<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1997
REGISTRATION NO. 333-37651
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________
UIH AUSTRALIA/PACIFIC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
COLORADO 84-1341958
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
4643 SOUTH ULSTER STREET
DENVER, COLORADO 80237
(303) 770-4001
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
_______________
MICHAEL T. FRIES
CHIEF EXECUTIVE OFFICER
UIH AUSTRALIA/PACIFIC, INC.
4643 SOUTH ULSTER STREET
DENVER, COLORADO 80237
(303) 770-4001
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
_______________
COPIES TO:
GARTH B. JENSEN, ESQ.
HOLME ROBERTS & OWEN LLP
1700 LINCOLN, SUITE 4100
DENVER, COLORADO 80203
(303) 861-7000
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
_______________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
_______________
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<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE/WARRANT (3) OFFERING PRICE FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warrant(2)............................... 488,000 warrants $0 $0 $0
Common Stock (par value $.01 per share).. 488,000 shares $10.45 $5,099,600 $1,504*
=================================================================================================================
</TABLE>
* Previously paid.
(1) This Registration Statement relates to Warrants to purchase Common Stock of
the Company as well as to the Common Stock underlying such Warrants.
Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares of Common Stock as may become
issuable pursuant to adjustments under the Warrants.
(2) The Warrants are being issued at no additional cost to holders on November
15, 1997 of the Company's 14% Senior Discount Notes due 2006, pursuant to
the terms of the Indenture pursuant to which such Senior Notes were issued.
The Warrants are exercisable at a price of $10.45 per share of Common Stock.
(3) Based on the exercise price of the Warrants pursuant to Rule 457(a). There
is no current trading market for the Company's Common Stock, nor is the
Company planning to develop such a market.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus 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 such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 14, 1997
PROSPECTUS
488,000 WARRANTS TO PURCHASE SHARES OF COMMON STOCK
AND 488,000 OF COMMON STOCK
[LOGO] UIH AUSTRALIA/PACIFIC, INC.
UIH Australia/Pacific, Inc. (the "Company") intends to issue 488,000
warrants (the "Warrants") to purchase an aggregate of 488,000 shares of Common
Stock, par value $.01 per share ("Common Stock"), and to issue, from time to
time, up to 488,000 shares of Common Stock upon the exercise of such Warrants.
The Warrants are being issued pursuant to the terms of the indentures
(collectively, the "Indenture") governing the Company's outstanding 14% Senior
Discount Notes due May 15, 2006 (the "Senior Notes"). Pursuant to the
Indenture, the holders of Senior Notes on November 15, 1997 are being issued the
Warrants because the Company did not consummate an issuance of capital stock
resulting in gross proceeds to the Company of at least $70.0 million (an "Equity
Sale"), on or prior to November 15, 1997. One Warrant will be issued for each
$1,000 principal amount of the Senior Notes held on November 15, 1977 (the
"Record Date"). The Warrants are exercisable on or after November 15, 1997 and
prior to 5:00 p.m., New York City time, on May 15, 2006. The exercise and
transfer of the Warrants is subject to applicable federal and state securities
laws.
Each Warrant entitles the registered holder thereof, subject to and upon
compliance with the provisions thereof and of the Warrant Agreement (as defined
herein), at such holder's option, prior to 5:00 p.m., Eastern time, on May 15,
2006, to purchase from the Company one share (or such other number as may result
from adjustments as provided in the Warrant Agreement) of Common Stock at a
purchase price per share of $10.45.
There is no public market for the Warrants or the underlying Common Stock
and the Company does not intend to apply for listing of the Warrants or the
underlying Common Stock on any securities exchange.
_______________
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===================================================================
PRICE UNDERWRITING TOTAL PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
===================================================================
<S> <C> <C> <C>
Per Warrant....... $0 $0 $0
- -------------------------------------------------------------------
Per Share......... $10.45 $0 $10.45
- -------------------------------------------------------------------
Total............. $5,099,600 $0 $5,099,600
===================================================================
</TABLE>
(1) No underwriting discounts or commissions will be paid. The shares of Common
Stock will be offered directly by the Company upon exercise of the Warrants.
(2) Before deducting offering expenses estimated at $43,000
(3) Assumes all of the Warrants are exercised.
The date of this Prospectus is November __, 1997.
<PAGE>
TABLE OF CONTENTS
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<S> <C> <C> <C>
Available Information..................... 2 Recent Developments............... 10
Information Incorporated by Reference..... 2 Determination of Offering Price... 11
The Company............................... 3 Plan of Distribution.............. 11
Risk Factors.............................. 4 Legal Matters..................... 14
Use of Proceeds........................... 10 Experts........................... 14
</TABLE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Warrants and Common
Stock offered hereby (the "Registration Statement"). This prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and the securities offered hereby reference is made to the Registration
Statement, including the exhibits and schedules thereto, which may be inspected
at, and copies thereof may be obtained at prescribed rates from, the public
reference facilities of the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, Suite 1300, New York, New York 10048. In addition, reports and other
information that the Company files with the Commission electronically are
contained in the Internet Web site maintained by the Commission, the address of
which is http://www.sec.gov.
The Company intends to furnish holders of the Warrants and Common Stock
with annual reports containing audited financial statements and quarterly
reports for the first three quarters of each fiscal year containing unaudited
interim financial information.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed with the Commission (File No. 333-
05017) and are incorporated in this prospectus by reference and made a part
hereof:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996 (the "Form 10-K Report").
2. The Company's Quarterly Report on Form 10-Q for the quarters ended March
31, June 30 and September 30, 1997.
3. The Company's Current Report on Form 8-K dated May 15, 1997.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of this prospectus and
prior to the termination of the offering, shall be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the dates of filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this prospectus modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this prospectus is delivered, upon such person's
written or oral request, a copy of any and all of the information that has been
incorporated by reference in this prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference into
such information that the prospectus incorporates). Any such request should be
directed to UIH Australia/Pacific, Inc., Chief Financial Officer, 4643 South
Ulster Street, Suite 1300, Denver, Colorado, 80237 (telephone number 303-770-
4001).
2
<PAGE>
THE COMPANY
OVERVIEW
The Company is a leading provider of multi-channel television services in
Australia and New Zealand. Through its Australian operating companies, CTV Pty
Ltd. ("CTV") and STV Pty Ltd. ("STV"), which collectively are referred to herein
as "Austar," the Company is the largest provider of multi-channel television
services in regional Australia, where it operates wireless cable ("MMDS")
systems and markets a direct-to-home ("DTH") service in franchise areas
encompassing approximately 1.6 million television homes, or 25% of the total
Australian market. In addition, the Company, through its majority-owned New
Zealand operating company, Saturn Communications Limited ("Saturn"), is
constructing a wireline cable and telephony system in Wellington, New Zealand, a
market representing approximately 135,000 television homes. The Company's other
assets include (i) a 25% interest in XYZ Entertainment Pty Ltd. ("XYZ"), a
programming company that provides four channels to the Australian multi-channel
television market as part of the "Galaxy" package the most widely distributed
programming package in Australia and the core component of Austar's programming,
as well as a recently launched fifth channel, (ii) an up to 90% economic
interest in Telefenua S.A. ("Telefenua"), the only provider of multi-channel
television services in Tahiti, with an MMDS system in a market with 31,000
television homes, and (iii) a 100% interest in United Wireless Pty Limited
("United Wireless"), a provider of two-way wireless mobile data services in
Australia.
