<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 333-83395
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities or accept any offer to buy these securities until +
+we deliver this prospectus to you in final form. The prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated June 16, 2000
Preliminary Prospectus Supplement To Prospectus Dated July 30, 1999
$250,000,000
[LOGO OF CROWN CASTLE INTERNATIONAL]
Crown Castle International Corp.
% Senior Notes due 2011
--------
Terms of the Senior Notes
. Maturity
August 1, 2011
. Interest
Fixed Annual Rate of %.
Paid every six months on February 1 and August 1, beginning February 1,
2001.
See "Risk Factors" Beginning on page S-9 to read about factors you should
consider before buying the notes.
--------
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
--------
<TABLE>
<CAPTION>
Per Senior
Note Total
---------- -----
<S> <C> <C>
Public Offering Price $ $
Underwriting Discount $ $
Proceeds, before expenses, to Crown Castle $ $
</TABLE>
--------
The offering price set forth above does not include interest, if any. The
notes will accrue interest from , 2000 and must be paid by the purchaser
if the notes are delivered after , 2000.
--------
The underwriters are offering the notes subject to various conditions. The
underwriters expect to deliver the notes in book-entry form only through the
facilities of The Depository Trust Company against payment in New York, New
York on , 2000.
Goldman, Sachs & Co. Chase Securities Inc.
Joint Book-Running Manager Joint Book-Running Manager
Lehman Brothers Credit Suisse First Boston
Morgan Stanley Dean Witter CIBC Oppenheimer
BNY Capital Markets, Inc.
Scotia Capital Markets
McDonald Investments Inc.
PNC Capital Markets, Inc.
Deutsche Banc Alex. Brown
--------
Prospectus Supplement dated , 2000
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. You
should not assume that the information provided by this prospectus supplement
or the accompanying prospectus is accurate as of any date other than the date
on the applicable prospectus.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
About This Prospectus Supplement........................................... S-1
The Company................................................................ S-2
The Offering............................................................... S-4
Summary Financial and Other Data........................................... S-6
Risk Factors............................................................... S-9
Use of Proceeds............................................................ S-17
Ratio of Earnings to Fixed Charges......................................... S-18
Capitalization............................................................. S-19
Unaudited Pro Forma Condensed Consolidated Financial Statements............ S-21
Description of Certain Indebtedness........................................ S-32
Description of Notes....................................................... S-42
Underwriting............................................................... S-75
Validity of Securities..................................................... S-76
Prospectus
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 1
Incorporation of Information We File with the SEC.......................... 1
Forward-Looking Statements................................................. 2
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 5
Description of Capital Stock............................................... 15
Description of Warrants.................................................... 23
Selling Shareholders....................................................... 24
Plan of Distribution....................................................... 24
Validity of Securities..................................................... 25
Experts.................................................................... 25
</TABLE>
1
<PAGE>
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement contains the terms of this offering of debt
securities. This prospectus supplement, or the information incorporated by
reference in this prospectus supplement, may add, update or change information
in the attached prospectus. If information in this prospectus supplement, or
the information incorporated by reference in this prospectus supplement, is
inconsistent with the attached prospectus, this prospectus supplement, or the
information incorporated by reference in this prospectus supplement, will apply
and will supersede that information in the attached prospectus.
It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus in making your
investment decision. You should also read and consider the information in the
documents we have referred you to in "Where You Can Find More Information About
the Company" in the attached prospectus.
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this prospectus supplement or the prospectus and,
if given or made, such information or representations must not be relied upon
as having been authorized by Crown Castle International Corp., the underwriters
or any other person. Neither the delivery of this prospectus supplement and the
prospectus nor any sale made hereunder shall under any circumstances create an
implication that there has been no change in the affairs of Crown Castle
International Corp. since the date hereof or thereof or that the information
contained herein or therein is correct as of any time subsequent to its date.
This prospectus supplement and the prospectus do not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer
or solicitation.
S-1
<PAGE>
THE COMPANY
We are a leading owner and operator of towers and transmission networks for
wireless communications and broadcast transmission companies. As of April 30,
2000, we owned, leased or managed 10,392 towers and rooftops, including 8,195
sites in the United States and Puerto Rico and 2,197 sites in the United
Kingdom. We have entered into agreements, which, when completed, will provide
us with over 900 additional towers in the United States in 2000. In addition,
we have recently entered into an agreement that will provide us with a tower
portfolio of approximately 700 towers in Australia. Our customers currently
include many of the world's major wireless communications and broadcast
companies, including GTE Wireless, Verizon, BellSouth Mobility, Powertel,
Nextel, Sprint PCS, AT&T Wireless, Triton PCS, Tritel Communications, Motorola,
Cable & Wireless Optus, One 2 One and the British Broadcasting Corporation.
Our strategy is to use our leading domestic and international position to
capture the growing opportunities to consolidate ownership and management of
existing towers and other wireless and transmission infrastructure and to build
and operate new towers and wireless and transmission networks and
infrastructure created by:
. the transfer to third parties, or outsourcing, of tower ownership and
management by major wireless carriers;
. the need for existing wireless carriers to expand coverage and improve
capacity;
. the additional demand for towers and wireless infrastructure created by
new entrants into the wireless communications industry;
. the privatization of state-run broadcast transmission networks; and
. the introduction of new wireless technologies such as broadband data, or
"3G", technology.
Our main businesses are leasing antenna space on wireless and broadcast
towers that can accommodate multiple tenants and operating analog and digital
broadcast transmission networks and wireless networks. We also provide related
services to our customers, including network design, radio frequency
engineering, site acquisition, site development and construction, antenna
installation and network management and maintenance. We believe that our full
service capabilities are a key competitive advantage in forming strategic
partnerships to acquire large concentrations of towers, or tower clusters, and
in winning contracts for tower acquisitions, management and construction along
with wireless and transmission network management.
Our primary business in the United States is the leasing of antenna space to
wireless carriers. We believe that by owning and managing large tower clusters
we are able to offer customers the ability to fulfill rapidly and efficiently
their network expansion plans across particular markets or regions. Our
acquisition strategy has been focused on adding tower clusters to our tower
portfolio. As of April 30, 2000, we had tower clusters in 34 of the 50 largest
U.S. metropolitan areas, and 68 of the 100 largest U.S. metropolitan areas.
Our primary business in the United Kingdom, which is conducted through Crown
Castle UK Holdings Limited ("CCUK"), is the operation of television and radio
broadcast transmission networks. Following the 1997 acquisition of the BBC's
broadcast and tower infrastructure, we were awarded long-term contracts to
provide the BBC and other broadcasters analog and digital transmission
services. We also lease antenna space to wireless operators in the United
Kingdom on the towers we acquired from the BBC, as well as on various towers we
acquired from wireless carriers or that we have constructed. We have nationwide
broadcast and wireless coverage in the United Kingdom.
Our primary business in Australia is the leasing of antenna space to
wireless carriers. In March 2000, a subsidiary of ours, Crown Castle Australia
Limited, or "CCAL", entered into an agreement to purchase approximately 700
towers in Australia from Cable & Wireless Optus for a total purchase price of
approximately $135 million in cash (Australian $220 million). Upon completion
of the Cable & Wireless Optus transaction, which we expect to close during the
remainder of 2000, CCAL will own and operate a nationwide portfolio of
approximately 700 towers in Australia covering over 90 percent of the
Australian population.
S-2
<PAGE>
We believe our towers are attractive for use with a diverse range of
wireless communications industries, including personal communications services,
cellular, enhanced specialized mobile radio, specialized mobile radio, paging,
and fixed microwave, as well as radio and television broadcasting. In the
United States our major customers include GTE Wireless, Verizon, BellSouth
Mobility, Powertel, Nextel, Sprint PCS, AT&T Wireless, Triton PCS, Tritel
Communications and Motorola. In the United Kingdom our major customers include
the BBC, Cellnet, Dolphin, NTL, ONdigital, One 2 One, Orange, Virgin Radio and
Vodafone AirTouch. Our principal customer in Australia is Cable & Wireless
Optus.
We are continuing our ongoing construction program to enhance our tower
portfolios. In 1999, we constructed over 900 towers. In 2000, we plan to
construct approximately 1,170 towers, at an estimated aggregate cost of
approximately $270 million, for lease to wireless carriers such as Verizon,
BellSouth Mobility, GTE Wireless and Nextel. The actual number of towers built
may vary depending on acquisition opportunities and potential build-to-suit
contracts from large wireless carriers.
On November 7, 1999 we entered into a formation agreement with GTE and
certain of its affiliates to form a joint venture with GTE to own and operate
up to 2,322 towers. These towers represent a significant majority of the towers
in GTE's wireless network. The transaction will be completed in multiple
closings. Pursuant to closings on January 31, 2000, April 3, 2000 and June 15,
2000, we have contributed approximately $714.8 million in cash and
approximately 5.1 million shares of our common stock to the joint venture in
exchange for 2,277 towers. We expect to close the remaining towers during the
third quarter of 2000. The joint venture will also build and own the next 500
towers to be built for GTE's wireless communications business. GTE leases
antenna space on the 2,277 towers transferred to the joint venture and will
lease antenna space on the towers that the joint venture builds for GTE. In
addition, GTE has the right to contribute certain additional towers, including
towers acquired by GTE from Ameritech Corp., on terms substantially similar to
the formation agreement. In April 2000, we agreed with GTE that the Ameritech
towers would be contributed to the joint venture and the definitive agreement
relating to such transaction is in the process of being negotiated.
Consideration for these additional towers will be in the form of cash and
additional ownership interests for GTE in the joint venture. We currently
expect that approximately 470 towers acquired by GTE from Ameritech will be
transferred to the joint venture.
In March 2000, a subsidiary of ours entered into a credit agreement with a
syndicate of banks which consists of two term loan facilities and a revolving
line of credit aggregating $1.2 billion (the "2000 Credit Facility"). Available
borrowings under the 2000 Credit Facility are generally to be used for the
construction and purchase of towers, to partially finance the GTE Wireless
transaction, to repay existing indebtedness and for general corporate purposes.
Initial borrowings were used for the discharge of the then existing credit
facility of such subsidiaries. The amount of available borrowings will
generally be determined based upon the then current financial performance of
the assets of those subsidiaries. Up to $25 million of borrowing availability
under the 2000 Credit Facility can be used for letters of credit. On March 15,
2000, we used $83.4 million in borrowings under the 2000 Credit Facility to
repay outstanding borrowings and accrued interest under our senior credit
facility. Additional proceeds from approximately $317 million in borrowings
were used in April 2000 to fund a portion of the purchase price of the GTE
Wireless transaction and for general corporate purposes.
On April 3, 2000, we borrowed $400.0 million under a term loan agreement
with a group of investment banks. The net proceeds from this borrowing, which
amounted to $395.9 million, were used to fund a portion of the cash
contribution for the second closing of towers at the GTE joint venture in April
2000. The term loans mature on March 31, 2011 and must be prepaid from the net
proceeds of equity or debt securities sold by us in the future. We intend to
repay a portion of these term loans with the net proceeds of this offering. See
"Use of Proceeds."
On May 10, 2000, France Telecom reached an agreement with the Office of Fair
Trading in the United Kingdom to sell all of its interest in us and relinquish
its governance rights in us. On May 17, 2000, we entered into a disposition
agreement with France Telecom providing for a plan of disposition of France
Telecom's
S-3
<PAGE>
interest in us. Under this plan, France Telecom agreed to sell shares of our
common stock that would reduce its interests in us below 10% on a fully diluted
basis. On June 8, 2000, France Telecom completed the sale of 24,942,360 shares
of our common stock, following which their interest in us was reduced to
approximately 8.4% on a fully diluted basis. Upon completion of the offering of
these shares by France Telecom, France Telecom relinquished all governance
rights with respect to our businesses.
Under the disposition agreement, France Telecom is required to sell its
remaining interest in us (17,713,536 shares of Common Stock, assuming
conversion of all shares of Class A Common Stock and capital stock of CCUK) to
one or more financial institutions. France Telecom has agreed in the
disposition agreement, and expects, to enter into a swap or similar agreement
with such financial institutions by July 8, 2000 pursuant to which France
Telecom will continue to bear the economic risks and benefits associated with
any disposition of the shares by the financial institutions. The financial
institutions will be required to hold these shares for at least a one year
period, except that the financial institutions may sell the shares (i) to
certain permitted transferees or (ii) at any time after 90 days following the
completion of this offering in the event of certain bankruptcy or liquidation
events involving France Telecom. The financial institutions will be required to
agree to vote their shares on any matter submitted to our stockholders in the
same proportion as the votes cast with respect to all other outstanding shares
of our common stock. After one year, the financial institutions will be
entitled to sell such shares and after two years, we will have the right to
require the financial institutions to sell any remaining shares. We have agreed
to provide piggyback and either demand or shelf registration of the shares to
be purchased by the financial institutions. In connection with the sale by
France Telecom to the financial institutions, the shares of CCUK will be
exchanged for shares of CCIC common stock, and CCUK will become a wholly owned
subsidiary of CCIC.
Our principal executive offices are located at 510 Bering Drive, Suite 500,
Houston, Texas 77057, and our telephone number is (713) 570-3000.
THE OFFERING
<TABLE>
<C> <S>
Total amount offered.................. $250.0 million in aggregate principal
amount of % Senior Notes due 2011.
Maturity.............................. August 1, 2011
Issue price........................... %, plus accrued interest, if any,
from , 2000.
Interest.............................. Annual rate-- %. Payment frequency--
every six months on February 1 and
August 1. Cash interest on these notes
is payable beginning on February 1,
2001.
Ranking............................... These notes constitute senior debt of
the Company, and rank equally in right
of payment with all of our existing
and future senior debt, but will be
effectively junior in right of payment
to the extent of the assets securing
our other senior debt. Our only
significant assets are the capital
stock of our subsidiaries, and the
notes will not be guaranteed by our
subsidiaries. As a result, the notes
will be structurally subordinated to
all debt and other liabilities of our
subsidiaries, including borrowings
under their credit facilities.
Optional redemption................... On or after August 1, 2005, we may
redeem some or all of the notes at any
time at the redemption price listed in
the "Description of Notes" section
under the heading "Optional
Redemption."
</TABLE>
S-4
<PAGE>
<TABLE>
<C> <S>
Before August 1, 2003, we may redeem
up to 35% of the notes with the
proceeds of public offerings of equity
or strategic investments in us at the
price listed in the "Description of
Notes" section under the heading
"Optional Redemption."
Mandatory offer to repurchase......... If we sell certain assets, or
experience specific kinds of changes
of control, we must offer to
repurchase the notes at the price
listed in the "Description of Notes"
section under the heading "Repurchase
at the Option of Holders."
Basic covenants of Indenture.......... We will issue the notes under an
indenture with the United States Trust
Company of New York. The indenture
will, among other things, restrict our
ability and the ability of our
subsidiaries to:
. borrow money;
. pay dividends on stock or repurchase
stock;
. make investments;
. use assets as security in other
transactions; and
. sell assets or merge with or into
other companies.
For more details, see the "Description
of the Notes" section under the
heading "Certain Covenants."
Use of proceeds....................... We expect to use the proceeds of this
offering to repay a portion of the
term loans borrowed in connection with
the GTE transaction. For more details,
see "Use of Proceeds."
</TABLE>
S-5
<PAGE>
Summary Financial and Other Data
The summary historical consolidated financial and other data set forth
below for each of the five years in the period ended December 31, 1999, and as
of December 31, 1995, 1996, 1997, 1998 and 1999, have been derived from the
consolidated financial statements of CCIC, which have been audited by KPMG LLP,
independent auditors. The summary historical consolidated financial and other
data set forth below for the three months ended March 31, 1999 and 2000, and as
of March 31, 2000, have been derived from the unaudited consolidated financial
statements of CCIC, which include all adjustments that CCIC considers necessary
for a fair presentation of the financial position and results of operations for
those periods. Operating results for the three months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the entire
year. The results of operations for the three months ended March 31, 2000 are
not comparable to the three months ended March 31, 1999, the results for the
year ended December 31, 1999 are not comparable to the year ended December 31,
1998, the results for the year ended December 31, 1998 are not comparable to
the year ended December 31, 1997, and the results for the year ended December
31, 1997 are not comparable to the year ended December 31, 1996, in each case
as a result of business acquisitions completed in 1997, 1998, 1999 and 2000.
Results of operations of these acquired businesses are included in CCIC's
consolidated financial statements for the periods after the respective dates of
acquisition. The information set forth below should be read in conjunction with
the consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Results of Operations" included in CCIC's Annual Report on Form 10-K and
Quarterly Report on Form 10-Q.
<TABLE>
<CAPTION>
Three Months
Years Ended December 31, Ended March 31,
----------------------------------------------- ------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- -------- -------- --------- -------- --------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues:
Site rental and
broadcast
transmission.......... $ 4,052 $ 5,615 $ 11,010 $ 75,028 $ 267,894 $ 45,326 $ 93,741
Network services and
other................. 6 592 20,395 38,050 77,865 9,783 30,503
------- ------- -------- -------- --------- -------- --------
Total net revenues... 4,058 6,207 31,405 113,078 345,759 55,109 124,244
------- ------- -------- -------- --------- -------- --------
Costs of operations:
Site rental and
broadcast
transmission.......... 1,226 1,292 2,213 26,254 114,436 18,527 40,287
Network services and
other................. -- 8 13,137 21,564 42,312 6,982 15,901
------- ------- -------- -------- --------- -------- --------
Total costs of
operations.......... 1,226 1,300 15,350 47,818 156,748 25,509 56,188
------- ------- -------- -------- --------- -------- --------
General and
administrative......... 729 1,678 6,824 23,571 43,823 8,304 14,853
Corporate
development(a)......... 204 1,324 5,731 4,625 5,403 874 2,071
Restructuring charges... -- -- -- -- 5,645 1,814 --
Non-cash compensation
charges(b) ............ -- -- -- 12,758 2,173 667 461
Depreciation and
amortization........... 836 1,242 6,952 37,239 130,106 19,656 45,122
------- ------- -------- -------- --------- -------- --------
Operating income
(loss)................. 1,063 663 (3,452) (12,933) 1,861 (1,715) 5,549
Other income (expense):
Equity in earnings
(losses) of
unconsolidated
affiliate............. -- -- (1,138) 2,055 -- -- --
Interest and other
income (expense)(c)... 53 193 1,951 4,220 17,731 340 5,704
Interest expense and
amortization of
deferred financing
costs................. (1,137) (1,803) (9,254) (29,089) (110,908) (11,286) (41,761)
------- ------- -------- -------- --------- -------- --------
Loss before income
taxes, minority
interests,
extraordinary item and
cumulative effect of
change in accounting
principle.............. (21) (947) (11,893) (35,747) (91,316) (12,661) (30,508)
Provision for income
taxes.................. -- (10) (49) (374) (275) (127) (11)
Minority interests...... -- -- -- (1,654) (2,756) (685) (1,541)
------- ------- -------- -------- --------- -------- --------
Loss before
extraordinary item and
cumulative effect of
change in accounting
principle.............. (21) (957) (11,942) (37,775) (94,347) (13,473) (32,060)
Extraordinary item--loss
on early extinguishment
of debt................ -- -- -- -- -- -- (1,495)
Cumulative effect of
change in accounting
principle for costs of
start-up activities.... -- -- -- -- (2,414) (2,414) --
------- ------- -------- -------- --------- -------- --------
Net loss................ (21) (957) (11,942) (37,775) (96,761) (15,887) (33,555)
Dividends on preferred
stock.................. -- -- (2,199) (5,411) (28,881) (6,408) (11,493)
------- ------- -------- -------- --------- -------- --------
Net loss after deduction
of dividends on
preferred stock........ $ (21) $ (957) $(14,141) $(43,186) $(125,642) $(22,295) $(45,048)
======= ======= ======== ======== ========= ======== ========
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
Years Ended December 31, March 31,
------------------------------------------------------ --------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- --------- ---------- ----------- -------- ----------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Per common share--basic
and diluted:
Loss before
extraordinary item
and cumulative effect
of change in
accounting
principle............. $ (0.01) $ (0.27) $ (2.27) $ (1.02) $ (0.94) $ (0.21) $ (0.27)
Extraordinary item..... -- -- -- -- -- -- (0.01)
Cumulative effect of
change in accounting
principle............. -- -- -- -- (0.02) (0.03) --
-------- -------- --------- ---------- ----------- -------- ----------
Net loss............... $ (0.01) $ (0.27) $ (2.27) $ (1.02) $ (0.96) $ (0.24) $ (0.28)
======== ======== ========= ========== =========== ======== ==========
Common shares
outstanding--basic
and diluted (in
thousands)............ 3,316 3,503 6,238 42,518 131,466 94,732 158,566
======== ======== ========= ========== =========== ======== ==========
Other Data:
Site data (at period
end)(d):
Towers owned........... 126 155 240 1,344 7,326 3,683 8,497
Towers managed......... 7 7 133 129 13 13 13
Rooftop sites managed
(revenue producing)... 41 52 80 135 149 146 149
-------- -------- --------- ---------- ----------- -------- ----------
Total sites owned and
managed............. 174 214 453 1,608 7,488 3,842 8,659
======== ======== ========= ========== =========== ======== ==========
EBITDA(e):
Site rental............ $ 2,697 $ 3,555 $ 7,682 $ 44,661 $ 139,966 $ 24,658 $ 48,528
Network services and
other................. (594) (326) 1,549 (2,972) 5,222 (3,362) 4,675
Corporate development
expenses(a)........... (204) (1,324) (5,731) (4,625) (5,403) (874) (2,071)
-------- -------- --------- ---------- ----------- -------- ----------
Total EBITDA......... $ 1,899 $ 1,905 $ 3,500 $ 37,064 $ 139,785 $ 20,422 $ 51,132
======== ======== ========= ========== =========== ======== ==========
Capital expenditures.... $ 161 $ 890 $ 18,035 $ 138,759 $ 293,801 $ 76,363 $ 110,427
Summary cash flow
information:
Net cash provided by
(used for) operating
activities............ 1,672 (530) (624) 44,976 92,608 20,487 36,934
Net cash used for
investing
activities............ (16,673) (13,916) (111,484) (149,248) (1,509,146) (281,208) (399,288)
Net cash provided by
financing
activities............ 15,597 21,193 159,843 345,248 1,670,402 66,397 324,915
Ratio of earnings to
fixed charges(f)....... -- -- -- -- -- -- --
Balance Sheet Data (at
period end):
Cash and cash
equivalents............ $ 596 $ 7,343 $ 55,078 $ 296,450 $ 549,328 $ 509,505
Property and equipment,
net.................... 16,003 26,753 81,968 592,594 2,468,101 2,851,855
Total assets............ 19,875 41,226 371,391 1,523,230 3,836,650 4,212,512
Total debt.............. 11,182 22,052 156,293 429,710 1,542,343 1,892,566
Redeemable preferred
stock(g)............... 5,175 15,550 160,749 201,063 422,923 430,291
Total stockholders'
equity (deficit)....... 619 (210) 41,792 737,562 1,617,747 1,596,412
</TABLE>
--------
(a) Corporate development expenses represent costs incurred in connection with
acquisitions and development of new business initiatives. These expenses
consist primarily of allocated compensation, benefits and overhead costs
that are not directly related to the administration or management of
existing towers. For the year ended December 31, 1997, such expenses
include (1) nonrecurring cash bonuses of $0.9 million paid to certain
executive officers in connection with our initial investment in Castle
Transmission and (2) a nonrecurring cash charge of $1.3 million related to
our purchase of shares of our common stock from our former chief executive
officer in connection with our initial Castle Transmission investment.
(b) Represents charges related to the issuance of stock options to certain
employees and executives.
(c) Includes a $1.2 million fee received in March 1997 as compensation for
leading an investment consortium that provided the equity financing in
connection with our initial Castle Transmission investment.
(d) Represents our aggregate number of sites as of the end of each period.
(e) EBITDA is defined as operating income (loss) plus depreciation and
amortization, non-cash compensation changes and restructuring charges.
EBITDA is presented as additional information because management believes
it to be a useful indicator of our ability to meet debt service and capital
expenditure requirements. It is not, however, intended as an alternative
measure of operating results or cash flow from operations, as determined in
accordance with generally accepted accounting principles. Furthermore, our
measure of EBITDA may not be comparable to similarly titled measures of
other companies.
(f) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income (loss) before income taxes, minority interests,
extraordinary item, cumulative effect of change in accounting principle,
fixed charges and equity in earnings (losses) of unconsolidated affiliate.
Fixed charges consist of interest expense, the interest component of
operating leases and amortization of deferred financing costs. For the
years ended December 31, 1995, 1996, 1997, 1998 and 1999, earnings were
insufficient to cover
S-7
<PAGE>
fixed charges by $21,000, $0.9 million, $10.8 million, $37.8 million and
$91.3 million, respectively. For the three months ended March 31, 1999 and
2000, earnings were insufficient to cover fixed charges by $12.7 million
and $30.5 million, respectively.
(g) The 1995, 1996 and 1997 amounts represent (1) the senior convertible
preferred stock we privately placed in August 1997 and October 1997, all
of which has been converted into shares of common stock, and (2) Series A
convertible preferred stock, Series B convertible preferred stock and
Series C convertible preferred stock we privately placed in April 1995,
July 1996 and February 1997, respectively, all of which has been converted
into shares of common stock in connection with the completion of our
initial public offering in August 1998. The 1998, 1999 and 2000 amounts
represent (1) our exchangeable preferred stock we privately placed in
December 1998 and (2) our convertible preferred stock we privately placed
in November 1999.
S-8
<PAGE>
RISK FACTORS
You should carefully consider the risks described below, as well as the
other information included in this prospectus supplement, when evaluating an
investment in our common stock.
Failure to Properly Manage Our Growth--If we are unable to successfully
integrate acquired operations or manage our existing operations as we grow, our
business will be adversely affected and we may not be able to continue our
current business strategy.
We cannot guarantee that we will be able to successfully integrate acquired
businesses and assets into our business or implement our plans without delay.
If we fail to do so it could have a material adverse effect on our financial
condition and results of operations. We have grown significantly over the past
two years through acquisitions, and such growth continues to be an important
part of our business plan. The addition of over 8,500 towers to our operations
through our recent and agreed-to transactions has and will continue to increase
our current business considerably and adds operating complexities. Successful
integration of these transactions will depend primarily on our ability to
manage these combined operations and to integrate new management and employees
with and into our existing operations. For the three months ended March 31,
2000, our net loss increased from $15.9 million to $33.6 million, an increase
of 111%, as a result of our expanded business operations and the financing
thereof, including a 130% increase in depreciation and amortization and a 270%
increase in interest expense in the first quarter of 2000 as compared to the
first quarter 1999. We expect that such net losses, at least in the near term,
will continue to exceed those of comparable prior year periods, as a result of
our growth and the financing thereof.
Implementation of our acquisition strategy may impose significant strains on
our management, operating systems and financial resources. We regularly
evaluate potential acquisition and joint venture opportunities and are
currently evaluating potential transactions that could involve substantial
expenditures, possibly in the near term. If we fail to manage our growth or
encounter unexpected difficulties during expansion it could have a material
adverse effect on our financial condition and results of operations. The
pursuit and integration of acquisitions and joint venture opportunities will
require substantial attention from our senior management, which will limit the
amount of time they are able to devote to our existing operations.
Substantial Level of Indebtedness--Our substantial level of indebtedness could
adversely affect our ability to react to changes in our business. We may also
be limited in our ability to use debt to fund future capital needs.
We have a substantial amount of indebtedness. The following chart sets forth
certain important credit information and is presented as of March 31, 2000, on
an actual basis as well as on a pro forma basis giving effect to our recent
borrowings under the term loans, this offering and the application of the net
proceeds of the offering, and on a pro forma basis giving effect also to the
roll-up and consolidation of CCUK into CCIC.
<TABLE>
<CAPTION>
Pro Forma
for
Pro Forma Offering
for and Roll-
Actual Offering up
---------- ---------- ----------
(Dollars In Thousands)
<S> <C> <C> <C>
Total indebtedness..................... $1,892,566 $2,302,691 $2,302,691
Redeemable preferred stock............. 430,291 430,291 430,291
Stockholders' equity................... 1,596,412 1,596,412 2,192,762
Debt and redeemable preferred stock to
equity ratio.......................... 1.46x 1.71x 1.25x
</TABLE>
In addition, our earnings for the quarter ended March 31, 2000 were
insufficient to cover fixed charges by $30.5 million.
As a result of our substantial indebtedness:
. we could be more vulnerable to general adverse economic and industry
conditions;
. we may find it more difficult to obtain additional financing to fund
future working capital, capital expenditures and other general corporate
requirements;
S-9
<PAGE>
. we will be required to dedicate a substantial portion of our cash flow
from operations to the payment of principal and interest on our debt,
reducing the available cash flow to fund other projects;
. we may have limited flexibility in planning for, or reacting to, changes
in our business and in the industry; and
. we will have a competitive disadvantage relative to other companies with
less debt in our industry.
We cannot guarantee that we will be able to generate enough cash flow from
operations or that we will be able to obtain enough capital to service our
debt, including the notes, or fund our planned capital expenditures. In
addition, we may need to refinance some or all of our indebtedness, including
the notes, on or before maturity. We cannot guarantee, however, that we will be
able to refinance our indebtedness on commercially reasonable terms or at all.
