UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- ---------
Commission File No. 333-05017
United Australia/Pacific, Inc.
(formerly known as UNITED Australia/Pacific, Inc.)
(Exact name of Registrant as specified in its charter)
State of Colorado 84-1341958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4643 South Ulster Street, #1300
Denver, Colorado 80237
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (303) 770-4001
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
The Company has no publicly-traded shares of capital stock. As of November 12,
1999, the Company had 17,810,249 shares of common stock outstanding.
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UNITED AUSTRALIA/PACIFIC, INC.
TABLE OF CONTENTS
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Page
Number
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PART I - FINANCIAL INFORMATION
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Item 1 - Financial Statements
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Condensed Consolidated Balance Sheets as of September 30, 1999 (Unaudited) and December 31, 1998......... 2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,
1999 and 1998 (Unaudited)............................................................................ 3
Condensed Consolidated Statement of Stockholder's Deficit for the Nine Months Ended September 30,
1999 (Unaudited)..................................................................................... 4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1999 and
1998 (Unaudited).................................................................................... 5
Notes to Condensed Consolidated Financial Statements (Unaudited)........................................ 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations............... 15
- ------
Item 3 - Quantitative and Qualitative Disclosures about Market Risk.......................................... 23
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PART II - OTHER INFORMATION
---------------------------
Item 6 - Exhibits and Reports on Form 8-K.................................................................... 26
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UNITED AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in thousands, except share and per share amounts)
(Unaudited)
As of As of
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................................... $ 12,872 $ 181
Short-term liquid investments................................................................... 271,326 763
Subscriber receivables, net..................................................................... 8,090 6,322
Related party receivables....................................................................... 2,390 746
Prepaids and other current assets............................................................... 6,826 5,351
-------- --------
Total current assets......................................................................... 301,504 13,363
Investments in and advances to affiliated companies, accounted for under the equity method, net... 28,401 24,597
Property, plant and equipment, net of accumulated depreciation of $232,737 and $147,511,
respectively..................................................................................... 223,569 122,968
Goodwill and other intangible assets, net of accumulated amortization of $25,071 and $17,512,
respectively..................................................................................... 76,839 42,559
Deferred financing costs, net of accumulated amortization of $7,368 and $3,237, respectively...... 17,666 11,675
Other non-current assets, net..................................................................... 2,803 870
-------- --------
Total assets................................................................................. $650,782 $216,032
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable................................................................................ $ 3,154 $ 5,426
Accrued liabilities............................................................................. 44,211 28,522
Construction payables........................................................................... 3,264 1,076
Current portion of due to parent................................................................ 12,792 3,665
Short-term debt................................................................................. - 36,738
Current portion of other long-term debt......................................................... 1,239 2,189
-------- --------
Total current liabilities.................................................................... 64,660 77,616
Due to parent..................................................................................... 10,177 6,578
Senior discount notes............................................................................. 394,453 356,640
Other long-term debt.............................................................................. 227,074 68,086
Other long-term liabilities....................................................................... 1,516 1,741
-------- --------
Total liabilities............................................................................ 697,880 510,661
-------- --------
Minority interest................................................................................. 77,119 -
Stockholder's deficit:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding...... - -
Common stock, $0.01 par value, 30,000,000 shares authorized, 17,810,249 shares
issued and outstanding........................................................................ 178 178
Additional paid-in capital...................................................................... 311,305 215,624
Deferred compensation........................................................................... (19,685) -
Accumulated deficit............................................................................. (392,662) (481,240)
Other cumulative comprehensive loss............................................................. (23,353) (29,191)
-------- --------
Total stockholder's deficit.................................................................. (124,217) (294,629)
-------- --------
Total liabilities and stockholder's deficit.................................................. $650,782 $216,032
======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
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2
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UNITED AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands, except share and per share amounts)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue.......................................................... $ 41,745 $ 21,795 $ 106,565 $ 62,558
System operating expense, including related party expense
of $112, $990, $3,636 and $2,924, respectively................. (28,397) (20,933) (75,842) (50,684)
System selling, general and administrative expense............... (13,587) (12,294) (35,928) (34,216)
Corporate general and administrative expense, including
allocated expense from related party of $1,549, $(96),
$21,197 and $4,252, respectively............................... (2,833) 75 (22,610) (4,454)
Depreciation and amortization.................................... (25,086) (22,379) (75,029) (73,014)
---------- ---------- ---------- ----------
Net operating loss.......................................... (28,158) (33,736) (102,844) (99,810)
Gain on sale of stock issued by subsidiary....................... 249,036 - 249,036 -
Interest income.................................................. 2,430 32 2,497 158
Interest expense, including related party expense of $0,
$264, $0 and $887, respectively............................... (17,635) (14,166) (50,672) (41,461)
Other income (expense), net...................................... 413 (683) (5,353) (1,847)
---------- ---------- ---------- ----------
Net income (loss) before other items............................. 206,086 (48,553) 92,664 (142,960)
Share in results of affiliated companies, net.................... (4,175) (4,659) (12,855) (8,195)
Minority interest................................................ 8,769 - 8,769 -
---------- ---------- ---------- ----------
Net income (loss)........................................... $ 210,680 $ (53,212) $ 88,578 $ (151,155)
========== ========== ========== ==========
Change in cumulative translation adjustments..................... 2,458 (3,669) 5,838 208
---------- ---------- ---------- ----------
Comprehensive income (loss)................................. $ 213,138 $ (56,881) $ 94,416 $ (150,947)
========== ========== ========== ==========
Net income (loss) per common share:
Basic net income (loss)..................................... $ 11.82 $ (3.84) $ 4.97 $ (10.90)
========== ========== ========== ==========
Diluted net income (loss)................................... $ 11.51 $ (3.84) $ 4.84 $ (10.90)
========== ========== ========== ==========
Weighted-average number of common shares outstanding:
Basic....................................................... 17,810,249 13,864,941 17,810,249 13,864,941
========== ========== ========== ==========
Diluted..................................................... 18,298,249 13,864,941 18,298,249 13,864,941
========== ========== ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
3
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UNITED AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIT
(Stated in thousands, except share amounts)
(Unaudited)
Other
Cumulative
Common Stock Additional Comprehensive
-------------------- Paid-In Deferred Accumulated Income
Shares Amount Capital Compensation Deficit (Loss)(1) Total
---------- -------- ---------- ------------ ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1998........... 17,810,249 $178 $215,624 $ - $(481,240) $(29,191) $(294,629)
Cash contributions from parent........ - - 29,639 - - - 29,639
Non-cash contributions from parent.... - - 27,463 - - - 27,463
Net income............................ - - - - 88,578 - 88,578
Equity transactions of subsidiaries... - - 38,579 (19,685) - - 18,894
Change in cumulative translation
adjustments......................... - - - - - 5,838 5,838
---------- ---- -------- -------- --------- -------- ---------
Balances, September 30, 1999.......... 17,810,249 $178 $311,305 $(19,685) $(392,662) $(23,353) $(124,217)
========== ==== ======== ======== ========= ======== =========
(1) As of September 30, 1999, Other Cumulative Comprehensive Income (Loss) represents foreign currency translation adjustments.
The accompanying notes are an integral part of this condensed consolidated financial statement.
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4
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UNITED AUSTRALIA/PACIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Stated in thousands)
(Unaudited)
For the Nine Months Ended
September 30,
----------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................................... $ 88,578 $(151,155)
Adjustments to reconcile net loss to net cash flows from operating activities:
Gain on issuance of common equity securities by subsidiaries.................................. (249,036) -
Minority interest............................................................................. (8,769) -
Depreciation and amortization................................................................. 75,029 73,014
Share in results of affiliated companies, net................................................. 6,477 8,195
Allocation of expense accounted for as capital contributions by parent........................ 2,391 3,617
Accretion of interest on senior notes and amortization of deferred financing costs............ 41,647 36,279
Stock-based compensation expense.............................................................. 18,894 -
Decrease in receivables, net.................................................................. (1,165) (3,614)
Decrease (increase) in other assets........................................................... 4,934 (3,568)
Increase in accounts payable, accrued liabilities and other................................... 8,455 8,588
--------- ---------
Net cash flows from operating activities........................................................ (12,565) (28,644)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments....................................................... (270,044) -
Sale of short-term liquid investments........................................................... 1,444 12,325
Investments in and advances to affiliated companies............................................. (5,177) (10,895)
Consolidation (deconsolidation) of New Zealand subsidiary....................................... 613 (9,881)
Purchase of property, plant and equipment....................................................... (83,516) (38,228)
Other........................................................................................... (3,930) 121
--------- ---------
Net cash flows from investing activities........................................................ (360,610) (46,558)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributions from parent.................................................................. 29,639 53,455
Issuance of common stock by subsidiary.......................................................... 294,338 -
Borrowings on the New Austar Bank Facility and Saturn Bank Facility............................. 198,168 9,410
Payment of the Austar Bank Facility............................................................. (129,149) -
Payments on capital leases and other debt....................................................... (597) (499)
Deferred financing costs........................................................................ (8,056) -
--------- ---------
Net cash flows from financing activities........................................................ 384,343 62,366
--------- ---------
EFFECT OF EXCHANGE RATES ON CASH................................................................ 1,523 1,082
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS........................................................... 12,691 (11,754)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................................................. 181 12,344
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD........................................................ $ 12,872 $ 590
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash received for interest...................................................................... $ 28 $ 259
========= =========
Cash paid for interest.......................................................................... $ 5,611 $ 3,808
========= =========
NON-CASH CONTRIBUTION FROM PARENT:
Investment in XYZ Entertainment................................................................. $ 25,072 $ -
========= =========
Non-cash capital contribution from parent....................................................... $ - $ 6,155
========= =========
CONSOLIDATION/DECONSOLIDATION OF NEW ZEALAND SUBSIDIARY:
Working capital................................................................................. $ 10,162 $ 4,159
Property, plant and equipment................................................................... (80,656) (26,484)
Elimination of investment in Saturn............................................................. 21,974 -
Goodwill and other assets....................................................................... (5,737) (2,805)
Notes payable and other debt.................................................................... 54,870 3,833
Minority interest............................................................................... - 11,416
--------- ---------
Total cash received (relinquished).............................................................. $ 613 $ (9,881)
========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
5
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UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF OPERATIONS
United Australia/Pacific, Inc. (the "Company"), a wholly-owned subsidiary of
United Asia/Pacific Communications, Inc. ("UAP") (formerly known as UIH
Asia/Pacific Communications, Inc.), which is in turn an indirect wholly-owned
subsidiary of UnitedGlobalCom, Inc. ("United") (formerly known as United
International Holdings, Inc.), was formed on October 14, 1994, for the purpose
of developing, acquiring and managing foreign multi-channel television,
programming and telephony operations.
The following chart presents a summary of the Company's significant investments
in multi-channel television, programming and telephony operations as of
September 30, 1999.
***********************************************************
* *
* United *
* *
***********************************************************
*
100% *
***********************************************************
* *
* United International Properties, Inc. ("UIPI") *
* *
***********************************************************
*
100% (1) *
***********************************************************
* *
* UAP *
* *
***********************************************************
*
100% *
***********************************************************
* *
* The Company(2) *
* *
***********************************************************
*
75.5% *
***********************************************************
* Austar United Communications Limited *
* ("Austar United") *
* *
***********************************************************
*
*
***********************************************************
* *
*Australia: *
* CTV Pty Limited and STV Pty Limited *
* (collectively, "Austar") 100.0% *
* United Wireless Pty Limited ("United *
* Wireless") 100.0% *
* XYZ Entertainment Pty Limited ("XYZ *
* Entertainment") 50.0% *
*New Zealand: *
* Saturn Communications Limited ("Saturn") 100.0% *
* *
***********************************************************
(1) Effective October 8, 1999, UIPI purchased the remaining 2.0% interest in
UAP that it did not own. The seller has the right to repurchase these
shares at the original sale price, plus interest at 14.0% per annum, at any
time prior to October 8, 2000.
(2) The Company also holds an up to 90.0% economic interest in Telefenua S.A.
("Telefenua") in Tahiti.
6
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UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The accompanying interim condensed consolidated financial statements are
unaudited and include the accounts of the Company and all subsidiaries where the
Company exercises a controlling financial interest through the ownership of a
majority voting interest. On July 27, 1999, Austar United acquired from the
minority shareholder of Saturn ("SaskTel") its 35.0% interest in Saturn in
exchange for 13,659,574 of Austar United's shares, thereby increasing Austar
United's ownership interest in Saturn from 65.0% to 100%. As a result, Saturn is
consolidated in these financial statements effective July 27, 1999. The Company
previously consolidated the operations of Saturn from July 1, 1996 through
September 30, 1998. Prior to that time, the Company accounted for its investment
in Saturn under the equity method. During the fourth quarter of 1998, the
Company discontinued consolidating the results of operations of Saturn effective
as of January 1, 1998 and returned to the equity method of accounting through
July 26, 1999. The change was made to comply with the consensus guidance of the
Emerging Issues Task Force regarding Issue 96-16 ("EITF 96-16"), and related
rules of the SEC, because SaskTel had participating approval or veto rights with
respect to certain significant decisions of Saturn in the ordinary course of
business. Accordingly, the condensed consolidated statement of operations and
statement of cash flows for the period ended September 30, 1998 have been
adjusted to reflect the deconsolidation of Saturn effective as of January 1,
1998. Effective October 1, 1998, the Company discontinued consolidating the
results of operations of Telefenua due to an other-than-temporary loss of
control and began using the equity method of accounting. All significant
intercompany accounts and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS AND SHORT-TERM LIQUID INVESTMENTS
Cash and cash equivalents include cash and investments with original maturities
of less than three months. Short-term liquid investments include certificates of
deposit, commercial paper and government securities which have original
maturities greater than three months but less than twelve months. Short-term
liquid investments are classified as available-for-sale and are reported at fair
market value.
INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES, ACCOUNTED FOR UNDER THE
EQUITY METHOD
For those investments in unconsolidated subsidiaries and companies in which the
Company's voting interest is 20.0% to 50.0%, the Company's investments are held
through a combination of voting common stock, preferred stock, debentures or
convertible debt and/or the Company exerts significant influence through board
representation and management authority, the equity method of accounting is
used. Under this method, the investment, originally recorded at cost, is
adjusted to recognize the Company's proportionate share of net earnings or
losses of the affiliate, limited to the extent of the Company's investment in
and advances to the affiliate, including any debt guarantees or other funding
commitments. The Company's proportionate share of net earnings or losses of
affiliates includes the amortization of the excess of its cost over its
proportionate interest in each affiliate's net tangible assets.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Additions, replacements,
installation costs and major improvements are capitalized, and costs for normal
repair and maintenance of property, plant and equipment are charged to expense
as incurred. Upon disconnection of a multi-channel multi-point distribution
system ("MMDS") or direct-to-home ("DTH") subscriber, the remaining book value
of the subscriber equipment, excluding converters which are recovered upon
disconnection, and the unamortized portion of capitalized labor are written off
and accounted for as additional depreciation expense. Depreciation is calculated
using the straight-line method over the estimated economic life of the asset.
7
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UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The economic lives of property, plant and equipment at acquisition are as
follows:
Subscriber premises equipment and converters.......... 3-10 years
MMDS/DTH distribution facilities...................... 5-10 years
Cable distribution networks........................... 5-10 years
Office equipment, furniture and fixtures.............. 3-10 years
Buildings and leasehold improvements.................. 3-10 years
Other................................................. 3-10 years
GOODWILL AND OTHER INTANGIBLE ASSETS
The excess of investments in consolidated subsidiaries over the net tangible
asset value at acquisition is amortized using the straight-line method over 15
years. The acquisition of MMDS licenses has been recorded at fair market value,
and amortization expense is computed using the straight-line method over the
term of the license, up to a maximum of 15 years.
REVENUE RECOGNITION
Revenue is primarily derived from the sale of multi-channel cable television
services to subscribers and is recognized in the period the related services are
provided. Initial installation fees are recognized as revenue in the period in
which the installation occurs, to the extent installation fees are equal to or
less than direct selling costs, which are expensed. To the extent installation
fees exceed direct selling costs, the excess fees are deferred and amortized
over the average contract period. All installation fees and related costs with
respect to reconnections and disconnections are recognized in the period in
which the reconnection or disconnection occurs because reconnection fees are
charged at a level equal to or less than related reconnection costs.
STAFF ACCOUNTING BULLETIN NO. 51 ("SAB 51") ACCOUNTING POLICY
Gains realized as a result of stock issuances by the Company's subsidiaries are
recorded in the statement of operations, except for any transactions which must
be credited directly to equity in accordance with the provisions of SAB 51.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
"Basic net income (loss) per share" is determined by dividing net income (loss)
available to common stockholders by the weighted-average number of common shares
outstanding during each period. "Diluted net income (loss) per share" includes
the effects of potentially issueable common stock, but only if dilutive. The
Company's warrants are included in the Company's diluted net income (loss) per
share amounts for the three and nine months ended September 30, 1999.
FOREIGN OPERATIONS AND FOREIGN EXCHANGE RATE RISK
The functional currency for the Company's foreign operations is the applicable
local currency for each affiliate company. Assets and liabilities of foreign
subsidiaries are translated at exchange rates in effect at period-end, and the
statements of operations are translated at the average exchange rates during the
period. Exchange rate fluctuations on translating foreign currency financial
statements into U.S. dollars that result in unrealized gains or losses are
referred to as translation adjustments. Cumulative translation adjustments are
recorded as a separate component of stockholder's deficit and are included in
Other Cumulative Comprehensive Income (Loss).
Transactions denominated in currencies other than the local currency are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes in exchange rates result in transaction gains and losses which are
reflected in income as unrealized (based on period-end translations) or realized
upon settlement of the transactions.
Cash flows from the Company's operations in foreign countries are translated
based on their functional currencies. As a result, amounts related to assets and
liabilities reported in the consolidated statements of cash flows will not agree
to changes in the corresponding balances in the consolidated balance sheets. The
effects of exchange rate changes on cash balances held in foreign currencies are
reported as a separate line item below cash flows from financing activities.
8
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UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Certain of the Company's foreign operating companies have notes payable and
notes receivable that are denominated in a currency other than their own
functional currency. In general, the Company and the operating companies do not
execute hedge transactions to reduce the Company's exposure to foreign currency
exchange rate risks. Accordingly, the Company may experience economic loss and a
negative impact on earnings and equity with respect to its holdings solely as a
result of foreign currency exchange rate fluctuations.
NEW ACCOUNTING PRINCIPLES
The Financial Accounting Standards Board ("FASB") recently issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which requires that companies recognize
all derivatives as either assets or liabilities in the balance sheet at fair
value. Under SFAS 133, accounting for changes in fair market value of a
derivative depends on its intended use and designation. SFAS 133 is effective
for fiscal years beginning after June 15, 1999. In June 1999, the FASB approved
Statement No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133," which
amends SFAS 133 to be effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The Company is currently assessing the effect of
this new standard.
3. RESTRUCTURING OF ASSETS AND INITIAL PUBLIC OFFERING
In June 1999, the Company's interests in Austar, United Wireless, XYZ
Entertainment and Saturn were contributed to Austar United in exchange for new
shares issued by Austar United. On July 27, 1999, Austar United acquired from
SaskTel its 35.0% interest in Saturn in exchange for 13,659,574 of Austar
United's shares, thereby increasing Austar United's ownership interest in Saturn
from 65.0% to 100%. In addition, on July 27, 1999, Austar United successfully
completed an initial public offering ("Australian IPO") selling 103.5 million
shares on the Australian Stock Exchange, raising gross and net proceeds in
Australian dollars ("A$")4.70 ($3.03) per share of A$486.5 million ($313.6
million) and A$456.5 million ($294.3 million), respectively. Based on the
carrying value of the Company's investment in Austar United as of July 27, 1999,
the Company recognized a gain of $249.0 million from the resulting step-up in
the carrying amount of the Company's investment in Austar United, in accordance
with SAB 51. No deferred taxes were recorded related to this gain due to the
Company's intent on holding its investment in Austar United indefinitely. Austar
United's offering reduced the Company's ownership interest from 100% to
approximately 75.5%. Including all vested stock options granted to employees,
the Company's ownership interest in Austar United on a fully diluted basis is
approximately 73.9%.
4. INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES, ACCOUNTED FOR UNDER THE
EQUITY METHOD
<TABLE>
<CAPTION>
As of September 30, 1999
-------------------------------------------------------------------------------------------
Investments in Cumulative Share Cumulative
and Advances to in Results of Translation Valuation
Affiliated Companies Affiliated Companies Adjustments Allowance Total
-------------------- -------------------- ----------- ---------- -------
(In thousands)
<S> <C> <C> <C> <C> <C>
XYZ Entertainment (1).. $44,306 $(18,818) $ 2,913 $ - $28,401
Telefenua.............. 18,599 (14,215) - (4,384)(2) -
------- -------- ------- ------- -------
Total............. $62,905 $(33,033) $ 2,913 $(4,384) $28,401
======= ======== ======= ======= =======
As of December 31, 1998
-------------------------------------------------------------------------------------------
Investments in Cumulative Share Cumulative
and Advances to in Results of Translation Valuation
Affiliated Companies Affiliated Companies Adjustments Allowance Total
-------------------- -------------------- ----------- ---------- -------
(In thousands)
Saturn................. $49,808 $(23,138) $(2,881) $ - $23,789
XYZ Entertainment...... 19,363 (18,666) 111 - 808
Telefenua.............. 18,599 (14,215) - (4,384)(2) -
------- -------- ------- ------- -------
Total............. $87,770 $(56,019) $(2,770) $(4,384) $24,597
======= ======== ======= ======= =======
</TABLE>
(1) In June 1999, the 25.0% interest in XYZ Entertainment held by UAP was
transferred to the Company at its carrying value of $25.1 million.
(2) The Company has reserved the remaining balance of the Telefenua
investment of $4.4 million due to the uncertainty of realization.
9
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UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. PROPERTY, PLANT AND EQUIPMENT
As of As of
September 30, December 31,
1999 1998
------------- ------------
(In thousands)
Subscriber premises equipment and converters... $269,347 $187,247
MMDS/DTH distribution facilities............... 63,068 54,725
Cable distribution networks.................... 82,555 2,009
Office equipment, furniture and fixtures....... 18,505 9,810
Buildings and leasehold improvements........... 4,890 2,841
Other.......................................... 17,941 13,847
-------- --------
456,306 270,479
Accumulated depreciation.................... (232,737) (147,511)
-------- --------
Net property, plant and equipment........... $223,569 $122,968
======== ========
6. GOODWILL AND OTHER INTANGIBLE ASSETS
As of As of
September 30, December 31,
1999 1998
------------- ------------
(In thousands)
Austar United.................................. $101,910 $ -
Austar......................................... - 60,071
-------- --------
101,910 60,071
Accumulated amortization.................... (25,071) (17,512)
-------- --------
Net goodwill and other intangible assets.... $ 76,839 $ 42,559
======== ========
7. SENIOR DISCOUNT NOTES
As of As of
September 30, December 31,
1999 1998
------------- ------------
(In thousands)
May 1996 Notes (as defined below), net
of unamortized discount....................... $356,648 $321,687
September 1997 Notes (as defined below),
net of unamortized discount................... 37,805 34,953
-------- --------
Total senior discount notes................. $394,453 $356,640
======== ========
MAY 1996 NOTES
The 14.0% senior notes, which the Company issued in May 1996 at a discount from
their principal amount of $443.0 million (the "May 1996 Notes"), had an accreted
value of $356.6 million as of September 30, 1999. On and after May 15, 2001,
cash interest will accrue and will be payable semi-annually on each May 15 and
November 15, commencing November 15, 2001. The May 1996 Notes are due May 15,
2006. Effective May 16, 1997, the interest rate on these notes increased by an
additional 0.75% per annum to 14.75%. On October 14, 1998, the Company
consummated an equity sale resulting in gross proceeds to the Company of $70.0
million which reduced the interest rate from 14.75% to 14.0% per annum. Due to
the increase in the interest rate effective May 16, 1997 until consummation of
the equity sale, the May 1996 Notes will accrete to a principal amount of $447.4
million on May 15, 2001, the date cash interest begins to accrue. The quoted
fair market value of these notes was approximately $340.0 million and $223.7
million as of September 30, 1999 and December 31, 1998, respectively.
10
<PAGE>
UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SEPTEMBER 1997 NOTES
The 14.0% senior notes, which the Company issued in September 1997 at a discount
from their principal amount of $45.0 million (the "September 1997 Notes"), had
an accreted value of $37.8 million as of September 30, 1999. On and after May
15, 2001, cash interest will accrue and will be payable semi-annually on each
May 15 and November 15, commencing November 15, 2001. The September 1997 Notes
are due May 15, 2006. Effective September 23, 1997, the interest rate on these
notes increased by an additional 0.75% per annum to 14.75%. On October 14, 1998,
the Company consummated an equity sale, reducing the interest rate from 14.75%
to 14.0% per annum. Due to the increase in the interest rate effective September
23, 1997 until consummation of the equity sale, the September 1997 Notes will
accrete to a principal amount of $45.4 million on May 15, 2001, the date cash
interest begins to accrue. The quoted fair market value of these notes was
approximately $34.5 million and $22.7 million as of September 30, 1999 and
December 31, 1998, respectively.
On November 17, 1997, pursuant to the terms of the indentures governing the May
1996 Notes and the September 1997 Notes (collectively, the "Notes"), the Company
issued warrants to purchase 488,000 shares of its common stock, which
represented 3.4% of the Company's common stock at that time. The warrants are
exercisable at a price of $10.45 per share which would result in gross proceeds
of approximately $5.1 million upon exercise. The warrants are exercisable
through May 15, 2006. The warrants were valued at $3.7 million and have been
reflected as an additional discount to the Notes on a pro-rata basis and as an
increase in additional paid-in capital.
8. OTHER LONG-TERM DEBT
As of As of
September 30, December 31,
1999 1998
------------- ------------
(In thousands)
Austar Bank Facility........................... $173,448 $ 67,352
Saturn Bank Facility........................... 52,288 -
Capitalized leases and other................... 2,577 2,923
-------- --------
228,313 70,275
Less current portion...................... (1,239) (2,189)
-------- --------
Total other long-term debt................ $227,074 $ 68,086
======== ========
AUSTAR BANK FACILITY
In July 1997, Austar secured a senior syndicated term debt facility (the "Austar
Bank Facility") in the amount of A$200.0 million to fund its subscriber
acquisition and working capital needs. Austar had drawn the full amount of the
facility by April 1999 when it secured a new syndicated senior secured debt
facility (the "New Austar Bank Facility") for A$400.0 million to refinance the
A$200.0 million Austar Bank Facility and to fund Austar's subscriber acquisition
and working capital needs. The New Austar Bank Facility consists of two
sub-facilities: (i) A$200.0 million amortizing term facility ("Tranche 1") and
(ii) A$200.0 million cash advance facility ("Tranche 2"). Tranche 1 was used to
refinance the Austar Bank Facility, and Tranche 2 is available upon the
contribution of additional equity on a 2:1 debt-to-equity basis. As of September
30, 1999, Austar had drawn A$266.0 million ($173.4 million) on the New Austar
Bank Facility. All of Austar's assets are pledged as collateral for this
facility. In addition, pursuant to this facility, Austar cannot pay any
dividends, interest or fees under its technical assistance agreements without
the consent of the majority banks. The New Austar Bank Facility bears interest
at the professional market rate in Australia plus a margin ranging from 1.75% to
2.25% based upon certain debt to cash flow ratios. The New Austar Bank Facility
is fully repayable pursuant to an amortization schedule beginning December 31,
2002 and ending March 31, 2006.
SATURN BANK FACILITY
On July 15, 1999, Saturn closed a syndicated senior debt facility (the "Saturn
Bank Facility") in the amount of NZ$125.0 million ($64.7 million) to fund the
completion of Saturn's network. As of September 30, 1999, Saturn had drawn
NZ$101.0 million ($52.3 million) against the facility and expects to draw down
the remaining balance by the end of fourth quarter 2000. This debt facility has
an interest rate of 3.0% over the current base rate upon draw down which has
averaged approximately 8.1%. The Saturn Bank Facility is repayable over a five
year period beginning fourth quarter 2001.
11
<PAGE>
UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. RELATED PARTY
Effective May 1, 1996, the Company and United Management, Inc. ("United
Management") (formerly known as UIH Management, Inc.), an indirect wholly-owned
subsidiary of United, executed a 10-year management services agreement (the
"Management Agreement"), pursuant to which United Management performs certain
administrative, accounting, financial reporting and other services for the
Company, which has no separate employees of its own. Pursuant to the Management
Agreement, the management fee was $0.75 million for the first year of such
agreement (beginning May 1, 1996), and it increases on each anniversary date of
the Management Agreement by 8.0% per year. Effective March 31, 1997, United
Management assigned its rights and obligations under the Management Agreement to
UAP, the Company's immediate parent, and extended the agreement for 20 years
from that date (the "UAP Management Agreement"). In addition, the Company
reimburses UAP or United for any out-of-pocket expenses including travel,
lodging and entertainment expenses, incurred by UAP or United on behalf of the
Company. In December 1997, United began allocating corporate general and
administrative expense to the Company in the form of deemed capital
contributions, based on increased activity at the operating system level.
Management believes that this method of allocating costs is reasonable. For the
nine months ended September 30, 1999 and 1998, the Company recorded $21.2
million and $4.3 million, respectively, in corporate general and administrative
expense allocated from United and management fees due from the Company to UAP.
The September 30, 1999 amount includes $17.6 million of non-cash stock-based
compensation expense related to UAP stock appreciation rights.
Austar, Saturn, Telefenua and United Wireless are also parties to technical
assistance agreements with UAP whereby such operating companies pay to UAP fees
based on their respective gross revenues. In addition, United has appointed
certain of its employees to serve in senior management positions at the
operating systems. The operating systems reimburse United for certain direct
costs incurred by United, including salaries and benefits relating to these
senior management positions, pursuant to the terms of the technical assistance
agreements. For the nine months ended September 30, 1999 and 1998, the Company
recorded $3.6 million and $2.9 million, respectively, in related party
management fees due from the operating systems to UAP. Effective June 24, 1999,
the rights under these management fee agreements, excluding Telefenua, have been
assigned to Austar United as part of the restructuring associated with the
Australian IPO.
In addition, effective June 24, 1999, United and Austar United executed a
management services agreement pursuant to which United performs certain
technical and consulting services in return for a monthly management fee. The
monthly fee payable by Austar United to United in 1999 is $0.2 million per
month. This amount may be adjusted before January 1 of each year by the board of
directors of United but may not increase by more than 15.0% in any one year.
This agreement also requires that Austar United reimburse United for all direct
and other expenses reasonably incurred by United on behalf of Austar United. The
agreement will continue through December 31, 2010.
Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1999 1998
------------- ------------
(In thousands)
<S> <C> <C>
Austar United............................................................. $ 1,714 $ -
Austar technical assistance agreement obligations, including deferred
management fees of $11,212 and $5,973, respectively (1)................. 13,806 8,347
Saturn technical assistance agreement obligations......................... 1,809 -
United Wireless technical assistance agreement obligations................ 723 605
Payable to parent for management fees..................................... 1,741 1,056
Other..................................................................... 489 235
------- -------
20,282 10,243
Less current portion................................................. (10,105) (3,665)
------- -------
Total due to parent.................................................. $10,177 $ 6,578
======= =======
</TABLE>
(1) Austar United and UAP have the option of converting these management
fees into equity.
12
<PAGE>
UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. STOCK OPTION PLAN
The Austar United Communications Executive Share Option Plan ("AU Plan") was
established June 17, 1999. Effective on the Australian IPO date of July 27,
1999, certain employees of United and Austar United were granted options under
the AU Plan in direct proportion to their previous holding of UAP options under
the UAP stock option plan. A total of 20,401,954 options were granted at a
strike price of A$1.80 each, A$2.90 below the Australian IPO price of A$4.70.
Each option holder was also given retroactive vesting through the Australian IPO
date to reflect vesting under the old UAP Plan, resulting in a total of
9,126,018 options vested. The total intrinsic value as of the Australian IPO
date was $38.6 million, which was recorded in the statement of stockholder's
equity with a corresponding deferred compensation amount of $21.0 million for
those options not yet vested. The net $17.6 million of intrinsic value that was
previously recorded on UAP's books was recorded as a deemed capital contribution
from UAP to Austar United as of June 30, 1999. The Company will continue to
amortize deferred compensation under variable plan accounting as these options
vest on a monthly basis. For the two months ended September 30, 1999 an
additional $1.3 million of compensation expense was recorded in the statement of
operations. On July 27, 1999, the AU Plan became a fixed option plan for all
future grants.
11. SEGMENT INFORMATION
The Company's business has historically been derived from its video
entertainment segment. This service has been provided in various countries where
the Company owns and operates its systems. Accordingly, the Company's current
reportable segments are the various countries in which it operates multi-channel
television, programming and/or telephony operations. These reportable segments
are evaluated separately because each country presents different marketing
strategies and technology issues as well as distinct economic climates and
regulatory constraints. The key operating performance criteria used in this
evaluation include revenue growth, operating income before depreciation,
amortization, management fees, non-cash general and administrative expense
allocated from parent, stock-based compensation charges ("Adjusted EBITDA"), and
capital expenditures. Senior management of the Company does not view segment
results below Adjusted EBITDA, therefore, interest income, interest expense,
provision for losses on investment related costs, gain on sale of investments,
share in results of affiliated companies, minority interests in subsidiaries and
other expenses are not broken out by segment below.
13
<PAGE>
UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
For the Three Months Ended For the Three Months Ended For the Nine Months Ended For the Nine Months Ended
September 30, 1999 September 30, 1998 September, 1999 September 30, 1998
-------------------------- -------------------------- ------------------------- ------------- -----------
Adjusted Adjusted Adjusted Adjusted
Revenue EBITDA(1) Revenue EBITDA(1) Revenue EBITDA(1) Revenue EBITDA(1)
------- --------- ------- --------- ------- --------- ------- ---------
(In thousands) (In thousands) (In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Australia......... $39,596 $ 703 $20,643 $(10,435) $104,416 $ (738) $59,147 $(19,541)
New Zealand....... 2,149 (832) - - 2,149 (832) - -
Tahiti............ - - 1,152 (7) - - 3,411 122
Corporate......... - (18) - (22) - (148) - (203)
------- ----- ------- -------- -------- ------- ------- --------
Total........ $41,745 $(147) $21,795 $(10,464) $106,565 $(1,718) $62,558 $(19,622)
======= ===== ======= ======== ======== ======= ======= ========
</TABLE>
As of As of
September December 31,
1999 1998
---------------------------
Total Assets
---------------------------
(In thousands)
Australia......... $512,384 $181,169
New Zealand....... 128,602 23,789
Tahiti............ - -
Corporate......... 9,796 11,074
-------- --------
Total........ $650,782 $216,032
======== ========
(1) "Adjusted EBITDA" represents net operating earnings before depreciation,
amortization, non-cash general and administrative expense allocated from
parent, stock-based compensation charges and management fees. Industry
analysts generally consider Adjusted EBITDA to be a helpful way to measure
the performance of cable television operations and communications
companies. Management believes Adjusted EBITDA helps investors to assess
the cash flow from operations from period to period and thus, to value the
Company's business. Adjusted EBITDA should not, however, be considered a
replacement for net income, cash flows or for any other measure of
performance or liquidity under GAAP, or as an indicator of a company's
operating performance. The Company's presentation of Adjusted EBITDA may
not be comparable to statistics with a similar name reported by other
companies. Not all companies and analysts calculate EBITDA in the same
manner.
Adjusted EBITDA reconciles to the consolidated statements of operations as
follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Net operating loss............................................. $(28,158) $(33,736) $(102,844) $(99,810)
Depreciation and amortization.................................. 25,086 22,379 75,029 73,014
Stock-based compensation expense............................... 1,264 - 18,894 -
Non-cash general and administrative expense
allocation from parent....................................... 823 (315) 2,391 3,617
Management fees................................................ 838 1,208 4,812 3,557
-------- -------- --------- --------
Consolidated Adjusted EBITDA.............................. $ (147) $(10,464) $ (1,718) $(19,622)
======== ======== ========= ========
</TABLE>
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- --------------------------------------------------------------------------------
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes thereto included elsewhere herein. Such
condensed consolidated financial statements provide additional information
regarding our financial activities and condition.
We have no employees of our own. UAP, our parent, provides various management,
financial reporting, accounting and other services for us pursuant to the terms
of the UAP Management Agreement. Until June 24, 1999, Austar, Saturn, Telefenua
and United Wireless were also parties to technical service agreements with UAP
for which such operating companies paid to UAP fees based on their respective
gross revenues. Effective June 24, 1999, these technical service agreements with
UAP, excluding Telefenua, were assigned to Austar Untied.
Certain statements in this report may constitute "forward-looking statements"
within the meaning of the federal securities laws. These forward-looking
statements may include, among other things, statements concerning our plans,
objectives and future economic prospects, expectations, beliefs, future plans
and strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. These forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements or industry results, to be
materially different from what we say or imply with such forward-looking
statements. These factors include, among other things, changes in television
viewing preferences and habits by subscribers and potential subscribers, their
acceptance of new technology, programming alternatives and new services we may
offer, our ability to secure adequate capital to fund other system growth and
development, risks inherent in investment and operations in foreign countries,
changes in government regulation, changes in the nature of key strategic
relationships with partners and joint venturers, and other factors referenced in
this report. These forward-looking statements apply only as of the date of this
report, and we have no obligation or plans to provide updates or revisions to
these forward-looking statements, or any other changes in events, conditions or
circumstances on which these statements are based. Our statements contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in this report related to Year 2000 issues are hereby denominated as
"Year 2000 Statements" within the meaning of the Year 2000 Information and
Readiness Disclosure Act.
INTRODUCTION
As of September 30, 1999, we held (i) an effective 100% economic interest in
Austar, (ii) a 100.0% interest in Saturn, (iii) a 50.0% interest in XYZ
Entertainment and (iv) a 100% interest in United Wireless through Austar United.
In connection with the July 1999 Australian IPO, we decreased our interest in
Austar United from 100% to approximately 75.5% (73.9% on a fully diluted basis
after vested employee options). We also hold an up to 90.0% economic interest in
Telefenua.