SPONSORSHIP BY UIH
The Company currently is a wholly owned subsidiary of UIH Asia/Pacific
Communications, Inc. ("UAP"), which in turn is an indirect majority owned
subsidiary of United International Holdings, Inc. ("UIH"), a leading provider of
multi-channel television services outside the United States. Together with its
strategic and financial partners, UIH has ownership interests in multi-channel
television systems in operation or under construction in 23 countries. UIH's
operations are organized in three geographic regions: (i) Europe, consisting
primarily of the Company's interest in one of Europe's largest privately owned
multi-channel television operating companies; (ii) Asia/Pacific, including
investments in operating systems and early stage projects in Australia, New
Zealand, the Philippines, Tahiti and China; and (iii) Latin America, including
multi-channel television systems in Brazil, Chile and Mexico. These operating
systems served an aggregate of approximately 3.4 million subscribers, passed
approximately 7.3 million homes and had the potential to reach approximately 9.9
million homes as of March 31, 1997. UIH's net equity interest in those
subscribers was 1.2 million, homes passed were 3.6 million, and homes in service
area were 4.8 million. Assuming the full exercise of all of the Warrants, UAP
will continue to hold 96.6% of the Company's Common Stock. See "Risk Factors --
Control of the Company by Majority Shareholder."
OTHER
On November 12, 1997, in anticipation of the issuance of the Warrants, the
Company effected a stock split whereby the then outstanding 500 shares of Common
Stock were converted into a total of 13,864,941 shares of Common Stock.
The Company was incorporated in 1994 as a Colorado corporation. The
principal executive office of the Company is located at 4643 South Ulster
Street, Suite 1300, Denver, Colorado 80237, and its telephone number is (303)
770-4001.
3
<PAGE>
RISK FACTORS
Prospective purchasers of the Warrants and underlying Common Stock offered
hereby should consider carefully the following Risk Factors, as well as the
other information set forth in this Prospectus (including attachments), before
purchasing the Warrants and underlying Common Stock.
This Prospectus and the documents incorporated herein by reference contain
statements which constitute forward-looking statements within the meaning of
Section 27A of the Securities Act. Discussions containing such forward-looking
statements may be found in the material set forth below and as well as generally
within the Prospectus and the documents incorporated by reference herein. In
addition, when used in this Prospectus or the documents incorporated by
reference herein, the words "believes," "anticipates," "expects," "plans,"
"intends" and similar expressions are intended to identify forward-looking
statements. Forward-looking statements and statements of expectations, plans and
intent are subject to a number of risks and uncertainties. Actual results in the
future could differ materially from those described in the forward-looking
statements as a result, among other things, of the risk factors set forth
below and the matters set forth generally in the Prospectus and within the
documents incorporated herein by reference. The Company undertakes no obligation
to release publicly the result of any revisions to these forward-looking
statements that may be made to reflect any future events or circumstances. The
Company cautions the reader, however, that this list of risk factors and other
cautionary language contained herein may not be exhaustive.
Leverage. The Company is highly leveraged. As of September 30, 1997, the
consolidated liabilities of the Company and its subsidiaries (including trade
payables of subsidiaries) were approximately $426.0 million (including the
Senior Notes), substantially all of which, except for the Senior Notes, would
have been obligations of the Company's subsidiaries. As of May 16, 2001 (the
date cash interest payments begin on the Company's Senior Notes) and assuming an
Equity Sale is consummated on December 31, 1997, the Senior Notes will have an
Accreted Value of $490.1 million ($501.9 million if an Equity Sale is not
consummated on or before May 15, 2001). Beginning in May 2001 and assuming an
Equity Sale is consummated on December 31, 1997, the Company will have annual
cash interest payments with respect to the Senior Notes of approximately $68.6
million ($74.0 million if an Equity Sale is not consummated prior to maturity).
The Company's ability to meet its debt service requirements will be dependent
upon substantial growth in the Company's cash flow. If the Company's cash flow
and working capital are not sufficient to fund the Company's expenditures and to
service its indebtedness, the Company would be required to raise additional
funds through the sale of equity or debt securities, the refinancing of all or
part of its indebtedness, or by effecting the sale of significant assets. The
Indenture as well as the indentures governing the outstanding 14% Senior Secured
Discount Notes due 1999 of UIH, restrict the ability of the Company and its
Restricted Subsidiaries (as defined therein) to incur additional indebtedness
beyond specified financial ratios. There can be no assurance that the Company
will be successful in generating cash flow by a sufficient magnitude or in a
timely manner or in raising additional equity or debt financing to enable the
Company to meet its debt service and other liquidity requirements. The high
degree to which the Company is leveraged could have significant adverse
consequences upon the Company, including, without limitation, (i) increased
vulnerability to adverse economic and competitive conditions, (ii) inability to
obtain additional financing necessary to fund future working capital
requirements, capital expenditures, acquisitions or other general needs, and
(iii) the dedication of a substantial portion of cash flow from operations to
the payment of principal of and interest on indebtedness, rather than to the
expansion of operations and the pursuit of new opportunities. In addition, the
Company and its subsidiaries and affiliates may incur additional indebtedness,
which may be secured debt and/or at the level of the operating companies, from
time to time to finance expansion, either through capital expenditures or
acquisitions, or for other general corporate purposes.
The Company's ability to sell or transfer its ownership interests in
Saturn, Telefenua and XYZ is subject to limitations contained in the agreements
between the Company and its strategic and financial partners including, in
certain cases, complete prohibitions on sales or transfers for a period of years
and/or rights of first refusal. In addition, none of the operating companies
currently has any publicly traded securities, and there can be no guarantee that
there will be in the future either a public or private market for the securities
of the operating companies. As a result, the Company's ability to liquidate any
or all of its investments may be substantially limited, and there can be no
guarantee that the Company will be able to do so in a timely manner in the
event of an acceleration of the Senior Notes prior to their maturity or in order
to satisfy its obligations in respect of such securities in the event of a
change of control of the Company, or to repay the Senior Notes upon their
maturity.
History of Operating Losses. The Company has experienced net losses since
its formation. The Company had consolidated net operating losses of $68.2
million for fiscal 1996 and consolidated net operating losses of $82.5 million
for the nine months ended September 30, 1997. The Company expects to incur
substantial additional net losses and net operating losses for the foreseeable
future as it pursues the development of its multi-channel television systems and
programming ventures, and there can be no assurance that such losses will not
continue indefinitely or exceed the Company's expectations. In addition, the
Company has experienced net losses, net operating losses and negative cash flows
from operations since formation, as each of its operating companies has been in
the early stages of constructing and marketing its operations. In fiscal 1995,
net operating losses (translated using a weighted average
4
<PAGE>
exchange rate) for Austar, Saturn, Telefenua and XYZ were $8.3 million, $2.6
million, $4.2 million and $28.9 million, respectively. From the Company's
acquisition of United Wireless in September 1995 through December 31, 1995,
United Wireless had net operating losses of $0.6 million. In fiscal 1996, net
operating losses (translated using a weighted average exchange rate) for Austar,
Saturn, Telefenua, XYZ and United Wireless were $54.0 million, $5.3 million,
$2.5 million, $18.4 million and $3.1 million, respectively. Continuing net
losses, net operating losses and negative cash flows would increase the
Company's need for additional capital in the future. See "--Need for Additional
Capital."
Limited Operating History; Uncertainties Associated with a New Industry;
Customer Acceptance and Market Demand. Saturn and Telefenua are in the early
stages of constructing their respective multi-channel television and
telecommunication systems and/or marketing their respective services. Although
Austar has finished construction of substantially all of its MMDS systems and
has launched DTH service in all of its franchise areas, it is still in the early
stages of marketing its services. Austar's success will depend largely upon its
ability to gain and retain subscribers throughout its franchise areas. Saturn
is in the early stages of constructing a full-service network in its identified
markets. Saturn has launched service in a portion of its service areas and has
only recently begun marketing its services and connecting subscribers beyond its
existing base. Telefenua launched its service in March 1995 and is also in the
early stages of marketing its services. In addition, the successful
implementation of the Company's operating strategies is subject to factors and
uncertainties, many of which are outside of its control and difficult to
predict, due, in part, to the limited history of multi-channel television in
Australia and Tahiti and of integrated multi-channel television and telephony
services in New Zealand. No assurance can be given that such factors will not
negatively affect the implementation of such operating strategies and the
Company's financial results.
