Common
Stock to Series A Common Stock on a one-for-one basis, or (ii) 0% of the voting
power of the Company's outstanding equity securities, assuming none of the
Series B Common Stock is converted to Series A Common Stock.
None of the Filing Persons beneficially owns any shares of Series A Convertible
Preferred Stock as of December 16, 1997 other than as set forth herein.
(b) Each of CEA II and CEA Investors has sole power to vote or direct the vote
of 315,484 shares of Series A Convertible Preferred Stock, shared power to vote
or direct the vote of no shares of Series A Convertible Preferred Stock, sole
power to dispose or direct the disposition of 315,484 shares of Series A
Convertible Preferred Stock, and shared power to dispose or direct the
disposition of no shares of Series A Convertible Preferred Stock. Michaels has
sole power to vote or direct the vote of 320,496 shares of Series A Convertible
Preferred Stock, shared power to vote or direct the vote of 883 shares of Series
A Convertible Preferred Stock, sole power to dispose or direct the disposition
of 320,496 shares of Series A Convertible Preferred Stock, and shared power to
dispose or direct the disposition of 883 shares of Series A Convertible
Preferred Stock. Michaels shares voting and dispositive power with the Kimberly
Lynn Michaels Trust with respect to 883 shares.
Michaels disclaims beneficial ownership of any shares of Series A Convertible
Preferred Stock held by CEA II, CEA Investors or The Kimberly Lynn Michaels
Trust, except to the extent of his pecuniary interest therein. The filing of
this statement on Schedule 13D shall not be construed as an admission that any
of such Filing Persons is, for the purposes of Section 13(d) or 13(g) of the
Securities Exchange Act of 1934, as amended, the beneficial owner of such
securities.
Burns may be deemed to be the beneficial owner of 316,184 shares of Series A
Convertible Preferred Stock, with sole power to vote or direct the vote of 700
shares of Series A Convertible Preferred Stock, shared power to vote or direct
the vote of 315,484 shares of Series A Convertible Preferred Stock, sole power
to dispose or direct the disposition of 700 shares of Series A Convertible
Preferred Stock, and shared power to dispose or direct the disposition of
315,484 shares of Series A Convertible Preferred Stock. Burns may be deemed to
share voting and dispositive power with respect to 315,484 shares with CEA II
and CEA Investors, by reason of his position as Executive Vice President of CEA
Investors. Burns disclaims beneficial ownership of any shares of Series A
Convertible Preferred Stock held by CEA II or CEA Investors.
(c) Except as set forth in Item 2 with respect to the Merger, no transactions in
the Series A Convertible Preferred Stock were effected by the Filing Persons or
Burns during the past sixty days.
(d) No other person is known by any Filing Person or Burns to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, any shares of Series A Convertible Preferred Stock
beneficially owned by any Filing Person or Burns.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Pursuant to the terms of the Merger Agreement, each outstanding share of the Box
common stock, including the Box common stock beneficially owned by the Filing
Persons, was converted into the right to receive shares of Series A Convertible
Preferred stock on the terms set forth in the Merger Agreement and cash in lieu
of fractional shares of Series A Convertible Preferred Stock. The description of
the Merger and the securities received in connection therewith contained herein
is qualified in its entirety by reference to the text of the Merger Agreement.
The Merger Agreement is incorporated herein by reference and is attached to this
Statement as Exhibit 99.0.3.
Except as described herein, none of the Filing Persons is a party to any
contract, arrangement, understanding or relationship with respect to any
securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 99.0.1 Joint Filing Agreement by and among CEA Investors
Partnership II, Ltd., CEA Investors, Inc. and J.
Patrick Michaels, Jr., dated December 26, 1997.
Exhibit 99.0.2 Registration Statement on Form S-4, filed by TCI
Music, Inc. and The Box Worldwide, Inc. on November
12, 1997, under Commission File No. 333-39943, which
is hereby incorporated by this reference.
Exhibit 99.0.3 Agreement and Plan of Merger, dated as of August 12,
1997, among TCI Music, TCI Music Acquisition Sub,
Inc. and The Box Worldwide, Inc., filed November 12,
1997 as Appendix I to the Prospectus/Proxy Statement
contained in said Registration Statement, under
Commission File No. 333-39943, which is hereby
incorporated by this reference.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: December 26, 1997 CEA INVESTORS PARTNERSHIP II, LTD.
By: CEA Investors, Inc. its general partner
By: /S/ DAVID BURNS
------------------------------------
David Burns
Title: Executive Vice President
Date: December 26, 1997 CEA INVESTORS, INC.
By: /S/ DAVID BURNS
------------------------------------
David Burns
Title: Executive Vice President
Date: December 26, 1997 /S/ J. PATRICK MICHAELS, JR.
-----------------------------------
J. Patrick Michaels, Jr.
Exhibit 99.0.1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act
of 1934, the undersigned agree to the joint filing of a Statement on Schedule
13D (including any and all amendments thereto) with respect to the shares of
Series A Convertible Preferred Stock, $.01 par value per share, of TCI Music,
Inc., and further agree that this Joint Filing Agreement be included as an
Exhibit thereto. In addition, each party to this Agreement expressly authorizes
each other party to this Agreement to file on its behalf any and all amendments
to such Statement.
Date: December 26, 1997 CEA INVESTORS PARTNERSHIP II, LTD.
By: CEA Investors, Inc. its general partner
By: /S/DAVID BURNS
------------------------------------
David Burns
Title: Executive Vice President
Date: December 26, 1997 CEA INVESTORS, INC.
By: /S/ DAVID BURNS
------------------------------------
David Burns
Title: Executive Vice President
Date: December 26, 1997 /S/ J. PATRICK MICHAELS, JR.
-----------------------------------
J. Patrick Michaels, Jr.