As a Holding Company, We Require Dividends from Subsidiaries to Meet Cash
Requirements or Pay Dividends--If our subsidiaries are unable to dividend cash
to us when we need it, we may be unable to pay dividends or satisfy our
obligations, including interest and principal payments, under our debt
instruments.
Crown Castle International Corp., or CCIC, is a holding company with no
business operations of its own. CCIC's only significant asset is the
outstanding capital stock of its subsidiaries. CCIC conducts all its business
operations through its subsidiaries. Accordingly, CCIC's only source of cash to
pay dividends or make other distributions on its capital stock or to pay
interest and principal on its outstanding indebtedness is distributions
relating to its ownership interest in its subsidiaries from the net earnings
and cash flow generated by such subsidiaries. We currently expect that the
earnings and cash flow of CCIC's subsidiaries will be retained and used by such
subsidiaries in their operations, including to service their respective debt
obligations. Even if we did determine to make a distribution in respect of the
capital stock of CCIC's subsidiaries, there can be no assurance that CCIC's
subsidiaries will generate sufficient cash flow to pay or distribute such a
dividend or funds, or that applicable state law and contractual restrictions,
including negative covenants contained in the debt instruments of such
subsidiaries, would permit such dividends, distributions or payments.
Furthermore, the terms of our credit facilities place restrictions on our
principal subsidiaries' ability to pay dividends or to make distributions, and
in any event, such dividends or distributions may only be paid if no default
has occurred under the applicable instrument. Moreover, CCIC's subsidiaries are
permitted under the terms of their existing debt instruments to incur
additional indebtedness that may restrict or prohibit the making of
distributions, the payment of dividends or the making of loans by such
subsidiaries to CCIC. See "--Substantial Level of Indebtedness" and "--Ability
to Service Debt".
Ability to Service Debt--To service our indebtedness, including the notes, we
will require a significant amount of cash from our subsidiaries. An inability
to access our subsidiaries' cash flow may lead to an acceleration of our
indebtedness, including the notes. Currently, the instruments governing our
subsidiaries' indebtedness do not allow sufficient funds to be distributed to
CCIC to service its indebtedness.
If CCIC is unable to refinance its subsidiary debt or renegotiate the terms
of such debt, CCIC may not be able to meet its debt service requirements,
including interest payments on our notes, in the future. Our 9% senior notes
and our 9 1/2% senior notes require, and these notes will require, annual cash
interest payments of approximately $16.2 million, $11.9 million and $
million, respectively. Prior to November 15, 2002, May 15, 2004 and August 1,
2004, the interest expense on our 10 5/8% discount notes, our 10 3/8% discount
notes and our 11 1/4% discount notes, respectively, will be comprised solely of
the amortization of original issue discount. Thereafter, the 10 5/8% discount
notes, the 10 3/8% discount notes and the 11 1/4% discount notes will require
annual cash interest payments of approximately $26.7 million, $51.9 million and
$29.3 million, respectively. Prior to December 15, 2003, we do not expect to
pay cash dividends on our exchangeable preferred stock or, if issued, cash
interest on the exchange debentures. Thereafter, assuming all dividends or
interest have been paid-in-kind, our exchangeable preferred stock or, if
issued, the exchange debentures will require annual cash dividend or interest
payments of approximately $47.8 million.
S-10
<PAGE>
Restrictive Debt Covenants--The terms of our debt instruments limit our ability
to take a number of actions that our management might otherwise believe to be
in our best interests. In addition, if we fail to comply with our covenants,
our debt could be accelerated.
Currently we have debt instruments in place that restrict our ability to
incur more indebtedness, pay dividends, create liens, sell assets and engage in
certain mergers and acquisitions. Our subsidiaries, under their debt
instruments, are also required to maintain specific financial ratios. Our
ability to comply with the restrictions of these instruments and to satisfy our
debt obligations will depend on our future operating performance. If we fail to
comply with the debt restrictions, we will be in default under those
instruments, which in some cases would cause the maturity of substantially all
of our long-term indebtedness to be accelerated. See "Description of Certain
Indebtedness."
We Require Significant Capital to Fund Our Operations and Make Acquisitions--If
we are unable to raise capital in the future, we will be unable to achieve our
currently contemplated business strategy and may not be able to fund our
operations.
We will require substantial capital (1) as we increase the number of towers
we own and manage by partnering with wireless carriers, by pursuing
opportunities to build new towers, or build-to-suit opportunities, for wireless
carriers and by pursuing other tower acquisition opportunities and (2) to
acquire existing transmission networks globally as opportunities arise. If we
are unable to raise capital when our needs arise, we will be unable to pursue
our current business strategy and may not be able to fund our operations.
To fund the execution of our business strategy, including the agreed to
transactions described in this document and the construction of new towers that
we have agreed to build, we expect to use the remaining net proceeds of our
prior offerings and borrowings available under our credit facilities. We will
have additional cash needs to fund our operations and acquisitions in the
future, including some of the agreed to transactions. We may also have
additional cash needs in the near term if additional tower acquisitions or
build-to-suit opportunities arise. Some of the opportunities that we are
currently pursuing could require significant additional capital. If we do not
otherwise have cash available, or borrowings under our credit facilities have
otherwise been utilized, when our cash need arises, we would be forced to seek
additional debt or equity financing or to forego the opportunity. In the event
we determine to seek additional debt or equity financing, there can be no
assurance that any such financing will be available, on commercially acceptable
terms or at all, or permitted by the terms of our existing indebtedness.
We May Not Be Able To Construct Or Acquire New Towers At The Pace And In The
Locations That We Desire--If we are unable to do so, we may not be able to
satisfy our current agreements to build new towers and we may have difficulty
finding tenants to lease space on our new towers.
Our growth strategy depends in part on our ability to construct and operate
towers in conjunction with expansion by wireless carriers. If we are unable to
build new towers when wireless carriers require them, or we are unable to build
new towers where we believe the best opportunity to add tenants exists, we
could fail to meet our contractual obligations under build-to-suit agreements,
and we could lose opportunities to lease space on our towers.
Currently, we have over 130 towers under construction. During the fiscal
quarter ended March 31, 2000, we completed construction of 308 towers. We
currently have plans to commence construction on approximately 730 additional
towers during the remainder of fiscal 2000. Our ability to construct these new
towers could be affected by a number of factors beyond our control, including:
. zoning and local permitting requirements and national regulatory
approvals;
. availability of construction equipment and skilled construction
personnel; and
. bad weather conditions.
S-11
<PAGE>
In addition, as the concern over tower proliferation has grown in recent
years, certain communities have placed restrictions on new tower construction
or have delayed granting permits required for construction. You should consider
that:
. the barriers to new construction may prevent us from building towers
where we want;
. we may not be able to complete the number of towers planned for
construction in accordance with the requirements of our customers; and
. we cannot guarantee that there will be a significant need for the
construction of new towers once the wireless carriers complete their
tower networks.
All of the above factors could affect both our domestic and international
operations. In addition, competition laws could prevent us from acquiring or
constructing towers or tower networks in certain geographical areas.
Our Business Depends on the Demand for Wireless Communications--We will be
adversely affected by any slowdown in the growth of, or reduction in demand
for, wireless communications.
Demand for our site rentals depends on demand for communication sites from
wireless carriers, which, in turn, depends on the demand for wireless services.
The demand for our sites depends on many factors which we cannot control,
including:
. the level of demand for wireless services generally;
. the financial condition and access to capital of wireless carriers;
. the strategy of carriers relating to owning or leasing communication
sites;
. changes in telecommunications regulations; and
. general economic conditions.
A slowdown in the growth of, or reduction in, demand in a particular
wireless segment could adversely affect the demand for communication sites.
Moreover, wireless carriers often operate with substantial indebtedness, and
financial problems for our customers could result in accounts receivable going
uncollected, the loss of a customer (and associated lease revenue), or a
reduced ability of these customers to finance expansion activities. Finally,
advances in technology, such as the development of new satellite and antenna
systems, could reduce the need for land-based, or terrestrial, transmission
networks. The occurrence of any of these factors could have a material adverse
effect on our financial condition and results of operations.
Variability In Demand For Network Services May Reduce The Predictability Of Our
Results--Our network services business has historically experienced significant
volatility in demand. As a result, the operating results of our network
services business for any particular period may vary significantly and should
not be considered as necessarily being indicative of longer-term results.
Demand for our network services fluctuates from period to period and within
periods. These fluctuations are caused by a number of factors, including:
. the timing of customers' capital expenditures;
. annual budgetary considerations of customers;
. the rate and volume of wireless carriers' tower build-outs;
. timing of existing customer contracts; and
. general economic conditions.
While demand for our network services fluctuates, we must incur certain
costs, such as maintaining a staff of network services employees in
anticipation of future contracts, even when there may be no current business.
Furthermore, as wireless carriers complete their build-outs, the need for the
construction of new towers and the demand for our network services could
decrease significantly and could result in fluctuations and, possibly,
significant declines in our operating performance.
S-12
<PAGE>
We Operate Our Business In An Increasingly Competitive Industry And Many Of Our
Competitors Have Significantly More Resources--As a result of this competition,
we may find it more difficult to achieve favorable lease rates on our towers
and we may be forced to pay more for future tower acquisitions.
We face competition for site rental customers from various sources,
including:
. other large independent tower owners;
. wireless carriers that own and operate their own towers and lease
antenna space to other carriers;
. site development companies that acquire antenna space on existing towers
for wireless carriers and manage new tower construction; and
. traditional local independent tower operators.
Wireless carriers that own and operate their own tower portfolios generally
are substantially larger and have greater financial resources than we have.
Competition for tenants on towers could adversely affect lease rates and
service income.
In addition, competition for the acquisition of towers is keen, and we
expect it to continue to grow. We not only compete against other independent
tower owners and operators, but also against wireless carriers, broadcasters
and site developers. As competition consolidates, we may be faced with fewer
acquisition opportunities, as well as higher acquisition prices. While we
regularly explore acquisition opportunities, we cannot guarantee that we will
be able to identify suitable towers to acquire in the future.
A Substantial Portion Of Our Revenues Is Dependent Upon Agreements With the
BBC, NTL, Verizon, BellSouth Mobility, BellSouth DCS, GTE Wireless And Powertel
If we were to lose our contracts with the BBC or our site sharing agreement
with NTL, we would likely lose a substantial portion of our revenues. The BBC
accounted for approximately 28% and 20% of our revenues for the twelve-month
period ended December 31, 1999 and the fiscal quarter ended March 31, 2000,
respectively.
Our broadcast business is substantially dependent on our contracts with the
BBC. We cannot guarantee that the BBC will renew our contracts or that they
will not attempt to negotiate terms that
are not as favorable to us as those in place now. If we were to lose these BBC
contracts, our business, results of operations and financial condition would be
materially adversely affected. The initial term of our analog transmission
contract with the BBC will expire on March 31, 2007, and our digital
transmission contract with the BBC expires on October 31, 2010. In addition,
our digital transmission contract with the BBC may be terminated by the BBC
after five years if the BBC's board of governors does not believe that digital
television in the United Kingdom has enough viewers.
A substantial portion of our U.K. broadcast transmission operations is
conducted using sites owned by National Transmission Limited, or NTL, our major
competitor in the United Kingdom. NTL also utilizes our sites for their
broadcast operations. This site sharing arrangement with NTL may be terminated
with five years' notice by either us or NTL, and may be terminated sooner upon
a continuing breach of the agreement. The agreement is set to expire on
December 31, 2005. We cannot guarantee that this agreement will not be
terminated, which could have a material adverse effect on our business, results
of operations and financial condition.
In addition, a substantial portion of our revenues are received from a few
major wireless carriers, particularly carriers that have transferred their
tower assets to us. We cannot guaranty that the lease or management agreements
with such carriers will not be terminated or that these carriers will renew
such agreements.
S-13
<PAGE>
Extensive Regulations Which Could Change At Any Time And With Which We Could
Fail To Comply Regulate Our Business--If we fail to comply with applicable
regulations, we could be fined or even lose our right to conduct some of our
business.
A variety of foreign, federal, state and local regulations apply to our
business. Failure to comply with applicable requirements may lead to civil
penalties or require us to assume costly indemnification obligations or breach
contractual provisions. We cannot guarantee that existing regulatory policies
will not adversely affect the timing or cost of new tower construction or that
additional regulations will not be adopted which increase delays or result in
additional costs. These factors could have a material adverse effect on our
financial condition and results of operations.
Since we signed our analog transmission contact with the BBC, the BBC has
increased its service requirements to include 24-hour broadcasting on our
transmission network for the BBC's two national television services and a
requirement for us to add a number of additional analogue stations and service
enhancements to existing analogue stations. The BBC has agreed to increases of
approximately (Pounds)1,320,000 (approximately $2,101,704) per year in the
charges payable by the BBC to us for these service enhancements. These
additional charges may require a revision amendment to that part of CCUK's
transmission telecommunications license dealing with price regulation of
analogue broadcasting services to the BBC. We are in discussions with the BBC
and OFTEL, the relevant regulatory authority in the United Kingdom, as to the
most appropriate way to clarify the license regulatory provisions to take into
account these agreed additional payments. There can be no assurance that such
clarification will be achieved as a result of these discussions with OFTEL.
If we fail to complete any or all of the agreed-to transactions described in
this prospectus supplement, we will not recognize all of the benefits of such
transactions.
If one or more of the agreed-to transactions we describe in this prospectus
supplement is not fully completed or is completed on significantly different
terms than those currently contemplated, it could substantially affect the
implementation of our business strategy. If we fail to close these
transactions, our ability to offer tower clusters in many major U.S. markets
will be impaired. As a result, our future site rental revenue would be
adversely affected. The agreements relating to these agreed to transactions
contain many conditions that must be satisfied before we can close such agreed
to transactions. In addition, each of the agreements relating to these agreed
to transactions includes provisions that could result in our purchasing fewer
towers at closing.
Emissions from our Antennas May Create Health Risks--We could suffer from
future claims if the radio frequency emissions from equipment on our towers is
demonstrated to cause negative health effects.
The government imposes requirements and other guidelines on our towers
relating to radio frequency emissions. The potential connection between radio
frequency emissions and certain negative health effects, including some forms
of cancer, has been the subject of substantial study by the scientific
community in recent years. To date, the results of these studies have been
inconclusive. We cannot guarantee that claims relating to radio frequency
emissions will not arise in the future.
Our International Operations Expose Us to Changes in Foreign Currency Exchange
Rates--If we fail to properly match or hedge the currencies in which we conduct
business, we could suffer losses as a result of changes in currency exchange
rates.
We conduct business in countries outside the United States, which exposes us
to fluctuations in foreign currency exchange rates. We also intend to expand
our international operations in the future. For the quarter ended March 31,
2000, approximately 44.4% of our consolidated revenues originated outside the
United States, all of which were denominated in currencies other than U.S.
dollars, principally pounds sterling. We have not
S-14
<PAGE>
historically engaged in significant hedging activities relating to our non-U.S.
dollar operations, and we could suffer future losses as a result of changes in
currency exchange rates.
We Are Heavily Dependent on Our Senior Management--If we lose members of our
senior management, we may not be able to find appropriate replacements on a
timely basis and our business could be adversely affected.
Our existing operations and continued future development depend to a
significant extent upon the performance and active participation of certain key
individuals as employees, including our chief executive officer and our
president. We cannot guarantee that we will be successful in retaining the
services of these, or other key personnel. None of our executives have signed
noncompetition agreements. If we were to lose any of these individuals, we may
not be able to find appropriate replacements on a timely basis and our
financial condition and results of operations could be materially adversely
affected.
The Notes Are Subject to the Risk of Fraudulent Conveyance Liability--Federal
and state statutes allow courts, under specific circumstances, to void the
notes and require noteholders to return payments received from us.
Various laws enacted for the protection of creditors may apply to our
incurrence of indebtedness, including the issuance of the notes in this
offering. If these laws are held by a court to apply to the notes, you could be
required to return payments you receive on the notes, and the notes could be
voided. If a court were to find in a lawsuit by an unpaid creditor or
representative of creditors that we did not receive fair consideration or
reasonably equivalent value for incurring such indebtedness or obligation and,
at the time of such incurrence, we
. were insolvent;
. were rendered insolvent by reason of such incurrence;
. were engaged in a business or transaction for which our remaining assets
constituted unreasonably small capital; or
. intended to incur or believe we would incur obligations beyond our
ability to pay such obligations as they mature,
such court could, subject to statutes of limitations, determine to invalidate
such indebtedness and obligations as fraudulent conveyances or subordinate such
indebtedness and obligations to existing or future creditors.
There is Currently No Market for the Notes--If an active trading market for the
notes does not develop, the liquidity and value of the notes could be harmed.
The notes are new issues of securities for which there is currently no
trading market. The underwriters have advised us that they intend to make a
market in the notes, although the underwriters are not obligated to do so and
may discontinue such market making at any time. We do not intend to apply for
listing of the notes on any domestic securities exchange or to seek approval
for quotation through an automated quotation system. Accordingly, there can be
no assurance that an active market will develop upon completion of the debt
offering or, if developed, that such market will be sustained or as to the
liquidity of any market.
This Prospectus Supplement Includes Forward-Looking Statements--If our
expectations reflected in these forward-looking statements prove to be
incorrect, our actual results could differ materially from these expectations.
This prospectus supplement includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements other than statements of
historical facts included in this document, including, without limitation, the
statements under
S-15
<PAGE>
"Summary", "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Industry Background" and "Business" and located
elsewhere in this prospectus supplement regarding industry prospects, our
prospects and our financial position are forward-looking statements. Although
we believe that the expectations reflected in such forward-looking statements
are reasonable, we can give no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to differ
materially from our expectations are disclosed in this document. All subsequent
written and oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by the
cautionary statements included in this prospectus supplement. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in
this prospectus supplement might not occur.
S-16
<PAGE>
USE OF PROCEEDS
The net proceeds from this offering are estimated to be $239.9 million,
after deducting underwriting discount and estimated fees and expenses. We
expect to use the total net proceeds to repay a portion of the term loans
borrowed in connection with our acquisition of towers from GTE Wireless. The
term loans mature on March 31, 2011 and bear interest at an increasing rate
over LIBOR, not to exceed 16%.
S-17
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges, the deficiency of our consolidated earnings to cover fixed charges,
our consolidated ratio of earnings to combined fixed charges and preferred
stock dividends and the deficiency of our consolidated earnings to cover
combined fixed charges and preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
Three
Months
Years Ended December 31, Ended
---------------------------------- March 31,
1995 1996 1997 1998 1999 2000
---- ---- ------- ------- -------- ---------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges.......................... -- -- -- -- -- --
Deficiency of Earnings to Cover
Fixed Charges.................... $21 $947 $10,755 $37,802 $ 91,316 $30,508
Ratio of Earnings to Combined
Fixed Charges and Preferred Stock
Dividends........................ -- -- -- -- -- --
Deficiency of Earnings to Cover
Combined Fixed Charges and
Preferred Stock Dividends........ $21 $947 $12,954 $43,213 $120,197 $42,001
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends, earnings
represent income (loss) before income taxes, minority interests, extraordinary
item, cumulative effect of change in accounting principle, fixed charges and
equity in earnings (losses) of unconsolidated affiliate. Fixed charges consist
of interest expense, the interest component of operating leases and
amortization of deferred financing costs.
S-18
<PAGE>
CAPITALIZATION
The following table sets forth as of March 31, 2000:
. our historical capitalization;
. our pro forma capitalization after giving effect to the recent
borrowings under the term loans in connection with the GTE transaction
and this offering; and
. our pro forma capitalization after giving effect to the recent
borrowings under the term loans, this offering, and the conversion of
France Telecom's ownership interest in CCUK into shares of our common
stock and the resulting roll-up of CCUK into CCIC.
The information set forth below should be read in conjunction with "Unaudited
Pro Forma Condensed Consolidated Financial Statements" included elsewhere in
this prospectus supplement, and the consolidated financial statements and
related notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in CCIC's Annual Report on Form 10-K and
Quarterly Report on Form 10-Q. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements" for detail regarding the pro forma adjustments.
<TABLE>
<CAPTION>
March 31, 2000
-----------------------------------
Pro Forma
for 2000
Term
Pro Forma Loans,
for 2000 Offering
Term Loans and Roll-
Actual and Offering up
---------- ------------ ----------
(Dollars in thousands, except
share amounts)
<S> <C> <C> <C>
Cash and cash equivalents(a)(b)........... $ 509,505 $ 905,380 $ 905,380
========== ========== ==========
Notes payable and current maturities of
long-term debt........................... $ -- $ -- $ --
========== ========== ==========
Long-term debt (less current maturities):
2000 Credit Facility(c).................. $ 400,000 $ 400,000 $ 400,000
CCUK Credit Facility(c).................. 131,778 131,778 131,778
Crown Atlantic Credit Facility(c)........ 180,000 180,000 180,000
9% Guaranteed Bonds due 2007............. 193,096 193,096 193,096
10 5/8% Senior Discount Notes due 2007... 191,321 191,321 191,321
10 3/8% Senior Discount Notes due 2011... 329,511 329,511 329,511
9% Senior Notes due 2011................. 180,000 180,000 180,000
11 1/4% Senior Discount Notes due 2011... 161,860 161,860 161,860
9 1/2% Senior Notes due 2011............. 125,000 125,000 125,000
Term Loans due 2011...................... -- 160,125 160,125
Notes offered hereby..................... -- 250,000 250,000
---------- ---------- ----------
Total long-term debt(a)................. 1,892,566 2,302,691 2,302,691
---------- ---------- ----------
Minority interests........................ 74,529 74,529 31,777
Redeemable preferred stock:
Exchangeable Preferred Stock ($.01 par
value; 400,000 shares authorized;
233,973 shares issued).................. 235,216 235,216 235,216
Convertible Preferred Stock ($.01 par
value; 200,000 shares authorized;
200,000 shares issued).................. 195,075 195,075 195,075
---------- ---------- ----------
Total redeemable preferred stock(a).... 430,291 430,291 430,291
---------- ---------- ----------
Stockholders' equity:
Common stock ($.01 par value; 690,000,000
shares authorized):
Common stock (148,813,270 shares issued,
actual; 148,813,270 shares issued, pro
forma for offering; and 177,596,770
shares issued, pro forma for offering
and CCUK consolidation)................ 1,488 1,488 1,776
Class A common stock (11,340,000 shares
issued, actual; 11,340,000 shares
issued, pro forma for offering; and -0-
shares issued, pro forma for offering
and CCUK consolidation)................ 113 113 --
Additional paid-in capital............... 1,831,119 1,831,119 2,427,294
Cumulative foreign currency translation
adjustment.............................. (5,393) (5,393) (5,393)
Accumulated deficit...................... (230,915) (230,915) (230,915)
---------- ---------- ----------
Total stockholders' equity(a)........... 1,596,412 1,596,412 2,192,762
---------- ---------- ----------
Total capitalization(a)................ $3,993,798 $4,403,923 $4,957,521
========== ========== ==========
</TABLE>
S-19
<PAGE>
--------
(a) On a pro forma basis for the transactions described above, the restricted
group, which is made up of CCIC and its subsidiaries that are restricted by
the covenants in our high yield debt instruments, would have cash and cash
equivalents, total long-term debt, redeemable preferred stock, total
stockholders' equity and total capitalization of $870.9 million, $1,797.8
million, $430.3 million, $2,192.8 million and $4,439.3 million,
respectively. See "Unaudited Pro Forma Condensed Consolidated Financial
Statements--Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet".
(b) In April 2000, we paid $538.8 million in cash (of which $395.9 million
resulted from borrowings under the term loans) in connection with closings
for the GTE Wireless, Optus, BellSouth and BellSouth DCS transactions. The
effect of these payments has not been reflected in the Unaudited Pro Forma
Condensed Consolidated Balance Sheet included elsewhere in this prospectus
supplement.
(c) As of June 1, 2000, CCUSA had unused borrowing availability under its
senior credit facility of approximately $180.0 million, CCUK had
approximately (Pounds)65.0 million ($101.1 million) of unused borrowing
availability under its credit facility and Crown Atlantic had approximately
$70.0 million of unused borrowing availability under its credit facility.
See "Description of Certain Indebtedness".
S-20
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements are based on the historical financial statements of CCIC and the
historical financial statements of the entities acquired by CCIC during the
periods presented, adjusted to give effect to the following transactions:
(1) our 1999 debt and equity offerings and the issuance of the convertible
preferred stock and warrants in the GE Capital transaction;
(2) the Bell Atlantic joint venture;
(3) the BellSouth transaction;
(4) the Powertel acquisition;
(5) the recent borrowings under the term loans in connection with the GTE
transaction;
(6) this offering; and
(7) the conversion of France Telecom's ownership interest in CCUK into
shares of our common stock and resulting roll-up of CCUK into CCIC.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the year ended December 31, 1999 and the three months ended March 31, 2000 give
effect to these transactions as if they had occurred as of January 1, 1999. The
Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the
transactions described in clauses (5) through (7) above as if they had been
completed as of March 31, 2000. The pro forma adjustments are described in the
accompanying notes and are based upon available information and certain
assumptions that management believes are reasonable.
Included in the notes accompanying the pro forma financial statements are
tables summarizing the unaudited pro forma results of operations and balance
sheet for CCIC and its subsidiaries that are restricted by covenants in our
high yield debt instruments. These subsidiaries exclude our U.K. subsidiaries
and the Bell Atlantic joint venture, both of which are designated as
unrestricted subsidiaries under our high yield debt instruments.
The pro forma financial statements do not purport to represent what CCIC's
results of operations or financial condition would actually have been had these
transactions in fact occurred on such dates or to project CCIC's results of
operations or financial condition for any future date or period. The pro forma
financial statements should be read in conjunction with the consolidated
financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in CCIC's
most recent annual report on Form 10-K and quarterly report on Form 10-Q.
The Bell Atlantic joint venture and the Powertel acquisition are accounted
for under the purchase method of accounting. The total purchase price for the
Bell Atlantic joint venture and the Powertel acquisition has been allocated to
the identifiable tangible and intangible assets and liabilities of the
applicable acquired business based upon CCIC's estimate of their fair values
with the remainder allocated to goodwill and other intangible assets.
In April 2000, CCIC (1) paid $538.8 million in cash (of which $395.9 million
resulted from borrowings under the term loans) in connection with closings for
the GTE Wireless, Optus, BellSouth and BellSouth DCS transactions and (2) used
$50.0 million in funds from an escrow account in connection with a closing for
the GTE Wireless transaction. The effect of these payments has not been
reflected in the Unaudited Pro Forma Condensed Consolidated Balance Sheet.