Subscription television services were not introduced in Australia and
Tahiti until 1995 and 1994, respectively. There can be no assurance that the
Company will experience and sustain the levels of customer acceptance and
retention required for its success. While the subscription television and
telecommunications markets in New Zealand have operating histories, there
currently are no fully operational integrated video and voice networks such as
Saturn is building. As a result, the size of the New Zealand market for such
services, likely rates of penetration of services in this market, acceptance of
projected monthly rates for combined services, structure of the competitive
environment and long-term attractiveness of the integrated video and voice
business in New Zealand are unclear.
Need for Additional Capital. While the Company believes that its cash on
hand, available funds under existing financing facilities and projected cash
flow from operations will be sufficient for the Company to complete the
construction and initial marketing of its existing operating companies,
currently estimated as of September 30, 1997 to require approximately $185.3
million in total (of which the Company's pro rata portion is approximately
$155.1 million), not taking into account existing financing facilities), over
the next two to three years, there can be no assurances that such funds will be
sufficient for its needs. See "Recent Developments--Funding Requirements."
Availability under the Bank Facility is conditioned on certain cash flow levels
and equity contributions to Austar. See "Recent Developments--Austar Bank
Facility." Austar is evaluating the economic and strategic benefits of a larger
commitment to its DTH business which may entail greater capital and operating
expenditures for subscriber installation and programming costs. Sources of
additional capital, if any, may include additional debt and equity financing at
the Company and operating company levels, although there can be no assurance
that such funds will be available on satisfactory terms or on a timely basis, if
at all.
Competitive Industry. The subscription television business in each of the
countries in which the Company operates is and will remain competitive and
subject to rapid change due to regulatory and other factors. Austar currently
competes in one of its metropolitan markets with FoxTel Management Pty Limited
("FoxTel"), which has substantial financial resources and also carries the
Galaxy package. Austar may face competition as FoxTel launches service in other
franchise areas. To the extent Austar experiences competition in any of its
markets, its "churn" rate (rate of subscriber disconnects) could increase. An
increase in Austar's churn rate would result in higher capital expenditure
requirements. In addition, since July 1997 Australian law has allowed other
persons to deliver subscription television services via DTH. Optus Vision Pty
Limited ("Optus Vision") publicly announced in 1996 that it plans to offer
subscription television services by DTH throughout Australia. Saturn expects to
compete with existing providers of multi-channel television services and
telephony services in New Zealand, certain of which have substantially more
resources and experience than Saturn. These competitors include Telecom New
Zealand Limited, New Zealand's largest telecommunications service provider,
which has announced its intention to rebuild certain of its existing networks to
enable it to offer video and data services to approximately 70,000 homes in
various parts of that country. Telefenua also competes with another provider of
subscription television services in its operating area. In addition to an
existing competitor, United Wireless could face competition in the future from
certain companies with significantly greater resources than the Company that are
currently attempting to implement satellite-generated data transmission and
paging services on a global scale.
Deployment of Network; Access to Infrastructure; Construction Risk. The
construction within management's cost estimates and launch schedules of the
Saturn network is dependent upon factors, many of which are outside of the
Company's control. Because the New Zealand pay television market is in its
early development stages, access to contractors experienced in the necessary
deployment of combined cable television and voice networks in New Zealand is
limited. The Company's continued access to and successful training of
contractors is a key element to meeting management's launch schedules, but there
can be no assurance as to such access. The Company's success will depend in
part upon its ability to deploy networks quickly throughout its service areas.
No assurance can be given that the
5
<PAGE>
Company will succeed with its development schedule or that the Company's
financial performance and results of operations will not be adversely affected
by its inability to do so.
Construction projects are subject to cost overruns and delays not within
the control of the Company or its subcontractors, such as delays related to
governmental rules and regulations including zoning and permit requirements, as
well as acts of governmental entities, financing delays and catastrophic
occurrences. Delays also can arise from design changes and material or
equipment shortages or delays in delivery. Services to buildings passed by the
operating systems can be delayed if easements are not obtained from third
parties. Failure to complete construction on a timely basis could jeopardize
such operating company's ability to compete and could have material adverse
effects on the financial condition and results of operations of one or more of
the operating companies.
Ability to Procure Additional Programming Services. The Company's success
is largely dependent upon management's ability to procure programming that is
attractive to its customers at reasonable commercial rates. The Company is
dependent upon third parties for the development and delivery of programming
services. These programming suppliers will charge the operating companies for
the right to distribute the channels to the operating companies' customers. The
costs to the operating companies for additional services will be determined
through negotiations between the operating companies and these programming
suppliers. Management believes that the availability of sufficient programming
on a timely basis will be critical to the Company's future success. There can
be no assurance that the operating companies will have access to additional
programming services or that management can secure rights to such programming on
commercially acceptable terms.
Australis Media Limited ("Australis"), Austar's supplier of sports and
movie programming, is engaged in a rapid roll-out of service that has required a
significant amount of capital and has strained its liquidity. Australis recently
announced that it may need to appoint a receiver owing to liquidity issues. If
Australis were to appoint a receiver it is uncertain whether four non-XYZ Galaxy
channels distributed directly by Australis will be available to Austar. The
Company believes that if Austar is no longer able to obtain the four Galaxy
channels provided by Australis and it were required to seek replacement
programming, it would have access to similar programming directly from the
suppliers of such four Galaxy channels or sufficient alternative programming on
competitive terms. There can be no assurance, however, that this would be the
case, and the inability of Austar to procure the same or suitable alternative
programming at competitive rates and on an exclusive basis in its service areas
could have a material adverse effect on the Company. See "Recent Developments --
Australian Pay Television Market."
Rapid Technological Changes. The multi-channel television industry is
subject to rapid and significant changes in technology. Although the Company
believes that its operating companies' current and planned networks have been
designed to be sufficiently flexible to permit them to deliver a variety of
existing multi-channel television and, where appropriate, telecommunications
services to their respective customers and advanced, integrated entertainment,
telecommunications and information services as they become available in the
future, the effect of any future technological changes on the viability or
competitiveness of the Company's network and services cannot be predicted.
Government Regulations; License Renewal. Multi-channel television
operations and programming services are subject to governmental regulation,
which may change from time to time. There can be no assurance that material and
adverse changes in the regulation of the Company's existing operating systems
will not occur in the future. Regulation can take the form of price controls,
service requirements and programming content restrictions, among others.
Broadcasting services provided by Austar are subject to Australian
government regulation under the Radiocommunications Act 1992 (the
"Radiocommunications Act"), which regulates the use of the radio spectrum in
Australia; the Broadcasting Services Act 1992 (the "BSA"), which, among other
things, regulates the delivery and content of broadcasting services in
Australia, including subscription television broadcasting services; the Trade
Practices Act 1974 (the "TPA"), which, among other things, regulates the
provision of and access to telecommunications services, and the use of DTH and
cable services; and the Telecommunications Act 1997 (the "Telecommunications
Act"), which, among other things, regulates the use of telecommunications
facilities that supply telecommunications services and program suppliers who
deliver a subscription television broadcasting or narrowcasting service using
cable and in certain respects, DTH satellite transmission. The
Telecommunications Act, which commenced on July 1, 1997, removes the duopoly
previously enjoyed by Telstra and Optus Vision and established for the first
time an open competition regime. At this stage, it is too early to predict what
impact this regime will have on Austar. Changes in existing regulations or laws
or in the interpretation of existing regulations or laws by the courts or
governmental authorities in Australia, as well as the development of the
subscription television industry in Australia generally, may have a material
adverse effect on the ability of XYZ and Austar to compete with other forms of
entertainment and may also have a material adverse effect on XYZ's and Austar's
ability to attain their business objectives or on their results of operations.