Immediately prior to the Australian IPO, Austar United issued 13,659,574 shares
of Austar United to SaskTel for SaskTel's 35.0% interest in Saturn. As a result,
Saturn has been consolidated in these financial statements effective July 27,
1999. We previously consolidated the operations of Saturn from July 1, 1996
through September 30, 1998. Prior to that time, we accounted for our investment
in Saturn under the equity method. During the fourth quarter of 1998, we
discontinued consolidating the results of operations of Saturn effective as of
January 1, 1998 and returned to the equity method of accounting through July 26,
1999. The change was made to comply with the consensus guidance of the Emerging
Issues Task Force regarding Issue 96-16 ("EITF 96-16"), and related rules of the
SEC, because SaskTel had participating approval or veto rights with respect to
certain significant decisions of Saturn in the ordinary course of business.
Accordingly, the condensed consolidated statement of operations and statement of
cash flows for the period ended September 30, 1998 have been adjusted to reflect
the deconsolidation of Saturn effective as of January 1, 1998. Effective October
1, 1998, we discontinued consolidating the results of operations of Telefenua
due to an other-than-temporary loss of control and began using the equity method
of accounting.
15
<PAGE>
SUMMARY OPERATING DATA
The following tables set forth certain unaudited operating data:
<TABLE>
<CAPTION>
As of September 30, 1999
------------------------------------------------------------------------------------
Net
Television Basic Economic
Homes in Homes Subscribers/ Basic Ownership
Service Area Passed Lines Penetration Interest
------------ ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Multi-channel television:
Austar..................... 2,085,000 2,083,108 360,708 17.3% 75.5%
Saturn..................... 141,000 83,582 13,907 16.6% 75.5%
--------- --------- -------
Total................... 2,226,000 2,166,690 374,615
========= ========= =======
Telephony:
Saturn..................... 141,000 83,071 20,547 24.7% 75.5%
========= ========= =======
Programming:
XYZ Entertainment.......... N/A N/A 870,972(1) N/A 37.8%
========= ========= =======
Data:
Saturn (2)................. 141,000 83,071 4,826 5.8% 75.5%
========= ========= =======
As of September 30, 1998
------------------------------------------------------------------------------------
Net
Television Basic Economic
Homes in Homes Subscribers/ Basic Ownership
Service Area Passed Lines Penetration Interest
------------ ---------- ------------ ----------- ---------
Multi-channel television:
Austar..................... 2,085,000 2,072,706 251,255 12.1% 100.0%
Saturn..................... 141,000 42,712 4,651 10.9% 65.0%
--------- --------- -------
Total................... 2,226,000 2,115,418 255,906
========= ========= =======
Telephony:
Saturn..................... 141,000 26,974 4,190 15.5% 65.0%
========= ========= =======
Programming:
XYZ Entertainment.......... N/A N/A 647,255 (1) N/A 50.0%
========= ========= =======
</TABLE>
(1) This figure represents the total subscribers to the five-channel XYZ
Entertainment package.
(2) Saturn launched data services in late 1998.
16
<PAGE>
SELECTED SYSTEM OPERATING DATA. The following table displays selected system
operating data in Austar's local currency and U.S. dollar:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- ------------------------
1999 1998 1999 1998
-------- -------- -------- --------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Austar (A$):
Revenue.................... 58,425 34,620 157,893 93,890
Adjusted EBITDA (1)........ (1,484) (16,355) (12,135) (25,795)
Austar (US$):
Revenue.................... 37,935 20,588 102,121 58,934
Adjusted EBITDA (1)........ (968) (9,718) (7,804) (15,513)
</TABLE>
(1) "Adjusted EBITDA" represents net operating earnings before
depreciation, amortization, non-cash general and administrative expense
allocated from parent and management fees. Industry analysts generally
consider Adjusted EBITDA to be a helpful way to measure the performance
of cable television operations and communications companies. We believe
Adjusted EBITDA helps investors to assess the cash flow from operations
from period to period and thus, to value our business. Adjusted EBITDA
should not, however, be considered a replacement for net income, cash
flows or for any other measure of performance or liquidity under GAAP,
or as an indicator of a company's operating performance. Our
presentation of Adjusted EBITDA may not be comparable to statistics
with a similar name reported by other companies. Not all companies and
analysts calculate EBITDA in the same manner.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, we had invested approximately $471.6 million in our
projects. These fundings do not include amounts contributed by shareholders
other than the Company, proceeds from the Australian IPO, the operating
subsidiary bank borrowings or amounts contributed in either cash or stock to
acquire additional economic interests.
As of
September 30,
SOURCES OF FUNDINGS: 1999
--------------
(In thousands)
Senior discount notes proceeds, net of offering costs...... $244,652
Cash contributions and other equity from parent (1) (2).... 222,416
Cash received for interest................................. 4,546
--------
Total................................................. $471,614
========
As of
September 30,
USES OF FUNDINGS: 1999
--------------
(In thousands)
Austar (1)................................................. $349,429
Saturn..................................................... 44,612
Telefenua.................................................. 16,738
XYZ Entertainment (2)...................................... 41,553
United Wireless............................................ 11,344
Other...................................................... 7,938
--------
Total................................................. $471,614
========
(1) Includes issuance/use of $29.8 million and $6.2 million in United
convertible preferred stock in 1995 and 1998, respectively, to acquire
additional economic interests in Australia.
(2) Includes the non-cash contribution from UAP of $25.1 million for an
additional 25.0% interest in XYZ Entertainment.
17
<PAGE>
We are responsible for our proportionate share of capital requirements of the
operating companies. We have funded our proportionate share to date with capital
contributions by United through UAP and proceeds from private debt offerings and
have reduced our proportionate share to date with subsidiary bank debt and
strategic partner contributions. We do not expect to contribute additional
capital to Austar United for their on-going operating and development
requirements, as future funding will come from the Australian IPO proceeds, the
New Austar Bank Facility, the Saturn Bank Facility and operating cash flow.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
We incurred a net profit during the nine months ended September 30, 1999 of
$88.6 million, which included non-cash items such as depreciation and
amortization expense totaling $75.0 million, accretion of interest on the Notes
and amortization of deferred financing costs totaling $41.6 million and the
stock-based compensation expense of $18.9 million.
Cash and cash equivalents increased $12.7 million from $0.2 million as of
December 31, 1998 to $12.9 million as of September 30, 1999. Principal sources
of cash during the nine months ended September 30, 1999 included proceeds from
the Australian IPO of $294.3 million, borrowings on the New Austar Bank Facility
and the Saturn Bank Facility of $198.1 million, cash contributions from parent
of $29.6 million and other investing and financing sources totaling $3.6
million.
During the nine months ended September 30, 1999, cash was used principally for
purchase of short-term liquid investments of $270.0 million, payment of the
Austar Bank Facility of $129.1 million, purchases of property, plant and
equipment totaling $83.5 million to continue new subscriber connections at
Austar and the build-out of existing projects, the funding of operating
activities of $12.6 million, deferred financing costs of $8.1 million,
investments in and advances to affiliated companies of $5.2 million and other
uses totaling $4.4 million.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
We incurred a net loss during the nine months ended September 30, 1998 of $151.2
million, which included non-cash items such as depreciation and amortization
expense totaling $73.0 million and accretion of interest on the Notes and
amortization of deferred financing costs totaling $36.3 million.
Cash and cash equivalents decreased $11.7 million from $12.3 million as of
December 31, 1997 to $0.6 million as of September 30, 1998. Principal sources of
cash during the nine months ended September 30, 1998 included cash contributions
from parent of $53.5 million, net proceeds from the sale of short-term
investments of $12.3 million, borrowings on the Austar Bank Facility of $9.4
million and other investing and financing sources of $1.2 million.
During the nine months ended September 30, 1998, cash was used principally for
the purchase of property, plant and equipment of $38.2 million to construct
Austar's and Telefenua's systems, the funding of operating activities of $28.6
million, investments in and advances to affiliated companies of $10.9 million,
the deconsolidation of Saturn of $9.9 million and other investing and financing
uses totaling $0.5 million.
RESULTS OF OPERATIONS
On July 27, 1999, Austar United acquired from SaskTel its 35.0% interest in
Saturn in exchange for 13,659,574 of its shares, thereby increasing Austar
United's ownership interest in Saturn from 65.0% to 100%. As a result, Saturn
was consolidated in these financial statements as of July 27, 1999. We had
previously discontinued consolidating the results of operations of Saturn and
returned to the equity method of accounting, effective as of January 1, 1998
(see Note 2 to our financial statements). Accordingly, the results of operations
for the three and nine months ended September 30, 1998 have been restated to
reflect the effect of this change.
EXCHANGE RATES. We translate revenue and expense from our foreign subsidiaries
using the weighted-average exchange rates during the period. However, for ease
of presentation, the spot rates for the countries in the Australia/Pacific
region are shown below for the Australian and New Zealand dollar per one U.S.
dollar.
Australian New Zealand
Dollars Dollars
---------- -----------
September 30, 1999..................... 1.5336 1.9316
December 31, 1998...................... 1.6332 1.8939
September 30, 1998..................... 1.6855 2.0000
December 31, 1997...................... 1.5378 1.7161
18
<PAGE>
REVENUE. We recognized revenue of $41.7 million and $106.6 million for the three
and nine months ended September 30, 1999, respectively, compared to $21.8
million and $62.6 million for the same periods in the prior year. This was an
increase of $19.9 million and $44.0 million for the three and nine months ended
September 30, 1999, respectively, compared to the amounts for the corresponding
periods in the prior year.
AUSTAR
Revenue for Austar increased $17.3 million, or 84.0% from $20.6 million for the
three months ended September 30, 1998 to $37.9 million for the three months
ended September 30, 1999. Austar's revenue increased $43.2 million, or 73.3%,
from $58.9 million for the nine months ended September 30, 1998 to $102.1
million for the nine months ended September 30, 1999. The U.S. dollar increase
in revenue was positively impacted by $2.8 million and $3.1 million due to
fluctuation in exchange rates between the three and nine months ended September
30, 1999, respectively, compared to the same periods in the prior year. On a
functional currency basis, Austar's revenue increased A$23.8 million from A$34.6
million for the three months ended September 30, 1998 to A$58.4 million for the
three months ended September 30, 1999, a 68.8% increase. Austar's functional
currency revenue increased A$64.0 million, from A$93.9 million for the nine
months ended September 30, 1998 to A$157.9 million for the nine months ended
September 30, 1999, a 68.2% increase. These increases were primarily due to
subscriber growth (360,708 at September 30, 1999 compared to 251,255 at
September 30, 1998) and increased average monthly revenue per subscriber as
Austar continues to expand its customer base. The average monthly revenue per
subscriber increased A$7.48 ($4.88) from an average per subscriber of A$46.36
($30.23) for the nine months ended September 30, 1998 to an average of A$53.84
($35.11) per subscriber for the nine months ended September 30, 1999, a 16.1%
increase.
ADJUSTED EBITDA. Adjusted EBITDA was negative $0.1 million and negative $1.7
million for the three and nine months ended September 30, 1999, respectively,
compared to negative $10.5 million and negative $19.6 million for the same
periods in the prior year. This was a decrease in the Adjusted EBITDA loss of
$10.4 million and $17.9 million for the three and nine months ended September
30, 1999, respectively, compared to the amounts for the corresponding periods in
the prior year.
AUSTAR
Austar's Adjusted EBITDA loss decreased $8.7 million, or 89.7%, from negative
$9.7 million for the three months ended September 30, 1998 to negative $1.0
million for the three months ended September 30, 1999. Austar's Adjusted EBITDA
loss decreased $7.7 million, or 49.7%, from negative $15.5 million for the nine
months ended September 30, 1998 to negative $7.8 million for the nine months
ended September 30, 1999. The U.S. dollar Adjusted EBITDA loss decrease was
positively impacted by $0.1 million due to fluctuation in exchange rates between
the three months ended September 30, 1999 and 1998 and the U.S. dollar Adjusted
EBITDA loss decrease was positively impacted by $0.2 million due to fluctuation
in exchange rates between the nine months ended September 30, 1999 and 1998.
These decreases in Adjusted EBITDA loss for the three and nine months were
primarily due to Austar achieving incremental sales growth while keeping certain
costs fixed, such as the national customer service center, corporate management
staff and media-related marketing costs. On a functional currency basis,
Austar's Adjusted EBITDA loss decreased A$14.9 million from negative A$16.4
million for the three months ended September 30, 1998 to negative A$1.5 million
for the three months ended September 30, 1999, a 90.9% decrease. Austar's
functional currency Adjusted EBITDA loss decreased A$13.7 million, from negative
A$25.8 million for the nine months ended September 30, 1998 to negative A$12.1
million for the nine months ended September 30, 1999, a 53.1% decrease.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense
increased $2.7 million and $2.0 million for the three and nine months ended
September 30, 1999, respectively, compared to the amounts for the corresponding
periods in the prior year as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Austar...................................... $23,229 $21,774 $72,183 $70,009
Saturn...................................... 1,540 - 1,540 -
Other....................................... 317 605 1,306 3,005
------- ------- ------- -------
Total depreciation and amortization
expense.............................. $25,086 $22,379 $75,029 $73,014
======= ======= ======= =======
</TABLE>
19
<PAGE>
AUSTAR
Depreciation and amortization expense for Austar increased $1.4 million, or
6.4%, from $21.8 million for the three months ended September 30, 1998 to $23.2
million for the three months ended September 30, 1999. Depreciation and
amortization expense for Austar increased $2.2 million, or 3.1% from $70.0
million for the nine months ended September 30, 1998 to $72.2 million for the
nine months ended September 30, 1999. The U.S. dollar increases were negatively
impacted by $1.7 million due to fluctuation in exchange rates between the three
months ended September 30, 1999 and 1998 and negatively impacted by $2.1 million
due to fluctuation in exchange rates between the nine months ended September 30,
1999 and 1998. On a functional currency basis, Austar's depreciation and
amortization expense decreased A$0.7 million, from A$35.1 million for the three
months ended September 30, 1998 to A$34.4 million for the three months ended
September 30, 1999, a 2.0% decrease. On a functional currency basis, Austar's
depreciation and amortization expense increased A$1.1 million, from A$106.4
million for the nine months ended September 30, 1998 to A$107.5 million for the
nine months ended September 30, 1999, a 1.0% increase.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSE. Corporate general and
administrative expense increased $3.0 million from $(0.1) million for the three
months ended September 30, 1998 due to an allocation adjustment to $2.9 million
for the three months ended September 30, 1999. Corporate general and
administrative expense increased $18.1 million from $4.5 million for the nine
months ended September 30, 1998 to $22.6 million for the nine months ended
September 30, 1999. This increase was primarily attributable to a stock-based
compensation charge of $18.9 million from the AU Plan for the nine months ended
September 30, 1999 compared to nil for the same period in 1998.
GAIN ON ISSUANCE OF SECURITIES BY SUBSIDIARY. On July 27, 1999, Austar United
successfully completed the Australian IPO selling 103.5 million shares on the
Australian Stock Exchange raising gross and net proceeds at A$4.70 ($3.03) per
share of A$486.5 million ($313.6 million) and A$456.5 million ($294.3 million),
respectively. Based on the carrying value of our investment in Austar United as
of July 27, 1999, we recognized a gain of $249.0 million from the resulting
step-up in the carrying amount of our investment in Austar United, in accordance
with SAB 51. No deferred taxes were recorded related to this gain due to our
intent on holding our investment in Austar United indefinitely.
INTEREST EXPENSE. Interest expense increased $3.5 million and $9.2 million for
the three and nine months ended September 30, 1999, respectively, compared to
the amounts for the corresponding periods in the prior year. These increases
were primarily due to interest expense related to the Austar Bank Facility which
was $4.2 million and $12.1 million for the three and nine months ended September
30, 1999, respectively, compared to $1.7 million and $5.3 million for the three
and nine months ended September 30, 1998, respectively.
OTHER INCOME/EXPENSE. Other expense, net decreased $1.1 million for the three
months ended September 30, 1999 compared to the corresponding period in the
prior year. Other expense, net increased $3.5 million for the nine months ended
September 30, 1999 compared to the amount for the corresponding period in the
prior year. This increase was primarily due to a programming license write-off
of $3.7 million in May 1999.
SHARE IN RESULTS OF AFFILIATED COMPANIES, NET. Our share in results of
affiliated companies totaled a loss of $4.2 million and $12.9 million for the
three and nine months ended September 30, 1999, respectively, compared to $4.7
million and $8.2 million for the same periods in the prior year as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Saturn (1).................................. $(2,679) $(4,056) $ (6,324) $(8,062)
XYZ Entertainment........................... (1,496) (603) (6,531) (133)
------- ------- -------- -------
Total share in results of affiliated
companies, net............................. $(4,175) $(4,659) $(12,855) $(8,195)
======= ======= ======== =======
</TABLE>
(1) Equity in losses through July 26, 1999 only, due to acquisition of
additional 35.0% by Austar United.
20
<PAGE>
YEAR 2000 READINESS DISCLOSURE
Our multi-channel television, programming and telephony operations are heavily
dependent upon computer systems and other technological devices with embedded
chips. Such computer systems and other technological devices may not be capable
of accurately recognizing dates beginning on January 1, 2000. This problem could
cause miscalculations, resulting in our multi-channel television and telephony
systems or programming services malfunctioning or failing to operate.
YEAR 2000 PROGRAM. In response to possible Year 2000 problems, the Board of
Directors of United established a Task Force to assess the impact that potential
Year 2000 problems may have on company-wide operations, including the Company
and its operating companies, and to implement necessary changes to address such
problems. The Task Force reports directly to the United Board. In creating a
program to minimize Year 2000 problems, the Task Force identified certain
critical operations of our business. These critical operations are service
delivery systems, field and headend devices, customer service and billing
systems and corporate management and administrative operations (e.g., cash flow,
accounts payable and accounts receivable, payroll and building operations).
The Task Force has established a three-phase program to address potential Year
2000 problems:
(a) Identification Phase: identify and evaluate computer systems and other
devices (e.g., headend devices, switches and set top boxes) on a system
by system basis for Year 2000 compliance.
(b) Implementation Phase: establish a database and evaluate the information
obtained in the Identification Phase, determine priorities, implement
corrective procedures, define costs and ensure adequate funding.
(c) Testing Phase: test the corrective procedures to verify that all
material compliance problems will operate on and after January 1, 2000,
and develop, as necessary, contingency plans for material operations.
As of September 30, 1999, 97.0% of our operating systems had completed the
Identification Phase and the Task Force is working on the Implementation Phase
for these systems. The Task Force has researched almost 100% of the items
identified during the Identification Phase as to Year 2000 compliance. Of the
items researched, 95.0% are either compliant or can be easily remediated without
significant cost to us. Based on current data to date, the computer systems for
all corporate operations are expected to be in compliance prior to Year 2000 and
should not require material remediation or replacement.
The Task Force commenced the Testing Phase in first quarter 1999. The Task Force
is supervising the Testing Phase of the computer systems for our headend
controllers and our customer service billing systems and routers. Based on
current data to date, testing will continue to the end of 1999. At this time, we
anticipate that all material aspects of the program will be completed before
January 1, 2000. Certain of our operating systems have not completed the
Identification Phase, including Tahiti and certain Australian programming
interests. Despite the Task Force's attempts to include these systems in the
Year 2000 Programs, these systems have not responded. Therefore, we have no
information on which to determine if these systems will be Year 2000 compliant
by December 31, 1999. If none of these systems are compliant, we do not believe
that their operation failure will have a material adverse effect on our business
as a whole. The basis for determining the above percentages includes these
systems. In general, United is managing the program with its internal Task
Force. In addition, we have retained independent consultants to assist with our
operations in New Zealand, the results of which are not included in the above
percentages.
In addition to its program, United is a member of a Year 2000 working group,
which has 12 cable television companies and meets under the auspices of Cable
Labs. The dialogue with the other cable operators has assisted United in
developing its Year 2000 program. Part of the agenda of the working group is to
develop test procedures and contingency plans for critical components of
operating systems for the benefit of all of its members. These test procedures
and plans have been completed and made available to members, including United
and the Company.
THIRD PARTY DEPENDENCIES. We believe our largest Year 2000 risk is our
dependency upon third-party products. Two significant areas on which our systems
depend upon third-party products are programming and telephony interconnects. We
do not have the ability to control such parties in their assessment and
remediation procedures for potential Year 2000 problems. Should these parties
not be prepared for Year 2000, their systems may fail and we would not be able
to provide service to our customers. Notwithstanding these limitations, the Task
Force monitors the websites for all vendors used by us, to the extent available,
for information on such vendors' Year 2000 programs. To the extent applicable,
the Task Force uses such information to verify Year 2000 compliance and to
implement remediation procedures. For example, this is how the Task Force
learned that previously compliant reports on computer hardware and software from
third party vendors have been re-classified as non-compliant or conditional
compliant. Such changes are not within the control of the Company.
21
<PAGE>
We also have requested information from various third parties on the status of
their Year 2000 compliance programs in an effort to prevent any possible
interruptions or failures. To date, responses to such communications have been
limited and the responses received state only that the party is working on Year
2000 issues and does not have a definitive position at this time. As a result,
we are unable to assess the risk posed by our dependence upon such third
parties' systems. Vendors for critical equipment components, such as the headend
controllers mentioned below, have been more responsive and we believe
substantially all of our equipment will be Year 2000 compliant. We cannot,
however, give any assurance concerning compliance of equipment because such
belief is based on information provided by vendors, which cannot be
independently verified, and because of the uncertainties inherent in Year 2000
remediation.
The Task Force is considering certain limited contingency plans, including
preparing back-up programming and stand-by power generators. Such contingency
plans may not, however, resolve the problem in a satisfactory manner. With
respect to other third-party systems, each operating system is responsible for
inquiring of their vendors and other entities with which they do business (e.g.,
utility companies, financial institutions and facility owners) as to such
entities' Year 2000 compliance programs. In addition, the Task Force has
distributed a contingency plan to all of our operating systems. Such plan sets
forth preparation procedures and recovery solutions.
The Task Force is working closely with the manufacturers of our headend devices
to remedy any Year 2000 problems assessed in the headend equipment. Recent
information from the two primary manufacturers of such equipment indicate that
most of the equipment used in our operating systems are not date sensitive.
Where such equipment needs to be upgraded for Year 2000 issues, such vendors are
upgrading without charge. These upgrades are expected to be completed before
year-end 1999, but such a process is not wholly within our control or our
systems' control. Approximately 99.0% of the headend controllers, which are the
most critical component of the headend devices have been upgraded and tested as
compliant. With respect to billing and customer care systems, we use standard
billing and customer care programs from several vendors. The Task Force is
working with such vendors to achieve Year 2000 compliance for all systems.
COSTS OF COMPLIANCE. The Task Force is not able to determine the full cost of
its Year 2000 program and its related impact on our financial condition. In the
course of our business, we have made substantial capital adjustments over the
past few years in improving our systems, primarily for reasons other than Year
2000. Because these upgrades also resulted in Year 2000 compliance, replacement
and remediation costs have been low. The Task Force estimates the cost for the
Year 2000 program to be $1.5 million. The cost includes certain identified
replacement and remediation procedures and external consultants. Such estimate
does not, however, include internal costs because we do not separately track the
internal costs incurred for the Year 2000 program. Although no assurance can be
made, we believe that the known Year 2000 compliance issues can be remedied
without a material financial impact. No assurance can be made, however, as to
the total cost for the Year 2000 program until completion of the project. In
addition, we can not predict the financial impact we will incur if Year 2000
problems are caused by third parties upon which our systems are dependent or
experienced by entities in which we hold investments. The failure of any one of
these parties to implement Year 2000 procedures could have a material adverse
impact on our operations and financial condition.
22
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- ------------------------------------------------------------------
INVESTMENT PORTFOLIO
We do not use derivative financial instruments in our non-trading investment
portfolio. We place our cash and cash equivalent investments in highly liquid
instruments that meet high credit quality standards with original maturities at
the date of purchase of less than three months. We also place our short-term
investments in liquid instruments that meet high credit quality standards with
original maturities at the date of purchase of between three and twelve months.
We also limit the amount of credit exposure to any one issue, issuer or type of
instrument. These investments are subject to interest rate risk and will fall in
value if market interest rates increase, however, we do not expect any material
loss with respect to our investment portfolio.
IMPACT OF FOREIGN CURRENCY RATE CHANGES
We are exposed to foreign exchange rate fluctuations related to the operating
subsidiaries' monetary assets and liabilities and the financial results of
foreign subsidiaries when their respective financial statements are translated
into U.S. dollars during consolidation. Our exposure to foreign exchange rate
fluctuations also arises from intercompany charges such as the cost of
equipment, management fees and certain other charges. These intercompany
accounts are predominantly denominated in the functional currency of the foreign
subsidiary.
The operating companies' monetary assets and liabilities are subject to foreign
currency exchange risk as certain equipment purchases and payments for certain
operating expenses, such as programming expenses, are denominated in currencies
other than their own functional currency. In addition, certain of the operating
companies have notes payable and notes receivable which are denominated in a
currency other than their own functional currency. Foreign currency rate changes
also affect our share in results of our unconsolidated affiliates such as XYZ
Entertainment.
The spot rates for the countries in the Australia/Pacific region are shown below
for the Australian and New Zealand dollars per one U.S. dollar.
Australian New Zealand
Dollars Dollars
----------- -----------
September 30, 1999............................ 1.5336 1.9316
December 31, 1998............................. 1.6332 1.8939
September 30, 1998............................ 1.6855 2.0000
December 31, 1997............................. 1.5378 1.7161
In general, the Company and the operating companies do not execute hedge
transactions to reduce our exposure to foreign currency exchange rate risk.
Accordingly, we may experience economic loss and a negative impact on earnings
and equity with respect to our holdings solely as a result of foreign currency
exchange rate fluctuations.
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 is no assurance this situation will continue. We may also acquire
interests in companies that operate in countries where the removal or conversion
of currency is restricted.
23
<PAGE>
INTEREST RATE SENSITIVITY
The table below provides information about our primary debt obligations. The
information is presented in U.S. dollar equivalents, which is our reporting
currency. The instrument's actual cash flows are denominated in both U.S.
dollars (the Notes), Australian dollars (New Austar Bank Facility) and New
Zealand dollars (Saturn Bank Facility).
<TABLE>
<CAPTION>
As of September 30, 1999
------------------------------------------
Book Value Fair Value
---------- ----------
(U.S. dollars, in thousands, except interest rates)
<S> <C> <C>
Long-term and short-term debt:
Fixed rate USD denominated Notes....................... $394,453 $374,578
Average interest rate................................ 14.00% 15.04%
Variable rate NZ$ denominated Saturn Bank Facility..... $ 52,288 $ 52,288
Average interest rate................................ 8.03% 8.03%
Variable rate A$ denominated New Austar Bank Facility.. $173,448 $173,448
Average interest rate................................ 7.65% 7.65%
</TABLE>
The table below presents principal cash flows and related weighted-average
interest rates by expected maturity dates for our debt obligations. The
information is presented in U.S. dollar equivalents, which is our reporting
currency. The instrument's actual cash flows are denominated in both U.S.
dollars (Notes), Australian dollars (New Austar Bank Facility) and New Zealand
dollars (Saturn Bank Facility).
<TABLE>
<CAPTION>
As of September 30, 1999
------------------------------------------------------------------------
1999 2000 2001 2002 2003 Thereafter Total
-------- -------- -------- -------- -------- ---------- ---------
(U.S. dollars, in thousands, except interest rates)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term and short-term debt:
Fixed rate USD denominated Notes....................... $ - $ - $ - $ - $ - $394,453 $394,453
Variable rate NZ$ denominated Saturn Bank Facility..... $ - $ - $647 $5,177 $ 9,319 $ 37,145 $ 52,288
Variable rate A$ denominated New Austar Bank Facility.. $ - $ - $ - $ - $51,553 $121,895 $173,448
</TABLE>
Interest rate swap agreements are used by the Company from time to time, to
manage interest rate risk on its floating rate debt facilities. Interest rate
swaps are entered into depending on our assessment of the market, and generally
are used to convert the floating rate debt to fixed rate debt. Interest
differentials paid or received under these swap agreements are recognized over
the life of the contracts as adjustments to the effective yield of the
underlying debt, and related amounts payable to, or receivable from, the
counterparties are included in the consolidated balance sheet.
Currently, we have four interest rate swaps to manage interest rate exposure on
the New Austar Bank Facility. Two of these swap agreements expire in 2002 and
effectively convert an aggregate principal amount of A$50.0 million ($32.6
million as of September 30, 1999) of variable rate, long-term debt into fixed
rate borrowings. The other two swap agreements expire in 2004 and convert an
aggregate principal amount of A$100.0 million ($65.2 million as of September 30,
1999) of variable rate, long-term debt into fixed rate borrowings. As of
September 30, 1999, the weighted-average fixed rate under these agreements was
7.95%. As a result of these swap agreements, interest expense was increased by
approximately A$0.3 million ($0.2 million) during the third quarter 1999.
In addition, we have an interest rate swap to manage our exposure on the Saturn
Bank Facility which effectively converts an aggregate principal amount of
NZ$60.6 million ($31.4 million as of September 30, 1999) of variable rate,
long-term debt into fixed rate borrowings. The interest rate swap includes a
stepped fix rate with an additional margin which is expected to decline as the
debt to EBITDA ratio declines. As of September 30, 1999, the average fixed rate
under the agreement was 9.34%. As a result of this swap agreement, interest
expense was increased by approximately NZ$0.2 million ($0.1 million) during the
third quarter 1999.
24
<PAGE>
Fair values of the interest rate swap agreements are based on the estimated
amounts that we would receive or pay to terminate the agreements at the
reporting date, taking into account current interest rates and the current
creditworthiness of the counterparties. As of September 30, 1999, we estimate
that we would have paid approximately A$3.4 million ($2.2 million) to terminate
the agreements on the New Austar Bank Facility.
The table below provides information about our interest rate swaps. The table
presents notional amounts and weighted-average interest rates by expected
(contractual) maturity dates. Notional amounts are used to calculate the
contractual payments to be exchanged under the contract. The information is
presented in U.S. dollar equivalents (in thousands), which is our reporting
currency. The instrument's actual cash flows are denominated in Australian and
New Zealand dollars.
<TABLE>
<CAPTION>
As of September 30, 1999
------------------------------------------------------------------------
1999 2000 2001 2002 2003 Thereafter Total
-------- -------- -------- -------- -------- ---------- ---------
(U.S. dollars, in thousands, except interest rates)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps:
Variable to fixed (New Austar Bank Facility)........... $ - $ - $ - $32,603 $ - $65,206 $97,809
Average pay rate %................................... 7.95% 7.95% 7.95% 7.95% 7.95% 7.95% 7.95%
Average receive rate %............................... 7.65% 7.65% 7.65% 7.65% 7.65% 7.65% 7.65%
Variable to fixed (Saturn Bank Facility)............... $ - $ - $ - $ - $ - $31,373 $31,373
Average pay rate %................................... 9.34% 9.09% 10.19% 10.19% 9.69% 9.94% 9.74%
Average receive rate %............................... 8.03% 8.03% 8.03% 8.03% 8.03% 8.03% 8.03%
</TABLE>
25
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
10.1 Supplemental Deed dated July 15, 1999 by and among Saturn
Communications Limited, as the Borrower, Kiwi Cable Company
Limited, as Guarantor, SaskTel Holding (New Zealand) Inc. and
Saturn (NZ) Holding Company Pty Ltd, as the Mortgagors, each
financial institution specified as a bank in Schedule 1 attached
thereto, and Toronto Dominion Australia Limited, as the Agent.
10.2 Second Supplemental Deed and Capital Contribution dated July 29,
1999 by and among Saturn Communications Limited, as the Borrower,
Kiwi Cable Company Limited, as Guarantor, Austar United
Communications Limited and Saturn (NZ) Holding Company Pty Ltd,
as the Mortgagors, and Toronto Dominion Australia Limited, as the
Agent.
27.1 Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter.
Date of Filing Date of Event Item Reported
--------------------- ----------------- ------------------------
July 28, 1999 July 27, 1999 Item 5 - Other Events
26
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED AUSTRALIA/PACIFIC, INC.
Date: November 15, 1999
---------------------------------
By: /S/ Valerie L. Cover
---------------------------------
Valerie L. Cover
Controller
(A Duly Authorized Officer and Principal Financial Officer)
27
Date: 15 July 1999
Saturn Communications Limited
Borrower
Kiwi Cable Company Limited
Guarantor
SaskTel Holding (New Zealand) Inc.
Saturn (NZ) Holding Company Pty Ltd
each a Mortgagor
Toronto Dominion Australia Limited
TDA
Paribas
Paribas
Each Financial Institution specified as a New Bank in Schedule 1
each a New Bank
The Toronto-Dominion Bank
Acceding Bank
Toronto Dominion Australia Limited
Agent
<PAGE>
TABLE OF CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION 2
2. CONDITIONS PRECEDENT 3
3. VARIATIONS TO FACILITY AGREEMENT 4
4. REPRESENTATIONS AND WARRANTIES 4
5. GENERAL CONFIRMATIONS, RATIFICATIONS AND ACKNOWLEDGEMENTS 5
6. LEGAL COSTS, DUTIES ETC. 6
7. COMMITMENTS 6
8. ADVANCES 6
9. BANK ACCESSION 7
10. EFFECT ON TRANSACTION DOCUMENTS 7
11. NO EFFECT ON ACCRUED RIGHTS AND OBLIGATIONS 8
12. LIQUEFYING BILLS 8
13. PAYMENTS 8
14. INDEPENDENT ASSESSMENT 8
15. ACKNOWLEDGEMENTS 8
16. MISCELLANEOUS 9
<PAGE>
SUPPLEMENTAL DEED made on 15 July 1999
BETWEEN SATURN COMMUNICATIONS LIMITED, NZ Co. No. WN/435672 of 75 The
Esplanade, Petone, Wellington, New Zealand ("Borrower")
AND KIWI CABLE COMPANY LIMITED, NZ Co. No. WN/647464 of 75 The
Esplanade, Petone, Wellington, New Zealand ("Guarantor")
AND SATURN (NZ) HOLDING COMPANY PTY LTD, ACN 088 052 000 of 259
George Street, Sydney, New South Wales and SASKTEL HOLDING (NEW
ZEALAND) INC., (a Saskatchewan corporation) (each a "Mortgagor")
AND TORONTO DOMINION AUSTRALIA LIMITED, ACN 004 858 020 of Level 36,
385 Bourke Street, Melbourne, Victoria in its capacity as a Bank
("TDA")
AND PARIBAS, Taipei Branch (Offshore Banking Unit) of 205 TunHua
North Road, 11th Floor, Taipei, Taiwan in its capacity as a Bank
("Paribas")
AND EACH FINANCIAL INSTITUTION SPECIFIED AS A NEW BANK in Schedule 1
(each a "New Bank")
AND THE TORONTO-DOMINION BANK, ARBN 082 818 175 of Level 36, 385
Bourke Street, Melbourne, Victoria ("Acceding Bank")
AND TORONTO DOMINION AUSTRALIA LIMITED, ACN 004 858 020 of Level 36,
385 Bourke Street, Melbourne, Victoria in its capacity as agent
for the Banks ("Agent")
RECITALS
A. Under the Facility Agreement, the Existing Banks have made available to the
Borrower a syndicated senior secured debt facility.
B. Under the Facility Agreement, the Guarantor has guaranteed to the Banks the
due and punctual performance by the Borrower of the Obligations.
C. Under the Share Mortgages, the Mortgagors have given security for the
payment in full to the Agent of all the Secured Money as defined in the
Share Mortgages.
D. The Borrower and the Guarantor have requested the Existing Banks to vary
the terms of the Facility and the Existing Banks have agreed to this
request on the terms contained in this deed.
E. Each Mortgagor acknowledges and consents to the variation of the Facility
Agreement contained in this deed.
F. The Existing Banks presently have Commitments under the Facility Agreement.
<PAGE>
G. The New Banks wish to assume some of the Existing Banks' Commitments and
participate in the outstanding Advances under the Facility Agreement. The
New Banks and the Existing Banks also wish to increase the Total
Commitments.
H. From the Substitution Date the Existing Banks and the New Banks will have
the Commitments specified in Schedule 1 of the Facility Agreement (as
varied by this deed).
I. From the Accession Date, the Acceding Bank will be party to the Facility
Agreement as a Bank pursuant to clause 29.5 of the Facility Agreement so
that it can become a Swap Counterparty and enter into Hedging Agreements.
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
(a) In this deed and in the Recitals:
"Accession Date" means the date of this deed or such other date
as the Borrower, the Agent and the Acceding Bank may agree in
writing.
"Banks" means the Acceding Bank, the Existing Banks and the New
Banks. "Existing Banks" means TDA and Paribas.
"Facility Agreement" means the Syndicated Senior Secured Debt
Facility Agreement dated 5 November 1998 between the Agent, the
Borrower, the Guarantor and each of the other parties referred to
as a "Bank" therein.
"Substitution Date" means, subject to the satisfaction of the
conditions precedent set out in clause 2, 20 July 1999, or such
later date as the Borrower, the Agent and the New Banks may agree
in writing.
2
<PAGE>
"Variation Date" means the date on which the conditions precedent
in clause 2 are satisfied, or such earlier date as notified to
the Borrower by the Agent.
(b) Subject to clause 1.1(a), unless the context indicates a contrary
intention, all terms defined in the Facility Agreement (as varied
by this deed) shall have the same meaning in this deed.
1.2 Interpretation
The provisions of clause 1.2 (Interpretation) of the Facility
Agreement (as varied by this deed) shall be incorporated into this
deed as if set out herein.
1.3 Collateral and Supplemental Agreement
This deed is collateral and supplemental to the Facility Agreement.
1.4 Transaction Document
This deed is a Transaction Document under and for the purposes of the
Facility Agreement and the Securities.