S-21
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1999
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Adjustments Pro Forma for
for 1999 1999
Adjustments Acquisitions Transactions,
for and Bell Adjustments Adjustments 2000 Term
Historical 1999 Historical 1999 South for 2000 for Loans and
CCIC Offerings Acquisitions(c) Transaction Term Loans Offering Offering
---------- ----------- --------------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission...... $ 267,894 $ -- $ 5,569 $ 35,671 (d) $ -- $ -- $ 309,134
Network services
and other......... 77,865 -- -- -- -- -- 77,865
--------- -------- ------- -------- -------- ---- ---------
Total net
revenues........ 345,759 -- 5,569 35,671 -- -- 386,999
--------- -------- ------- -------- -------- ---- ---------
Operating expenses:
Costs of
operations:
Site rental and
broadcast
transmission.... 114,436 -- 7,948 7,207 (e) -- -- 129,591
Network services
and other....... 42,312 -- -- -- -- -- 42,312
General and
administrative.... 43,823 -- -- 10,878 (f) -- -- 54,701
Corporate
development....... 5,403 -- -- -- -- -- 5,403
Restructuring
charges........... 5,645 -- -- -- -- -- 5,645
Non-cash
compensation
charges........... 2,173 -- -- -- -- -- 2,173
Depreciation and
amortization...... 130,106 -- 5,532 27,887 (g) -- -- 163,525
--------- -------- ------- -------- -------- ---- ---------
343,898 -- 13,480 45,972 -- -- 403,350
--------- -------- ------- -------- -------- ---- ---------
Operating income
(loss)............. 1,861 -- (7,911) (10,301) -- -- (16,351)
Other income
(expense):
Interest and
other income
(expense)......... 17,731 -- -- -- -- -- 17,731
Interest expense
and amortization
of deferred
financing costs... (110,908) (36,947)(a) -- (4,428)(h) (47,250)(j) 940(k) (198,593)
--------- -------- ------- -------- -------- ---- ---------
Income (loss)
before income
taxes, minority
interests and
cumulative effect
of change in
accounting
principle.......... (91,316) (36,947) (7,911) (14,729) (47,250) 940 (197,213)
Provision for
income taxes....... (275) -- -- -- -- -- (275)
Minority
interests.......... (2,756) -- -- 1,224 (i) -- -- (1,532)
--------- -------- ------- -------- -------- ---- ---------
Income (loss)
before cumulative
effect of change in
accounting
principle.......... (94,347) (36,947) (7,911) (13,505) (47,250) 940 (199,020)
Cumulative effect
of change in
accounting
principle for costs
of start-up
activities......... (2,414) -- -- -- -- -- (2,414)
--------- -------- ------- -------- -------- ---- ---------
Net income (loss).. (96,761) (36,947) (7,911) (13,505) (47,250) 940 (201,434)
Dividends on
preferred stock.... (28,881) (14,916)(b) -- -- -- -- (43,797)
--------- -------- ------- -------- -------- ---- ---------
Net income (loss)
after deduction of
dividends on
preferred stock.... $(125,642) $(51,863) $(7,911) $(13,505) $(47,250) $940 $(245,231)
========= ======== ======= ======== ======== ==== =========
Per common share--
basic and diluted:
Loss before
cumulative effect
of change in
accounting
principle.......... $ (0.94) $ (1.54)
Cumulative effect
of change in
accounting
principle.......... (0.02) (0.01)
--------- ---------
Net loss........... $ (0.96) $ (1.55)
========= =========
Common shares
outstanding--basic
and diluted (in
thousands)......... 131,466 158,016
========= =========
<CAPTION>
Pro Forma
for 1999 and
Adjustments 2000
for CCUK Transactions
Consolidation and Offering
--------------- ------------
<S> <C> <C>
Net revenues:
Site rental and
broadcast
transmission...... $ -- $ 309,134
Network services
and other......... -- 77,865
--------------- ------------
Total net
revenues........ -- 386,999
--------------- ------------
Operating expenses:
Costs of
operations:
Site rental and
broadcast
transmission.... -- 129,591
Network services
and other....... -- 42,312
General and
administrative.... -- 54,701
Corporate
development....... -- 5,403
Restructuring
charges........... -- 5,645
Non-cash
compensation
charges........... -- 2,173
Depreciation and
amortization...... 27,858 (l) 191,383
--------------- ------------
27,858 431,208
--------------- ------------
Operating income
(loss)............. (27,858) (44,209)
Other income
(expense):
Interest and
other income
(expense)......... -- 17,731
Interest expense
and amortization
of deferred
financing costs... -- (198,593)
--------------- ------------
Income (loss)
before income
taxes, minority
interests and
cumulative effect
of change in
accounting
principle.......... (27,858) (225,071)
Provision for
income taxes....... -- (275)
Minority
interests.......... 3,835 (m) 2,303
--------------- ------------
Income (loss)
before cumulative
effect of change in
accounting
principle.......... (24,023) (223,043)
Cumulative effect
of change in
accounting
principle for costs
of start-up
activities......... -- (2,414)
--------------- ------------
Net income (loss).. (24,023) (225,457)
Dividends on
preferred stock.... -- (43,797)
--------------- ------------
Net income (loss)
after deduction of
dividends on
preferred stock.... $(24,023) $(269,254)
=============== ============
Per common share--
basic and diluted:
Loss before
cumulative effect
of change in
accounting
principle.......... $ (1.52)
Cumulative effect
of change in
accounting
principle.......... (0.01)
------------
Net loss........... $ (1.53)
============
Common shares
outstanding--basic
and diluted (in
thousands)......... 175,459
============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations
S-22
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2000
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro
Forma
for 2000
Term Pro Forma
Adjustments Adjustments Loans Adjustments for 2000
Historical for 2000 for and for CCUK Transactions
CCIC Term Loans Offering Offering Consolidation and Offering
---------- ----------- ----------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues:
Site rental and
broadcast
transmission........... $ 93,741 $ -- $-- $ 93,741 $ -- $ 93,741
Network services and
other.................. 30,503 -- -- 30,503 -- 30,503
-------- -------- ---- -------- ------- --------
Total net revenues... 124,244 -- -- 124,244 -- 124,244
-------- -------- ---- -------- ------- --------
Operating expenses:
Costs of operations:
Site rental and
broadcast
transmission......... 40,287 -- -- 40,287 -- 40,287
Network services and
other................ 15,901 -- -- 15,901 -- 15,901
General and
administrative......... 14,853 -- -- 14,853 -- 14,853
Corporate
development............ 2,071 -- -- 2,071 -- 2,071
Non-cash compensation
charges................ 461 -- -- 461 -- 461
Depreciation and
amortization........... 45,122 -- -- 45,122 6,965 (l) 52,087
-------- -------- ---- -------- ------- --------
118,695 -- -- 118,695 6,965 125,660
-------- -------- ---- -------- ------- --------
Operating income
(loss).................. 5,549 -- -- 5,549 (6,965) (1,416)
Other income (expense):
Interest and other
income (expense)....... 5,704 -- -- 5,704 -- 5,704
Interest expense and
amortization of
deferred financing
costs.................. (41,761) (12,907)(j) 890(k) (53,778) -- (53,778)
-------- -------- ---- -------- ------- --------
Income (loss) before
income taxes, minority
interests and
extraordinary item...... (30,508) (12,907) 890 (42,525) (6,965) (49,490)
Provision for income
taxes................... (11) -- -- (11) -- (11)
Minority interests...... (1,541) -- -- (1,541) 1,303 (m) (238)
-------- -------- ---- -------- ------- --------
Income (loss) before
extraordinary item...... (32,060) (12,907) 890 (44,077) (5,662) (49,739)
Extraordinary item--loss
on early extinguishment
of debt................. (1,495) -- -- (1,495) -- (1,495)
-------- -------- ---- -------- ------- --------
Net income (loss)....... (33,555) (12,907) 890 (45,572) (5,662) (51,234)
Dividends on preferred
stock................... (11,493) -- -- (11,493) -- (11,493)
-------- -------- ---- -------- ------- --------
Net income (loss) after
deduction of dividends
on preferred stock...... $(45,048) $(12,907) $890 $(57,065) $(5,662) $(62,727)
======== ======== ==== ======== ======= ========
Per common share--basic
and diluted:
Loss before
extraordinary item..... $ (0.27) $ (0.35) $ (0.35)
Extraordinary item..... (0.01) (0.01) (0.01)
-------- -------- --------
Net loss............... $(0.28) $ (0.36) $ (0.36)
======== ======== ========
Common shares
outstanding--basic and
diluted (in thousands).. 158,566 158,566 176,010
======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations
S-23
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
(Dollars in thousands)
(a) Reflects:
(1) increase in interest expense as a result of the issuance of the notes
in the 1999 debt offerings of $36,132; and
(2) amortization of deferred financing costs related to the notes issued in
the 1999 debt offerings of $815.
(b) Reflects the increase in dividends attributable to the issuance of the
convertible preferred stock.
(c) Reflects:
(1) the historical results of operations of the tower operations
contributed to the Bell Atlantic joint venture, comprising net
revenues, costs of operations and depreciation and amortization of
$3,705, $5,359 and $1,899, respectively; and
(2) the historical results of operations of the tower operations acquired
in the Powertel acquisition, comprising net revenues, costs of
operations and depreciation and amortization of $1,864, $2,589 and
$3,633, respectively.
(d) Reflects:
(1) additional revenues to be recognized by the Bell Atlantic joint venture
under the global lease and the formation agreement of $8,092;
(2) additional revenues to be recognized by CCIC in connection with the
BellSouth transaction for the sublease of tower space by BellSouth,
including $16,842 in revenues to be received from BellSouth and $4,552
in revenues to be received from other tenants; and
(3) additional revenues to be recognized by CCIC in connection with the
Powertel acquisition under the master site agreements of $6,185.
(e) Reflects additional costs to be incurred for ground rents in connection
with the BellSouth agreement.
(f) We expect that the Bell Atlantic joint venture will incur incremental
operating expenses as a stand-alone entity. Such incremental expenses are
estimated to amount to approximately $1,313 for the year ended December 31,
1999. In addition, we expect that we will incur incremental operating
expenses as a result of the BellSouth transaction and the Powertel
acquisition. Such incremental expenses are estimated to amount to
approximately $9,565 for the year ended December 31, 1999. These
incremental operating expenses are based on management's best estimates
rather than any contractual obligations.
(g) Reflects the incremental depreciation of property and equipment as a result
of:
(1) the Bell Atlantic joint venture for $6,222;
(2) the BellSouth transaction for $19,282; and
(3) the Powertel acquisition for $2,383.
Property and equipment is being depreciated over twenty years.
(h) Reflects additional interest expense attributable to borrowings under the
credit facility entered into by the Bell Atlantic joint venture. Such
borrowings were initially estimated to incur interest at a rate of 9.25%
per annum.
(i) Reflects the minority partner's 38.5% interest in the Bell Atlantic joint
venture's operations.
(j) Reflects:
(1) increase in interest expense as a result of borrowings under the term
loans of $46,875 for the year ended December 31, 1999 and $12,813 for
the three months ended March 31, 2000; and
(2) amortization of deferred financing costs related to the term loans of
$375 for the year ended December 31, 1999 and $94 for the three months
ended March 31, 2000.
S-24
<PAGE>
Borrowings under the term loans are currently incurring interest at a rate
of 10.06% per annum, with such interest rate increasing on a periodic
basis.
(k) Reflects:
(1) increase in interest expense as a result of the issuance of the notes
in this offering of $26,250 for the year ended December 31, 1999 and
$6,563 for the three months ended March 31, 2000;
(2) amortization of deferred financing costs related to the notes in the
proposed offering of $920 for the year ended December 31, 1999 and $230
for the three months ended March 31, 2000; and
(3) decrease in interest expense as a result of the repayment of borrowings
under the term loans of $28,110 for the year ended December 31, 1999
and $7,683 for the three months ended March 31, 2000.
(l) Reflects the incremental amortization of goodwill as a result of the
increased ownership in CCUK. Goodwill is being amortized over twenty years.
(m) Reflects the elimination of minority interests related to CCUK's operations
as a result of CCUK becoming a wholly owned subsidiary of CCIC.
S-25
<PAGE>
The following tables summarize the unaudited pro forma results of operations
for the restricted group under our high yield debt instruments. Such
information is not intended as an alternative measure of the operating results
as would be determined in accordance with generally accepted accounting
principles.
<TABLE>
<CAPTION>
Year Ended December 31, 1999
---------------------------------------------
Restricted Group
Pro Forma Pro Forma
for 1999 for 1999
Transactions, Exclusion of Transactions,
2000 Term Loans Unrestricted 2000 Term Loans
and Offering Subsidiaries and Offering
--------------- ------------ ----------------
<S> <C> <C> <C>
Net revenues:
Site rental and broadcast
transmission.................. $ 309,134 $(221,398) $ 87,736
Network services and other..... 77,865 (31,981) 45,884
--------- --------- ---------
Total net revenues........... 386,999 (253,379) 133,620
--------- --------- ---------
Operating expenses:
Costs of operations:
Site rental and broadcast
transmission................ 129,591 (99,095) 30,496
Network services and other... 42,312 (20,275) 22,037
General and administrative..... 54,701 (12,084) 42,617
Corporate development.......... 5,403 (819) 4,584
Restructuring charges.......... 5,645 -- 5,645
Non-cash compensation
charges....................... 2,173 (769) 1,404
Depreciation and
amortization.................. 163,525 (95,873) 67,652
--------- --------- ---------
403,350 (228,915) 174,435
--------- --------- ---------
Operating income (loss)......... (16,351) (24,464) (40,815)
Other income (expense):
Interest and other income
(expense)..................... 17,731 (7,797) 9,934
Interest expense and
amortization of deferred
financing costs............... (198,593) 44,995 (153,598)
--------- --------- ---------
Income (loss) before income
taxes, minority interests and
cumulative effect of change in
accounting principle........... (197,213) 12,734 (184,479)
Provision for income taxes...... (275) -- (275)
Minority interests.............. (1,532) 1,532 --
--------- --------- ---------
Income (loss) before cumulative
effect of change in accounting
principle...................... (199,020) 14,266 (184,754)
Cumulative effect of change in
accounting principle for costs
of start-up activities......... (2,414) -- (2,414)
--------- --------- ---------
Net income (loss)............... (201,434) 14,266 (187,168)
Dividends on preferred stock.... (43,797) -- (43,797)
--------- --------- ---------
Net income (loss) after
deduction of dividends on
preferred stock................ $(245,231) $ 14,266 $(230,965)
========= ========= =========
</TABLE>
S-26
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
------------------------------------------
Restricted Group
Pro Forma Pro Forma
for 2000 Exclusion of for 2000
Term Loans Unrestricted Term Loans
and Offering Subsidiaries and Offering
------------ ------------ ----------------
<S> <C> <C> <C>
Net revenues:
Site rental and broadcast
transmission..................... $ 93,741 $(62,371) $ 31,370
Network services and other........ 30,503 (12,414) 18,089
-------- -------- --------
Total net revenues.............. 124,244 (74,785) 49,459
-------- -------- --------
Operating expenses:
Costs of operations:
Site rental and broadcast
transmission................... 40,287 (28,622) 11,665
Network services and other...... 15,901 (8,134) 7,767
General and administrative........ 14,853 (2,823) 12,030
Corporate development............. 2,071 (285) 1,786
Non-cash compensation charges..... 461 (54) 407
Depreciation and amortization..... 45,122 (23,672) 21,450
-------- -------- --------
118,695 (63,590) 55,105
-------- -------- --------
Operating income (loss)............ 5,549 (11,195) (5,646)
Other income (expense):
Interest and other income
(expense)........................ 5,704 (656) 5,048
Interest expense and amortization
of deferred financing costs...... (53,778) 12,661 (41,117)
-------- -------- --------
Income (loss) before income taxes,
minority interests and
extraordinary item................ (42,525) 810 (41,715)
Provision for income taxes......... (11) -- (11)
Minority interests................. (1,541) 1,441 (100)
-------- -------- --------
Income (loss) before extraordinary
item.............................. (44,077) 2,251 (41,826)
Extraordinary item--loss on early
extinguishment of debt............ (1,495) -- (1,495)
-------- -------- --------
Net income (loss).................. (45,572) 2,251 (43,321)
Dividends on preferred stock....... (11,493) -- (11,493)
-------- -------- --------
Net income (loss) after deduction
of dividends on preferred stock... $(57,065) $ 2,251 $(54,814)
======== ======== ========
</TABLE>
S-27
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2000
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments for 2000 Adjustments for 2000
Historical for 2000 Adjustments Term Loans for CCUK Transactions
CCIC Term Loans for Offering and Offering Consolidation and Offering
---------- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents............ $ 509,505 $395,875(a) $ -- $ 905,380 $ -- $ 905,380
Receivables............ 88,041 -- -- 88,041 -- 88,041
Inventories............ 24,948 -- -- 24,948 -- 24,948
Prepaid expenses and
other current assets... 12,897 -- -- 12,897 -- 12,897
---------- -------- ------- ---------- -------- ----------
Total current
assets............... 635,391 395,875 -- 1,031,266 -- 1,031,266
Property and equipment,
net..................... 2,851,855 -- -- 2,851,855 -- 2,851,855
Escrow deposit for
acquisition............. 50,000 -- -- 50,000 -- 50,000
Goodwill and other
intangible assets, net.. 595,166 -- -- 595,166 553,598 (f) 1,148,764
Deferred financing costs
and other assets, net... 80,100 4,125(b) 10,125(d) 94,350 -- 94,350
---------- -------- ------- ---------- -------- ----------
$4,212,512 $400,000 $10,125 $4,622,637 $553,598 $5,176,235
========== ======== ======= ========== ======== ==========
Liabilities and
Stockholders' Equity:
Current liabilities:
Accounts payable....... $ 43,640 $ -- $ -- $ 43,640 $ -- $ 43,640
Other current
liabilities............ 99,824 -- -- 99,824 -- 99,824
Long-term debt,
current maturities..... -- -- -- -- -- --
---------- -------- ------- ---------- -------- ----------
Total current
liabilities.......... 143,464 -- -- 143,464 -- 143,464
Long-term debt.......... 1,892,566 400,000(c) 10,125(e) 2,302,691 -- 2,302,691
Other liabilities....... 75,250 -- -- 75,250 -- 75,250
---------- -------- ------- ---------- -------- ----------
Total liabilities.... 2,111,280 400,000 10,125 2,521,405 -- 2,521,405
---------- -------- ------- ---------- -------- ----------
Minority interests...... 74,529 -- -- 74,529 (42,752)(g) 31,777
Redeemable preferred
stock................... 430,291 -- -- 430,291 -- 430,291
Stockholders' equity.... 1,596,412 -- -- 1,596,412 596,350 (h) 2,192,762
---------- -------- ------- ---------- -------- ----------
$4,212,512 $400,000 $10,125 $4,622,637 $553,598 $5,176,235
========== ======== ======= ========== ======== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
S-28
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(Dollars in thousands)
(a) Reflects the following adjustments to cash and cash equivalents:
<TABLE>
<S> <C>
(1) Increase resulting from borrowings under the term loans...... $400,000
(2) Decrease resulting from the payment of fees and expenses
related to the term loans.................................... (4,125)
--------
Total adjustments to cash and cash equivalents................. $395,875
========
(b) Reflects deferred financing costs resulting from the payment of fees and
expenses related to the term loans.
</TABLE>
(c) Reflects the increase resulting from borrowings under the term loans.
(d) Reflects deferred financing costs resulting from the payment of
underwriting discounts and commissions and other fees and expenses related
to the proposed offering.
(e) Reflects the following adjustments to long-term debt:
<TABLE>
<S> <C>
(1) Increase resulting from the receipt of proceeds from the
proposed offering.......................................... $ 250,000
(2) Decrease resulting from the repayment of borrowings under
the term loans............................................. (239,875)
---------
Total adjustments to long-term debt.......................... $ 10,125
=========
</TABLE>
(f) Reflects the increase resulting from the increased ownership of CCUK.
(g) Reflects the decreases resulting from CCUK becoming a wholly owned
subsidiary of CCIC.
(h) Reflects the increase resulting from the issuance of common stock for the
increased ownership in CCUK.
S-29
<PAGE>
The following table summarizes the adjustments for the 2000 term loans, with
increases to liabilities balances shown as negative amounts:
<TABLE>
<CAPTION>
Adjustment Reference
----------------------
(a)(1),(c) (a)(2),(b) Total
---------- ---------- ---------
<S> <C> <C> <C>
Cash and cash equivalents................ $ 400,000 $(4,125) $ 395,875
Deferred financing costs and other
assets, net............................. -- 4,125 4,125
Long-term debt........................... (400,000) -- (400,000)
--------- ------- ---------
$ -- $ -- $ --
========= ======= =========
</TABLE>
The following table summarizes the adjustments for the proposed offering,
with increases to liabilities balances shown as negative amounts:
<TABLE>
<CAPTION>
Adjustment
Reference
-----------
(d),(e)(1),
(e)(2)
-----------
<S> <C>
Deferred financing costs and other assets, net................... $ 10,125
Long-term debt:
Notes offered hereby........................................... (250,000)
2000 term loans................................................ 239,875
---------
Total adjustments to long-term debt.......................... (10,125)
---------
$ --
=========
</TABLE>
The following table summarizes the adjustments for the CCUK consolidation,
with increases to minority interests and stockholders' equity balances shown as
negative amounts:
<TABLE>
<CAPTION>
Adjustment
Reference
-----------
(f),(g),(h)
-----------
<S> <C>
Goodwill and other intangible assets, net........................ $553,598
Minority interests............................................... 42,752
Stockholders' equity............................................. (596,350)
--------
$ --
========
</TABLE>
S-30
<PAGE>
The following table summarizes the unaudited pro forma balance sheet for the
restricted group under our high yield debt instruments. Such information is not
intended as an alternative measure of financial position as determined in
accordance with generally accepted accounting principles.
<TABLE>
<CAPTION>
As of March 31, 2000
--------------------------------------------------------------
Restricted
Group Restricted
Pro Forma Pro Forma Group
for 2000 for 2000 Pro Forma
Term Loans Exclusion of Term Loans Adjustments for 2000
and Unrestricted and for CCUK Transactions
Offering Subsidiaries Offering Consolidation and Offering
---------- ------------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents.......... $ 905,380 $ (34,498) $ 870,882 $ -- $ 870,882
Receivables........... 88,041 (39,877) 48,164 -- 48,164
Inventories........... 24,948 (15,489) 9,459 -- 9,459
Prepaid expenses and
other current
assets............... 12,897 (9,272) 3,625 -- 3,625
---------- ----------- ---------- -------- ----------
Total current
assets............. 1,031,266 (99,136) 932,130 -- 932,130
Property and equipment,
net.................... 2,851,855 (1,144,906) 1,706,949 -- 1,706,949
Escrow deposit for
acquisition............ 50,000 -- 50,000 -- 50,000
Investments in
Unrestricted
Subsidiaries........... -- 999,931 999,931 596,350 1,596,281
Goodwill and other
intangible assets,
net.................... 595,166 (460,598) 134,568 -- 134,568
Deferred financing costs
and other assets, net.. 94,350 (11,574) 82,776 -- 82,776
---------- ----------- ---------- -------- ----------
$4,622,637 $ (716,283) $3,906,354 $596,350 $4,502,704
========== =========== ========== ======== ==========
Liabilities and
Stockholders' Equity:
Current liabilities:
Accounts payable...... $ 43,640 $ (19,725) $ 23,915 $ -- $ 23,915
Other current
liabilities.......... 99,824 (66,054) 33,770 -- 33,770
Long-term debt,
current maturities... -- -- -- -- --
---------- ----------- ---------- -------- ----------
Total current
liabilities........ 143,464 (85,779) 57,685 -- 57,685
Long-term debt.......... 2,302,691 (504,874) 1,797,817 -- 1,797,817
Other liabilities....... 75,250 (69,490) 5,760 -- 5,760
---------- ----------- ---------- -------- ----------
Total liabilities... 2,521,405 (660,143) 1,861,262 -- 1,861,262
---------- ----------- ---------- -------- ----------
Minority interests...... 74,529 (56,140) 18,389 -- 18,389
Redeemable preferred
stock.................. 430,291 -- 430,291 -- 430,291
Stockholders' equity.... 1,596,412 -- 1,596,412 596,350 2,192,762
---------- ----------- ---------- -------- ----------
$4,622,637 $ (716,283) $3,906,354 $596,350 $4,502,704
========== =========== ========== ======== ==========
</TABLE>
S-31
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
2000 Credit Facility
Under the loan agreement dated as of March 15, 2000, a wholly owned
subsidiary of CCIC entered into a senior credit facility with a group of banks
and other lenders led by The Chase Manhattan Bank, Credit Suisse First Boston
Corporation, Key Corporate Capital Inc., The Bank of Nova Scotia and Chase
Securities Inc., as agents and arrangers.
The 2000 Credit Facility provides for revolving credit loans in an aggregate
principal amount not to exceed $500.0 million. The 2000 Credit Facility
includes a $25.0 million sublimit available for the issuance of letters of
credit and a $15.0 million sublimit for swingline loans. It also provides for a
Tranche A term loan in an aggregate principal amount not to exceed $300.0
million and a Tranche B term loan in an aggregate principal amount not to
exceed $400.0 million. Additionally, the borrower and one or more lenders may
agree to increase Tranche A term. Tranche B term or revolving loans up to an
aggregate principal amount of $200.0 million, or make additional incremental
term loans in an aggregate principal amount not to exceed $300.0 million, all
prior to March 15, 2002. The borrower may use the proceeds of all loans and
letters of credit for general corporate purposes. As of June 1, 2000, the
borrower and its subsidiaries had unused borrowing availability under the 2000
Credit Facility of approximately $180 million.
The Tranche A term loan under the 2000 Credit Facility matures in
consecutive quarterly installments commencing June 30, 2003. The installments
increase each year and range from 1.25% to 12.50% of the principal amount of
the Tranche A term loan during the life of the 2000 Credit Facility. The
Tranche B term loan matures in consecutive quarterly installments, commencing
on June 30, 2003. The first 19 installments are in the amount of 0.25% of the
principal amount of the Tranche B term loan, and the last installment is in the
amount of 95.25% of the principal amount of the Tranche B term loan. The
revolving loan commitment reduces in quarterly installments in the same
percentages and periods as the maturity of the Tranche A term loan. All
outstanding loans under the 2000 Credit Facility must be repaid on the date
that is six months prior to the date of any scheduled maturity or redemption of
indebtedness or preferred stock of CCIC, unless refinanced or otherwise
extended, in which case repayment shall be prior to such later date. In
addition, the 2000 Credit Facility provides for mandatory reduction and
mandatory prepayment of the revolving loan commitment and mandatory prepayment
of the Tranche A and Tranche B term loans with the:
(1) net cash proceeds of indebtedness not otherwise permitted under the
loan agreement incurred by the borrower and its subsidiaries,
(2) net cash proceeds of certain asset sales and settlements of or
payments in respect of any property or casualty insurance claim or any
condemnation proceeding relating to any asset of the borrower and its
subsidiaries, subject to certain exceptions for cash proceeds that are
reinvested, and
(3) a percentage of the excess cash flow of the borrower and its
subsidiaries, commencing with the calendar year ending December 31, 2003.
The borrower's obligations under the 2000 Credit Facility are guaranteed by
each direct and indirect wholly owned domestic subsidiary of the borrower and
are also secured by (1) with certain limited exception, a pledge by the
borrower and its subsidiaries of all of the outstanding capital stock of each
of the borrower's direct and indirect subsidiaries, and (2) with certain
limited exceptions, a perfected first priority security interest in
substantially all of the personal property of the borrower and its
subsidiaries. In addition, the 2000 Credit Facility is guaranteed by CCIC and
secured by a pledge by CCIC of all of the outstanding capital stock of each of
its direct subsidiaries, including the borrower.
S-32
<PAGE>
The loans under the 2000 Credit Facility bear interest, at the borrower's
option, at either (A) a "base rate" equal to The Chase Manhattan Bank's prime
lending rate, the Base CD Rate in effect plus 1% or the Federal Funds Effective
Rate in effect plus 0.5%, plus an applicable spread ranging from 0.75% to 2.00%
(determined based a leverage ratio and the type of loan) or (B) a "LIBOR rate"
plus an applicable spread ranging from 1.75% to 3.00% (determined based on a
leverage ratio and the type of loan). Following the occurrence and during the
continuance of an event of default under the Credit Facility, the principal
amount of the loans bear interest at the rate otherwise applicable plus 2.00%.
The 2000 Credit Facility contains a number of covenants that, among other
things, restrict the ability of CCIC, the borrower and its subsidiaries to:
. create liens on assets.
. merge, liquidate or dispose of all or substantially all of their
property or businesses,
. sell and leaseback assets, and
. enter into agreements restricting their ability to suffer to exist liens
on their property.
The 2000 Credit Facility contains a number of covenants that, among other
things, restrict the ability of the borrower and its subsidiaries, but not
CCIC, to:
. incur additional indebtedness,
. dispose of assets,
. pay dividends or make capital distributions,
. make investments,
. engage in certain transactions with subsidiaries and affiliates and
otherwise restrict corporate activities, and
. suffer to exist clauses in other agreements restricting distributions by
subsidiaries of the Borrower.
In addition, the 2000 Credit Facility requires compliance with certain
financial covenants, including requiring the borrower and its subsidiaries to
maintain;
. a maximum ratio of indebtedness to operating cash flow,
. a minimum ratio of operating cash flow to projected debt service,
. a minimum ratio of operating cash flow to interest expense, and
. a minimum ratio of operating cash flow to fixed charges.
The 2000 Credit Facility restricts the ability of CCIC to conduct or
transact any business other than its ownership of the borrower and certain
unrestricted subsidiaries or subsidiaries that are holding companies for
unrestricted subsidiaries and certain management and administrative functions.
The 2000 Credit Facility mandates that the borrower and its subsidiaries must
hold any communication tower facilities in special purpose vehicles.
CCIC does not expect that such covenants will materially impact the ability
of CCIC, the borrower and their subsidiaries to operate their respective
businesses.
The 2000 Credit Facility contains customary events of default, including:
. the failure to pay principal when due or any interest or other amount
that becomes due within three days after the due date,
S-33
<PAGE>
. any representation or warranty being made by CCIC or the borrower that
is incorrect in any material respect on or as of the date made,
. a default in the performance of any negative covenants and certain other
covenants or a default in the performance of any other agreements made
under the Credit Facility or collateral documents for a period of thirty
days,
. a default in certain other indebtedness,
. certain insolvency events,
. certain ERISA events,
. certain judgments,
. the security documents shall cease to be in full force and effect, and
. certain change of control events.
CCUK Credit Facility
Under the loan amendment agreement dated June 18, 1999, among CCUK, as
borrower, Crown Castle UK Holdings Limited and Millennium Communications, as
guarantors, Credit Suisse First Boston, as lead arranger and agent, and J.P.
Morgan Securities Ltd., as co-arranger, CCUK's (Pounds)64.0 million ($101.9
million) revolving loan facility was amended to a (Pounds)150.0 million ($238.8
million) revolving loan facility. The facility comprises a seven-year
(Pounds)100.0 million ($159.2 million) revolving loan facility which converts
into a term loan facility on the third anniversary of the amendment date and a
seven year (Pounds)50.0 million ($79.6 million) revolving loan facility.
The CCUK credit facility, formerly referred to as the Castle Transmission
Credit Facility, provides for revolving credit loans in an aggregate principal
amount not to exceed (Pounds)150.0 million ($238.8 million) to finance working
capital, capital expenditures and other related costs in respect of digital
terrestrial television for working capital needs and for general corporate
purposes. As of May 1, 2000, CCUK and its subsidiaries had unused borrowing
availability under the CCUK credit facility of approximately (Pounds)65.0
million ($103.5 million).