Matters which could adversely affect the profitability of XYZ and Austar and/or
the value of their licenses include anti-siphoning regulations which have
limited and, in the future, could limit further the Company's access to certain
sports programming, the loss by Austar of certain of its licenses, the inability
of Austar to acquire additional licenses or be reissued its existing
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licenses, the inability of Austar to comply with class licenses for the
provision of broadcasting services or licenses or other obligations under the
Telecommunications Act, the issuance of additional licenses to competitors of
Austar, changes in the Australian programming content requirements, changes in
the amount or calculation of taxes, fees or charges payable for licenses,
license renewals or conversions, changes in the conditions attaching to any
licenses or any other policies or regulations that modify the present regulatory
environment. Such regulatory changes and limitations, or the enactment of future
limitations, may adversely affect the ability of XYZ and Austar to secure
additional financing. The Australian Federal government has expressed its intent
to review certain issues relating to subscription television broadcasting
services, including Australian program content requirements and limitations on
foreign and cross-media ownership (although the government announced recently
that it would not pursue any review of the foreign or cross-media ownership
rules until after the next Federal election, which the Company does not
anticipate happening for at least the next two years).
Austar's MMDS licenses issued under the Radiocommunications Act were
granted between 1994 and 1996 and have initial terms of five years from the date
of grant. The terms governing the renewal or conversion of Austar's existing
MMDS apparatus licenses into spectrum licenses has not been announced. The
failure to renew or the revocation of Austar's MMDS licenses, or the failure of
Austar to receive appropriate spectrum licenses upon conversion of existing
licenses would have a material adverse effect on the Company's financial
condition.
While New Zealand currently has an extremely unregulated environment in
which to operate multi-channel television and telephony services and currently
requires no special licenses or franchises to operate multi-channel television
systems, there can be no assurance that the regulatory environment will continue
to remain so unregulated. Telefenua's MMDS authorization expires in 2004 and is
currently under legal challenge. There can be no assurance that Telefenua will
be successful in renewing its license or defending any challenge.
Foreign Acquisitions and Takeovers Act/Investment Company Act
Considerations. The Company currently holds a majority of the outstanding
securities presently entitled to vote for the election of directors and has the
right to designate all of the directors of Austar. While the transactions
pursuant to which the Company acquired such securities and related rights did
not require any advance notification or approval under Australian law, in the
future, they could be reviewed by the Treasurer of Australia (the "Treasurer")
under provisions of the Australian Foreign Acquisition and Takeovers Act 1975,
as amended ("FATA"). If so reviewed and determined by the Treasurer to have
resulted in a change of control of an Australian person to a foreign person that
is against the national interest of the Commonwealth of Australia, there would
be no violation of law, but the Treasurer could require the parties to restore
the voting control of Austar so that the Company is entitled to appoint directly
only three of six directors of Austar. While the Company believes a
determination under the FATA should not affect its effective 100% economic
interest in Austar, there can be no assurance that such would be the case. In
addition, if the manner in which the Company designates directors of Austar is
changed as a result of action by the Treasurer, an issue may be presented under
the Investment Company Act of 1940 (the "1940 Act") as to whether the Company
would then be an unregistered investment company. If the Company's economic
interests in Austar did not provide the Company sufficient control of Austar to
permit the Company to obtain exemptive relief from the Commission, there would
be a risk that the Company would be an unregistered investment company and as
such, the Company would be subject to monetary penalties and injunctive relief
in an action brought by the Commission, the Company would be unable to enforce
contracts with third parties and third parties could seek to obtain recision of
transactions undertaken during the period it was established that the Company
was an unregistered investment company.
Challenge to Telefenua Authorization. In 1993 and 1994, Telefenua entered
into local franchise agreements with 30-year terms to provide cable television
services in Tahiti and subsequently obtained authorizations with a term through
2004 from the Conseil Superieur de l'Audiovisuel ("CSA") permitting a holder of
a cable television license to provide subscription broadcast services via MMDS.
The authorizations were based in part on a French government decree of July 22,
1993 (the "Decree"). In response to a legal challenge by the territorial
government of Tahiti, the Conseil d'Etat of France recently canceled part of the
Decree authorizing the issuance of MMDS licenses by the CSA in French Polynesia.
The cancellation provides a legal basis to cancel the required authorization
already granted to Telefenua by the French communications agency. The
territorial government of Tahiti has brought an action in French court seeking
such cancellation, although no such cancellation has yet taken place. A law
enacted by the French Parliament in July 1996 may give Telefenua a statutory
basis for seeking a new authorization from the communications agency, should the
existing authorization be nullified. There can be no assurance, however, that if
the existing authorization is nullified a new authorization will be obtained. In
addition, the new authorization would last no more than five years and could
differ in other respects from the previous authorization. The Company believes
that if the existing authorization is nullified and Telefenua is unable to
obtain a new authorization, Telefenua may petition for restitution for the
taking of such authorization. If Telefenua does not obtain a new authorization,
however, there is no assurance that Telefenua will receive any restitution. In
addition, any available restitution could be limited and could take years to
obtain.
Dependence on Key Personnel; Relationship with UIH and UAP. Many of the
personnel performing key managerial and executive functions in the operating
companies are employees of the Company's parent, UIH, over which
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the Company has no control. The services of such personnel are made available to
the operating companies under the terms of Technical Assistance Agreements and
the Management Agreement between the Company and UAP upon payment by the
operating companies of certain fees. No assurance can be given as to the
continued availability of such key personnel.
As the Company continues the construction and marketing of its operating
systems, its success and growth strategy depends in large part on its ability to
attract and retain local management, marketing and operating personnel at the
UAP and operating company levels. There can be no assurance that the Company
will be able to attract and retain the qualified personnel needed for its
business.
Control of the Company by UAP. The Company is currently a wholly owned
subsidiary of UAP. Assuming that all of the Warrants are exercised, UAP would
still hold 96.6% of the Company's outstanding shares of Common Stock and as such
will be able to control all matters requiring the approval of the Company's
shareholders.
Risks Inherent in Foreign Investment. The Company has invested
substantially all of its resources outside of the United States. Risks inherent
in foreign operations include loss of revenue, property and equipment from
expropriation, nationalization, war, insurrection, terrorism and other political
risks and risks of increases in taxes and governmental royalties and fees. The
Company is also exposed to the risk of changes in foreign and domestic laws and
policies that govern operations of foreign-based companies. Although the
majority of the Company's operations are located in Australia and New Zealand,
the Company has interests in operating systems in Tahiti where foreign
investment risks may be greater.
Foreign Currency Exchange Rate and Conversion Risks. Although the
operating companies have attempted, and will continue to attempt, to match costs
and revenues and borrowings and repayments in terms of their respective local
currencies, payment for a majority of purchased equipment has been, and may
continue to be, required to be made in currencies, including dollars, other than
local currencies. In addition, the value of the Company's investment in an
operating company is partially a function of the currency exchange rate between
the dollar and the applicable local currency. In general, the Company does not
execute hedge transactions to reduce its exposure to foreign currency exchange
rate risks. Accordingly, the Company may experience economic loss and a
negative impact on earnings with respect to its holdings solely as a result of
foreign currency exchange rate fluctuations, which include foreign currency
devaluations against the dollar. The Company may also experience economic loss
and a negative impact on earnings related to these monetary assets and
liabilities. The countries in which the operating companies now conduct
business generally do not restrict the removal or conversion of local or foreign
currency; however, there can be no assurance this situation will continue. Such
restrictions, if enacted, could create substantial barriers to the conversion or
repatriation of funds, and such restrictions could adversely affect the
Company's and its operating companies' ability to pay overhead expenses, meet
their respective debt obligations and to continue and expand their businesses.
Limited Insurance Coverage. The operating companies obtain insurance of
the type and amount which management believes is appropriate for their systems.
