[GRAPHIC OMITTED]
Offer to Exchange
$300,000,000 of 11 1/2% Senior Notes due 2010
$600,000,000 of 11 1/4% Senior Notes due 2010
(Euro)200,000,000 of 11 1/4% Senior Notes due 2010
$1,000,000,000 of 13 3/4% Senior Discount Notes due 2010
of
United Pan-Europe Communications N.V.
for substantially identical Series B Notes
registered under the Securities Act
- --------------------------------------------------------------------------------
Terms of the Exchange Offer
o The exchange offer expires at 5:00 p.m., New York City time (midnight,
London time), on June 3, 2000, unless we extend the expiration date.
o We will exchange all old notes that you validly tender and do not validly
withdraw.
o You may withdraw tenders of old notes any time prior to the expiration of the
exchange offer.
o The exchange offer is not subject to any condition, other than that it
not violate applicable law or any applicable interpretation of the
staff of the Securities and Exchange Commission.
o We will not receive any proceeds from the exchange offer.
o Your exchange of old notes for new notes will not be a taxable exchange
for U.S. federal income tax purposes.
o The terms of the new notes and the old notes are substantially
identical, except for transfer restrictions, registration rights and
liquidated damages that apply to the old notes.
o There is no existing market for the new notes, and we do not intend to
apply for their listing on any securities exchange other than the
Luxembourg Stock Exchange.
See the "Description of the Notes" section on page 23 for more
information about the notes to be issued in this exchange offer.
This investment involves risks. See the section entitled "Risk Factors"
that begins on page 10 for a discussion of the risks that you should consider
prior to tendering your old notes for exchange.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is April 26, 2000
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We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of UPC have not
changed since the date hereof.
TABLE OF CONTENTS
Page
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Prospectus Summary.................................................. 3
Risk Factors........................................................ 10
Disclosure Regarding Forward Looking Statements..................... 15
The Exchange Offer.................................................. 16
Use of Proceeds..................................................... 22
Capitalization...................................................... 22
Description of the Notes............................................ 23
Description of Other Debt........................................... 68
Certain Tax Consequences............................................ 70
Legal Matters....................................................... 78
Experts............................................................. 78
Enforcement of Civil Liabilities.................................... 78
Available Information............................................... 79
General Information................................................. 81
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary does not contain all of the information that you should
consider before investing in our notes. You should read the entire prospectus
carefully, especially the risks of investing in our notes discussed under "Risk
Factors."
General Information About Us and Our Business
We own and operate broadband communications networks in 12 countries in
Europe and in Israel. We provide communications services in many European
countries through our business lines: cable television, DTH and programming,
telephone and Internet/data services. Our subscriber base is the largest of any
group of broadband communications networks operated across Europe.
While we began business as cable television service providers, over the
last few years we have been upgrading many of our networks so that they are
capable of providing telephone and Internet/data access services as well as
enhanced or more advanced video services. Our telephone service is branded
"Priority Telecom" and has been launched in many of our markets in 1998 and
1999. Our chello broadband subsidiary has launched an Internet/access and portal
service branded under its name in many of our systems during 1999. We have
launched chello broadband services on broadband networks other than our own,
including on systems owned by UnitedGlobalCom, Inc. ("United"), our majority
shareholder.
We operated from July 1995 to December 1997 as a 50/50 joint venture
between United and Philips. In December 1997, we and United acquired the 50% of
our ordinary shares held by Philips. Following this acquisition and until our
initial public offering in February 1999, we became a wholly owned subsidiary of
United, other than approximately 7% of our stock held by a foundation to support
our stock option plans to employees.
We have grown substantially since formation through acquisitions of
cable television systems and related businesses in our existing and new markets.
During 1999 we grew from a number of acquisitions. We expect to grow further
from acquisitions.
Our Address and Telephone Number
Our office address is Fred. Roeskestraat 123, 1076 EE Amsterdam, The
Netherlands. Our telephone number is +31 20 778 9840.
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The Exchange Offer
On January 20, 2000, we issued $300,000,000 of 11 1/2% Senior Notes due
2010, $600,000,000 of 11 1/4% Senior Notes due 2010, (Euro)200,000,000 of 11
1/4% Senior Notes due 2010 and $1,000,000,000 of 13 3/4% Senior Discount Notes
due 2010 to the following initial purchasers:
o Goldman, Sachs & Co.
o Morgan Stanley Dean Witter
o Credit Suisse First Boston
o ING Barings
o Merrill Lynch & Co.
o Morgan Stanley Dean Witter
o TD Securities
o ABN AMRO Incorporated
o Banc of America Securities LLC
o BNP Paribas Group
These initial purchasers then sold the old notes in an offering exempt
from the registration requirements of the Securities Act.
Simultaneously with the private placement, we entered into a
registration rights agreement with the initial purchasers of the old notes.
Under the registration rights agreement, we must deliver this prospectus to you.
You may exchange your old notes for new notes, which have substantially
identical terms, except that the new notes will be freely transferable by the
holders except as otherwise provided in this prospectus. The exchange offer
satisfies your rights under the registration rights agreement. After the
exchange offer is over, you will not be entitled to any exchange or registration
rights with respect to your old notes, except under limited circumstances.
The exchange offer............. We are offering to exchange:
o $300,000,000 total principal amount of Series B 11 1/2% Senior Notes
due 2010, which have been registered under the Securities Act, for your
outstanding 11 1/2% senior dollar notes;
o $600,000,000 total principal amount of Series B 11 1/4% Senior Notes
due 2010, which have been registered under the Securities Act, for your
outstanding 11 1/4% senior dollar notes;
o (Euro)200,000,000 total principal amount of 11 1/4% Series B Senior
Notes due 2010, which have been registered under the Securities Act,
for your outstanding 11 1/4% senior euro notes; and
o $1,000,000,000 total principal amount at maturity of 13 3/4% Series B
Senior Discount Notes due 2010, which have been registered under the
Securities Act, for your outstanding 13 3/4% senior discount notes.
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To exchange your old notes, you must
properly tender them, and we must
accept them. We will exchange all old
notes that you validly tender and do
not validly withdraw.
Resales.................... We believe that you can offer for
resale, resell and otherwise transfer
the new notes without complying with
the registration and prospectus
delivery requirements of the Securities
Act if:
o you acquire the new notes in the ordinary course of your business;
o you are not participating, do not intend to participate, and have no
arrangement or understanding with any person to participate, in the
distribution of the new notes; and
o you are not an "affiliate" of ours, as defined in Rule 405 of the
Securities Act.
By executing the letter of transmittal, or by agreeing to the terms of
the letter of transmittal, you represent to us that you satisfy each of
these conditions. If you do not satisfy any of these conditions and you
transfer any exchange note without delivering a proper prospectus or
without qualifying for a registration exemption, you may incur
liability under the Securities Act. We do not assume or indemnify you
against this liability.
If a broker-dealer acquires new notes for its own account in exchange
for old notes, and it acquired the old notes through market-making or
other trading activities, the broker-dealer must acknowledge that it
will deliver a proper prospectus when any new notes are transferred. A
broker-dealer may use this prospectus for an offer to resell, a resale
or other retransfer of the new notes.
Expiration date; The exchange offer expires at, and you may
Withdrawal rights . withdraw your tender of old notes at any
time before, 5:00 p.m., New York City time
(midnight, London time), on June 3,
2000, unless we extend the expiration date.
Procedures for We issued the old notes as global
tendering old notes securities. When we issued the old dollar
denominated notes, we deposited them with
Citibank, N.A., as custodian. Citibank,
N.A. issued a certificateless depositary
interest in the dollar denominated notes,
which represents a 100% interest in the
dollar denominated notes, to DTC. Beneficial
interests in the dollar denominated notes,
which direct or indirect participants in DTC
hold through the certificateless depositary
interest, are shown on records that DTC
maintains in book-entry form.
When we issued the old euro denominated
notes, we deposited them with Morgan
Guaranty Trust Company of New York as
operator of the Euroclear System and
Cedelbank, as common depositary. Security
entitlements with respect to the euro
denominated notes are shown on records in
book-entry form that Euroclear, Cedelbank or
your securities intermediary maintain.
To tender outstanding notes in the exchange
offer the registered holder (Euroclear,
Cedelbank or DTC) must transfer your
outstanding notes in accordance with DTC's,
Euroclear's or Cedelbank's standard
procedures for such transfer. In lieu of
delivering a letter of transmittal to the
exchange agent, a computer- generated
message, in which the holder of the
outstanding notes acknowledges and agrees to
be bound by the terms
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of the letter of transmittal, must be
transmitted by DTC, Euroclear or Cedelbank
on behalf of a holder and received by the
exchange agent before 5:00 p.m., New York
City time (midnight, London time), on the
expiration date.
Special procedures for
beneficial owners........... If:
o you beneficially own old notes,
o these notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, and
o you wish to tender your old notes in the exchange offer,
please contact the registered holder as soon as possible and instruct
it to tender on your behalf and comply with our instructions set forth
elsewhere in this prospectus.
Appraisal or dissenters'
rights .................... You do not have any appraisal or dissenters'
rights in the exchange offer. If you do
not tender your old notes or we reject your
tender, you will not be entitled to any
further registration rights under the
registration rights agreement, except under
limited circumstances. However, your notes
will remain outstanding and entitled to
the benefits of the indentures.
U.S. federal income tax
considerations............. Your exchange of old notes for new notes is
not a taxable exchange for United States
federal income tax purposes. You will not
recognize any taxable gain or loss or any
interest income as a result of the exchange.
Exchange agent............. Citibank, N.A. is serving as the exchange
agent for both the dollar denominated notes
and the euro denominated notes in the
exchange offer. The address, telephone
number and facsimile number of the exchange
agent are listed in "The Exchange
Offer-Exchange agent" and in the letter of
transmittal. The address, telephone number
and facsimile number of the exchange agent
are listed in "The Exchange
Offer-Exchange agent" and in the letter of
transmittal.
In order to comply with Netherlands securities laws, the new notes may
not be offered, transferred or sold as part of their initial distribution, other
than to individuals or legal entities, situated in or outside The Netherlands,
who or which trade or invest in securities in the conduct of their profession or
business (which includes banks, brokers, dealers, insurance companies, pension
funds, other institutional investors and other parties (including treasury
departments of commercial enterprise and finance companies or groups), which
regularly trade or invest in securities).
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The New Notes
The new notes to be issued to you in the exchange offer will evidence
the same obligations of UPC as the notes you currently hold. The indentures that
currently govern your existing notes are the same indentures that will govern
the new notes. The terms of the new notes will be the same as the old notes,
except that there will be no legends on the new notes restricting their transfer
and the new notes will be registered under the Securities Act instead of having
registration rights. You should read "Description of the Notes" beginning on
page 23 for a detailed description of the terms and conditions of the new notes.
Notes Offered.......................$300,000,000 in aggregate principal amount
of dollar denominated 11 1/2% senior notes
due 2010;
$600,000,000 in aggregate principal amount
of dollar denominated 11 1/4% senior
notes due 2010;
(Euro) 200,000,000 in aggregate principal
amount of euro denominated 11 1/4%
senior notes due 2010;
$1,000,000,000 in aggregate principal amount
at maturity of dollar denominated
13 3/4% senior discount notes due 2010;
Maturity............................February 1, 2010
Accretion...........................The senior discount notes will accrete at a
rate of 13 3/4% per year, compounded
semi-annually, to an aggregate principal
amount of $1,000,000,000 at February 1,
2005.
Interest............................Annual rate of 11 1/2% for the 11 1/2%
senior notes due 2010 and 11 1/4% for the
11 1/4% senior notes due 2010. Interest on
the notes will be payable semi-annually in
cash in arrears on February 1 and August 1
of each year, beginning August 1, 2000.
The senior discount notes will accrue
interest at the rate of 13 3/4% per year,
beginning February 1, 2005. Interest on the
senior discount notes will be payable
semi-annually in cash in arrears on February
1 and August 1 of each year, beginning
August 1, 2005.
Registration Covenant;
Exchange Offer.....................We agreed to register the new notes under
the Securities Act by filing the
registration statement of which this
prospectus forms a part. We agreed to:
o cause the registration statement to become effective on or before
July 19, 2000; and
o consummate the exchange offer within 45 days after the effective
date of the registration statement.
In addition, we have agreed, in certain
circumstances, to file a "shelf registration
statement" that would allow some or all of
the notes to be offered to the public.
If we fail to meet any or all the targets
listed above (a "registration default"), the
annual interest rates on the notes will
increase by 0.50% during the first 90-day
period during which the registration default
continues, and will increase by an
additional 0.25% for each subsequent 90-day
period during which the registration default
continues, up to a maximum increase of 1.50%
over the interest rates that
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would otherwise apply to the notes. As soon
as we cure a registration default, the
interest rates on the notes will revert to
their original levels.
Upon consummation of the exchange offer,
holders of notes will no longer have any
rights under the registration rights
agreement, except to the extent that we have
continuing obligations to file a shelf
registration statement.
Additional Amounts............... Unless required by law, all our payments
with respect to the notes will be made
without withholding or deduction for any
present or future taxes or governmental
charges of whatever nature imposed or levied
by any tax authority within The
Netherlands or any other jurisdiction in
which we are organized or engaged in a trade
or business. Subject to certain exceptions,
if we are required by law to withhold or
deduct taxes in respect of payments on the
notes, we will pay additional amounts so
that the net amounts receivable by the
holders, after any withholding or deduction
in respect of such tax or liability, will
equal the respective amounts which would
have been receivable in respect of the notes
in the absence of such payments, withholding
or deduction. See "Description of the
Notes--Additional Amounts."