On the third anniversary of the amendment date, the amount drawn under the
(Pounds)100.0 million revolving loan facility is converted into a term loan
facility and is amortized in equal semi-annual installments on June 30 and
December 31 of each year with the final installment being on the seventh
anniversary of the amendment date. The (Pounds)50.0 million revolving loan
facility expires on the seventh anniversary of the amendment date. In addition,
the CCUK credit facility provides for mandatory cancellation of all or part of
the loan commitment and mandatory prepayment (1) with an amount equal to the
net proceeds of certain asset sales and (2) upon the completion of an initial
public offering or the listing on any stock exchange of the shares of CCUK
Transmission or Crown Castle UK Holdings Limited.
CCUK's, Millennium's and Crown Castle UK Holdings Limited's obligations
under the CCUK credit facility are secured by fixed and floating charges over
all of their respective assets. The loans under the CCUK credit facility will
bear interest at a "LIBOR rate" plus an applicable spread ranging from 0.625%
to 1.5%, which is determined based on a leverage ratio, plus cost rates related
to the lenders' cost of making the CCUK credit facility available to CCUK.
The CCUK credit facility contains a number of covenants that, among other
things, restrict the ability of CCUK to:
. dispose of assets,
. incur additional indebtedness,
S-34
<PAGE>
. incur guaranty obligations,
. repay subordinated indebtedness except in accordance with the
subordination provisions,
. pay dividends or make capital distributions,
. create liens on assets,
. make investments,
. make acquisitions,
. engage in certain transactions with subsidiaries and affiliates, and
. otherwise restrict corporate activities.
In addition, the CCUK credit facility will require compliance with certain
financial covenants, including requiring CCUK to maintain a maximum ratio of
indebtedness to EBITDA, a minimum ratio of EBITDA to interest expense, and a
minimum fixed charges coverage ratio from June 30, 2002. CCIC does not expect
that such covenants will materially impact the ability of CCUK to operate its
business.
The CCUK credit facility contains customary events of default, including:
. the failure to pay principal or any interest or any other amount that
becomes due within three business days after the due date;
. any representation or warranty being made by CCUK that is untrue or
misleading on the date made;
. a default in the performance of any of its covenants under the CCUK
credit facility unless, if such default is capable of remedy, the
default is cured within 14 days of CCUK becoming aware of such default;
. default in certain other indebtedness;
. certain insolvency events; and
. certain change of control events.
We currently contemplate that we will refinance the CCUK Credit Facility in
connection with the closing of this offering. However, the refinancing is not a
condition to the offering, and there is no assurance that we will complete the
refinancing.
Joint Venture Credit Facility
Under the loan agreement dated as of March 31, 1999, Crown Atlantic Holding
Sub L.L.C. entered into the joint venture credit facility with Key Corporate
Capital, Inc. The joint venture credit facility provides for revolving credit
loans in an aggregate principal amount not to exceed $250.0 million, $180.0
million of which was drawn in connection with the formation of the joint
venture, and the balance of which will be used for acquisition and construction
of tower facilities, capital expenditures, working capital needs and general
corporate purposes. As of May 1, 2000, the joint venture had $70.1 million
unused borrowing availability under the joint venture credit facility. The
borrowing base until September 30, 2001, is based on a multiple of test
operating cash flow. On September 30, 2001, the conversion date, the borrowing
base test will be eliminated and the amount of the facility will be decreased
to the borrowing base as of that date. The joint venture credit facility
includes a $25.0 million sublimit available for the issuance of letters of
credit.
The amount of the facility after the conversion date will be reduced on a
quarterly basis until March 31, 2006, when the joint venture credit facility
matures. The annual percentage reduction in this loan commitment
S-35
<PAGE>
is 3.0% in 2001 (two quarters), 7.5% in 2002, 22.5% in 2003, 26.0% in 2004,
32.0% in 2005 and 9.0% in 2006 (one quarter). In addition, the joint venture
credit facility provides for mandatory reduction of the loan commitment and
mandatory prepayment with the
. net proceeds of certain asset sales,
. 50% of capital contributions to the joint venture subject to certain
significant exceptions including capital expenditures under the build-
to-suit agreement,
. net proceeds of any unused insurance proceeds, and
. a percentage of the excess cash flow of the joint venture, commencing
with the calendar year ending December 31, 2001.
The joint venture's obligations under the joint venture credit facility are
secured by
. a pledge of the membership interest in the joint venture and
. a perfected first priority security interest in the joint venture's
interest in tenant leases including the global lease.
The joint venture credit facility contractually permits the joint venture to
pay maintenance, operating, ground lease and other expenses and costs relating
to the tower facilities out of the tower rentals whether or not an event of
default has occurred.
The loans under the joint venture credit facility will bear interest, at the
joint venture's option, at either (A) a "base rate" equal to KeyCorp's prime
lending rate plus an applicable spread ranging from 0% to 1.25% (determined
based on a leverage ratio) or (B) a "LIBOR rate" plus an applicable spread
ranging from 1.0% to 2.75% (determined based on a leverage ratio). The joint
venture must hedge approximately 50% of its variable interest rate obligations
for a period of two years. Following the occurrence of and during the
continuance of an event of default under the joint venture credit facility, the
loans will bear interest at the "base rate" plus 4.875%.
Term Loans due 2011
On April 3, 2000, we borrowed $400.0 million under a term loan agreement
dated as of March 30, 2000, which we entered into with a group of banks and
other lenders led by Chase Securities Inc. and Goldman Sachs Credit Partners
L.P. The net proceeds from this borrowing, which amounted to $395.9 million,
were used to fund a portion of the cash contribution for the second closing of
towers in the GTE joint venture. The following summary of the term loan
facility does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the provisions of the term loan facility.
The term loan facility provides for term loans in an aggregate principal
amount not to exceed $400 million. The loans under the term loan facility
mature on March 31, 2011 and bear interest at an increasing rate based on LIBOR
as set forth in the term loan agreement, but in no event shall the interest on
such loans exceed 16%. At any time we may, at our option, prepay the term loans
without penalty or premium. Subject to limited exceptions, the term loan
facility requires us to prepay the loans without penalty or premium with the
proceeds of:
. any offering of debt or equity securities,
. the incurrence of other debt, other than debt under our senior
credit facility,
. asset sales for cash consideration, or with a fair market value, in
excess of $1.0 million, and
. any recovery of amounts deposited in escrow in connection with the
GTE joint venture.
S-36
<PAGE>
The term loan agreement contains covenants substantially identical to the
covenants contained in our 9 1/2% discount notes. At any time on or after April
4, 2001, the lenders under the term loan agreement may exchange their term
loans for an equal aggregate principal amount of our senior exchange notes due
2011. These exchange notes, if issued, will be issued under an indenture dated
as of March 30, 2000, between us and United States Trust Company of New York,
as trustee. These exchange notes will have the same maturity as the term loans
and will bear interest at the rate in effect for the term loans on the date of
exchange. The covenants contained in the exchange note indenture will be
substantially identical to the covenants contained in the term loans.
The CCUK Bonds
On May 21, 1997, a subsidiary of CCUK, issued (Pounds)125.0 million
aggregate principal amount of its 9% Guaranteed Bonds due 2007. The CCUK bonds,
formerly referred to as the Castle Transmission Bonds, are listed on the
Luxembourg Stock Exchange.
The CCUK bonds constitute direct, general and unconditional guaranteed
obligations of the subsidiary of CCUK and rank equally with all other present
and future unsecured and unsubordinated obligations of such subsidiary. The
CCUK bonds are guaranteed jointly and severally by CCUK and Crown Castle UK
Holdings Limited. The CCUK bonds will mature on March 30, 2007. Interest on the
CCUK bonds is payable annually in arrears on March 30 in each year, the first
payment having been made on March 30, 1998.
The CCUK bonds may be redeemed at our option in whole or in part, at any
time or from time to time, at the greater of their principal and such price as
will provide a gross redemption yield 0.5% per annum above the gross redemption
yield of the benchmark gilt plus, in either case, accrued and unpaid interest.
Upon the occurrence of a change of control of CCUK, each holder of CCUK
bonds has the right to require such subsidiary to purchase all or a portion of
such holder's CCUK bonds at a price equal to 101% of the aggregate principal
amount, together with accrued and unpaid interest to the date of purchase.
The trust deed contains certain covenants, including covenants that limit:
. indebtedness,
. restricted payments,
. distributions from restricted subsidiaries,
. transactions with affiliates,
. sales of assets and subsidiary stock,
. dividend and other payment restrictions affecting restricted
subsidiaries, and
. mergers or consolidations.
We currently contemplate that we will redeem the CCUK Bonds in connection
with the closing of this offering. However, the redemption is not a condition
to the offering, and there is no assurance that we will complete the
redemption.
The 10 5/8% Discount Notes
The 10 5/8% discount notes are our unsecured senior obligations, and rank
equally in right of payment with all our existing and future senior
indebtedness and will be senior to our future subordinated indebtedness. The 10
5/8% discount notes mature on November 15, 2007. The 10 5/8% discount notes
will accrete in value until November 15, 2002. Thereafter, cash interest will
accrue on the 10 5/8% discount notes at the rate of 10.625% per annum and will
be payable semi-annually, commencing on May 15, 2003.
S-37
<PAGE>
Except as stated below, the 10 5/8% discount notes are not redeemable prior
to November 15, 2002. Thereafter, the 10 5/8% discount notes are redeemable at
our option, in whole or in part, at any time or from time to time, at a premium
which is at a fixed percentage that declines to par on or after November 15,
2005, in each case together with accrued and unpaid interest, if any, to the
date of redemption. In the event we complete a public equity offering or
certain strategic equity investments prior to November 15, 2000, we may, at our
option, use all or a portion of the proceeds from such offering to redeem up to
35% of the original aggregate principal amount at maturity of the 10 5/8%
discount notes at a redemption price equal to 110.625% of the accreted value of
the 10 5/8% discount notes to be redeemed, plus accrued and unpaid interest, if
any, thereon to the redemption date, provided at least 65% of the original
aggregate principal amount at maturity of the 10 5/8% discount notes remains
outstanding after each such redemption.
Upon the occurrence of a change of control of CCIC, each holder of 10 5/8%
discount notes has the right to require us to purchase all or a portion of such
holder's 10 5/8% discount notes at a price equal to 101% of the aggregate
principal amount, together with accrued and unpaid interest to the date of
purchase.
The 10 5/8% notes indenture contains certain covenants, including covenants
that limit:
. indebtedness,
. restricted payments,
. distributions from restricted subsidiaries,
. transactions with affiliates,
. sales of assets and subsidiary stock (including sale and leaseback
transactions),
. dividend and other payment restrictions affecting restricted
subsidiaries, and
. mergers or consolidations.
The joint venture credit facility will contain a number of covenants that,
among other things, restrict the ability of the joint venture to:
. dispose of assets,
. incur additional indebtedness,
. incur guaranty obligations,
. repay subordinated indebtedness except in accordance with the
subordination provisions,
. pay dividends or make capital distributions,
. create liens on assets,
. enter into leases,
. make investments,
. make acquisitions,
. engage in mergers or consolidations,
. make capital expenditures, and
. engage in certain transactions with subsidiaries and affiliates and
otherwise restrict company activities.
S-38
<PAGE>
In addition, the joint venture credit facility will require compliance with
certain financial covenants, including requiring the joint venture to maintain:
. a minimum ratio of operating cash flow to indebtedness,
. a minimum ratio of operating cash flow to fixed charges,
. a minimum ratio of operating cash flow to projected debt service, and
. a minimum ratio of operating cash flow to interest expense.
The joint venture does not expect that such covenants will materially impact
its ability to operate its business.
The joint venture credit facility contains customary events of default,
including:
. the failure to pay principal when due or any interest or other amount
that becomes due within two days after the due date;
. any representation or warranty being made by the joint venture that is
incorrect in any material respect on or as of the date made;
. a default in the performance of any negative covenants or a default in
the performance of certain other covenants or agreements for a period of
days;
. default in certain other indebtedness;
. certain insolvency events; and
. certain change of control events.
During the first two years of the joint venture credit facility, capital
contributions can cure an operating cash flow default and certain other
covenant and agreement defaults.
9% Cash-Pay Notes and 10 3/8% Discount Notes
On May 17, 1999, we issued a $180.0 million principal amount of 9% cash-pay
notes and $500.0 million principal amount at maturity ($301.7 million gross
proceeds) of 10 3/8% discount notes. In this section the term "notes" refers to
both the 9% cash-pay notes and the 10 3/8% discount notes. The notes are our
unsecured senior obligations, rank equally in right of payment with all our
existing and future senior indebtedness and are senior to our future
subordinated indebtedness. The notes rank equally in right of payment with each
other. The notes will mature on May 15, 2011.
The 9% cash-pay notes accrue interest at a rate of 9%, which is payable
semiannually.
The 10 3/8% discount notes accrete in value through May 15, 2004, to their
principal amount at maturity. After that date, cash interest will accrue on the
10 3/8% discount notes at a rate of 10.375% per annum, which will be payable
semiannually commencing on November 15, 2004.
In the event we complete a public equity offering or certain strategic
equity investments prior to May 15, 2002, we will be able to use all or a
portion of the net proceeds from such offering or investment to redeem up to
35% of the original aggregate principal amount of the 9% cash-pay notes, so
long as at least 65% of the original aggregate principal amount of the 9% cash-
pay notes remains outstanding after each such redemption. The price for this
redemption would equal 109.000% of the principal amount of the 9% cash-pay
notes to be redeemed, plus accrued and unpaid interest, if any, to the
redemption date. Except as stated above, the 9% cash-pay notes will not be
redeemable prior to May 15, 2004. On or after that date, we will have the right
to redeem the 9% cash-pay notes, in whole or in part, at a premium which is at
a fixed percentage that declines to par on or after May 15, 2007, in each case
together with accrued and unpaid interest, if any, to the date of redemption.
S-39
<PAGE>
In the event we complete a public equity offering or certain strategic
equity investments prior to May 15, 2002, we will be able to at our option use
all or a portion of the proceeds from such offering or investment to redeem up
to 35% of the original aggregate principal amount at maturity of the 10 3/8%
discount notes, so long as at least 65% of the original aggregate principal
amount at maturity of the 10 3/8% discount notes remains outstanding after
each such redemption. The price for this redemption would equal 110.375% of
the accreted value of the 10 3/8% discount notes to be redeemed. Except as
stated above, the 10 3/8% discount notes will not be redeemable prior to May
15, 2004. After that date, we will have the right to redeem the 10 3/8%
discount notes, in whole or in part, at a premium which is at a fixed
percentage that declines to par on or after May 15, 2007, in each case
together with accrued and unpaid interest, if any, to the date of redemption.
If a change of control occurs, as defined in the indentures governing the
notes, each holder of notes has the right to require us to purchase all or a
portion of such holder's notes at a price equal to:
. 101% of the principal amount of any 9% cash-pay notes repurchased, plus
accrued and unpaid interest on those 9% cash-pay notes, if any, to the
date of repurchase;
. 101% of the principal amount of any 10 3/8% discount notes repurchased
after May 15, 2004, plus accrued and unpaid interest on those 10 3/8%
discount notes, if any, to the date of repurchase; and
. 101% of the accreted value of any 10 3/8% discount notes repurchased
before May 15, 2004.
The indentures governing the notes contain covenants that include, among
others, covenants that limit:
. restricted payments,
. incurrence of indebtedness and issuance of preferred stock,
. liens,
. dividend and other payment restrictions affecting subsidiaries,
. mergers or consolidations,
. transactions with affiliates,
. sale and leaseback transactions,
. issuances and sales of capital stock of restricted subsidiaries, and
. issuances of guarantees of indebtedness.
9 1/2% Senior Notes and 11 1/4% Senior Discount Notes
On August 3, 1999, we issued through a private placement $125.0 million
principal amount of 9 1/2% cash-pay senior notes and $260.0 million principal
amount at maturity ($150.5 million gross proceeds) of 11 1/4% senior discount
notes. In this section the term "notes" refers to both the 9 1/2% cash-pay
notes and the 11 1/4% discount notes. The notes are our unsecured senior
obligations, rank equally in right of payment with all our existing and future
senior indebtedness and are senior to our future subordinated indebtedness.
The notes rank equally in right of payment with each other. The notes will
mature on August 1, 2011.
The 9 1/2% cash-pay notes accrue interest at a rate of 9 1/2% which is
payable semiannually.
The 11 1/4% discount notes accrete in value through August 1, 2004, to
their principal amount at maturity. After that date, cash interest will accrue
on the 11 1/4% discount notes at a rate of 11.25% per annum, which will be
payable semiannually commencing on February 1, 2005.
In the event we complete a public equity offering or certain strategic
equity investments on or prior to August 1, 2002, we will be able to use all
or a portion of the net proceeds from such offering or investment to redeem up
to 35% of the original aggregate principal amount of the 9 1/2% cash-pay
notes, so long as at least
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65% of the original aggregate principal amount of the 9 1/2% cash-pay notes
remains outstanding after each such redemption. The price for this redemption
would equal 109.50% of the principal amount of the 9 1/2% cash-pay notes to be
redeemed, plus accrued and unpaid interest, if any, to the redemption date.
Except as stated above, the 9 1/2% cash-pay notes will not be redeemable prior
to August 1, 2004. On or after that date, we will have the right to redeem the
9 1/2% cash-pay notes, in whole or in part, at a premium which is at a fixed
percentage that declines to par on or after August 1, 2007, in each case
together with accrued and unpaid interest, if any, to the date of redemption.
In the event we complete a public equity offering or certain strategic
equity investments prior to August 1, 2002, we will be able at our option to
use all or portion of the net proceeds from such offering or investment to
redeem up to 35% of the original aggregate principal amount at maturity of the
11 1/4% discount notes, so long as at least 65% of the original aggregate
principal amount at maturity of the 11 1/4% discount notes remains outstanding
after each such redemption. The price for this redemption would equal 111.25%
of the accreted value of the 11 1/4% discount notes to be redeemed. Except as
stated above, the 11 1/4% discount notes will not be redeemable prior to
August 1, 2004. After that date, we will have the right to redeem the 11 1/4%
discount notes, in whole or in part, at a premium which is at a fixed
percentage that declines to par on or after August 1, 2007, in each case
together with accrued and unpaid interest, if any, to the date of redemption.
If a change of control occurs, as defined in the indentures governing the
notes, each holder of notes has the right to require us to purchase all or a
portion of such holder's notes at a price equal to:
. 101% of the principal amount of any 9 1/2% cash-pay notes repurchased,
plus accrued and unpaid interest on those 9 1/2% cash-pay notes, if any, to
the date of repurchase;
. 101% of the principal amount of any 11 1/4% discount notes repurchased
after August 1, 2004, plus accrued and unpaid interest on those 11 1/4%
discount notes, if any, to the date of repurchase; and
. 101% of the accreted value of any 11 1/4% discount notes repurchased
before August 1, 2004.
The indentures governing the notes contain covenants that include, among
others, covenants that limit:
. restricted payments,
. incurrence of indebtedness and issuance of preferred stock,
. liens,
. dividend and other payment restrictions affecting subsidiaries,
. mergers or consolidations,
. transactions with affiliates,
. sale and leaseback transactions,
. issuances and sales of capital stock of restricted subsidiaries, and
. issuances of guarantees of indebtedness.
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DESCRIPTION OF NOTES
General
You can find the definitions of certain terms used in the following summary
under the subheading "Certain Definitions." In this summary, the word "CCIC"
refers only to Crown Castle International Corp. and not to any of its
Subsidiaries.
CCIC will issue the notes under an indenture between itself and The United
States Trust Company of New York, as trustee. The terms of the notes include
those stated in the indenture and those made part of the indenture by
reference to the Trust Indenture Act of 1939, as amended.
The following description is a summary of the material provisions of the
indenture. It does not restate the indenture in its entirety. We urge you to
read the indenture, because it, and not this description, defines your rights
as Holders of the notes. A copy of the proposed form of indenture has been
filed as an exhibit to the registration statement which includes this
prospectus and is available as set forth below under "--Additional
Information." We will file a revised form of indenture pursuant to a Current
Report on Form 8-K in connection with the sale of the notes.
Brief Description of the Notes
The notes:
. are general obligations of CCIC;
. rank equally with all existing and future senior debt of CCIC;
. accrue interest from the date they are issued at a rate of %, which
is payable semi-annually; and
. mature on August 1, 2011.
CCIC has covenanted that it will offer to repurchase notes under the
circumstances described in the indenture upon:
. a Change of Control of CCIC; or
. an Asset Sale by CCIC or any of its Restricted Subsidiaries.
The indenture also contains the following covenants:
. Restricted Payments;
. incurrence of Indebtedness and issuance of preferred stock;
. Liens;
. dividend and other payment restrictions affecting Subsidiaries;
. merger, consolidation or sale of assets;
. transactions with Affiliates;
. sale and leaseback transactions;
. limitation on issuances and sales of Capital Stock of Restricted
Subsidiaries;
. limitation on issuances of Guarantees of Indebtedness;
. Business Activities; and
. Reports.
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The operations of CCIC are conducted through its Subsidiaries and,
therefore, CCIC depends on the cash flow of its Subsidiaries to meet its
obligations, including its obligations under the notes. CCIC's Subsidiaries
will not be guarantors of the notes and the notes will be effectively
subordinated to all Indebtedness, including all borrowings under the Senior
Credit Facility, the Bell Atlantic joint venture credit facility, the Castle
Transmission credit facility and the Castle Transmission bonds, and other
liabilities and commitments, including trade payables and lease obligations, of
CCIC's Subsidiaries. Any right of CCIC to receive assets of any of its
Subsidiaries upon the liquidation or reorganization of the Subsidiaries, and
the consequent right of the Holders of the notes to participate in those
assets, will be effectively subordinated to the claims of that Subsidiary's
creditors, except to the extent that CCIC is itself recognized as a creditor of
such Subsidiary. If CCIC is recognized as a creditor of such Subsidiary, the
claims of CCIC would still be subordinate in right of payment to any security
in the assets of that Subsidiary and any indebtedness of that Subsidiary senior
to that held by CCIC. As of June 1, 2000, after giving pro forma effect to the
agreed-to transactions, described in this prospectus, CCIC's Subsidiaries would
have had $351.1 million of Indebtedness outstanding, and would have had $180.0
million, $70.0 million and $101.1 million of unused borrowing availability,
respectively, under the Senior Credit Facility, the Bell Atlantic joint venture
credit facility and the Castle Transmission credit facility. The provisions of
the Senior Credit Facility, the Bell Atlantic joint venture credit facility,
the Castle Transmission credit facility and the Castle Transmission bonds
contain substantial restrictions on the ability of those Subsidiaries to
dividend or distribute cash flow or assets to CCIC. See "Risk Factors--As a
Holding Company, We Require Dividends from Subsidiaries to Meet Cash
Requirements or Pay Dividends" and "Description of Certain Indebtedness."
As of the date of the indenture, all of CCIC's Subsidiaries will be
Restricted Subsidiaries other than:
(1) CTSH and its subsidiaries; and
(2) Crown Castle Investment Corp. and Crown Castle Investment Corp. II
and their subsidiaries, through which CCIC holds its interest in the Bell
Atlantic joint venture.
However, under certain circumstances, CCIC will be able to designate current
or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries
will not be subject to many of the restrictive covenants set forth in the
indenture.
Principal, Maturity and Interest
The notes initially will be limited in aggregate principal amount to $250.0
million and will mature on August 1, 2011. The indenture governing the notes
will allow CCIC to issue up to $100.0 million in aggregate principal amount of
notes in addition to the notes being sold in the offering. The issuance of any
of those additional notes will be subject to CCIC's ability to incur
Indebtedness under the covenant "Incurrence of Indebtedness and Issuance of
Preferred Stock" and similar restrictions in the instruments governing CCIC's
other Indebtedness. Any such additional notes will be treated as part of the
same class and series as the notes issued in this offering for purposes of
voting under the indenture. CCIC will issue the notes in denominations of
$1,000 and integral multiples of $1,000.
Interest on the notes will accrue at the rate of % per annum and will
be payable in U.S. Dollars semiannually in arrears on February 1 and August 1,
commencing on February 1, 2001. CCIC will make each interest payment to Holders
of record on the immediately preceding January 15 and July 15.
Interest on the notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
indenture. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
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Methods of Receiving Payments on the Notes
If a Holder has given wire transfer instructions to CCIC, CCIC will make all
payments of principal, premium and interest, if any, on that Holder's notes in
accordance with those instructions. All other payments on the notes will be
made at the office or agency of the paying agent and registrar for the notes
within the City and State of New York unless CCIC elects to make interest
payments by check mailed to the Holders at their address set forth in the
register of Holders.
Paying Agent and Registrar for the Notes
The trustee under the indenture will initially act as the paying agent and
registrar for the notes. CCIC may change the paying agent or registrar under
the indenture without prior notice to the Holders of the notes, and CCIC or any
of its Subsidiaries may act as paying agent or registrar under the indenture.
Transfer and Exchange
A Holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a Holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of notes.
Holders will be required to pay all taxes due on transfer. CCIC is not required
to transfer or exchange any notes selected for redemption. Also, CCIC is not
required to transfer or exchange any notes for a period of 15 days before a
selection of notes to be redeemed.
Optional Redemption
During the first 36 months after the date of original issuance of the notes,
CCIC may on any one or more occasions redeem up to 35% of the aggregate
principal amount of notes originally issued at a redemption price of %
of the principal amount of the notes to be redeemed on the redemption date with
the net cash proceeds of one or more Public Equity Offerings and/or Strategic
Equity Investments; provided that:
(1) at least 65% of the aggregate principal amount of notes originally
issued remains outstanding immediately after the occurrence of such
redemption, excluding notes held by CCIC or any of its Subsidiaries; and
(2) the redemption occurs within 60 days of the date of the closing of
the Public Equity Offering or Strategic Equity Investment.
Except pursuant to the preceding paragraph, the notes will not be redeemable
at CCIC's option prior to August 1, 2005. On or after August 1, 2005, CCIC may
redeem all or a part of the notes upon not less than 30 nor more than 60 days'
notice, at the redemption prices expressed as percentages of principal amount
set forth below plus accrued and unpaid interest if any, on the notes redeemed
to the applicable redemption date, subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date, if redeemed during the twelve-month period beginning on August 1,
of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2005.......................................................... . %
2006.......................................................... . %
2007.......................................................... . %
2008 and thereafter........................................... 100.000%
</TABLE>
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Selection and Notice
If less than all of the notes are to be redeemed at any time, the trustee
under the indenture will select notes for redemption as follows:
(1) if the notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange, if any, on which the notes are listed; or
(2) if the notes are not listed on any national securities exchange, on
a pro rata basis, by lot or by such method as the trustee shall deem fair
and appropriate.
No notes of $1,000 of principal amount at maturity or less will be redeemed
in part. Notices of redemption will be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of notes
to be redeemed at its registered address. Notices of redemption may not be
conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to such note shall state the portion of the principal amount of that
note to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note presented for redemption will be issued in the
name of the Holder thereof upon cancellation of the original note. Notes
called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on notes or portions of
them called for redemption.
Mandatory Redemption
CCIC is not required to make mandatory redemption or sinking fund payments
with respect to the notes.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each Holder of notes will have the right to
require CCIC to repurchase all or any part, equal to $1,000 or an integral
multiple of $1,000, of such Holder's notes pursuant to the offer described
below (the "Change of Control Offer"). The offer price in any Change of
Control Offer will be payable in cash and will be 101% of the aggregate
principal amount of any notes repurchased plus accrued and unpaid interest on
the notes, if any (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), to
the date of purchase (the "Change of Control Payment"). Within 30 days
following any Change of Control, CCIC will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of
Control and offering to repurchase notes on the date specified in the notice
(the "Change of Control Payment Date"). The Change of Control Payment Date
will be no earlier than 30 days and no later than 60 days from the date the
notice is mailed, pursuant to the procedures required by the indenture and
described in such notice.
On the Change of Control Payment Date, CCIC will, to the extent lawful:
(1) accept for payment all notes or portions of the notes properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions of notes properly
tendered; and
(3) deliver or cause to be delivered to the trustee the notes so
accepted together with an officers' certificate stating the aggregate
principal amount of notes or portions of the notes being purchased by CCIC.
The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail, or cause to be transferred by book
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entry, to each Holder a new note equal in principal amount to any unpurchased
portion of the notes surrendered, if any; provided that the new note will be in
a principal amount of $1,000 or an integral multiple of $1,000.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the indenture are applicable. CCIC will comply
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations to the extent those laws and regulations are
applicable to any Change of Control Offer. If the provisions of any of the
applicable securities laws or securities regulations conflict with the
provisions of the covenant described above, CCIC will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the covenant described above by virtue of the
compliance.
The Change of Control purchase feature is a result of negotiations between
CCIC and the underwriters. Management has no present intention to engage in a
transaction involving a Change of Control, although it is possible that CCIC
would decide to do so in the future. Subject to the limitations discussed
below, CCIC could, in the future, enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the indenture, but that could increase the
amount of Indebtedness outstanding at such time or otherwise affect CCIC's
capital structure. Restrictions on the ability of CCIC to incur additional
Indebtedness are contained in the covenants described under "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," "--
Certain Covenants--Liens" and "--Certain Covenants--Sale and Leaseback
Transactions." Such restrictions can only be waived with the consent of the
Holders of a majority in principal amount of the notes then outstanding. Except
for the limitations contained in the covenants, however, the indenture will not
contain any covenants or provisions that may afford Holders of the notes
protection in the event of certain highly leveraged transactions.