2. CONDITIONS PRECEDENT
The amendments to the Facility Agreement effected by this document and
the acknowledgements and discharges in clause 5.5 of this document are
subject to the conditions precedent that all of the following are
received by the Agent in form and substance satisfactory to the Agent
and to its legal advisers:
(a) (Executed document): this document duly executed by the Banks,
the Borrower, the Mortgagors and the Guarantor;
(b) (Directors certificate): a certificate signed by 2 directors or
one director and the Chief Financial Officer of the Borrower
stating that SaskTel NZ and S(NZ)HC have contributed to the
Borrower, in aggregate, not less than $15,000,000 in the form of
equity or subordinated debt (in accordance with clause
17.4(c)(iv) of the Facility Agreement) since 1 February 1999;
(c) (Subordination): a certified copy of a subordination agreement in
respect of the subordinated debt referred to in paragraph (b), on
terms acceptable to the Agent;
(d) (Requisitions): searches and replies to all requisitions of the
Agent and its solicitors in relation to this document, the
Borrower, the Guarantor and the Mortgagors;
3
<PAGE>
(e) (Powers of attorney): certified copies of the powers of attorney,
if any, under which any party (other than the Banks and the
Agent) execute this deed;
(f) (Legal opinion): a legal opinion from Bell Gully, SaskTel
in-house counsel and Clayton Utz in a form satisfactory to the
Agent; and
(g) (Corporate authorisations):
(i) (Australian companies): a certified copy of:
(A) the Constitution of S(NZ)HC; and
(B) an extract of a resolution of the directors of S(NZ)HC
approving the terms of this deed and authorising the
execution of this deed by S(NZ)HC; and
(ii) (New Zealand companies): in the case of each of the Borrower
and the Guarantor:
(A) a certified copy of its Constitution;
(B) a certified copy of a resolution or resolution of its
directors approving this deed and authorising its
execution of this deed; and
(C) a director's certificate in the form set out in
Schedule 9 to the Facility Agreement (with such
modifications thereto as may be required or agreed by
the Agent) from one of its directors in respect of its
authorisation, execution and performance of this deed.
3. VARIATIONS TO FACILITY AGREEMENT
Subject to clause 7, as from the Variation Date, the Facility
Agreement shall be varied so that it is in the form of Annexure "A".
4. REPRESENTATIONS AND WARRANTIES
4.1 Borrower and Guarantor
(a) The Borrower and the Guarantor hereby confirm and repeat each of
the representations and warranties made by it in clause 16.1
(except for paragraph 16.1(e)), 16.2 (except for paragraphs (c),
(d), (e) and (f)) and 16.3 of the Facility Agreement (as varied
by this deed) with reference to the facts and circumstances
subsisting as at the date of this deed.
(b) The Borrower and the Guarantor hereby represent and warrant in
respect of itself only to each of the Agent and the Banks that no
event has occurred which constitutes an Event of Default or a
Potential Event of Default other than those events which have
already been disclosed to the Agent in writing prior to the date
of this deed.
4
<PAGE>
4.2 Mortgagors
Each Mortgagor hereby confirms and repeats each of the representations
and warranties made by it in clauses 3.1 and 3.2 of the Share Mortgage
to which it is a party with reference to the facts and circumstances
subsisting as at the date of this deed and as if references in those
clauses to "this Mortgage" include this deed.
5. GENERAL CONFIRMATIONS, RATIFICATIONS AND ACKNOWLEDGEMENTS
5.1 The Borrower
The Borrower hereby unconditionally and irrevocably:
(a) ratifies and confirms to the Banks its continuing obligations
under the Facility Agreement (as varied by this deed) and the
Securities to which it is a party; and
(b) acknowledges and agrees that except to the extent of the
variations effected by the provisions of this deed the provisions
of the Facility Agreement and the Securities to which it is a
party shall in all respects apply.
5.2 The Guarantor
The Guarantor hereby unconditionally and irrevocably acknowledges and
agrees that the guarantees and indemnities contained in the Facility
Agreement (as varied by this deed) apply mutatis mutandis to all
obligations of the Borrower to the Banks thereunder and hereby
ratifies and confirms to the Banks its continuing liability to the
Banks pursuant to the Facility Agreement (as varied by this deed) and
the Securities to which the Guarantor is a party.
5.3 The Mortgagors
Each Mortgagor hereby ratifies and confirms to the Banks its
continuing liability to the Agent (as agent for the Banks) and the
Banks pursuant to and subject to the recourse limitation in the Share
Mortgage to which it is a party.
5.4 Consent to Variation
Each of the Borrower, the Guarantor and the Mortgagors hereby
irrevocably and unconditionally consents to the provisions of this
deed and to the variation of the Facility Agreement as herein
provided.
5.5 Acknowledgements
Each of the parties to this deed acknowledges and agrees that, upon
receipt by the Borrower of not less than $15,000,000 of equity or
subordinated debt referred to in clause 2(b), the obligations of all
parties under:
5
<PAGE>
(a) the Shareholder Contribution Deed dated 5 November 1998 between
the Borrower, UIHNZ, UAP, SaskTel NZ and STHC; and
(b) the Tripartite Deed dated 5 November 1998 between the Borrower,
UIHNZ, UAP, SaskTel NZ and STHC and the Agent,
were or will be discharged in full.
6. LEGAL COSTS, DUTIES ETC.
The Borrower shall pay or reimburse the Agent for all stamp duty paid
or payable in relation to this deed and for all reasonable costs and
reasonable expenses (including legal costs as between solicitor and
client) incurred by the Banks in drawing, settling, executing and
stamping this deed.
7. COMMITMENTS
7.1 Existing Banks
The Commitment of each Existing Bank is reduced to the amount shown in
Schedule 1 of the Facility Agreement (as varied by this deed) with
effect on and from the Substitution Date. Each Existing Bank is
released from its obligations in relation to the Commitment which it
no longer has with effect on and from the Substitution Date. Each
Existing Bank shall, however, remain bound by its obligations and
responsibilities under the Transaction Documents which accrue prior to
the Substitution Date.
7.2 New Banks
Each New Bank undertakes to each Existing Bank, the Agent and the
Borrower that it shall be bound by the Facility Agreement as a Bank
with the Commitment shown in Schedule 1 of the Facility Agreement (as
varied by this deed) with effect on and from the Substitution Date.
7.3 Increased Total Commitments
The parties acknowledge that the Total Commitments are increased by
this deed.
8. ADVANCES
(a) As of the date of this deed, the Existing Banks have provided the
following contributions to the Advances:
TDA: $39,000,000
Paribas: $39,000,000
-----------
TOTAL: $78,000,000
6
<PAGE>
(b) As of the Substitution Date, the Banks (other than the Acceding
Bank) will be taken to have provided and be entitled to the
following participations in the Advances:
TDA: $20,280,000
Paribas: $20,280,000
Export Development Corporation: $12,480,000
Credit Lyonnais S.A.,
Singapore Branch: $12,480,000
The Development Bank of
Singapore Ltd: $ 6,240,000
The National Bank of
New Zealand Limited: $ 6,240,000
-----------
TOTAL: $78,000,000
9. BANK ACCESSION
(a) The Acceding Bank agrees with each other party or person who is
to become party to the Facility Agreement, to become, with effect
from the Accession Date, a Bank under the Facility Agreement,
agrees to be bound in that capacity with effect from such date by
the terms of the Facility Agreement and undertakes accordingly to
perform its obligations as a Bank thereunder.
(b) Each party agrees with the Acceding Bank that, with effect from
the Accession Date, the Acceding Bank will become a Bank under
the Facility Agreement, and have the benefit of the Facility
Agreement and the Securities, as if it were a party originally to
the Facility Agreement.
10. EFFECT ON TRANSACTION DOCUMENTS
10.1 New Banks
The parties agree that with effect on and from the Substitution Date:
(a) each New Bank, each Existing Bank and each party to each
Transaction Document will assume obligations and responsibilities
towards each other, and will have rights, remedies and powers in
relation to each other, determined on the basis that the
respective Commitment of each New Bank and each Existing Bank
will be that shown in Schedule 1 of the Facility Agreement (as
varied by this deed); and
(b) each New Bank will be deemed a party to each Transaction Document
to which each Existing Bank is a party as a Bank.
7
<PAGE>
10.2 Acceding Bank
The parties agree that with effect on and from the Accession Date the
Acceding Bank will be deemed a party to each Transaction Document to
which the Existing Banks are a party as a Bank.
11. NO EFFECT ON ACCRUED RIGHTS AND OBLIGATIONS
Save as expressly provided herein, this deed shall not affect the
Existing Banks' rights, remedies and powers arising, and obligations
and responsibilities accrued, prior to the Substitution Date.
12. LIQUEFYING BILLS
Nothing contained in this deed releases, relieves or otherwise affects
the obligations and responsibilities and the rights, remedies and
powers, of the Existing Banks in respect of Bills drawn under clause 9
of the Facility Agreement. The New Banks will not assume any
obligations or responsibilities, or acquire any rights, remedies or
powers, in respect of such Bills.
13. PAYMENTS
13.1 Consideration
The Banks (other than the Acceding Bank) shall agree separately
between themselves the amounts payable between them in relation to the
substitutions effected by this deed in respect of principal and
accrued interest and fees.
13.2 Agent
On and from the Substitution Date the Agent will make all payments
received by it in respect of the amounts referred to in paragraph 8(b)
to the Banks (other than the Acceding Bank) in accordance with their
respective entitlements.
14. INDEPENDENT ASSESSMENT
The Acceding Bank and each New Bank agrees that the provisions of
clause 24.13 of the Facility Agreement binds it as if the reference
therein to this "Agreement" included this deed and (subject to any
agreement to the contrary between the Banks) the reference therein to
the "Agent" included the Existing Banks.
15. ACKNOWLEDGEMENTS
(a) The Acceding Bank and each New Bank acknowledges that it has
received a complete and current copy of each Transaction Document
together with such other documents and information as it has
required in connection therewith.
8
<PAGE>
(b) Each party acknowledges that the substitutions and accession
effected by this deed are effective under clause 29.4 and 29.5 of
the Facility Agreement, respectively, notwithstanding that no
Substitution Certificates or Bank Accession Certificate in the
forms set out in the Schedules to the Facility Agreement were
entered into.
(c) Each party acknowledges that, as of the Accession Date, the
Acceding Bank is party to the Facility Agreement as a Bank
pursuant to clause 29.5 of the Facility Agreement notwithstanding
that it may only be a Swap Counterparty and has no Commitment and
the provisions of the Facility Agreement are to be construed and
applied accordingly.
16. MISCELLANEOUS
16.1 Governing law
This deed is to be construed in accordance with the laws applying in
New Zealand and each of the parties hereto submits to the
non-exclusive jurisdiction of the courts and appellate courts of New
Zealand.
16.2 Facility Agreement in full force
(a) Except as varied and supplemented hereby, the Facility Agreement
is declared to be in full force and effect.
(b) The variation of the terms of the Facility Agreement effected
hereby is without prejudice to any other deed, agreement,
instrument, document or arrangement presently in existence as
between the Banks and the Borrower, the Guarantor and the
Mortgagors, or any of them (including but not limited to the
Securities), and the rights, powers, remedies and discretions
available to the Banks thereunder remain in full force and
effect.
16.3 Further assurances
The Borrower, the Guarantor and each Mortgagor shall, on demand by the
Agent, make, execute, do, perform and provide all such further acts,
agreements, assurances, contracts, deeds, documents, guarantees,
indemnities, instruments, matters and things as the Agent shall
reasonably require to give full effect to this deed and the rights and
obligations of the parties under it.
16.4 Counterparts
This deed may be executed in any number of counterparts, all of which
taken together will be deemed to constitute one and the same document.
9
<PAGE>
SCHEDULE 1
NEW BANKS
Name Address
Export Development Corporation 151 O'Connor Street
Ottawa
Ontario K1A 1K3
Credit Lyonnais S.A., Singapore Branch 3 Temasek Avenue
#11-01 Centennial Tower
Singapore 039190
The Development Bank of Singapore Ltd 6 Shenton Way
DBS Building
Tower One
Singapore 068809
The National Bank of New Zealand Limited 6th Floor, NBNZ House
1 Victoria Street
Wellington, New Zealand
10
<PAGE>
<TABLE>
<CAPTION>
EXECUTED as a deed.
<S> <C>
SIGNED for and on behalf of SATURN COMMUNICATIONS )
LIMITED, by ) /s/ Vicki Lynne Potts
Vicki Lynn Potts ) .........................................
in the presence of: ) (Signature)
/s/ Mark Rigotti
.....................................................
(Signature of Witness)
Mark Rigotti
.....................................................
(Name of Witness in Full)
Martin Place, Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of KIWI CABLE COMPANY )
LIMITED, by ) /s/ Vicki Lynne Potts
Vicki Lynn Potts ) .........................................
in the presence of: ) (Signature)
/s/ Mark Rigotti
.....................................................
(Signature of Witness)
Mark Rigotti
.....................................................
(Name of Witness in Full)
Martin Place, Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
11
<PAGE>
SIGNED for and on behalf of SATURN (NZ) HOLDING )
COMPANY PTY LTD, ACN 088 052 000, by )
Anne Marks ) /s/ Anne Marks
in the presence of: ) .........................................
) (Signature)
/s/ Mark Rigotti
.....................................................
(Signature of Witness)
Mark Rigotti
.....................................................
(Name of Witness in Full)
Martin Place, Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of SASKTEL HOLDING (NEW )
ZEALAND) INC., by ) /s/ D. B.
) .........................................
in the presence of: ) (Signature)
/s/ R. Stephanson
.........................................
.....................................................
(Signature of Witness)
.....................................................
(Name of Witness in Full)
.....................................................
(Address of Witness)
.....................................................
(Occupation of Witness)
12
<PAGE>
SIGNED for and on behalf of TORONTO DOMINION )
AUSTRALIA LIMITED by ) /s/ Patrick St. John
Patrick St. John ) .........................................
in the presence of: ) (Signature)
/s/ Stuart Marks
.....................................................
(Signature of Witness)
Stuart Marks
.....................................................
(Name of Witness in Full)
O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of PARIBAS by )
Patrick St. John ) /s/ Patrick St. John
in the presence of: ) .........................................
) (Signature)
/s/ Stuart Marks
.....................................................
(Signature of Witness)
Stuart Marks
.....................................................
(Name of Witness in Full)
O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
13
<PAGE>
SIGNED for and on behalf of EXPORT DEVELOPMENT )
CORPORATION by ) /s/ Michael J. Fortner
) .........................................
in the presence of: ) (Signature)
Michael J. Fortner
/s/ Howard Clysdale Telecom Team
.....................................................
(Signature of Witness)
Howard Clysdale
.....................................................
(Name of Witness in Full)
151 O'Conner, Ottawa, Canada
.....................................................
(Address of Witness)
Financial Services Manager
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of CREDIT LYONNAIS S.A., ) /s/ Patrick St. John
SINGAPORE BRANCH by ) .........................................
Patrick St. John ) (Signature)
)
in the presence of: )
/s/Stuart Marks
.....................................................
(Signature of Witness)
Stuart Marks
.....................................................
(Name of Witness in Full)
O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
14
<PAGE>
SIGNED for and on behalf of THE DEVELOPMENT BANK OF )
SINGAPORE LTD by ) /s/ Patrick St. John
Patrick St. John ) .........................................
in the presence of: ) (Signature)
)
/s/ Stuart Marks
.....................................................
(Signature of Witness)
Stuart Marks
.....................................................
(Name of Witness in Full)
O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of THE NATIONAL BANK OF )
NEW ZEALAND LIMITED by ) /s/ Patrick St. John
Patrick St. John ) .........................................
and ) (Signature)
Andrew Tramair ) /s/ Andrew Tramair
in the presence of: ) .........................................
) (Signature)
/s/ Stuart Marks
.....................................................
(Signature of Witness)
Stuart Marks
.....................................................
(Name of Witness in Full)
O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
15
<PAGE>
SIGNED for and on behalf of THE TORONTO-DOMINION ) /s/ Patrick St. John
BANK by ) .........................................
Patrick St. John ) (Signature)
in the presence of: )
/s/ Stuart Marks
.....................................................
(Signature of Witness)
Stuart Marks
.....................................................
(Name of Witness in Full)
O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
</TABLE>
16
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Vicki Lynne Potts (name) Chief Financial Officer (occupation), of 75 The
Esplanade, Wellington (address) New Zealand (country), certify that:
1. by deed dated 14 July 1999, Kiwi Cable Company Limited, (the "grantor"),
appointed me its attorney on the terms and subject to the conditions set
out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Vicki Lynne Potts
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Vicki Lynne Potts (name) Chief Financial Officer (occupation), of 75 The
Esplanade, Wellington (address) New Zealand (country), certify that:
1. by deed dated 14 July 1999, Saturn Communications Limited, (the "grantor"),
appointed me its attorney on the terms and subject to the conditions set
out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Vicki Lynne Potts
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Anne Marks (name) Lawyer (occupation), of Level 29 AAP Centre, Sydney
(address) Australia (country), certify that:
1. by deed dated 12 July 1999, Saturn (NZ) Holding Company Pty Ltd., (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Anne Marks
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 8 July 1999, Toronto Dominion Australia Limited, (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 12 July 1999, Paribas, (the "grantor"), appointed me its
attorney on the terms and subject to the conditions set out in the said
deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 8 July 1999, The Toronto-Dominion Bank, (the "grantor"),
appointed me its attorney on the terms and subject to the conditions set
out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 12 July 1999, The National Bank of New Zealand Limited, (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Andrew Tramair (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 12 July 1999, The National Bank of New Zealand Limited, (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Andrew Tramair
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 13 July 1999, The Development Bank of Singapore Limited, (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) Solicitor (occupation), of 1 O'Connell St., Sydney
(address) Australia (country), certify that:
1. by deed dated 7 July 1999, Credit Lyonnais S.A., (the "grantor"), appointed
me its attorney on the terms and subject to the conditions set out in the
said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 15th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<PAGE>
THIS IS THE ANNEXURE "A" REFERRED TO IN THE SUPPLEMENTAL DEED BETWEEN SATURN
COMMUNICATIONS LIMITED, KIWI CABLE COMPANY LIMITED, SATURN (NZ) HOLDING COMPANY
PTY LTD, SASKTEL HOLDING (NEW ZEALAND) INC., PARIBAS, TORONTO DOMINION AUSTRALIA
LIMITED, THE TORONTO-DOMINION BANK AND EACH PARTY SPECIFIED AS A NEW BANK IN
SCHEDULE 1 THERETO DATED: 15 JULY 1999
Syndicated Senior Secured Debt Facility
Agreement
First executed: 5 November 1998
Amended and restated: 15 July 1999
Saturn Communications Limited
Borrower
Kiwi Cable Company Limited
Guarantor
Each Financial Institution specified as a Bank in Schedule 1
Bank
Toronto Dominion Australia Limited
Agent
<PAGE>
TABLE OF CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION 1
2. THE FACILITY 16
3. CONDITIONS PRECEDENT 17
4. UTILISATIONS 19
5. COMMITMENTS 21
6. REPAYMENT AND PREPAYMENTS 22
7. INTEREST 25
8. INTEREST ON OVERDUE AMOUNTS 26
9. BILL RELIQUIFICATION 26
10. FEES 27
11. PAYMENTS 28
12. TAXES 31
13. ILLEGALITY 33
14. INCREASED COST 33
15. MITIGATION 34
16. REPRESENTATIONS AND WARRANTIES 35
17. UNDERTAKINGS 39
18. FINANCIAL AND OPERATING RATIOS 52
19. DEFAULT AND TERMINATION 54
20. GUARANTEE AND INDEMNITY 57
21. ADDITIONAL GUARANTORS AND SECURITY 63
22. RELEASE OF GUARANTORS AND SECURITY 65
23. INDEMNITY 66
24. AGENT 66
25. HEDGING ARRANGEMENTS 72
26. SET-OFF 73
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Clause Page
27. PRO RATA SHARING 73
28. EXPENSES AND STAMP DUTIES 74
29. ASSIGNMENTS AND CONFIDENTIALITY 75
30. GOVERNING LAW AND JURISDICTION 78
31. MISCELLANEOUS 79
32. NO REPRESENTATION BY OR RELIANCE ON THE BANK OR AGENT 82
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FACILITY AGREEMENT made at Sydney on 5 November 1998
BETWEEN SATURN COMMUNICATIONS LIMITED, NZ Co. No. WN/435672 of 75
The Esplanade, Petone, Wellington, New Zealand (the
"Borrower")
AND KIWI CABLE COMPANY LIMITED, NZ Co. No. WN/647464 of 75 The
Esplanade, Petone, Wellington, New Zealand (the "Original
Guarantor")
AND EACH FINANCIAL INSTITUTION SPECIFIED AS A BANK in Schedule 1
(each a "Bank")
AND TORONTO DOMINION AUSTRALIA LIMITED, ACN 004 858 020 of Level
36, 385 Bourke Street, Melbourne, Victoria as agent for the
Banks (in this capacity the "Agent")
RECITALS
At the request of the Borrower the Banks have agreed, subject to the terms of
this Agreement, to provide the facility described herein to the Borrower.
THE PARTIES AGREE:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"Accession Agreement" means an agreement substantially in the form of
Schedule 5 made pursuant to clause 21.1.
"Accounts" means from time to time:
(a) the latest audited consolidated annual accounts of the Borrower
and each Guarantor;
(b) the latest unaudited consolidated Quarterly accounts of the
Borrower and each Guarantor;
(c) the latest unaudited consolidated monthly management accounts of
the Group; and
(d) any other audited or unaudited consolidated or unconsolidated
accounts (if any) of the Group or any member thereof,
delivered or required to be delivered to the Agent pursuant to this
Agreement, or such of those accounts as the context requires.
"Additional Guarantor" means any entity which becomes a party hereto
as a Guarantor pursuant to an Accession Agreement.
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"Advance" means the principal amount of each borrowing under this
Agreement or the principal amount of such borrowing outstanding from
time to time, as the context requires.
"Adverse Title Retention Arrangement" means any title retention
arrangement entered into with any person in connection with the
acquisition of goods in the course of business on terms that the
vendor's title is or may be retained in respect of any goods which
have been paid for in full.
"Amortisation Schedule" means the schedule of dates and payments
calculated by the Agent in accordance with clause 6.1.
"Annualised EBITDA" on any date means the EBITDA for the previous
Quarter multiplied by 4.
"Approved Issuer Levy" means in relation to any payment of interest
(as defined in section 86F of the Stamp and Cheque Duties Act 1971)
under or in respect of this Agreement, the levy payable by the
Borrower in accordance with section 86J of the Stamp and Cheque Duties
Act 1971 to enable the payment of such interest to be made to a New
Zealand Non-Resident for tax purposes with a deduction for New Zealand
non resident withholding tax (as defined in Section 0B1) of the Income
Tax Act 1994 at the rate of zero per cent, pursuant to Section NG2(1)
of the Income Tax Act 1994.
"AUC" means AUSTAR United Communications Limited, ACN 087 695 707.
"Authorisation" includes any kind of authorisation, permit, consent,
approval, resolution, licence, exemption, permission, recording,
filing or registration required by any Government Agency or any law or
regulation.
"Availability Period" means the period from the date of this Agreement
to close of business in Wellington on 31 December 2000 or such later
date as all the Banks may agree in writing on or after the date
hereof.
"Bank" means each of the following:
(a) each bank or other financial institution whose name is set out in
Schedule 1;
(b) each bank or other financial institution to which rights and/or
obligations under this Agreement are assigned or transferred
pursuant to clause 29;
(c) each bank or other financial institution which executes a Bank
Accession Certificate;
(d) each bank or other financial institution which the Borrower and
the Agent (acting on the instructions of the Banks) agree is a
Bank for the purposes of this Agreement; and
(e) any successor or successors in title to any of the foregoing,
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provided that upon (i) termination in full of all the Commitments of
any Bank, and (ii) irrevocable payment in full of all amounts which
may be or become payable to such Bank under the Transaction Documents,
such Bank shall not be regarded as being a Bank for the purposes of
determining whether any provision of any of the Transaction Documents
requiring consultation with or the consent or approval of or
instructions from the Banks or the Majority Banks has been complied
with (together the "Banks").
"Bank Accession Certificate" means a certificate substantially in the
form of Schedule 10 completed and entered into in accordance with
clause 29.5.
"Banking Day" means a day on which trading banks are open for business
generally in Sydney, Melbourne, Wellington, New York and Singapore.
"Bill" means a bill of exchange within the meaning given to the
expression "bill of exchange" in the Bills of Exchange Act 1908 of New
Zealand, but does not include a cheque or payment order, and any
reference to the drawing, acceptance, indorsement or other dealing of
or with a Bill refers to a drawing, acceptance, indorsement or other
dealing within the meaning of that Act.
"Bill Rate" in relation to each Interest Period means the rate
(expressed as a percentage per annum) which is the average of the bid
rates shown at approximately 11.00 am Wellington time on page "BKBM"
on the Reuters Screen (or its successor page) on the first day of that
Interest Period for a term approximately equal to the duration of that
Interest Period (or if that Interest Period is subject to marginal
adjustment, for a term equal to the duration of the Interest Period
prior to such adjustment) provided that if such rate is no longer
available or, in the opinion of the Agent such rate becomes
inappropriate, unfair or incapable of application, the Bill Rate shall
mean the rate reasonably determined by the Agent to be the appropriate
equivalent rate having regard to prevailing market conditions.
"Business" means the investment in and provision of voice, video and
data services over the Cable Network and includes any related
activities.
"Business Plan" means the financial model prepared by the Borrower
dated October 1998 and entitled "Saturn Communications Limited -
CATV/Telephony Business Plan", or any revised version of such model,
agreed by the Agent acting on instructions from the Majority Banks to
be the Business Plan for the purposes of the Facility.
"Cable Network" means the Borrower's full-service, broadband
communications network in the greater metropolitan areas of
Wellington.
"Commitment" in relation to a Bank means the amount appearing and
designated as such against that Bank's name in Schedule 1 or in the
Substitution Certificate, Bank Accession Certificate or other document
by which it became a party to or acquired rights under this Agreement
as reduced or increased by substitution or transfer pursuant to clause
29 and any Substitution Certificates to which such Bank is party, and
to the extent not cancelled, reduced or terminated under this
Agreement (collectively the "Total Commitments").
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"Compliance Certificate" means a certificate in the form of Schedule 8
signed by two directors of the Borrower or one director and an Officer
of the Borrower and, when given at the end of the financial year, will
be based on audited Accounts.
"Computer System" means any date sensitive computer hardware or
software on any date sensitive equipment operated by electronic means.
"Dollar" or "$" means the lawful currency for the time being of New
Zealand.
"DSC" means DSC Finance Corporation, a company incorporated in Texas,
United States of America.
"EBITDA" for any period means on a consolidated basis net profit after
tax:
(a) plus depreciation, amortisation (including programming
amortisation), other non-cash charges and income taxes accrued
for such period;
(b) plus Interest Expense less interest revenue; and
(c) minus (net) extraordinary abnormal and non recurring gains, and
gains or losses from the sale of assets to the extent such items
are included in operating expenses.
For the avoidance of doubt, any amounts paid under the Technical
Assistance Agreements shall be treated as an expense.
"Encumbrance" means any mortgage, charge, pledge, lien, encumbrance,
security interest, title retention, preferential right, security trust
arrangement, contractual right of set-off or any other security
agreement or arrangement in favour of any person.
"Environmental Law" means any law relating to the environment, land or
water use, noise, smell, pollution or contamination, toxic or
hazardous substances, waste disposal or conservation (including,
without limitation), the Resource Management Act 1991, and any
consent, audit or notice under any such law.
"Equivalent Billing Units" for any period means the amount of total
Recurring Revenue divided by the greater of:
(a) the average Recurring Revenue per residential Subscriber; and
(b) $30.00 per calendar month,
in that period.
"Event of Default" means any of the events set out or referred to in
clause 19 as an Event of Default.
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"Event of Insolvency" means:
(a) a receiver, manager, trustee, administrator or similar officer is
appointed in respect of an Obligor or any asset of an Obligor;
(b) a liquidator or provisional liquidator is appointed in respect of
any Obligor;
(c) any application (not being an application withdrawn or dismissed
within 7 days or an application which the Agent agrees is
frivolous or vexatious and will be dismissed) is made to a court
for an order, or an order is made, or a meeting is convened, or a
resolution is passed, for the purpose of:
(i) appointing a person referred to in paragraphs (a) or (b);
(ii) winding up or dissolving an Obligor; or
(iii) proposing or implementing a scheme of arrangement in
respect of an Obligor;
(d) a moratorium of any debts of an Obligor or an official assignment
or a composition or an arrangement (formal or informal) with an
Obligor's creditors or any similar proceeding or arrangement by
which the assets of an Obligor are subjected conditionally or
unconditionally to the control of an Obligor's creditors is
ordered, declared or agreed to, or is applied for and the
application is not withdrawn or dismissed within 7 days;
(e) an Obligor becomes, or admits in writing that it is, or is
declared to be, is deemed under any applicable law to be,
insolvent or unable to pay its debts;
(f) any writ of execution, garnishee order, mareva injunction or
similar order, attachment, distress or other similar process is
made, levied or issued against or in relation to any asset of an
Obligor in respect of a claim greater than $100,000;
(g) a statutory manager is appointed under the Corporations
(Investigation and Management) Act 1989 in respect of an Obligor,
or any associated person (as that term is defined in that Act) or
an Obligor is declared at risk pursuant to the provisions of that
Act.
"Excess Cash Flow" for any period means all cash inflows during that
period of the Group from whatever source (not including cash proceeds
from new equity and Subordinated Debt issues) less all cash outflows
during that period of the Group (including changes in working capital,
capital expenditure and debt amortisation in accordance with the
Amortisation Schedule but excluding any payments made pursuant to
clause 6.4 and 17.6), determined on a consolidated basis and based on
Quarterly accounts.
"Excluded Taxes" means any Taxes imposed by any jurisdiction on the
overall net income of a Bank but not Taxes:
(a) which are calculated on or by reference to the gross amount of
any payments (without the allowance of any deduction) derived
under this Agreement or any Transaction Document or any other
document referred to in this Agreement or a Transaction Document
by the Bank; or
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(b) which are imposed as a result of the Bank being considered a
resident of or organised or doing business in that jurisdiction
solely as a result of it being a party to this Agreement or a
Transaction Document or any transaction contemplated by this
Agreement or a Transaction Document.
"Facility" means the amortising term loan facility referred to in
clause 2.1.
"Financial Liability" means present or future, actual or contingent
indebtedness in respect of financial accommodation, credit or hedging
arrangements, finance leases or hire purchase arrangements or any
guarantee or other assurance in respect of any such indebtedness.
"financial year" means a calendar year ending on 31 December.
"Foreign Currency" means the currency for the time being of any
country other than New Zealand.
"Freehold Mortgage" means the registrable mortgage of the whole of the
estate in fee simple described in Certificate of Title No. 53B-414.
"Government Agency" means any government (or minister thereof),
semi-government authority or department and any agency, authority or
central bank.
"Group" means the Borrower, and each Subsidiary of the Borrower.
"Guarantor" means the Original Guarantor and each Additional Guarantor
(together the "Guarantors").
"Hedging Agreements" means any interest rate or currency hedging
agreement entered into between the Borrower and a Bank.
"Hedging Liabilities" means all present and future liabilities (actual
or contingent) payable or owing by the Borrower to the Swap
Counterparties or any of them under or in connection with the Hedging
Agreements, whether or not matured and whether or not liquidated,
together in each case with:
(a) any novation, deferral or extension of any of those liabilities
permitted by the terms of this Agreement;
(b) any claim for damages or restitution arising out of, by reference
to or in connection with any of the Hedging Agreements;
(c) any claim flowing from any recovery by the Borrower or a receiver
or liquidator thereof or any other person of a payment or
discharge in respect of any of those liabilities on the grounds
of any Insolvency Provision or otherwise; and
(d) any amounts (such as post-insolvency interest) which would be
included in any of the above but for any discharge,
non-provability, unenforceability or non-allowability of the same
as a result of any Insolvency Provision.
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"Homes Serviceable" means homes and businesses which are located
sufficiently close to built and activated segments of the Cable
Network and which require only a standard installation for the
provision of cable and telephony services (in circumstances where it
would be economically viable for the Borrower to make such
installations).
"Information Memorandum" means the memorandum to be prepared by the
Agent on the basis of information supplied by the Obligors to assist
the Agent in obtaining persons to provide financial accommodation
pursuant to the Facility and containing information, financial and
otherwise, regarding Obligors.
"Insolvency Provision" means any law relating to insolvency,
sequestration, liquidation or bankruptcy (including any law relating
to the avoidance of conveyances in fraud of creditors or of
preferences and any law under which a liquidator or trustee in
bankruptcy may set aside or avoid transactions) and any provision of
any agreement, arrangement or scheme, formal or informal, relating to
the administration of any of the assets of any person.
"Insurable Property" means any part of the Security Property which is
of an insurable nature excluding the Cable Network outside of any
buildings housing the technical operations facilities of the Borrower.
"Insurances" means the insurances required to be taken out or
maintained by the Borrower and the Guarantors to comply with the
provisions of this Agreement.
"Intended Obligations" means any payment or other act the making or
doing of which would have formed part of the Obligations but for a
circumstance referred to in clause 20.7(c).
"Interconnection Agreement" means the agreement so called between
Telecom New Zealand Limited and the Borrower dated 20 June 1997.
"Interest Expense" means all Senior Debt interest and financing costs,
whether paid as cash or accrued as a liability on all direct,
contingent (including imputed interest on capital equipment lease
obligations), and other permitted indebtedness of the Group,
determined on a consolidated basis.
"Interest Period" means each period determined in accordance with
clause 7.1.
"Licence" means each licence, certificate, document, registration,
permission, privilege, permit, authority or consent which is issued or
held in connection with or which is necessary in connection with the
business or premises of an Obligor including, without limitation, any
variation or renewal of any of the foregoing.
"Majority Banks" means at any time:
(a) whilst no Advance is outstanding, a Bank or Banks the aggregate
of whose Commitments at the relevant time represent by value more
than 66.6% of the Total Commitments at such time; or
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(b) if an Advance is then outstanding, a Bank or Banks the aggregate
of whose participation in the Advances outstanding at such time
represent by value more than 66.6% of the aggregate of all the
Advances.
"Material Adverse Effect" means any effect which is, or is reasonably
likely:
(a) to be materially adverse to:
(i) the ability of an Obligor to perform its material
obligations under any of the Transaction Documents to which
it is a party; or
(ii) the business, assets, financial condition of the Borrower, a
Guarantor or the Group taken as a whole; and/or
(b) (where the context so admits) to result in any of the Transaction
Documents not being legal, valid and binding on, and enforceable
in accordance with its terms against, any party (other than a
Bank or the Agent) to that Transaction Document and/or (in the
case of any of the Securities) not providing to the Agent for
itself and on behalf of the Banks, perfected, enforceable
security over the assets to be covered by that Security.
"Material Contract" means
(a) Pole and Cabling Duct Agreement between the Borrower and Capital
Power Limited dated 22 September 1995;
(b) Pole and Cabling Duct Agreement between the Borrower and Energy
Direct Corporation Limited dated 28 July 1995;
(c) Pay-Per-View Term Sheet between the Borrower and Warner Bros.;
(d) Pay-Per-View License Agreement between the Borrower and Universal
Studios International B.V. dated 8 April 1997;
(e) Construction Contract between the Borrower, Australian Power
Industries Pty. Limited and Australian Power Industries (NZ)
Limited dated 12 June 1998;
(f) Subscription and Investment Agreement between SaskTel NZ, STHC,
UIHNZ, UAP and the Borrower dated 21 July 1997;
(g) Shareholders Agreement between UIHNZ, SaskTel NZ and the Borrower
dated 23 July 1997;
(h) each Technical Assistance Agreement;
(i) Interconnection Agreement;
(j) Register Agreement between Telecom New Zealand Limited and the
Borrower dated 20 June 1997;
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(k) Agreement for the Provision of Number Portability between Telecom
New Zealand Limited and the Borrower dated 27 March 1998;
(l) Operations Centre Lease; and
(m) each other contract entered into by a member of the Group after
the date of this Agreement which is of similar importance to the
net cash flow or operation of the business of the Group as the
contracts listed in paragraphs (a) to (l) of this definition and
which the Agent (acting on the instructions of the Majority
Banks) designates to be a Material Contract by notice to the
Borrower.
"Maximum Monthly Utilisation" means the maximum amount the Borrower
may utilise in any calendar month during the period listed in clause
4.2(b).
"Maximum Utilisation Amount" means the maximum amount the Borrower may
utilise as determined in accordance with clause 4.2.
"Net Proceeds" means the consideration received by any member or
members of the Group in respect of the disposal to a person not in the
Group of any member of the Group or of all or any part of the
business, undertaking or assets of any member of the Group (including
the amount of any intercompany debt repaid to continuing members of
the Group as a consequence of such disposal), after deduction of all
Taxes applicable on, or to any gain resulting from, the disposal and
of all reasonable costs, fees, expenses and the like properly incurred
by continuing members of the Group in arranging and effecting that
disposal.
"New Zealand Non-Resident" means any person (as that term is defined
in section OB1 of the Income Tax Act 1994) who is not resident (as
that term is defined in section OE1 and OE2 of the Income Tax Act
1994) in New Zealand and/or not engaged in business in New Zealand
through a fixed establishment of New Zealand.
"Nortel" means Nortel New Zealand Limited, a company incorporated in
Wellington.
"Nortel/DSC Debt" means:
(a) the loan made by Nortel to the Borrower pursuant to a facility
agreement dated 29 April 1998; and
(b) the loan by DSC to the Borrower pursuant to a facility agreement
dated 6 March 1998.
"Nortel/DSC Security" means:
(a) the fixed charge over equipment granted by the Borrower in favour
of Nortel pursuant to an instrument dated 29 April 1998;
(b) the fixed charge over equipment granted by the Borrower in favour
of DSC pursuant to an instrument dated 13 July 1997; and
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(c) any other security granted in favour of Nortel or DSC by the
Borrower.
"Obligations" means all the liabilities of the Borrower or any
Guarantor to the Agent and the Banks under or by reason of any
Transaction Document and, without limiting the generality of the
foregoing, includes any liabilities which:
(a) are liquidated or unliquidated;
(b) are present, prospective or contingent;
(c) are in existenced before or come into existence upon or after the
date of this document;
(d) relate to the payment of money or the performance or omission of
any act;
(e) sound in damages only; or
(f) accrue as a result of an Event of Default,
and irrespective of:
(i) whether the Borrower or any other Obligor is liable or
obligated solely, or jointly and severally with another
person;
(ii) the circumstances in which the Banks come to be owed each
liability or obligation and in which each liability or
obligation came to be secured by this document, including,
without limitation any assignment of any liability or
obligation or of this document; or
(iii) the capacity in which the Borrower, any other Obligor and
the Banks come to owe or to be owed such liability or
obligation.