Optional Redemption............ On or after February 1, 2005, we may redeem
some or all of the 11 1/2% senior notes
due 2010 and senior discount notes at any
time at the redemption prices described in
the section "Optional Redemption" under the
heading "Description of the Notes." The
11 1/4% senior notes due 2010 may not be
redeemed prior to maturity, except as set
forth below.
In addition, we may redeem up to 35% of the
aggregate original principal amount of each
series of the notes prior to February 1,
2003, with the net cash proceeds from
certain sales of our equity at the price
listed in the section "Description of the
Notes--Optional Redemption," provided at
least 65% of the principal amount (principal
amount at maturity with respect to the
senior discount notes) of the respective
series of notes originally issued under the
indentures (as defined) on the issue date
remains outstanding thereafter.
Optional Tax Redemption..... We may redeem the notes, in whole but not in
part, at the principal amount thereof or,
in the case of the senior discount notes,
the accreted value thereof, plus accrued and
unpaid interest and liquidated damages, if
any, thereon to the date of redemption in
certain circumstances in which we would be
required to pay additional amounts. See
"Description of the Notes-- Redemption for
Changes in Withholding Taxes."
Mandatory Offer to If we undertake certain sales of assets or
Repurchase..........................experience specific kinds of changes in
control, we must offer to repurchase the
notes.
Ranking.............................The notes are senior, general, unsecured
obligations of United Pan-Europe
Communications, N.V. They rank equally with
all of our current and future senior,
unsecured indebtedness. The notes are
effectively junior to our senior secured
indebtedness to the extent of the collateral
securing such indebtedness and to all of
the existing and future indebtedness,
including trade payables, of our
subsidiaries.
At December 31, 1999, on a pro forma basis,
assuming consummation of UPC's tender offer
for SBS Broadcasting S.A. and the
acquisition of Eneco KabelTV and Telecom
Group, the notes would have effectively
ranked junior in right of payment to
approximately EURO 1.7 billion ($1.7
billion) of our and our subsidiaries'
indebtedness.
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Original Issue Discount......... We issued the senior discount notes with
original issue discount for U.S. federal
income tax purposes. Thus, although cash
interest will not be payable on the senior
discount notes prior to August 1, 2005, U.S.
holders will be required to include
amounts in gross income for U.S. federal
income tax purposes prior to receiving the
cash payments to which that income is
attributable. See "Certain Tax
Consequences-- Certain United States Federal
Income Tax Consequences--Senior Discount
Notes--Original Issue Discount."
Certain Covenants................. The indenture contains certain covenants
that place certain limitations on our
ability, and the ability of our
subsidiaries, to:
o borrow money,
o issue capital stock,
o pay dividends on stock or repurchase stock,
o make investments,
o create certain liens,
o engage in certain transactions with affiliates, and
o sell certain assets or merge with or into other companies.
These covenants are subject to a number of
important exceptions and qualifications,
which are described under the heading
"Description of the Notes--Certain
Covenants."
Listing.............................We have applied to list the old notes on th
Luxembourg Stock Exchange and we will
apply to list the new notes on the
Luxembourg Stock Exchange.
Trustee, Registrar,
Principal Paying and
Transfer Agent.....................Citibank, N.A.
Luxembourg Paying
Agent...............................Banque Internationale a Luxembourg.
Use of Proceeds.....................We will not receive any proceeds from the
exchange offer. We used the net proceeds
from the sale of the notes to fund a portion
of our new acquisitions, and for working
capital and other general corporate
purposes. See "Use of Proceeds."
Risk Factors........................You should carefully consider all of the
information set forth in this prospectus
and, in particular, the specific factors set
forth under the "Risk Factors" section
before deciding to tender your old notes in
the exchange offer.
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RISK FACTORS
You should carefully consider the risks described below in addition to
all other information provided to you in this prospectus before deciding whether
to participate in this exchange offer. The multi-channel television, telephone
and Internet/data service industries are changing rapidly. Therefore, the
forward-looking statements and statements of expectations, plans and intent in
this prospectus are subject to a greater degree of risk than similar statements
regarding certain other industries.
You may have difficulty selling any notes that you do not exchange.
If you do not exchange your old notes for the notes offered in this
exchange offer, you will continue to be subject to the restrictions on the
transfer of your notes. Those transfer restrictions are described in the
indenture governing the notes and in the legend contained on the old notes, and
arose because we originally issued the old notes under exemptions from, and in
transactions not subject to, the registration requirements of the Securities
Act.
In general, you may offer or sell your old notes only if they are
registered under the Securities Act and applicable state securities laws, or if
they are offered and sold under an exemption from those requirements. We do not
intend to register the old notes under the Securities Act.
If a large number of old notes are exchanged for notes issued in the
exchange offer, it may be more difficult for you to sell your unexchanged notes.
In addition, if you do not exchange your old notes in the exchange offer, you
will no longer be entitled to have those notes registered under the Securities
Act.
See "The Exchange Offer--Consequences of Failure to Exchange Old notes"
for a discussion of the possible consequences of failing to exchange your notes.
The notes are effectively junior in right of payment to obligations of our
subsidiaries
The notes are effectively subordinated to all our subsidiaries'
existing and future preferred stock, indebtedness and other liabilities. This is
because our right to receive the assets of any of our subsidiaries upon their
liquidation or reorganization will be subordinated, by operation of law, to the
claims of our subsidiaries' creditors. These creditors include trade creditors.
However, even if we are recognized as a creditor of any of our subsidiaries, our
claims would be subordinated to any indebtedness of that subsidiary that is
senior in right of payment to our claim. Our assets consist almost exclusively
of our direct and indirect ownership interests in our subsidiaries and
affiliated companies that operate our respective businesses. Our ability to pay
interest on the notes and to repay the principal of the notes depends on
earnings and cash flows or sales of the shares or assets of our subsidiaries and
affiliate companies and payment of funds by our subsidiaries or affiliated
companies to us in the form of loans, dividends and otherwise. Some of our
subsidiaries and other affiliates are parties to credit or other borrowing
agreements that severely restrict or prohibit them from paying dividends and
management fees. The future operating performance of our subsidiaries and
affiliated companies is also subject to general economic, financial,
competitive, legislative, regulatory, business and other factors beyond our
control.
See "Description of Other Debt."
The indentures restrict our and our subsidiaries' ability to incur
additional indebtedness. The indentures do not, however, otherwise specifically
prohibit us from incurring indebtedness that provides for cash payments of
interest or principal prior to maturity of the notes. See "Description of the
Notes."
The covenants in the indentures governing the notes restrict our and
our subsidiaries' activities. In some situations, we can designate some of our
subsidiaries as unrestricted subsidiaries. Unrestricted subsidiaries generally
are not subject to the restrictions of the indentures. The indentures also limit
our ability to make future investments in persons other than our subsidiaries.
Thus our ability to capitalize unrestricted subsidiaries is limited even though
we may depend materially on them for cash flow. See "Description of the Notes."
We expect to continue to make net losses for the next five to ten years.
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We have experienced net losses every year since we started business in
July 1995. Through December 31, 1999, we had recognized cumulative losses of
approximately EURO 1,114.2 million, excluding approximately EURO 70.2 million in
losses allocated to a former shareholder, Philips, through December 11, 1997.
New lines of business, in particular, generally have negative cash flow. We
expect negative cash flow from the new business ventures to increase as these
operations expand. We expect to incur net losses for at least the next five to
ten years. Continuing net losses will increase our capital needs.
Our high level of debt and limitations on our capacity to borrow and invest
could slow down growth in subscribers and revenue.
We are highly leveraged. Our high level of debt and limitations on our
capacity to borrow and invest reduce our financial flexibility. This could
reduce the amount of money available to develop our businesses and result in
slower growth in subscribers and revenues than we plan. On a pro forma basis,
including our January 2000 offering of senior notes and the completion of our
acquisition of Eneco KabelTV and Telecom Group and SBS, as of December 31, 1999,
we would have owed EURO 5.8 billion in consolidated debt. Although there can be
no assurance that we will be successful in doing so, we may need in the future
to seek significant additional financing which could result in our incurring
significant additional indebtedness. See "--We may not be able to raise
sufficient capital to fund our acquisitions strategy." Many of our
unconsolidated subsidiaries and affiliates also have long- and short-term debt.
As a subsidiary of UGC, we are restricted by the terms of UGC's debt
instruments in additional to our own test instruments. We have agreed with UGC
not to take any action that would result in a breach of these terms. This limits
our ability to incur more debt and issue certain preferred stock. Our freedom to
invest in entities that we do not control is also limited. Even if we do not
cause a breach of the terms of UGC's debt securities, a breach that is caused by
UGC or one of its other subsidiaries could still restrict us from incurring more
debt or taking other actions.
Failure to raise necessary capital could hinder our acquisitions strategy and
restrict the development of our network and the introduction of new services.
We will need to raise more capital in the future to fund our
acquisitions strategy, continue to develop our network and introduce new
services. We may raise further capital by selling assets, issuing debt or equity
or borrowing funds. We are not sure whether we will be able to raise capital
through any of these or other methods. If we cannot raise capital, we may not be
able to grow by acquiring systems as we intend. Further, we may not be able to
develop our network, including building a digital distribution platform, and
introduce new services as planned.
Technological change may make further upgrades necessary if our
operating companies are to compete effectively in their markets and continue
introducing new and enhanced services. Failure to upgrade our operating systems
or make other planned capital expenditures could harm our operations and
competitive position.
Our acquisitions strategy involves significant risks.
A key element of our growth strategy is to continue to acquire systems,
and to increase the percentage we own in some systems in order to expand our
coverage and implement our branded package of video, voice and Internet/data
offerings. We are often and currently are engaged in discussions or negotiations
regarding the acquisition of businesses and systems, some potentially
significant in relation to our size. Our acquisitions strategy is accompanied by
several challenges including:
o Identifying appropriate acquisitions. Our growth may suffer if
we are not able to identify and acquire cable/telephone
systems that are either near our existing networks or are
large enough to serve as the basis for expanded operations.
o Completing acquisitions. We may not be able to satisfy
conditions that sellers of networks may demand in order to
close acquisitions. In addition, there may be significant
legal, regulatory and contractual issues in connection with
acquisitions, such as change of control provisions in licenses
and agreements, that could delay or prevent completion.
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o Entering into new markets. If we consummate acquisitions in
markets in which we have not previously operated, we will have
no prior experience in dealing with local regulators or with
local market conditions.
In addition, our acquisitions strategy may expose us to the risk of
unanticipated expenditures. At the time of closing any new acquisition, we may
waive conditions to closing, either because we believe that the condition will
be satisfied in the future or because we believe an unsatisfactory resolution
would not materially adversely affect us and our subsidiaries as a whole. For
example, although we normally negotiate customary warranty protection when
acquiring new systems, we may be liable for disclosed or undisclosed
liabilities, or we may have to incur greater capital expenditures than we
intended, in relation to a particular acquisition. There is a risk that our
beliefs in some of these instances will prove to be incorrect.
We cannot be certain that we will be successful in integrating acquired
businesses with our existing businesses.
Our success depends, in part, upon the successful integration of our
new acquisitions and any future acquisitions we make. Although we believe that
the consummation of our new acquisitions will result in significant benefits and
synergies, the integration of these businesses will also present significant
challenges, including:
o realizing economies of scale in interconnection, programming
and network operations, and eliminating
duplicate overheads; and
o integrating networks, financial systems and operational
systems.
We cannot assure you, with respect to either our new acquisitions or future
acquisitions, that we will realize any anticipated benefits or will successfully
integrate any acquired business with our existing operations.
Adverse regulation of our video services could limit our revenues and growth
plans and expose us to various penalties.
In most of our markets, regulation of video services takes the form of
price controls and programming content restrictions. Also, in The Netherlands
and Austria, local municipalities have contractual rights that restrict our
flexibility to increase prices, change programming and introduce new services.
In addition, laws in Belgium may require us to obtain special authorization for
distributing programming from non-European Union sources (which we are currently
distributing without such authorization), and to distribute certain digital
multiplexed programming (which we are not distributing). In Israel, our
subscription fees and program offerings are restricted by franchise agreements
and are subject to review by governmental agencies, including the Restrictive
Trade Practices Tribunal. We are subject to pending claims in Israel alleging
that we have engaged in certain unlawful acts, including violation of our cable
television franchise agreements. @Entertainment, our Polish operating company,
is currently operating in certain areas without the necessary permits. Failure
to obtain these permits could lead to governmental orders requiring
@Entertainment to stop operating in those areas, the imposition of monetary
penalties, and forfeiture of our cable networks. Poland also has restrictions
with respect to rights to install and operate cable television and DTH
broadcasting networks by entities in which foreign ownership exceeds certain
limits and in which the majority of governing bodies are not Polish citizens
residing in Poland. @Entertainment may not be deemed to be in full compliance
with these or other restrictions or regulations. In addition, @Entertainment's
permits could be revoked or limited in scope upon a direct or indirect change of
control of PTK Operator Sp.z o.o. There is a risk that our acquisition of
@Entertainment constituted an indirect change of control of PTK Operator
Sp.zo.o.
Regulation may increase the cost of offering Internet/data services and slow
demand.
The Internet access business has, to date, not been materially
restricted by regulation in our markets. The legal and regulatory environment of
Internet access and electronic commerce is uncertain, however, and may change.
New laws and regulations may be adopted for Internet service offerings. Existing
laws may be applied to the new forms of electronic commerce. Uncertainty and new
regulation could increase our costs. It could also slow the growth of electronic
commerce on the Internet significantly. This could delay growth in demand for
our Internet/data services and limit the growth of our revenues. New and
existing laws may cover issues such as:
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o user privacy,
o pricing controls,
o consumer protection,
o cross-border commerce,
o libel and defamation,
o copyright and trademark infringement,
o pornography and indecency, and
o other claims based on the nature and content of Internet
materials.
Low demand, competition, unplanned costs, regulation and difficulties with
interconnection could hinder the profitability of our telephone services.