The credit facilities of CCIC's Subsidiaries limit CCIC's access to the cash
flow of those Subsidiaries and will, therefore, restrict CCIC's ability to
purchase any notes. Each of these credit facilities also provides that the
occurrence of certain change of control events with respect to CCIC constitutes
a default under that credit facility. In the event that a Change of Control
occurs at a time when CCIC's Subsidiaries are prohibited from making
distributions to CCIC to purchase notes, CCIC could cause its Subsidiaries to
seek the consent of the lenders under the credit facilities to allow the
distributions or could attempt to refinance the borrowings that contain the
prohibition. If CCIC does not obtain a consent or repay such borrowings, CCIC
will remain prohibited from purchasing notes. In this case, CCIC's failure to
purchase tendered notes would constitute an Event of Default under the
indenture which would, in turn, constitute a default under the credit
facilities. Future indebtedness of CCIC and its Subsidiaries may contain
prohibitions on the occurrence of certain events that would constitute a Change
of Control or require the indebtedness to be repurchased if a Change of Control
occurs. Moreover, the exercise by the Holders of their right to require CCIC to
repurchase the notes could cause a default under such indebtedness, even if the
Change of Control itself does not, due to the financial effect of such
repurchase on CCIC. Finally, CCIC's ability to pay cash to the Holders of notes
following the occurrence of a Change of Control may be limited by CCIC's then
existing financial resources, including its ability to access the cash flow of
its Subsidiaries. See "Risk Factors--As a Holding Company, We Require Dividends
from Subsidiaries to Meet Cash Requirements on Pay Dividends." There can be no
assurance that sufficient funds will be available when necessary to make any
required repurchases.
CCIC will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control Offer made by CCIC and purchases
all notes properly tendered and not withdrawn under such Change of Control
Offer. The provisions under the indenture relating to CCIC's obligation to make
an offer to repurchase the notes as a result of a Change of Control may be
waived or modified with the written consent of the Holders of a majority in
principal amount of the notes then outstanding.
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The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of CCIC and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of notes to require
CCIC to repurchase the notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of CCIC and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) CCIC (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
(2) fair market value is determined by CCIC's board of directors and
evidenced by a resolution of its board of directors set forth in an
officers' certificate delivered to the trustee under the indenture; and
(3) except in the case of a Tower Asset Exchange, at least 75% of the
consideration received in such Asset Sale by CCIC or such Restricted
Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to be
cash:
(a) any liabilities, as shown on CCIC's or such Restricted Subsidiary's
most recent balance sheet, of CCIC or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated
to the notes or any guarantee of the notes) that are assumed by the
transferee of any assets pursuant to a customary novation agreement that
releases CCIC or the Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by CCIC or any
Restricted Subsidiary from the transferee that are converted by CCIC or the
Restricted Subsidiary into cash within 20 days of the applicable Asset
Sale, to the extent of the cash received in that conversion.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
CCIC or the Restricted Subsidiary may apply those Net Proceeds to:
(1) reduce Indebtedness under a Credit Facility;
(2) reduce other Indebtedness of any of CCIC's Restricted Subsidiaries;
(3) the acquisition of all or substantially all the assets of a
Permitted Business;
(4) the acquisition of Voting Stock of a Permitted Business from a
Person that is not a Subsidiary of CCIC; provided, that, after giving
effect to the acquisition, CCIC or its Restricted Subsidiary owns a
majority of the Voting Stock of that business; or
(5) the making of a capital expenditure or the acquisition of other
long-term assets that are used or useful in a Permitted Business.
Pending the final application of any Net Proceeds, CCIC may temporarily reduce
revolving credit borrowings or otherwise invest the Net Proceeds in any manner
that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
CCIC will be required to make an offer to all Holders of notes and all holders
of other senior Indebtedness of CCIC containing provisions similar to those
set forth in the indenture relating to the notes with respect to offers to
purchase or redeem with the proceeds of sales of (an "Asset Sale Offer"), to
purchase the
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maximum principal amount of notes and such other senior Indebtedness of CCIC
that may be purchased out of the Excess Proceeds. The offer price in any Asset
Sale Offer will be payable in cash and will be 100% of the principal amount of
any notes, plus accrued and unpaid interest to the date of purchase. In the
case of any other senior Indebtedness, the offer price will be 100% of the
principal amount (or accreted value, as applicable) of the Indebtedness plus
accrued and unpaid interest thereon, if any, to the date of purchase. Each
Asset Sale Offer will be made in accordance with the procedures set forth in
the indenture and the other senior Indebtedness of CCIC. If any Excess Proceeds
remain after consummation of an Asset Sale Offer, CCIC may use the remaining
Excess Proceeds for any purpose not otherwise prohibited by the indenture. If
the aggregate principal amount of notes and the other senior indebtedness of
CCIC tendered into the Asset Sale Offer exceeds the amount of Excess Proceeds,
the trustee will select the notes and such other senior Indebtedness to be
purchased on a pro rata basis. Upon completion of the Asset Sale Offer, the
amount of Excess Proceeds will be reset at zero.
Certain Covenants
Restricted Payments
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of CCIC's or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving CCIC or any of its
Restricted Subsidiaries) or to the direct or indirect holders of CCIC's
or any of its Restricted Subsidiaries' Equity Interests in their capacity
as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of CCIC or to CCIC or a
Restricted Subsidiary of CCIC);
(2) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or
consolidation involving CCIC) any Equity Interests of CCIC or any direct
or indirect parent of CCIC (other than any such Equity Interests owned by
CCIC or any of its Restricted Subsidiaries);
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes, except a payment of interest or principal at
Stated Maturity; or
(4) make any Restricted Investment (all such payments and other
actions set forth in these clauses (1) through (4) above, including those
occurring since the date of the May 1999 Senior Discount Note Indenture,
being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default has occurred and is continuing or would occur as a
consequence of the Restricted Payment; and
(2) CCIC would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Adjusted Consolidated
Cash Flow Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock"; provided that CCIC and its Restricted
Subsidiaries will not be required to comply with this clause (2) in order
to make any Restricted Investment; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by CCIC and its Restricted Subsidiaries
after the date of the May 1999 Senior Discount Note Indenture (excluding
Restricted Payments permitted by clauses (2), (3) and (4) of the
paragraph of exceptions below), is less than the sum, without
duplication, of:
(a) 100% of the Consolidated Cash Flow of CCIC for the period
(taken as one accounting period) from the beginning of the fiscal
quarter during which the May 1999 Senior Discount Note Indenture was
executed to the end of CCIC's most recently ended fiscal quarter for
which internal
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financial statements are available at the time of such Restricted
Payment (or, if the Consolidated Cash Flow for such period is a
deficit, less 100% of the deficit), less 1.75 times the Consolidated
Interest Expense of CCIC since the beginning of the fiscal quarter
during which the May 1999 Senior Discount Note Indenture was executed;
plus
(b) 100% of the aggregate net cash proceeds received by CCIC since
the beginning of the fiscal quarter during which the May 1999 Senior
Discount Note Indenture was executed as a contribution to its common
equity capital or from the issue or sale of Equity Interests of CCIC
(other than Disqualified Stock and except to the extent such net cash
proceeds are used to incur new Indebtedness outstanding pursuant to
clause (11) of the second paragraph of the covenant described below
under the caption "Incurrence of Indebtedness and Issuance of
Preferred Stock") or from the issue or sale of Disqualified Stock or
debt securities of CCIC that have been converted into Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Subsidiary of CCIC and other than
Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock); plus
(c) to the extent that any Restricted Investment that was made
after the date of the May 1999 Senior Discount Note Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of:
(A) the cash return of capital with respect to the Restricted
Investment (less the cost of disposition, if any), and
(B) the initial amount of the Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of CCIC and all
of its Subsidiaries are designated as Restricted Subsidiaries after
the date of the May 1999 Senior Discount Note Indenture, the lesser
of:
(A) the fair market value of CCIC's Investments in such
Subsidiaries as of the date of such designation, or
(B) the sum of:
(x) the fair market value of CCIC's Investments in such
Subsidiaries as of the date on which such Subsidiaries were
originally designated as Unrestricted Subsidiaries, and
(y) the amount of any Investments made in such Subsidiaries
subsequent to such designation (and treated as Restricted
Payments) by CCIC or any Restricted Subsidiary; provided that:
(1) in the event the Unrestricted Subsidiaries
designated as Restricted Subsidiaries are CTSH and its
Subsidiaries, the references in clauses (A) and (B) of this
clause (d) to fair market value of CCIC's Investments in
such Subsidiaries shall mean the amount by which the fair
market value of all such Investments exceeds 34.3% of the
fair market value of CTSH and its Subsidiaries as a whole;
and
(2) in the event the Unrestricted Subsidiaries
designated as Restricted Subsidiaries are CCA Investment
Corp. and its Subsidiaries, the references in clauses (A)
and (B) of this clause (d) to fair market value of CCIC's
Investments in such Subsidiaries shall mean the amount by
which the fair market value of all such Investments exceeds
$250.0 million; plus
(e) 50% of any dividends received by CCIC or a Restricted
Subsidiary after the date of the May 1999 Senior Discount Note
Indenture from an Unrestricted Subsidiary of CCIC, to the extent that
such dividends were not otherwise included in Consolidated Net Income
of CCIC for such period.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of that dividend, if at said date of declaration such payment
would have complied with the provisions of the indenture;
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(2) the making of any Investment or the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated
Indebtedness or Equity Interests of CCIC in exchange for, or out of the net
cash proceeds from the sale since the beginning of the fiscal quarter
during which the May 1999 Senior Discount Note Indenture was executed
(other than to a Subsidiary of CCIC) of Equity Interests of CCIC (other
than any Disqualified Stock); provided that the net cash proceeds are not
used to incur new Indebtedness pursuant to clause (11) of the second
paragraph of the covenant described below under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock"); and provided further
that, in each case, the amount of any net cash proceeds that are so
utilized will be excluded from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of CCIC to
the Holders of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of CCIC or any Restricted Subsidiary of CCIC
held by any member of CCIC's (or any of its Restricted Subsidiaries')
management pursuant to any management equity subscription agreement or
stock option agreement in effect as of the date of the May 1999 Senior
Discount Note Indenture; provided that the aggregate price paid for all of
the repurchased, redeemed, acquired or retired Equity Interests may not
exceed:
(a) $500,000 in any twelve-month period, and
(b) $5.0 million in the aggregate since the date of the August 1999
Senior Note Indenture; or
(6) the payment of scheduled dividends on CCIC's 12% Senior Exchangeable
Preferred Stock due 2010, whether paid in cash or in kind through the
issuance of additional shares of such preferred stock, all in accordance
with the certificate of designations governing such preferred stock as in
effect on the date of the May 1999 Senior Discount Note Indenture.
The board of directors of CCIC may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by CCIC
and its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated will be deemed to be Restricted Payments at the time
of the designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All of those outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of the Investments at the time of such designation. Such
designation will only be permitted if the Restricted Payment would be
permitted at the time and if the Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The board of directors of CCIC may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary if the
designation would not cause a Default.
The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued by CCIC or the applicable Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any property, assets or Investments required by this covenant
to be valued will be valued by the board of directors of CCIC whose resolution
with respect to the determination will be delivered to the trustee.
Incurrence of Indebtedness and Issuance of Preferred Stock
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and CCIC
will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided that
CCIC may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock
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and CCIC's Restricted Subsidiaries may incur Indebtedness (including Acquired
Debt) or issue preferred stock if, in each case, CCIC's Debt to Adjusted
Consolidated Cash Flow Ratio at the time of incurrence of the Indebtedness or
the issuance of the preferred stock, after giving pro forma effect to such
incurrence or issuance as of such date and to the use of proceeds from such
incurrence or issuance as if the same had occurred at the beginning of the most
recently ended four full fiscal quarter period of CCIC for which internal
financial statements are available, would have been no greater than 7.5 to 1.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness or the issuance of any of the following
items of Disqualified Stock or preferred stock (collectively, "Permitted
Debt"):
(1) the incurrence by CCIC or any of its Restricted Subsidiaries of
Indebtedness under Credit Facilities since the date of the August 1999
Senior Note Indenture in an aggregate principal amount (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of CCIC and its Restricted Subsidiaries thereunder) at
any one time outstanding not to exceed the product of $150,000 times the
number of Completed Towers on the date of such incurrence;
(2) the incurrence by CCIC and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by CCIC of the Indebtedness represented by the notes
issued on the date of the May 1999 Senior Discount Note Indenture;
(4) the issuance by CCIC of additional shares of its 12% Senior
Exchangeable Preferred Stock due 2010 solely for the purpose of paying
dividends thereon and the incurrence by CCIC of Indebtedness represented by
CCIC's 12% Senior Subordinated Exchange Debentures due 2010;
(5) the incurrence by CCIC or any of its Restricted Subsidiaries of
Indebtedness since the date of the August 1999 Senior Note Indenture
represented by Capital Lease Obligations, mortgage financings or purchase
money obligations, in each case incurred for the purpose of financing all
or any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of CCIC or such
Restricted Subsidiary, in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (5), not to exceed
$10.0 million at any one time outstanding;
(6) the incurrence by CCIC or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund
Indebtedness of CCIC or any of its Restricted Subsidiaries or Disqualified
Stock of CCIC (other than intercompany Indebtedness) that was permitted by
the indenture to be incurred under the first paragraph of this covenant or
clauses (2), (3), (4), (5) or this clause (6) of this paragraph;
(7) the incurrence by CCIC or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among CCIC and any of its Restricted
Subsidiaries; provided, however, that:
(i) if CCIC is the obligor on such Indebtedness, such Indebtedness
is expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the notes and that:
(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than
CCIC or a Restricted Subsidiary, and
(B) any sale or other transfer of any such Indebtedness to a
Person that is not either CCIC or a Restricted Subsidiary shall be
deemed, in each case, to constitute an incurrence of the
Indebtedness by CCIC or the Restricted Subsidiary, as the case may
be;
(8) the incurrence by CCIC or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of the indenture to be outstanding or currency
exchange risk;
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(9) the guarantee by CCIC or any of its Restricted Subsidiaries of
Indebtedness of CCIC or a Restricted Subsidiary of CCIC that was permitted
to be incurred by another provision of the indenture;
(10) the incurrence by CCIC or any of its Restricted Subsidiaries of
Acquired Debt in connection with the acquisition of assets or a new
Subsidiary and the incurrence by CCIC's Restricted Subsidiaries of
Indebtedness as a result of the designation of an Unrestricted Subsidiary
as a Restricted Subsidiary; provided that, in the case of any such
incurrence of Acquired Debt, such Acquired Debt was incurred by the prior
owner of such assets or such Restricted Subsidiary prior to such
acquisition by CCIC or one of its Restricted Subsidiaries and was not
incurred in connection with, or in contemplation of, the acquisition by
CCIC or one of its Restricted Subsidiaries; and provided further that, in
the case of any incurrence pursuant to this clause (10), as a result of
such acquisition by CCIC or one of its Restricted Subsidiaries, CCIC's Debt
to Adjusted Consolidated Cash Flow Ratio at the time of incurrence of such
Acquired Debt, after giving pro forma effect to such incurrence as if the
same had occurred at the beginning of the most recently ended four full
fiscal quarter period of CCIC for which internal financial statements are
available, would have been less than CCIC's Debt to Adjusted Consolidated
Cash Flow Ratio for the same period without giving pro forma effect to such
incurrence;
(11) the incurrence by CCIC or any of its Restricted Subsidiaries of
Indebtedness or Disqualified Stock not to exceed, at any one time
outstanding, the sum of:
(i) 2.0 times the aggregate net cash proceeds, plus
(ii) 1.0 times the fair market value of non-cash proceeds (evidenced
by a resolution of the board of directors of CCIC set forth in an
officers' certificate delivered to the trustee),
in each case, from the issuance and sale, other than to a Subsidiary,
of Equity Interests (other than Disqualified Stock) of CCIC since the
beginning of the fiscal quarter during which the May 1999 Senior
Discount Note Indenture was executed (less the amount of such proceeds
used to make Restricted Payments as provided in clause (3)(b) of the
first paragraph or clause (2) of the second paragraph of the covenant
described above under the caption "--Restricted Payments"); and
(12) the incurrence by CCIC or any of its Restricted Subsidiaries since
the date of the August 1999 Senior Note Indenture of additional
Indebtedness and/or the issuance by CCIC of Disqualified Stock in an
aggregate principal amount, accreted value or liquidation preference, as
applicable, at any time outstanding, not to exceed $25.0 million.
The indenture will also provide that:
(1) CCIC will not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of CCIC unless
such Indebtedness is also contractually subordinated in right of payment to
the notes on substantially identical terms; provided, however, that no
Indebtedness of CCIC will be deemed to be contractually subordinated in
right of payment to any other Indebtedness of CCIC solely by virtue of
being unsecured; and
(2) CCIC will not permit any of its Unrestricted Subsidiaries to incur
any Indebtedness other than Non-Recourse Debt.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Debt described in clauses (1) through (12) above or is entitled to
be incurred pursuant to the first paragraph of this covenant, CCIC will, in its
sole discretion, classify (or later reclassify in whole or in part) such item
of Indebtedness in any manner that complies with this covenant. Accrual of
interest, accretion or amortization of original issue discount and the payment
of interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant. Indebtedness under
Credit Facilities outstanding on the date of the indenture shall be deemed to
have been incurred on such date in reliance on the exception provided by clause
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(1) of the definition of Permitted Debt. The debt represented by the notes
issued on the date of the indenture shall be deemed to have been incurred on
such date in reliance on the exception provided by clause (11) of the
definition of Permitted Debt.
Liens
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions to CCIC or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits;
(2) pay any indebtedness owed to CCIC or any of its Restricted
Subsidiaries;
(3) make loans or advances to CCIC or any of its Restricted
Subsidiaries; or
(4) transfer any of its properties or assets to CCIC or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the indenture, and
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof; provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in the applicable series of
Existing Indebtedness as in effect on the date of the indenture;
(2) Indebtedness of any Restricted Subsidiary under any Credit Facility
that is permitted to be incurred pursuant to the covenant under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock"; provided that
such Credit Facility and Indebtedness contain only such encumbrances and
restrictions on such Restricted Subsidiary's ability to engage in the
activities set forth in clauses (1) through (4) of the preceding paragraph
as are, at the time such Credit Facility is entered into or amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced, ordinary and customary for a Credit Facility of that type as
determined in the good faith judgment of CCIC's board of directors (and
evidenced in a board resolution), which determination shall be conclusively
binding;
(3) encumbrances and restrictions applicable to any Unrestricted
Subsidiary, as the same are in effect as of the date on which the
Subsidiary becomes a Restricted Subsidiary, and as the same may be amended,
modified, restated, renewed, increased, supplemented, refunded, replaced or
refinanced; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings
are no more restrictive, taken as a whole, with respect to the dividend and
other payment restrictions than those contained in the applicable series of
Indebtedness of such Subsidiary as in effect on the date on which such
Subsidiary becomes a Restricted Subsidiary;
(4) any Indebtedness incurred in compliance with the covenant under the
heading "--Incurrence of Indebtedness and Issuance of Preferred Stock" or
any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in the
Indebtedness or agreement and the encumbrance or
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restriction is not materially more disadvantageous to the Holders of the
notes than is customary in comparable financings (as determined by CCIC)
and CCIC determines that any such encumbrance or restriction will not
materially affect CCIC's ability to pay interest or principal on the notes;
(5) the indenture governing the notes;
(6) applicable law;
(7) any instrument governing Indebtedness or Capital Stock of a Person
acquired by CCIC or any of its Restricted Subsidiaries as in effect at the
time that Person is acquired by CCIC (except to the extent the Indebtedness
was incurred in connection with or in contemplation of the acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, the Indebtedness was permitted by the terms of the indenture
to be incurred;
(8) customary non-assignment provisions in leases or licenses entered
into in the ordinary course of business;
(9) purchase money obligations for property acquired in the ordinary
course of business of the nature described in clause (5) in the second
paragraph of the covenant described above under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock" on the property so acquired;
(10) the provisions of agreements governing Indebtedness incurred
pursuant to clause (4) of the second paragraph of the covenant described
above under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock";
(11) any agreement for the sale of a Restricted Subsidiary that
restricts that Restricted Subsidiary pending its sale;
(12) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing the Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(13) Liens permitted to be incurred pursuant to the provisions of the
covenant described under the caption "Liens" that limit the right of the
debtor to transfer the assets subject to such Liens;
(14) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar
agreements; and
(15) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
CCIC may not:
(1) consolidate or merge with or into (whether or not CCIC is the
surviving corporation), or
(2) sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets in one or more related
transactions, to another corporation, Person or entity, unless:
(a) either:
(A) CCIC is the surviving corporation, or
(B) the entity or the Person formed by or surviving any such
consolidation or merger (if other than CCIC) or to which the sale,
assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation organized or existing under the
laws of the United States, any state thereof or the District of
Columbia;
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(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than CCIC) or the entity or Person
to which the sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of CCIC
under the notes and the indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the trustee;
(c) immediately after such transaction no Default exists; and
(d) except in the case of:
(A) a merger of CCIC with or into a Wholly Owned Restricted
Subsidiary of CCIC, and
(B) a merger entered into solely for the purpose of
reincorporating CCIC in another jurisdiction:
(x) in the case of a merger or consolidation in which CCIC
is the surviving corporation, CCIC's Debt to Adjusted
Consolidated Cash Flow Ratio at the time of the transaction,
after giving pro forma effect to the transaction as of such
date for balance sheet purposes and as if the transaction had
occurred at the beginning of the most recently ended four full
fiscal quarter period of CCIC for which internal financial
statements are available for income statement purposes, would
have been less than CCIC's Debt to Adjusted Consolidated Cash
Flow Ratio for the same period without giving pro forma effect
to such transaction, or
(y) in the case of any other such transaction, the Debt to
Adjusted Consolidated Cash Flow of the entity or Person formed
by or surviving any such consolidation or merger (if other than
CCIC), or to which the sale, assignment, transfer, lease,
conveyance or other disposition shall have been made, at the
time of the transaction, after giving pro forma effect to the
transaction as of such date for balance sheet purposes and as
if such transaction had occurred at the beginning of the most
recently ended four full fiscal quarter period of such entity
or Person for which internal financial statements are available
for income statement purposes, would have been less than CCIC's
Debt to Adjusted Consolidated Cash Flow Ratio for the same
period without giving pro forma effect to such transaction;
provided that for purposes of determining the Debt to Adjusted
Consolidated Cash Flow Ratio of any entity or Person for
purposes of this clause (y) the entity or Person will be
substituted for CCIC in the definition of Debt to Adjusted
Consolidated Cash Flow Ratio and the defined terms included
therein under the caption "--Certain Definitions".
Transactions with Affiliates
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
CCIC or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by CCIC or such Restricted Subsidiary
with an unrelated Person; and
(2) CCIC delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the board of directors of CCIC set forth
in an officers' certificate certifying that the Affiliate Transaction
complies with clause (1) above and that the Affiliate Transaction has
been approved by a majority of the disinterested members of the board of
directors of CCIC; and
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(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of the
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
Notwithstanding the foregoing, the following items will not be deemed to be
Affiliate Transactions:
(1) any employment arrangements with any executive officer of CCIC or a
Restricted Subsidiary that is entered into by CCIC or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with
compensation arrangements of similarly situated executive officers at
comparable companies engaged in Permitted Businesses;
(2) transactions between or among CCIC and/or its Restricted
Subsidiaries;
(3) payment of directors fees in an aggregate annual amount not to
exceed $25,000 per Person;
(4) Restricted Payments that are permitted by the provisions of the
indenture described above under the caption "--Restricted Payments";
(5) the issuance or sale of Equity Interests (other than Disqualified
Stock) of CCIC; and
(6) transactions pursuant to the provisions of the governance agreement
and the stockholders agreement, as the same were in effect on the date of
the indenture.
Sale and Leaseback Transactions
CCIC will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that CCIC or any of its
Restricted Subsidiaries may enter into a sale and leaseback transaction if:
(1) CCIC or such Restricted Subsidiary, as applicable, could have:
(a) incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction pursuant to the
Debt to Adjusted Consolidated Cash Flow Ratio test set forth in the
first paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock";
(b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "--Liens";
(2) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
board of directors) of the property that is the subject of the sale and
leaseback transaction; and
(3) the transfer of assets in the sale and leaseback transaction is
permitted by, and CCIC applies the proceeds of such transaction in
compliance with, the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales."
Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries
CCIC:
(1) will not, and will not permit any of its Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests
in any Restricted Subsidiary of CCIC to any Person (other than CCIC or a
Wholly Owned Restricted Subsidiary of CCIC); and
(2) will not permit any of its Restricted Subsidiaries to issue any of
its Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to CCIC
or a Wholly Owned Restricted Subsidiary of CCIC, unless, in each such case:
(a) as a result of such transfer, conveyance, sale, lease or other
disposition or issuance such Restricted Subsidiary no longer
constitutes a Subsidiary; and
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(b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition or issuance are applied in accordance with
the covenant described above under the caption "--Repurchase at the
Option of Holders--Asset Sales."
Notwithstanding the foregoing, the issuance or sale of shares of Capital Stock
of any Restricted Subsidiary of CCIC will not violate the provisions of the
immediately preceding sentence if such shares are issued or sold in connection
with:
(x) the formation or capitalization of a Restricted Subsidiary, or
(y) a single transaction or a series of substantially contemporaneous
transactions whereby such Restricted Subsidiary becomes a Restricted
Subsidiary of CCIC by reason of the acquisition of securities or assets
from another Person.
Limitation on Issuances of Guarantees of Indebtedness
CCIC will not permit any Restricted Subsidiary, directly or indirectly, to
Guarantee or pledge any assets to secure the payment of any other Indebtedness
of CCIC unless such Subsidiary simultaneously executes and delivers a
supplemental indenture to the indenture governing the notes providing for the
Guarantee of the payment of the notes by such Subsidiary, which Guarantee shall
be senior to or pari passu with such Subsidiary's Guarantee of or pledge to
secure such other Indebtedness. Notwithstanding the foregoing, any Guarantee by
a Subsidiary of the notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person other than a Subsidiary of CCIC, of all of
the CCIC's stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions of the indenture governing the notes. The form of a
Guarantee will be attached as an exhibit to the indenture.
Business Activities
CCIC will not, and will not permit any Subsidiary to, engage in any business
other than Permitted Businesses, except to the extent as would not be material
to CCIC and its Subsidiaries taken as a whole.
Reports
Whether or not required by the Securities and Exchange Commission, so long
as any notes are outstanding, CCIC will furnish to the Holders of notes:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
CCIC were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of CCIC and its
consolidated Subsidiaries showing in reasonable detail in the footnotes to
the financial statements and in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," in each case to the extent
not prohibited by the SEC's rules and regulations:
(a) the financial condition and results of operations of CCIC and
its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of CCIC; and
(b) the Tower Cash Flow for the most recently completed fiscal
quarter and the Adjusted Consolidated Cash Flow for the most recently
completed four-quarter period) and, with respect to the annual
information only, a report thereon by CCIC's certified independent
accountants; and
(2) all current reports that would be required to be filed with the SEC
on Form 8-K if CCIC were required to file such reports, in each case within
the time periods specified in the CCIC's rules and regulations.
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In addition, whether or not required by the rules and regulations of the
SEC, CCIC will file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations, unless the SEC will not accept such a filing, and make such
information available to securities analysts and prospective investors upon
request.
Events of Default and Remedies
Each of the following constitutes an Event of Default under the indenture:
(1) default for 30 days in the payment when due of interest on the
notes;
(2) default in payment when due of the principal of or premium, if any,
on the notes;
(3) failure by CCIC or any of its Subsidiaries to comply with the
provisions described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" or failure by CCIC to consummate a Change
of Control Offer or Asset Sale Offer in accordance with the provisions of
the indenture applicable to the offers;
(4) failure by CCIC or any of its Subsidiaries for 30 days after notice
to comply with any of its other agreements in the indenture or the notes;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by CCIC or any of its Significant
Subsidiaries, or the payment of which is guaranteed by CCIC or any of its
Significant Subsidiaries, whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture, which default:
(a) is caused by a failure to pay principal of or premium, if any,
or interest on the Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of the default (a
"Payment Default"); or
(b) results in the acceleration of the Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $20.0 million or
more;
(6) failure by CCIC or any of its Significant Subsidiaries to pay final
judgments aggregating in excess of $20.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; or
(7) certain events of bankruptcy or insolvency described in the
indenture with respect to CCIC or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the trustee under the
indenture or the Holders of at least 25% in principal amount at maturity of the
then outstanding notes may declare all the notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to CCIC,
all outstanding notes will become due and payable without further action or
notice. Holders of the notes may not enforce the indenture or the notes except
as provided in the indenture. Subject to certain limitations, Holders of a
majority in principal amount at maturity of the then outstanding notes may
direct the trustee under the indenture in its exercise of any trust or power.