"Obligor" means a several reference to the Borrower, each Guarantor,
any other member of the Group which has been required to enter into
(whether or not it has yet entered into) any Accession Agreement
and/or Security and, when used in clause 20, also means any person
from whom a Guarantor, but for any provision of this Agreement, would
be entitled to seek contribution in respect of money paid or payable
by virtue of the guarantee contained herein (together the "Obligors").
"Officer" means chief executive officer, chief financial officer,
company secretary or general legal counsel.
"Operating Expense" means expenses of the Group incurred in the
operation of the business of the Group, determined in accordance with
generally accepted accounting principles.
"Original Securities" means:
(a) Deed of Fixed and Floating Charge in favour of the Agent over the
whole of the assets and undertakings of the Borrower and the
Original Guarantor, dated on or around the date of this
Agreement;
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(b) the Freehold Mortgage; and
(c) the Share Mortgage.
"Potential Event of Default" means any event which, with the giving of
notice, lapse of time, satisfaction of a condition or any
determination would be likely to constitute an Event of Default.
"Prescribed Rate" for each Interest Period means the aggregate of the
Bill Rate in relation thereto and the Utilisation Margin.
"Proportion" means the amount of a Bank's participation in an Advance
in the proportion (applied to the requested amount of the Advance)
which its Commitment bears to the amount of the Total Commitments.
"Quarter" means the period commencing on the date of this Agreement
and ending on 30 September 1998, each succeeding period of 3 months
ending 31 December, 31 March, 30 June and 30 September and the broken
period ending on the date when this Agreement terminates which
commenced on the day immediately following the last preceding Quarter
day.
"Ratios" means the financial and operating ratios listed in Schedule
2.
"Recurring Revenue" means all Revenue other than connection and
installation fees.
"Related Company" has the meaning given in section 2(3) of the
Companies Act 1993.
"Repayment Date" means each repayment date specified in clause 6.1.
"Revenue" means all revenue of the Borrower other than abnormal or
extraordinary revenue.
"SaskTel NZ" means SaskTel Holding (New Zealand) Inc., a Saskatchewan
corporation.
"Securities" means the Original Securities together with any other
security held by the Agent as agent of the Banks at any time for the
due performance, observance and fulfilment of the Obligations, and
"Security" means each or any one of them as the context requires.
"Security Property" means any property subject to a Security.
"Senior Debt" means all direct and contingent borrowings (excluding
non-financial corporate guarantees) of the Group which are not
subordinated.
"Share Mortgage" means:
(a) the non recourse Deed of Mortgage in favour of the Agent dated 5
November 1998 granted by SaskTel NZ in respect of its share
capital in the Borrower and any loans made by SaskTel NZ to any
member of the Group; and
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(b) the non recourse Deed of Mortgage in favour of the Agent dated 11
June 1999 granted by S(NZ)HC in respect of its share capital in
the Borrower and any loans made by S(NZ)HC to any member of the
Group.
"Share Transfer Date" means the date on which SaskTel NZ transfers its
shareholding in the Borrower to AUC with the consent of the Agent.
"S(NZ)HC" means Saturn (NZ) Holding Company Pty Ltd, ACN 088 052 000.
"Specified Rate" means the aggregate of the Prescribed Rate and 2% per
annum.
"STHC" means Saskatchewan Telecommunications Holding Corporation, a
statutory corporation formed under the laws of Saskatchewan.
"Subordinated Debt" means any indebtedness the payment of which is
subordinated to the Senior Debt.
"Subscriber" means a customer connected to the Cable Network whose
account is current and who has either:
(a) a telephone line rental; or
(b) a cable rental,
and where a customer has both (a) and (b), such customer will be
treated as 2 Subscribers.
"Subsidiary" in relation to any person, means:
(a) a subsidiary, as defined in section 5 of the Companies Act 1993;
or
(b) an "in-substance subsidiary", in accordance with any approved
financial reporting standard,
of that person.
"Substitution Certificate" means a certificate substantially in the
form of Schedule 6 completed and entered into in accordance with
clause 29.4, and references to "substitutes" shall be construed as
references to persons becoming party to this Agreement pursuant to
Substitution Certificates.
"Swap Counterparty" means any Bank who is a party to a Hedging
Agreement.
"Tax" and "Taxes" mean all income tax, stamp duty and other taxes,
levies, imposts, deductions, charges and withholdings plus interest
thereon and penalties, if any, and charges, fees or other amounts made
on or in respect thereof and "Taxation" shall be construed
accordingly.
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"Technical Assistance Agreement" means:
(a) the Technical Assistance Agreement between the Borrower and UAP
(as successor in interest to UIHI) dated 8 July 1994 (as
amended);
(b) the Technical Assistance Agreement between the Borrower and
SaskTel NZ dated 23 July 1997; or
(c) any agreement entered into in replacement of any document
referred to in paragraphs (a) or (b).
together the "Technical Assistance Agreements".
"Termination Date" means the earlier of:
(a) 30 September 2006, or such other date as is agreed in writing
between the Agent (acting on the instructions of all Banks) and
the Borrower; and
(b) such earlier date on which the Facility is terminated or
cancelled in accordance with this Agreement.
"Total Debt" means the sum of all financial indebtedness of the
Borrower (other than subordinated loans approved by the Banks).
"Total Debt/EBITDA" on any date means the amount of Total Debt divided
by the Annualised EBITDA for the last Quarter.
"Transaction Document" means:
(a) this Agreement (together with each Accession Agreement, Bank
Accession Certificate and Substitution Certificate);
(b) each Hedging Agreement;
(c) each Security; and
(d) each other document to which any Obligor (on the one hand) and
the Agent or a Bank (on the other hand) are parties at any time
that:
(i) relates to any money that is declared by that document to be
part of the Obligations; or
(ii) is expressed to be, or is agreed by the said parties to be,
a Transaction Document for the purposes hereof; and
(e) any other document which is, or which is expressed to be,
collateral or supplemental to any other document that is then a
Transaction Document.
"UAP" means UIH Asia/Pacific Communications Inc., a Delaware
corporation.
"UIHI" means United International Holdings Inc., a Delaware
corporation.
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"UIHNZ" means UIH New Zealand Holdings, Inc., a Colorado corporation.
"Underwriters" means Toronto Dominion Australia Limited and Paribas.
"Underwriting Letter" means the letter agreement dated on or about the
date of this Agreement between the Borrower and each of the
Underwriters in relation to, among other things, the fees payable
under clauses 10.2 and 10.3 and the Commitments.
"Utilisation" means a utilisation under this Agreement of the
Facility.
"Utilisation Date" means the date on which an Advance is made or,
where the context requires, is proposed to be made.
"Utilisation Margin" means the percentage per annum determined in
accordance with clause 10.4.
"Utilisation Notice" means a notice given under clause 4 in respect of
an Advance.
"Warner Bros." means Warner Bros. International Television
Distribution, a division of Time Warner Entertainment Company, L.P.
"Year 2000 Compliant" means, in relation to any Computer System, that
any reference to or use of electronic date data which specifies the
year but does not specify the century, for dates before, on or after
31 December 1999, in the operation of that Computer System, will not,
in the Borrower's reasonable assessment, have a material adverse
effect on the use of that Computer System.
1.2 Interpretation
In this Agreement unless the context indicates a contrary intention:
(a) the expression "person" includes an individual, the estate of an
individual, a body politic, a corporation and a statutory or
other authority or association (incorporated or unincorporated);
(b) a reference to any party includes that party's executors,
administrators, successors, substitutes and assigns, including
any person taking by way of novation and in the case of the Agent
includes any substituted or additional agent or trustee;
(c) a reference to any Transaction Document however described or to
any other document includes the Transaction Document or other
document as amended, novated, supplemented, varied or replaced
from time to time;
(d) a reference to any legislation or to any section or provision
thereof includes any statutory modification or re-enactment or
any statutory provision substituted therefor and all ordinances,
by-laws, regulations and other statutory instruments issued
thereunder;
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(e) words importing the singular include the plural (and vice versa)
and words denoting a given gender include all other genders;
(f) headings are for convenience only and do not affect
interpretation;
(g) a reference to a clause or schedule is a reference to a clause or
schedule of this Agreement;
(h) where any word or phrase is given a defined meaning any other
part of speech or other grammatical form in respect of such word
or phrase has a corresponding meaning;
(i) where the day on or by which any sum is payable or any act,
matter or thing is to be done is a day other than a Banking Day,
that sum will be paid and such act, matter or thing will be done
on the immediately preceding Banking Day;
(j) all accounting terms used have the meaning given to those terms
under accounting principles and practices generally accepted in
New Zealand from time to time;
(k) representations, warranties, covenants, undertakings and
agreements made or given in favour of the Agent in their capacity
as Agent enure for the benefit of and, subject to the Transaction
Documents, be capable of enforcement by the Banks and each of
them; and
(l) a reference to a law includes a New Zealand or applicable foreign
law, regulation, rule, directive or policy of any government or
regulatory authority whether or not having the force of law.
1.3 Joint and several liability
The obligations of the Guarantors under this Agreement will bind each
of them severally and every 2 or more of them jointly and unless the
context indicates a contrary intention, the expression "Guarantors"
will be deemed to include any person who has guaranteed, or in the
future guarantees to the Agent and the Banks the due performance of
the whole or any part of Obligations.
1.4 Guarantor at date of Agreement
The parties acknowledge that there is one Guarantor (being Kiwi Cable
Company Limited) at the date of this Agreement.
1.5 Voting
Any Bank, by written notice to the Agent, may notionally divide any or
all of its Commitment and/or participation in the Advances into
separate amounts to reflect any sub-participation and may vote or
abstain from voting, with respect to any such separate amount, on any
matter separately and differently from its vote or abstention with
respect to any other such separate amount on such matter.
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1.6 Inconsistency
In the event of any inconsistency between:
(a) the terms of the Freehold Mortgage (including but not limited to
the Memorandum No. 1995/4004); and
(b) the terms of any Transaction Document (excluding the Freehold
Mortgage),
the terms of the Transaction Documents (excluding the Freehold
Mortgage) will prevail over the terms of the Freehold Mortgage and the
Freehold Mortgage will be read and construed as amended, varied or
supplemented by the Transaction Documents (excluding the Freehold
Mortgage) to the extent of any such inconsistency.
2. THE FACILITY
2.1 Facility
Subject to the terms of this Agreement and in reliance upon the
representations and warranties set out in clause 16, the Banks grant
to the Borrower a term loan facility whereby the Banks, when requested
by the Borrower pursuant to a Utilisation Notice, during the
Availability Period, will make Advances in an aggregate amount which
will not exceed the Commitments.
2.2 Banks' Commitments
Notwithstanding the Maximum Utilisation Amount and Maximum Monthly
Utilisation amounts set out in clause 4.2(b), no Bank is obliged to
participate in the making of an Advance if to do so would cause the
aggregate of its participation in Advances outstanding under this
Agreement to exceed its Commitment.
2.3 Several obligations
The obligations of each Bank under this Agreement and each Transaction
Document are several. The failure of a Bank to perform its obligations
under this Agreement or a Transaction Document shall not relieve any
other Bank, the Agent or an Obligor of any of its respective
obligations or responsibilities under this Agreement or the
Transaction Documents. The Agent shall not be responsible for the
obligations of any Bank (except for its own obligations, if any, as a
Bank), nor shall any Bank be responsible for the obligations of any
other Bank.
2.4 Several interests
The interests of the Agent and each Bank under this Agreement and each
Transaction Document are several. The amounts due to the Agent on its
own account and to each Bank under this Agreement or a Transaction
Document constitutes a separate and independent debt.
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2.5 Purpose
(a) The Facility will be used to assist in the funding of:
(i) capital expenditure for the building of the Cable Network;
(ii) the establishment and operating costs of the Business; and
(iii) the repayment of the Nortel/DSC Debt.
(b) The Facility will not be used for any other purpose than that
described in clause 2.5(a).
2.6 Termination
The Facility terminates on the Termination Date.
2.7 Nature of Borrower's rights and obligations hereunder
(a) (Borrower as Agent): Each Obligor (other than the Borrower) by
its execution of this Agreement or an Accession Agreement
irrevocably authorises the Borrower on its behalf to give all
notices and instructions under the Transaction Documents, to
execute on its behalf any Accession Agreement and to make such
agreements capable of being given or made by any Obligor relating
to the Transaction Documents notwithstanding that they may affect
such Obligor, without further reference to or the consent of such
Obligor.
(b) (Borrower's acts binding): Every act, omission, agreement,
undertaking, settlement, waiver, notice or other communication
given or made by the Borrower under this Agreement, or in
connection with this Agreement, (whether or not known to any
other Obligor and whether occurring before or after such other
Obligor became an Obligor under this Agreement) shall be binding
for all purposes on all other Obligors as if the other Obligors
had expressly concurred with the same. In the event of any
conflict between any notices or other communications of the
Borrower and any other Obligor, those of the Borrower shall
prevail.
3. CONDITIONS PRECEDENT
3.1 Conditions precedent to the first Utilisation
The obligations of each Bank under this Agreement are subject to the
conditions precedent that:
(a) (Transaction Documents): the Agent has received original copies
of this Agreement and the Transaction Documents (other than
Hedging Agreements), duly executed together with an undertaking
by the Borrower (which it hereby gives) that it will pay all
applicable levies and stamp duty when, and if, required;
(b) (Documents): the Agent has received all of the documents listed
in Schedule 3 in form and substance satisfactory to it;
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(c) (Fees): all fees referred to in clauses 10.2 and 10.3 and all
other fees and expenses owing to the Banks and their legal
consultants have been paid or confirmation that the Borrower will
pay simultaneously with the first Utilisation those fees and
expenses;
(d) (Shareholder contribution): the Agent has received evidence in
the form of a statement from 2 directors or one director and the
Chief Financial Officer of the Borrower, that SaskTel NZ and
UIHNZ have contributed, in aggregate, not less than $105,000,000
of equity to the Borrower;
(e) (Subscribers): the Agent has received evidence in the form of a
statement from two directors or one director and an Officer of
the Borrower, that as at 1 September 1998, the Group has achieved
and maintains a minimum of 6,000 Subscribers;
(f) (Indenture): the Agent has received a notice substantially in the
form of Schedule 7 from UAP;
(g) (Rollout): the Agent has received evidence in the form of a
statement from 2 directors or one director and an Officer of the
Borrower that as at 1 September 1998 the Cable Network extends to
a minimum of 20,000 Homes Serviceable;
(h) (Hedging policy): the Borrower has a hedging policy in place
satisfactory to the Underwriters to cover its interest rate and
currency exposures under the Transaction Documents;
(i) (Nortel/DSC Debt): the Nortel/DSC Debt has been repaid in full or
confirmation that the Borrower will repay such debt in full
simultaneously with the first Utilisation;
(j) (Nortel/DSC Security): the Nortel/DSC Security will be discharged
simultaneously with the first Utilisation; and
(k) (Approved Issuer Levy): the Borrower has been granted approved
issuer status.
3.2 Conditions precedent to all Utilisations
The obligations of the Agent and each Bank in respect of each
Utilisation are subject to the Agent being satisfied that at the
Utilisation Date:
(a) (Representations and warranties true): the representations and
warranties listed in clause 16 (except for clauses 16.2(c), (d),
(e) and (f)) are true and correct and will be correct immediately
after the making of the Advance;
(b) (No Event of Default): no Event of Default or Potential Event of
Default is subsisting or will result from the making of the
Advance;
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(c) (No Material Adverse Effect): no event has occurred which would
have a Material Adverse Effect;
(d) (No Change in Law): no change has occurred in applicable laws or
regulations which would have a Material Adverse Effect;
(e) (Further Guarantees and Security): all Accession Agreements and
Securities required by the terms of this Agreement to be entered
into on or before such Utilisation Date have been or will on such
Utilisation Date be duly executed and delivered to the Agent
together with all other documents required to be delivered to the
Agent in relation thereto; and
(f) (Compliance with Ratios): it has received evidence satisfactory
to it that:
(i) up to and including 31 December 1999, the Ratios for the
previous month have been met; and
(ii) from 1 January 2000, the Ratios for the previous Quarter
have been met.
3.3 Waiver
The conditions precedent listed in clauses 3.1 and 3.2 may be waived
by the Agent acting on behalf of:
(a) all Banks, in relation to clause 3.1 and 3.2(e); and
(b) the Majority Banks, in relation to clause 3.2 other than clause
3.2(e).
3.4 Agent not liable
The Agent shall be deemed to be satisfied with the form and substance
of a document under clause 3.1(b) if to the Agent the document appears
on its face to conform with its description and the Agent shall not be
liable for any cost, loss damage or expense suffered or incurred by
any person as a result of its being so satisfied.
3.5 Agent satisfied
The Agent will be deemed to be satisfied that the conditions precedent
to Utilisations referred to in clause 3.2 have been met if, prior to
each Utilisation Date, the Agent receives from the Borrower a written
notice certifying that the relevant conditions precedent have been met
and information in support of that certification and the information
appears, on its face, to support the certification made.
4. UTILISATIONS
4.1 Notice
The Borrower may request a Utilisation under the Facility on a Banking
Day by giving written notice of its intention to do so to the Agent.
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4.2 Maximum Utilisation Amount
(a) The Borrower may not issue a Utilisation Notice if the making of
the Advance specified therein would exceed the Maximum
Utilisation Amount or the Maximum Monthly Utilisation Amount to
which the Borrower is entitled in accordance with clauses 4.2(b)
below.
(b) Subject to clause 2.2, the Maximum Utilisation Amount and Maximum
Monthly Utilisation during the periods set out below will be as
follows:
Maximum Maximum
Period Utilisation Monthly
Amounts ($) Utilisation ($)
Prior to 1 January 1999 40,000,000 40,000,000
1 January to 31 March 1999 50,000,000 8,000,000
1 April to 31 May 1999 70,000,000 10,000,000
1 June to 30 June 1999 78,000,000 8,000,000
1 July to 30 September 1999 101,000,000 10,000,000
1 October to 31 December 1999 109,000,000 4,000,000
1 January to 31 March 2000 115,000,000 6,000,000
1 April to 31 December 2000 125,000,000 5,000,000
4.3 Contents of Utilisation Notice
Each Utilisation Notice for an Advance shall be in the form of
Schedule 4 and shall specify:
(a) the amount of the Utilisation (which shall not be less than
$1,000,000 and which must be an integral multiple of $500,000);
(b) the proposed Utilisation Date which must be a Banking Day prior
to expiration of the Availability Period;
(c) the proposed duration of its Interest Period (which must be of
either 1, 2, 3 or 6 months duration);
(d) the proposed purpose to which the Utilisation will be applied:
(e) payment instructions; and
(f) such other particulars as the Agent may from time to time
require.
4.4 Requirements of Utilisation Notice
Each Utilisation Notice shall:
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(a) be received by the Agent 4 clear Banking Days before the proposed
Utilisation Date;
(b) be signed by a person duly authorised by the Borrower to do so;
(c) be irrevocable; and
(d) not be given unless the conditions precedent to a Utilisation
will be satisfied or waived on or before the proposed Utilisation
Date.
4.5 Agent Notify Banks
Within 1 Banking Day after its receipt of a Utilisation Notice the
Agent shall notify each Bank.
4.6 Making of Advances
Subject to the terms of this Agreement, each Bank shall, on the
Utilisation Date, make available to the Agent its Proportion in
Dollars for the account of the Borrower. All such amounts shall be
made available to the Agent in accordance with clause 11 for
disbursement to or to the order of the Borrower in accordance with the
provisions of this Agreement.
4.7 Disbursement
Amounts received by the Agent under clause 4.6 shall be applied by it
in accordance with the payment instructions specified in the relevant
Utilisation Notice.
4.8 Agent's right to vary
Without limitation to the rights and powers vested in it under this
Agreement, the Agent may vary any of the times at or by which any act,
matter or thing is to be done under this clause 4 if it determines
that such a variation is necessary or desirable to ensure the
effective operation of the Facility. Any such variation shall be
binding on all parties to this Agreement.
5. COMMITMENTS
5.1 Cancellation of Commitments
Any part of the Commitments not borrowed hereunder before expiry of
the Availability Period shall be cancelled automatically at close of
business in Wellington on the date of such expiry.
5.2 Voluntary Cancellation
The Borrower may, on giving not less than 30 days' prior written
notice to the Agent (which shall promptly give notice of the same to
the Banks), cancel or reduce the Total Commitments in whole or in part
specified by the Borrower without incurring any penalty or other cost,
provided that such cancellation or reduction may only be effected to
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the extent of the amount of the Total Commitments undrawn on that date
and the applicable Commitments of each Bank must be reduced pro rata.
Any such notice by the Borrower shall be irrevocable and shall specify
the date upon which the reduction is to become effective and the
amount of the reduction. No fee, penalty or other amount is payable in
connection with any cancellation hereunder.
5.3 Reduction consequent on Repayment or Prepayment
(a) The Total Commitments shall be reduced (such reduction being
applied pro rata as between all the Commitments) by the amount of
any repayment or prepayment of any Advance made pursuant to
clauses 6.1, 6.2 and 6.4.
(b) An individual Bank's Commitment shall be reduced by the amount of
any prepayment of that Bank's participation in any Advance made
pursuant to any other provision of this Agreement.
5.4 Limitations
Save as expressly provided, any amount of the Total Commitments
cancelled or otherwise extinguished under this Agreement may not be
reinstated. Save as expressly provided neither the Total Commitments
nor any constituent part thereof may be reduced or cancelled under
this Agreement.
6. REPAYMENT AND PREPAYMENTS
6.1 Repayment of Advances
(a) (Calculation of repayments): At the end of the Availability
Period, the Agent will calculate the repayment instalments for
each Repayment Date specified below having regard to the
outstanding Advances at that time ("Total Principal Amount"). The
amount to be repaid on each Repayment Date will be calculated by
multiplying the Total Principal Amount by the percentage set out
opposite the relevant date.
Repayment Date Repayment %
---------------- -------------
31 December 2001 1.0
31 March 2002 2.0
30 June 2002 2.0
30 September 2002 2.0
31 December 2002 2.0
31 March 2003 3.6
30 June 2003 3.6
30 September 2003 3.6
31 December 2003 3.6
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Repayment Date Repayment %
---------------- -------------
31 March 2004 5.0
30 June 2004 5.0
30 September 2004 5.0
31 December 2004 5.0
31 March 2005 7.0
30 June 2005 7.0
30 September 2005 7.0
31 December 2005 7.0
31 March 2006 8.0
30 June 2006 10.3
30 September 2006 10.3
(b) (Amortisation Schedule): Promptly upon expiry of the Availability
Period (or following any prepayment), the Agent will produce an
Amortisation Schedule in accordance with paragraph (a) (and
taking into account any prepayment where relevant) and will
provide such Amortisation Schedule to the Banks and the Borrower
promptly thereafter.
(c) (Repayment): The Borrower will repay the Advances on the
Repayment Dates in accordance with the Amortisation Schedule
until the Advances outstanding are repaid in full.
6.2 Voluntary Prepayment
(a) The Borrower may prepay an Advance or part thereof on the last
day of its current Interest Period on giving not less than 10
Banking Days' prior written notice to the Agent.
(b) Any notice of prepayment given by the Borrower is irrevocable and
the Borrower is thereby bound to prepay in accordance with the
notice.
(c) Interest accrued on any amount prepaid under this Agreement shall
be paid at the time of prepayment.
(d) Any prepayment is permanent, and the Facility will be cancelled
to the extent of the prepayment.
(e) Any prepayment under this clause 6.2 will be applied pro rata
against the remaining instalments listed in the Amortisation
Schedule. No fee, penalty other amount is payable in connection
with any prepayment hereunder.
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6.3 Agent to notify Banks
Promptly after its receipt of a notice of prepayment the Agent shall
notify each Bank of the voluntary prepayment, the date on which the
voluntary prepayment is to be made and its pro rata share thereof.
6.4 Mandatory Prepayment
(a) (Excess Cash Flow): After 1 January 2001, the Borrower will apply
on a Quarterly basis towards the repayment of the Facility, 50%
of the Excess Cash Flow for the preceding Quarter, with the first
such Quarter ending on 31 March 2001. The amount to be prepaid
will be calculated by the Agent and notified to the Borrower
after receipt of the Quarterly Accounts.
(b) (Disposal): If any member of the Group or any of the assets,
business or undertaking of any member of the Group are disposed
of, the Borrower, unless the Majority Banks shall otherwise
consent in writing, shall apply, or shall procure that there
shall be applied, forthwith an amount equal to the Net Proceeds
arising from the disposal, in or towards prepayment of the
Utilisations in accordance with clause 6.5, provided that the
foregoing shall not apply to Net Proceeds arising from:
(i) a disposal of trading stock in the ordinary course of
trading; or
(ii) a disposal of assets not constituting trading stock which
are to be replaced by other assets being acquired for use
for like purposes and are so replaced within 3 months of the
date of such disposal (save to the extent the Net Proceeds
exceed the acquisition cost of those other assets); or
(iii) any disposal the consideration for which, when taken
together with the consideration for any related disposals or
recoveries, does not exceed $500,000 unless or until the
aggregate thereof exceeds $5,000,000 in any 12 month period.
(c) (Insurance proceeds): At any time during the term of the
Facility, the Borrower must apply in prepayment of any Advances
outstanding at the time all of the proceeds (in excess of
replacement costs) of any property or casualty insurance received
by it, other than business interruption insurance.
6.5 Application of Mandatory Prepayment
The amounts required to be applied in prepayment pursuant to clause
6.4 shall be applied against the remaining instalments listed in the
Amortisation Schedule in their inverse order of maturity.
6.6 Date for Prepayment
If the Borrower becomes obliged to prepay or procure the prepayment of
any amount under clause 6.4, the prepayment shall be made on the last
day of the next Interest Period to expire.
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6.7 No Redrawings
Amounts repaid and prepaid under any provision of this Agreement may
not be reborrowed hereunder.
7. INTEREST
7.1 Interest Periods
(a) Not later than 4 Banking Days before the commencement of each
Interest Period in respect of an Advance, the Borrower will
notify the Agent whether the Interest Period for that Advance is
to be of 1, 2, 3 or 6 months' duration (or such other period as
the Agent may agree to facilitate compliance with clause 7.2(a)).
(b) The first Interest Period in relation to an Advance is the period
commencing on the Utilisation Date for that Advance.
(c) If the Borrower fails to select an Interest Period for an Advance
in accordance with clause 7.1(a), the Interest Period shall be 3
months.
(d) The term of each Interest Period is subject to such marginal
adjustment as the Agent in its discretion determines so that the
first and last days of it are Banking Days and the final Interest
Period terminates on the Termination Date.
7.2 Restrictions on Selection
(a) The Borrower shall, in relation to Advances drawn by it, select
the duration of Interest Periods pursuant to clause 7.1 so as to
ensure that:
(i) no more than 5 different Interest Periods are current at any
one time;
(ii) each date for repayment of part of the Facility will also be
the last day of an Interest Period in relation to an amount
at least equal to the amount due to be paid on such date;
and
(iii) that no Advance shall have an Interest Period expiring
after the Termination Date.
(b) If it appears to the Agent in good faith that the requirements of
paragraph (a) above will not be met by either the Borrower's
selection of any Interest Period or the operation of clause
7.1(c), the Agent, on behalf of and after consultation with the
Borrower, shall select a different duration for such Interest
Period.
7.3 Calculation of Interest
(a) Interest on each Advance accrues daily and is to be computed on a
daily basis on a year of 365 days. Interest is to be calculated
from and including the first day of an Interest Period but
excluding the last day of the Interest Period.
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(b) The rate of interest for each Advance for each Interest Period is
the Prescribed Rate in relation thereto.
(c) The Agent's certificate as to the Prescribed Rate and the
Specified Rate at any time will be conclusive and binding on the
Borrower and the Guarantors in the absence of manifest error on
the face of the certificate.
7.4 Payment of Interest
(a) The Borrower will pay to the Agent for the account of the Banks
the accrued interest in relation to that Advance at the end of
each Interest Period.
(b) The Agent will promptly distribute the interest received by it
from the Borrower among the Banks in accordance with their
Proportions with respect to that Advance.
8. INTEREST ON OVERDUE AMOUNTS
8.1 Payment of Interest
(a) The Borrower and the Guarantors will pay to the Agent for the
account of the Banks interest on all amounts due and payable by
them under or in respect of this Agreement or the Securities and
unpaid, including any interest payable under this clause.
(b) The Agent will distribute the interest received by it from the
Borrower among the Banks in accordance with their Proportions
with respect to that Advance.
8.2 Accrual of Interest
Interest will accrue on all amounts due and payable from day to day
from the due date up to the date of actual payment, before and (as a
separate and independent obligation but without duplication) after
judgment, at the Specified Rate for successive 3 month periods (as if
the same were 3 month Interest Periods) commencing on the date of
default and, if not paid when due, shall itself bear interest in
accordance with this clause.
9. BILL RELIQUIFICATION
9.1 Drawing of Bills
The Borrower agrees (at the relevant Bank's cost) to draw Bills in
connection with any Advance made to it in the manner required by any
Bank whenever requested by a Bank to do so except that:
(a) the discounted value of those Bills when added to the aggregate
discounted value of all other Bills drawn under this clause for
the relevant Bank and which are outstanding at any time may not
exceed that Bank's participation in all Advances which are
outstanding;
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(b) the obligations of the Borrower as drawer or otherwise under
those Bills are non-recourse; and
(c) Bills are not to be drawn if to do so would cause the Approved
Issuer Levy registration of the Borrower (as an approved issuer)
or the Advances or Bills (as registered securities) to be
cancelled.
9.2 Attorney
The Borrower irrevocably appoints each Bank (severally) as its
attorney to draw Bills in its name or on its behalf under clause 9.1
and agrees to ratify all action taken by any Bank as its attorney
under this clause.
9.3 Appointment Revoked
The requirement to draw Bills under clause 9.1 and the appointment
under clause 9.2 will cease and be revoked without necessity for
notice when all Advances are repaid. Nothing in clause 9.1 or 9.2
requires the Borrower or authorises any Bank as attorney to draw a
Bill which matures after the Termination Date.
9.4 Indemnity
Each Bank (severally) indemnifies the Borrower against loss, cost,
expense or liability on any Bill drawn by the Borrower at the request
of that Bank under clause 9.1 or drawn by that Bank under clause 9.2.
Each Bank agrees to pay the costs of preparation of and all stamp duty
on each Bill drawn at its request under this clause 9. Each indemnity
in this clause 9.4 is a continuing obligation of each Bank (severally)
and survives the termination of this Agreement or the repayment of any
Bill drawn under this clause 9.
9.5 Notice
On request from the Borrower through the Agent (not more often than
once each Quarter) the Banks will notify the Borrower through the
Agent of the total face value of Bills outstanding at that time under
this clause.
10. FEES
10.1 Commitment Fee
(a) The Borrower will pay in Dollars to the Agent for distribution
among the Banks pro rata to their respective Commitments, a
commitment fee ("Commitment Fee") of 1% per annum on the daily
undrawn balance of the Commitments, during the period from and
including the date of this Agreement until the expiry of the
Availability Period.
(b) The accrued Commitment Fee shall be payable quarterly in arrears
from the date of this Agreement and also on any date on which the
Total Commitments shall be terminated.
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(c) The Commitment Fee shall accrue from day to day and be calculated
on the basis of a year of 365 days and for the actual number of
days elapsed.
10.2 Underwriting Fee
The Borrower must pay to the Underwriters an underwriting fee as and
when specified in the Underwriting Letter.
10.3 Agency Fees
The Borrower must pay to the Agent an agency fee as and when specified
in the Underwriting Letter.
10.4 Margin
(a) From the date of this Agreement until and including 30 September
1999, the Utilisation Margin will be 3% per annum. From and
including 1 October 1999 until the Borrower achieves a Total
Debt/EBITDA for the most recent financial Quarter of 6.5 or less,
the Utilisation Margin will be 2.75% per annum and thereafter it
shall be determined in accordance with the following provisions
of this clause.
(b) Subject to paragraph (c) below, the Utilisation Margin will be
set in accordance with the Total Debt/EBITDA for the most recent
financial Quarter as follows:
Total Debt/EBITDA Utilisation Margin
Above 6.50* 2.75% pa
6.50 - 6.00 2.50% pa
5.99 - 5.00 2.25% pa
4.99 - 400 2.00% pa
Less than 4.00 1.75% pa
* applicable only for the period up to 31 December 2000
(c) The Total Debt/EBITDA will be calculated quarterly by the Agent
upon receipt of the relevant Accounts showing the results of the
latest financial Quarter. If the Total Debt/EBITDA for the last
Quarter results in a change of Utilisation Margin the Agent will
notify the Borrower and the Banks and the change will take effect
from the date of delivery of the relevant Accounts to the Agent.
11. PAYMENTS
11.1 Payment to Agent
All payments to be made by any Obligor under any Transaction Document,
or by any Bank under this Agreement (unless expressly provided
otherwise in writing), are to be made to the Agent in Dollars in
immediately available funds not later than 11.00 am Wellington time on
the due date to such accounts as the Agent may from time to time
designate.
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11.2 Merger
If the liability of any Obligor to pay any money the payment or
repayment of which forms part of the Obligations becomes merged in any
judgment or order, as an independent obligation the Obligor will pay
to the Agent on behalf of the Banks interest at the rate which is the
higher of that payable under this Agreement and that fixed by or
payable under such judgment or order.
11.3 Conversion of Foreign Currency receipts to Dollars
(a) Notwithstanding the Obligor's obligation under clause 11.1 to
make all payments in Dollars, if any payment is tendered to the
Agent or a Bank under any Transaction Document in a Foreign
Currency, the Agent or Bank, as the case may be, at its absolute
discretion may accept payment in the Foreign Currency as
tendered.
(b) If any payment in a Foreign Currency is tendered to and accepted
by the Agent or Bank, or if any funds are recovered by the Agent
or Bank under any Transaction Document in a Foreign Currency, the
Agent or Bank as the case may be at its absolute discretion may
actually or notionally convert such payment or funds to Dollars
at such time or times as it sees fit and at such rate or rates as
it is, or considers it would be, able to obtain in the market at
the time of such conversion. The amount of Dollars actually or
notionally received after such conversion will be applied in
reduction of the Obligations.
11.4 Costs of Conversion
The Borrower will pay to the Agent or a Bank all commissions and
expenses involved in actually or notionally converting any payment or
receipt in a Foreign Currency into Dollars.
11.5 Application
Each payment received by the Agent for the account of another person
pursuant to clause 4.6 or 11.1 shall:
(a) in the case of a payment received for the account of the
Borrower, be made available by the Agent to the Borrower by
application, on the date of receipt:
(i) first, in or towards payment of any amounts then due and
payable (and unpaid) by the Borrower under this Agreement;
and
(ii) second, in payment to such account as the Borrower shall
have properly designated for the purpose in the relevant
Utilisation Notice or otherwise in writing; and
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(b) in the case of any other payment, be made available by the Agent
to the person for whose account the payment was received on the
date of receipt to such account of the person as that person
shall have previously notified to the Agent for the purposes of
this Agreement.
The Agent shall promptly distribute payments received for the account
of the Banks among the Banks pro rata to their respective entitlements
provided that the Agent may deduct therefrom any amount due to it
pursuant to clause 11.8, 24.14 or 27.
11.6 Foreign Currency indemnity
If Foreign Currency is received by the Agent or a Bank as a result of
a court or tribunal order or as a result of a distribution under an
Insolvency Provision, then as a separate, additional and continuing
liability (notwithstanding such order or distribution) the Borrower
will pay to the Agent or Bank any deficiency in the amount of Dollars
actually received by the Agent or Bank resulting from any variation
between:
(a) the rate of exchange at which the amount of Foreign Currency was
calculated for the purposes of the court or tribunal order or the
distribution; and
(b) the rate of exchange at which the Agent or Bank is able to
purchase Dollars with the amount of Foreign Currency actually
received by the Agent or Bank.
11.7 Insufficient payment
If an amount required to be paid to the Agent under this Agreement is
not paid in full when due, the Agent may apportion such amount between
principal, interest, commission, fees, charges and other amounts
payable under this Agreement in such manner as it may determine and
any such determination shall be binding on each party hereto.
11.8 Anticipatory payments
The Agent will not be obliged to make a payment to a Bank or a
Borrower out of any sum which it is expecting to receive for the
account of the Bank or the Borrower until it has been able to
establish that it has received the sum. The Agent may elect to make
such payment, whereupon to the extent such payment is made but the
Agent does not receive the sum when due in whole or in part:
(a) each person to which such payment was made shall, on request by
the Agent, immediately refund it to the Agent;
(b) if the person who has failed to pay the sum when due is an
Obligor, interest payable by the Obligor on the amount of the sum
not paid when due and not refunded under clause 11.8(a) shall,
notwithstanding any other provision of this Agreement, belong to
the Agent absolutely; and
(c) if the person who has failed to pay the sum is a Bank, the Bank
will pay interest on the amount of the sum not paid when due and
not refunded under clause 11.8(a) at a rate determined by the
Agent to be equal to its cost of funds.
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The provisions of this clause are without prejudice to any rights
which any person may have against the party who fails to pay any sum.
11.9 Rounding
In making any payment under this Agreement, the Agent may round
amounts to the nearest dollar.
12. TAXES
12.1 No deduction for Taxes and no set-off or counterclaim
All payments by the Obligors under any Transaction Document, whether
of principal, interest or other amounts due thereunder, shall be:
(a) free of any set-off or counterclaim; and
(b) without deduction or withholding for any present or future Taxes
unless the Obligor is compelled by law to deduct or withhold the
same.