Our telephone services may not become profitable for a number of
reasons. Customer demand could be low, or we may encounter competition and
pricing pressure from incumbent and other telecommunications operators. Our
network upgrade may cost more than planned. In addition, our operating companies
need to obtain and retain licenses and other regulatory approvals for our
existing and new services. They may not succeed. Furthermore, our operating
systems need to interconnect their networks with those of the incumbent
telecommunications operators in order to provide telephone services. Problems in
negotiating interconnection agreements could delay the introduction or impede
the profitability of our telephone services. Not all of our systems have
interconnection agreements in place, and interconnection agreements have limited
duration and may be subject to regulatory and judicial review. We are
negotiating interconnection agreements for our planned telephone markets that do
not yet have them. This may involve time-consuming negotiations and regulatory
proceedings. While incumbent telecommunications operators in the European Union
are required by law to provide interconnection, incumbent telecommunications
operators may not agree to interconnect on a time scale or on terms that will
permit us to offer profitable telephone services. After interconnection
agreements are concluded, we remain reliant upon the good faith and cooperation
of the other parties to these agreements for reliable interconnection. We are
currently involved in a dispute with the Austrian telecommunications operator in
the Austrian courts over our interconnection arrangement there.
The complexities of the operating systems we need to develop for our new
services could increase their costs and slow their introduction.
We only recently began to offer local telephone and advanced
Internet/data services. We may not have planned for or be able to overcome all
of the problems in introducing these new services. Our new services may not meet
our financial expectations. This would impede our planned revenue growth and
harm our financial condition.
The new services involve many operating complexities. We will need to
develop and enhance new services, products and systems, as well as marketing
plans to sell the new services. For example, we intend to introduce a
comprehensive new billing system to support our new telephone and Internet/data
businesses. Until then, however, we plan to employ enhanced versions of our
existing customer care and billing systems for these services. Problems with the
existing or new systems could delay the introduction of the new services,
increase their costs, or slow successful marketing. These complexities and
others may cause the new services not to meet our financial expectations. This
could impede our planned revenue growth and harm our financial condition.
The success of our new telephone and Internet/data services depends on whether
we continue to achieve technological advances.
Technology in the cable television and telecommunications industry is
changing very rapidly. These changes influence the demand for our products and
services. We need to be able to anticipate these changes and to develop
successful new and enhanced products quickly enough for the changing market.
This will determine whether we can continue to increase our revenues and the
number of our subscribers and be competitive.
We have introduced new services, including:
o additional video channels and tiers,
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o pay-per-view services with frequent starting times, which are
known as "impulse" pay-per-view,
o high speed data and Internet access services, and cable
telephone services.
The technologies used to provide these services are in operation in
some of our systems as well as systems of other providers. However, we cannot be
sure that demand for our services will develop or be maintained in light of
other new technological advances.
Lack of necessary equipment could delay or impair the expansion of our new
services.
If we cannot obtain the equipment needed for our existing and planned
services, our operating results and financial condition may be harmed. For
example, a customer will need a digital set-top box to access the Internet or
receive our other enhanced services through a television set. These boxes are
being developed by several suppliers. If there are not enough affordable set-top
boxes for subscribers, however, we may have to delay our expansion plans.
Inability to obtain the necessary programming could reduce demand for our
services.
Our success depends on obtaining or developing affordable and popular
programming for our subscribers. We may not be able to obtain or develop enough
competitive programming to meet our needs. This would reduce demand for our
video services, limiting their revenues. We rely on other programming suppliers
for most of our programming although we plan to commit substantial resources to
obtaining and developing new programming. We expect to seek partners for this.
We may not, however, find appropriate partners, obtain necessary broadcasting
licenses or successfully implement our programming plans.
European use of the Internet, electronic commerce and other bandwidth intensive
applications may not increase as we expect.
Our business plan assumes that Western European use of the Internet,
electronic commerce and other bandwidth intensive applications will increase
substantially in the next few years, in a manner similar to the increased use in
the United States in the past few years. Our business plan assumes a less rapid
increase in Eastern Europe. If the use of applications requiring intensive
bandwidth does not increase in Europe as anticipated, chello broadband and other
services involving managed bandwidth could be materially lower than we currently
anticipate. Reduced demand for our services may have a negative effect on our
pricing and our financial condition.
Increased competition in video services could reduce our revenues.
The cable television industry in many of our markets is competitive and
changing rapidly. Competition could result in the loss of our customers and a
decrease in our revenues. We expect that competition will increase with new
entrants who use multi-channel television technologies different from the
technologies our cable systems use. These technologies may include DTH satellite
services, private cable systems used by housing associations and multiple unit
dwellings, and "wireless" cable transmitted by low frequency radio.
We may also face competition from other communications and
entertainment media companies. These could include incumbent telecommunications
operators and providers of services over the Internet. In some franchise areas,
our rights to provide video services are not exclusive. We currently compete
with other cable operators and in the future may have to compete with additional
cable operators.
The competitiveness of the telephone services and Internet/data services
industries will make it difficult for our new services to enter the market.
In the provision of our telephony and Internet/data services, we will
face competition from incumbent telecommunications operators and other new
entrants to these markets. Our telephony service also competes with wireless
telephone carriers. In the provision of Internet/data services we also compete
with companies that provide such services using traditional, low speed telephone
lines, and we expect to face growing competition from Internet service providers
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that, like us, use higher-speed, higher-capacity cable modems and providers that
use other broadband technologies, such as fiber, microwave, satellite and
digital subscriber lines. Some of these competitors have more experience in
providing these services than we have and others may be able to devote more
capital to these services than we can.
Developing a profitable telephone service will depend, among other
things, on whether we can attract and retain customers, maintain competitive
prices, and provide high quality customer care and billing services without
incurring significant additional costs. Prices for long distance calls have
decreased significantly in recent years and we expect them to continue to drop.
Increased competition may also push prices down for local telephone services.
Regulators may make incumbent telecommunications operators lower their rates or
increase their pricing flexibility. Because these are our principal competitors,
this could force us to lower our rates to remain competitive.
Foreign currency exchange rate fluctuations may cause financial losses.
Changes in foreign currency exchange rates can reduce the value of our
assets and revenues and increase our liabilities and costs. In general, neither
we nor our operating companies try to reduce our exposure to these exchange rate
risks by using hedging transactions. We may therefore suffer losses solely as a
result of exchange rate currencies. In each country, our operating companies
attempt to match costs, revenues, borrowings and repayments in their local
currencies. Nonetheless, they have had to pay for a lot of equipment in
currencies other than their own. They may continue to be required to do so. On
an aggregate basis, as of December 31, 1999, pro forma for our January 2000
senior note offering, including the effect of the cross-currency swaps entered
into in July, October 1999 and January 2000, about 39.7% of our consolidated
debt was denominated in currencies outside of the European Monetary Union. At
the UPC level, the value of our investment in an operating company outside the
euro "zone" is affected by the exchange rate between the euro and the local
currency of the operating company.
We will continue to be controlled by UGC, whose interests may be different from
those of other shareholders.
UGC owns about 54.8% of our outstanding ordinary shares A and all of
our priority shares. As a result, United is able to control the election of all
but two of the members of our Supervisory Board. Philips has had the right to
appoint one member since UGC acquired 50% of us from Philips in 1997. In
addition, the Discount Group, our partner in our Israeli system, has a
contractual right to appoint one director although they have not yet exercised
this right. UGC will be able to determine the outcome of almost all corporate
actions requiring the approval of our shareholders. Thus, UGC will continue to
control substantially all of our business affairs and policies. The priority
shares give UGC additional approval rights over certain of our actions.
Our Supervisory Board has the power to approve transactions in which
UGC has an interest. This power is subject to directors' fiduciary duties to our
other shareholders. Nonetheless, conflicts may arise between the interests of
UGC and our other shareholders. For example, UGC could cause us to provide
financial resources to our shareholders. This could limit our current strategy
of investing in our new businesses.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We caution you that, in addition to the historical financial
information included herein, this prospectus includes and incorporates by
reference certain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Litigation Reform Act") that are
based on management's beliefs, as well as on assumptions made by and information
currently available to management. These forward- looking statements may include
statements concerning our plans, objectives and future economic prospects,
expectations, beliefs, future plans and strategies, anticipated events or trends
and similar expressions concerning matters that are not historical facts. These
forward-looking statements involve both known and unanticipated risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from what we
say or imply with the forward-looking statements. These factors include, among
other things, changes in television viewing preferences and habits by our
subscribers and potential subscribers, their acceptance of new technology,
programming alternatives and new video services we may offer. They also include
our ability to complete announced transactions and to manage and grow our newer
telephone and Internet/data services. These forward-looking statements apply
only as of
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the time of this prospectus and we have no obligation or plans to provide
updates or revisions to these forward-looking statements or any other changes in
events or circumstances on which these forward-looking statements are based.
THE EXCHANGE OFFER
Purpose of the exchange offer:
On January 20, 2000, we privately placed $300,000,000 in aggregate
principal amount of dollar denominated 11 1/2% senior notes due 2010,
$600,000,000 in aggregate principal amount of dollar denominated 11 1/4% senior
notes due 2010, (Euro)200,000,000 in aggregate principal amount of euro
denominated 11 1/4% senior notes due 2010, and $1,000,000,000 in aggregate
principal amount at maturity of dollar denominated 13 3/4% senior discount notes
due 2010. Simultaneously with the sale of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old notes.
Under the registration rights agreement, we agreed to file a registration
statement regarding the exchange of the old notes for notes with terms identical
in all material respects. We also agreed to use our reasonable best efforts to
cause that registration statement to become effective with the SEC.
We issued the old notes as global securities. When we issued the old
dollar denominated notes, we deposited them with Citibank, N.A., as custodian.
Citibank, N.A. issued a certificateless depositary interest in the dollar
denominated notes, which represents a 100% interest in the dollar denominated
notes, to DTC. Beneficial interests in the dollar denominated notes, which
direct or indirect participants in DTC hold through the certificateless
depositary interest, are shown on records that DTC maintains in book-entry form.
When we issued the old euro denominated notes, we deposited them with
Morgan Guaranty Trust Company of New York as operator of the Euroclear System
and Cedelbank, as common depositary. Security entitlements with respect to the
euro denominated notes are shown on records in book-entry form that Euroclear,
Cedelbank or your securities intermediary maintain.
We are conducting the exchange offer to satisfy our contractual
obligations under the registration rights agreement. The form and terms of the
new notes are the same as the form and terms of the old notes, except that the
new notes will be registered under the Securities Act. As a result, the new
notes will not bear legends restricting their transfer and will not contain the
registration rights and liquidated damage provisions contained in the old notes.
The old notes provide that, if a registration statement relating to the exchange
offer has not been filed by April 20, 2000, declared effective by July 19, 2000
and consummated within 45 days after the effective date of the registration
statement, we will pay liquidated damages on the old notes. Upon the completion
of the exchange offer, you will not be entitled to any liquidated damages on
your old notes or any further registration rights under the registration rights
agreement, except under limited circumstances. The exchange offer is not
extended to holders of old notes in any jurisdiction where the exchange offer
does not comply with the securities or blue sky laws of that jurisdiction. A
copy of the registration rights agreement is filed as an exhibit to the
registration statement of which this prospectus is a part.
In this section entitled "The Exchange Offer," the term "holder" means
any person whose old notes are held of record by DTC, Euroclear or Cedelbank and
who wants to deliver these old notes by book-entry transfer.
Terms of the exchange offer:
The expiration date of the exchange offer is 5:00 p.m., New York City
time (midnight, London time), on June 3, 2000 unless we extend the exchange
offer.
The exchange offer is not conditioned upon holders tendering a minimum
principal amount of old notes.
You do not have any appraisal or dissenters' rights in the exchange
offer. If you do not tender old notes or you tender old notes that we do not
accept, your old notes will remain outstanding. Any old notes will be entitled
to the benefits of the indenture under which they were, and the new notes will
be, issued. The old notes will not, however, be entitled to any further
registration rights under the registration rights agreement, except under
limited circumstances. See
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"Risk Factors--You may have difficulty selling any notes that you do not
exchange" for more information regarding notes outstanding after the exchange
offer.
After the expiration date, we will return to you any tendered old notes
that we did not accept for exchange.
You will not have to pay brokerage commissions or fees or transfer
taxes for exchanging your notes if you follow the instructions in the letter of
transmittal. We will pay the charges and expenses, other than those taxes
described below, in the exchange offer. See "--Fees and expenses" below for
further information regarding fees and expenses.
Neither UPC nor UPC's board of directors recommends that you tender or
not tender old notes in the exchange offer. In addition, UPC has not authorized
anyone to make any recommendation. You must decide whether to tender in the
exchange offer and, if so, the aggregate amount of old notes to tender.
We have the right, in accordance with applicable law, at any time:
o to delay the acceptance of the old notes;
o to terminate the exchange offer if we determine that any of
the conditions to the exchange offer have not occurred or have
not been satisfied;
o to extend the expiration date of the exchange offer and keep
all old notes tendered other than those notes properly
withdrawn; and
o to waive any condition or amend the terms of the exchange
offer.
If we materially change the exchange offer, or if we waive a material
condition of the exchange offer, we will promptly distribute a prospectus
supplement to you disclosing the change or waiver. We also will extend the
exchange offer if required by Rule 14e-1 under the Securities Exchange Act of
1934.
If we exercise any of the rights listed above, we will promptly give
written notice of the action to the exchange agent, as described below under
"--Exchange agent", and we will issue a release to appropriate news agencies. In
the case of an extension, an announcement will be made no later than 9:00 a.m.,
New York City time in the case of dollar denominated notes, or 9:00 a.m., London
time in the case of euro denominated notes, on the next business day after the
previously scheduled expiration date.