The Holders of a majority in aggregate principal amount at maturity of the
notes then outstanding by notice to the trustee under the indenture may on
behalf of the Holders of all notes waive any existing Default or Event of
Default and its consequences under the indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the notes.
The indenture provides that if a Default occurs and is continuing and is
known to the trustee, the trustee must mail to each Holder of the notes notice
of the Default within 90 days after it occurs. Except in the case of
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a Default in the payment of principal of or interest on any note, the trustee
may withhold notice if and so long as a committee of its trust officers
determines that withholding notice is not opposed to the interest of the
Holders of the notes. In addition, CCIC is required to deliver to the trustee,
within 90 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. CCIC is also required to deliver to the trustee, promptly after
the occurrence thereof, written notice of any event that would constitute a
Default, the status thereof and what action CCIC is taking or proposes to take
in respect thereof.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of CCIC, as
such, shall have any liability for any obligations of CCIC under the notes, the
indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
CCIC may, at its option and at any time, elect to have all of its
obligations discharged with respect to the notes outstanding ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, and interest on the notes
when such payments are due from the trust referred to below;
(2) CCIC's obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee,
and CCIC's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, CCIC may, at its option and at any time, elect to have the
obligations of CCIC released with respect to certain covenants that are
described in the indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events described under "--Events of Default and Remedies", but not
including non-payment and bankruptcy, receivership, rehabilitation and
insolvency events with respect to CCIC, will no longer constitute an Event of
Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) CCIC must irrevocably deposit with the trustee, in trust, for the
benefit of the Holders of the notes, cash in United States Dollars, non-
callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the outstanding notes on the stated maturity or on the
redemption date, as the case may be, and CCIC must specify whether the
notes are being defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, CCIC shall have delivered to the
trustee under the indenture an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that:
(A) CCIC has received from, or there has been published by, the
Internal Revenue Service a ruling, or;
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(B) since the date of the indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that,
and based thereon such opinion of counsel shall confirm that, the
Holders of the outstanding notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, CCIC shall have delivered to the
trustee under the indenture an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that the Holders of the
outstanding notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either:
(a) on the date of such deposit, other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit, or
(b) insofar as Events of Default from bankruptcy or insolvency
events with respect to CCIC are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument, other than the indenture, to which CCIC or any of
its Restricted Subsidiaries is a party or by which CCIC or any of its
Restricted Subsidiaries is bound;
(6) CCIC must have delivered to the trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) CCIC must deliver to the trustee under the indenture an officers'
certificate stating that the deposit was not made by CCIC with the intent
of preferring the Holders of the notes over the other creditors of CCIC
with the intent of defeating, hindering, delaying or defrauding creditors
of CCIC or others; and
(8) CCIC must deliver to the trustee under the indenture an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Amendment, Supplement and Waiver
Except as described in the two paragraphs below, the Holders of a majority
in principal amount at maturity of the notes outstanding can, with respect to
the notes:
(1) consent to any amendment or supplement to the indenture or the
notes; and
(2) waive any existing default under, or the compliance with any
provisions of, the indenture or the notes.
Consents and waivers obtained in connection with a purchase of, or tender
offer or exchange offer for, the notes shall be included for purposes of the
previous sentence.
Without the consent of each Holder affected, an amendment or waiver with
respect to any notes held by a non-consenting Holder may not :
(1) reduce the principal amount of notes whose Holders must consent to
an amendment, supplement or waiver;
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(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption, but not any required
repurchase in connection with an Asset Sale Offer or Change of Control
Offer, of the notes;
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the notes, excluding a rescission of
acceleration of the notes by the Holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment default
that resulted from such acceleration;
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of Holders of notes to receive
payments of principal of or premium, if any, or interest on the notes;
(7) waive a redemption payment, but not any payment upon a required
repurchase in connection with an Asset Sale Offer or Change of Control
Offer, with respect to any note;
(8) except as provided under the caption "--Legal Defeasance and
Covenant Defeasance" or in accordance with the terms of any Subsidiary
Guarantee, release a Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee or make any change in a Subsidiary Guarantee that
would adversely affect the Holders of the notes; or
(9) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of notes,
CCIC and the trustee may amend or supplement the indenture or the notes to:
(1) cure any ambiguity, defect or inconsistency,
(2) provide for uncertificated notes in addition to or in place of
certificated notes,
(3) provide for the assumption of CCIC's obligations to Holders of notes
in the case of a merger or consolidation,
(4) make any change that would provide any additional rights or benefits
to the Holders of notes or that does not adversely affect the legal rights
under the indenture of any such Holder, or
(5) comply with requirements of SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act.
Concerning the Trustee
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of CCIC, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue or resign.
The Holders of a majority in principal amount at maturity of the notes then
outstanding will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee
under the indenture, subject to certain exceptions. The indenture provides that
if an Event of Default occurs and is not cured, the trustee will be required,
in the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to these provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any Holder of notes, unless that Holder shall have offered to
the trustee security and indemnity satisfactory to it against any loss,
liability or expense.
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Additional Information
Anyone who receives this prospectus may obtain a copy of the indenture
without charge by writing to Crown Castle International Corp., 510 Bering
Drive, Suite 500, Houston, Texas 77057, Attention: Chief Financial Officer.
Certain Definitions
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Adjusted Consolidated Cash Flow" means, as of any date of determination,
the sum of:
(1) the Consolidated Cash Flow of CCIC for the four most recent full
fiscal quarters ending immediately prior to such date for which internal
financial statements are available, less CCIC's Tower Cash Flow for such
four-quarter period; plus
(2) the product of four times CCIC's Tower Cash Flow for the most recent
fiscal quarter for which internal financial statements are available.
For purposes of making the computation referred to above:
(1) acquisitions that have been made by CCIC or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period or subsequent
to such reference period and on or prior to the calculation date shall be
deemed to have occurred on the first day of the reference period and
Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (2) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the calculation date, shall be excluded; and
(3) the corporate development expense of CCIC and its Restricted
Subsidiaries calculated in a manner consistent with the audited financial
statements of CCIC included in this prospectus shall be added to
Consolidated Cash Flow to the extent it was included in computing
Consolidated Net Income.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback);
provided that the sale, lease, conveyance or other disposition
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of all or substantially all of the assets of CCIC and its Subsidiaries
taken as a whole will be governed by the provisions of the indenture
described above under the caption "--Repurchase at the Option of Holders--
Change of Control" and/or the provisions described above under the caption
"--Repurchase at the Option of Holders--Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issue or sale by CCIC or any of its Restricted Subsidiaries of
Equity Interests of any of CCIC's Subsidiaries (other than directors'
qualifying shares or shares required by applicable law to be held by a
Person other than CCIC or a Restricted Subsidiary), in the case of either
clause (1) or (2), whether in a single transaction or a series of related
transactions:
(a) that have a fair market value in excess of $1.0 million; or
(b) for net proceeds in excess of $1.0 million.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets by CCIC to a Restricted Subsidiary or by a
Restricted Subsidiary to CCIC or to another Restricted Subsidiary;
(2) an issuance of Equity Interests by a Subsidiary to CCIC or to
another Restricted Subsidiary;
(3) a transfer or issuance of Equity Interests of an Unrestricted
Subsidiary to an Unrestricted Subsidiary; provided, however, that such
transfer or issuance does not result in a decrease in the percentage of
ownership of the voting securities of such transferee Unrestricted
Subsidiary that are collectively held by CCIC and its Subsidiaries;
(4) a Restricted Payment that is permitted by the covenant described
above under the caption "--Certain Covenants--Restricted Payments";
(5) grants of leases or licenses in the ordinary course of business; and
(6) disposals of Cash Equivalents.
"August 1999 Senior Note Indenture" means that certain indenture dated as of
August 3, 1999 between the Company and The United States Trust Company of New
York, as Trustee, governing the Company's 9 1/2% Senior Notes due 2011.
"Asset Sale Offer" has the meaning set forth above under the caption
"Repurchase at the Option of Holders--Asset Sales."
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
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"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government, or any agency or instrumentality thereof
(provided that the full faith and credit of the United States, is pledged
in support thereof) having maturities of not more than six months from the
date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities
of six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits, in
each case with any lender party to the Senior Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1)-(5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of CCIC and its
Restricted Subsidiaries, taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act) other than a Principal or a
Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of
CCIC;
(3) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly
or indirectly, of more than 50% of the Voting Stock of CCIC (measured by
voting power rather than number of shares); provided that transfers of
Equity Interests in CCIC between or among the beneficial owners of CCIC's
Equity Interests and/or Equity Interests in CTSH, in each case as of the
date of the indenture, will not be deemed to cause a Change of Control
under this clause (3) so long as no single Person together with its
Affiliates acquires a beneficial interest in more of the Voting Stock of
CCIC than is at the time collectively beneficially owned by the Principals
and their Related Parties;
(4) the first day on which a majority of the members of the board of
directors of CCIC are not Continuing Directors; or
(5) CCIC consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, CCIC, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of
CCIC is converted into or exchanged for cash, securities or other property,
other than any such transaction where:
(a) the Voting Stock of CCIC outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person
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constituting a majority of the outstanding shares of such Voting Stock
of such surviving or transferee Person (immediately after giving effect
to such issuance); or
(b) the Principals and their Related Parties own a majority of such
outstanding shares after such transaction.
"Change of Control Offer" has the meaning set forth above under the caption
"Repurchase at the Option of Holders--Change of Control."
"Change of Control Payment" has the meaning set forth above under the
caption "Repurchase at the Option of Holders--Change of Control."
"Change of Control Payment Date" has the meaning set forth above under the
caption "Repurchase at the Option of Holders--Change of Control."
"Completed Tower" means any wireless transmission tower owned or managed by
CCIC or any of its Restricted Subsidiaries that, as of any date of
determination:
(1) has at least one wireless communications or broadcast tenant that
has executed a definitive lease with CCIC or any of its Restricted
Subsidiaries, which lease is producing revenue with respect to the tower as
of the date of determination; and
(2) has capacity for at least two tenants in addition to the tenant
referred to in clause (1) of this definition.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period; plus
(1) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income;
plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letters of
credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income; plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; minus
(4) non-cash items increasing such Consolidated Net Income for such
period (excluding any items that were accrued in the ordinary course of
business),
in each case on a consolidated basis and determined in accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of any date
of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries; plus
(2) the total amount of Indebtedness of any other Person, to the extent
that such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries; plus
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(3) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period determined in accordance with GAAP, whether
paid or accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net payments, if any, pursuant to Hedging Obligations); plus
(2) all preferred stock dividends paid or accrued in respect of CCIC's
and its Restricted Subsidiaries' preferred stock to Persons other than CCIC
or a Wholly Owned Restricted Subsidiary of CCIC other than preferred stock
dividends paid by CCIC in shares of preferred stock that is not
Disqualified Stock.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(1) the Net Income (but not loss) of any Person other than CCIC that is
not a Restricted Subsidiary or that is accounted for by the equity method
of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a
Restricted Subsidiary thereof;
(2) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(3) the cumulative effect of a change in accounting principles shall be
excluded; and
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall
be excluded whether or not distributed to CCIC or one of its Restricted
Subsidiaries.
"Consolidated Tangible Assets" means, with respect to CCIC, the total
consolidated assets of CCIC and its Restricted Subsidiaries, less the total
intangible assets of CCIC and its Restricted Subsidiaries, as shown on the
most recent internal consolidated balance sheet of CCIC and such Restricted
Subsidiaries calculated on a consolidated basis in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of CCIC who:
(1) was a member of such board of directors on the date of the August
1999 Senior Note Indenture;
(2) was nominated for election or elected to such board of directors
with the approval of a majority of the Continuing Directors who were
members of such board of directors at the time of such nomination or
election; or
(3) is a designee of a Principal or was nominated by a Principal.
"Covenant Defeasance" has the meaning set forth above under the caption
"Legal Defeasance and Covenant Defeasance."
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Senior Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables
to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
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"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date of
determination, the ratio of:
(1) the Consolidated Indebtedness of CCIC as of such date to
(2) the Adjusted Consolidated Cash Flow of CCIC as of such date.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the notes mature; provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require CCIC to repurchase such Capital Stock upon
the occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that CCIC may
not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described
above the caption "--Certain Covenants--Restricted Payments."
"Eligible Indebtedness" means any Indebtedness other than:
(1) Indebtedness in the form of, or represented by, bonds or other
securities or any guarantee thereof; and
(2) Indebtedness that is, or may be, quoted, listed or purchased and
sold on any stock exchange, automated trading system or over-the-counter or
other securities market (including, without prejudice to the generality of
the foregoing, the market for securities eligible for resale pursuant to
Rule 144A under the Securities Act).
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Excess Proceeds" has the meaning set forth above under the caption
"Repurchase at the Option of Holders--Asset Sales."
"Existing Indebtedness" means Indebtedness of CCIC and its Subsidiaries
(other than Indebtedness under the Senior Credit Facility) in existence on
August 3, 1999, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
S-67
<PAGE>
"Holder" means a Person in whose name a note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person whether
or not such Indebtedness is assumed by such Person (the amount of such
Indebtedness as of any date being deemed to be the lesser of the value of such
property or assets as of such date or the principal amount of such
Indebtedness of such other Person so secured) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If CCIC or any Restricted Subsidiary of CCIC sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of CCIC or a
Restricted Subsidiary of CCIC issues any of its Equity Interests such that, in
each case, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of CCIC, CCIC shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"Legal Defeasance" has the meaning set forth above under the caption "Legal
Defeasance and Covenant Defeasance."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"May 1999 Senior Discount Note Indenture" means that certain indenture,
dated as of May 15, 1999, between CCIC and the United States Trust Company of
New York, as trustee, governing CCIC's 10 3/8% Senior Discount Notes due 2011.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with:
(a) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions); or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
S-68
<PAGE>
(2) any extraordinary gain or loss, together with any related provision
for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by CCIC or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-
cash consideration received in any Asset Sale), net of:
(1) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof;
(2) taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements);
(3) amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under a Credit Facility) secured by a Lien on the
asset or assets that were the subject of such Asset Sale;
(4) all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries as a result of such Asset Sale;
(5) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by CCIC or any
Restricted Subsidiary after such Asset Sale; and
(6) without duplication, any reserves that CCIC's board of directors
determines in good faith should be made in respect of the sale price of
such asset or assets for post closing adjustments;
provided that in the case of any reversal of any reserve referred to in clause
(5) or (6) above, the amount so reversed shall be deemed to be Net Proceeds
from an Asset Sale as of the date of such reversal.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither CCIC nor any of its Restricted Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness);
(b) is directly or indirectly liable (as a guarantor or otherwise);
or
(c) constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of CCIC or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of CCIC or any of its
Restricted Subsidiaries (except that this clause (3) will not apply to any
indebtedness incurred by CTSH and its Subsidiaries prior to the date CTSH
became a Subsidiary).
"Payment Default" has the meaning set forth above under the caption "Events
of Default and Remedies."
"Permitted Business" means any business conducted by CCIC, its Restricted
Subsidiaries or CTSH and its Subsidiaries on the date of the indenture and any
other business related, ancillary or complementary to any such business.
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<PAGE>
"Permitted Investment" means:
(1) any Investment in CCIC or in a Restricted Subsidiary of CCIC;
(2) any Investment in Cash Equivalents;
(3) any Investment by CCIC or any Restricted Subsidiary of CCIC in a
Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of CCIC; or
(b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, CCIC or a Restricted Subsidiary of CCIC;
(4) any Restricted Investment made as a result of the receipt of non-
cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of CCIC;
(6) receivables created in the ordinary course of business;
(7) loans or advances to employees made in the ordinary course of
business since the date of the August 1999 Senior Note Indenture not to
exceed $2.0 million at any one time outstanding;
(8) securities and other assets received in settlement of trade debts or
other claims arising in the ordinary course of business;
(9) purchase of additional Equity Interests in CTSH for cash pursuant to
the governance agreement as the same is in effect on the date of the May
1999 Senior Discount Note Indenture for aggregate cash consideration not to
exceed $20.0 million since the beginning of the quarter during which the
May 1999 Senior Discount Note Indenture was executed;
(10) Investments since the date of the August 1999 Senior Note Indenture
of up to an aggregate of $100.0 million (each such Investment being
measured as of the date made and without giving effect to subsequent
changes in value); and
(11) other Investments in Permitted Businesses since the date of the
August 1999 Senior Note Indenture not to exceed an amount equal to $10.0
million plus 10% of CCIC's Consolidated Tangible Assets at any one time
outstanding (each such Investment being measured as of the date made and
without giving effect to subsequent changes in value).
"Permitted Liens" means:
(1) Liens securing Eligible Indebtedness of CCIC under one or more
Credit Facilities that was permitted by the terms of the indenture to be
incurred;
(2) Liens securing any Indebtedness of any of CCIC's Restricted
Subsidiaries that was permitted by the terms of the indenture to be
incurred;
(3) Liens in favor of CCIC;
(4) Liens existing on the date of the August 1999 Senior Note Indenture;
(5) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(6) Liens securing Indebtedness permitted to be incurred under clause
(5) of the second paragraph of the covenant described above under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock"; and
S-70
<PAGE>
(7) Liens incurred in the ordinary course of business of CCIC or any
Restricted Subsidiary of CCIC since the date of the August 1999 Senior Note
Indenture with respect to obligations that do not exceed $5.0 million at
any one time outstanding and that:
(a) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than trade credit in the
ordinary course of business); and
(b) do not in the aggregate materially detract from the value of the
property or materially impair the use thereof in the operation of
business by CCIC or such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of CCIC or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of CCIC or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount (or initial accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount of (or accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of expenses and prepayment premiums incurred in
connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to,
the notes on terms at least as favorable to the holders of notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by CCIC or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principals" means Berkshire Fund III, Limited Partnership; Berkshire Fund
IV, Limited Partnership; Berkshire Investors LLC; Berkshire Partners LLC;
Centenial Fund IV, L.P.; Centenial Fund V, L.P.; Centenial Entrepreneurs Fund
V, L.P.; Nassau Capital Partners II, L.P.; and NAS Partners I, L.L.C. and any
Related Party of the foregoing.
"Public Equity Offering" means an underwritten primary public offering of
common stock of CCIC pursuant to an effective registration statement under the
Securities Act.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary of such
Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, members, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist
of such Principal and/or such other Persons referred to in the immediately
preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
S-71
<PAGE>
"Senior Credit Facility" means that certain Credit Agreement, dated as of
March 15, 2000, by and among The Chase Manhattan Bank, Key Corporate Capital,
Inc. and The Bank of Nova Scotia as agents for the several lenders and Crown
Castle Operating Company and CCIC, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced
or refinanced from time to time.
"Significant Subsidiary" means, with respect to any Person, any Restricted
Subsidiary of such Person that would be a "significant subsidiary" of such
Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof,
except that all references to "10 percent" in Rule 1-02(w)(1), (2) and (3)
shall mean "5 percent" and that all Unrestricted Subsidiaries of CCIC shall be
excluded from all calculations under Rule 1-02(w).
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Strategic Equity Investment" means a cash contribution to the common
equity capital of CCIC or a purchase from CCIC of common Equity Interests
(other than Disqualified Stock), in either case by or from a Strategic Equity
Investor and for aggregate cash consideration of at least $50.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted Business
whose Total Equity Market Capitalization exceeds $1.0 billion.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership:
(a) the sole general partner or the managing general partner of which
is such Person or a Subsidiary of such Person; or
(b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Total Equity Market Capitalization" of any Person means, as of any day of
determination, the sum of:
(1) the product of:
(a) the aggregate number of outstanding primary shares of common
stock of such Person on such day (which shall not include any options or
warrants on, or securities convertible or exchangeable into, shares of
common stock of such person); multiplied by
(b) the average closing price of such common stock listed on a
national securities exchange or the Nasdaq National Market System over
the 20 consecutive business days immediately preceding such day; plus
(2) the liquidation value of any outstanding shares of preferred stock
of such Person on such day.
"Tower Asset Exchange" means any transaction in which CCIC or one of its
Restricted Subsidiaries exchanges assets for Tower Assets and/or cash or Cash
Equivalents where the fair market value (evidenced by a resolution of the
board of directors set forth in an officers' certificate delivered to the
trustee) of the Tower
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Assets and cash or Cash Equivalents received by CCIC and its Restricted
Subsidiaries in such exchange is at least equal to the fair market value of the
assets disposed of in such exchange.
"Tower Assets" means wireless transmission towers and related assets that
are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of CCIC
and its Restricted Subsidiaries for such period that is directly attributable
to site rental revenue or license fees paid to lease or sublease space on
communication sites owned or leased by CCIC, all determined on a consolidated
basis and in accordance with GAAP. Tower Cash Flow will not include revenue or
expenses attributable to non-site rental services provided by CCIC or any of
its Restricted Subsidiaries to lessees of communication sites or revenues
derived from the sale of assets.
"Unrestricted Subsidiary" means any Subsidiary of CCIC that is designated by
the board of directors as an Unrestricted Subsidiary pursuant to a board
resolution; but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with CCIC or any Restricted Subsidiary of CCIC unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to CCIC or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of CCIC;
(3) is a Person with respect to which neither CCIC nor any of its
Restricted Subsidiaries has any direct or indirect obligation:
(a) to subscribe for additional Equity Interests; or
(b) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of CCIC or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of CCIC or any of its Restricted Subsidiaries
and has at least one executive officer that is not a director or executive
officer of CCIC or any of its Restricted Subsidiaries.
Any such designation by the board of directors shall be evidenced to the
trustee by filing with the trustee a certified copy of the board resolution
giving effect to such designation and an officers' certificate certifying that
such designation complied with the foregoing conditions and was permitted by
the covenant described above under the caption "--Certain Covenants--Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of that Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of CCIC as of such date (and, if such Indebtedness is not permitted
to be incurred as of such date under the covenant described above under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock," CCIC shall be in default of such covenant). The board of
directors of CCIC may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that the designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of CCIC of any
outstanding Indebtedness of such Unrestricted Subsidiary and the designation
shall only be permitted if:
(1) such Indebtedness is permitted under the covenant described above
under the caption "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference
period; and
(2) no Default would occur or be in existence following such
designation.
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<PAGE>
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof; by
(b) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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<PAGE>
UNDERWRITING
CCIC and the underwriters for the offering named below have entered into an
underwriting agreement with respect to the notes. Subject to certain
conditions, each underwriter has severally agreed to purchase the amount of
notes indicated in the following table.
<TABLE>
<CAPTION>
Principal
Amount of
Underwriters Senior Notes
------------ ---------------
<S> <C>
Goldman, Sachs & Co. .......................................... $
Chase Securities Inc. .........................................
Lehman Brothers Inc. ..........................................
Credit Suisse First Boston Corporation.........................
Morgan Stanley & Co. Incorporated..............................
CIBC Oppenheimer Corp. ........................................
BNY Capital Markets, Inc. .....................................
Scotia Capital Markets (USA) Inc. .............................
McDonald Investments Inc., A KeyCorp Company...................
PNC Capital Markets, Inc. .....................................
Deutsche Bank Securities Inc...................................
---------------
Total........................................................ $250,000,000.00
===============
</TABLE>
The notes are a new issue of securities with no established trading market.
CCIC has been advised by the underwriters that the underwriters intend to make
a market in the notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the notes.
In connection with the offerings, the underwriters may purchase and sell
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
notes than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the notes while the
offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased notes sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the notes. As a result, the price of the notes may
be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the underwriters at
any time these transactions may be effected in the over-the-counter market or
otherwise.
Also, because the net proceeds to CCIC from the offering will be paid to
affiliates of Goldman, Sachs & Co., Chase Securities Inc. and Lehman Brothers
Inc. to repay the term loans, the offerings are being conducted in accordance
with Rule 2720 of the NASD. That rule requires that the initial public offering
price can be no higher than that recommended by a "qualified independent
underwriter", as defined by the NASD. Credit Suisse First Boston Corporation
has served in this capacity and performed due diligence investigations and
reviewed and participated in the preparation of the registration statement of
which this prospectus forms a part. Credit Suisse First Boston Corporation has
not received any additional compensation for such role.
CCIC estimates that CCIC's share of the total expenses of the offerings,
excluding underwriting discounts and commissions, will be approximately
$2,000,000.
The underwriters have performed certain investment banking and advisory
services for CCIC from time to time for which they have received customary fees
and expenses. Chase Securities Inc. is an affiliate of The
S-75
<PAGE>
Chase Manhattan Bank, which is agent bank and a lender under the 2000 Credit
Facility. The underwriters may, from time to time, engage in transactions with
and perform services for CCIC in the ordinary course of its business.
CCIC has agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
VALIDITY OF SECURITIES
The validity of the securities offered hereby will be passed upon for us by
Cravath, Swaine & Moore, New York, New York. Latham & Watkins, New York, New
York, has acted as counsel for the underwriters.
S-76
<PAGE>
PROSPECTUS
CROWN CASTLE INTERNATIONAL CORP.
From time to time, we may sell any of the following securities:
--DEBT SECURITIES
--PREFERRED STOCK
--COMMON STOCK
--WARRANTS
We will provide the specific terms of these securities in one or more
supplements to this prospectus. You should read this prospectus and any
prospectus supplement carefully before you invest.
Our common stock is traded over-the-counter on The Nasdaq Stock Market's
National Market under the trading symbol "TWRS." The applicable prospectus
supplement will contain information, where applicable, as to any other listing
(if any) on The Nasdaq Stock Market's National Market or any securities
exchange of the securities covered by the prospectus supplement.
In addition, up to 15,000,000 shares of common stock being registered may be
offered by certain selling shareholders. For additional information on the
methods of sale, you should refer to the section entitled "Plan of
Distribution."
The securities may be sold directly by us or, in case of the common stock,
may be sold by selling shareholders, to investors, through agents designated
from time to time or to or through underwriters or dealers. See "Plan of
Distribution." If any underwriters are involved in the sale of any securities
in respect of which this prospectus is being delivered, the names of such
underwriters and any applicable commissions or discounts will be set forth in a
prospectus supplement. The net proceeds we expect to receive from such sale
also will be set forth in a prospectus supplement. We would not receive any of
the proceeds from the sale of common stock by selling shareholders.
This prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under this
prospectus or determined if this prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
The date of this prospectus is July 30, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ABOUT THIS PROSPECTUS...................................................... 1
WHERE YOU CAN FIND MORE INFORMATION........................................ 1
INCORPORATION OF INFORMATION WE FILE WITH THE SEC.......................... 1
FORWARD-LOOKING STATEMENTS................................................. 2
THE COMPANY................................................................ 3
RATIO OF EARNINGS TO FIXED CHARGES......................................... 4
USE OF PROCEEDS............................................................ 4
DESCRIPTION OF DEBT SECURITIES............................................. 5
DESCRIPTION OF CAPITAL STOCK............................................... 15
DESCRIPTION OF WARRANTS.................................................... 23
SELLING SHAREHOLDERS....................................................... 24
PLAN OF DISTRIBUTION....................................................... 24
VALIDITY OF SECURITIES..................................................... 25
EXPERTS.................................................................... 25
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may,
over the next two years, sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$650,000,000.
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described
immediately below under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at the SEC's following public reference
facilities:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-
2511
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further
information on the operations of the public reference facilities. Our SEC
filings are also available at the offices of The Nasdaq Stock Market at 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file with
them, which means:
--incorporated documents are considered part of this prospectus;
--we can disclose important information to you by referring you to those
documents; and
--information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed with
the SEC under the Securities Exchange Act of 1934:
(1) Our Annual Report on Form 10-K for the year ended on December 31, 1998.
(2) Our Quarterly Report on Form 10-Q for the three months ended March 31,
1999.
(3) Our Current Report on Form 8-K dated March 8, 1999.
(4) Our Current Report on Form 8-K dated March 15, 1999.
(5) Our Current Report on Form 8-K dated March 31, 1999.
(6) Our Current Report on Form 8-K dated June 9, 1999.
(7) Our Current Report on Form 8-K dated July 12, 1999.
(8) The description of our common stock contained in the Registration
Statement on Form S-1, as amended (File No. 333-74553), filed on March
16, 1999.
<PAGE>
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of the initial filing of the registration
statement and prior to the time we sell all of the securities offered by this
prospectus:
--Reports filed under Section 13(a) and (c) of the Exchange Act;
--Definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent shareholders meeting;
and
--Any reports filed under Section 15(d) of the Exchange Act.
You can obtain any of the filings incorporated by reference in this document
through us, or from the SEC through the SEC's web site or at the addresses
listed above. Documents incorporated by reference are available from us without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this prospectus. You
can obtain documents incorporated by reference in this prospectus by requesting
them in writing or by telephone from us at the following address:
Crown Castle International Corp.
510 Bering Drive
Suite 500
Houston, TX 77057
Attention: Kathy Broussard, Corporate Secretary
Telephone: (713) 570-3100
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or state other
forward-looking statements, as this term is defined in the Private Securities
Litigation Reform Act. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of
identifying them. These forward-looking statements reflect the current views of
our management; however, various risks, uncertainties and contingencies could
cause our actual results, performance or achievements to differ materially from
those expressed in, or implied by, these statements, including the following:
. the success or failure of our efforts to implement our business
strategy
. the other factors discussed below under the heading "Risk Factors"
and elsewhere in this prospectus
We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. For a
discussion of important risks of an investment in our securities, including
factors that could cause actual results to differ materially from results
referred to in the forward-looking statements, see "Risk Factors." You should
carefully consider the information set forth under the caption "Risk Factors."