12.2 Payment net of Taxes
If:
(a) an Obligor is legally compelled to make any deduction or
withholding on account of Taxes (other than Excluded Taxes);
(b) the Agent is legally compelled to make any deduction or
withholding on account of Taxes (other than Excluded Taxes) from
any payment to a Bank;
(c) a Bank does not receive a payment to which it is entitled under
this Agreement or a Transaction Document free and clear of Taxes
(other than Excluded Taxes);
(d) a Bank or the Agent is obliged to pay any Taxes in respect of a
payment made or to be made by an Obligor under this Agreement or
a Transaction Document (other than Excluded Taxes); or
(e) a Bank is obliged, in respect of financial accommodation
("Funding") raised or proposed to be raised by the Bank to permit
or facilitate its participation in an Advance:
(i) to make any additional payments as a result of any deduction
or withholding from any payment or repayment which the Bank
is obliged to make in respect of the Funding (other than in
respect of Excluded Taxes); or
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(ii) to pay any Taxes (other than Excluded Taxes) as a result of
or in connection with the Funding or any payment or
repayment to be made by it in connection with the Funding,
then:
(f) where clause 12.2(a), (b), (c) or (d) apply, the Obligor shall on
demand by the Agent pay to the Agent such additional amounts, by
way of additional interest, as may be necessary to ensure that
the Agent or Bank affected receives when due a net amount (after
payment of any Taxes, other than Excluded Taxes) equal to the
full amount which it would have been entitled to receive and
retain had the deduction or withholding not been made or had the
payment been free and clear of Taxes or had the Agent or Bank not
been obliged to pay any Taxes in respect of the payment; and
(g) where clause 12.2(e) applies in relation to a Bank, the relevant
Obligor shall on demand by the Agent pay to the Agent on account
of the Bank an amount equal to the amount required to be paid, or
paid, in respect of or as a result of any deduction or
withholding or payment of Taxes to which the paragraph applies;
and
(h) in addition to clause 12.2(f), where any Obligor is legally
compelled to make any deduction or withholding on account of
Taxes the relevant Obligor, shall:
(i) pay to the appropriate governmental authority or department
any amount deducted or withheld in respect of Taxes; and
(ii) within 20 Banking Days after making the deduction or
withholding provide to the Agent evidence satisfactory to it
of that payment having been made.
12.3 Funding
(a) The Banks will use their reasonable efforts to raise all Funding
(as defined in clause 12.2(e)) free and clear of Taxes (other
than Taxes which may be reduced or eliminated by the Borrower
obtaining approved issuer status). If a Bank is entitled to make
a claim under clause 12.2, the parties agree to consider in good
faith funding arrangements which would mitigate the Obligor's
costs under clause 12.2 as and when the need arises (including,
but not limited to, the use of a fronting bank in order to avoid
making any deduction or withholding or paying any Taxes as
referred to in clause 12.2 as and when the need arises).
(b) If a Bank is obliged to make any deduction or withholding or pay
any Taxes as referred to in clause 12.2(e), the Bank will
promptly notify the Agent and the Borrower of that obligation and
its amount.
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12.4 Termination
If any Obligor fails to comply with the provisions of clause 12.2 in
relation to a Bank, the Bank may by notice to the Borrower through the
Agent terminate its obligations under this Agreement. Upon such a
notice being given, the Borrower will within 5 Banking Days prepay the
relevant Bank's participation in all affected Utilisations together
with accrued interest thereon and all other money payable under this
Agreement to the Bank. Any such prepayment shall be permanent and the
Facility shall be cancelled to the extent of the prepayment.
13. ILLEGALITY
If any change in applicable law, regulation, treaty or official
directive or in the interpretation or administration thereof by any
governmental authority charged with the administration thereof makes
it unlawful or impossible for a Bank to give effect to its obligations
under this Agreement:
(a) the Bank's obligations under this Agreement will be suspended
immediately for the duration of such illegality or impossibility;
(b) the Bank may by notice to the Borrower through the Agent
terminate its obligations under this Agreement;
(c) if required by or as a result of the applicable event, or if
necessary to prevent or remedy a breach of, or to comply with,
any applicable law, regulation, treaty or official directive, the
Borrower will prepay an amount equal to the Bank's participation
in all Utilisations together with all interest and fees accrued
thereon and such other amounts as are payable to the Bank under
this Agreement in full immediately, or if delay in prepayment
does not compound such breach or affect such compliance, at the
end of the current Interest Period (or such lesser period if the
applicable law, regulation, treaty or official directive
requires); and
(d) the Borrower will indemnify the Bank and notwithstanding
termination of its obligations under this Agreement keep it
indemnified against any cost, loss, damage or expense suffered,
incurred or payable by it as a result of the operation of clause
13(a), (b) and (c) and shall pay to the Agent for the account of
the Bank prior to termination of the Bank's obligations under
this Agreement such amount as the Bank estimates in good faith to
be, then or in the future, payable to it by the Borrower under
this indemnity.
14. INCREASED COST
(a) If by reason of any change in law or in its interpretation or
administration or by reason of compliance with any request from
or requirement of any fiscal, monetary or other authority:
(i) a Bank incurs a cost as a result of its having entered into
or performed its obligations under the Facility or as a
result of any Advance being outstanding hereunder;
(ii) there is any increase in the cost to a Bank of funding or
maintaining any Utilisation made or to be made hereunder;
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(iii) the amount of principal, interest or other amount payable
to a Bank or the effective return to a Bank on the
Utilisations under this Agreement or the anticipated rate of
return at the date of this Agreement on the Bank's overall
capital is reduced; or
(iv) a Bank becomes liable to make any payment (not being a
payment of Tax on its overall net income) on or calculated
by reference to the amount of Utilisations made hereunder or
Bills outstanding hereunder,
then from time to time on notification by the Bank through the
Agent the Borrower shall pay to the Agent on account of the Bank
amounts sufficient to indemnify the Bank against such cost,
increased cost, reduction or liability.
(b) The notification referred to in paragraph (a) above shall set out
in reasonable detail (excluding confidential information) the
basis for the notification.
(c) If a Bank has acted in good faith it is no defence that any such
cost, increased cost, reduction or liability could have been
avoided.
(d) A Bank's certificate as to the amount of, and basis for arriving
at, any such cost, increased cost, reduction or liability is
conclusive and binding on the Borrower and the Guarantors in the
absence of manifest error on the face of the certificate.
15. MITIGATION
15.1 Mitigation
If circumstances arise in respect of any Bank which would, or upon the
giving of notice would, result in the operation of clause 12, 13 or 14
to the detriment of an Obligor:
(a) such Bank shall use best endeavours to promptly notify the Agent
and the Borrower and, upon the request of the Borrower, shall
enter into discussions with the Borrower with a view to
determining what mitigating action might be taken by such Bank,
including discussion of the possibility of a change in its
lending office, a change in the method of funding Advances or a
transfer of its participation in the Facility and its Commitments
to another bank or financial institution; and
(b) at the request of the Borrower, the Agent will enter into
discussions with the Borrower with a view to determining what
mitigating action might be taken by the Agent with respect to the
administration of this Agreement by the Agent,
PROVIDED THAT nothing in this clause shall oblige any Bank or the
Agent to incur any costs or expenses or to take any action or refrain
from taking any action.
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15.2 Replacement of Bank
(a) If such circumstances as are referred to in clause 15.1 shall
arise, the Agent, at the request of the Borrower, will consult
with the Borrower with a view to identifying and approaching
bank(s) and financial institution(s) acceptable to the Borrower
who may be willing to become party to this Agreement as Bank(s)
in replacement for the relevant Bank(s).
(b) If:
(i) such circumstances as are referred to in clauses 12.2 or
14(a) arise in respect of a Bank (the "Relevant Bank"); and
(ii) the Borrower finds a bank or financial institution (the
"Replacement Bank") who is willing to become a party to this
Agreement in replacement of the Relevant Bank,
the Relevant Bank must promptly transfer all of its rights and
obligations under the Transaction Documents in accordance with
clause 29.
15.3 Costs and Expenses
Any reasonable costs and expenses incurred by any Bank or the Agent
pursuant to this clause shall be paid by the Borrower within 5 Banking
Days after receipt of a demand specifying the same.
16. REPRESENTATIONS AND WARRANTIES
16.1 General representations and warranties
The Borrower and each Guarantor hereby represents and warrants in
respect of itself only to the Agent and each Bank that:
(a) (Legally binding obligation): each Transaction Document and
Material Contract to which it is a party constitutes a valid and
legally binding obligation of it in accordance with its terms
subject to principles of equity and laws generally affecting
creditor's rights;
(b) (Execution, delivery and performance): the execution, delivery
and performance of each Transaction Document to which it is a
party does not violate any existing law or regulation or any
document or agreement to which it is a party or which is binding
upon it or any of its assets;
(c) (Authorisation): all consents, licences, approvals and
authorisations of every government or local government authority
required under any legislation (including, without limitation,
the Resource Management Act 1991) to be obtained by it in
connection with the execution, delivery and performance of each
Transaction Document to which it is a party and the business (if
any) carried on by it have been obtained and are valid and
subsisting;
(d) (No litigation): no litigation, arbitration, criminal or
administrative proceedings are current, pending or, to the
knowledge of the Borrower or Guarantor, threatened in which there
is a reasonable likelihood of an adverse determination;
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(e) (No Event of Default): no event has occurred which constitutes an
Event of Default or a Potential Event of Default;
(f) (Laws): it has complied with all statutes and regulations
relative to it and the businesses (if any) carried on by it the
non-compliance with which would have a Material Adverse Effect;
(g) (Financial Liabilities): save as disclosed to the Agent prior to
the date of this Agreement or any date on which this
representation and warranty is repeated, it is not in default in
the payment of any sum greater than $100,000, or in the
performance observance of any obligation in respect of any
Financial Liability greater than $500,000, and no event has
occurred which with the giving of notice, lapse of time or other
condition could constitute such a default in respect of any
Financial Liability greater than $500,000;
(h) (No trusts): it is not the trustee of any trust and does not hold
any property subject to or impressed by any trust;
(i) (Title): it is the sole legal and beneficial owner of the
Security Property subject to the Security free and clear of all
Encumbrances other than those of the type referred to in clause
17.3(a) and, in the period from the date of this Agreement to the
first Utilisation Date, the Nortel/DSC Security;
(j) (Intellectual Property Rights):
(i) it owns or has licensed to it all the intellectual property
rights which are material in the context of its business and
which are required by it in order for it to carry on its
business as it is being conducted and it does not, in
carrying on its business and to the best of its knowledge,
infringe any intellectual property rights of any third party
in any material respect;
(ii) none of the intellectual property rights which are material
in the context of its business is, to its knowledge, being
infringed nor, to its knowledge, is there any threatened
infringement of those intellectual property rights, by any
third party;
(k) (Tax liabilities): no material claims are being or are reasonably
likely to be asserted against it with respect to Taxes. It is not
materially overdue in the filing of any Tax returns required to
be filed by it and it has paid all Taxes shown to be due on such
returns or on any assessments made against it ;
(l) (Material Contracts): save as disclosed to the Agent prior to the
date of this Agreement or any date on which this representation
and warranty is repeated, each of the Material Contracts to which
it is a party is in full force and effect and it is not in breach
of any material term of any Material Contract to which it is a
party nor, is any other party to any Material Contract in breach
of any such term; and
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(m) (Year 2000 Compliant): it believes (having undertaken a detailed
review and assessment) that all Computer Systems used by any
member of the Group will be Year 2000 Compliant by 30 September
1999.
16.2 Information representations and warranties
The Borrower and each Guarantor hereby represents and warrants to the
Agent and each Bank in respect of itself only that:
(a) (Information): all information relating to an Obligor provided to
the Banks by an Obligor or at their direction in connection with
the Facility and each Transaction Document and Material Contract
is true in all material respects and is not, by omission or
otherwise, misleading in any material respect;
(b) (Accounts): the Accounts provided to the Agent:
(i) have been prepared in accordance with accounting principles
and practices generally accepted in New Zealand; and
(ii) give a true and fair view of the financial condition of the
relevant entity as at the date to which such accounts relate
and the results of operations for the accounting period
ending on that date and since that date there has been no
material adverse change in the financial condition of the
Borrower, the Guarantors or the Group as shown in such
accounts which would have a Material Adverse Effect;
(c) (Documents): the documents delivered to the Agent by or on behalf
of any Obligor pursuant to clause 3.1(b) and any other provision
of the Transaction Documents were genuine and in the case of copy
documents, were true, complete and accurate copies, of originals
which have not been amended, varied, supplemented or superseded
in any way;
(d) (Information Memorandum): save as disclosed in writing to the
Agent all material written factual information contained in the
Information Memorandum is true in all material respects at the
date (if any) ascribed thereto in the Information Memorandum, all
expressions of opinion or intention and all forecasts and
projections contained in the Information Memorandum were arrived
at after careful consideration and were based on reasonable
grounds, and so far as it is aware the Information Memorandum as
of its date was not misleading in any material respect and as at
its date did not omit to disclose any matter failure to disclose
which would result in any information contained in the
Information Memorandum being misleading in any material respect
in the context of this Agreement;
(e) (Business Plan): save as disclosed in writing to the Agent all
material factual information contained in the Business Plan is
true in all material respects at the date (if any) ascribed
thereto in the Business Plan or (if none) at the date of the
relevant Business Plan, all expressions of opinion or intention
and all forecasts and projections contained in the Business Plan
were arrived at after careful consideration, were based on
reasonable grounds, and the Business Plan as of its date was not
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misleading in any material respect and as at its date did not
omit to disclose any matter failure to disclose which would
result in any information contained in the Business Plan being
misleading in any material respect in the context of this
Agreement; and
(f) (Recent Events): save as disclosed in writing to the Agent, so
far as it is aware, reasonable enquiry having been made, since
the date of the material contained in the Information Memorandum
and the Business Plan respectively, nothing has occurred of which
it is aware and which is not in the public domain which, as at
the date of this Agreement, renders any of the material
information, expressions of opinion or intention, projections or
conclusions referred to in (d) or (e) above and contained in the
Information Memorandum or the Business Plan inaccurate or
misleading (or in the case of expressions of opinion, conclusions
or projections, other than fair and reasonable) in any material
respect in the context of the Group and the transaction
contemplated by this Agreement.
16.3 Corporate representations and warranties
The Borrower and each Guarantor hereby represents and warrants to the
Agent and each Bank in respect of itself only that:
(a) (Due incorporation): it is duly incorporated and has the
corporate power to own its own property and to carry on its own
business as is now being conducted;
(b) (Constitution): the execution, delivery and performance of each
Transaction Document to which it is a party does not violate its
constitution;
(c) (Corporate power): it has the power, and has taken all corporate
and other action required, to enter into any Transaction Document
to which it is a party and to authorise the execution and
delivery thereof and the performance of its obligations
thereunder; and
(d) (Filings): it has filed all corporate notices and effected all
registrations with the Registrar of Companies or similar office
in its jurisdiction of incorporation and in any other
jurisdiction as required by law, and all such filings and
registrations are current, complete and accurate in all material
respects.
16.4 Representations and warranties repeated
Each representation and warranty contained in clause 16.1, 16.2
(except for paragraphs (c), (d), (e) and (f)) and 16.3 shall be
repeated on the date of each Advance and on each date an interest
payment is due under the Facility with reference to the facts and
circumstances then subsisting, as if made on each such day and each
Quarter the Borrower will deliver a Compliance Certificate to the
Agent in respect of the same.
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17. UNDERTAKINGS
17.1 Duration and Benefit
The undertakings in this Agreement are given for the benefit of the
Agent and each Bank and shall remain in force from and after the date
of this Agreement and so long as any amount is or may be outstanding
under this Agreement or any Commitment is in force. The Agent (acting
at the direction of the Majority Banks) may waive compliance with any
undertaking contained in this clause 17 either for a specific purpose
or generally by providing the Borrower with a letter in writing
specifying the waiver being granted.
17.2 Information
(a) (Financial information): The Borrower and each Guarantor will
ensure that there is delivered to the Agent:
(i) as soon as practicable and in any event not later than 120
days after the close of each of its financial years, a copy
of the consolidated balance sheet and profit and loss
statement for the Group for that financial year certified as
correct by an auditor approved by the Agent it being
acknowledged that Arthur Anderson is acceptable;
(ii) as soon as practicable and in any event not later than 90
days after each half of each of its financial years, a copy
of the consolidated unaudited balance sheet and profit and
loss statement for and the Group for that half-year;
(iii) as soon as practicable and in any event not later than 10
Banking Days after the beginning of each month up to and
including June 2000 and thereafter within 30 days of the
beginning of each Quarter, a copy of the management accounts
of the Group for the preceding month or Quarter (as the case
may be) and a statement of the Subscribers (which includes
reasonable details of new installations and monthly churn
rate) at the end of the preceding month or Quarter (as the
case may be) together with a statement setting out in
sufficient detail any variance from the Business Plan and an
explanation of the reasons for any such variance;
(iv) as soon as practicable and in any event not later than 90
days after the commencement of its financial year, a copy of
the Group's annual budget and an updated Business Plan; and
(v) promptly such further information regarding its financial
condition and business operations as the Agent from time to
time reasonably requires.
(b) (Compliance with accounting standards): The Borrower and each
Guarantor will ensure that the Accounts (except for management
accounts of the Group given under clause 17.2(a)(iii)) are
prepared in accordance with the relevant constitutional
documents, the Companies Act 1993, the Financial Reporting Act
1993, any applicable statute and all accounting principles and
practices generally accepted in New Zealand consistently applied,
or if not consistently applied, accompanied by details of the
inconsistencies, and shall give a true and fair view of its
financial condition and the result of its operations as at the
date, and for the period ending on the date, to which those
Accounts are prepared.
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(c) (Projections): The Borrower shall ensure that there is delivered
to the Agent in sufficient copies for each of the Banks not later
than the commencement of each financial year, a projected
consolidated balance sheet, profit and loss account, cash flow
statement and rolling monthly cash forecast of the Group for (or
in the case of a balance sheet, as at the end of) the forthcoming
annual financial year, together with details of the principal
assumptions underlying such projections and a description of the
proposed activities of the Group during such period.
(d) (Provision of further information): The Borrower and each
Guarantor will:
(i) (Special resolutions): deliver to the Agent before the date
of the relevant meeting, a copy of any notice calling an
extraordinary general meeting of any Obligor or proposing
any special or extraordinary resolution thereof;
(ii) (Reports to members etc.): deliver to the Agent, upon issue,
a copy of all material reports, accounts, notices and
circulars issued by any Obligor (in order to comply with any
applicable legislative requirement or its constitution) to
any of its members;
(iii) (Certificate of default): as and when required by the
Agent, furnish the Agent with a statement made by 2
directors or 1 director and the Chief Financial Officer of
the Borrower stating whether or not an Event of Default or a
Potential Event of Default has occurred and, if it has,
setting out details thereof and the steps (if any) taken or
proposed to be taken to remedy or cure the same;
(iv) (Evidence of compliance): as and when required by the Agent,
furnish to the Agent proof to the satisfaction of the Agent
that the Obligations of the Borrower and each Guarantor have
been and continue to be performed and observed;
(v) (Business Plan): provide a revised Business Plan to the
Agent whenever there is any change to the timing of the
payments, budgets or assumptions contained therein;
(vi) (Authorisations): deliver to the Agent, Quarterly a copy of
all material Authorisations issued in relation to a Business
in the preceding quarter; and
(vii) (Government Agency): a copy of all material correspondence
with Government Agencies.
(e) (Notification of certain events): The Borrower and each Guarantor
will promptly notify the Agent in writing as soon as it becomes
aware of the occurrence of:
(i) (Event of Default): any Event of Default or Potential Event
of Default;
(ii) (Litigation): any litigation, arbitration, criminal or
administrative proceedings or labour disputes:
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(A) commenced by an Obligor; or
(B) against an Obligor or any Obligor's property, assets or
revenues that, if decided adversely to the Obligor is
reasonably likely to incur a liability greater than
$500,000,
and provide periodic reports on the status of the
litigation;
(iii) (Shutdown): any actual threatened shutdown or suspension of
the cable television service or telephone service operated
by the Group (including as a result of any shutdown of the
Telecom New Zealand Limited network or any inability to
interconnect with that network) except shutdown or
suspension in the ordinary course of business;
(iv) (Material Adverse Effect): any event which would reasonably
be expected to have a Material Adverse Effect;
(v) (Authorised persons): any change in the persons authorised
by it to sign Bills, notices, certificates or other
documents in connection with the Facility, giving specimen
signatures of any new person so authorised and giving to the
satisfaction of the Agent evidence, where requested by the
Agent, of the authority of that person; or
(vi) (Trustee): if any Obligor becomes or is appointed the
trustee of any trust or comes to hold any property subject
to or impressed by any trust.
(f) (Security Property): The Borrower and each Guarantor will
maintain and protect all of its Security Property and will not
take any action that is reasonably likely to result in the
business of the Group not remaining capable of operating in a
manner that will enable the Borrower to meet its obligations.
17.3 Security Value
(a) (Restriction on Encumbrances): No Borrower or Guarantor will
create, permit or suffer to exist any Encumbrance over all or any
of its assets (including the Security Property) except for:
(i) until the first Utilisation Date, the Nortel/DSC Security;
(ii) the Securities;
(iii) liens arising by operation of law in the ordinary course of
day-to-day trading and securing obligations not more than 90
days overdue;
(iv) a banker's lien or right of set-off or combination arising
by operation of law or practice over property or money
deposited with a banker in the ordinary course of the
Obligor's ordinary business;
(v) contractual set off rights in respect of the Borrower's
transactional banking facilities and arrangements;
(vi) arrangements constituted by retention of title (other than
an Adverse Title Retention Arrangement) in connection with
the acquisition of goods provided the goods are acquired in
the ordinary course of the Obligor's business;
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(vii) Encumbrances arising by operation of law in connection with
rights arising in the ordinary and usual course of its
business in favour of an unpaid seller, the obligations of
the purchaser not being more than 90 days overdue; or
(viii) Encumbrances created by statute in favour of governmental
or semi-governmental authorities or departments securing the
payment of rates or Taxes except as created because of the
failure to duly pay Taxes; or
(ix) Encumbrances existing as at the date of this Agreement in
favour of parties to the Pole and Cabling Duct Agreements
referred to in paragraphs (a) and (b) of the definition of
Material Contracts.
(b) (Transactions similar to security): No Borrower or Guarantor
will:
(i) sell or otherwise dispose of any of its assets on terms
whereby such asset is or may be leased to or re-acquired or
acquired by any member of the Group; or
(ii) sell or otherwise dispose of any of its receivables; or
(iii) except for assets acquired in the ordinary course of
business on the normal commercial terms of the vendor,
purchase any asset on terms providing for a retention of
title by the vendor or on conditional sale terms or on terms
having a like substantive effect to any of the foregoing,
except where such assets are fixed assets, the aggregate
capital value of the item or items acquired or supplied
under the same contract (or under a series of related
contracts) will be less than $100,000 or such other amount
as agreed.
(c) (Adverse Title Retention Arrangements): The Borrower and each
Guarantor will not enter into or allow to exist any Adverse Title
Retention Arrangement in respect of any assets delivered to it in
the course of its business.
(d) (Disposals): No Borrower or Guarantor will, either in a single
transaction or in a series of transactions whether related or not
and whether voluntarily or involuntarily, sell, transfer, assign,
lease or otherwise part with possession of or dispose of:
(i) any shares in any member of the Group;
(ii) all or any other part of its respective assets or
undertaking, other than:
(A) disposals in the ordinary course of business of the
Group;
(B) disposals of surplus, obsolete or redundant plant and
equipment, not required for the efficient operation of
its business, at fair market value;
(C) the expenditure of cash in payment for assets or
services acquired at market value in the course of its
business;
(D) disposals of assets in exchange for other assets, in
the reasonable opinion of the person effecting the
disposal, comparable or superior as to type, value or
quality;
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(E) disposals of assets to any member of the Group;
(F) disposals of assets for the purposes of replacement of
those assets; or
(G) disposals of assets with the prior written consent of
the Agent.
(e) (Pari passu ranking): The Borrower and each Guarantor undertakes
that its obligations under this Agreement rank and will at all
times rank at least pari passu in right and priority of payment
and in point of security (save by reason of and to the extent of
its security afforded thereto by the Securities or, until the
first Utilisation Date, the Nortel/DSC Security) with all its
other present and future unsecured and unsubordinated obligations
(including, without limitation, obligations arising under hedging
arrangements), other than obligations applicable generally to
companies incorporated in its jurisdiction of incorporation which
have priority by operation of law (including, without prejudice
to the generality of the foregoing, in respect of employees'
remuneration, Taxes and like obligations).
17.4 Liabilities
(a) (Restriction on guarantees): No Borrower or Guarantor will,
without the prior consent in writing of the Agent, enter into any
bond, guarantee or indemnity in respect of any Financial
Liabilities in favour of any person other than:
(i) pursuant to the Transaction Documents;
(ii) a guarantee given to a bank to facilitate the operation of
bank accounts of members of the Group maintained with such
Bank on a net balance basis; or
(iii) in respect of any Financial Liabilities permitted under
clause 17.4(c).
(b) (Further restriction on guarantees): No Borrower or Guarantor
will, without the prior consent in writing of the Agent, enter
into any bond, guarantee or indemnity in respect of any
obligation except Financial Liabilities in favour of any person
other than in respect of a member of the Group. For the avoidance
of doubt, it is agreed that take or pay or minimum payment
obligations incurred by a Borrower or a Guarantor are not bonds,
guarantees or indemnities to which this clause 17.4(b) applies.
(c) (Financial Liabilities): No Borrower or Guarantor will create,
incur or be liable for any Financial Liabilities of itself other
than:
(i) under the Transaction Documents;
(ii) indebtedness under transactional banking facilities and
arrangements;
(iii) trade or other similar indebtedness incurred in the
ordinary course of business;
(iv) subordinated loans from its shareholders or any person
approved by the Agent provided that:
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(A) such loans are on terms and conditions approved by the
Agent; and
(B) the Agent has been granted a limited recourse mortgage
over such loans;
(v) cash backed performance bond facilities up to an aggregate
of $1,000,000 or such larger amount agreed to by the Agent
acting on directions from the Majority Banks;
(vi) under finance leases and trade related letters of credit up
to an aggregate of $2,500,000, but so that Financial
Liabilities under finance leases do not exceed $500,000 at
any time; or
(vii) any Financial Liability approved by the Agent,
and ensure that no indebtedness referred to in paragraph (iv)
above is repaid or repurchased without the prior written consent
of the Agent or until the Facility has been repaid and cancelled
in full.
(d) (Options): No Borrower or Guarantor will, without the prior
consent of the Agent, enter into or permit to subsist any
arrangement whereby any person:
(i) has the right (whether or not exercisable only on a
contingency) to require any member of the Group to purchase
or otherwise acquire any property or any interest in
property; or
(ii) has the right (whether or not exercisable only on a
contingency) to require any member of the Group to sell or
otherwise dispose of any property or interest in property,
other than in the ordinary course of business.
(e) (Treasury Transactions): No Borrower or Guarantor will enter into
any interest rate swap, cap, ceiling, collar or floor or any
currency swap, futures, foreign exchange or commodity contract or
option (whether over the counter or exchange traded) or any
similar treasury transaction, other than in accordance with
clause 17.12(h), spot foreign exchange contracts entered into in
the ordinary course of business and transactions entered into for
the hedging of actual or projected exposures arising in the
ordinary course of ordinary trading activities of the Group or to
meet its obligations under this Agreement.
17.5 Use of Funds
(a) (Repayment of shareholders' loans): No Borrower or Guarantor will
repay, and the Borrower and each Guarantor will procure that no
amount of shareholders' loans to any Obligor will be repaid prior
to the Termination Date without the prior written consent of the
Agent except where the shareholder receiving the repayment is the
Borrower or a Guarantor or where permitted under clause 17.6;
(b) (Loans out): No Borrower or Guarantor will make any loan to any
person save for:
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(i) loans made by one member of the Group to another member of
the Group where the recipient of the loan is the Borrower or
a Guarantor;
(ii) deposits made with banks in the ordinary course of business
as part of its transactional banking facilities and
arrangements; and
(iii) the advance of $1,000,000 made to Australian Power
Industries (NZ) Limited under clause 4.13 of the
Construction Contract referred to in clause (e) of the
definition of Material Contracts.
17.6 Dividends and Share Capital
(a) (Restriction on Dividends): Up to and including 31 December 2001,
the Borrower and each Guarantor undertake not to:
(i) declare, make or pay any dividend, charge, fee or other
distribution (whether in cash or in kind) on or in respect
of its share capital; or
(ii) make any payment of interest or any similar payment in
respect of any shareholder loans; or
(iii) pay any fees under any management agreements or technical
assistance agreements with any Related Company (other than
reimbursement of operating expenses under the Technical
Assistance Agreement).
(b) (Payment of Dividends): From 1 January 2002, if in respect of any
Quarter Total Debt/EBITDA is 4.75 or less, the Borrower may make
payments of the sort described in paragraph (a) above during the
next Quarter or at any time thereafter provided that:
(i) at the time such payments are to be made no Event of Default
or monetary Potential Event of Default has occurred and is
subsisting; and
(ii) the payments by the Borrower in aggregate do not exceed 50%
of the Excess Cash Flow for the Quarter in respect of which
the payment is permitted.
(c) (Share Capital): No Borrower or Guarantor will, without the prior
written consent of the Agent:
(i) redeem, repurchase, defease, retire or repay any of its
share capital, or resolve to do so; or
(ii) issue any share capital to any person unless such share
capital will form part of the Security Property.
17.7 Intellectual Property Rights
(a) (Registrations): The Borrower and each Guarantor will make such
registrations and pay such fees, registration Taxes and similar
amounts as are necessary to keep its registered intellectual
property rights which are material to its business in force and
to record its interest in the intellectual property rights.
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(b) (Protection of Rights): The Borrower and each Guarantor will take
such steps as are necessary and commercially reasonable
(including, without limitation, the institution of legal
proceedings) to prevent third parties infringing those
intellectual property rights referred to in paragraph (a) above
and (without prejudice to paragraph (a) above) take such other
steps as are reasonably practicable to maintain and preserve its
interests in those rights.
(c) (No Abandonment): No Borrower or Guarantor will permit any
registration of any of the intellectual property rights to be
abandoned, cancelled or lapsed or to be liable to any claim of
abandonment for non-use or otherwise except where such
abandonment, cancellation or lapse would not reasonably be
expected to have a Material Adverse Effect.
17.8 Insurances
(a) (Insure): The Borrower and each Guarantor, to the extent that
insurance is generally available in commercial markets, will
insure all Insurable Property against:
(i) loss, theft, damage or destruction; and
(ii) any liability from time to time of the Borrower, the
Guarantors or the Agent in respect of the ownership, use or
occupation of the Insurable Property.
(b) (Terms): All Insurances will:
(i) be taken out with a reputable insurer;
(ii) have the name of the Agent noted as loss payee;
(iii) insure the Borrower's, the Guarantors' and the Agent's
respective insurable interests;
(iv) be for such amounts and cover such risks and contain such
terms and conditions as the Agent reasonably requires; and
(v) not be varied or cancelled without the prior written consent
of the Agent except if replaced with substantially
equivalent insurance;
(c) (Full replacement value): All Insurances against loss, theft,
damage or destruction of the Insurable Property will be for the
full replacement value thereof from time to time unless the Agent
otherwise agrees in writing.
(d) (Policies): All documents relating to the Insurances, including
without limiting the generality of the foregoing, a certified
copy of each proposal form under which the application for
insurance was made, the relevant policies, all renewal
certificates, certificates of currency and endorsement slips, are
to be delivered by the Borrower and each Guarantor to the Agent
immediately upon receipt.
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(e) (Maintenance of Insurance and production of policy): The Borrower
and each Guarantor will:
(i) maintain all Insurances;
(ii) duly and punctually pay or cause to be paid all premiums and
other money payable under, and perform, observe and fulfil
the terms of, all Insurances;
(iii) produce to the Agent the policy of Insurance and the
receipts for the payment of each premium and all other money
payable in respect of each policy (or other evidence of
payment satisfactory to the Agent) at least 14 days before
the due date for renewal thereof; and
(iv) to the extent it is able to do so, ensure that every policy
of Insurance:
(A) contains an agreement by the insurer that,
notwithstanding the lapse of any policy (except by
reason of expiration in accordance with its terms) or
any right of cancellation of the insurer or any
cancellation by the Borrower or a Guarantor (whether
voluntary or involuntary), that policy will continue in
force for the benefit of the Agent for at least 30 days
after written notice of cancellation has been sent by
certified mail to the Agent and that no reduction in
limits or coverage in that policy in whole or part will
be effected; and
(B) insures the Agent's interest up to the limits of the
policy regardless of any breach or violation by the
Borrower or the Guarantor of any warranties,
declarations or conditions contained in that policy.
(f) (Full disclosure): The Borrower and each Guarantor will disclose
to the proposed insurer all facts material to the insurer's risk
before entering into the Insurances.
(g) (No liability): The Agent will not incur any liability to the
Borrower or a Guarantor arising out of any failure by the Agent
to effect or renew any Insurance, nor will the Agent incur any
liability arising out of any failure by the insurer for any
reason to meet any claim under any Insurance.
(h) (Option as to payments): If any part of the Insurable Property is
lost, stolen, damaged or destroyed, the sum received under any
Insurance will be applied:
(i) towards the replacement or repair of such Insurable
Property; or
(ii) in or towards repayment or reduction of the Obligations,
and where such loss, theft, damage or destruction of the
Insurable Property would have a Material Adverse Effect, the
application of such sum will be applied, at the option of the
Agent, as specified in (i) or (ii) above.
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(i) (Money paid under Insurances): If any money payable under the
Insurances comes into the hands of the Borrower or a Guarantor, it
will be paid in accordance with clause 17.8(h)(i) or to the Agent
immediately.
(j) (Not prejudice Insurances): The Borrower and each Guarantor will not
cause or permit (to the extent it is within its control to do so)
anything to be done which may:
(i) render any part of the Insurances void, voidable or otherwise
unenforceable;
(ii) hinder or prevent recovery of any money in respect of the
Insurances; or
(iii) cause the premiums and other money payable to any insurer to be
increased.
17.9 Licences
The Borrower and each Guarantor will, and will ensure that each
Obligor will:
(a) (Renew): on or before the time and in the manner prescribed by
the relevant statute for each Licence, apply for and procure the
renewal of the Licence and pay or cause to be paid the renewal
fees and other sums required in respect of the Licence or the
renewal of the Licence within the time allowed and in the manner
prescribed by the statute unless the non renewal of the Licence
would, having regard to all of the circumstances (including the
non renewal of other Licences at any prior time) and taking into
account the cumulative effect of all such previous events and
circumstances, not be reasonably likely to have a Material
Adverse Effect;
(b) (Production of the Licence): upon request, produce to the Agent
each Licence and all receipts for payments in relation to each
Licence unless already delivered to the Agent under clause
17.11(f);
(c) (No cancellation): not do, allow or suffer any act, matter or
thing as a result of which any Licence is or may be surrendered,
forfeited, withdrawn, cancelled, refused or rendered void, or
whereby the holder of any Licence is disqualified permanently or
temporarily from receiving or continuing to hold a Licence except
on surrender and renewals of Licences unless such surrender,
forfeiture, withdrawal, cancellation, refusal, rendering void or
disqualification would, having regard to all of the circumstances
(including but not limited to, the surrender, forfeiture,
withdrawal, cancellation, refusal, rendering void or
disqualification of other Licences at any prior time) and taking
into account the cumulative effect of all such previous events
and circumstances, not be reasonably likely to have a Material
Adverse Effect;
(d) (No transfer): not surrender or concur in the transfer of any
Licence to any person other than to an Obligor where to do so
would have a Material Adverse Effect;
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(e) (Comply with statutes): comply with all statutes and all lawful
requirements of every Government Agency in relation to the
Licences if failure to comply would reasonably be expected to
result in a forfeiture, termination, cancellation, fine,
non-renewal or suspension of such Licences; and
(f) (Notice): promptly notify the Agent if any relevant authority
issues any material notice in respect of any Licence or threatens
to suspend or cancel any of the Licences or if it becomes aware
of any enquiry by any relevant authority which could affect any
of the Licences.
17.10 Material Contracts
(a) (No Changes): The Borrower and each Guarantor will not without
the prior written consent of the Agent (acting on instructions of
the Majority Banks) which consent will not unreasonably be
withheld:
(i) make (whether formally or by conduct) any material amendment
or modification to any of the Material Contracts or waive
compliance with any material provision of any of the
Material Contracts;
(ii) terminate, repudiate, rescind or revoke any Material
Contract;
(iii) except where the Material Contract may be terminated by
another party to it at any time without cause, in which case
this clause 17.10(a)(iii) shall not apply, take or fail to
take any action which could result in the termination of any
of the Material Contracts; or
(iv) assign or novate its interest in any of the Material
Contracts or consent or permit (where its consent or
permission is required) any other party to do the same.
(b) (Protection): The Borrower and each Guarantor will:
(i) comply with the material terms of the Material Contracts;
(ii) take all action reasonably available to them to ensure that
the Material Contracts remain in full force and effect; and
(iii) provide the Agent with copies of all material notices
served or received under any of the Material Contracts.
17.11 Security Property
(a) (Good repair): The Borrower and each Guarantor will maintain and
protect the Security Property and keep the same in a good and
tenantable state of repair and in good working order and
condition, and will on being required so to do by the Agent
promptly rectify every material defect in the repair and
condition thereof.
(b) (Outgoings): The Borrower and each Guarantor will duly and
punctually pay when due all outgoings including rent and Taxes
payable by it in respect of the Security Property.
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(c) (Not to prejudice): The Borrower and each Guarantor will not do
or (to the extent it is able) permit any act, omission or thing
whereby any part of the Security Property becomes or could be
liable to surrender, forfeiture or cancellation or becomes
prejudiced in any manner or the value of any Security as a
security to the Banks becomes or could be lessened.
(d) (Permit Inspection): The Borrower and each Guarantor will permit
the Agent and any employee, agent or professional adviser of the
Agent, to enter any land or buildings owned or occupied by the
Borrower or the Guarantor at all reasonable times after
reasonable notice, to inspect its condition and to monitor
compliance with the Transaction Documents.
(e) (Protection of Security Property): The Borrower and each
Guarantor will at the request of the Agent take or defend all
legal proceedings that the Agent considers necessary or desirable
for the preservation, protection or recovery of the Security
Property.
(f) (Documents of title and other securities): The Borrower and each
Guarantor will lodge with the Agent promptly upon request by the
Agent:
(i) all certificates, scrip and other indicia of title or
interest in any shares or securities;
(ii) all negotiable instruments other than cheques;
(iii) all certificates of title to land and all original property
leases;
(iv) all Licences unless delivered under clause 17.9(b);
(v) all other documents of title to the Security Property
immediately on request of the same from the Agent.
17.12 General undertakings
(a) (Perform Obligations): The Borrower and each Guarantor will
perform, fulfil and observe its Obligations.
(b) (Maintain Authorisations): The Borrower and each Guarantor will
obtain, renew, maintain and comply with all Authorisations and
all consents, licences, approvals and authorisation of every
local government authority required under any legislation
(including, without limitation, the Resource Management Act 1991)
necessary in connection with the business (if any) carried on by
it, for the validity and enforceability of the Transaction
Documents and the performance of its obligations hereunder and
thereunder and the effectiveness of each Security as a security
with the stated priority and it will promptly provide copies
thereof to the Agent when these are obtained or renewed.