Such policies do not, however, insure the entire portion of multi-channel
television systems. Accordingly, a catastrophe affecting a significant portion
of a system's infrastructure could result in substantial uninsured losses.
International Tax Risks. In general, a United States corporation may claim
a foreign tax credit against its federal income tax expense for foreign income
taxes paid or accrued. Because the Company must calculate its foreign tax
credit separately for dividends received from each foreign corporation in which
the Company owns 10% to 50% of the voting stock and because of certain other
limitations, the Company's ability to claim a foreign tax credit may be limited,
particularly with respect to dividends paid out of earnings subject to a high
rate of foreign income tax. The Company will also be obligated to allocate
deductions to its foreign activities in computing the foreign tax credit
limitation that limits the available foreign tax credit. These limitations and
the inability of the Company to offset losses in one foreign jurisdiction
against income earned in another foreign jurisdiction could result in a high
effective tax rate on the Company's earnings. The Company has an ownership
interest in Telefenua, which is located in Tahiti, a self-governing territory of
France, with which the United States does not have an income tax treaty. As a
result, the Company may be subject to increased withholding taxes on dividend
distributions and other payments from Telefenua and also may be subject to
double taxation with respect to income generated by Telefenua.
Ownership of Subsidiaries. While the Company has an effective 100%
economic interest in Austar, it holds only 14.9% of Austar's ordinary shares.
The Company, through its ownership and economic interest, has the right to
appoint all of the directors of Austar. While the holders of Austar's ordinary
shares are entitled to vote on certain limited matters, they do not have the
power to wrest control of Austar from its board of directors appointed by the
Company. Similarly, while the Company holds a majority economic interest in
Telefenua and appoints a controlling number of directors, it holds less than the
majority of Telefenua's outstanding common stock.
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Trading Market for the Warrants and the Underlying Common Stock; Absence of
Public Market. The Company has not sought and is not seeking a listing for the
Warrants or the underlying Common Stock on a national securities exchange or an
authorization for quotation on Nasdaq Stock Market. There can be no assurance
that an active trading market will develop for the Warrants or the underlying
Common Stock.
No Dividends. It is not expected that any dividends will be paid on the
Common Stock in the foreseeable future. In addition, the Indenture will limit
the Company's ability to pay cash dividends.
Dilution. Warrantholders who exercise Warrants to acquire shares of Common
Stock will experience an immediate, substantial dilution in net tangible book
value per share. As of September 30, 1997, the net tangible book deficit per
share of the Company's common stock was $12.89. After giving effect to (i) the
issuance and sale by the Company of Common Stock upon exercise of the Warrants,
at an exercise price of $10.45 per share, and (ii) the deduction or estimated
expenses of this offering, the pro forma net tangible book deficit of the common
stock at September 30, 1997, would have been $12.10 per share. This represents
an immediate reduction in net tangible book deficit per share of $0.79 to
present stockholders and an immediate dilution of $22.55 per share to
Warrantholders who exercise Warrants.
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USE OF PROCEEDS
If all of the Warrants are exercised, net proceeds to the Company after
payment of expenses of the offering are estimated to be approximately $5.1
million. See "Plan of Distribution." Such proceeds, if any, will be
contributed to the subsidiaries and affiliates of the Company for their capital
expenditures and working capital expenditures as permitted by the terms of the
Indenture, and for general corporate purposes.
Pending use of the net proceeds from the offering as described above, the
Company intends to hold such proceeds in short-term, interest bearing,
investment grade securities, including governmental obligations and other money
market instruments.
RECENT DEVELOPMENTS
AUSTAR BANK FACILITY
In July 1997, Austar secured from a bank a syndicated senior secured debt
facility (the "Bank Facility") in the amount of A$200 million (approximately
$144 million based on the September 15, 1997 exchange rate). The proceeds of
the Bank Facility will be used to finance Austar's subscriber acquisition and
working capital needs. The Bank Facility consists of three sub-facilities: (i)
an A$50 million working capital facility; (ii) an A$60 million cash advance
facility available upon the contribution of additional equity to Austar on a 2:1
debt-to-equity basis; and (iii) an A$90 million term loan facility, which will
be available on the basis of Austar having achieved minimum subscriber and
operating cash flow levels. The maximum amount of equity required in (ii) above
would be A$30 million, of which approximately A$18.5 million had been
contributed as of September 30, 1997, and the remainder of which is expected to
be contributed from the Company or by a third party equity provider, UIH or UAP.
The cash advance and term loan facilities are fully repayable pursuant to an
amortization schedule beginning December 31, 2000 and ending June 30, 2004. As
of September 30, 1997, Austar had drawn approximately A$87 million on the Bank
Facility, of which A$50 million was used to repay a bridge financing facility.
The Bank Facility is secured by all of the assets of Austar and a pledge of all
of the shares of CTV and STV held by the Company. Prior to December 31, 2000,
the Bank Facility limits the ability of Austar to declare and pay dividends,
make any payments on any debentures or any other subordinated shareholder loans,
or pay any fees under management or technical assistance agreements with any
related party. After December 31, 2000, however, these restrictions would be
lifted so long as Austar is not in default under the Bank Facility and there
exists an adequate ratio of excess cash flow to total outstanding debt.
SATURN TRANSACTION
Part of the Company's New Zealand strategy has been to offer an integrated
cable television/telephone service within its operating area. To further this
strategy, in July 1997, the Company took as its partner in Saturn a subsidiary
of Saskatchewan Telecommunications Holdings Corporation ("SaskTel"), a Canadian
telecommunications company with substantial experience in constructing and
operating telephone networks. SaskTel invested approximately $20 million for a
35% interest in Saturn. SaskTel has announced its intentions to invest in
Saturn up to an additional approximate $5.4 million, pro rata to additional
investments by the Company. The $20 million of funding by SaskTel has reduced
the Company's current funding obligations by the same amount and future funding
by SaskTel, pro rata based on its ownership interest, will reduce the Company's
future funding obligations by an additional $27.8 million from what the Company
had anticipated when Saturn was a wholly owned subsidiary of the Company. The
Company and SaskTel will explore additional project financing for construction
of Saturn's system.
The Company believes that SaskTel will bring valuable telephony expertise
to Saturn as it completes construction of its Wellington network and launches
telephone service, scheduled to occur in the first half of 1998. SaskTel has
appointed three of its employees to management positions, including Saturn's
Chief Technology Officer and its Telephone Switch Manager, and has signed a
technical assistance agreement with Saturn to provide additional technical and
management expertise.
SENIOR NOTE OFFERING
On September 23, 1997, the Company closed the sale of $45.0 million of
principal amount at maturity of Senior Notes pursuant to a private placement
(the "1997 Note Offering "). The Company received net proceeds of $29.3
million from the offering of Senior Notes.
FUNDING REQUIREMENTS
The following table sets forth, as of September 30 1997, (i) the total
estimated funding required for the construction and initial marketing of the
operating companies' systems in their existing license areas, including any
capital invested to date and the application of any operating cash flow sources
for such operating companies, (ii) the total amount of
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capital invested in each of the operating companies and the portion funded by
the Company and (iii) the total estimated additional funding required based on
the assumptions stated in (i) above and the Company's estimated portion of such
funding. Such amounts are expected to be funded over the next 24 to 36 months.
The estimated required additional funding numbers below have not been reduced to
give effect to any surplus cash flow of any one operating company which might be
available to fund the requirements of another operating company. To the extent
the operating companies fund their construction and other costs through project
financing, the Company's portion of estimated additional funding would be
reduced proportionately. The Company's portion of estimated additional funding
would be increased proportionately to the extent cash flow from the operating
companies and other sources of financing are not sufficient to meet project
funding requirements. To the extent that the other shareholders of XYZ or Saturn
fail to fund their pro rata share of the respective additional shareholder
capital, the Company may elect, if it is able, to fund all or a portion of such
shortfall.