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in or incorporated by reference in this prospectus might not
occur.
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THE COMPANY
We are a leading owner and operator of towers and transmission networks for
wireless communications and broadcast companies. Our customers currently
include many of the world's major wireless communications and broadcast
companies, including Bell Atlantic Mobile, BellSouth Mobility, AT&T Wireless,
Nextel and the British Broadcasting Corporation.
Our strategy is to use our leading domestic and international position to
capture the growing opportunities to consolidate ownership of existing towers
and to build new towers created by:
. the transfer to third parties, or outsourcing, of tower ownership and
management by major wireless carriers;
. the need for existing wireless carriers to expand coverage and
improve capacity;
. the additional demand for towers created by new entrants into the
wireless communications industry;
. the privatization of state-run broadcast transmission networks; and
. the introduction of new digital broadcast transmission technology and
wireless technologies.
Our two main businesses are leasing antenna space on wireless and broadcast
towers that can accommodate multiple tenants and operating networks that
transmit analog and digital broadcast signals, or broadcast transmission
networks. We also provide related services to our customers. We believe that
our full service capabilities are a key competitive advantage in forming
strategic partnerships to acquire large concentrations of towers, or tower
clusters, and in winning contracts for new tower construction.
Our primary business in the United States is the leasing of antenna space to
wireless carriers. Our primary business in the United Kingdom is the operation
of television and radio broadcast transmission networks. We also lease antenna
space to wireless operators in the United Kingdom on the towers we acquired
from the BBC and from various wireless carriers.
Our principal executive offices are located at 510 Bering Drive, Suite 500,
Houston, Texas 77057, and our telephone number is (713) 570-3000.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges, the deficiency of our consolidated earnings to cover fixed charges,
our consolidated ratio of earnings to combined fixed charges and preferred
stock dividends and the deficiency of our consolidated earnings to cover
combined fixed charges and preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
Three
Months
Years Ended December 31, Ended
------------------------- March 31,
1995 1996 1997 1998 1999
---- ---- ------- ------- ---------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........ -- -- -- -- --
Deficiency of Earnings to Cover Fixed
Charges.................................. $21 $947 $10,755 $37,802 $12,661
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... -- -- -- -- --
Deficiency of Earnings to Cover Combined
Fixed Charges and Preferred Stock
Dividends................................ $21 $947 $12,954 $43,213 $19,069
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends, earnings
represent income (loss) before income taxes, minority interests, fixed charges
and equity in earnings (losses) of unconsolidated affiliate. Fixed charges
consist of interest expense, the interest component of operating leases and
amortization of deferred financing costs.
USE OF PROCEEDS
We will use the net proceeds from our sale of the securities for our general
corporate purposes, which may include, repaying indebtedness, making additions
to our working capital, funding future acquisitions or for any other purpose we
describe in the applicable prospectus supplement.
We will not receive any of the proceeds from the sale of common stock that
may be sold by selling shareholders.
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DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities sets forth
certain general terms and provisions of the debt securities to which any
prospectus supplement may relate. The particular terms of the debt securities
offered by any prospectus supplement and the extent, if any, to which such
general provisions may apply to the debt securities so offered will be
described in the prospectus supplement relating to such debt securities.
Accordingly, for a description of the terms of a particular issue of debt
securities, reference must be made to both the prospectus supplement relating
thereto and to the following description.
The debt securities will be our general obligations and may be subordinated
to "Senior Indebtedness" (as defined below) we have or may incur to the extent
set forth in the prospectus supplement relating to them. See "Description of
Debt Securities--Subordination" below. Debt securities will be issued under an
indenture between us and one or more commercial banks to be selected as
trustees (collectively, the "trustee"). A copy of the form of indenture has
been filed as an exhibit to the registration statement filed with the SEC. The
following discussion of certain provisions of the indenture is a summary only
and should not be considered a complete description of the terms and provisions
of the indenture. Accordingly, the following discussion is qualified in its
entirety by reference to the provisions of the indenture, including the
definition of certain terms used below.
General
The indenture does not limit the aggregate principal amount of debt
securities that can be issued under it. The debt securities may be issued in
one or more series as we may authorize from time to time. You should refer to
the applicable prospectus supplement for the following terms of the debt
securities of the series with respect to which that prospectus supplement is
being delivered:
(a) the title of the debt securities of the series;
(b) any limit on the aggregate principal amount of the debt securities
of the series that may be authenticated and delivered under the indenture;
(c) the date or dates on which the principal and premium with respect to
the debt securities of the series are payable;
(d) the rate or rates (which may be fixed or variable) at which the debt
securities of the series shall bear interest (if any) or the method of
determining such rate or rates, the date or dates from which such interest
shall accrue, the interest payment dates on which such interest shall be
payable or the method by which such dates will be determined, the record
dates for the determination of holders thereof to whom such interest is
payable (in the case of Registered Securities (as defined below)), and the
basis upon which interest will be calculated if other than that of a 360-
day year of twelve 30-day months;
(e) the place or places, if any, in addition to or instead of the
corporate trust office of the trustee (in the case of Registered
Securities) or the principal New York office of the trustee (in the case of
Bearer Securities), where the principal, premium, and interest with respect
to debt securities of the series shall be payable;
(f) the price or prices at which, the period or periods within which,
and the terms and conditions upon which debt securities of the series may
be redeemed, in whole or in part at our option or otherwise;
(g) whether debt securities of the series are to be issued as Registered
Securities or Bearer Securities (as defined below) or both and, if Bearer
Securities are to be issued, whether coupons will be attached to them,
whether Bearer Securities of the series may be exchanged for Registered
Securities of the series, and the circumstances under which and the places
at which any such exchanges, if permitted, may be made;
(h) if any debt securities of the series are to be issued as Bearer
Securities or as one or more Global Securities (as defined below)
representing individual Bearer Securities of the series, whether certain
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<PAGE>
provisions for the payment of additional interest or tax redemptions shall
apply; whether interest with respect to any portion of a temporary Bearer
Security of the series payable with respect to any interest payment date
prior to the exchange of such temporary Bearer Security for definitive
Bearer Securities of the series shall be paid to any clearing organization
with respect to the portion of such temporary Bearer Security held for its
account and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the persons entitled to
interest payable on such interest payment date; and the terms upon which a
temporary Bearer Security may be exchanged for one or more definitive
Bearer Securities of the series;
(i) our obligation, if any, to redeem, purchase, or repay debt
securities of the series under any sinking fund or analogous provisions or
at the option of a holder of such debt securities and the price or prices
at which, the period or periods within which, and the terms and conditions
upon which debt securities of the series shall be redeemed, purchased, or
repaid, in whole or in part, under such obligations;
(j) the terms, if any, upon which the debt securities of the series may
be convertible into or exchanged for our or any other issuer's or obligor's
common stock, preferred stock, other debt securities or warrants for common
stock, preferred stock, indebtedness or other securities of any kind and
the terms and conditions upon which such conversion or exchange shall be
effected, including the initial conversion or exchange price or rate, the
conversion or exchange period and any other additional provisions;
(k) if other than denominations of $1,000 or any integral multiple
thereof, the denominations in which debt securities of the series shall be
issuable;
(l) if the amount of principal, premium or interest with respect to the
debt securities of the series may be determined with reference to an index
or pursuant to a formula, the manner in which such amounts will be
determined;
(m) if the principal amount payable at the stated maturity of debt
securities of the series will not be determinable as of any one or more
dates prior to such stated maturity, the amount that will be deemed to be
such principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any maturity
other than the stated maturity or which will be deemed to be outstanding as
of any such date (or, in any such case, the manner in which such deemed
principal amount is to be determined), and if necessary, the manner of
determining the equivalent thereof in United States currency;
(n) any changes or additions to the provisions of the indenture dealing
with defeasance;
(o) if other than the principal amount thereof, the portion of the
principal amount of debt securities of the series that shall be payable
upon declaration of acceleration of the maturity thereof or provable in
bankruptcy;
(p) the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the debt securities of the series of any properties,
assets, moneys, proceeds, securities or other collateral, including whether
certain provisions of the Trust Indenture Act of 1939, as amended, are
applicable and any corresponding changes to provisions of the Indenture as
then in effect;
(q) any addition to or change in the Events of Default (as defined
below) with respect to the debt securities of the series and any change in
the right of the trustee or the holders to declare the principal, premium
and interest with respect to such debt securities due and payable;
(r) if the debt securities of the series shall be issued in whole or in
part in the form of a global security, the terms and conditions, if any,
upon which such global security may be exchanged in whole or in part for
other individual debt securities in definitive registered form, the
depositary (as defined in the applicable prospectus supplement) for such
global security and the form of any legend or legends to be borne by any
such global Security in addition to or in lieu of the legend referred to in
the Indenture;
(s) any trustee, authenticating or paying agents, transfer agents or
registrars;
6
<PAGE>
(t) the applicability of, and any addition to or change in, the
covenants and definitions then set forth in the indenture or in the terms
then set forth in the indenture relating to permitted consolidations,
mergers, or sales of assets;
(u) the terms, if any, of any guarantee of the payment of principal,
premium, and interest with respect to debt securities of the series and any
corresponding changes to the provisions of the indenture as then in effect;
(v) the subordination, if any, of the debt securities of the series
pursuant to the indenture and any changes or additions to the provisions of
the Indenture relating to subordination;
(w) with regard to debt securities of the series that do not bear
interest, the dates for certain required reports to the trustee; and
(x) any other terms of the debt securities of the series (which terms
shall not be prohibited by the provisions of the Indenture).
The prospectus supplement will also describe any material United States
federal income tax consequences or other special considerations applicable to
the series of debt securities to which such prospectus supplement relates,
including those applicable to (a) Bearer Securities, (b) debt securities with
respect to which payments of principal, premium or interest are determined with
reference to an index or formula (including changes in prices of particular
securities, currencies or commodities), (c) debt securities with respect to
which principal, or interest is payable in a foreign or composite currency, (d)
debt securities that are issued at a discount below their stated principal
amount, bearing no interest or interest at a rate that at the time of issuance
is below market rates ("Original Issue Discount Debt Securities") and (e)
variable rate debt securities that are exchangeable for fixed rate debt
securities.
Unless otherwise provided in the applicable prospectus supplement,
Registered Securities may be transferred or exchanged at the office of the
trustee at which its corporate trust business is principally administered in
the United States or at the office of the trustee or the trustee's agent in the
Borough of Manhattan, the City and State of New York, at which its corporate
agency business is conducted, subject to the limitations provided in the
indenture, without the payment of any service charge, other than any tax or
governmental charge payable in connection therewith. Bearer Securities will be
transferable only by delivery. Provisions with respect to the exchange of
Bearer Securities will be described in the prospectus supplement relating to
such Bearer Securities.
All funds which we pay to a paying agent for the payment of principal,
premium or interest with respect to any debt securities that remain unclaimed
at the end of two years after such principal, premium or interest shall have
become due and payable will be repaid to us, and the holders of such debt
securities or any coupons appertaining thereto will thereafter look only to us
for payment thereof.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities. A global security is a debt security
that represents, and is denominated in an amount equal to the aggregate
principal amount of, all outstanding debt securities of a series, or any
portion thereof, in either case having the same terms, including the same
original issue date, date or dates on which principal and interest are due, and
interest rate or method of determining interest. A global security will be
deposited with, or on behalf of, a depositary, which will be identified in the
prospectus supplement relating to such debt securities. Global securities may
be issued in either registered or bearer form and in either temporary or
definitive form. Unless and until it is exchanged in whole or in part for the
individual debt securities represented thereby, a global security may not be
transferred except as a whole by the depositary to a nominee of the depositary,
by a nominee of the depositary to the depositary or another nominee of the
depositary, or by the depositary or any nominee of the depositary to a
successor depositary or any nominee of such successor.
7
<PAGE>
The specific terms of the depositary arrangement with respect to a series of
debt securities will be described in the prospectus supplement relating to such
debt securities. We anticipate that the following provisions will generally
apply to depositary arrangements.
Upon the issuance of a global security, the depositary for such global
security will credit, on its book entry registration and transfer system, the
respective principal amounts of the individual debt securities represented by
such global security to the accounts of persons that have accounts with the
depositary ("participants"). Such accounts shall be designated by the dealers
or underwriters with respect to such debt securities or, if such debt
securities are offered and sold directly by us or through one or more agents,
by us or such agents. Ownership of beneficial interests in a global security
will be limited to participants or persons that hold beneficial interests
through participants. Ownership of beneficial interests in such global security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the depositary (with respect to interests of
participants) or records maintained by participants (with respect to interests
of persons other than participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limitations and laws may impair the ability to transfer
beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner or holder of such global security, such depositary or nominee,
as the case may be, will be considered the sole owner or holder of the
individual debt securities represented by such global security for all purposes
under the indenture. Except as provided below, owners of beneficial interests
in a global security will not be entitled to have any of the individual debt
securities represented by such global security registered in their names, will
not receive or be entitled to receive physical delivery of any of such debt
securities in definitive form, and will not be considered the owners or holders
thereof under the Indenture.
Subject to the restrictions applicable to Bearer Securities described in an
applicable prospectus supplement (see "Limitations on Issuance of Bearer
Securities" below), payments of principal, premium, and interest with respect
to individual debt securities represented by a global security will be made to
the depositary or its nominee, as the case may be, as the registered owner or
holder of such global security. Neither we, the trustee, any paying agent or
registrar for such debt securities or any agent of ours or the trustee's will
have any responsibility or liability for (a) any aspect of the records relating
to or payments made by the depositary, its nominee or any participants on
account of beneficial interests in the global security or for maintaining,
supervising or reviewing any records relating to such beneficial interests, (b)
the payment to the owners of beneficial interests in the global security of
amounts paid to the depositary or its nominee or (c) any other matter relating
to the actions and practices of the depositary, its nominee or its
participants. Neither we, the trustee, any paying agent or registrar for such
debt securities or any agent of ours or the trustee will be liable for any
delay by the depositary, its nominee or any of its participants in identifying
the owners of beneficial interests in the global security, and we and the
trustee may conclusively rely on, and will be protected in relying on,
instructions from the depositary or its nominee for all purposes.
We expect that the depositary for a series of debt securities or its
nominee, upon receipt of any payment of principal, premium or interest with
respect to a definitive global security representing any of such debt
securities, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global security, as shown on the records of the depositary or
its nominee. We also expect that payments by participants to owners of
beneficial interests in such global security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers and registered in
"street name." Such payments will be the responsibility of such participants.
Receipt by owners of beneficial interests in a temporary global security of
payments of principal, premium or interest with respect thereto will be subject
to the restrictions described in an applicable prospectus supplement (see
"Limitation on Issuance of Bearer Securities" below).
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<PAGE>
If the depositary for a series of debt securities is at any time unwilling,
unable or ineligible to continue as depositary, we shall appoint a successor
depositary. If a successor depositary is not appointed by us within 90 days,
we will issue individual debt securities of such series in exchange for the
global security representing such series of debt securities. In addition, we
may at any time and in our sole discretion, subject to any limitations
described in the prospectus supplement relating to such debt securities,
determine to no longer have debt securities of a series represented by a
global security and, in such event, will issue individual debt securities of
such series in exchange for the global security representing such series of
debt securities. Furthermore, if we so specify with respect to the debt
securities of a series, an owner of a beneficial interest in a global security
representing debt securities of such series may, on terms acceptable to us,
the trustee, and the depositary for such global security, receive individual
debt securities of such series in exchange for such beneficial interests,
subject to any limitations described in the prospectus supplement relating to
such debt securities. In any such instance, an owner of a beneficial interest
in a global security will be entitled to physical delivery of individual debt
securities of the series represented by such global security equal in
principal amount to such beneficial interest and to have such debt securities
registered in its name (if the debt securities are issuable as Registered
Securities). Individual debt securities of such series so issued will be
issued (a) as Registered Securities in denominations, unless otherwise
specified by us, of $1,000 and integral multiples thereof if the debt
securities are issuable as Registered Securities, (b) as Bearer Securities in
the denomination or denominations specified by us if the debt securities are
issuable as Bearer Securities or (c) as either Registered Securities or Bearer
Securities as described above if the debt securities are issuable in either
form.
Limitations on Issuance of Bearer Securities
The debt securities of a series may be issued as Registered Securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such debt securities) or Bearer Securities
(which will be transferable only by delivery). If such debt securities are
issuable as Bearer Securities, the applicable prospectus supplement will
describe certain special limitations and considerations that will apply to
such debt securities.
Certain Covenants
Merger, Consolidation or Sale of Assets
The indenture provides that we may not:
(1) consolidate or merge with or into (whether or not we are the
surviving corporation), or
(2) sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our properties or assets in one or more related
transactions, to another corporation, Person or entity, unless:
(a) either:
(A) we are the surviving corporation, or
(B) the entity or the Person (as defined) formed by or surviving
any such consolidation or merger (if other than us) or to which the
sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of
Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than us) or the entity or Person to
which the sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all our obligations under the
debt securities and the indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the trustee;
(c) immediately after such transaction no Default (as defined)
exists; and
(d) except in the case of:
(A) a merger of us with or into our Wholly Owned Restricted
Subsidiary (as defined) and
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(B) a merger entered into solely for the purpose of
reincorporating us in another jurisdiction:
(x) in the case of a merger or consolidation in which we are
the surviving corporation, our Debt to Adjusted Consolidated
Cash Flow Ratio (as defined) at the time of the transaction,
after giving pro forma effect to the transaction as of such date
for balance sheet purposes and as if the transaction had
occurred at the beginning of our most recently ended four full
fiscal quarter period for which internal financial statements
are available for income statement purposes, would have been
less than our Debt to Adjusted Consolidated Cash Flow Ratio for
the same period without giving pro forma effect to such
transaction, or
(y) in the case of any other such transaction, the Debt to
Adjusted Consolidated Cash Flow of the entity or Person formed
by or surviving any such consolidation or merger (if other than
us), or to which the sale, assignment, transfer, lease,
conveyance or other disposition shall have been made, at the
time of the transaction, after giving pro forma effect to the
transaction as of such date for balance sheet purposes and as if
such transaction had occurred at the beginning of the most
recently ended four full fiscal quarter period of such entity or
Person for which internal financial statements are available for
income statement purposes, would have been less than our Debt to
Adjusted Consolidated Cash Flow Ratio for the same period
without giving pro forma effect to such transaction; provided
that for purposes of determining the Debt to Adjusted
Consolidated Cash Flow Ratio of any entity or Person for
purposes of this clause (y) the entity or Person will be
substituted for us in the definition of Debt to Adjusted
Consolidated Cash Flow Ratio and the defined terms included in
the indenture.
Subordination
Debt securities of a series may be subordinated ("subordinated debt
securities") to Senior Indebtedness (as defined in the applicable prospectus
supplement) to the extent set forth in the prospectus supplement relating
thereto. We conduct substantially all our operations through subsidiaries, and
the holders of debt securities (whether or not subordinated debt securities)
will be structurally subordinated to the creditors of our subsidiaries.
Upon any payment or distribution of our assets to creditors or upon our
total or partial liquidation or dissolution or in a bankruptcy, receivership,
or similar proceeding relating to us or our property, holders of Senior
Indebtedness shall be entitled to receive payment in full in cash of the Senior
Indebtedness before holders of subordinated debt securities shall be entitled
to receive any payment of principal, premium, or interest with respect to the
subordinated debt securities, and until the Senior Indebtedness is paid in
full, any distribution to which holders of subordinated debt securities would
otherwise be entitled shall be made to the holders of Senior Indebtedness
(except that such holders may receive shares of stock and any debt securities
that are subordinated to Senior Indebtedness to at least the same extent as the
subordinated debt securities).
We may not make any payments of principal, premium, or interest with respect
to subordinated debt securities, make any deposit for the purpose of defeasance
of such subordinated debt securities, or repurchase, redeem, or otherwise
retire (except, in the case of subordinated debt securities that provide for a
mandatory sinking fund, by the delivery of subordinated debt securities by us
to the trustee in satisfaction of our sinking fund obligation) any subordinated
debt securities if (a) any principal, premium or interest with respect to
Senior Indebtedness is not paid in full in cash within any applicable grace
period (including at maturity) or (b) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in
accordance with its terms, unless, in either case, the default has been cured
or waived and such acceleration has been rescinded, such Senior Indebtedness
has been paid in full in cash or we and the trustee receive written notice
approving such payment from the representatives of such Senior Indebtedness.
During the continuance of any default (other than a default described in clause
(a) or (b) above) with respect to any Designated Senior
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Indebtedness (as defined in the applicable prospectus supplement) pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, we may not pay the subordinated
debt securities for a period (the "payment blockage period") commencing on the
receipt by us and the trustee of written notice of such default from the
representative of any Designated Senior Indebtedness specifying an election to
effect a payment blockage period (a "blockage notice"). The payment blockage
period may be terminated before its expiration by written notice to the trustee
and us from the person who gave the blockage notice, by repayment in full in
cash of the Senior Indebtedness with respect to which the blockage notice was
given or because the default giving rise to the payment blockage period is no
longer continuing. Unless the holders of such Designated Senior Indebtedness
shall have accelerated the maturity thereof, we may resume payments on the
subordinated debt securities after the expiration of the payment blockage
period. Not more than one blockage notice may be given in any period of 360
consecutive days. In no event, however, may the total number of days during
which any payment blockage period or periods is in effect exceed 179 days in
the aggregate during any period of 360 consecutive days. After all Senior
Indebtedness is paid in full and until the subordinated debt securities are
paid in full, holders of the subordinated debt securities shall be subrogated
to the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness.
By reason of such subordination, in the event of insolvency, creditors of
ours who are holders of Senior Indebtedness, as well as certain general
creditors of ours, may recover more, ratably, than the holders of the
subordinated debt securities.
Events of Default and Remedies
The following events are defined in the indenture as "Events of Default"
with respect to a series of debt securities:
(a) default for 30 days in the payment when due of interest on the debt
securities;
(b) default in payment when due of the principal of or premium, if any,
on the debt securities;
(c) our failure or failure by any of our Subsidiaries (as defined) to
comply with the provisions described under the caption "--Certain
Covenants--Merger, Consolidation or Sale of Assets" or our failure to
consummate a Change of Control Offer (as defined) or Asset Sale Offer (as
defined) in accordance with the provisions of the indenture;
(d) our failure or failure by any of our Subsidiaries for 30 days after
notice to comply with any other agreements in the indenture or the debt
securities;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness (as defined) for money borrowed by us or any of our
Significant Subsidiaries (as defined), or the payment of which is
guaranteed by us or any of our Significant Subsidiaries, whether such
Indebtedness or guarantee now exists, or is created after the date of the
indenture, which default:
(1) is caused by a failure to pay principal of or premium, if any,
or interest on the Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of the default (a
"Payment Default"); or
(2) results in the acceleration of the Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $20.0 million or
more;
(f) failure by us or any of our Significant Subsidiaries to pay final
judgments aggregating in excess of $20.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; or
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(g) certain events of bankruptcy or insolvency described in the
indenture with respect to us or any of our Restricted Subsidiaries.
(h) any other Event of Default provided with respect to debt securities
of that series.
An Event of Default with respect to one series of debt securities is not
necessarily an Event of Default for another series.
A prospectus supplement may omit, modify or add to the foregoing Events of
Default.
If any Event of Default occurs and is continuing, the trustee under the
indenture or the holders of at least 25% in principal amount at maturity of the
then outstanding notes of the applicable series may declare all the notes of
such series to be due and payable immediately. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to us, all outstanding debt securities will become due
and payable without further action or notice. Holders of the debt securities
may not enforce the indenture or the debt securities except as provided in the
indenture. Subject to certain limitations, Holders of a majority in principal
amount at maturity of the then outstanding debt securities may direct the
trustee under the indenture in its exercise of any trust or power.
The holders of a majority in aggregate principal amount at maturity of the
debt securities then outstanding by notice to the trustee under the indenture
may on behalf of the holders of all of such series of debt securities waive any
existing Default or Event of Default and its consequences under the applicable
indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of the debt securities.
The indenture provides that if a Default occurs and is continuing and is
known to the trustee, the trustee must mail to each holder of the relevant
series of debt securities notice of the Default within 90 days after it occurs.
Except in the case of a Default in the payment of principal of or interest on
any debt security, the trustee may withhold notice if and so long as a
committee of its trust officers determines that withholding notice is not
opposed to the interest of the holders of the debt securities. In addition, we
are required to deliver to the trustee, within 90 days after the end of each
fiscal year, a certificate indicating whether the signers thereof know of any
Default that occurred during the previous year. We are also required to deliver
to the trustee, promptly after the occurrence thereof, written notice of any
event that would constitute a Default, the status thereof and what action we
are taking or proposes to take in respect thereof.
Modification of the Indenture
We and the trustee may enter into supplemental indentures without the
consent of the holders of debt securities for one or more of the following
purposes:
(a) to evidence the succession of another person to us pursuant to the
provisions of the indenture relating to consolidations, mergers and sales
of assets and the assumption by such successor of our covenants, agreements
and obligations in the indenture and in the debt securities;
(b) to surrender any right or power conferred upon us by the indenture,
to add to our covenants such further covenants, restrictions, conditions or
provisions for the protection of the holders of all or any series of debt
securities as our board of directors shall consider to be for the
protection of the holders of such debt securities, and to make the
occurrence, or the occurrence and continuance, of a default in any of such
additional covenants, restrictions, conditions or provisions a default or
an Event of Default under the indenture (provided, however, that with
respect to any such additional covenant, restriction, condition or
provision, such supplemental indenture may provide for a period of grace
after default, which may be shorter or longer than that allowed in the case
of other defaults, may provide for an immediate enforcement upon such
default, may limit the remedies available to the trustee upon such default
or may limit the right of holders of a majority in aggregate principal
amount of any or all series of debt securities to waive such default);
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(c) to cure any ambiguity or correct or supplement any provision
contained in the indenture, in any supplemental indenture or in any debt
securities that may be defective or inconsistent with any other provision
contained therein, to convey, transfer, assign, mortgage or pledge any
property to or with the trustee, or to make such other provisions in regard
to matters or questions arising under the indenture as shall not adversely
affect the interests of any holders of debt securities of any series;
(d) to modify or amend the indenture in such a manner as to permit the
qualification of the indenture or any supplemental indenture under the
Trust Indenture Act as then in effect;
(e) to add to or change any of the provisions of the indenture to
provide that Bearer Securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal or premium
with respect to Registered Securities or of principal, premium or interest
with respect to Bearer Securities, or to permit Registered Securities to be
exchanged for Bearer Securities, so as to not adversely affect the
interests of the holders of debt securities or any coupons of any series in
any material respect or permit or facilitate the issuance of debt
securities of any series in uncertificated form;
(f) to comply with the provisions of the indenture relating to
consolidations, mergers and sales of assets;
(g) in the case of subordinated debt securities, to make any change in
the provisions of the indenture relating to subordination that would limit
or terminate the benefits available to any holder of senior indebtedness
under such provisions (but only if each such holder of senior indebtedness
consents to such change);
(h) to add guarantees with respect to the debt securities or to secure
the debt securities;
(i) to make any change that does not adversely affect the rights of any
holder;
(j) to add to, change, or eliminate any of the provisions of the
indenture with respect to one or more series of debt securities, so long as
any such addition, change or elimination not otherwise permitted under the
indenture shall (1) neither apply to any debt security of any series
created prior to the execution of such supplemental indenture and entitled
to the benefit of such provision nor modify the rights of the holders of
any such debt security with respect to such provision or (2) become
effective only when there is no such debt security outstanding;
(k) to evidence and provide for the acceptance of appointment by a
successor or separate trustee with respect to the debt securities of one or
more series and to add to or change any of the provisions of the indenture
as shall be necessary to provide for or facilitate the administration of
the indenture by more than one trustee; and
(l) to establish the form or terms of debt securities and coupons of any
series, as described under "Description of Debt Securities--General" above.
With the consent of the holders of a majority in aggregate principal amount
of the outstanding debt securities of each series affected thereby, we and the
trustee may from time to time and at any time enter into a supplemental
indenture for the purpose of adding any provisions to, changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
Indenture or modifying in any manner the rights of the holder of the debt
securities of such series; provided, however, that without the consent of the
holders of each debt security so affected, no such supplemental indenture shall
(a) reduce the percentage in principal amount of debt securities of any series
whose holders must consent to an amendment, (b) reduce the rate of or extend
the time for payment of interest on any debt security or coupon or reduce the
amount of any payment to be made with respect to any coupon, (c) reduce the
principal of or extend the stated maturity of any debt security, (d) reduce the
premium payable upon the redemption of any debt security or change the time at
which any debt security may or shall be redeemed, (e) make any debt security
payable in a currency other than that stated in the debt security, (f) in the
case of any subordinated debt security or coupons appertaining thereto, make
any change in the provisions of the indenture relating to subordination that
adversely affects the rights of
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any holder under such provisions, (g) release any security that may have been
granted with respect to the debt securities, (h) make any change in the
provisions of the indenture relating to waivers of defaults or amendments that
require unanimous consent, (i) change any obligation of ours provided for in
the indenture to pay additional interest with respect to Bearer Securities or
(j) limit our obligation to maintain a paying agency outside the United States
for payment on Bearer Securities or limit our obligation to redeem certain
Bearer Securities.