(c) (Change of business): None of the Borrower or any Guarantor will
make or threaten to make any change in the nature of its
respective business as conducted at the date of this Agreement or
take any action which would result in the business not remaining
capable of operating.
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(d) (Any action): No Guarantor will take any action that would result
in the Borrower not remaining capable of operating in a manner
that would enable the Borrower to meet all of its Obligations.
(e) (Mergers): None of the Borrower or any Guarantor will enter into
any merger or consolidation or make any acquisition of any other
person or business except in respect of the assets or shares of a
member of the Group by the Borrower or a Guarantor.
(f) (Administration and liquidation orders etc.): None of the
Borrower or any Guarantor will make or join in making any
application to any court for an administration, liquidation,
receivership, dissolution or other similar order to be made in
relation to any member of the Group.
(g) (Arm's-length terms): No Borrower or Guarantor will enter into
any transaction with any person otherwise than on (or better
than) arm's-length terms and for full market value, and save for
intercompany loans permitted pursuant to clause 17.5(b).
(h) (Hedging): The Borrower must promptly establish, implement and
(unless the Agent acting on the instructions of the Majority
Banks otherwise consents) maintain until the Obligations are
satisfied in full, an interest rate hedging program in line with
prudent business practice to manage and protect the Group on an
ongoing basis against increases or fluctuations in the interest
or discount rates payable by the Borrower under this Agreement,
whereby the Borrower's Interest Expense of at least 50 percent of
the Senior Debt from time to time will be fixed pursuant to
Hedging Agreements in accordance with the notional amortising
principal amounts specified by the Agent from time to time. At no
time will the Borrower hedge more than 100% of its actual
exposures in any market.
(i) (Constitutional Documents): No Borrower or Guarantor will, save
as required by law, amend or agree to amend its constitutional
documents or by-laws of any member of the Group in any way which
has a Material Adverse Effect.
(j) (Related Entity Transactions): No Borrower or Guarantor will
knowingly enter into any transaction with any shareholder of the
Borrower or any Related Company of any shareholder of the
Borrower without the prior written consent of the Agent (such
consent not to be unreasonably withheld) unless such transaction
is entered into on ordinary commercial terms in the ordinary
course of that company's business.
(k) (Bank Accounts): No Borrower or Guarantor will open or maintain
any account with any branch of any bank or other financial
institution providing like services (other than an account
maintained pursuant to the requirements of the Transaction
Documents) unless the opening and maintenance of such account has
been approved by the Agent except for accounts for transactional
banking facilities and arrangements in the ordinary course of
business, including without limitation its transactional banking
facilities with Bank of New Zealand Limited in place as at the
date of this Agreement and which the Agent hereby approves.
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(l) (Compliance with laws): The Borrower and each Guarantor will
comply in all material respects with all applicable laws, rules,
regulations, orders and by-laws of any governmental authority or
local government, whether domestic or foreign having jurisdiction
over it or any of its assets.
(m) (Taxes): The Borrower and each Guarantor will pay all Taxes other
than those contested in good faith (including, without
limitation, the Approved Issuer Levy) due and payable by it.
(n) (Access): Upon notice being given by the Agent, the Borrower and
each Guarantor will procure that any one or more representatives
of the Agent be allowed (at the Agent's risk and expense) to have
access during normal business hours to its assets, books and
records and to inspect the same without disruption or
interference to the operation of those assets, books and records.
(o) (Environmental Laws): The Borrower and each Guarantor will:
(i) comply with all Environmental Laws affecting its business
where non-compliance with such laws would have a Material
Adverse Effect;
(ii) inform the Agent of any material breach of any Environmental
Law, or any notice or order received by it under any
Environmental Law, which would have a Material Adverse
Effect; and
(iii) provide the Agent upon request, but at the sole cost of the
Borrower or the Guarantor (as the case may be), with
environmental audits and reports in respect of that
company's assets, in a form and from an independent
consultant reasonably acceptable to the Agent where the
Agent, on reasonable grounds, believes that the Borrower or
a Guarantor (as the case may be) is in breach of any
Environmental Law, the consequences of which are likely to
have a Material Adverse Effect.
18. FINANCIAL AND OPERATING RATIOS
18.1 Operating Ratios
The Borrower and each Guarantor will ensure that:
(a) (Total Debt/Homes Serviceable): as at the end of each month
listed in Part 1 of Schedule 2, Total Debt as at that date
divided by the number of Homes Serviceable as at that date does
not exceed the amount listed in Part 1 of Schedule 2;
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(b) (Subscribers or Equivalent Billing Units): as at the end of each
month listed in Part 1 of Schedule 2, either the number of
Subscribers as at that date or Equivalent Billing Units as at
that date is greater than the relevant amount listed in Part 1 of
Schedule 2.
18.2 Financial Ratios
The Borrower and each Guarantor will ensure that:
(a) (EBITDA): until 30 September 2000 in respect of each 3 month
period ending on the date specified in Part 2 of Schedule 2
EBITDA will not be less than the amount listed in Part 2 of
Schedule 2;
(b) (Revenue): until 30 September 2000 in respect of each calender
month ending on the date specified in Part 2 of Schedule 2
Revenue will not be less than the amount listed in Part 2 of
Schedule 2;
(c) (Total Debt/Annualised EBITDA): commencing from the 3 month
period ending 31 December 2000, in respect of each 3 month period
ending on a date specified in Part 3 of Schedule 2, Total Debt as
at that date divided by Annualised EBITDA will not exceed the
amount listed in Part 3 of Schedule 2 and thereafter will not
exceed 3.50;
(d) (EBITDA/Interest Expense): commencing from the 3 month period
ending 31 March 2001, in respect of each 3 month period ending on
a date specific in Part 3 of Schedule 2, EBITDA divided by
Interest Expense less interest revenue will not be less than the
amount listed in Part 3 of Schedule 2 and thereafter will not be
less than 5.00.
18.3 Compliance Certificate
(a) The Borrower will deliver a Compliance Certificate to the Agent
within 10 days after:
(i) until 30 June 2000, the end of each month; and
(ii) from 1 July 2000, the end of each Quarter,
(except for Compliance Certificates given at the end of the
financial year which must be given promptly but in any event not
later than 120 days from the end of the financial year) and at
each Utilisation Date for a new Advance.
(b) At the end of each 6 month period from and including the 6 month
period ending on 30 June 1999, the Borrower will ensure that the
Borrower's auditor reviews one Compliance Certificate delivered
to the Agent at the end of that 6 month period and will ensure
that the Borrower's auditor provides a review report to the Agent
within 30 days of the end of the relevant 6 month period
detailing whether any items have come to the auditor's attention
through the course of the auditor's review which would suggest
that the ratios in clauses 18.1 or 18.2 were materially misstated
in that Compliance Certificate.
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19. DEFAULT AND TERMINATION
19.1 Events of Default
Each of the following events is an Event of Default, whether or not
the cause is beyond the control of the Borrower, the Guarantors or any
other person:
(a) (Failure to pay): the Borrower or a Guarantor does not pay and in
the specified manner, any amount payable by it under any
Transaction Document (except in the case of a failure in the
banking system in which case the Borrower or Guarantor must pay
within 2 Banking Days of being notified by the Agent of such
system failure);
(b) (Failure to comply): the Borrower or Guarantor defaults in fully
performing, observing and fulfilling any provision of any
Transaction Document other than a provision requiring the payment
of money as contemplated by clause 19.1(a), provided that in the
case of a default capable of remedy, that default has not been
remedied within 7 days of the occurrence (or such longer period
agreed by the Agent acting on instructions from Majority Banks);
(c) (Untrue warranty): any representation, warranty or statement
made, repeated or deemed to be made or repeated in any
Transaction Document or in connection with the Facility or under
this Agreement is proved to be untrue in any material respect
when made, repeated or deemed to be made, repeated or furnished
(as the case may be);
(d) (Breach of undertaking): any Obligor breaches any written
undertaking given at any time to the Banks or the Agent or fails
to comply with any condition imposed by the Banks or the Agent in
agreeing to any matter (including any waiver);
(e) (Default under other transactions):
(i) any Financial Liability greater than $500,000 of any Obligor
becomes, or becomes capable of being declared, prematurely
due and payable as a result of a default or an event of
default howsoever described thereunder;
(ii) any Financial Liability greater than $500,000 of any Obligor
or any sum payable in respect thereof is not paid when due
and payable;
(iii) any Encumbrance securing more than $500,000 over any asset
of an Obligor becomes capable of being enforced as a result
of a default or an event of default howsoever described
thereunder;
(iv) any Obligor defaults in fully performing, observing and
fulfilling any of the terms, covenants and conditions of any
Encumbrance securing more than $250,000 relating to any of
its assets or any Encumbrance relating to any asset of any
Obligor otherwise becomes enforceable;
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(v) any Encumbrance securing more than $500,000 which is a
floating security over any asset of any Obligor crystallises
into, or otherwise becomes, a fixed or specific security; or
(vi) any Encumbrance securing more than $500,000 relating to a
Security Property is varied without the prior written
consent of the Agent or comes to secure an aggregate debt or
liability (present or future, actual, contingent or
prospective and on any account whatsoever) that exceeds the
amount previously agreed to by the Agent in writing;
(f) (Event of Insolvency): any Event of Insolvency occurs in respect
of any Obligor;
(g) (Cessation of business): an Obligor ceases, or threatens to
cease, to carry on all or a substantial part of its business or
all or a material part of the Obligor's business is destroyed,
confiscated, appropriated or resumed or suffers loss or damage
unless insured to the satisfaction of the Agent;
(h) (Void or voidable): any Transaction Document is or becomes or is
claimed by any Obligor to be void, voidable or unenforceable in
whole or in part;
(i) (Illegality): at any time it is unlawful for an Obligor to
perform any of its material obligations under any Transaction
Document;
(j) (Failure to comply with laws): any Obligor fails to duly and
punctually comply with all statutes, regulations and other laws
binding on it where such failure has a Material Adverse Effect;
(k) (Change in ownership): without the prior written consent of the
Agent, acting on instructions from Majority Banks, a Change in
Ownership occurs. For the purpose of this sub-clause "Change in
Ownership" means:
(i) if the Share Transfer Date does not occur:
(A) the combined indirect shareholdings in the Borrower of
UIHI and STHC is less than 51%; and/or
(B) the indirect shareholding in the Borrower of either
UIHI or STHC falls below 51% of its respective
shareholding at the date of this Agreement; and
(ii) with effect on and from the Share Transfer Date:
(A) the indirect shareholding of UIHI in AUC is less than
51%; and/or
(B) the direct shareholding of AUC in S(NZ)HC is less than
100%; and/or
(C) the direct shareholding of S(NZ)HC in the Borrower is
less than 65%; and/or
(D) the direct shareholding of AUC in the Borrower is less
than 35%.
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(l) (Hedging): the Borrower hedges more than 100% of its physical
exposures;
(m) (Reduction in capital): without the prior written consent of the
Agent (acting on instructions from Majority Banks), an Obligor
takes action to reduce its share capital;
(n) (Reserve liability): without the prior written consent of the
Agent, a resolution is passed by the board of the Obligor for the
amalgamation of that Obligor with another company;
(o) (Material Contracts): without the prior written consent of the
Agent (acting on instructions from Majority Banks) an event of
default howsoever described occurs and is continuing under any
Material Contract or any Obligor fails to comply with any
material term of a Material Contract or any Material Contract is
prematurely terminated and (other than in the case of the
Interconnection Agreement) is not replaced with another contract
or set of arrangements reasonably acceptable to the Agent within
30 days or it becomes unlawful for any party to a Material
Contract to perform its obligations and which event of default or
failure to comply or termination without acceptable replacement
or illegality remains unremedied 7 days after the Agent has
requested the Borrower to procure that it be remedied;
(p) (Loss of consents):
(i) any Authorisation, approval, consent, licence (other than
the Licences), exemption, filing or registration or other
requirement necessary:
(A) to enable any Obligor to comply with any of its
material obligations under any of the Transaction
Documents or any of the Material Contracts; or
(B) for the conduct of its business,
is revoked or refused or does not remain in full force and
effect in accordance with its terms once granted, or is not
renewed prior to its expiry or is adversely modified and
that event has a Material Adverse Effect;
(ii) the authority of any Obligor in the conduct of its business
is wholly or substantially curtailed by any seizure or
intervention by or on behalf of any authority or the ability
of the Group to conduct its business or to determine the
amount it will charge for its services is limited,
restricted or constrained by any Government Authority taking
any action or such Government Authority announces its
intention to take such action in relation to any member of
the Group or any of its assets to an extent greater than
existing at the date of this Agreement and such action has a
Material Adverse Effect;
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(q) (Licences): a breach of any of the Licences occurs and such
breach is not remedied within 30 days or such other period as may
be specified in any notice of breach issued by the relevant
authority and the breach has a Material Adverse Effect; and
(r) (Material change): any event or series of events whether related
or not occurs which has a Material Adverse Effect.
19.2 Agent's rights upon Event of Default
If any Event of Default occurs, at any time thereafter while such
event continues, the Agent may at its option if so authorised by the
Majority Banks and shall upon the direction of the Majority Banks by
written notice to the Borrower:
(a) declare that an Event of Default has occurred; and/or
(b) declare that the Total Commitments and any other obligations of
the Banks or the Agent to the Obligors under the Transaction
Documents shall be cancelled forthwith, whereupon the same shall
be so cancelled and all fees payable in relation to the Total
Commitments shall become immediately due and payable; and/or
(c) declare that the Advances to the Borrower, together with all
interest accrued on those Advances and all other amounts which
form part of the Obligations (as specified in such notice) shall
thenceforth be repayable on demand being made by the Agent (and
in the event of any such demand those Advances, such interest and
such other amounts shall be immediately due and payable); and/or
(d) declare the Advances to the Borrower immediately due and payable,
whereupon they shall become immediately due and payable together
with all interest accrued on those Advances and all other amounts
which form part of the Obligations.
20. GUARANTEE AND INDEMNITY
20.1 Guarantee
Each Guarantor hereby irrevocably and unconditionally guarantees to
the Agent and each Bank (or any of them) the due and punctual
performance in full of the Obligations.
20.2 Indemnity
Each Guarantor as a separate, additional and primary liability hereby
irrevocably and unconditionally agrees to indemnify the Agent and each
Bank and at all times hereafter to keep the Agent and each Bank
indemnified against any failure by the Borrower to duly and punctually
perform its Obligations and Intended Obligations.
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20.3 Performance of Obligations
If the Borrower or a Guarantor or any other person bound to perform or
pay after the expiration of any applicable grace period any Obligation
or Intended Obligation fails to do so in full on the due date
therefor, each Guarantor shall immediately on demand by either of the
Agent or a Bank perform or pay that Obligation or Intended Obligation.
20.4 Liability as Guarantor and indemnifier
Any reference herein to the obligations or liabilities of a Guarantor
shall be construed as a reference to its obligations or liabilities
whether as a Guarantor or indemnifier hereunder and the use of the
expression "Guarantor" herein in relation to a party shall not be
construed as diminishing that party's obligations hereunder as an
indemnifier. The provisions of this clause 20 preserving the liability
of a party hereto as a Guarantor apply mutatis mutandis to any
liability that arises whether in regard to that party's guarantee or
indemnity hereunder.
20.5 Principal obligation
Each obligation of each Guarantor hereunder constitutes a principal,
and not a secondary or ancillary obligation, to the intent that,
without limiting in any way the operation of any of the other
provisions of this clause 20, any limitation on the liability of a
Guarantor which would otherwise arise by reason of its status as a
Guarantor, co-Guarantor, indemnifier or co-indemnifier is hereby
negatived.
20.6 Absolute liability
The liability of each Guarantor hereunder is absolute and is not
subject to the execution of the Transaction Documents (other than this
Agreement) or of any other document by any person or to the
performance of any condition precedent or subsequent, including,
without limiting the generality of the foregoing, as between any
Obligor and the Agent, the Banks or any of them or amongst any 2 or
more Obligors but is subject to non-payment or the non-performance of
an Obligation or Intended Obligation by the principal Obligor.
20.7 Unconditional liability
The liability of each Guarantor hereunder shall not be affected by any
act, omission, matter or thing that would otherwise operate in law or
in equity to reduce or release a Guarantor from its liability
including, without limiting the generality of the foregoing, any of
the following:
(a) (Event of Default): the occurrence of any Event of Default;
(b) (Distributions): the receipt by the Agent or any Bank of any
payment, dividend or distribution under any Insolvency Provision
in relation to the Borrower or any Guarantor;
(c) (Invalidity etc.): any Transaction Document or any payment or
other act the making or doing of which would otherwise have
formed part of the Obligations, or any transaction or document
which would otherwise have given rise to such a payment or other
act being or becoming or being conceded to be illegal, invalid,
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void, voidable, unenforceable or irrecoverable in whole or in
part for any reason whether past, present or future, including,
without limiting the generality of the foregoing:
(i) any statute, other law or principle of equity;
(ii) any act or omission by any person;
(iii) any legal limitation, disability or incapacity of the
Borrower or any Guarantor;
(iv) any improper exercise of a power or authority in relation to
the Borrower or any Guarantor;
(v) any right of the Agent or a Bank to enforce or recover such
document, payment or other act or to exercise any remedy or
right it has for the enforcement or recovery of such
document, payment or other act being suspended or postponed
by order of any court or otherwise; or
(vi) any Insolvency Provision;
(d) (New guarantors): the Agent, Banks or any of them accepting from
any person any guarantee, indemnity or contract of suretyship for
the performance of the whole or any part of the Obligations;
(e) (Time or indulgence): the Agent, Banks or any of them agreeing
with the Borrower or any Guarantor to grant time, waiver or other
indulgence or concession to, or to make any composition or
compromise with the Borrower or any Guarantor;
(f) (Forbearance): the Agent, Banks or any of them forbearing or
neglecting to exercise any remedy or right they have or it has
for the enforcement of any Transaction Document or any other
obligation or liability forming part of the Obligations;
(g) (Laches etc.): any laches, acquiescence or other act, neglect,
default, omission or mistake by the Agent, Banks or any of them;
(h) (Repudiation): the determination, rescission, repudiation or
termination, or the acceptance of any of the foregoing, by the
Agent, Banks, the Borrower or any Guarantor or any of them of any
Transaction Document or any other obligation or liability forming
part of the Obligations;
(i) (Variation): any variation (whether by way of insertion,
deletion, modification, novation or otherwise) to any Transaction
Document or any other obligation or liability forming part of the
Obligations, whether or not such variation is substantial or
material or imposes an additional liability upon or is onerous on
the Borrower or any Guarantor, including without limiting the
generality of the foregoing, any increase in the limit or
extension of the term for, or the imposition of any condition or
variation in the rate of interest in respect of advances or
financial accommodation to the Borrower;
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(j) (Release): the full, partial or conditional release or discharge
(whether before or after any demand has been made on the
Guarantor hereunder) by the Agent, Banks or any of them or by
operation of law, of the Borrower or any Guarantor or any other
person from any Transaction Document or any other obligation or
liability forming part of the Obligations (but without affecting
the validity of any release and discharge of a Guarantor in
accordance with this Agreement);
(k) (Security Property): the release of any property from any
Security or the substitution of any property in place of any
other property now or hereafter the subject of a Security;
(l) (Securities): the Agent, Banks or any of them wasting,
destroying, abandoning, prejudicing or not perfecting,
maintaining, preserving, enforcing or realising or negligently or
not bona fide enforcing or realising any Security;
(m) (Loss of Securities): the failure to obtain any Security or the
loss or impairment of any Security by operation of law or
otherwise, whether or not the same is in breach of an express or
implied condition to obtain or preserve such Security or in
breach of any equitable duty which might otherwise have been
imposed upon the Agent, Banks or any of them;
(n) (Priority of Securities): the Agent, Banks or any of them
agreeing to any order of priorities with respect to any Security
or to any variation of any then previously agreed order of
priority;
(o) (Accounts): the opening or operation of any new account with the
Agent, Banks or any of them by the Borrower or any Guarantor;
(p) (Change of constitution): any change in membership (whether by
death or retirement of an existing member, admission of a new
member or otherwise), in the place of business or in the name of
any partnership, firm or association in which the Borrower or any
Guarantor is a member;
(q) (Transfer): the transfer or assignment of the benefit of any
Transaction Document or of any other obligation or liability
forming part of the Obligations;
(r) (Disclosure): any failure by the Agent, Banks or any of them to
disclose to the Guarantor any material or unusual fact,
circumstance, event or thing whatsoever known to, or ought to
have been known by, the Agent or any Bank relating to or
affecting the Borrower or any Guarantor at any time prior to or
during the currency of any Transaction Document, whether
prejudicial or not to the rights and liabilities of the Guarantor
and whether or not the Agent or any Bank was under any duty to
disclose such fact, circumstance, event or thing to the Guarantor
or the Borrower; or
(s) (Covenant not to take action): the Agent or any Bank entering
into a covenant with the Borrower or any Guarantor not to do all
or any of the following, namely, sue, issue process, sign or
execute judgment, commence proceedings for bankruptcy or
liquidation, participate in any official management, scheme of
arrangement or reconstruction, prove in any bankruptcy or
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liquidation or do any other act, matter or thing in respect of
the liability of the Borrower or that Guarantor (but without
affecting the validity of any waiver given in accordance with
clause 31.11 of this Agreement).
20.8 No obligation to gain consent
Nothing herein shall be construed as a requirement that any Guarantor
consent to or be made aware of any event referred to in clause 20.7,
any transaction between the Agent, Banks or any of them and the
Borrower or any one or more Guarantors or any particulars concerning
any obligation or liability that forms part of the Obligations.
20.9 No marshalling
The Agent and the Banks are under no obligation to marshal or
appropriate in favour of any Guarantor or to exercise, apply, transfer
or recover in favour of any Guarantor any Security or any funds or
assets that they or any of them hold or are entitled to receive or
have a claim upon.
20.10 Void or voidable transactions
If there is upheld, conceded or compromised any claim that a
transaction in any way affecting or relating to the Obligations or the
Securities is void, voidable, unenforceable or irrecoverable the
following provisions apply:
(a) (Restoration of Obligations): if as a result of or in connection
with entering into the transaction the Obligations have been
reduced in any way, then upon such claim being upheld, conceded
or compromised, the Agent and each Bank will be entitled against
each Guarantor to all such rights as it would have had if the
transaction or so much thereof as is held or conceded to be void
or voidable or is foregone on compromise had not taken place;
(b) (Restoration of Security): if as a result of or in connection
with entering into the transaction, or if as a result of the
transaction being held or conceded to be void or unenforceable, a
Bank's rights under any Security have been surrendered, cancelled
or reduced in any way, then upon such claim being upheld,
conceded or compromised, each Guarantor will take all steps and
sign all such documents as may be necessary or convenient to
restore those rights or equivalent rights to the Bank; and
(c) (Costs and expenses): the Guarantors will pay to the Agent and
each Bank all costs and expenses (including legal costs and
expenses as between solicitor and own client) incurred by the
Agent and each Bank in or in connection with any negotiations or
proceedings relating to any such claims.
20.11 Insolvency
No Guarantor will lodge any proof of debt or similar claim under any
Insolvency Provision in relation to the Borrower or any Guarantor in
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competition with the Agent or any Bank. Each Guarantor irrevocably
authorises the Agent to prove as its attorney for all money which it
may be entitled to from the Borrower or any Guarantor and to retain
and to carry to a suspense account and appropriate at the discretion
of the Agent (but for the benefit of the Banks) any amount so received
until with the aid thereof each Bank has been paid 100 cents in the
dollar in respect of the indebtedness of the Borrower or each
Guarantor as the case may be.
20.12 No set-off, counterclaim, etc.
No Guarantor will seek to reduce or avoid its liability under a
Transaction Document by raising any defence, set-off or counterclaim
available to the Agent or the Borrower or any other Guarantor.
20.13 Restriction on Guarantor's dealings
No Guarantor will, without the Agent's prior written consent (which
the Agent may withhold in its discretion):
(a) (No proceedings): institute any proceedings against any other
Obligor;
(b) (No demand): make any demand for, or accept any money in part or
complete satisfaction of, any liability on any account of any
other Obligor other than as permitted under this Agreement or for
a liability arising out of the supply of goods and services by
the Guarantor to that Obligor in the ordinary course of that
Guarantor's ordinary business at a rate and on terms not
exceeding and not more onerous than usually found for the supply
of such goods and services by parties dealing at arm's length;
(c) (No enforcement of Securities): enforce any Encumbrance now or
hereafter held by it (either alone or with others) in respect of
any such liability as aforesaid; or
(d) (No set-off): set-off any money owing by the Guarantor against
any liability owing to the Guarantor by any other Obligor or
permit any Obligor to set off any money owing by the Obligor
against any liability owing to that Obligor by the Guarantor.
20.14 Release of Obligor
Notwithstanding any presumption or principle of law to the contrary,
the Agent may in relation to any Obligor enter into a covenant not to
sue, issue process, sign judgment and execute or commence proceedings
for the bankruptcy or liquidation of any one or more of such resultant
judgment debtors, participate in any official management, scheme of
arrangement or reconstruction, prove in any bankruptcy or liquidation
and do any other act, matter or thing in respect of that Obligor's
liability without thereby in any way impairing or reducing the
liability of any Guarantor or other Guarantor (as the case may be) to
the Agent, the Banks or any of them under this Agreement.
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20.15 Conditions precedent
The Agent may waive, dispense with or accept such evidence as in its
absolute discretion it sees fit in relation to the satisfaction of any
condition precedent contained in any Transaction Document or otherwise
for the grant of any advances or financial accommodation to or for the
account of the Borrower, and the Guarantors' liability hereunder shall
not be affected or in any way impaired by any exercise by the Agent of
that discretion.
20.16 Claim on the Guarantors
(a) The Agent or a Bank shall not make any demand or claim on a
Guarantor under this clause 20 unless the Borrower or a Guarantor
has failed in the due and punctual payment of any of its
Obligations.
(b) Neither the Agent nor a Bank shall be required to make any claim
or demand on the Borrower or on any other Obligor, or to enforce
any Transaction Document or any other right, power or remedy
against any Obligor, before making any demand or claim upon any
Guarantor.
20.17 Subrogation
No Guarantor will seek the transfer to it of any Security which is
subject to an agreed order of priority in the Agent's or any Bank's
hands under any right of subrogation, unless and until it has entered
into a deed under which it undertakes to be bound by the priority
affecting such Security with the other parties to such agreed order of
priority.
20.18 General waiver by Guarantors
The Guarantors expressly waive all rights inconsistent with the
provisions of this Agreement, including all rights as to contribution,
indemnity or subrogation which they might otherwise be entitled to
claim and enforce until the Obligations have been paid in full.
20.19 Judgment
Any judgment obtained against the Borrower is conclusive as against
each Guarantor.
21. ADDITIONAL GUARANTORS AND SECURITY
21.1 Additional Guarantors
(a) The Borrower and each Guarantor shall procure that any wholly
owned member of the Group which is not a Guarantor shall become,
promptly after being required by the Agent on the instructions of
the Majority Banks to become, an Additional Guarantor by entering
into an Accession Agreement, subject to any provision of law
(including but not limited to laws concerning major transactions,
financial assistance or related party transactions) prohibiting
that person from becoming an Additional Guarantor.
(b) Where any such prohibition as is referred to above exists, the
Borrower and each Guarantor shall use its best endeavours
lawfully to overcome the prohibition, and the Agent may (but
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shall not be obliged to) agree with the potential Additional
Guarantor concerned limitations on its liability as an Additional
Guarantor under this Agreement and other amendments (applying
only in relation to that Additional Guarantor) to this Agreement
or to the relevant Accession Agreement.
(c) On each date that an Accession Agreement is entered into the
Borrower shall procure that each of the documents listed in
paragraphs 1, 3, 4, 5, 8 and 9 of Schedule 3 (as appropriate) are
delivered in respect of the Additional Guarantor and the
Accession Agreement in form and substance satisfactory to the
Agent.
21.2 Security
(a) The Borrower and each Guarantor shall execute and deliver to the
Agent such further or additional Securities in such form and in
relation to such of its assets as the Majority Banks shall
require subject to any provision of law prohibiting such person
from entering into such Security.
(b) Where any such prohibition as is referred to above exists, the
Borrower and each Guarantor shall use their best endeavours
lawfully to overcome the prohibition, and the Agent may (but
shall not be obliged to) agree with the relevant Obligor
limitations on the extent of the security granted by it.
(c) The Obligors shall at their own expense execute and do all such
assurances, acts and things as the Agent or the Majority Banks
may require for perfecting or protecting the security intended to
be afforded by the Securities or for facilitating the realisation
in accordance with the Securities of all or any part of the
assets which are subject to the Securities and the exercise of
all powers, authorities and discretions vested in the Agent under
the Securities or in any receiver of all or any part of those
assets and in particular shall execute all transfers,
conveyances, assignments and releases of that property whether to
the Agent or to its nominees and give all notices, orders and
directions which the Agent may think expedient for the purpose of
this clause 21.2(c).
(d) The Obligors shall procure that in relation to each further or
additional Security the relevant Borrower or Guarantor shall do
all things necessary duly to perfect in the jurisdiction of its
incorporation and in the jurisdiction wherein the assets which
are the subject of the further or additional Securities are
located, the security intended to be afforded to the Agent and
the Banks under such further or additional Securities and shall
deliver to the Agent such directors and shareholders resolutions,
legal opinions, notices, certificates or documents of title or
other items as the Agent shall require.
21.3 Additional Security
Notwithstanding clause 21.2(a), the Borrower and each Guarantor shall:
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(a) procure that any person who becomes a member of the Group and who
is a wholly owned subsidiary of an Obligor shall execute and
deliver and do all things necessary to be joined to the
Securities; and
(b) ensure that any Security Property relating to the Securities
referred to in clause 21.3(a) shall be free and clear of any
Encumbrances other than Encumbrances permitted under clause
17.3(a) or the Securities.
22. RELEASE OF GUARANTORS AND SECURITY
22.1 Guarantors
Subject to clause 22.3, at the time of completion of any sale or other
disposal to a person or persons outside (and which will remain
outside) the Group of all of the shares in the capital of any
Guarantor (or of all of the shares in any other member of the Group
such that any Guarantor ceases as a result thereof to be a member of
the Group) and in such other circumstances (if any) as all the Banks
may from time to time agree in writing, such Guarantor shall be
released from all past, present and future liabilities (both actual
and contingent) hereunder and under the Securities to which it is a
party, and the security provided over its assets under the Securities
will be released.
22.2 Assets
Subject to clause 22.3, at the time of completion of any sale or other
disposal to a person or persons outside (and which will remain
outside) the Group of any assets owned by an Obligor over which
security has been created by the Securities to which that Obligor is
party, those assets shall be released from such security.
22.3 Conditions for Release
The release of the guarantees and security referred to in clause 22.1
and 22.2 above shall only occur if:
(a) either:
(i) such disposal will not result directly or indirectly in any
breach of any of the terms of this Agreement; or
(ii) such disposal is being effected at the request of the
Majority Banks in circumstances where any of the security
created by the Securities has become enforceable; or
(iii) such disposal is being effected by enforcement of the
Securities; or
(iv) all Banks agree to the release; and
(b) the Net Proceeds arising out of such disposal will be applied
strictly in accordance with the requirements of this Agreement;
and
(c) any assets to be transferred to other members of the Group before
completion of such disposal shall have been so transferred and
(if so required by the Majority Banks) security over such assets
shall have been granted to the Agent to its satisfaction; and
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(d) the Agent shall have executed such documents effecting such
release as shall be reasonably required to achieve such release
as aforesaid (and the Agent shall execute such documents at the
expense of the relevant Obligor promptly upon (and only upon) it
being satisfied that the conditions in (a), (b) and (c) above are
satisfied or have been waived by all of the Banks).
22.4 Release of Group Members
If any person which is a member of the Group shall cease to be such a
member in consequence of the enforcement of any of the Securities or
in consequence of a disposal of the shares therein effected at the
request of the Majority Banks in circumstances where any of the
security created by the Securities has become enforceable, any claim
which any Obligor may have against such person or any of its
Subsidiaries in or arising out of this Agreement or any of the
Securities (including, without limitation, any claim by way of
subrogation to the rights of the Agent and the Banks against such
person under the Transaction Documents and any claim by way of
contribution or indemnity) shall be released automatically and
immediately upon such person ceasing to be a member of the Group.
23. INDEMNITY
The Borrower shall on demand by the Agent indemnify each Bank against
any loss, cost or reasonable out of pocket expenses which the Bank may
sustain or incur as a consequence of:
(a) any sum payable by the Borrower hereunder not being paid when
due;
(b) the occurrence of any Event of Default or Potential Event of
Default;
(c) an Advance requested in a Utilisation Notice not being provided
for any reason including failure to fulfil any condition
precedent but excluding any default by the Bank claiming an
indemnity pursuant to this paragraph; or
(d) the Bank receiving payments of principal other than on the last
day of an Interest Period or when due for any reason, including,
without limitation, prepayment in accordance with a Transaction
Document.
Such losses, costs or expenses shall include the amount determined in
good faith by the Bank as being any loss including loss of margin,
cost or expense incurred by reason of the liquidation or re-employment
of deposits or other funds acquired or contracted for by the Bank to
fund or maintain any such Advance or amount.
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24. AGENT
24.1 Appointment
The Agent is hereby appointed and authorised to act on behalf of each
Bank with power to enter into each Transaction Document and to
exercise such rights, remedies, powers and discretions as are
specifically delegated to them under the Transaction Documents
together with such rights, remedies, powers and discretions as are
incidental thereto. The Agent does not have any duties, obligations or
liabilities to the Banks or any of them beyond those expressly stated
in this Agreement and the Transaction Documents.
24.2 Relationships
(a) Nothing contained in this Agreement, and no action taken by the
Banks pursuant hereto, shall be deemed to constitute the Banks a
partnership, association, joint venture or other entity.
(b) In performing their respective functions and duties under the
Transaction Documents, the Agent shall act solely on behalf of
the Banks and does not assume and shall not be deemed in any
circumstances whatsoever to have assumed any responsibility,
liability or obligation, towards, or relationship of agency or
trust with, or for, the Obligors.
24.3 Communications
Except where this Agreement otherwise expressly provides, all
communications to be made between an Obligor and the Banks or any of
them concerning the Facility shall be made by or through the Agent.
24.4 Instructions of Majority
Subject to clause 24.5, the Agent must act or refrain from acting in
the exercise of any right or power, or as to any matter not expressly
provided for by this Agreement, in accordance with the instructions of
the Majority Banks and it shall be fully protected in so doing. Any
such instructions shall be binding on all the Banks. In the absence of
any such instructions, the Agent may act or refrain from acting as it
sees fit, provided that it has used reasonable endeavours to obtain
such instructions. In no event, however, shall the Agent be required
to take any action which exposes, or is likely to expose, it to
personal liability unless it is indemnified to its satisfaction, or
which is contrary to this Agreement or any law, regulation or
directive.
24.5 Amendments
If authorised by the Majority Banks, the Agent may (except where any
other authority is required for the same by the express provisions of
the Transaction Documents) grant waivers or consents or (with the
agreement of the Borrower) vary the terms of the Transaction
Documents. Any such waiver, consent or variation so authorised and
effected by the Agent shall be binding on all the Banks and the Agent
shall be under no liability whatsoever in respect of any such waiver,
consent or variation, provided always that, except with the prior
written consent of all the Banks and the Borrower, nothing in this
clause shall authorise:
(a) the extension of any Availability Period; or
(b) any variation of the definition "Majority Banks" in clause 1.1;
or
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(c) any extension of the date for, or alteration in the amount or
currency of, or waiver of any payment of principal, interest,
Utilisation Margin, fee, commission or any other amount payable
under any of the Transaction Documents; or
(d) any change to any Bank's Commitment; or
(e) any variation of clauses 11.5, 12, 27 or this clause 24.5; or
(f) any variation of any provision wherein (before such variation) it
is provided that certain things may not be done without or may be
done with the consent or approval of all the Banks; or
(g) any waiver or consent in relation to, or variation of the
material provisions of, any Security or clause 20 or 21 of this
Agreement; or
(h) (save as otherwise expressly provided for elsewhere in this
Agreement or the relevant Security) any release of the security
provided by any of the Securities over any asset.
24.6 No need for inquiries
No Obligor shall be concerned to inquire as to whether the Agent has
been given any instructions by the Majority Banks or as to the terms
of any instructions so given and may rely on all notices from the
Agent without the need to make further enquiry.
24.7 Delegation
The Agent may from time to time delegate the performance of its duties
and obligations as Agent. The Banks and each Obligor agree that any
delegate of the duties and obligations of the Agent will be entitled
to the benefit of the provisions of this clause 24 as if it were the
Agent and, without limitation, will not be responsible or liable for
any damage, cost, loss or expense they or any of them may suffer or
incur as a result of or in connection with an act or omission or
negligence of the delegate except to the extent arising as a direct
result of the gross negligence or wilful misconduct of the delegate.
24.8 Agent not bound to Enquire
The Agent is not obliged to ascertain or enquire:
(a) either initially or on a continuing basis, as to the credit or
financial condition or affairs of the Obligors or any other
person; or
(b) as to the performance or observance by the Obligors or any other
person of any of the terms of any Transaction Document; or
(c) whether any Event of Default or Potential Event of Default has
occurred.
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24.9 Default
The Agent shall not be obliged to make any inquiry as to whether an
Obligor is in breach of, or in default under a Transaction Document or
as to the existence of the Event of Default or Potential Event of
Default and shall not be deemed to have any knowledge of the
occurrence of such a breach, default, Event of Default or Potential
Event of Default unless it has received express written notice thereof
from a Bank or an Obligor, stating that such notice is a "Notice of
Default" and describing the breach, default, Event of Default or
Potential Event of Default. In the event that the Agent receives such
a notice, or otherwise acquires actual notice of an Event of Default
or Potential Event of Default it shall promptly notify the Banks.
Subject to its being indemnified to its satisfaction, the Agent shall
take such action with respect to an Event of Default as it shall be
directed to take by the Majority Banks. Until the Agent receives such
directions it may (but shall not be obliged) take or refrain from
taking such action as it shall in its absolute discretion deem
advisable in the best interests of the Banks.