<TABLE>
<CAPTION>
ESTIMATED TOTAL PROJECT CAPITAL INVESTED ESTIMATED REQUIRED
FUNDING REQUIREMENTS (1) AS OF SEPTEMBER 30, 1997 (1) ADDITIONAL FUNDING
OPERATING ------------------------ ------------------------------ ----------------------------
COMPANY THE COMPANY TOTAL THE COMPANY (2) TOTAL (2) THE COMPANY (TOTAL)
--------- ----------- ------ --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(In thousands)
Austar $391,000 $391,000 $290,202 (3) $290,202 (3) $100,798 (4) $100,798 (4)
Saturn 83,015 130,464 31,296 (5) 50,896 (6) 51,719 79,568
Telefenua 17,400 17,400 16,737 16,737 663 663
XYZ 13,974 55,896 13,185 52,740 789 3,156
United Wireless 8,226 8,226 7,087 7,087 1,139 1,139
-------- -------- -------- -------- -------- --------
Total $513,615 $602,986 $358,507 $417,662 $155,108 $185,324
======== ======== ======== ======== ======== ========
</TABLE>
- ----------------------------------
(1) Certain amounts contributed by the Company's partners were contributed in
currencies other than U.S. dollars. Such amounts have been translated to
U.S. dollars using a convenience translation.
(2) Includes amounts contributed to Austar (approximately $11.0 million) and
Saturn (approximately $2.9 million) by shareholders other than the Company
which were contributed by such shareholders prior to the acquisition of
their respective interests by the Company.
(3) Includes approximately A$87.0 million ($67.5 million converted using the
exchange rate on each funding date) funded under the Austar Bank
Facility. Does not include $58.6 million paid by the Company to increase
its economic interest in Austar to 100%.
(4) The Austar Bank Facility of A$200.0 million ($155.0 million) reduces the
Company's portion of the remaining funding requirements. As of September 30,
1997, Austar had drawn A$87.0 million on this facility leaving A$113.0
million ($82.0 million converted using a September 30, 1997 exchange rate)
that can be drawn, assuming compliance with certain financial convenants.
(5) Does not include the value of shares of common stock exchanged for shares of
the Company to increase the Company's interest in Saturn to 100% effective
July 1996.
(6) Includes the $19.6 million invested by SaskTel for its 35% interest in
Saturn in July 1997. Does not include the value of shares of common stock
exchanged for shares of the Company to increase the Company's interest in
Saturn to 100% effective July 1996.
AUSTRALIAN PAY TELEVISION MARKET
Optus Vision has publicly announced that it plans to offer subscription
television services by DTH throughout Australia. Optus Vision and Australis had
previously announced plans to form a joint venture to which Australis would
contribute its satellite infrastructure allowing for DTH transmission of Optus
Vision's television programming services. On May 30, 1997, the Supreme Court of
New South Wales, in a proceeding brought by FoxTel, granted a permanent
injunction restraining Australis from transferring such assets to the joint
venture. At this point, the Company is uncertain whether Optus Vision will
continue with its plans to provide DTH service. Australis, a supplier of movie
and sports programming, and satellite distribution services to Austar, has
publicly announced that it may need to appoint a receiver owing to liquidity
issues. The Company is currently in negotiations with Australis and other
programming suppliers for this type of programming and therefore currently
believes it will be able to arrange satisfactory programming arrangements in the
event of a disruption in service from Australis. There can be no assurance,
however, that such arrangements will be concluded or will be concluded on terms
favorable to Austar.
DETERMINATION OF OFFERING PRICE
The Warrants are issued at no consideration to holders of Senior Notes.
The Exercise Price of the Warrants was determined by negotiation between the
Company and Donaldson, Lufkin & Jenrette Securities Corporation in connection
with the offering and sale in May 1996 of $443.0 million of principal amount at
maturity of the Senior Notes.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby are being issued by the Company
upon the exercise of the Warrants. The Warrants are being issued pursuant to
Warrant Agreements (collectively, the "Warrant Agreement") between the Company
and Firstar Bank of Minnesota, N.A., as Warrant Agent (the "Warrant Agent") to
holders of the Senior Notes. One Warrant is being issued for each $1,000
principal amount at maturity of Senior Notes held by the respective holder on
the Record Date. The following summary of certain provisions of the Warrant
Agreement does not purport to be complete and is qualified in its entirety by
reference to, all the provisions of the Warrants and the Warrant Agreement, a
copy of which may be obtained from the Company upon request, including the
definitions therein of certain terms used below.
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GENERAL
Each Warrant will entitle the registered holder thereof, subject to and
upon compliance with the provisions thereof and of the Warrant Agreement, at
such holder's option, prior to 5:00 p.m., Eastern time, on May 15, 2006, to
purchase from the Company one share (or such other number as may result from
adjustments as provided in the Warrant Agreement) of Common Stock at an Exercise
Price per share of $10.45.
The Warrants will be exercisable on or after November 15, 1997 and prior to
5:00 p.m., New York City time, on May 15, 2006. The exercise and transfer of
the Warrants will be subject to applicable federal and state securities laws.
The Warrants may be exercised by surrendering to the Company the warrant
certificates evidencing the Warrants to be exercised with the accompanying form
of election to purchase properly completed and executed, together with payment
of the Exercise Price. Payment of the Exercise Price may be made (i) in the
form of cash or by certified or official bank check payable to the order of the
Company or (ii) by tendering Senior Notes having an Accreted Value at the time
of tender equal to the Exercise Price or (iii) by tendering Warrants having a
fair market value equal to the Exercise Price or (iv) any combination of cash,
Senior Notes or Warrants. Upon surrender of the warrant certificate and payment
of the Exercise Price, the Company will issue or cause to be delivered, to or
upon the written order of such holder, stock certificates representing the
number of whole shares of Common Stock to which such holder is entitled. If less
than all of the Warrants evidenced by a warrant certificate are to be exercised,
a new warrant certificate will be issued for the remaining number of Warrants.
No fractional shares of Common Stock will be issued upon exercise of the
Warrants. The Company will pay to the holder of each Warrant at the time of
exercise an amount in cash equal to the current market value of any such
fractional share of Common Stock less a corresponding fraction of the Exercise
Price.
The holders of the Warrants will have no right to vote on matters submitted
to the stockholders of the Company and will have no right to receive dividends.
The holders of the Warrants will not be entitled to share in the assets of the
Company in the event of liquidation, dissolution or the winding up of the
Company. In the event a bankruptcy or reorganization is commenced by or against
the Company, a bankruptcy court may hold that unexercised Warrants are executory
contracts which may be subject to rejection by the Company with approval of the
bankruptcy court, and the holders of the Warrants may, even if sufficient funds
are available, receive nothing or a lesser amount as a result of any such
bankruptcy case than they would be entitled to if they had exercised their
Warrants prior to the commencement of any such case.