Acceptance of old notes for exchange, and issuance of new notes
UPC will issue to the exchange agent new notes for old notes tendered and
accepted and not withdrawn promptly after the expiration date. The exchange
agent might not deliver the new notes to all tendering holders at the same time.
The timing of delivery depends upon when the exchange agent receives and
processes the required documents.
UPC will be deemed to have exchanged old notes validly tendered and not
withdrawn when it gives written notice to the exchange agent of their
acceptance. The exchange agent is an agent for UPC for receiving tenders of old
notes, letters of transmittal and related documents. If UPC for any reason:
o delays the acceptance or exchange of any old notes, or
o extends the exchange offer, or
o is unable to accept or exchange notes,
then the exchange agent may, on behalf of UPC and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered notes. Old notes that the exchange agent
retains may not be withdrawn, except according to the withdrawal procedures
outlined below in "--Withdrawal rights."
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In tendering old notes, you must warrant in the letter of transmittal
or in an agent's message, which is described below, that:
o you have full power and authority to tender, exchange, sell,
assign and transfer old notes,
o UPC will acquire good, marketable and unencumbered title to
the tendered old notes, free and clear of all liens,
restrictions, charges and other encumbrances, and
o the old notes tendered for exchange are not subject to any
adverse claims or proxies.
You also must warrant and agree that you will, upon request, execute
and deliver any additional documents that UPC or the exchange agent requests to
complete the exchange, sale, assignment, and transfer of the old notes.
Procedures for Tendering Old Notes:
To tender outstanding notes in the exchange offer, the registered
holder of the notes must transfer such outstanding notes into the exchange
agent's account in accordance with DTC's ATOP procedures or Euroclear's or
Cedalbank's standard transfer procedures.
In lieu of delivering a letter of transmittal to the exchange agent, a
computer-generated message, in which the holder of the outstanding euro notes
acknowledges and agrees to be bound by the terms of the letter of transmittal,
must be transmitted by DTC, Euroclear or Cedelbank, as the case may be, on
behalf of a holder and received by the exchange agent prior to 5:00 p.m., New
York City time (midnight, London time), on the expiration date.
The tender by a holder of outstanding notes will constitute an
agreement between such holder and us in accordance with the terms and subject to
the conditions set forth herein and in the letter of transmittal.
No letter of transmittal should be sent to us.
Only a registered holder of outstanding notes may tender outstanding
notes in the exchange offer.
Any beneficial holder whose outstanding notes are registered in the
name of his broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf.
Determination of Validity
All the questions as to the validity, form, eligibility, time of
receipt, acceptance and withdrawal of the tendered outstanding notes will be
determined by us in our sole discretion, which determinations will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not validly tendered or any outstanding notes our acceptance of which would, in
the opinion of our counsel, be unlawful. We also reserve the absolute right to
waive any irregularities or conditions of tender as to particular outstanding
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of outstanding notes must be cured within such time as
we shall determine. Neither us, the exchange agent nor any other person shall be
under any duty to give notification of defects or irregularities with respect to
tenders of outstanding notes nor shall any of them incur any liability for
failure to give such notification. Tenders of outstanding notes will not be
deemed to have been made until such irregularities have been cured or waived.
Any outstanding notes received by the exchange agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned without cost by the exchange agent to the tendering
holder of such outstanding notes unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
In addition, we reserve the right in our sole discretion to:
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(a) purchase or make offers or any outstanding notes that
remain outstanding subsequent to the expiration date, or to terminate
the exchange offer and
(b) to the extent permitted by applicable law, purchase
outstanding notes in the open market, in privately negotiated
transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
By tendering, each holder of outstanding notes will represent to us
that, among other things, the exchange notes acquired pursuant to the exchange
offer are being obtained in the ordinary course of business of the person
receiving such exchange notes, whether or not such person is the holder, that
neither the holder nor any other person has an arrangement or understanding with
any person to participate in the distribution of the exchange notes and that
neither the holder nor any such other person is an "affiliate" of ours within
the meaning of Rule 405 under the Securities Act.
Withdrawal of Tenders:
Except as otherwise provided herein, tenders of outstanding notes may
be withdrawn at any time prior to 5:00 p.m., New York City time (midnight,
London time),on the expiration date unless previously accepted for exchange.
To withdraw a tender of outstanding notes in the exchange offer, a
notice of withdrawal must be transmitted by DTC, Euroclear or DTC, Cedelbank, as
the case may be, and received by the exchange agent, in accordance with the
standard operating procedures of DTC, Euroclear or Cedelbank, as the case may
be, on behalf of a holder, prior to 5:00 p.m., New York City time (midnight,
London time), on the expiration date and prior to acceptance for exchange
thereof by us. Any such notice of withdrawal must
(1) specify the name of the person having deposited the
outstanding notes to be withdrawn,
(2) identify the outstanding notes to be withdrawn, including
the principal amount of such outstanding notes, and
(3) be signed by the depositor in the same manner as the
original signature on the letter of transmittal by which such
outstanding notes were tendered, or be accompanied by documents of
transfers sufficient to permit the trustee with respect to the
outstanding notes to register the transfer of such outstanding notes
into the name of the depositor withdrawing the tender.
All questions as to the validity, form and eligibility, including time
of receipt, for such withdrawal notices will be determined by us, whose
determination shall be final and binding on all parties. Any outstanding notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the exchange offer and no exchange notes will be issued with respect thereto
unless the outstanding notes so withdrawn are validly tendered. Any outstanding
notes which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. Properly withdrawn outstanding notes may be tendered by following one of
the procedures for tendering described above at any time prior to the expiration
date.
Exchange Agent:
Citibank, N.A., the trustee under the indentures, has been appointed as
exchange agent for the exchange of the outstanding notes. Questions and requests
for assistance relating to the exchange of the outstanding notes and requests
for additional copies of this prospectus or of the letter of transmittal should
be directed to the exchange agent addressed at Citibank Global Agency and Trust
Services, telephone (44-171) 508-3839.
Resales of new notes:
Based on the staff of the SEC's letters to other parties, we believe
that holders of new notes, other than broker-dealers, can offer the new notes
for resale, resell and otherwise transfer the new notes without delivering a
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prospectus to prospective purchasers. However, you must acquire the new notes in
the ordinary course of business and have no intention of engaging in a
distribution of the new notes, as a "distribution" is defined by the Securities
Act. We are exchanging the old notes for new notes in reliance upon the staff of
the SEC's position, set forth in interpretive letters to third parties in other
similar transactions. We will not seek our own interpretive letter. As a result,
we cannot assure you that the staff will take the same position on this exchange
offer as it did in interpretive letters to other parties.
If you are an "affiliate" of UPC or you intend to distribute new notes,
or if you are a broker-dealer who purchased old notes from UPC to resell
pursuant to Rule 144A or any other available exemption under the Securities Act,
you:
o cannot rely on the staff's interpretations in the above
mentioned interpretive letters;
o cannot tender old notes in the exchange offer; and
o must comply with the registration and prospectus delivery
requirements of the Securities Act to transfer the old notes,
unless the sale is exempt.
In addition, if you are a broker-dealer who acquired old notes for your
own account as a result of market-making or other trading activities and you
exchange the old notes for new notes, you must deliver a prospectus with any
resales of the new notes.
If you want to exchange your old notes for new notes, you will be
required to affirm that you:
o are not an "affiliate" of UPC;
o are acquiring the new notes in the ordinary course of your
business;
o have no arrangement or understanding with any person to
participate in a distribution of the new notes, within the
meaning of the Securities Act; and
o are not a broker-dealer, are not engaged in, and do not intend
to engage in, a distribution of the new notes, within the
meaning of the Securities Act.
In addition, we may require you to provide information regarding the number of
"beneficial owners" of the old notes within the meaning of Rule 13d-3 under the
Exchange Act. Each broker-dealer that receives new notes for its own account
must acknowledge that it acquired the old notes for its own account as the
result of market-making activities or other trading activities. Each
broker-dealer must further agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of new notes.
By making this acknowledgment and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" under the Securities
Act. Based on the staff's position in interpretive letters issued to third
parties, we believe that broker-dealers who acquired old notes for their own
accounts as a result of market-making activities or other trading activities may
fulfill their prospectus delivery requirements with respect to the new notes
with a prospectus meeting the requirements of the Securities Act. Accordingly, a
broker-dealer may use this prospectus to satisfy such requirements. We have
agreed that a broker-dealer may use this prospectus for a period ending six
months after the expiration date of the exchange offer. You should read the
section entitled "Plan of Distribution" for further information about the use of
this prospectus by broker-dealers. A broker-dealer intending to use this
prospectus in the resale of new notes must notify us, on or prior to the
expiration date, that it is a participating broker-dealer. This notice may be
given in the letter of transmittal or may be delivered to the exchange agent.
Any participating broker-dealer who is an "affiliate" of UPC may not rely on the
staff's interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act when reselling new notes.
Each participating broker-dealer exchanging old notes for new notes
agrees that, upon receipt of notice from UPC:
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o that any statement contained or incorporated by reference in
this prospectus makes the prospectus untrue in any material
respect, or
o that this prospectus omits to state a material fact necessary
to make the statements contained or incorporated by reference
in this prospectus, in light of the circumstances under which
they were made, not misleading, or
o on the occurrence of other events specified in the
registration rights agreement,
the participating broker-dealer will suspend the sale of new notes.
Each participating broker-dealer agrees not to resell the new notes
until:
o UPC has amended or supplemented this prospectus to correct the
misstatement or omission and UPC furnishes copies of the
amended or supplemented prospectus to the participating
broker-dealer, or
o UPC gives notice that the sale of the new notes may be resumed.
If UPC gives notice suspending the sale of new notes, it shall extend
the six month period during which this prospectus may be used by a participating
broker-dealer by the number of days between the date UPC gives notice of
suspension and the date participating broker-dealers receive copies of the
amended or supplemented prospectus or the date UPC gives notice resuming the
sale of new notes.
Fees and Expenses
We will pay the exchange agent's fees for their services and
out-of-pocket expenses. We will also pay brokerage houses and other custodians,
nominees and fiduciaries their reasonable out-of- pocket expenses for sending
copies of this prospectus and related documents to holders of old notes, and for
handling or tendering for their customers.
We will pay the transfer taxes for the exchange of the old notes in the
exchange offer. If, however, new notes are delivered to or issued in the name of
a person other than the registered holder, or if a transfer tax is imposed for
any reason other than for the exchange of old notes in the exchange offer, then
the tendering holder will pay the transfer taxes. If a tendering holder does not
submit satisfactory evidence of payment of taxes or exemption from taxes with
the letter of transmittal, the taxes will be billed directly to the tendering
holder.
We will not make any payment to brokers, dealers or other nominees
soliciting acceptances in the exchange offer.
Accounting Treatment
The new notes will be recorded at the same carrying value as the old
notes. Accordingly, UPC will not recognize any gain or loss on the exchange for
accounting purposes.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. The net
proceeds from the sale of the old notes to the initial purchasers was
approximately EURO 1.5billion ($1.6 billion), less fees and expenses. We used
the net proceeds to fund a portion of the new acquisitions, and for working
capital, other general corporate purposes and acquisitions.
CAPITALIZATION
The following table sets forth, on a consolidated basis, our
non-restricted cash and cash equivalents, short-term and long-term debt and
equity capitalization as of December 31, 1999, to reflect (1) our offering of
senior notes and
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discount notes in January 2000 and the related swap agreement, (2) the use of
the net proceeds from our offering of senior notes and discount notes in January
2000, (3) our acquisition of Eneco and (4) our tender offer for SBS.
The table should be read in conjunction with our audited consolidated
financial statements, the notes and supplements thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our "Unaudited Pro Forma Condensed Consolidated Financial Data," all of which
are incorporated by reference.
As of December 31, 1999
Actual Adjusted
Non-restricted cash and cash equivalents............ 1,025,460 278,977
========= =======
Short-term debt:
Stjarn seller's note................................ 99,378 99,378
Stjarn facilities................................... 39,088 39,088
A2000 facility...................................... 20,447 20,447
Other............................................... 4,328 10,879
Current portion of long-term debt................... 50,291 61,839
--------- ---------
Total short-term debt..................... 213,532 231,631
========= =========
Long-term debt:
UPC January 2000 senior notes and discount notes.... - 1,618,110
UPC July 1999 senior notes and discount notes....... 1,473,840 1,473,840
UPC October 1999 senior notes and discount notes.... 985,739 985,739
UPC senior credit facility.......................... 357,482 357,482
PCI discount notes.................................. 16,355 16,355
@Entertainment discount notes....................... 267,955 267,955
New Telekabel facility.............................. 255,263 255,263
CNBH facility....................................... 121,556 121,556
A2000 facilities.................................... 207,831 207,831
Mediaresaux facility................................ 44,912 44,912
RCF facility........................................ 31,654 31,654
Rhone Vision Cable credit facility.................. 60,979 60,979
Videopole facility.................................. 7,704 7,704
Monor facility...................................... 33,280 33,280
Bank and other loans................................ 38,860 72,304
--------- ---------
3,903,410 5,554,964
Shareholders' equity:
Priority stock...................................... - -
Ordinary stock...................................... 435,605 453,459
Additional paid-in capital.......................... 2,371,951 3,672,677
Deferred compensation............................... (47,425) (47,425)
Accumulated deficit................................. (1,114,219) (1,114,219)
Other cumulative comprehensive income .............. 374,288 374,288
--------- --------
Total shareholders' equity ............... 2,020,200 3,338,780
--------- ---------
Total capitalization....................... 5,923,610 8,893,744
========= =========
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DESCRIPTION OF THE NOTES
The 11 1/2% Senior Notes due 2010 (the "11 1/2% Senior Notes due 2010")
were issued pursuant to an indenture (the "11 1/2% Senior Notes due 2010
Indenture") dated as of January 20, 2000, by and among United Pan-Europe
Communications N.V. and Citibank N.A., as trustee (the "11 1/2% Senior Notes due
2010 Trustee"); the 11 1/4% Senior Dollar Notes due 2010 and the 11 1/4% Senior
Euro Notes due 2010 (together the "11 1/4% Senior Notes due 2010" and together
with the 11 1/2% Senior Notes due 2010, the "Senior Notes") were issued pursuant
to an indenture (the "11 1/4% Senior Notes due 2010 Indenture" and together with
the 11 1/2% Senior Notes due 2010 Indenture, the "Senior Notes Indentures")
dated as of January 20, 2000, by and among United Pan-Europe Communications N.V.
and Citibank N.A., as trustee (the "11 1/4% Senior Notes due 2010 Trustee" and
together with the 11 1/2% Senior Notes due 2010 Trustee, the "Senior Notes
Trustee"); and the Senior Discount Notes were issued pursuant to an indenture
(the "Discount Notes Indenture" and together with the Senior Notes Indentures,
the "Indentures") dated as of January 20, 2000, by and among United Pan-Europe
Communications N.V. and Citibank N.A., as trustee (the "Discount Notes Trustee"
and together with the Senior Notes Trustee, the "Trustees"). Although, for
convenience, the 11 1/2% Senior Notes due 2010, the 11 1/4% Senior Notes due
2010 and the Senior Discount Notes are referred to as the "Notes," the 11 1/2%
Senior Notes due 2010, the 11 1/4% Senior Notes due 2010 and the Senior Discount
Notes were issued each as a separate series and will not together have any class
voting or other rights.