24.10 Agent as Bank
With respect to its own rights as a Bank (if any), the Agent shall
have the same rights and powers under each Transaction Document as any
other Bank and may exercise the same as though it were not performing
the duties and functions delegated to it as the Agent and the term
"Banks" shall include the Agent in its individual capacity as a Bank.
24.11 Agent's dealings
The Agent may, without any liability to account to the Banks or any of
them, accept deposits from, lend money to and generally engage in any
kind of banking or financial, trust or other business with any Obligor
as if they were not Agent and may accept fees and other consideration
from any Obligor for services in connection with any Transaction
Document or otherwise without having to account for the same to the
Banks.
24.12 Notices and reports
Promptly after its receipt thereof, the Agent will make available for
examination by each Bank at its address for service of notices and on
request by a Bank provide to the Bank a copy of each report, notice or
other document required under this document or a Transaction Document
to be delivered to the Agent by an Obligor.
24.13 Not responsible
(a) The Agent shall not be responsible to any Bank for failure of an
Obligor to perform its obligations under a Transaction Document,
an Obligor's financial condition, the completeness or accuracy of
any statements, representations or warranties in a Transaction
Document, the Information Memorandum (except statements
authorised by it) or any document delivered under or in
connection with a Transaction Document, the valid execution,
effectiveness, adequacy, genuineness, validity, enforceability or
admissibility in evidence of a Transaction Document or any such
other document or the failure of any party to perform and observe
its obligations under a Transaction Document.
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(b) Each Bank acknowledges that it has not relied on any statement,
opinion, forecast or other representation made by the Agent to
induce it to enter into this Agreement or agree to participate in
the Facility whether made in the Information Memorandum or
otherwise and that it has made and (without reliance on the Agent
and based on such documents as it considers appropriate) it will
continue to make its own appraisal of the affairs and financial
condition of each Obligor and its own decisions as to whether or
not to take action under a Transaction Document.
(c) The Agent will not be obliged on a continuing basis or at a
particular time to provide any Bank with any financial or other
information with respect to an Obligor other than as provided in
clause 24.12.
(d) Without limitation to clause 24.9, the Agent will not be obliged
to keep itself informed as to the performance and observance by
the Obligors of their respective obligations and responsibilities
under this document and the Transaction Documents.
(e) The Agent shall not be liable for any cost, loss, damage or
expense of whatsoever nature suffered or incurred by a Bank or
any other person except to the extent arising as a direct result
of the gross negligence or wilful misconduct of the Agent.
24.14 Indemnity
Each Bank shall reimburse the Agent rateably in accordance with
Commitments (to the extent that it is not reimbursed by the Borrower)
on demand, for charges and expenses incurred by it in connection with
the negotiation, preparation, execution, stamping and registration of
the Transaction Documents, in contemplation of, or otherwise in
connection with, the enforcement or preservation of any rights under a
Transaction Document or in carrying out its duties as Agent under the
Transaction Documents including, in each case, the fees and expenses
of legal and other professional advisers. Each Bank shall indemnify
the Agent rateably in accordance with its Commitments against all
liability, damage, costs, claims and expenses suffered or incurred or
made against the Agent in connection with a Transaction Document, the
performance or purported performance of its duties as Agent under a
Transaction Document or any action taken or omitted to be taken by the
Agent under (or purportedly under) a Transaction Document except to
the extent, however, that such liability, damage, cost, claim or
expense directly results from the Agent's gross negligence or wilful
misconduct.
24.15 Observe laws
The Agent may refrain from doing anything which would or might in its
opinion either be contrary to any relevant law of any relevant
jurisdiction or any official directive or render it liable to any
person and may do anything which in its opinion is necessary to comply
with any relevant law or official directive.
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24.16 Replacement
(a) The Agent (the "retiring Agent") may:
(i) resign at any time by giving not less than 20 Banking Days'
written notice thereof to the Banks and the Borrower; and
(ii) be removed from office upon not less than 20 Banking Days'
prior written notice signed by or on behalf of the Majority
Banks.
(b) Upon receipt of a notice of resignation from the retiring Agent,
or the giving of a notice of removal of the retiring Agent, the
Majority Banks shall have the right, in consultation with the
Borrower, to appoint a successor Agent. In the case only of
resignation of the retiring Agent, if within 20 Banking Days
after the giving of a notice of resignation, no successor Agent
has been appointed, the retiring Agent may, in consultation with
the Borrower, appoint a successor Agent which shall be a
reputable and experienced financier having an office in Sydney,
Melbourne or Wellington.
(c) The resignation or removal of the retiring Agent and the
appointment of the successor Agent shall both become effective
upon the successor Agent notifying the Banks and the Borrower of
its acceptance of such appointment, and specifying for the
purposes of this Agreement an office in Sydney, Melbourne or
Wellington. Upon giving such notification, the successor Agent
shall succeed to and be vested with all the rights, obligations,
powers and duties and privileges of the Agent under the
Transaction Documents in place of the retiring Agent and the
retiring Agent shall be discharged from its duties and
obligations under the Transaction Documents.
(d) The provisions of this clause 24 shall continue in effect for the
benefit of a retiring Agent in respect of any actions taken or
omitted to be taken while the retiring Agent was acting as the
Agent.
24.17 No authority
Each Bank acknowledges and agrees that it does not have authority on
behalf of the other Banks to waive any right or remedy of the Banks or
the Agent or to modify or vary, or agree to modify or vary, any
provision of any Transaction Document.
24.18 Agent as Trustee
(a) The Agent in its capacity as trustee or otherwise shall not be
liable for any failure, omission, or defect in perfecting the
security constituted by the Securities.
(b) The Agent in its capacity as trustee or otherwise may accept
without enquiry such title as an Obligor may have to the property
over which security is intended to be created by the Securities.
(c) Each Bank hereby confirms its approval of the Transaction
Documents and any security created pursuant thereto and hereby
authorises, empowers and directs the Agent (by itself or by such
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person(s) as it may nominate) to execute and enforce the same as
trustee or as otherwise provided (and whether or not expressly in
the Banks' names) on its behalf.
25. HEDGING ARRANGEMENTS
25.1 Undertakings of Swap Counterparties
Except as the Majority Banks have previously consented in writing, no
Swap Counterparty will:
(a) demand (other than as may be necessary in order to exercise any
right to terminate or close out any hedging transaction as
provided in and permitted under clause 25.1(b)) or receive
payment, prepayment or repayment of, or any distribution in
respect of, or on account of, any of the Hedging Liabilities in
cash or in kind, or apply any money or property in or towards the
discharge of any Hedging Liabilities except:
(i) for scheduled payments arising under the terms of the
Hedging Agreements entered into by the Borrower with that
Swap Counterparty; and/or
(ii) for the proceeds of enforcement of the Securities received
and applied in the order permitted by this Agreement;
(b) exercise any right to terminate or close out any hedging
transaction under the Hedging Agreements prior to its stated
maturity (whether by reason of the Borrower becoming a Defaulting
Party thereunder (and as defined therein) or otherwise) unless it
has given written notice to the Agent and:
(i) the Borrower has defaulted on a payment due under the
Hedging Agreements after allowing for any required notice
and any applicable days of grace and such default continues
for more than 7 Banking Days after notice of such default
being given to the Agent; or
(ii) the Agent has declared all or part of the Obligations
prematurely due and payable under clause 19.2; or
(iii) the continued existence of the Hedging Agreements would be
illegal;
(c) discharge all or any part of the Hedging Liabilities by set-off,
any right of combination of accounts or otherwise except if and
to the extent that those Hedging Liabilities are permitted to be
paid under paragraph (a) above; or
(d) permit to subsist or receive any Encumbrance or any financial
support (including without limitation the taking of any
participation, the giving of any guarantee, indemnity or other
assurance against loss, or the making of any deposit or payment)
for, or in respect of, any of the Hedging Liabilities other than
under the Securities or any other Encumbrance or support granted
for the full benefit (save to the extent otherwise required so as
to comply with applicable law) of the Agent and the Banks.
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25.2 Hedging Agreements
Each Swap Counterparty will provide to the Agent copies of all
documents constituting the Hedging Agreements to which it is a party
as soon as reasonably practicable.
26. SET-OFF
Each Obligor authorises each Bank at any time after an Event of
Default has occurred and is continuing to apply without prior notice
any credit balance (whether or not then due) to which the Obligor is
at any time entitled on any account at any office of the Bank in or
towards satisfaction of any sum then due and unpaid from that Obligor
to the Bank and the Obligors each further authorise each Bank without
prior notice at any time after an Event of Default has occurred and is
continuing to set-off any amount owing (whether present or future,
actual, contingent or prospective and on any account whatsoever) by
that Obligor against any liability (whether present, future, actual,
contingent or prospective) of the Obligor hereunder or on any other
account whatsoever. No Bank shall be obliged to exercise any of its
rights under this clause, which shall be without prejudice and in
addition to any right of set-off, combination of accounts, lien or
other right to which it is at any time otherwise entitled (whether by
operation of law, contract or otherwise). Each Bank shall notify the
Agent and the relevant Obligor forthwith upon its exercise of a right
of set-off involving any Obligor giving full details in relation
thereto and the Agent shall inform the other Banks.
27. PRO RATA SHARING
If at any time the proportion which a Bank ("Overpaid Bank") has
received or recovered by set-off or otherwise in respect of its
portion of any sum due from an Obligor to the Banks under the
Transaction Documents is greater (the amount of the excess being
herein referred to as the "excess amount") than the proportion thereof
received or recovered by the Bank receiving or recovering the smallest
or no proportion thereof, then:
(a) the Overpaid Bank shall promptly notify the Agent;
(b) the Overpaid Bank shall, within 10 Banking Days of such
notification, pay to the Agent an amount equal to the excess
amount;
(c) the Agent shall treat such payment as if it were a payment by the
Obligor on account of the sum owed to the Banks as aforesaid; and
(d) at the option of the Overpaid Bank:
(i) subject to clause 27(f), the liability of the Obligor to the
Overpaid Bank shall be increased (or treated as not having
been reduced); or
(ii) the Obligor shall fully indemnify the Overpaid Bank making
such payment for the amount thereof;
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provided that:
(e) if a Bank has commenced an action or proceeding in any court to
recover sums owing to it pursuant to this Agreement or a
Transaction Document and as a result thereof, or in connection
therewith, has received an excess amount, the Bank shall not be
required to share any portion of such excess amount with a Bank
which was notified of such legal action or proceeding and which
had the legal right to, but did not, join such action or
proceeding or commence and diligently prosecute a separate action
or proceeding to enforce its rights in the same or another court;
and
(f) if all or a portion of the relevant receipt or payment by or to
an Overpaid Bank is thereafter rescinded or must otherwise be
restored to an Obligor, the Banks shall repay to the Agent for
the account of the Overpaid Bank such amount as shall be
necessary to ensure that (subject to clause 27(e)) all the Banks
share rateably in the amount of the receipt or payment retained
by the Overpaid Bank and the provisions of clause 27(c) and (d)
shall apply only to the retained amount.
28. EXPENSES AND STAMP DUTIES
28.1 Expenses
The Borrower on demand by the Agent or the Banks will pay to or at the
direction of the Agent or the Banks (as the case may be) all
reasonable out of pocket expenses including legal fees, costs and
disbursements (on a solicitor/own client basis) assessed without the
necessity of taxation, incurred or payable by the Agent or the Banks
(except that the Borrower will only be liable to pay the legal fees
and disbursements of one firm acting for the Agent and Banks and is
not liable to pay any legal fees, costs and expenses incurred by any
Banks instructing separate legal counsel) in connection with:
(a) the preparation and negotiation of the Transaction Documents and
the Securities and any subsequent consent, agreement, approval or
waiver thereunder or amendment thereto;
(b) the execution of the Transaction Documents and the Securities and
any subsequent consent, agreement, approval or waiver thereunder
or amendment thereto;
(c) the enforcement, attempted enforcement or the preservation of any
rights under the Transaction Documents and the Securities
including, without limitation, any expenses incurred in the
evaluation of any matter of material concern to the Agent;
(d) the obtaining of persons to participate in the Facility as Banks
(including, without limitation, advertising, accommodation,
travelling and out-of-pocket expenses); and
(e) the carrying out by the Agent (or any delegate of the Agent) of
any of their duties under the Transaction Documents.
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28.2 Levies
(a) (Payment of all duties): The Borrower must pay all levies, stamp,
loan transaction, registration and similar Taxes, including fines
and penalties, financial institutions duty and debits tax which
may be payable to or required to be paid by any appropriate
authority or determined to be payable in connection with the
execution, delivery, performance or enforcement of the
Transaction Documents or any payment, receipt or other
transaction contemplated by them.
(b) (Indemnity): The Borrower will indemnify and keep indemnified the
Agent and each Bank against any loss or liability incurred or
suffered by it as a result of the delay or failure by the
Borrower to pay such Taxes.
29. ASSIGNMENTS AND CONFIDENTIALITY
29.1 Successors and assigns
This Agreement is binding on and enures to the benefit of each party
hereto and its respective successors and permitted assigns.
29.2 Assignments by the Borrower
The Borrower cannot assign any of its rights under any Transaction
Document without the prior written consent of the Agent acting with
the approval of all the Banks.
29.3 Banks
A Bank may assign all or any of its rights or transfer all or any of
its rights and obligations under the Transaction Documents to another
bank or financial institution at any time if:
(a) it has first consulted with the Borrower regarding the identity
of the new Bank;
(b) any necessary prior Authorisation from any Government Agency or
other department is obtained;
(c) in the case of an assignment of rights only, the Agent has
received notice of the assignment under which the assignee
irrevocably authorises the assignor to act as the assignee's
agent with full power and authority to exercise the rights
assigned and to receive (and give valid receipts for) all money
payable under the Transaction Documents in respect of those
rights;
(d) in the case of a transfer of rights and obligations, such
transfer is effected by a substitution in accordance with clause
29.4;
(e) in the case of an assignment or transfer of part of its rights
and obligations, the Bank assigns or transfer a pro-rata share
the Facility; and
(f) it receives the prior consent of the Agent.
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29.4 Substitution
(a) If a Bank wishes to transfer all or any of its rights and
obligations under the Transaction Documents to a bank or
financial institution, it and the proposed transferee shall
execute and deliver to the Agent 4 counterparts of the
Substitution Certificate.
(b) On receipt of a Substitution Certificate the Agent shall (if it
is satisfied that the substitution complies with clause 29.3)
promptly:
(i) notify the Borrower and each other Bank;
(ii) countersign the counterparts on behalf of all other parties
to this Agreement;
(iii) enter the transfer in a register kept by it (which shall be
conclusive); and
(iv) retain one counterpart and deliver one counterpart to each
of the relevant transferor and transferee and to the
Borrower.
(c) On any such certificate being countersigned by the Agent the
transferor shall be relieved of its obligations to the extent and
from the date specified in such certificate and the transferee
shall be bound by the Transaction Documents to the extent and
from the date stated in the certificate.
(d) Each other party to this Agreement irrevocably authorises the
Agent to sign each such certificate on its behalf and
acknowledges that:
(i) upon such a certificate being signed by the Agent it shall
be deemed for all purposes to have consented to the transfer
of obligations provided for in the certificate; and
(ii) it will continue to be bound by the provisions of the
Transaction Documents accordingly.
(e) Unless the Agent otherwise agrees, no transfer of a Bank's
obligations may be effected while any Utilisation Notice is
current.
29.5 Bank accession
(a) If a bank approved by the Underwriters (acting reasonably)
("Acceding Bank") wishes to become a party to this Agreement and
to provide Commitments in addition to the Commitments of those
Banks existing immediately prior to the proposed accession
("Existing Banks"), the Borrower (on behalf of itself and the
Guarantors) and the Acceding Bank will execute and deliver to the
Agent 3 counterparts of a Bank Accession Certificate.
(b) On receipt of a Bank Accession Agreement the Agent shall
promptly:
(i) notify each Existing Bank of the Acceding Bank and its
proposed Commitment (if they have not already been so
notified);
(ii) countersign the counterparts on behalf of all other parties
to this Agreement;
(iii) enter the accession in a register kept by it; and
(iv) retain one counterpart and deliver one counterpart to each
of the Borrower and the Acceding Bank.
(c) Each other party to this Agreement irrevocably authorises the
Agent to sign each such certificate on its behalf and
acknowledges that:
(i) upon such a certificate being signed by the Agent it shall
be deemed for all purposes to have consented to the
accession provided for in the certificate; and
(ii) it will continue to be bound by the provisions of the
Transaction Documents accordingly.
(d) Upon the Acceding Bank becoming a Bank pursuant to a Bank
Accession Certificate, each Existing Bank will transfer at par a
portion of the outstanding Advances at that time so that the
Acceding Bank participates in the outstanding Advances pro rata
according to its respective Commitment.
29.6 Increased Costs and Illegality
If any change in lending office of any Bank or assignment or
substitution of or with respect to all or any part of the rights or
obligations of a Bank under this Agreement pursuant to clause 29.3,
29.4 or 29.5 is made which results (or would but for this clause
result) at the time thereof in amounts becoming payable under clauses
12.2 or 14.l, then the assignee or transferee (or, in the case of a
change in lending office, the Bank) shall be entitled to receive such
amounts only to the extent that the assignor or transferor would have
been so entitled had there been no such assignment, transfer or change
in lending office. Nothing in this clause will affect the rights of an
assignee or transferee under clauses 12.2 or 14.1 in relation to
amounts which may become payable after the time of assignment or
transfer. No such assignment or transfer shall be made if the assignee
or transferee would be entitled immediately afterwards to give notice
under clause 13.
29.7 Sub-participations
Any Bank shall be entitled freely to enter into any sub-participation
or other arrangement with any third party relating to the Transaction
Documents which does not transfer to that third party any obligation
and/or any legal or equitable interest in any of the rights arising
under this Agreement.
29.8 Confidentiality
(a) Subject to paragraph (b), no Bank shall disclose any confidential
or unpublished information or documents supplied by an Obligor in
connection with the Transaction Documents which are specifically
indicated by the Obligor to be confidential.
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(b) A Bank shall be entitled to disclose any confidential information
or documents:
(i) in any proceeding arising out of or in connection with any
Transaction Document to the extent that such disclosure is
deemed by the Bank necessary to protect its interests;
(ii) if required to do so under a binding order of any Government
Agency or any procedure for discovery in any proceedings;
(iii) if required to do so under any law or any administrative
guideline, directive, request or policy whether or not
having the force of law and, if not having the force of law,
the observance of which is in accordance with the practice
of responsible bankers or financial institutions;
(iv) otherwise as required or permitted by any Transaction
Document;
(v) to its legal advisers and its consultants as long as it
advises them of the confidential nature of the information
or documents or that nature is clear from the circumstances
of the disclosure;
(vi) to a proposed assignee or transferee or sub-participant with
the prior written consent of the Borrower which consent
shall not unreasonably be withheld or delayed and will be
deemed to have been given if not refused within 15 Banking
Days of a request therefor;
(vii) relating to its level of exposure to any Obligor under any
Hedging Agreement or on any other account, to the Agent or
any other Bank; or
(viii) with the prior written consent of the Borrower.
(c) This clause 29.8 shall survive the termination of this Agreement.
30. GOVERNING LAW AND JURISDICTION
30.1 Governing law
This Agreement is governed by and construed in accordance with the
laws applying in New Zealand.
30.2 Jurisdiction
(a) (Acceptance of jurisdiction): Each of the Obligors irrevocably
submits to and accepts, generally and unconditionally, the
non-exclusive jurisdiction of the courts and appellate courts of
New Zealand with respect to any legal action or proceedings which
may be brought at any time relating in any way to any Transaction
Document.
(b) (No objection to inconvenient forum): Each of the Obligors
irrevocably waives any objection it may now or in the future have
to the venue of any action or proceedings relating to a
Transaction Document including any objection it may now or in the
future have that any such action or proceeding has been brought
in an inconvenient forum.
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31. MISCELLANEOUS
31.1 Certificate of Agent
A certificate in writing signed by an officer of the Agent certifying
the amount payable by an Obligor hereunder or stating any other act,
matter or thing relating to any Transaction Document is prima facie
and binding on each Obligor in the absence of manifest error on the
face of the certificate.
31.2 Notices
Any notice or other communication which must be given, served or made
under or in connection with any Transaction Document:
(a) must be in writing in order to be valid;
(b) is sufficient if executed by the party giving, serving or making
the same or on its behalf by any attorney, director, secretary,
other duly authorised officer or solicitor of such party;
(c) will be deemed to have been duly given, served or made in
relation to a person if it is delivered or posted by prepaid post
to the address, or sent by facsimile to the number of that person
set out herein (or at such other address or number as is notified
in writing by that person to the other parties from time to
time); and
(d) will be deemed to be given, served or made:
(i) (in the case of prepaid post) on the fifth day after the
date of posting;
(ii) (in the case of facsimile) on receipt of a transmission
report confirming successful transmission; and
(iii) (in the case of delivery by hand) on delivery.
31.3 Continuing obligation
Each Transaction Document constitutes a continuing obligation
regardless of any settlement of account, intervening payment, express
or implied revocation or any other matter or thing, until a final
discharge thereof has been given to the Borrower and the Guarantors.
31.4 Settlement conditional
Any settlement or discharge between the Agent, the Banks and the
Borrower and/or the Guarantors is conditional on any security or
payment given or made by the Borrower, any Guarantor or any other
person in relation to the Obligations not being avoided, repaid or
reduced by virtue of any Insolvency Provision. If such security or
payment is so avoided, repaid or reduced, the Agent and the Banks are
entitled to recover the value or amount of such security or payment
avoided, repaid or reduced from the Borrower and the Guarantors
subsequently as if such settlement or discharge had not occurred.
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31.5 Further assurance
The Borrower and the Guarantors on demand by the Agent and at the
entire cost and expense of the Borrower and the Guarantors will
perform all such acts and execute all such agreements, assurances and
other documents and instruments as the Agent requires to perfect or
improve the rights and powers afforded, created, or intended to be
afforded or created, by any Transaction Document.
31.6 Attorney
Each Obligor hereby irrevocably appoints:
(a) the Agent and each Bank, severally;
(b) each director and secretary and authorised officer from time to
time of the Agent and each Bank; and
(c) any duly appointed agent of the Agent and each Bank,
jointly and severally the attorney of the Obligor, in the Obligor's
name and on the Obligor's behalf, at any time from time to time while
an Event of Default subsists and in such manner as the Agent or the
relevant Bank, as the case may be, in its absolute discretion shall
think fit to:
(d) do all acts necessary or proper to further or fully assure any
Transaction Document or any Bill to the Bank; and
(e) do all acts necessary or proper to perfect or improve the rights
and powers afforded or created, or intended to be afforded or
created, by any Transaction Document.
31.7 Severability of provisions
Any provision of any Transaction Document which is illegal, void or
unenforceable will be ineffective to the extent only of such
illegality, voidness or unenforceability without invalidating the
remaining provisions hereof or thereof.
31.8 Remedies cumulative
The rights and remedies conferred by this Agreement on the Agent or
the Banks are cumulative and in addition to all other rights or
remedies available to the Agent or the Banks by law or by virtue of
any Transaction Document.
31.9 Waiver
A failure to exercise or enforce or a delay in exercising or enforcing
or the partial exercise or enforcement of any right, remedy, power or
privilege arising under any Transaction Document by the Agent or the
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Banks will not in any way preclude, or operate as a waiver of, any
further exercise or enforcement thereof or the exercise or enforcement
of any other right, remedy, power or privilege thereunder or provided
by law.
31.10 Consents and approvals
Where any act, matter or thing under any Transaction Document depends
on the consent or approval of the Agent or Banks, then unless
expressly provided otherwise therein, that consent or approval may be
given or withheld in the absolute and unfettered discretion of the
Agent or Banks (as the case requires) and may be given subject to such
conditions as the Agent or Banks (as the case requires) thinks fit in
its absolute and unfettered discretion.
31.11 Written waiver, consent and approval
Any waiver, consent or approval given by the Agent under any
Transaction Document will only be effective and only binds the Banks
if it is given in writing, and executed by the Agent or on its behalf
by an officer for the time being of the Agent.
31.12 Time of essence
Time is of the essence in respect of each Obligor's obligations under
the Transaction Documents.
31.13 Consultants fees
Where the Agent has to make any determination (whether in respect of
an Advance or otherwise), it may employ such consultants or persons as
it thinks fit to assist in making such determination. The Borrower
will reimburse the Agent for all reasonable fees paid by the Agent to
any such consultants or persons upon receipt of a written demand
therefor.
31.14 Moratorium legislation
To the fullest extent permitted by law, the provisions of all statutes
whether existing now or in the future and whether operating directly
or indirectly to lessen or otherwise to vary or affect in favour of
any Obligor any obligation under any Transaction Document, or to delay
or otherwise prevent or prejudicially affect the exercise of any
rights or remedies conferred on the Agent or any Bank under any
Transaction Document, are hereby expressly waived, negatived and
excluded.
31.15 Binding on each signatory
Each Transaction Document is binding on each of the signatories
notwithstanding that any one or more of the named parties hereto does
not execute it, that there is any invalidity, forgery or irregularity
touching its execution or that it is or becomes unenforceable, void or
voidable against a named party.
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31.16 Counterparts
This Agreement may be executed in a number of counterparts, all of
which taken together will be deemed to constitute one and the same
document.
31.17 Entire Agreement
To the extent permitted by law, the Transaction Documents and the
Underwriting Letter together embody the entire understanding of the
parties and constitute the entire terms agreed upon between the
parties and supersede any prior agreement (whether or not in writing)
between the parties in relation to the subject matter of this
Agreement.
32. NO REPRESENTATION BY OR RELIANCE ON THE BANK OR AGENT
Each party other than each Bank and the Agent acknowledges that:
(a) no Bank or Agent has any duty to supply that party with
information in relation to or affecting the other or others of
them prior to the date hereof or during the currency of any
Transaction Document;
(b) it has relied upon that party's own inquiries as to the other or
others of them, the nature and extent of the entire relationship
between them and between them and each Bank and the Agent whether
or not recorded in the Transaction Documents, and the nature and
effect of the Transaction Documents; and
(c) it has not entered into any Transaction Document in reliance on
or as a result of any representation, promise, statement, conduct
or inducement to that party by or on behalf of any Bank or the
Agent or by or on behalf of any Obligor otherwise than as
embodied in the Transaction Documents or as notified in writing
by that party to the Banks and the Agent prior to the date
hereof.
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SCHEDULE 1
BANKS
NAME & ADDRESS FOR NOTICES COMMITMENT
Toronto Dominion Australia Limited, Level 36,
385 Bourke Street, Melbourne, Victoria $32,500,000
Attention: Manager Credit Administration
Facsimile: (613) 9670 3779
Paribas, Taipei Branch
(Offshore Banking Unit) $32,500,000
205 TunHua North Road
11th Floor
Taipei, Taiwan 10592
Attention: Manager Operations
Facsimile: (8862) 27 13 1182
Copy Notices to:
Paribas Group Australia Limited
Level 11, 3 Spring Street,
Sydney NSW 2000
Attention: Leo Leslie/
Chrisoula Theos
Facsimile: (612) 9241 5363
Export Development Corporation $20,000,000
151 O'Connor Street
Ottawa
Ontario K1A 1K3
Attention: Stephen Hebert
Loan Services Officer
Viola Wedge-Moores
Loan Services Manager
Facsimile: (613) 598 2514
Credit Lyonnais S.A., Singapore Branch $20,000,000
3 Temasek Avenue
#11-01 Centennial Tower
Singapore 039190
Attention: Kok Che Yu /
Thomas Baetz
Facsimile: (65) 333 8556
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NAME & ADDRESS FOR NOTICES COMMITMENT
The Development Bank of Singapore Ltd $10,000,000
6 Shenton Way
DBS Building
Tower One
Singapore 068809
Attention: Sannly Cheng
Associate
Facsimile: (65) 225 0282
The National Bank of New Zealand Limited $10,000,000
6th Floor, NBNZ House
1 Victoria Street
Wellington, New Zealand
Attention: Mark T. Hiddleston
Facsimile: (644) 802 2022
TOTAL COMMITMENT
$125,000,000
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SCHEDULE 2
RATIOS
PART 1: Operating Ratios
Month Total Debt/Homes Subscribers OR Equivalent
Serviceable Billing Units
($)
January 1999 1,400 13,000 14,500
February 1999 1,400 14,500 16,500
March 1999 1,300 17,000 20,000
April 1999 1,250 20,000 24,000
May 1999 1,200 24,000 28,000
June 1999 1,200 28,000 32,000
July 1999 1,250 32,000 37,000
August 1999 1,300 36,000 42,000
September 1999 1,300 40,000 46,000
October 1999 1,300 44,000 51,000
November 1999 1,300 47,000 55,000
December 1999 1,300 50,000 60,000
March 2000 1,300 54,000 66,000
June 2000 1,300 58,000 72,000
September 2000 1,300 61,000 78,000
PART 2: Financial Ratios pre 30 September 2000
Period Ending Minimum EBITDA Minimum Revenue
31 December 1998 (5,250,000) -
31 January 1999 (5,750,000) 700,000
28 February 1999 (5,500,000) 800,000
31 March 1999 (4,250,000) 1,000,000
30 April 1999 (3,750,000) 1,250,000
31 May 1999 (3,250,000) 1,450,000
30 June 1999 (3,000,000) 1,750,000
31 July 1999 (2,500,000) 2,000,000
31 August 1999 (2,150,000) 2,200,000
30 September 1999 (1,750,000) 2,500,000
31 October 1999 (1,250,000) 2,700,000
30 November 1999 (750,000) 2,900,000
31 December 1999 (250,000) 3,100,000
31 March 2000 2,750,000 11,500,000
30 June 2000 3,250,000 12,500,000
30 September 2000 4,000,000 13,500,000
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PART 3: Financial Ratios post 30 June 2000
3 Month Total Debt/Annualised EBITDA EBITDA/Interest Expense
Period Ending
31 December 2000 6.50 -
31 March 2001 6.25 2.00
30 June 2001 6.00 2.00
30 September 2001 5.50 2.00
31 December 2001 5.25 2.00
31 March 2002 5.00 2.50
30 June 2002 4.75 2.50
30 September 2002 4.50 2.50
31 December 2002 4.25 2.50
31 March 2003 4.00 3.00
30 June 2003 3.50 3.00
30 September 2003 3.50 3.00
31 December 2003 3.50 3.00
31 March 2004 3.50 4.00
30 June 2004 3.50 4.00
30 September 2004 3.50 4.00
31 December 2004 3.50 4.00
31 March 2005 3.50 5.00
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SCHEDULE 3
DOCUMENTARY CONDITIONS PRECEDENT
1. A certified copy of the constitutional documents of each Obligor.
2. A certified copy of a resolution or resolutions of the directors of the
Borrower approving the Facility and authorising:
(a) the execution by the Borrower of this Agreement and of any of the
Original Securities to be given by the Borrower; and
(b) a person or persons to sign Bills, notices, certificates or other
documents in connection with the Facility on behalf of the Borrower.
3. A certified copy of a resolution or resolutions of each Original Guarantor
approving the giving of the guarantee by that Guarantor in this Agreement
and authorising:
(a) the execution by the Original Guarantor of this Agreement and of any
of the Original Securities to be given by that Original Guarantor; and
(b) a person or persons to sign notices, certificates or other documents
in connection with the Facility on behalf of the Guarantor.
4. Evidence, satisfactory to the Agent, that the powers of attorney (if any)
used to execute any of the Transaction Documents on behalf of any Obligor
have been or will be registered, if necessary or two originals of the
powers of attorney have been provided.
5. A certified copy of the signatures of all persons authorised to sign on
behalf of the Borrower and the Original Guarantors.
6. A copy of the Original Securities in registrable form.
7. Replies to all requisitions of the Agent and its solicitors relating to the
Facility and the Original Securities.
8. A certified copy or originals of each of the Material Contracts duly
executed and stamped (if required).
9. A certified copy of (and of all applications for) any and all approvals,
consents, licences, exemptions and other requirements (whether governmental
requirements or otherwise) required for each Obligor to carry on its
business or to enter into or perform its obligations under the Transaction
Documents.
10. An opinion, addressed to the Agent and the Banks, of the legal advisers to
the Agent and the Banks as to such matters relating to the Obligors and/or
the Transaction Documents as the Agent may require.
11. An opinion, addressed to the Agent on behalf of the Banks as to the
enforceability of the Transaction Documents to which SaskTel NZ, UIHNZ, UAP
and STHC is a party against that party.
12. The Business Plan.
13. Evidence that all insurance policies are in existence as required under
this Agreement and any of the Securities and where applicable, that the
Agent's interest has been noted thereon and if requested certified copies
of each such insurance policy.
14. Model audit.
15. Directors certificate in the form of Schedule 9 for the Borrower and each
Guarantor.
For the purposes of this Schedule, "certified" means a copy certified to be such
by a director or Officer of the Borrower.
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SCHEDULE 4
FORM OF UTILISATION NOTICE
To: Toronto Dominion Australia Limited
From: Saturn Communications Limited Date: [ ]
UTILISATION NOTICE (ADVANCE).
Facility Agreement dated [ ]
Dear Sirs
We hereby give you notice pursuant to clause 4.1 of the above Facility Agreement
that we require an Advance to be made to us under the Facility Agreement, as
follows
(a) Utilisation Date: [ ]
(b) Amount: [ ]
(c) Interest Period: [ ]
(d) Purpose: [ ]
Payment instructions with respect to the proceeds of the Advance are as follows:
[ ]
Terms used in this Utilisation Notice and defined in the Facility Agreement have
the same meaning in this Utilisation Notice as in the Facility Agreement.
We confirm that no Event of Default or Potential Event of Default has occurred
and is continuing or would result from the borrowing of the proposed Advance. We
also confirm that the representations, warranties and undertakings in clauses 16
(except for clauses 16.2(c), (d), (e) and (f)) and 17 of the Facility Agreement
have been complied with and the statements in those clauses are correct as at
the date of this Utilisation Notice.
Yours faithfully
[Authorised Signatory]
For and on behalf of Saturn Communications Limited
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SCHEDULE 5
ACCESSION AGREEMENT
THIS ACCESSION AGREEMENT is dated the [ ] day of , 19 and made BETWEEN [ ] (the
"Additional Guarantor"), Saturn Communications Limited (the "Borrower"), [ ]
(each an "Existing Guarantor"), Toronto Dominion Australia Limited in its
capacity as Agent under the Facility Agreement referred to in Recital (A) hereof
and on behalf of the Banks parties to and defined as such in such Facility
Agreement.
WHEREAS:
(A) By and upon and subject to the terms of a facility agreement (the "Facility
Agreement", which term includes any supplements and amendments thereto
which may at any time be made in relation thereto and also any Substitution
Certificates, Bank Accession Certificates and Accession Agreements) dated
[ ] made between the Borrower and Guarantors as therein defined,
the several banks parties thereto as Banks and Toronto Dominion Australia
Limited, as Agent an amortising term loan facility was made available to
the Borrower (as defined in the Facility Agreement).
(B) Each of the entities expressed to be party hereto, whether directly or
through signature hereof by the Agent or the Borrower on its behalf, is a
party to the Facility Agreement either by having been an original party
thereto or pursuant to an Accession Agreement, Bank Accession Certificate
or a Substitution Certificate to which it is party or otherwise.
(C) The Additional Guarantor wishes to become party to the Facility Agreement
as a Guarantor pursuant to the procedure established in clause 21 of the
Facility Agreement by the execution of this Accession Agreement.
(D) It is the intention of the parties that this Accession Agreement shall take
effect as a deed.
NOW IT IS HEREBY AGREED as follows:
1. Definitions
Terms used herein which are defined in or to which a meaning or
construction is assigned by or in the Facility Agreement shall, unless
otherwise defined herein, have the same meaning and construction herein as
therein.
2. Agreements, Confirmations and Representations
(a) The Additional Guarantor hereby:
(i) confirms that it has received a copy of the Facility Agreement
together with such other documents and information as it has
required in connection herewith and therewith;
(ii) agrees to become, with effect from the date of this Accession
Agreement, a Guarantor under the Facility Agreement, agrees to be
bound in that capacity with effect from such date by the terms of
the Facility Agreement and undertakes accordingly to perform its
obligations as a Guarantor thereunder;
(iii) confirms the accuracy of the information set out under its name
at the end of this Accession Agreement;
(iv) represents and warrants as an Obligor to the Banks and the Agent
in the terms of clause 16 (other than paragraphs 16.2(c), (d),
(e) and (f)) of the Facility Agreement by reference to the facts
and circumstances existing at the date hereof; and
(v) confirms that it has not relied on the Banks or the Agent to
assess or inform it as to the legality, validity, effect or
enforceability of the Facility Agreement or any other document
referred to therein or the accuracy or completeness of any such
information as is referred to in paragraph (i) above or the
creditworthiness, affairs, condition or status of any of the
parties to the Facility Agreement, or any such other document.
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(b) The Borrower, the Existing Guarantor(s), the Agent and the Banks
hereby agree amongst themselves and with the Additional Guarantor that
the Additional Guarantor shall become party to the Facility Agreement
with effect from the date of this Accession Agreement.
3. Law
This Accession Agreement shall be governed by and construed in accordance
with the laws applying in New Zealand.
IN WITNESS WHEREOF the parties hereto have caused this Accession Agreement to be
duly executed on the date first written above.
SIGNATURES
Additional Guarantor:
[ ]
Borrower:
SATURN COMMUNICATIONS LIMITED
for itself and as agent for and on behalf of the Existing Guarantors
By:
Agent:
TORONTO DOMINION AUSTRALIA LIMITED for itself and as Agent and on behalf of the
Banks.
By:
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SCHEDULE 6
SUBSTITUTION CERTIFICATE
Substitution Certificate made the day of
BY ("Existing Bank");
AND ("New Bank");
AND Toronto Dominion Australia Limited for itself and as agent for each
party under the Facility Agreement ("Agent").
WHEREAS
A. The Existing Bank and the New Bank presently have the Commitments specified
in Schedule 1 of this Certificate.
B. The New Bank wishes to [assume [some/all] of the Existing Bank's
Commitments and] participate in the outstanding Advances under the Facility
Agreement.
C. After the Substitution Date the Existing Bank and the New Bank will have
the Commitments specified in the Schedule.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Certificate:
"Borrower" means Saturn Communications Limited.