The certificates evidencing the Warrants may be surrendered for exercise or
exchange, and the transfer of warrant certificates will be registrable, at the
office or agency of the Company maintained for such purpose, which initially
will be the corporate trust office of the Warrant Agent. The warrant
certificates will be issued only in fully registered form in denominations of
whole numbers of Warrants. No service charge will be made for any transfer,
exchange or issuance of warrant certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
ADJUSTMENTS
The number of shares of Common Stock purchasable upon exercise of Warrants
and the Exercise Price will be subject to adjustment in certain events
including: (i) the payment by the Company of dividends (and other
distributions) on its Common Stock in shares of its Common Stock, (ii)
subdivisions, combinations and reclassifications of the Common Stock, (iii) the
issuance to all holders of Common Stock of rights, options or warrants entitling
them to subscribe for Common Stock or securities convertible into, or
exchangeable or exercisable for, Common Stock within sixty (60) days after the
Record Date for such issuance of rights, options or warrants at an offering
price (or with an initial conversion, exchange or exercise price) which is less
than the current market price per share (as defined) of Common Stock, (iv) the
distribution to all holders of Common Stock of any of the Company's assets
(including cash), debt securities, preferred stock or any rights or warrants to
purchase any such securities (excluding those rights and warrants referred to in
clause (iii) above), (v) the issuance of shares of Common Stock for a
consideration per share less than the then current market price per share of
Common Stock (excluding securities issued in transactions referred to in clauses
(i) through (iv) above), (vi) the issuance of securities convertible into or
exchangeable for Common Stock for a conversion or exchange price plus
consideration received upon issuance less than the then current market price per
share of Common Stock (excluding securities issued in transactions referred to
in clauses (iii) or (iv) above) and (vii) certain other events that could have
the effect of depriving holders of the Warrants of the benefit of all or a
portion of the purchase rights evidenced by the Warrants. The events described
in clauses (v) and (vi) above are subject to certain exemptions described in the
Warrant Agreement including, without limitation, (A) bona fide public offerings,
(B) bona fide private placements to persons that are not Affiliates of the
Company, (C) Common Stock (and options exercisable therefor) issued to the
Company's employees, consultants and directors under bona fide benefit plans in
an
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aggregate amount since the date of the Warrant Agreement not to exceed 10% of
Common Stock outstanding at the time of issuance.
No adjustment in the Exercise Price will be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Exercise price; provided, however, that any adjustment that is not made will be
carried forward and taken into account in any subsequent adjustment. In
addition, the Company may at any time reduce the Exercise Price to any amount
(but not less than the par value of the Common Stock) for any period of time
(but not less than twenty (20) business days) deemed appropriate by the Board of
Directors of the Company.
If the Company is a party to a consolidation, merger or binding share
exchange, or certain transfers of all or substantially all of its assets occur,
the right to exercise a Warrant for Common Stock may be changed into a right to
receive the same securities, cash or other assets of the Company or another
person that a holder of Common Stock is entitled to receive upon such
consolidation, merger, share exchange or transfer (which securities, cash or
other assets may not necessarily be of equal value to the Common Stock).
In the event of a taxable distribution to holders of Common Stock which
results in an adjustment to the number of shares of Company Common Stock or
other consideration for which a Warrant may be exercised, the holders of the
Warrants may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend.
The Warrant Agreement permits, with certain exceptions, the amendment
thereof and the modification of the rights and obligations of the Company and
the rights of the holders of Warrants under the Warrant Agreement at any time by
the Company and the Warrant Agent with the consent of the holders of a majority
of the then outstanding Warrants if such amendment or modification will have a
material adverse effect on the holders.
Book-Entry, Delivery and Form
The Depository Trust Company ("DTC"), New York, New York, will act as
Warrants depository for the Warrants. The Warrants will be issued as
fully-registered Warrants registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Warrant certificate will be issued
for the Warrants with respect to each of the two Warrant Agreements, totalling
488,000 Warrants, and will be deposited with DTC.
DTC is limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as Warrants brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Purchasers of Warrants under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Warrants on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Warrants are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Warrants, except
in the event that use of the book-entry system for the Warrants is discontinued.
To facilitate subsequent transfers, all Warrants deposited by Participants
with DTC are registered in the name of DTC's partnership nominee: Cede & Co. The
deposit of Warrants with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Warrants; DTC's records reflect only the identity of
the Direct Participants to whose accounts such Warrants are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to Warrants.
Under its usual procedures, DTC mails an Omnibus Proxy to the Company as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Warrants are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Any distributions with respect to the Warrants will be made to DTC. DTC's
practice is to credit Direct Participant's accounts on payable date in
accordance with the respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Agent or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility of
the Company or the Agent, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners hall be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository with
respect to the Warrants at any time by giving reasonable notice to the Company
or the Agent. Under such circumstances, in the event that a successor securities
depository is not obtained. Warrant certificates are required to be printed and
delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Warrant certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
LEGAL MATTERS
The validity of the Warrants to be issued to holders of the Senior Notes
and the Common Stock to be issued upon exercise of the Warrants will be passed
upon for the Company by Holme Roberts & Owen LLP, Denver, Colorado.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference into this prospectus from the Company's annual report on Form 10-K,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto. In that report, that firm
states that with respect to the consolidated amounts from the financial
statements of Telefenua S.A. and the equity in losses from XYZ Entertainment Pty
Ltd. as of and for the year ended December 31, 1995, its report is based on the
reports of other auditors, namely Coopers & Lybrand (with respect to Telefenua
S.A.) and Deloitte Touche Tohmatsu (with respect to XYZ Entertainment Pty Ltd.).
The report referred to above is incorporated by reference herein and in the
Registration Statement in reliance upon the authority of said firm as experts in
giving said report.
The consolidated financial statements of CTV Pty Ltd. incorporated by
reference into this prospectus from the Company's annual report on Form 10-K,
have been audited by Arthur Andersen, independent public accountants, as
indicated in their report with respect thereto and are incorporated by reference
and in the Registration Statement upon the authority of said firm as experts in
giving said report.
The consolidated financial statements of STV Pty Ltd. incorporated by
reference into this prospectus from the Company's annual report on Form 10-K,
have been audited by Arthur Andersen, independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein and in the Registration Statement upon the authority of said
firm as experts in giving said report.
The financial statements of Saturn Communications Limited incorporated by
reference in this prospectus from the Company's annual report on Form 10-K, have
been audited by Arthur Andersen, independent public accountants, as stated in
their report appearing therein, and have been incorporated by reference herein
and in the Registration Statement in reliance upon the report of such firm given
upon their authority as experts in giving said report.
The financial statement of XYZ Entertainment Pty Ltd. as of December 31,
1994 and 1995 and for the year then ended incorporated by reference in this
Prospectus, have been audited by Deloitte Touche Tohmatsu, independent auditors,
as stated in their report with respect thereto, and are incorporated by
reference herein and in the Registration Statement upon the authority of said
firm as experts in giving said report.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings
ascribed to them in the Prospectus contained in this Registration Statement.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
<C> <S>
(a) Exhibits
3.1 Articles of Incorporation of the Company, as amended.(1)
3.1A Articles of Amendment to Articles of Incorporation of the Company.
3.2 By-laws of the Company.(1)
4.1 Form of Warrant Agreement.(1)
5.1 Opinion of Holme Roberts & Owen LLP as to the legality of the Warrants and
Common Stock to be issued.*
23.1 Consent of Arthur Andersen LLP (UIH Australia/Pacific, Inc.).
23.2 Consent of Arthur Andersen (CTV Pty Limited).
23.3 Consent of Arthur Andersen (STV Pty Limited).
23.4 Consent of Arthur Andersen (Saturn Communications Limited).
23.5 Consent of Deloitte Touche Tohmatsu (XYZ Entertainment Pty Limited).
23.6 Consent of Coopers & Lybrand (Telefenua S.A.)
23.7 The consent of Holme Roberts & Owen LLP is included in its opinion filed
as Exhibit 5.1.
24.1 Powers of Attorney.*
</TABLE>
______________
* Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on Form
S-4 (File No. 33-05017) filed with the Commission on May 31, 1996.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON THIS
12TH DAY OF NOVEMBER 1997.
UIH AUSTRALIA/PACIFIC, INC.,
A COLORADO CORPORATION
By: /s/ J. Timothy Bryan
-------------------------
J. Timothy Bryan
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
TITLE/POSITION HELD
SIGNATURE WITH THE REGISTRANT DATE
--------- ------------------- ----
<S> <C> <C>
* Chairman of the Board November 12, 1997
- ----------------------------
Gene W. Schneider
* Chief Executive Officer November 12, 1997
- ---------------------------- and Director
Michael T. Fries
/s/ J. Timothy Bryan Chief Financial Officer November 12, 1997
- ---------------------------- and Director
J. Timothy Bryan
* Director November 12, 1997
- ----------------------------
Mark L. Schneider
* Controller (Principal November 12, 1997
- ---------------------------- Accounting Officer)
Valerie L. Cover
*By: /s/ J. Timothy Bryan
- ----------------------------
J. Timothy Bryan
Attorney-in-fact
</TABLE>
II-3
<PAGE>
Exhibit 3.1A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UIH AUSTRALIA/PACIFIC, INC.