Satisfaction and Discharge of the Indenture; Defeasance
The indenture shall generally cease to be of any further effect with respect
to a series of debt securities if (a) we have delivered to the trustee for
cancellation all debt securities of such series (with certain limited
exceptions) or (b) all debt securities and coupons of such series not
theretofore delivered to the trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year, and we shall have deposited with
the trustee as trust funds the entire amount sufficient to pay at maturity or
upon redemption all such debt securities and coupons (and if, in either case,
we shall also pay or cause to be paid all other sums payable under the
indenture by us).
In addition, we shall have a "legal defeasance option" (pursuant to which we
may terminate, with respect to the debt securities of a particular series, all
of our obligations under such debt securities and the indenture with respect to
such debt securities) and a "covenant defeasance option" (pursuant to which we
may terminate, with respect to the debt securities of a particular series, our
obligations with respect to such debt securities under certain specified
covenants contained in the indenture). If we exercise our legal defeasance
option with respect to a series of debt securities, payment of such debt
securities may not be accelerated because of an Event of Default. If we
exercise our covenant defeasance option with respect to a series of debt
securities, payment of such debt securities may not be accelerated because of
an Event of Default related to the specified covenants.
The applicable prospectus supplement will describe the procedures we must
follow in order to exercise our defeasance options.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 600,000,000 shares of common stock,
par value $.01 per share, 90,000,000 shares of Class A common stock, par value
$.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per
share. As of July 20, 1999 there are 139,993,196 shares of common stock
outstanding, 11,340,000 shares of Class A common stock outstanding and 212,953
shares of 12 3/4% Senior Exchangeable Preferred Stock due 2010 outstanding.
Common Stock
Voting Rights
Each share of common stock is entitled to one vote. The common stock votes
together as a single class on all matters presented for a vote of the
stockholders, except as provided under the Delaware General Corporation Law.
Dividends and Liquidation Rights
Each share of common stock is entitled to receive dividends if, as and when
declared by the board of directors out of funds legally available for that
purpose, subject to approval of certain holders of the senior convertible
preferred stock. In the event of our dissolution, after satisfaction of amounts
payable to our creditors and distribution of any preferential amounts to the
holders of outstanding senior convertible preferred stock, if any, holders of
common stock are entitled to share ratably in the assets available for
distribution to the stockholders.
Other Provisions
There are no preemptive rights to subscribe for any additional securities
which we may issue, and there are no redemption provisions or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are legally issued, fully paid and nonassessable.
Class A Common Stock
Voting Rights
Each share of Class A common stock is entitled to one vote for each such
share on all matters presented to the stockholders, except the election of
directors. The holders of the shares of Class A common stock vote, except as
provided under the Delaware General Corporation Law, together with the holders
of the common stock and any other class or series of our stock accorded such
general voting rights, as a single class.
TdF, the holders of all the shares of Class A common stock, currently has
the right to elect two directors to our board of directors; however, if TdF's
ownership interest in us changes, so long as the ownership interest of the TdF
group is at least 5%, holders of Class A common stock voting as a separate
class have the right to elect one director.
The holders of Class A common stock, subject to limitations, have a veto
over certain significant corporate actions we may take.
Convertibility
Each share of Class A common stock is convertible, at the option of its
record holder, into one share of common stock at any time.
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In the event of any transfer of any share of Class A common stock to any
person other than an Affiliate (as defined in Rule 12b-2 of the Exchange Act),
such share of Class A common stock automatically converts, without any further
action, into one share of common stock. However, a holder of shares of Class A
common stock may pledge its shares to a lender under a bona fide pledge of such
shares of Class A common stock as collateral security for any indebtedness or
other obligation of any person due to the pledgee or its nominee.
Further, each share of Class A common stock automatically converts into one
share of common stock on the first date on which the ownership interest of TdF
group is less than 5%.
Dividends and Liquidation Rights
Holders of shares of Class A common stock are entitled to the same dividends
and liquidation rights as holders of shares of common stock.
Other Provisions
Under the governance agreement, so long as TdF remains qualified under the
governance agreement, TdF has anti-dilutive rights in connection with
maintaining a certain percentage of voting power in us and, accordingly, we may
not, subject to certain exceptions relating primarily to compensation of
directors and employees, issue, sell or transfer additional securities, unless
TdF is offered the right to purchase, at the same price, an amount such that it
would maintain such percentage of voting power in us.
Preferred Stock
Under our certificate of incorporation, we may issue up to 10,000,000 shares
of preferred stock in one or more series. Our board of directors after honoring
any rights TdF may have under the governance agreement, has the authority,
without any vote or action by the stockholders, to create one or more series of
preferred stock up to the limit of our authorized but unissued shares of
preferred stock and to fix their designations, preferences, rights,
qualifications, limitations and restrictions, including the voting rights,
dividend rights, dividend rate, conversion rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation
preferences and the number of shares constituting any series.
Exchangeable Preferred Stock
Each share of exchangeable preferred stock has a liquidation preference of
$1,000 per share and is exchangeable, at our option, in whole but not in part,
for our exchange debentures.
Voting Rights
The shares of exchangeable preferred stock have no voting rights, except as
required by law and as specified in the certificate of designations. If we fail
to meet our obligations under the certificate of designations, the holders of
the exchangeable preferred stock will be entitled to elect two additional
members to the board of directors.
Dividends
Dividends are paid on each March 15, June 15, September 15 and December 15
commencing March 15, 1999, at an annual fixed rate of 12 3/4%. On or before
December 15, 2003, we have the option to pay dividends in cash or in additional
fully paid and non-assessable shares of exchangeable preferred stock having an
aggregate liquidation preference equal to the amount of such dividends. After
December 15, 2003, dividends will be paid only in cash.
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Mandatory Redemption
We are required to redeem all of the shares of exchangeable preferred stock
outstanding on December 15, 2010 at a redemption price equal to 100% of the
liquidation preference of such shares, plus accumulated and unpaid dividends to
the date of redemption.
Optional Redemption
On or after December 15, 2003, we may redeem some or all of the shares of
exchangeable preferred stock at any time at certain specified redemption
prices. In addition, before December 15, 2001, we may redeem up to 35% of the
exchangeable preferred stock with the proceeds of public equity offerings or
strategic equity investments at a redemption price equal to 112.750% of the
liquidation preference of the exchangeable preferred stock, together with
accumulated and unpaid dividends.
Change of Control
If we experience specific kinds of changes in control, we will be required
to make an offer to purchase any and all shares of exchangeable preferred stock
at a purchase price of 101% of the liquidation preference of such shares
together with all accumulated and unpaid dividends.
Certain Covenants
We issued the exchangeable preferred stock under a certificate of
designations that became part of our certificate of incorporation. The
certificate of designations contains certain covenants that, among other
things, limit our ability and the ability of our subsidiaries to borrow money;
pay dividends on stock or purchase capital stock; make investments and sell
assets or merge with or into other companies.
Ranking
The exchangeable preferred stock ranks (1) senior to all our other classes
of capital stock established after the issue date of the exchangeable preferred
stock that do not expressly provide that they rank on par with the exchangeable
preferred stock as to dividends and distributions upon our liquidation, winding
up and dissolution and (2) on par with any class of capital stock established
after the date of issuance of the exchangeable preferred stock the terms of
which provide that such class or series will rank on par with the exchangeable
preferred stock as to dividends and distributions upon our liquidation, winding
up and dissolution.
Senior Preferred Warrants
In connection with the offering of the senior convertible preferred stock in
August 1997 and October 1997, we issued warrants to purchase an aggregate of
1,314,990 shares of common stock at a price of $7.50 per share.
Certificate of Incorporation and By-laws
Stockholders' rights and related matters are governed by the Delaware
General Corporation Law, and our certificate of incorporation and the by-laws.
Certain provisions of our certificate of incorporation and by-laws, which are
summarized below, may have the effect, either alone or in combination with each
other, of discouraging or making more difficult a tender offer or takeover
attempt that is opposed by our board of directors but that a stockholder might
consider to be in its best interest. Such provisions may also adversely affect
prevailing market prices for the common stock. We believe that such provisions
are necessary to enable us to develop our business in a manner that will foster
our long-term growth without disruption caused by the threat of a takeover not
deemed by our board of directors to be in our best interests and those of our
stockholders.
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Classified Board of Directors and Related Provisions
Our certificate of incorporation provides that our directors, other than
those directors who may be elected by holders of any series of preferred stock
or holders of the Class A common stock, initially are divided into three
classes of directors, consisting of three, three and four directors. One class
of directors, initially consisting of three directors, was elected for a term
expiring at the annual meeting of shareholders to be held in 2000, another
class initially consisting of three directors was elected for a term expiring
at the annual meeting of stockholders to be held in 2000, and another class
initially consisting of four directors was elected for a term expiring at the
annual meeting of stockholders in 2001. The classified board provisions will
prevent a party who acquires control of a majority of our outstanding voting
stock from obtaining control of our board of directors until the second annual
stockholders meeting following the date such party obtains the controlling
interest. Voting stock is defined in our certificate of incorporation as the
outstanding shares of our capital stock entitled to vote in a general vote of
our stockholders as a single class with shares of common stock, which shares of
capital stock include the shares of Class A common stock.
No Stockholder Action by Written Consent; Special Meeting
The certificate of incorporation prohibits stockholders from taking action
by written consent in lieu of an annual or special meeting, except relating to
holders of Class A common stock on matters on which they are entitled to vote
and, thus, stockholders may only take action at an annual or special meeting
called in accordance with our by-laws. The by-laws provide that special
meetings of stockholders may only be called by our secretary at the direction
of our board of directors under a resolution adopted by the board.
These provisions could have the effect of delaying consideration of a
stockholder proposal until the next annual meeting. The provisions would also
prevent the holders of a majority of the voting power of our capital stock
entitled to vote from unilaterally using the written consent procedure to take
stockholder action.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our by-laws establish advance notice procedures for stockholder proposals
and the nomination, other than by or at the direction of the board of
directors, of candidates for election as directors. These procedures provide
that the notice of stockholder proposals and stockholder nominations for the
election of directors at an annual meeting must be in writing and received by
our secretary at least 90 days but not more than 120 days prior to the first
anniversary of our preceding year's annual meeting. However, if the date of our
annual meeting is more than 30 days earlier than, or more than 90 days later
than, the anniversary date of our preceding year's annual meeting, notice by a
stockholder will be considered timely if it is delivered not earlier than the
120th day prior to such annual meeting and not later than the later of the 90th
day prior to such annual meeting or the 10th day following the day on which
public disclosure of the date of the annual meeting was made. The notice of
nominations for the election of directors must set forth certain information
concerning the stockholder giving the notice and each nominee.
By requiring advance notice of nominations by stockholders, these procedures
will afford our board of directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the board of directors, to inform stockholders about these
qualifications. By requiring advance notice of other proposed business, these
procedures will provide our board of directors with an opportunity to inform
stockholders of any business proposed to be conducted at a meeting, together
with any recommendations as to the board of directors' position on action to be
taken on such business. This should allow stockholders to better decide whether
to attend a meeting or to grant a proxy for the disposition of any such
business.
Dilution
Our certificate of incorporation provides that our board of directors is
authorized to create and issue, whether or not in connection with the issuance
and sale of any of its stock or other securities or property, rights
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entitling the holders to purchase from us shares of stock or other securities
of us or any of other corporation. Our board of directors is authorized to
issue these rights even though the creation and issuance of these rights could
have the effect of discouraging third parties from seeking, or impairing their
right to seek, to:
(1) acquire a significant portion of our outstanding securities;
(2) engage in any transaction which might result in a change of control
of the corporation; or
(3) enter into any agreement, arrangement or understanding with another
party to accomplish these transactions or for the purpose of acquiring,
holding, voting or disposing of any of our securities.
Amendments
Our certificate of incorporation and by-laws provide that we may amend,
alter, change or repeal any provision contained in our certificate of
incorporation or a preferred stock designation. However, the affirmative vote
of the holders of at least 80% of the voting power of the then outstanding
voting stock, voting together as a single class, is required to amend, repeal
or adopt any provision inconsistent with certain provisions our certificate of
incorporation, including the provisions discussed above relating to the
classification of our board of directors, prohibiting stockholder action by
written consent, and prohibiting the calling of special meetings by
stockholders.
Our by-laws may be amended by either the holders of 80% of the voting power
of the voting stock or by the majority of the board; but the board may alter,
amend or repeal or adopt new by-laws in conflict with some of these provisions
by a two-thirds vote of the entire board.
Rights Plan
Rights
Our board of directors has declared a dividend of one right for each
outstanding share of common stock and each outstanding share of Class A common
stock. Rights have been issued in connection with each outstanding share of
common stock and Class A common stock; and rights will be issued in connection
with common stock and Class A common stock issued subsequently until the
distribution date, and, in certain circumstances, for common stock and Class A
common stock issued after the distribution date referred to below. Each right,
when it becomes exercisable as described below, will entitle the registered
holder to purchase from us one one-thousandth of a share of Series A
Participating Cumulative Preferred Stock at a price of $110.00 per one one-
thousandth of a share, subject to adjustment in certain circumstances. The
description and terms of the rights are set forth in a rights agreement between
us and the rights agent named therein. The rights will not be exercisable until
the distribution date and will expire on the tenth annual anniversary of the
rights agreement, unless earlier redeemed by us. Until a right is exercised,
the holder, as such, will have no rights as our stockholder, including the
right to vote or to receive dividends.
Distribution Date
Under the rights agreement, the "distribution date" is the earlier of:
(1) such time as we learn that a person or group, including any
affiliate or associate of such person or group, has acquired, or has
obtained the right to acquire, beneficial ownership of more than 15% of our
outstanding voting securities (such person or group being an "acquiring
person"), subject to the exceptions relating to the TDF group and the
Berkshire group described in the paragraph below, unless provisions
preventing accidental triggering of the distribution of the rights apply,
and
(2) the close of business on such date, if any, as may be designated by
our board of directors following the commencement of, or first public
disclosure of an intent to commence, a tender or exchange offer for more
than 15% or more of the outstanding shares of voting securities.
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Each member of the TdF group will not otherwise be considered an acquiring
person if:
(a) during the first five years following the adoption of the rights
agreement, the aggregate ownership interest of the TdF group does not
exceed 25%, or 30% if the board so elects, of the outstanding voting
securities or
(b) thereafter, the aggregate ownership interest of the TdF group does
not exceed the lesser of:
(1) 25% or 30%, as applicable, of the voting securities then
outstanding and
(2) the greater of the aggregate interest of the TdF group as of the
fifth anniversary of the rights agreement and 15% of the then
outstanding voting securities.
Each member of the Berkshire group will not otherwise be deemed an acquiring
person if the aggregate ownership interest of the Berkshire group does not
exceed the greater of:
(a) the aggregate ownership interest of the Berkshire group upon the
execution of the rights agreement, reduced by an amount equal to any
disposition of voting securities following the date the rights agreement is
executed and
(b) 15% of the outstanding voting securities.
Triggering Event and Effect of Triggering Event
When there is an acquiring person, the rights will entitle each holder,
other than such acquiring person, of a right to purchase, at the purchase
price, that number of one one-thousandths of a preferred share equivalent to
the number of shares of common stock that at the time of such event would have
a market value of twice the purchase price.
If we are acquired in a merger or other business combination by an acquiring
person or an affiliate or associate of an acquiring person that is a publicly
traded corporation, or if 50% or more of our assets or assets representing 50%
or more of our revenues or cash flow are sold, leased, exchanged or otherwise
transferred to an acquiring person or an affiliate or associate of an acquiring
person that is a publicly traded corporation, each right will entitle its
holder, other than rights beneficially owned by such acquiring person, to
purchase, for the purchase price, that number of common shares of such
corporation which at the time of the transaction would have a market value or,
in some cases, book value of twice the purchase price. If we are acquired in a
merger or other business combination by an acquiring person or an affiliate or
associate of an acquiring person that is not a publicly traded entity, or if
50% or more of our assets or assets representing 50% or more of our revenues or
cash flow are sold, leased, exchanged or otherwise transferred to an acquiring
person or affiliate or associate of an acquiring person that is not a publicly
traded entity, each right will entitle its holder to purchase for the purchase
price, at such holder's option:
(1) that number of shares of the surviving corporation, which could be
us, in the transaction with such entity, which at the time of the
transaction would have a book value of twice the purchase price,
(2) that number of shares of the ultimate parent of or entity
controlling such surviving corporation which at the time of the transaction
would have a book value of twice the purchase price or
(3) if such entity has an affiliate which has publicly traded common
shares, that number of common shares of such affiliate which at the time of
the transaction would have a market value of twice the purchase price.
Any rights that are at any time beneficially owned by an acquiring person,
or any affiliate or associate of an acquiring person, will be null and void and
nontransferable, and any holder of any such right will be unable to exercise or
transfer any such right.
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Redemption
At any time prior to the earlier of (1) such time as a person or group
becomes an acquiring person and (2) the expiration date, our board of directors
may redeem the rights in whole, but not in part, at a price, in cash or common
stock or other securities of ours deemed by our board of directors to be at
least equivalent in value, of $.01 per right, which amount shall be subject to
adjustment as provided in the rights agreement. Immediately upon the action of
our board of directors ordering the redemption of the rights, and without any
further action and without any notice, the right to exercise the rights will
terminate and the only right of the holders of rights will be to receive the
redemption price.
In addition, at any time after there is an acquiring person, our board of
directors may elect to exchange each right for consideration per right
consisting of one-half of the securities that would be issuable at such time
upon exercise of one right under the terms of the rights agreement.
Amendment
At any time prior to the distribution date, we may, without the approval of
any holder of any rights, supplement or amend any provision of the rights
agreement, including the date on which the expiration date or distribution date
shall occur, the definition of acquiring person, the time during which the
rights may be redeemed or the terms of the preferred shares, except that no
supplement or amendment shall be made which reduces the redemption price other
than under certain adjustments therein.
Certain Effects of the Rights Plan
The rights plan is designed to protect our stockholders in the event of
unsolicited offers to acquire us and other coercive takeover tactics which, in
the opinion of our board of directors, could impair its ability to represent
stockholder interests. The provisions of the rights plan may render an
unsolicited takeover of us more difficult or less likely to occur or might
prevent such a takeover, even though such takeover may offer our stockholders
the opportunity to sell their stock at a price above the prevailing market rate
and may be favored by a majority of our stockholders.
Section 203 of the Delaware General Corporation Law
Section 203 of the Delaware General Corporation Law prohibits certain
transactions between a Delaware corporation and an "interested stockholder",
which is defined as a person who, together with any affiliates and/or
associates of such person, beneficially owns, directly or indirectly, 15% or
more of the outstanding voting shares of a Delaware corporation. This provision
prohibits certain business combinations between an interested stockholder and a
corporation for a period of three years after the date the interested
stockholder acquired its stock, unless:
(1) the business combination is approved by the corporation's board of
directors prior to the date the interested stockholder acquired shares;
(2) the interested stockholder acquired at least 85% of the voting stock
of the corporation in the transaction in which it became an interested
stockholder; or
(3) the business combination is approved by a majority of the board of
directors and by the affirmative vote of two-thirds of the outstanding
voting stock owned by disinterested stockholders at an annual or special
meeting.
A business combination is defined broadly to include mergers,
consolidations, sales or other dispositions of assets having an aggregate value
of 10% or more of the consolidated assets of the corporation, and certain
transactions that would increase the interested stockholder's proportionate
share ownership in the corporation. A Delaware corporation, under a provision
in its certificate of incorporation or by-laws, may elect not to be governed by
Section 203 of the Delaware General Corporation Law. We are subject to the
restrictions imposed by Section 203.
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Under certain circumstances, Section 203 makes it more difficult for a
person who could be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. Our certificate of incorporation does not exclude us from the
restrictions imposed under Section 203 of the Delaware General Corporation Law.
It is anticipated that the provisions of Section 203 of the Delaware General
Corporation Law may encourage companies interested in acquiring us to negotiate
in advance with the board of directors, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approves, prior to the date on which a stockholder becomes an interested
stockholder, either the business combination or the transaction which results
in the stockholder becoming an interested stockholder.
Limitations of Directors' Liability
Our certificate of incorporation provides that none of our directors will be
personally liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director except for liability:
(1) for any breach of the director's duty of loyalty to us or our
stockholders,
(2) for acts of omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
(3) under Section 174 of the Delaware General Corporation Law, or
(4) for any transaction from which the director derived an improper
personal benefit.
The effect of these provisions will be to eliminate our rights and our
stockholders (through stockholders' derivatives suits on behalf of us) to
recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from grossly negligent behavior), except
in the situations described above. These provisions will not limit the
liability of directors under federal securities laws and will not affect the
availability of equitable remedies such as an injunction or rescission based
upon a director's breach of his duty of care.
Transfer Agent
The Transfer Agent and Registrar for the common stock is ChaseMellon
Shareholder Services, L.L.C.
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DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. Warrants may be issued independently or together with debt
securities, preferred stock or common stock offered by any prospectus
supplement and may be attached to or separate from any such offered securities.
Each series of warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with the warrants and
will not assume any obligation or relationship of agency or trust for or with
any holders or beneficial owners of warrants. The following summary of certain
provisions of the warrants does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the warrant
agreement that will be filed with the SEC in connection with the offering of
such warrants.
Debt Warrants
The prospectus supplement relating to a particular issue of debt warrants
will describe the terms of such debt warrants, including the following: (a) the
title of such debt warrants; (b) the offering price for such debt warrants, if
any; (c) the aggregate number of such debt warrants; (d) the designation and
terms of the debt securities purchasable upon exercise of such debt warrants;
(e) if applicable, the designation and terms of the debt securities with which
such debt warrants are issued and the number of such debt warrants issued with
each such debt security; (f) if applicable, the date from and after which such
debt warrants and any debt securities issued therewith will be separately
transferable; (g) the principal amount of debt securities purchasable upon
exercise of a debt warrant and the price at which such principal amount of debt
securities may be purchased upon exercise (which price may be payable in cash,
securities, or other property); (h) the date on which the right to exercise
such debt warrants shall commence and the date on which such right shall
expire; (i) if applicable, the minimum or maximum amount of such debt warrants
that may be exercised at any one time; (j) whether the debt warrants
represented by the debt warrant certificates or debt securities that may be
issued upon exercise of the debt warrants will be issued in registered or
bearer form; (k) information with respect to book-entry procedures, if any; (1)
the currency or currency units in which the offering price, if any, and the
exercise price are payable; (m) if applicable, a discussion of material United
States federal income tax considerations; (n) the antidilution provisions of
such debt warrants, if any; (o) the redemption or call provisions, if any,
applicable to such debt warrants; and (p) any additional terms of such debt
warrants, including terms, procedures, and limitations relating to the exchange
and exercise of such debt warrants.
Stock Warrants
The prospectus supplement relating to any particular issue of preferred
stock warrants or common stock warrants will describe the terms of such
warrants, including the following: (a) the title of such warrants; (b) the
offering price for such warrants, if any; (c) the aggregate number of such
warrants; (d) the designation and terms of the common stock or preferred stock
purchasable upon exercise of such warrants; (e) if applicable, the designation
and terms of the offered securities with which such warrants are issued and the
number of such warrants issued with each such offered security; (f) if
applicable, the date from and after which such warrants and any offered
securities issued therewith will be separately transferable; (g) the number of
shares of common stock or preferred stock purchasable upon exercise of a
warrant and the price at which such shares may be purchased upon exercise; (h)
the date on which the right to exercise such warrants shall commence and the
date on which such right shall expire; (i) if applicable, the minimum or
maximum amount of such warrants that may be exercised at any one time; (j) the
currency or currency units in which the offering price, if any, and the
exercise price are payable, (k) if applicable, a discussion of material United
States federal income tax considerations; (l) the antidilution provisions of
such warrants, if any; (m) the redemption or call provisions, if any,
applicable to such warrants; and (n) any additional terms of such warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such warrants.
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SELLING SHAREHOLDERS
The selling shareholders may be our directors, executive officers, former
directors, employees or certain holders of our common stock. The prospectus
supplement for any offering of the common stock by selling shareholders will
include the following information:
--the names of the selling shareholders;
--the number of shares held by each of the selling shareholders;
--the percentage of the common stock held by each of the selling
shareholders; and
--the number of shares of the common stock offered by each of the
selling shareholders.
PLAN OF DISTRIBUTION
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each prospectus
supplement will describe the method of distribution of the securities offered
therein.
Our company and any selling shareholders may sell securities directly,
through agents designated from time to time, through underwriting syndicates
led by one or more managing underwriters or through one or more underwriters
acting alone. The selling shareholders may also distribute securities through
one or more special purpose trusts, which will enter into forward purchase
arrangements with selling shareholders and distribute their own securities.
Each prospectus supplement will describe the terms of the securities to which
such prospectus supplement relates, the names of the selling shareholders and
the number of shares of common stock to be sold by each, the name or names of
any underwriters or agents with whom we or the selling shareholders, or both,
have entered into arrangements with respect to the sale of such securities, the
public offering or purchase price of such securities and the net proceeds we or
the selling shareholders will receive from such sale. In addition, each
prospectus supplement will describe any underwriting discounts and other items
constituting underwriters' compensation, any discounts and commissions allowed
or paid to dealers, if any, any commissions allowed or paid to agents, and the
securities exchange or exchanges, if any, on which such securities will be
listed. Dealer trading may take place in certain of the securities, including
securities not listed on any securities exchange.
If so indicated in the applicable prospectus supplement, we or the selling
shareholders, or both, will authorize underwriters or agents to solicit offers
by certain institutions to purchase securities from us or the selling
shareholders, or both, pursuant to delayed delivery contracts providing for
payment and delivery at a future date. Institutions with which such contracts
may be made include, among others:
--commercial and savings banks;
--insurance companies;
--pension funds;
--investment companies;
--educational and charitable institutions.
In all cases, such institutions must be approved by us or the selling
shareholders, or both. Unless otherwise set forth in the applicable prospectus
supplement, the obligations of any purchaser under any such contract will not
be subject to any conditions except that (i) the purchase of the securities
will not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject and (ii) if the securities are
also being sold to underwriters acting as principals for their own account, the
underwriters will have purchased such
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securities not sold for delayed delivery. The underwriters and such other
persons will not have any responsibility in respect of the validity or
performance of such contracts.
Any selling shareholder, underwriter or agent participating in the
distribution of the securities may be deemed to be an underwriter, as that term
is defined in the Securities Act, of the securities so offered and sold and any
discounts or commissions received by them, and any profit realized by them on
the same or resale of the securities may be deemed to be underwriting discounts
and commissions under the Securities Act.
Certain of any such underwriters and agents including their associates, may
be customers of, engage in transactions with and perform services for us and
our subsidiaries in the ordinary course of business. One or more of our
affiliates may from time to time act as an agent or underwriter in connection
with the sale of the securities to the extent permitted by applicable law. The
participation of any such affiliate in the offer and sale of the securities
will comply with Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. regarding the offer and sale of securities of an
affiliate.
Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for the common
stock, which is listed on The Nasdaq Stock Market's National Market, and any
underwriters or dealers will not be obligated to make a market in securities.
We cannot predict the activity or liquidity of any trading in the securities.
We will not receive any proceeds from the sale of shares of common stock by
the selling shareholders. We will, however, bear certain expenses in connection
with the registration of the securities being offered under this prospectus by
the selling shareholders, including all costs incident to the offering and sale
of the securities to the public other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes.
VALIDITY OF SECURITIES
The validity of the securities offered hereby will be passed upon for us by
Cravath, Swaine & Moore, New York, New York and for the underwriters or agents,
if any, by Latham & Watkins, New York, New York.
EXPERTS
The consolidated financial statements of CCIC at December 31, 1997 and 1998,
and for each of the three years in the period ended December 31, 1998, the
financial statements of the Home Service Transmission business of the BBC at
March 31, 1996 and for the year ended March 31, 1996 and the period from April
1, 1996 to February 27, 1997, the consolidated financial statements of CTSH at
March 31, 1997 and December 31, 1997 and for the period from February 28, 1997
to March 31, 1997 and the period from April 1, 1997 to December 31, 1997, the
financial statements of the Bell Atlantic Mobile Tower Operations at December
31, 1998 and for each of the two years in the period ended December 31, 1998
and the financial statements of the Powertel Tower Operations at December 31,
1998 and for the year ended December 31, 1998, have been incorporated by
reference in this prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing.
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$250,000,000
Crown Castle International Corp.
% Senior Notes due 2011
[LOGO OF CROWN CASTLE INTERNATIONAL]
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PROSPECTUS SUPPLEMENT
, 2000
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Goldman, Sachs & Co. Chase Securities Inc.
Lehman Brothers Credit Suisse First Boston
Morgan Stanley Dean Witter CIBC Oppenheimer
BNY Capital Markets, Inc.
Scotia Capital Markets
McDonald Investments Inc.
PNC Capital Markets, Inc.
Deutsche Banc Alex. Brown
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