The following summaries of certain provisions of the Indentures are
summaries only, do not purport to be complete and are qualified in their
entirety by reference to all of the provisions of the Indentures.
You can find the definitions of certain capitalized terms in this
section under the subheading "- Certain Definitions." For purposes of this
section, references to "Company," "we," "our," or "us" includes only United
Pan-Europe Communications N.V. and not its Subsidiaries.
The terms of the Notes include those stated in the Indentures and those
made part of the Indentures by reference to the Trust Indenture Act of 1939, as
amended (the "TIA"). The Notes are subject to all such terms, and Holders of
Notes are referred to the Indentures and the TIA for a statement thereof. A copy
of forms of the Indentures are available from the Company upon request.
The following description is a summary of the material provisions of
the Indentures. It does not restate the Indentures in their entirety. We urge
you to read the Indentures because they, and not this description, define your
rights as a Holder of the Notes.
The terms of the notes to be issued in the exchange offer are identical
in all material respects to the terms of the old notes, except for the transfer
restrictions relating to the old notes. Any old notes that remain outstanding
after the exchange offer, together with the notes issued under the same
Indenture in the exchange offer, will be treated as a single class of securities
under each indenture for voting purposes. When we refer to the term "Note" or
"Notes", we are referring to both the old notes and the notes to be issued in
the exchange offer .
Brief Description of the Notes
The Notes
The Notes are:
o our unsecured, general obligations;
o ranked equally in right of payment with all of our existing
and future unsubordinated and unsecured Indebtedness; and
o ranked senior in right of payment to all of our existing and
future Subordinated Indebtedness;
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Our operations are conducted through our subsidiaries and, therefore,
we depend on the cash flow of our subsidiaries to meet our obligations,
including our obligations under the Notes. The Notes are effectively
subordinated in right of payment to all Indebtedness and other liabilities and
commitments (including trade payables and lease obligations) and preferred stock
of our subsidiaries. Any right we have to receive assets of any of our
subsidiaries upon the subsidiary's liquidation or reorganization (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
and preferred interest holders, except to the extent that we are recognized as a
creditor of the subsidiary, in which case our claims would still be subordinate
in right of payment to any security in the assets of the subsidiary and any
indebtedness of the subsidiary senior to that held by us. The term
"Subsidiaries" as used in this Description of the Notes does not include
Unrestricted Subsidiaries. On a pro forma basis, assuming the completion of the
acquisition of Eneco and the completion of the SBS tender offer, as of December
31, 1999, we would have owed EURO 5.8 billion in consolidated debt.
Principal, Maturity and Interest
The Senior Notes
The 11 1/2% Senior Notes due 2010, the 11 1/4% Senior Euro Notes due
2010 and the 11 1/4% Senior Dollar Notes due 2010 are limited in aggregate
principal amount to $300,000,000, 200,000,000 and $600,000,000, respectively,
and will mature on February 1, 2010, February 1, 2010 and February 1, 2010,
respectively. Interest on the 11 1/2% Senior Notes due 2010 and the 11 1/4%
Senior Notes due 2010 will accrue at a rate of 11 1/2%, and 11 1/4% per annum,
respectively, and will be payable semi-annually in arrears, on each February 1
and August 1 (each, an "Interest Payment Date"), commencing August 1, 2000, to
the record holders thereof on each preceding January 15 and July 15 (each, a
"Record Date"). Except as set forth below, interest on the Senior Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from January 20, 2000. Interest will be computed on the
basis of a 360-day year comprised of twelve 20-day months. Interest on overdue
principal and (to the extent permitted by law) on overdue installments of
interest will accrue at a rate equal to the rate borne by the Senior Notes.
Notwithstanding the foregoing paragraph, in the event that, at any time
prior to 180 days following the Issue Date, the Company issues or sells, or
offers or negotiates to issue or sell, for cash, any debt securities (other than
debt securities convertible or exchangeable into Capital Stock of the Company)
to qualified institutional buyers who, as a regular part of their business,
purchase debt securities comparable to the Notes, the interest rate otherwise
applicable to the Notes shall, on and after the date of such event, be increased
by 25 basis points. Any amounts owing as a result of such increase shall be paid
to holders of record as of the Record Payment Date next following any such
event, on the immediately following Interest Payment Date. Upon the occurrence
of such event, the Company shall cause promptly to be delivered a notice to
Holders of the occurrence thereof and the amount to be paid to such holders of
record on the next Interest Payment Date.
A reference to payment of principal in respect of the Senior Notes
includes a payment of premium, if any. For additional information concerning
payments on the Senior Notes. See "--Payment on the Notes."
We have appointed Citibank N.A. to serve as registrar and principal
paying agent for the Senior Notes.
We have applied to list the Senior Notes on the Luxembourg Stock
Exchange. As long as the Senior Notes are listed on the Luxembourg Stock
Exchange and as long as the rules of this exchange require, we will also
maintain a paying agent and a transfer agent in Luxembourg.
The Senior Notes are issued without coupons and in fully registered
form only, in minimum denominations of $1,000 or 1,000, as the case may be, and
in integral multiples of $1,000 or 1,000. No service charge will be made for any
registration of transfer or exchange of the Senior Notes, but we may require
payment to cover any transfer tax or similar governmental charge.
The Senior Discount Notes
The Senior Discount Notes are limited in aggregate principal amount at
maturity to $1,000,000,000, and will mature on February 1, 2010. Except as set
forth below, the Accreted Value of the Senior Discount Notes will accrete at a
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rate of 13 3/4% per annum, until they reach their principal amount at maturity
on February 1, 2005. Interest on the Senior Discount Notes will be payable in
cash semi-annually in arrears, on each February 1 and August 1 (each, an
"Interest Payment Date"), commencing August 1, 2005, to the record holders
thereof on each preceding January 15 and July 15 (each, a "Record Date").
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Interest on overdue principal and (to the extent permitted by
law) on overdue installments of interest will accrue at a rate equal to the rate
borne by the Senior Discount Notes.
Notwithstanding the foregoing paragraph, in the event that, at any time
prior to 180 days following the Issue Date, the Company issues or sells, or
offers or negotiates to issue or sell, for cash, any debt securities (other than
debt securities convertible or exchangeable into Capital Stock of the Company)
to qualified institutional buyers who, as a regular part of their business,
purchase debt securities comparable to the Notes, the interest rate and rate of
accretion of the Accreted Value otherwise applicable to the Notes shall be
increased, on and after the date of such event, by 25 basis points. Upon the
occurrence of such event, the Company shall cause promptly to be delivered a
notice to Holders of the occurrence thereof. In the event that additional
amounts are payable pursuant to this paragraph, the Accreted Value of the Senior
Discount Notes will reach on February 1, 2005 a principal amount at maturity in
excess of $1,000 per Senior Discount Note, but not in excess of $1,012 per
Senior Discount Note.
A reference to payment of principal or Accreted Value in respect of the
Senior Discount Notes includes a payment of premium, if any. For additional
information concerning payments on the Senior Discount Notes, see "--Payment on
the Notes."
We have appointed Citibank N.A. to serve as registrar and principal
paying agent for the Senior Discount Notes.
We have applied to list the Senior Discount Notes on the Luxembourg
Stock Exchange. As long as the Senior Discount Notes are listed on the
Luxembourg Stock Exchange and as long as the rules of this exchange require, we
will also maintain a paying agent and a transfer agent in Luxembourg.
The Senior Discount Notes are issued without coupons and in fully
registered form only, in minimum denominations of $1,000 principal amount at
maturity, and in integral multiples of $1,000 principal amount at maturity. No
service charge will be made for any registration of transfer or exchange of the
Senior Discount Notes, but we may require payment to cover any transfer tax or
similar governmental charge.
Additional Amounts
All payments made by us under or with respect to the Notes will be made
free and clear of and without withholding or deduction for or on account of any
present or future Taxes imposed or levied by or on behalf of any Taxing
Authority within The Netherlands, or within any other jurisdiction in which the
Company is organized or engaged in business, unless we are required to withhold
or deduct Taxes by law or by the interpretation or administration thereof. If we
are required to withhold or deduct any amount for or on account of Taxes (other
than any estate, inheritance, gift, sales, excise, transfer, wealth, or personal
property tax, or similar non-income tax based assessment or governmental charge)
imposed by a Taxing Authority within (i) The Netherlands, (ii) any jurisdiction
in which the Company is organized or engaged in business, or (iii) any other
jurisdiction if payments on the Notes are made by the Company or any Affiliate
or agent of the Company from within such jurisdiction, from any payment made
under or with respect to the Notes, we will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each Holder of Notes (including Additional Amounts) after such withholding or
deduction (including any withholding or deduction in respect of such Additional
Amounts) will not be less than the amount the Holder would have received if such
Taxes had not been withheld or deducted; provided that no Additional Amounts
will be payable with respect to a payment made to a Holder with respect to any
Tax or portion thereof which would not have been imposed, payable or due:
(1) but for the existence of any present or former connection
between the Holder (or the beneficial owner of, or person
ultimately entitled to obtain an interest in, such Notes) and
The Netherlands or other jurisdiction in which the Company is
organized or engaged in business other than the holding of the
Notes;
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(2) but for the failure of the Holder to use its reasonable best
efforts to comply upon written notice by us delivered 60 days
prior to any payment date with a request by us to satisfy any
certification, identification or other reporting requirements
which shall include any applicable forms or instructions
whether imposed by statute, treaty, regulation or
administrative practice concerning the nationality or
residence of the Holder or the connection of the Holder with
The Netherlands or other jurisdiction in which we are
organized or engaged in business; provided that the Holder's
failure to comply with the 60 day requirement described above
shall not relieve us of our obligation to pay Additional
Amounts if the Holder's application for any requested
certification, identification or other reporting requirement
remains outstanding or is otherwise pending and the Holder
continues to use its reasonable best efforts to obtain such
information; provided, further, that we shall pay any
Additional Amounts not paid on any payment date as a result of
the operation of this clause upon the satisfaction of the
relevant certification, identification or other reporting
requirements within 30 days after such payment date; provided,
further, that we shall not, as a result of such satisfaction
occurring after the payment date, have already irrevocably
paid to the relevant taxing authority the withheld or deducted
amount in respect of which such Additional Amounts would have
been payable;
(3) but for the failure of the Holder (or the beneficial
individual owner of, or individual ultimately entitled to
obtain an interest in, such Notes) who is an individual
citizen or resident of a member state of the European Union to
comply with a written notice by us delivered 60 days prior to
any payment date with a request by us to provide any
certification, identification or other reporting requirement,
whether imposed by statute, treaty, regulation or
administrative practice, if such action would otherwise
eliminate the requirement for the withholding or deduction of
Taxes; or
(4) if the beneficial owner of, or person ultimately entitled to
obtain an interest in, such Notes had been the Holder of the
Notes and would not be entitled to the payment of Additional
Amounts (excluding the impact of the book-entry procedures
described under "--Book-Entry Procedures").
In addition, Additional Amounts will not be payable with respect to any
Tax which is payable and so paid otherwise than by withholding or deduction from
payments of, or in respect of principal of, Accreted Value of, premium on, or
any interest or Liquidated Damages on, the Notes. We will remit the full amount
of any withholdings or deductions for or on account of Taxes to the relevant
Taxing Authority in accordance with applicable law. We will make reasonable
efforts to obtain certified copies of tax receipts evidencing the payment of any
Taxes so deducted or withheld from each Taxing Authority imposing such Taxes. We
will furnish to the Holders, within 60 days after the date the payment of any
Taxes so deducted or withheld are due pursuant to applicable law, either
certified copies of tax receipts evidencing such payment by us or, if such
receipts are not obtainable, other evidence of such payments by us.
At least 30 days prior to each date on which any payment under or with
respect to the Notes is due and payable, if we will be obligated to pay
Additional Amounts with respect to such payment, we will deliver to the
respective Trustee an Officers' Certificate stating (i) the fact that such
Additional Amounts will be payable, (ii) the amounts so payable and (iii) such
other information necessary to enable the respective Trustee to pay such
Additional Amounts to the Holders of Notes on the Interest Payment Date.