(Pursuant to Section 7-110-106)
UIH Australia/Pacific, Inc., a corporation organized and existing under and
by virtue of the Colorado Business Corporation Act (the "Corporation"), does
hereby certify as follows for the purpose of amending its Articles of
Incorporation:
1. That the Board of Directors of the Corporation duly adopted
resolutions containing amendments to the Articles of Incorporation of the
Corporation set forth below, declaring such amendments to be advisable and
calling for the approval of the sole stockholder of the Corporation to such
amendments.
2. That sole holder of all outstanding stock of each class of the
Corporation entitled to vote thereon, acting by means of written consent in lieu
of a meeting pursuant to Section 7-107-104 of the Colorado Business Corporation
Act, adopted and approved these Articles of Amendment to the Articles of
Incorporation of the Corporation.
3. That the Articles of Incorporation be amended by deleting
Sections 2.1 and 2.2 of Article II in their entirety and inserting in lieu
thereof as follows:
2.1 Authorized Capital. (a) Capital Stock. The total number of
------------------ -------------
shares of stock that the Corporation shall have authority to issue is
31,000,000, divided into the following classes:
(i) 30,000,000 shares of common stock, par value of
$.01 per share ("Common Stock"); and
(ii) 1,000,000 shares of preferred stock, par value of
$.01 per share which shall be available for designation by the Board of
Directors pursuant to Section 2.
(b) Preferred Stock. The Board of Directors is authorized,
---------------
subject to any limitations prescribed by law, to provide from time to time
for the issuance of the shares of preferred stock in series, and by filing
a certificate pursuant to the
<PAGE>
applicable law of the State of Colorado, to establish the characteristics
of each series, including the following:
(i) the number of shares of that series, which may
subsequently be increased or decreased (but not below the number of shares
of that series then outstanding) by resolution of the Board of Directors,
and the distinctive designation thereof;
(ii) the voting powers, full or limited, if any, of
the shares of that series and the number of votes per share;
(iii) the rights in respect of dividends on the shares
of that series, whether dividends shall be cumulative and, if so, from
which date or dates and the relative rights or priority, if any, of payment
of dividends on shares of that series and any limitations, restrictions or
conditions on the payment of dividends;
(iv) the relative amounts, and the relative rights or
priority, if any, of payment in respect of shares of that series, which the
holders of the shares of that series shall be entitled to receive upon any
liquidation, dissolution or winding up of the Corporation;
(v) the terms and conditions (including the price or
prices, which may vary under different conditions and at different
redemption dates), if any, upon which all or any part of the shares of that
series may be redeemed, and any limitations, restrictions or conditions on
such redemption;
(vi) the terms, if any, of any purchase, retirement
or sinking fund to be provided for the shares of that series;
(vii) the terms, if any, upon which the shares of that
series shall be convertible into or exchangeable for shares of any other
class, classes or series, or other securities, whether or not issued by the
Corporation;
(viii) the restrictions, limitations and conditions, if
any, upon issuance of indebtedness of the Corporation so long as any shares
of that series are outstanding; and
(ix) any other preferences and relative,
participating, optional or other rights and limitations not inconsistent
with law, this Article II or any resolution of the Board of Directors
pursuant to this Article II.
2.2 Voting of Shares of Common Stock. Each shareholder of record of
--------------------------------
Common Stock entitled to vote shall have one vote for each share of Common
Stock standing in his name on the books of the Corporation.
Notwithstanding the
2
<PAGE>
foregoing, in the election of the directors of the Corporation, the
shareholder of Common Stock shall have the right to vote such number of
shares for as many persons as there are directors to be elected. Cumulative
voting shall not be allowed in the election of directors or for any other
purpose.
4. Immediately upon the filing of these Articles of Amendment to the
Articles of Incorporation (the "Effective Time"), 500 shares of Common Stock
issued and outstanding immediately prior to the Effective Time (the "Old Common
Stock"), shall automatically, without further action on the part of the
corporation or any holder of such Old Common Stock, be reclassified as and
converted into a total of 13,864,941 fully paid and nonassessable shares of New
Common Stock as herein authorized (the "Stock Split"). Such reclassification
and conversion of Old Common Stock into New Common Stock shall not change the
par value per share of the shares reclassified and converted, which par value
shall remain $.01 per share. The reclassification of the Old Common Stock into
New Common Stock will be deemed to occur at the Effective Time, regardless of
when the certificates representing such Old Common Stock are physically
surrendered to the Corporation. After the Effective Time, certificates
representing the Old Common Stock will, until such shares are surrendered to the
Corporation, represent the number of shares of New Common Stock into which such
Old Common Stock shall have been converted pursuant hereto. The Corporation is
authorized to use a book-entry transfer facility to reflect ownership of the New
Common Stock; however, upon request and in accordance with the procedures of any
such book-entry transfer facility and Colorado law, the stockholder shall be
entitled to receive a certificate representing shares of New Common Stock.
Following the Effective Time, the capital of the corporation shall be
adjusted to reflect the change in the outstanding shares of the Corporation.
IN WITNESS WHEREOF, these Articles of Amendment to the Articles of
Incorporation of the Corporation have been signed this 12th day of November,
1997.
UIH AUSTRALIA/PACIFIC, INC.
By: /s/ J. Timothy Bryan
-------------------------------------
J. Timothy Bryan
Chief Financial Officer
3
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the consolidated
financial statements of UIH Australia/Pacific, Inc. dated March 28, 1997
included in UIH Australia/Pacific, Inc.'s Form 10-K for the year ended December
31, 1996 and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Denver, Colorado,
November 12, 1997.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the consolidated
financial statements of CTV Pty Limited dated March 29, 1996 included in UIH
Australia/Pacific, Inc.'s Form 10-K for the year ended December 31, 1996 and to
all references to our Firm included in this registration statement.
ARTHUR ANDERSEN
Denver, Colorado,
November 12, 1997.
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the consolidated
financial statements of STV Pty Limited dated March 29, 1996 included in UIH
Australia/Pacific, Inc.'s Form 10-K for the year ended December 31, 1996 and to
all references to our Firm included on the financial statements included in this
registration statement.
ARTHUR ANDERSEN
Denver, Colorado,
November 12, 1997.
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the financial
statements of Saturn Communications Limited dated February 20, 1996 included in
UIH Australia/Pacific, Inc.'s Form 10-K for the year ended December 31, 1996 and
to all references to our Firm included on the financial statements included in
this registration statement.
ARTHUR ANDERSEN
Denver, Colorado
November 12, 1997
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion in this Registration Statement on Form S-3
and in each Prospectus constituting part of this Registration Statement our
report dated March 15, 1996 on the financial statement of XYZ Entertainment Pty
Limited included in each Prospectus. We also consent to the reference to our
firm under the caption "Experts" in each Prospectus included in the Registration
Statement.
November 12, 1997
Deloitte Touche Tohmatsu
<PAGE>
Exhibit 23.6
CONSENT OF INDEPENDENT AUDITORS
- -------------------------------
We hereby consent to the inclusion in this Registration Statement on Form S-3
and each Prospectus constituting part of this Registration Statement of our
report dated February 16, 1996 on the financial statements of TELEFENUA SA,
included in each Prospectus.
We also consent to the reference to our firm under the caption (Experts) in each
Prospectus included in the Registration Statement.
Papeete, November 12, 1997
Coopers & Lybrand Tahiti
/s/ Jean-Pierre Gosse
-------------------------------
Jean-Pierre GOSSE