"Facility Agreement" means the agreement dated [ ] between (amongst
others) the Borrower and the Agent together with and as supplemented
by all Accession Agreements, Bank Accession Certificates and
Substitution Certificates.
"Substituted Commitments" means the Commitments specified as such in
Schedule 1 of this Certificate.
"Substituted Obligations" means the obligations and responsibilities
identical to the obligations and responsibilities under the
Transaction Documents of the Existing Bank in relation to the
Substituted Commitments.
"Substituted Portion" means the amount of each outstanding Advance
specified as such in Schedule 2 of this Certificate.
"Substituted Rights" means rights, remedies and powers identical to
the rights, remedies and powers under the Transaction Documents of the
Existing Bank in relation to the Substituted Commitments and the
Substituted Portion.
"Substitution Date" means the later of the date on which this
Certificate is executed on behalf of the Agent or such later date as
the parties hereto may agree in writing.
1.2 Interpretation
(a) A reference in this Certificate to "identical" obligations and
responsibilities or rights, remedies and powers is a reference to
the character of those obligations and responsibilities, rights,
remedies and powers rather than to the identity of the person
obliged to perform them or entitled to them.
(b) Terms defined or given a special meaning in the Facility
Agreement have the same meaning in this Certificate.
1.3 Transaction Documents
This Certificate is a Transaction Document.
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2. REPRESENTATION
The Existing Bank represents and warrants to the New Bank that as at
the date of this Certificate the Existing Bank's present Commitments
under the Facility Agreement are as shown in Schedule 1 and the
Existing Bank's participation in outstanding Advances is as shown in
Schedule 2 of this Certificate.
3. SUBSTITUTED OBLIGATIONS
Release from Future Obligations
The Existing Bank is released from the Substituted Obligations with
effect on and from the Substitution Date. The Existing Bank shall,
however, remain bound by its obligations and responsibilities under
the Transaction Documents which accrue prior to the Substitution Date
save as provided in clause 5 below.
3.1 Assumption of Obligations
The New Bank undertakes to the Existing Bank and the Agent that it
shall assume the Substituted Obligations on and from the Substitution
Date.
4. SUBSTITUTED RIGHTS
The Existing Bank shall no longer be entitled to the Substituted
Rights or the Substituted Portion and the New Bank shall become
entitled to the Substituted Rights and the Substituted Portion, with
effect on and from the Substitution Date.
5. EFFECT ON TRANSACTION DOCUMENTS
The Existing Bank, the New Bank and the Agent agree that with effect
on and from the Substitution Date:
(a) the New Bank and each party to each Transaction Document will
assume obligations and responsibilities towards each other, and
have rights, remedies and powers in relation to each other,
determined on the basis that the obligations and responsibilities
of the New Bank are the Substituted Obligations and the rights,
remedies and powers of the New Bank are the Substituted Rights;
(b) the Existing Bank will be released from its obligations and
responsibilities under each of the Transaction Documents accruing
on and after the Substitution Date to the extent of the
Substituted Obligations and it will cease to be entitled to
exercise any rights, remedies or powers under the Transaction
Documents arising on or after the Substitution Date in respect of
the Substituted Rights; and
(c) the New Bank will be deemed a party to each Transaction Document
to which the Existing Bank is a party as a Bank with Commitments
equal to the Substituted Commitments.
6. NO EFFECT ON ACCRUED RIGHTS AND OBLIGATIONS
Save as expressly provided herein this Certificate shall not affect
the Existing Bank's rights, remedies and powers arising, and
obligations and responsibilities accrued, prior to the Substitution
Date.
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7. LIQUEFYING BILLS
Nothing contained in this Certificate releases, relieves or otherwise
affects the obligations and responsibilities and the rights, remedies
and powers, of the Existing Bank in respect of Bills drawn under
clause 9 of the Facility Agreement. The New Bank will not assume any
obligations or responsibilities, or acquire any rights, remedies or
powers, in respect of such Bills.
8. PAYMENTS
8.1 Consideration
The Existing Bank and the New Bank shall agree separately between
themselves the amounts (if any) payable from one to the other in
relation to the substitution in respect of principal and accrued
interest and fees.
8.2 Agent
On and from the Substitution Date the Agent will make all payments
received by it in respect of the Substituted Commitments, Substituted
Obligations, Substituted Rights and Substituted Portion to the New
Bank.
9. INDEPENDENT ASSESSMENT
Without limiting clause 6 of this Certificate, the New Bank agrees
that the provisions of clause 24.13 of the Facility Agreement binds it
as if the reference therein to this "Agreement" included this
Certificate and (subject to any agreement to the contrary between the
Existing Bank and New Bank) the reference therein to the "Agent"
included the Existing Bank.
10. ACKNOWLEDGEMENTS
The New Bank acknowledges that it has received a complete and current
copy of each Transaction Document together with such other documents
and information as it has required in connection therewith.
11. GOVERNING LAW
This Certificate is governed by the laws applying in New Zealand.
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Schedule 1: Commitments
Commitment
- --------------------------------------------------------------------------
Existing Bank's present Commitments $[ ]
New Bank's present Commitments $[ ]
Substituted Commitments $[ ]
Existing Bank's Commitments after substitution $[ ]
New Bank's Commitments after substitution $[ ]
Schedule 2: Advances
Total Existing Substituted
Outstanding Bank's Portion
Participation
- --------------------------------------------------------------------------------
Advances $[ ] $[ ] $[ ]
SIGNED as an agreement.
[To be signed by Existing Bank, New Bank and Agent]
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SCHEDULE 7
NOTICE FROM UAP
[LETTERHEAD OF UIH AUSTRALIA/PACIFIC, INC.]
[Date]
Toronto Dominion Australia Limited
Level 36
385 Bourke Street
MELBOURNE VIC 3000
Attention [*]
Dear Sir
SATURN COMMUNICATIONS LIMITED
We refer to:
(a) the Indenture dated as of 14 May 1996 between UIH Australia/Pacific, Inc.
("UAP") and Firstar Bank of Minnesota N.A., as supplemented by a
Supplemental Indenture dated as of 30 June 1997 (the "Indentures"); and
(b) the terms and conditions of the syndicated senior term debt facility
arranged by Toronto Dominion Australia Limited ("TDA") for Saturn
Communications Limited ("SCL") dated [ ] (the "Senior Debt Terms").
Having reviewed the Senior Debt Terms and consulted with our lawyers we confirm
that the provision of a financing for SCL in accordance with the Senior Debt
Terms will not cause a breach either of the Indentures.
We acknowledge that TDA will rely on this letter in providing finance to SCL and
confirm that this letter may also be disclosed to and relied on by prospective
syndicate banks which participate in the proposed financing for SCL.
Signed on behalf of UAP by [ ] with the authority of the directors of UAP.
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SCHEDULE 8
COMPLIANCE CERTIFICATE
TO: Toronto Dominion Australia Limited (in its capacity as Agent)
ACN 004 958 020
Level 36
385 Bourke Street
MELBOURNE VIC 3000
FROM: Saturn Communications Limited
COMPLIANCE CERTIFICATE
Reference is made to the NZ$125,000,000 Syndicated Senior Secured Debt Facility
Agreement dated [ ] between (amongst others) Saturn Communications Limited
("Company") and Toronto Dominion Australia Limited in its capacity as Agent
("Facility Agreement") and all Accession Agreements, Bank Accession Certificates
and Substitution Certificates entered into in respect of the Facility Agreement.
Words defined in the Facility Agreement have the same meaning in this
Certificate.
This Certificate is given by the Company on behalf of all Obligors.
1. RATIOS
1.1 Total Debt/Homes Serviceable Ratio
The ratio of Total Debt to Homes Serviceable for the Group for the
period from [ ] to [ ] was [ ].
1.2 Total Subscribers
The number of Subscribers as at [ ] was [ ].
1.3 Equivalent Billing Units
The Equivalent Billing Units for the Group for the period from [ ]
to [ ] was [ ].
1.4 EBITDA
EBITDA for the Group for the period from [ ] to [ ] was
[ ].
1.5 Revenue
The Revenue of the Group for the period from [ ] to [ ]
was [ ].
1.6 Total Debt/Annualised EBITDA
The ratio of Total Debt to Annualised EBITDA for the Group for the
period from [ ] to [ ] was [ ].
1.7 EBITDA/Interest Expense
The ratio of EBITDA to Interest Expense for the Group for the period
from [ ] to [ ] was [ ].
2. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
The representations, warranties and undertakings in clauses 16 (except
for clauses 16.2(c), (d), (e) and (f)) and 17 of the Facility
Agreement have been complied with and the statements in those clauses
are correct as at the date of this Certificate [except as set out
below:].
We, [ ], being [directors/director and Chief Financial Officer of
the Company] certify that the contents of this Certificate are true and correct
as at the date of this Certificate.
....................................... ......................................
Name of Director [Name of Director /Chief Financial
Officer]
Date: .................................
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SCHEDULE 9
FORM OF DIRECTOR'S CERTIFICATE
[Date]
Toronto Dominion Australia Limited
Level 36
385 Bourke Street
MELBOURNE VIC 3000
Attention: Legal Counsel
I, [name of director], a director of [Saturn Communications Limited/Kiwi Cable
Company Limited] (the "Company") certify as follows:
1. Board resolutions
1.1 The board of directors of the Company (the "Board") has passed resolutions:
(a) approving the transactions (the "Transaction") contemplated by the
documents listed in the schedule below (the "Documents"), and the
Documents themselves; and
(b) authorising execution of the Documents by the Company in the manner in
which they have actually been executed.
1.2 The resolutions were duly passed in writing signed by all of the directors
of the Company entitled to receive notice of a meeting of the Board.
OR
The resolutions were duly passed at a meeting of the Board:
(a) which was properly convened; and
(b) in respect of which all quorum requirements were duly observed.
1.3 The resolutions remain in full force and effect.
2. Directors' self-interested transactions
To the best of my knowledge and belief after making due enquiry of all
other of the Company's directors (as defined in section 126 of the
Companies Act 1993 (the "Act")), none of the directors of the Company has
an interest (as that term is defined in section 139 of the Act) in the
Transactions.
OR
After making due enquiry, it has been determined that one or more of the
Company's directors (as defined in section 126 of the Companies Act 1993
(the "Act")) is, or may be, interested (as that term is defined in section
139 of the Act) in the Transactions. In approving the Documents and the
Transactions, the Board, after taking into account all relevant factors,
considers that the Company is receiving or will receive fair value under
them.
OR
All of the Company's entitled persons have agreed in writing (pursuant to
section 107(3) of the Act) to the Company's entry into and performance of
the Documents and the Transactions (so that nothing in sections 140 and 141
of the Act shall apply to the Transactions). A true and complete copy of
the relevant agreement is attached.
3. Corporate benefit
In approving the Documents and the Transactions, the Board, after taking
into account all relevant factors, has resolved that the Company's entry
into and performance of the Documents and the Transactions is in the best
interests of the Company.
OR
In approving the Documents and the Transactions the Board has:
(a) (after taking into account all relevant factors and pursuant to an
express provision in the Company's constitution), resolved that the
97
<PAGE>
Company's entry into and performance of the Documents and the
Transactions is in the best interests of the Company's holding
company; and
(b) (in any case where the Company is not a wholly owned subsidiary of the
Company's holding company) obtained prior agreement to the Company's
entry into and performance of the Documents and the Transactions from
the Company's shareholders (other than the Company's holding
company).
4. Shareholder action
It has been determined that the Transactions are a "major transaction" for
the purposes of section 129 of the Act. Accordingly all of the shareholders
of the Company have by special resolution (a true and complete copy of
which is attached):
(a) approved the Documents and Transactions; and
(b) confirmed, approved and ratified the resolutions of the Board referred
to above.
5. Due execution
Each of the Documents has been properly executed by the Company.
6. Solvency
6.1 I am not aware of any liquidation proceedings which have been commenced or
are intended to be commenced by any person against the Company, or which
are intended or anticipated by the Company.
6.2 Having taken into account all relevant factors (including, in the case of a
guarantee, all rights of contribution and subrogation to which the Company
would be entitled if called upon to perform its obligations and the
solvency of the guaranteed parties), the Board is satisfied that the value
of the consideration or benefit received (or to be received) by the Company
is not less than the value of the consideration provided (or to be
provided) by the Company.
OR
The Company:
(a) is able to pay its due debts;
(b) is not engaged or about to engage in business for which its financial
resources are unreasonably small;
(c) will be able to perform its obligations under the Documents and the
Transactions when required to do so; and
(d) will not become unable to pay its due debts as a result of the
Documents and the Transactions.
7. Financial assistance
The Transactions do not include or involve any provision by the Company
(directly or indirectly) of financial assistance in connection with the
purchase of a share issued or to be issued by the Company or its holding
company.
8. Constitution
The copy of the constitution of the Company held on its records as
maintained at the office of Registrar of Companies at Wellington as at 27
August 1998 is complete and includes all alterations to date other than
those attached to this certificate.
Schedule of Documents
1. Syndicated Senior Debt Facility Agreement
2. Deed of Charge
3. Freehold Mortgage*
Signed by ..........................................
Director
Date: ..........................................
* Not relevant for Kiwi Cable Company Limited
98
<PAGE>
SCHEDULE 10
BANK ACCESSION CERTIFICATE
THIS BANK ACCESSION CERTIFICATE is dated the [ ] day of , 19 and made BETWEEN [
] (the "Acceding Bank"), Saturn Communications Limited (the "Borrower"), [ ]
(each a "Guarantor"), Toronto Dominion Australia Limited in its capacity as
Agent under the Facility Agreement referred to in Recital A hereof and on behalf
of the Banks parties to and defined as such in such Facility Agreement.
WHEREAS:
A By and upon and subject to the terms of a facility agreement (the "Facility
Agreement", which term includes any supplements and amendments thereto
which may at any time be made in relation thereto and also any Substitution
Certificates, Bank Accession Certificates and Accession Agreements) dated [
] made between the Borrower and Guarantors as therein defined, the several
banks parties thereto as Banks and Toronto Dominion Australia Limited, as
Agent an amortising term loan facility was made available to the Borrower
(as defined in the Facility Agreement).
B Each of the entities expressed to be party hereto, whether directly or
through signature hereof by the Agent or the Borrower on its behalf, is a
party to the Facility Agreement either by having been an original party
thereto or pursuant to an Accession Agreement, Bank Accession Certificate
or a Substitution Certificate to which it is party or otherwise.
C The Acceding Bank wishes to become party to the Facility Agreement as a
Bank pursuant to the procedure established in clause 29.5 of the Facility
Agreement by the execution of this Certificate.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
"Accession Date" means the later of:
(a) the date on which this Certificate is executed on behalf of the Agent
and on behalf of the Borrower and each Guarantor; and
(b) such later date as the parties hereto may agree in writing.
"Existing Bank" means each Bank existing immediately prior to the proposed
accession, together the "Existing Banks".
"New Commitments" means [ ].
"New Obligations" means the obligations and responsibilities of the
Acceding Bank in relation on the New Commitments which shall be identical
to the obligations and responsibilities under the Transaction Documents of
the Existing Banks in relation to their respective Commitments.
1.2 Interpretation
Terms defined or given a special meaning in the Facility Agreement have the
same meaning in this Certificate.
2. ACKNOWLEDGEMENT AND AGREEMENT
The Acceding Bank hereby:
(a) confirms that it has received a copy of the Facility Agreement
together with such other documents and information as it has required
in connection herewith and therewith; and
(b) agrees to become, with effect from the date of this Certificate, a
Bank under the Facility Agreement, agrees to be bound in that capacity
with effect from such date by the terms of the Facility Agreement and
undertakes accordingly to perform its obligations as a Bank
thereunder;
3. NEW COMMITMENT
The Acceding Bank undertakes to the Existing Banks, the Agent and the
Borrower that it shall assume the New Obligations on and from the Accession
Date.
99
<PAGE>
4. EFFECT ON TRANSACTION DOCUMENTS
The parties agree that with effect on and from the Accession Date:
(a) the Acceding Bank and each party to each Transaction Document will
assume obligations and responsibilities towards each other, and have
rights, remedies and power in relation to each other, determined on
the basis that the obligations and responsibilities of the Acceding
Bank are the New Obligations;
(b) the Acceding Bank will be deemed a party to each Transaction Document
to which the Existing Banks are a party as a Bank with Commitments
equal to the New Commitments; and
(c) the Total Commitments will be increased by the amount of the New
Commitments.
5. NO EFFECT ON ACCRUED RIGHTS AND OBLIGATIONS
Save as expressly provided herein, this Certificate shall not affect the
Existing Banks' rights, remedies and powers arising, and obligations and
responsibilities accrued under any Transaction Document.
6. INDEPENDENT ASSESSMENT
Without limiting clause 5 of this Certificate, the Acceding Bank agrees
that the provisions of clause 24.13 of the Facility Agreement binds it as
if the reference therein to this "Agreement" included this Certificate and
(subject to any agreement to the contrary between the Existing Banks and
Acceding Bank) the reference therein to the "Agent" included the Existing
Banks.
7. ACKNOWLEDGEMENTS
The Acceding Bank acknowledges that it has received a complete and current
copy of each Transaction Document together with such other documents and
information as it has required in connection therewith.
8. GOVERNING LAW
This Certificate is governed by the laws applying in New Zealand.
IN WITNESS WHEREOF the parties hereto have caused this Bank Accession
Certificate to be duly executed on the date first written above.
SIGNATURES
Acceding Bank:
[ ]
Borrower:
SATURN COMMUNICATIONS LIMITED
for itself and as agent for and on behalf of the Guarantors
By:
Agent:
TORONTO DOMINION AUSTRALIA LIMITED for itself and as Agent and on behalf of the
Banks.
By:
100
Saturn Communications Limited
Borrower
Kiwi Cable Company Limited
Guarantor
AUSTAR United Communications Limited
Saturn (NZ) Holding Company Pty Ltd
each a Mortgagor
Toronto Dominion Australia Limited
Agent
<PAGE>
TABLE OF CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 2
1.3 Collateral and Supplemental Agreement 2
1.4 Transaction Document 2
2. CONDITIONS PRECEDENT 2
3. VARIATIONS TO FACILITY AGREEMENT 3
4. REPRESENTATIONS AND WARRANTIES 3
4.1 Borrower and Guarantor 3
4.2 Mortgagors 4
5. CAPITAL CONTRIBUTION 4
5.1 Capital Contribution Amount 4
5.2 Form of contribution 4
5.3 Obligations not affected 4
5.4 Termination of obligations 5
6. CONSENTS AND ACKNOWLEDGEMENTS 5
6.1 The Borrower 5
6.2 The Guarantor 5
6.3 The Mortgagors 5
6.4 Consent to Variation 6
6.5 The Agent 6
7. VARIATION FEE 6
8. LEGAL COSTS, DUTIES ETC. 6
9. MISCELLANEOUS 6
9.1 Governing law 6
9.2 Facility Agreement in full force 6
9.3 Further assurances 6
9.4 Counterparts 7
9.5 Contracts (Privity) Act 1982 7
<PAGE>
SECOND SUPPLEMENTAL DEED & CAPITAL CONTRIBUTION made on 29 July 1999
BETWEEN SATURN COMMUNICATIONS LIMITED, NZ Co. No. WN/435672 of 75 The
Esplanade, Petone, Wellington, New Zealand ("Borrower")
AND KIWI CABLE COMPANY LIMITED, NZ Co. No. WN/647464 of 75 The
Esplanade, Petone, Wellington, New Zealand ("Guarantor")
AND AUSTAR UNITED COMMUNICATIONS LIMITED, ACN 087 695 707 of Level
29, AAP Centre, 259 George Street, Sydney, New South Wales
("AUC") and SATURN (NZ) HOLDING COMPANY PTY LTD, ACN 088 052 000
of 259 George Street, Sydney, New South Wales (each a
"Mortgagor")
AND TORONTO DOMINION AUSTRALIA LIMITED, ACN 004 858 020 of Level 36,
385 Bourke Street, Melbourne, Victoria in its capacity as agent
for the Banks ("Agent")
RECITALS
A. Under the Facility Agreement, the Banks have made available to the Borrower
a syndicated senior secured debt facility.
B. Under the Facility Agreement, the Guarantor has guaranteed to the Banks the
due and punctual performance by the Borrower of the Obligations.
C. Under the Share Mortgages, the Mortgagors have given security for the
payment in full to the Agent of all the Secured Money as defined in the
Share Mortgages.
D. The Borrower and the Guarantor have requested the Agent (acting on the
instructions of the Banks) to vary the terms of the Facility and the Agent
(acting on the instructions of the Banks) has agreed to this request on the
terms contained in this deed.
E. Each Mortgagor acknowledges and consents to the variation of the Facility
Agreement contained in this deed.
F. AUC covenants in favour of the Borrower and the Agent (on behalf of the
Banks) to contribute capital to the Borrower on the terms set out in this
deed.
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
(a) In this deed and in the Recitals:
"Facility Agreement" means the Syndicated Senior Secured Debt
Facility Agreement dated 5 November 1998 (as varied from time to
1
<PAGE>
time including by a supplemental deed dated 15 July 1999) between
the Agent, the Borrower, the Guarantor and each of the other
parties referred to as a "Bank" therein.
"Subordinated Debt" means debt which is unsecured and
subordinated to the obligations of the Borrower under the
Facility Agreement (as varied by this deed) and the Transaction
Documents.
"Variation Date" means the date on which the conditions precedent
in clause 2 are satisfied, or such earlier date as notified to
the Borrower by the Agent.
(b) Subject to clause 1.1(a), unless the context indicates a contrary
intention, all terms defined in the Facility Agreement (as varied
by this deed) shall have the same meaning in this deed.
1.2 Interpretation
The provisions of clause 1.2 (Interpretation) of the Facility
Agreement (as varied by this deed) shall be incorporated into this
deed as if set out herein.
1.3 Collateral and Supplemental Agreement
This deed is collateral and supplemental to the Facility Agreement.
1.4 Transaction Document
This deed is a Transaction Document under and for the purposes of the
Facility Agreement and the Securities.
2. CONDITIONS PRECEDENT
The amendments to the Facility Agreement effected by this document are
subject to the conditions precedent that all of the following are
received by the Agent in form and substance satisfactory to the Agent
and to its legal advisers:
(a) (Executed document): this document duly executed by the Borrower,
the Guarantor and the Mortgagors;
(b) (Requisitions): searches and replies to all requisitions of the
Agent and its solicitors in relation to this document, the
Borrower, the Guarantor and the Mortgagors;
(c) (Powers of attorney): certified copies of the powers of attorney,
if any, under which any party (other than the Agent) executes
this deed;
(d) (Legal opinion): a legal opinion from Bell Gully and Clayton Utz
in a form satisfactory to the Agent; and
2
<PAGE>
(e) (Corporate authorisations):
(i) (Australian companies): in the case of each Mortgagor, a
certified copy of:
A. its Constitution; and
B. an extract of a resolution of its board of directors
approving the terms of this deed and authorising its
execution of this deed; and
(ii) (New Zealand companies): in the case of each of the Borrower
and the Guarantor:
A. a certified copy of a resolution or resolution of its
directors approving this deed and authorising its
execution of this deed; and
B. a director's certificate in the form set out in
Schedule 9 to the Facility Agreement (with such
modifications thereto as may be required or agreed by
the Agent) from one of its directors in respect of its
authorisation, execution and performance of this deed.
3. VARIATIONS TO FACILITY AGREEMENT
As from the Variation Date, the Facility Agreement shall be varied as
follows:
(a) (Clause 10.4(b) of the Facility Agreement): "31 December 2000"
referred to in the last line of clause 10.4(b) of the Facility
Agreement is deleted and replaced with "31 March 2001".
(b) (Clause 18.2(a) of the Facility Agreement): "30 September 2000"
referred to in the first line of clause 18.2(a) of the Facility
Agreement is deleted and replaced with "31 December 2000".
(c) (Clause 18.2(b) of the Facility Agreement): "30 September 2000"
referred to in the first line of clause 18.2(b) of the Facility
Agreement is deleted and replaced with "31 December 2000".
(d) (Schedule 2 of the Facility Agreement): Schedule 2 of the
Facility Agreement is varied so that is in the form of Annexure
"A".
4. REPRESENTATIONS AND WARRANTIES
4.1 Borrower and Guarantor
(a) The Borrower and the Guarantor hereby confirm and repeat each of
the representations and warranties made by it in clause 16.1
(except for paragraph 16.1(e)), 16.2 (except for paragraphs (c),
(d), (e) and (f)) and 16.3 of the Facility Agreement (as varied
by this deed) with reference to the facts and circumstances
subsisting as at the date of this deed.
3
<PAGE>
(b) The Borrower and the Guarantor hereby represent and warrant in
respect of itself only to each of the Agent and the Banks that no
event has occurred which constitutes an Event of Default or a
Potential Event of Default other than those events which have
already been disclosed to the Agent in writing prior to the date
of this deed.
4.2 Mortgagors
Each Mortgagor hereby confirms and repeats each of the representations
and warranties made by it in clauses 3.1 and 3.2 of the Share Mortgage
to which it is a party with reference to the facts and circumstances
subsisting as at the date of this deed and as if references in those
clauses to "this Mortgage" include this deed.
5. CAPITAL CONTRIBUTION
5.1 Capital Contribution Amount
AUC covenants in favour of the Borrower and the Agent (on behalf of
the Banks) that it will pay to the Borrower (in accordance with this
clause 5) the following amounts ("Capital Contribution Amounts") on or
before the following dates:
Date Amount
31 March 2000 $1,000,000
31 December 2000 $5,000,000
5.2 Form of contribution
(a) All payments by AUC to the Borrower under this clause 5 will be
applied:
(i) as subscription for shares in the Borrower; or
(ii) as subscription for Subordinated Debt,
and the Borrower will complete all subscription or other
documentation, issue share certificates or other evidence and
make such register entries, notifications or filings and take all
other action required to record and implement the issue of such
shares or Subordinated Debt.
(b) If the Borrower is unable for any reason whatsoever to issue
shares in the manner referred to in paragraph (a)(i) above
(including, without limitation, due to its liquidation or other
Event of Insolvency in relation to it), AUC will make its payment
obligation under this clause 5 in the manner set out in paragraph
5.2(a)(ii).
5.3 Obligations not affected
(a) The obligation of AUC to pay the Capital Contribution Amounts
will not be reduced, postponed, determined, delayed or otherwise
4
<PAGE>
affected by any failure and/or inability of the Borrower to issue
shares or do any other thing required under clause 5.2.
(b) The Capital Contribution Amounts will not be reduced (in part or
in full) and the obligations of the parties under this deed will
not be affected by the contribution of capital to the Borrower or
any other financial accommodation in favour of the Borrower
provided by the Mortgagors or any other person otherwise than in
accordance with this deed.
5.4 Termination of obligations
The obligations of AUC under this clause 5 shall automatically
terminate upon the first to occur of:
(a) the full and unconditional satisfaction of the Obligations
including, without limitation the payment in full of the Secured
Money; and
(b) such other date as the Agent may agree in writing.
6. CONSENTS AND ACKNOWLEDGEMENTS
6.1 The Borrower
The Borrower hereby unconditionally and irrevocably:
(a) ratifies and confirms to the Agent and the Banks its continuing
obligations under the Facility Agreement (as varied by this deed)
and the Securities to which it is a party; and
(b) acknowledges and agrees that except to the extent of the
variations effected by the provisions of this deed the provisions
of the Facility Agreement and the Securities to which it is a
party shall in all respects apply.
6.2 The Guarantor
The Guarantor hereby unconditionally and irrevocably acknowledges and
agrees that the guarantees and indemnities contained in the Facility
Agreement (as varied by this deed) apply mutatis mutandis to all
obligations of the Borrower to the Agent and the Banks thereunder and
hereby ratifies and confirms to the Agent and the Banks its continuing
liability to the Agent and the Banks pursuant to the Facility
Agreement (as varied by this deed) and the Securities to which the
Guarantor is a party.
6.3 The Mortgagors
Each Mortgagor hereby ratifies and confirms to the Agent and the Banks
its continuing liability to the Agent (as agent for the Banks) and the
Banks pursuant to and subject to the recourse limitation in the Share
Mortgage to which it is a party.
5
<PAGE>
6.4 Consent to Variation
Each of the Borrower, the Guarantor and the Mortgagors hereby
irrevocably and unconditionally consents to the provisions of this
deed and to the variation of the Facility Agreement as herein
provided.
6.5 The Agent
The Agent irrevocably and unconditionally acknowledges that it is
acting in accordance with, and enters into this deed and the
variations contemplated and effected by it, in accordance with the
authority and instructions of the Banks.
7. VARIATION FEE
The Borrower will pay to each Bank on the date of its execution of
this Deed a variation fee of 0.20% flat on its Commitment.
8. LEGAL COSTS, DUTIES ETC.
The Borrower shall pay or reimburse the Agent for all stamp duty paid
or payable in relation to this deed and for all reasonable costs and
reasonable expenses (including legal costs as between solicitor and
client) incurred by the Agent or the Banks in drawing, settling,
executing and stamping this deed.
9. MISCELLANEOUS
9.1 Governing law
This deed is to be construed in accordance with the laws applying in
New Zealand and each of the parties hereto submits to the
non-exclusive jurisdiction of the courts and appellate courts of New
Zealand.
9.2 Facility Agreement in full force
(a) Except as varied and supplemented hereby, the Facility Agreement
is declared to be in full force and effect.
(b) The variation of the terms of the Facility Agreement effected
hereby is without prejudice to any other deed, agreement,
instrument, document or arrangement presently in existence as
between the Agent, the Banks and the Borrower, the Guarantor and
the Mortgagors, or any of them (including but not limited to the
Securities), and the rights, powers, remedies and discretions
available to the Agent and the Banks thereunder remain in full
force and effect.
9.3 Further assurances
The Borrower, the Guarantor and each Mortgagor shall, on demand by the
Agent, make, execute, do, perform and provide all such further acts,
agreements, assurances, contracts, deeds, documents, guarantees,
indemnities, instruments, matters and things as the Agent shall
reasonably require to give full effect to this deed and the rights and
obligations of the parties under it.
6
<PAGE>
9.4 Counterparts
This deed may be executed in any number of counterparts, all of which
taken together will be deemed to constitute one and the same document.
9.5 Contracts (Privity) Act 1982
The Borrower, the Guarantor and each Mortgagor hereby unconditionally
and irrevocably acknowledge and agree that the provisions of this deed
which confer or purport to confer a benefit on the Banks are promises
enforceable at the suit of each Bank as if each Bank was a party to
this deed in accordance with the Contracts (Privity) Act of 1982.
7
<PAGE>
<TABLE>
<CAPTION>
EXECUTED as a deed.
<S> <C>
SIGNED for and on behalf of SATURN COMMUNICATIONS )
LIMITED, by its attorney: ) /s/ Mark Rigotti
Mark Rigotti ) .........................................
in the presence of: ) (Signature)
/s/ Patrick St. John
.....................................................
(Signature of Witness)
Patrick St. John
.....................................................
(Name of Witness in Full)
1 O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of KIWI CABLE COMPANY )
LIMITED, by its attorney: ) /s/ Mark Rigotti
Mark Rigotti ) .........................................
in the presence of: ) (Signature)
/s/ Patrick St. John
.....................................................
(Signature of Witness)
Patrick St. John
.....................................................
(Name of Witness in Full)
1 O'Connell St., Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
8
<PAGE>
SIGNED for and on behalf of AUSTAR UNITED )
COMMUNICATIONS LIMITED, ACN 087 695 707 by its attorney:) /s/ R. J. Birrell
R. J. Birrell ) .........................................
in the presence of: ) (Signature)
/s/ Mark Rigotti
.....................................................
(Signature of Witness)
Mark Rigotti
.....................................................
(Name of Witness in Full)
Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
SIGNED for and on behalf of SATURN (NZ) HOLDING COMPANY )
PTY LIMITED, ACN 088 052 000, by its attorney: ) /s/ R. J. Birrell
R. J. Birrell ) .........................................
in the presence of: ) (Signature)
/s/ Mark Rigotti
.....................................................
(Signature of Witness)
Mark Rigotti
.....................................................
(Name of Witness in Full)
Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
9
<PAGE>
SIGNED for and on behalf of TORONTO DOMINION AUSTRALIA )
LIMITED, ACN 004 858 020, by its attorney: ) /s/ Patrick St. John
Patrick St. John ) .........................................
in the presence of: ) (Signature)
/s/ Mark Rigotti
.....................................................
(Signature of Witness)
Mark Rigotti
.....................................................
(Name of Witness in Full)
Sydney
.....................................................
(Address of Witness)
Solicitor
.....................................................
(Occupation of Witness)
</TABLE>
10
<PAGE>
THIS IS THE ANNEXURE "A" REFERRED TO IN THE SECOND SUPPLEMENTAL DEED BETWEEN
SATURN COMMUNICATIONS LIMITED, KIWI CABLE COMPANY LIMITED, SATURN (NZ) HOLDING
COMPANY PTY LIMITED, AUSTAR UNITED COMMUNICATIONS LIMITED AND TORONTO DOMINION
AUSTRALIA LIMITED DATED: 29 July 1999
SCHEDULE 2
RATIOS
PART 1: Operating Ratios
Month Total Debt/Homes Subscribers OR Equivalent
Serviceable Billing Units
($)
January 1999 1,400 13,000 14,500
February 1999 1,400 14,500 16,500
March 1999 1,300 17,000 20,000
April 1999 1,250 20,000 24,000
May 1999 1,200 24,000 28,000
June 1999 1,200 28,000 32,000
July 1999 1,250 27,000 37,000
August 1999 1,300 30,000 42,000
September 1999 1,300 33,000 46,000
October 1999 1,300 36,000 51,000
November 1999 1,300 39,000 55,000
December 1999 1,300 41,000 60,000
March 2000 1,300 45,000 66,000
June 2000 1,300 51,000 72,000
September 2000 1,300 57,000 78,000
December 2000 1,300 62,000 83,000
PART 2: Financial Ratios pre 31 December 2000
Period Ending Minimum EBITDA Minimum Revenue
31 December 1998 (5,250,000) -
31 January 1999 (5,750,000) 700,000
28 February 1999 (5,500,000) 800,000
31 March 1999 (4,250,000) 1,000,000
30 April 1999 (3,750,000) 1,250,000
31 May 1999 (3,250,000) 1,450,000
11
<PAGE>
30 June 1999 (3,000,000) 1,750,000
31 July 1999 (3,000,000) 1,700,000
31 August 1999 (2,900,000) 1,900,000
30 September 1999 (2,800,000) 2,100,000
31 October 1999 (2,600,000) 2,300,000
30 November 1999 (2,300,000) 2,500,000
31 December 1999 (2,000,000) 2,600,000
31 March 2000 250,000 9,500,000
30 June 2000 1,250,000 11,000,000
30 September 2000 2,250,000 13,000,000
31 December 2000 3,250,000 14,500,000
PART 3: Financial Ratios post 31 December 2000
3 Month Total Debt/Annualised EBITDA EBITDA/Interest
Period Ending Expense
31 March 2001 6.25 2.00
30 June 2001 6.00 2.00
30 September 2001 5.50 2.00
31 December 2001 5.25 2.00
31 March 2002 5.00 2.50
30 June 2002 4.75 2.50
30 September 2002 4.50 2.50
31 December 2002 4.25 2.50
31 March 2003 4.00 3.00
30 June 2003 3.50 3.00
30 September 2003 3.50 3.00
31 December 2003 3.50 3.00
31 March 2004 3.50 4.00
30 June 2004 3.50 4.00
30 September 2004 3.50 4.00
31 December 2004 3.50 4.00
31 March 2005 3.50 5.00
12
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Mark John Rigotti (name) Solicitor (occupation), of Level 32, MLC Centre
Minter Pl. (address) Australia (country), certify that:
1. by deed dated 27 July 1999, Saturn Communications Limited (the "grantor"),
appointed me its attorney on the terms and subject to the conditions set
out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 29th day of July 1999.
/s/ Mark John Rigotti
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Mark John Rigotti (name) Solicitor (occupation), of Level 32, MLC Centre
Minter Pl. (address) Australia (country), certify that:
1. by deed dated 27 July 1999, Kiwi Cable Company Limited (the "grantor"),
appointed me its attorney on the terms and subject to the conditions set
out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 29th day of July 1999.
/s/ Mark John Rigotti
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Robert James Birrell (name) CFO (occupation), of George Street, Sydney
(address) Australia (country), certify that:
1. by deed dated 27 July 1999, Austar United Communications Ltd. (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 29th day of July 1999.
/s/ Robert James Birrell
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Robert James Birrell (name) CFO (occupation), of George Street, Sydney
(address) Australia (country), certify that:
1. by deed dated 26 July 1999, Saturn (NZ) Holding Company Pty Limited (the
"grantor"), appointed me its attorney on the terms and subject to the
conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 29th day of July 1999.
/s/ Robert James Birrell
.............................
Attorney
<PAGE>
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, Patrick St. John (name) solicitor (occupation), of 1 O'Connell Street, Sydney
(address) Australia (country), certify that:
1. by deed dated 26 July 1999, Toronto Dominion Australia Limited, ACN 004 858
020 (the "grantor"), appointed me its attorney on the terms and subject to
the conditions set out in the said deed;
2. at the date of this certificate I have not received any notice or
information of the revocation of that appointment by the commencement of
the liquidation of the grantor, the removal of the grantor from the
register or otherwise; and
3. I have executed the attached document on behalf of the grantor in my
capacity as its attorney under the powers conferred by the said deed.
SIGNED at Sydney this 29th day of July 1999.
/s/ Patrick St. John
.............................
Attorney
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITED
AUSTRALIA/PACIFIC, INC.'S FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,872
<SECURITIES> 0
<RECEIVABLES> 8,090
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 301,504
<PP&E> 456,306
<DEPRECIATION> 232,737
<TOTAL-ASSETS> 650,782
<CURRENT-LIABILITIES> 64,660
<BONDS> 394,453
0
0
<COMMON> 178
<OTHER-SE> (124,395)
<TOTAL-LIABILITY-AND-EQUITY> 650,782
<SALES> 41,745
<TOTAL-REVENUES> 41,745
<CGS> 0
<TOTAL-COSTS> 28,397
<OTHER-EXPENSES> 25,086
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,635
<INCOME-PRETAX> 210,680
<INCOME-TAX> 0
<INCOME-CONTINUING> 210,680
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210,680
<EPS-BASIC> 11.82
<EPS-DILUTED> 11.51
</TABLE>