Whenever in the Indentures or in this "Description of the Notes" there is
mentioned, in any context, the payment of amounts based upon the principal
amount or Accreted Value of the Notes or of Accreted Value, principal, premium,
if any, interest or Liquidated Damages, if any, or of any other amount payable
under or with respect to any of the Notes, such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
Optional Redemption
The 11 1/2% Senior Notes due 2010
We will not have the right to redeem any 11 1/2% Senior Notes due 2010
prior to February 1, 2005 (other than out of the Net Cash Proceeds of an Equity
Offering of common stock, as described further below).
At any time on or after February 1, 2005, we may redeem the 11 1/2%
Senior Notes due 2010 for cash at our option, in whole or in part, upon not less
than 30 days nor more than 60 days notice to each Holder of Senior Notes due
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2010, at the following redemption prices (expressed as percentages of principal
amount thereof) if redeemed during the 12-month period commencing February 1 of
the years indicated below, in each case together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of redemption of
the 11 1/2% Senior Notes due 2010 ("Redemption Date"):
11 1/2%
Senior
Notes due
Year 2010
- ----
2005................... 107.260%
2006................... 104.840%
2007................... 102.420%
2008 and thereafter.... 100.000%
Prior to February 1, 2003, upon an Equity Offering of common stock for
cash of the Company, up to 35% of the aggregate original principal amount of the
11 1/2% Senior Notes due 2010 issued pursuant to the 11 1/2% Senior Notes due
2010 Indenture may be redeemed at our option within 90 days after the date of
the closing of such Equity Offering, on not less than 30 days, but not more than
60 days, notice to each Holder of the 11 1/2% Senior Notes due 2010 to be
redeemed, with cash in an amount not in excess of the Net Cash Proceeds of such
Equity Offering, at a redemption price equal to 111.500% of the principal
amount, in the case of the 11 1/2% Senior Notes due 2010, together with accrued
and unpaid interest and Liquidated Damages, if any, thereon to the Redemption
Date; provided, however, that immediately following such redemption not less
than 65% of the aggregate original principal amount of the 11 1/2% Senior Notes
due 2010 originally issued pursuant to the 11 1/2% Senior Notes due 2010
Indenture remain outstanding and provided, further, that such redemption shall
occur within 90 days after the date of the closing of such Equity Offering.
If the Redemption Date hereunder is on or after an interest record date
("Record Date") on which the Holders of record have a right to receive the
corresponding interest due and Liquidated Damages, if any, and on or before the
associated Interest Payment Date, any accrued and unpaid interest and Liquidated
Damages, if any, due on such Interest Payment Date will be paid to the Person in
whose name a 11 1/2% Senior Note due 2010 is registered at the close of business
on such Record Date, and such Interest and Liquidated Damages, if any, will not
be payable to Holders whose 11 1/2% Senior Notes due 2010 are redeemed pursuant
to such redemption.
The 11 1/4% Senior Notes due 2010
We will not have the right to redeem any 11 1/4% Senior Notes due 2010
prior to their maturity on February 1, 2010 (other than out of the Net Cash
Proceeds of an Equity Offering of common stock, as described in the next
following paragraph).
Prior to February 1, 2003, upon an Equity Offering of common stock for
cash of the Company, up to 35% of the aggregate original principal amount of
each of the 11 1/4% Senior Dollar Notes due 2010 and the 11 1/4% Senior Euro
Notes due 2010 (determined separately) issued pursuant to the 11 1/4% Senior
Notes due 2010 Indenture may be redeemed at our option within 90 days after the
date of the closing of such Equity Offering, on not less than 30 days, but not
more than 60 days, notice to each Holder of the 11 1/4% Senior Notes due 2010 to
be redeemed, with cash in an amount not in excess of the Net Cash Proceeds of
such Equity Offering, at a redemption price equal to 111.250% of the principal
amount, in the case of the 11 1/4% Senior Dollar Notes due 2010 and 111.250% of
the principal amount in the case of the 11 1/4% Senior Euro Notes due 2010, in
each case together with accrued and unpaid interest and Liquidated Damages, if
any, thereon to the Redemption Date; provided, however, that immediately
following such redemption not less than 65% of the aggregate original principal
amount of the 11 1/4% Senior Dollar Notes due 2010 and the 11 1/4% Senior Euro
Notes due 2010 (determined separately) originally issued pursuant to the 11 1/4%
Senior Notes due 2010 Indenture remain outstanding and provided, further, that
such redemption shall occur within 90 days after the date of the closing of such
Equity Offering.
If the Redemption Date hereunder is on or after a Record Date on which
the Holders of record have a right to receive the corresponding interest due and
Liquidated Damages, if any, and on or before the associated Interest Payment
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Date, any accrued and unpaid interest and Liquidated Damages, if any, due on
such Interest Payment Date will be paid to the Person in whose name a 11 1/4%
Senior Note due 2010 is registered at the close of business on such Record Date,
and such Interest and Liquidated Damages, if any, will not be payable to Holders
whose 11 1/4% Senior Notes due 2010 are redeemed pursuant to such redemption.
The Senior Discount Notes
We will not have the right to redeem any Senior Discount Notes prior to
February 1, 2005 (other than out of the Net Cash Proceeds of an Equity Offering
of common stock, as described further below).
At any time on or after February 1, 2005, we may redeem the Senior
Discount Notes for cash at our option, in whole or in part, upon not less than
30 days nor more than 60 days notice to each Holder of Senior Discount Notes, at
the following redemption prices (expressed as percentages of Accreted Value
thereof) if redeemed during the 12-month period commencing February 1 of the
years indicated below, in each case together with accrued and unpaid interest
and Liquidated Damages, if any, thereon to the Redemption Date:
Senior
Year Discount Notes
2005................... 106.875%
2006................... 104.583%
2007................... 102.292%
2008 and thereafter.... 100.000%
Prior to February 1, 2003, upon an Equity Offering of common stock for
cash of the Company, up to 35% of the aggregate original principal amount at
maturity of the Senior Discount Notes issued pursuant to the Discount Notes
Indenture may be redeemed at our option within 90 days after the date of the
closing of such Equity Offering, on not less than 30 days, but not more than 60
days, notice to each such Holder of the Senior Discount Notes to be redeemed,
with cash in an amount not in excess of the Net Cash Proceeds of such Equity
Offering, at a redemption price equal to 113.75% of the Accreted Value thereof,
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Redemption Date; provided, however, that immediately following
such redemption not less than 65% of the aggregate original principal amount at
maturity of the Senior Discount Notes originally issued pursuant to the Discount
Notes Indenture remains outstanding.
If the Redemption Date hereunder is on or after an interest record date
("Record Date") on which the Holders of record have a right to receive the
corresponding interest due and Liquidated Damages, if any, and on or before the
associated Interest Payment Date, any accrued and unpaid interest and Liquidated
Damages, if any, due on such Interest Payment Date will be paid to the Person in
whose name a Senior Discount Note is registered at the close of business on such
Record Date, and such Interest and Liquidated Damages, if any, will not be
payable to Holders whose Senior Discount Notes are redeemed pursuant to such
redemption.
Redemption for Changes in Withholding Taxes
The Notes will be subject to redemption in whole, but not in part, at
our option at 100% of the principal amount or, in the case of the Senior
Discount Notes, the Accreted Value thereof, together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Redemption Date, if a
Tax Event has occurred and is continuing. Prior to the publication of any notice
of redemption as a result of a Tax Event, we shall be required to deliver to the
respective Trustee (i) an Officer's Certificate stating that such amendment or
change has occurred (irrespective of whether such amendment or change is then
effective), describing the facts leading thereto and stating that we cannot
avoid the requirement to pay Additional Amounts by taking reasonable measures
available to us and (ii) an opinion of counsel reasonably acceptable to the
respective Trustee to the effect that we are or will become obligated to pay
Additional Amounts as a result of such change or amendment.
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Mandatory Redemption
The Notes will not have the benefit of any sinking fund and we will not
be required to make any mandatory redemption payments with respect to the Notes.
Selection and Notice
In the case of a partial redemption, the respective Trustee shall
select the Notes or portions thereof for redemption on a pro rata basis, by lot
or in such other manner it deems appropriate and fair. The Notes may be redeemed
in part in multiples of $1,000 or 1,000, as applicable, only.
Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption to the
Holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the registrar for the Company. Any notice which
relates to a Note to be redeemed in part only must state the portion of the
principal amount (principal amount at maturity, in the case of the Senior
Discount Notes) equal to the unredeemed portion thereof and must state that on
and after the date of redemption, upon surrender of such Note, a new Note or
Notes in a principal amount equal to the unredeemed portion thereof will be
issued. On and after the date of redemption, interest will cease to accrue (and,
if applicable, the Accreted Value of the Senior Discount Notes will cease to
increase) on the Notes or portions thereof called for redemption, unless we
default in the payment thereof.
If the Notes are listed on the Luxembourg Stock Exchange the Company
will publish a redemption notice in a daily newspaper with general circulation
in Luxembourg (which, for as long as the Notes are traded on the Luxembourg
Stock Exchange, is expected to be the Luxemburger Wort).
Certain Covenants
Repurchase of Notes at the Option of the Holder Upon a Change of Control
The Indentures provide that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an offer (subject only to conditions required by applicable law, if
any) by us (the "Change of Control Offer"), to require us to repurchase all or
any part of such Holder's Notes (provided that the principal amount of such
Notes must be $1,000 (or 1,000, as applicable) or an integral multiple thereof)
on a date (the "Change of Control Purchase Date") that is no later than 35
Business Days after the occurrence of such Change of Control, at a cash price
equal to, in the case of the Senior Notes, 101% of the principal amount thereof,
and in the case of the Senior Discount Notes, 101% of the Accreted Value thereof
(in each case, the "Change of Control Purchase Price"), together with accrued
and unpaid interest and Liquidated Damages, if any, to the Change of Control
Purchase Date.
The Change of Control Offer shall be made within 10 Business Days
following a Change of Control and shall remain open for 20 Business Days
following its commencement (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, we shall promptly purchase all
Notes properly tendered in response to the Change of Control Offer.
As used herein, a "Change of Control" means any merger or consolidation
of the Company with or into any Person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of our
assets, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction(s), either
(A) any "person" or "group" (other than the Parent or any of the Principals) is
or becomes the "beneficial owner," directly or indirectly, of more than 35% of
the total voting power of all classes of our securities in the aggregate
normally entitled to vote in the election of directors, managers, or trustees,
as applicable, of the transferee(s) or surviving entity or entities and such
"person" or "group" beneficially owns (after giving effect to such transaction)
a greater percentage of the total voting power than is at that time beneficially
owned by Parent and the Principals (in the aggregate) and none of the Parent nor
any of the Principals has the right or ability by voting power, contract or
otherwise to elect or nominate for elections a majority of our Supervisory
Board, or (B) the Continuing Directors cease for any reason to constitute a
majority of the Supervisory Board of the Company then in office or (C) we adopt
a plan of liquidation (other than a plan of liquidation as a consequence of
which (1) the Parent and the Principals (in the aggregate) beneficially own at
least the same percentage of voting power after the consummation of such plan as
before or otherwise retain the right or ability, by voting power, to control the
Person that acquires the proceeds of such liquidation and (2) the
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Person that acquires the substantial majority of the proceeds of such
liquidation shall have assumed by supplemental indenture the Company's
obligations pursuant to the Indentures).
As used in this covenant, "person" or "group" has the meaning given by
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable.
On or before the Change of Control Purchase Date, we will:
(1) accept for payment Notes or portions thereof properly tendered
pursuant to the Change of Control
Offer,
(2) deposit with the Paying Agent for us cash sufficient to pay
the Change of Control Purchase Price (together with accrued
and unpaid interest and Liquidated Damages, if any,) of all
Notes so tendered, and
(3) deliver to the respective Trustee the Notes so accepted
together with an Officers' Certificate listing the Notes or
portions thereof being purchased by us.
The Paying Agent promptly will pay the Holders of Notes so accepted an
amount equal to the Change of Control Purchase Price (together with accrued and
unpaid interest and Liquidated Damages, if any,) and the respective Trustee
promptly will authenticate and deliver to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered. We will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
The Change of Control purchase feature of the Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management.
The phrase "all or substantially all" of our assets will likely be
interpreted under applicable law and will be dependent upon particular facts and
circumstances. As a result, there may be a degree of uncertainty in ascertaining
whether a sale or transfer of "all or substantially all" of our assets has
occurred. In addition, no assurance can be given that we will be able to acquire
Notes tendered upon the occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all
applicable laws, rules and regulations, including, if applicable, Regulation 14E
under the Exchange Act and the rules thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this covenant, compliance by
us with such laws and regulations shall not in and of itself cause a breach of
their obligations under such covenant.
If the Change of Control Purchase Date hereunder is on or after an
interest payment Record Date and on or before the associated Interest Payment
Date, any accrued and unpaid interest (and Liquidated Damages, if any) due on
such Interest Payment Date will be paid to the Person in whose name a Note is
registered at the close of business on such Record Date, and such interest (and
Liquidated Damages, if applicable) will not be payable to Holders who tender the
Notes pursuant to the Change of Control Offer.
The Company will not be required to make an offer to purchase in
connection with any series of Notes on a Change of Control Purchase Date, if,
before the Change of Control occurs, it has exercised its right to redeem all of
the Notes of such series, as described, above under "Optional Redemption" or
"Redemption for Changes in Withholding Taxes."
Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock
The Indentures provide that, except as set forth in this covenant, we
will not, and will not permit any of our Subsidiaries to, directly or
indirectly, issue, assume, guaranty, incur, become directly or indirectly liable
with respect to (including as a result of an Acquisition), or otherwise become
responsible for, contingently or otherwise (individually and
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collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness
(including Disqualified Capital Stock and Acquired Indebtedness), other than
Permitted Indebtedness.
Notwithstanding the foregoing if:
(1) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect
on a pro forma basis to, such incurrence of Indebtedness; and
(2) on the date of such incurrence (the "Incurrence Date"), either
(i) the Leverage Ratio of the Company for the Reference Period
immediately preceding the Incurrence Date, after giving effect on
a pro forma basis to such incurrence of such Indebtedness and, to
the extent set forth in the definition of Leverage Ratio, the use
of proceeds thereof, would not exceed 7.0 to 1.0 (the "Debt
Incurrence Ratio"), (ii) the Consolidated Coverage Ratio of the
Company for the Reference Period immediately preceding the
Incurrence Date, after giving effect on a pro forma basis to such
incurrence of such Indebtedness and, to the extent set forth in
the definition of Consolidated Coverage Ratio, the use of
proceeds thereof, would not be less than 1.75 to 1.0, or (iii)
after giving effect on a pro forma basis to such incurrence of
Indebtedness, and, to the extent used to retire other
Indebtedness, the use of proceeds therefrom, the amount of
Indebtedness outstanding of the Company would not exceed 225% of
the Consolidated Invested Equity Capital of the Company,
then we may incur such Indebtedness (including Disqualified Capital Stock and
Acquired Indebtedness).
In addition, the foregoing limitations of the first paragraph of this
covenant will not prohibit:
(a) if no Event of Default shall have occurred and be continuing, the
incurrence by us or our Subsidiaries of Indebtedness in an
aggregate amount incurred and outstanding at any time pursuant to
this paragraph (a) (plus any refinancing indebtedness incurred to
retire, defease, refinance, replace or refund such Indebtedness)
of up to $400 million (or the equivalent thereof, at the time of
incurrence, in the applicable foreign currencies);
(b) the incurrence by us and our Subsidiaries of Indebtedness
pursuant to the Credit Agreement in an aggregate amount incurred
and outstanding at any time pursuant to this paragraph (b) (plus
any refinancing indebtedness incurred to retire, defease,
refinance, replace or refund such Indebtedness) of up to 1
billion, minus the amount of any such Indebtedness (1) retired
with the Net Cash Proceeds from any Asset Sale applied to reduce
permanently the outstanding amounts or the commitments with
respect to such Indebtedness pursuant to the covenant "Limitation
on Sale of Assets and Subsidiary Stock" or (2) assumed by a
transferee in an Asset Sale;
(c) the incurrence by any Subsidiary of Indebtedness if on the
Incurrence Date either (1) the Leverage Ratio of such Subsidiary
of the Company for the Reference Period immediately preceding the
Incurrence Date, after giving effect on a pro forma basis to such
incurrence of such Indebtedness and to the extent set forth in
the definition of Leverage Ratio, the use of proceeds thereof,(
would be no more than 7.0 to 1.0, or (2) the Consolidated
Coverage Ratio of such Subsidiary for the Reference Period
immediately preceding the Incurrence Date, after giving effect on
a pro forma basis to such incurrence of such Indebtedness and, to
the extent set forth in the definition of Consolidated Coverage
Ratio, the use of proceeds thereof, would be no less than 1.75 to
1.00, or (3) after giving effect on a pro forma basis to such
incurrence of such Indebtedness, and, to the extent used to
retire other Indebtedness, the use of proceeds therefrom, the
amount of Indebtedness outstanding of such Subsidiary would not
exceed 225% of the Consolidated Invested Equity Capital of such
Subsidiary, provided in the case of each of clauses (c)(1), (2)
and (3), the net proceeds therefrom are used in a Related
Business of the Company or any affiliated company of the Company,
and provided, further, that for the purposes of this clause (c) a
Subsidiary may be a co-obligor or guarantor on such Indebtedness
of another Subsidiary of the Company (A) if such co-obligor or
guarantor Subsidiary owns (either directly or indirectly through
one or more Subsidiaries of the Company) all or a portion of the
Equity Interests of the Subsidiary of the Company that incurred
such Indebtedness, (B) if all or a
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portion of the Equity Interests of such co-obligor or guarantor
Subsidiary is owned (either directly or indirectly through one or
more Subsidiaries of the Company) by the Subsidiary that incurred
such Indebtedness or (C) if such co-obligor or guarantor
Subsidiary owns (either directly or indirectly through one or
more Subsidiaries of the Company) all or a portion of the
business that will use the proceeds of such Indebtedness; and,
(d) if no Event of Default shall have occurred and be continuing, the
incurrence by Subsidiaries of the Company of Indebtedness
pursuant to the Existing Agreements up to, but not in excess of
the maximum applicable amounts of Indebtedness available for
borrowing pursuant to the terms of each such Existing Agreement
as in effect on the date of the Indenture; provided that in
determining the maximum applicable amounts available, it shall be
assumed that the Company satisfies any applicable conditions to
borrowing.
Indebtedness (including Disqualified Capital Stock) of any Person which
is outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other Person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable.
Upon each incurrence, we may designate pursuant to which provision of
this covenant such Indebtedness is being incurred and such Indebtedness shall
not be deemed to have been incurred or outstanding under any other provision of
this covenant, except as stated otherwise in the foregoing provisions.
Notwithstanding anything contained herein to the contrary, we will not,
and will not permit any of our Subsidiaries to, incur any Indebtedness that is
contractually subordinate to any other Indebtedness of the Company unless such
Indebtedness is at least as subordinate to the Notes.
Our ability to borrow and take other actions is significantly
restricted by the debt instruments and other obligations of our Parent. Our
ability to incur Indebtedness and take other actions we believe may be necessary
or appropriate in the due course of our business will, therefore, not be wholly
within our control (as limited by the Indentures and our other restrictive
agreements). Investors in the Notes are cautioned to be familiar with the
further material restrictions contained in our Parent's indentures, under which
we are currently deemed to be a restricted subsidiary.
Limitation on Restricted Payments
The Indentures provide that we will not, and will not permit any of our
Subsidiaries to, directly or indirectly, make any Restricted Payment if, after
giving effect to such Restricted Payment on a pro forma basis:
(1) a Default or an Event of Default shall have occurred and be
continuing,
(2) the Company is not permitted to incur at least $1.00 (or its
foreign currency equivalent) of additional Indebtedness
pursuant to the Debt Incurrence Ratio in the covenant
"Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock," or
(3) the aggregate amount of all Restricted Payments made by the
Company and its Subsidiaries, including after giving effect to
such proposed Restricted Payment, on and after July 30, 1999,
would exceed, without duplication (and except to the extent
otherwise credited pursuant to clause (g) of the definition of
"Permitted Investment"), the sum of:
(a)(i) the amount of the cumulative Consolidated EBITDA of the
Company, if positive, less 150% of the cumulative Consolidated
Fixed Charges of the Company, for the period (taken as one
accounting period), commencing on the first day of the first
full fiscal quarter commencing after July 30, 1999, to and
including the last day of the fiscal quarter ended immediately
prior to the date of each such calculation for which
consolidated financial statements of the Company are
available, provided that
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such sum shall not be deemed to result in an amount less than
zero for purposes of any calculation pursuant to this clause
(3)(a)(i); or (ii) if such cumulative Consolidated EBITDA of
the Company is zero or less, then the amount of such
cumulative Consolidated EBITDA for such period; plus
(b) the aggregate Net Cash Proceeds received by the Company
from the sale of its Qualified Capital Stock (other than (i)
to a Subsidiary of the Company and (ii) to the extent applied
in connection with a Qualified Exchange), after July 30, 1999,
plus
(c) to the extent that any Investment (other than a Permitted
Investment) that was made after July 30, 1999 is sold for cash
or Cash Equivalents or otherwise liquidated or repaid for cash
or Cash Equivalents, the amount of cash or Cash Equivalents
received by the Company, but only to the extent of the lesser
of (A) the cash or Cash Equivalents transferred as a return of
capital with respect to such Investment and (B) the initial
amount of such Investment (in either case, less the cost of
disposition, if any); plus
(d) in the event an Unrestricted Subsidiary is designated as a
Subsidiary, an amount equal to fair market value, at such
time, of the Investment of the Company and its Subsidiaries
made after July 30, 1999, provided, however, that such amount
shall not exceed the amount of Investments previously made in
such Subsidiary that were counted as Restricted Payments
pursuant to this covenant.
The foregoing clauses (2) and (3) of the immediately preceding
paragraph, however, will not prohibit:
(u) any dividend, distribution or payment of dividends on
Disqualified Capital Stock permitted by the covenant
"Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock"; and
(v) any repurchase by the Company of any shares of any class
or options to acquire such shares from any current, future or
former directors, officers or employees of the Company or any
of its Subsidiaries or Affiliates, provided that the aggregate
amount of all the repurchases made under this clause shall not
exceed $10 million in any twelve-month period (with unused
amounts in any calendar year being carried over to succeeding
calendar years subject to a maximum (without giving effect to
the following proviso) of $14 million in any calendar year);
provided, further, that such amount in any calendar year may
be increased by an amount not to exceed (1) the cash proceeds
from the sale of Capital Stock of the Company to its
supervisory board members, management board members or
officers of the Company and its Subsidiaries that occurs after
July 30, 1999, plus (2) the cash proceeds of key man life
insurance policies received by the Company and its
Subsidiaries after July 30, 1999;
and the foregoing clauses (1), (2) and (3) of the immediately preceding
paragraph will not prohibit:
(w) any dividend, distribution or other payments by any
Subsidiary of the Company on its Equity Interests that is paid
pro rata to all holders of such Equity Interests;
(x) a Qualified Exchange;
(y) the payment of any dividend on Qualified Capital Stock
within 60 days after the date of its declaration if such
dividend could have been made on the date of such declaration
in compliance with the foregoing provisions; or
(z) the payment of dividends by the Company in cash or
Qualified Capital Stock pursuant to the terms of any Parent
Stock Instrument that is incurred or issued (as applicable) in
compliance with the Indentures.
The full amount of any Restricted Payment made pursuant to the
foregoing clauses (u), (v), (w), (y) and (z), but not pursuant to clause (x) of
the immediately preceding sentence, however, will be counted as Restricted
Payments made for purposes of the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
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For purposes of this covenant, the amount of any Restricted Payment
made or returned, if other than in cash, shall be the fair market value thereof,
as determined in the good faith reasonable judgment of our Supervisory Board,
unless stated otherwise, at the time made or returned, as applicable.
Additionally, on the date of each Restricted Payment, we shall deliver an
Officers' Certificate to the respective Trustee describing in reasonable detail
the nature of such Restricted Payment, stating the amount of such Restricted
Payment, stating in reasonable detail the provisions of the Indentures pursuant
to which such Restricted Payment was made and certifying that such Restricted
Payment was made in compliance with the terms of the Indentures.
Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries
The Indentures provide that we will not, and will not permit any of our
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual restriction on the ability of any Subsidiary of the Company to pay
dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, the Company
or any Subsidiary of the Company, except:
(a) restrictions imposed by the Notes or the Indentures or by
other Indebtedness of the Company ranking pari passu with the
Notes, provided that such restrictions are no more restrictive
than those imposed by the Indentures and the Notes;
(b) restrictions imposed by applicable law;
(c) restrictions under Indebtedness outstanding on July 30, 1999,
including pursuant to the Credit Agreement;
(d) restrictions under any Acquired Indebtedness not incurred in
violation of the Indentures or any agreement (including any
Equity Interest) relating to any property, asset, or business
acquired by the Company or any of its Subsidiaries, which
restrictions in each case existed at the time of acquisition,
were not put in place in connection with or in anticipation of
such acquisition, and are not applicable to any Person, other
than the Person acquired, or to any property, asset or
business, other than the property, assets and business so
acquired;
(e) any such restriction or requirement imposed by Indebtedness
incurred under the Credit Agreement pursuant to the covenant
"Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock," provided that such restriction or
requirement is no more restrictive than that imposed by the
Credit Agreement as of July 30, 1999;
(f) with respect solely to a Subsidiary of the Company imposed
pursuant to a binding agreement which has been entered into
for the sale or disposition of all or substantially all of the
Equity Interests or assets of such Subsidiary, provided that
such restrictions apply solely to the Equity Interests or
assets of such Subsidiary which are being sold;
(g) restrictions under Purchase Money Indebtedness not incurred in
violation of the Indentures, provided that such restrictions
relate only to the property financed with such Indebtedness;
(h) with respect to any Subsidiary, restrictions contained in the
terms of any Indebtedness incurred in compliance with the
Indentures, or any agreement pursuant to which such
Indebtedness was issued, if
(A) the encumbrance or restriction applies only in the
event of a payment default or a default with respect
to a financial covenant contained in such
Indebtedness or agreement,
(B) the Company shall have reasonably determined that the
encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is
customary in comparable financings, and
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(c) the Company shall have reasonably determined that any
such encumbrance or restriction will not materially
affect the Company's ability to make principal or
interest payments on the Notes; and
(i) in connection with and pursuant to permitted Refinancings,
replacements of restrictions imposed pursuant to clauses (a),
(c), (d), or (g), or this clause (i), of this paragraph that
are not more restrictive than those being replaced and do not
apply to any other Person or assets than those that would have
been covered by the restrictions in the Indebtedness so
refinanced.
Notwithstanding the foregoing, (a) customary provisions restricting
subletting, assignment or transfer of any lease, license, conveyance, or similar
document or instrument entered into in the ordinary course of business,
consistent with industry practice and (b) any asset or property subject to a
Lien which is not prohibited to exist with respect to such asset pursuant to the
terms of the Indentures may be subject to customary restrictions on the transfer
or disposition thereof pursuant to such Lien.
Limitation on Issuances of Guarantees by Subsidiaries
Notwithstanding anything herein or in the Indentures to the contrary,
if any Subsidiary of the Company guarantees any other Indebtedness of the
Company (other than Indebtedness incurred pursuant to the Credit Agreement in
accordance with the terms of the Indentures) ("Guaranteed Indebtedness") then
such Subsidiary must become a Guarantor (a "Subsidiary Guarantor") of the Notes
on a basis such that the Subsidiary's guarantee of the Notes shall stand in
substantially the same relative ranking in right of payment to the guarantee of
such other Indebtedness as the Notes stand in relative ranking to such other
Indebtedness; provided that this paragraph shall not be applicable to any
guarantee by any Restricted Subsidiary that (a) existed at the time such Person
became a Subsidiary of the Company and (b) was not incurred in connection with,
or in contemplation of, such Person becoming a Subsidiary of the Company.
The Guarantee of the Notes by a Subsidiary Guarantor shall be
automatically released upon (i) the sale or other disposition of all or
substantially all of the Company's and its Subsidiaries' beneficial interest in
the Equity Interests or assets of such Subsidiary Guarantor, provided that
thereafter such Subsidiary Guarantor shall cease to be a Subsidiary of the
Company, (ii) the consolidation or merger of any such Subsidiary Guarantor with
any Person other than the Company or a Subsidiary of the Company if, as a result
of such consolidation or merger, such Subsidiary Guarantor ceases to be a
Subsidiary of the Company (and shall not be a Subsidiary of the successor to the
Company), (iii) a Legal Defeasance, or (iv) the unconditional and complete
release of such Subsidiary Guarantor from its Guarantee of all Guaranteed
Indebtedness.
Limitation on Liens Securing Indebtedness
The Indentures provide that we will not, and will not permit any of our
Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind,
other than Permitted Liens, upon any of their respective assets now owned or
acquired on or after the date of the Indentures or upon any income or profits
therefrom securing any Indebtedness of the Company, unless the Company provides,
and causes its Subsidiaries to provide, concurrently therewith, that the Notes
are equally and ratably so secured; provided that if such Indebtedness is
Subordinated Indebtedness, the Lien securing such Subordinated Indebtedness
shall be subordinate and junior to the Lien securing the Notes with the same
relative priority as such Subordinated Indebtedness shall have with respect to
the Notes.
Limitation on Sale of Assets and Subsidiary Stock
The Indentures provide that we will not, and will not permit any of our
Subsidiaries to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of our or
their property, business or assets (including by merger or consolidation in the
case of a Subsidiary of the Company), and including any sale or other transfer
or issuance of any Equity Interests of any Subsidiary of the Company, whether by
the Company or a Subsidiary or through the issuance, sale or transfer of Equity
Interests by a Subsidiary of the Company, and including any sale and leaseback
transaction (any of the foregoing, an "Asset Sale"), unless:
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(1)(a) the amount equal to the Net Cash Proceeds therefrom (the "Asset
Sale Offer Amount") is applied (i) within 360 days (1,825 days in
the case of an Asset Sale resulting from the underwritten public
sale of equity securities of chello broadband or 540 days in the
case of any other Special Character Asset Sale), after the date
of such Asset Sale to the optional redemption of the Notes in
accordance with the terms of the Indentures and other
Indebtedness of the Company ranking pari passu in right of
payment with the Notes and with similar provisions requiring the
Company to redeem such Indebtedness with the proceeds from such
Asset Sale, pro rata in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued
with original issue discount) of the Notes and such other
Indebtedness then outstanding or (ii) within 360 days (1,825 days
in the case of an Asset Sale resulting from the underwritten
public sale of equity securities of chello broadband or 540 days
in the case of any other Special Character Asset Sale), after the
date of such Asset Sale to the repurchase of the Notes and such
other Indebtedness ranking pro rata in right of payment with the
Notes and with similar provisions requiring us to make an offer
to purchase such Indebtedness with the proceeds from such Asset
Sale pursuant to a cash offer (subject only to conditions
required by applicable law, if any) pro rata in proportion to the
respective principal amounts (or accreted values in the case of
Indebtedness issued with original issue discount) of the Notes
and such other Indebtedness then outstanding (the "Asset Sale
Offer") at a purchase price of 100% of principal amount (or
accreted value in the case of Indebtedness issued with original
issue discount) (the "Asset Sale Offer Price") together with
accrued and unpaid interest and Liquidated Damages, if any, to
the date of payment, made within 360 days (1,825 days in the case
of an Asset Sale resulting from the underwritten public sale of
equity securities of chello broadband or 540 days in the case of
any other Special Character Asset Sale), of such Asset Sale, or
(iii) within 360 days (1,825 days in the case of an Asset Sale
resulting from the underwritten public sale of equity securities
of chello broadband or 540 days in the case of any other Special
Character Asset Sale), to the repayment of Indebtedness then
outstanding pursuant to the Credit Agreement or, if required by
the terms of such Indebtedness, of Indebtedness issued by a
Subsidiary of the Company (in respect of which Indebtedness the
Company is not a direct or contingent obligor except by virtue of
the Company's pledge of Equity Interests of, and other interests
of or claim on, such Subsidiary or the Company's guarantee of
such Subsidiary's Indebtedness to the extent, in either case, the
recourse against the Company is limited to such Equity Interests
or claim), or
(b within 360 days (1,825 days in the case of an Asset Sale
resulting from the underwritten public sale of equity securities
of chello broadband or 540 days in the case of any other Special
Character Asset Sale), following such Asset Sale, the Asset Sale
Offer Amount is invested in assets and property which in the good
faith reasonable judgment of the Company will immediately
constitute or be a part of a Related Business of the Company or
such Subsidiary (if it continues to be a Subsidiary) immediately
following such transaction or is used to make Permitted
Investments in the Company or a Subsidiary of the Company (other
than Cash Equivalents or securities of the Company or any Person
controlling the Company except as permitted by the Indentures),
provided that (i) 50% of the Net Cash Proceeds from Special
Character Asset Sales and 100% of the net proceeds from any Asset
Sale of an Investment made in reliance on clause (g) of the
definition of "Permitted Investments" may be reinvested in any
Permitted Investment (other than, in either case, Cash
Equivalents or securities of the Company or any Person
controlling the Company except as permitted by the Indentures)
which in the good faith reasonable judgment of the Company will
immediately constitute or be a part of a Related Business and
(ii) 100% of the net proceeds from an Asset Sale constituting the
sale of an Investment in any Person (excluding a Person that
would be consolidated with the Company under GAAP and excluding
Related Assets of the Company or any of its Subsidiaries) in
which the Company or any of its Subsidiaries has an Equity
Interest may be reinvested in Investments permitted by clause (e)
or (f) of the definition of "Permitted Investments,"
(2) at least 75% of the total consideration for such Asset Sale or
series of related Asset Sales consists of cash, Cash
Equivalents, Replacement Assets or the assumption of
Indebtedness of a Subsidiary,
(3) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect
to, on a pro forma basis, such Asset Sale, and
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(4) in the case of a transaction or series of related transactions
exceeding $15 million (or the foreign currency equivalent on
the date of the transaction) of consideration to any party
thereto, the Supervisory Board of the Company determines in
its good faith reasonable judgment that the Company or such
Subsidiary, as applicable, receives fair market value for such
Asset Sale.
The Indentures provide that an acquisition of Notes pursuant to an
Asset Sale Offer may be deferred until the accumulated Net Cash Proceeds from
Asset Sales not applied to the uses set forth in 1(a)(i), (iii), or 1(b) above
(the "Excess Proceeds") exceeds $50 million (or the foreign currency equivalent
thereof), provided that, in the case of an Asset Sale by a Subsidiary of the
Company that is not a Wholly Owned Subsidiary, only the Company's and its
Subsidiaries' pro rata portion of such Net Cash Proceeds shall constitute Net
Cash Proceeds subject to the provisions of this covenant. Each Asset Sale Offer
shall remain open for 20 Business Days following its commencement (the "Asset
Sale Offer Period"). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount, plus an amount equal to accrued and
unpaid interest and Liquidated Damages, if any, to the purchase of all
Indebtedness properly tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all Indebtedness so tendered) at the Asset
Sale Offer Price (together with accrued interest and Liquidated Damages, if
any). To the extent that the aggregate amount of Notes and such other pari passu
Indebtedness tendered pursuant to an Asset Sale Offer is less than the Asset
Sale Offer Amount, the Company may apply any remaining Net Cash Proceeds to any
purpose consistent with the other provisions of the Indentures, and following
the consummation of each Asset Sale Offer the Excess Proceeds amount shall be
reset to zero. For purposes of (2) above, total consideration received means the
total consideration received for such Asset Sales, minus the amount of (a)
Purchase Money Indebtedness secured solely by the assets sold and assumed by a
transferee, provided that the Company and the Subsidiaries are released from any
obligation in connection therewith; and (b) property that within 30 days of such
Asset Sale is converted into cash or Cash Equivalents, provided that such cash
and Cash Equivalents shall be treated as Net Cash Proceeds attributable to the
original Asset Sale for which such property was received.
Notwithstanding, and without complying with, the provisions of this
covenant:
(1) the Company and its Subsidiaries may, in the ordinary course
of business, (a) convey, sell, transfer, assign or otherwise
dispose of inventory and other assets acquired and held for
resale in the ordinary course of business and (b) liquidate
and otherwise dispose of Cash Equivalents;
(2) the Company and its Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of property, businesses, or assets
pursuant to and in accordance with the covenant "Limitation on
Merger, Sale or Consolidation";
(3) the Company and its Subsidiaries may sell or dispose of
damaged, worn out or other obsolete personal property in the
ordinary course of business so long as such property is no
longer necessary for the proper conduct of the business of the
Company or such Subsidiary, as applicable, and the Company and
its Subsidiaries may replace personal property in the ordinary
course of business so long as the replacement property is
necessary for the proper conduct of the business of the
Company or such Subsidiary, as applicable, and sell or dispose
of such replaced property in the ordinary course;
(4) the Company and its Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of property, businesses, or
assets to the Company or any of its Subsidiaries;
(5) the Company and each of its Subsidiaries may surrender or
waive contract rights or settle, release or surrender
contract, tort or other claims of any kind in the ordinary
course of business or grant Liens not otherwise prohibited by
the Indentures;
(6) the Company and its Subsidiaries may exchange assets for
property, businesses, or assets held by any Person (including
by merger or consolidation in the case of a Subsidiary of the
Company); provided that (a) property, businesses and assets,
which in one or a series of related transactions exceeds $15
million in value, received by the Company or such Subsidiaries
in any such exchange in the good faith reasonable judgment of
the Supervisory Board of the Company will immediately
constitute, be a part of, or be used in, a Related Business of
the Company or such Subsidiaries, (b) the Supervisory Board
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of the Company has determined that the terms of any exchange,
which in one or a series of related transactions exceeds $15
million in fair market value, are fair and reasonable, and (c)
any cash or Cash Equivalents received by the Company or any
Subsidiary in such exchange shall be treated as having been
received as a result of an Asset Sale.
All Net Cash Proceeds from an Event of Loss shall be used all within
the period and as otherwise provided above in clause (1) of the first paragraph
of this covenant.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws. To the extent that the provisions of any
applicable securities laws, rules, or regulations conflict with the provisions
of this covenant, compliance by the Company or any of its subsidiaries with such
laws, rules or regulations shall not in and of itself cause a breach of its
obligations under this covenant.
If the payment date in connection with an Asset Sale Offer hereunder is
on or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any, due on such Interest Payment Date) will be paid to the Person in whose
name a Note is registered at the close of business on such Record Date, and such
interest (or Liquidated Damages, if applicable) will not be payable to Holders
who tender Notes pursuant to such Asset Sale Offer.
Limitation on Transactions with Affiliates
The Indentures provide that neither we nor any of our Subsidiaries will
be permitted on or after the Issue Date to enter into any contract, agreement,
arrangement or transaction with any Affiliate of the Company (an "Affiliate
Transaction"), or any series of related Affiliate Transactions, other than
Exempted Affiliate Transactions, (1) unless it is determined by the Supervisory
Board as evidenced by a Board Resolution that the terms of such Affiliate
Transaction are fair and reasonable to us and no less favorable to us than could
have been obtained in an arm's length transaction with a non-Affiliate, and (2)
if involving consideration to either party in excess of $15 million (or its
foreign currency equivalent), unless such Affiliate Transaction(s) is evidenced
by an Officers' Certificate addressed and delivered to the respective Trustee
certifying that such Affiliate Transaction (or Transactions) has been approved
by a majority of the members of the Supervisory Board of the Company that are
disinterested in such transaction, if there are any directors who are so
disinterested, and (3) if involving consideration to either party in excess of
$15 million or $30 million if there are disinterested directors (or in each case
its foreign currency equivalent), unless in addition we, prior to the
consummation thereof, obtain a written favorable opinion as to the fairness of
such transaction to us from a financial point of view from an independent
investment banking firm of national reputation in the United States or, if
pertaining to a matter for which such investment banking firms do not
customarily render such opinions, an appraisal or valuation firm of national
reputation in the United States.
Limitation on Merger, Sale or Consolidation
The Indentures provide that the Company will not consolidate with or
merge with or into another Person or, directly or indirectly, sell, lease,
convey or transfer all or substantially all of its assets (computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, unless:
(1) either (a) the Company is the continuing entity or (b) the
resulting, surviving or transferee entity is a corporation
organized under the laws of The Netherlands or of the United
States of America or any State or the District of Columbia,
any member of the European Economic Area or Switzerland, and
expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Notes and
the Indentures;
(2) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such
transaction;
(3) unless such transaction is solely the merger of the Company
and one of its previously existing Wholly Owned Subsidiaries
and which transaction is not in connection with any other
transaction,
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immediately after giving effect to such transaction, on a pro
forma basis, the consolidated resulting, surviving or
transferee entity would immediately thereafter be permitted to
incur at least $1.00 of additional Indebtedness pursuant to
the Debt Incurrence Ratio set forth in the covenant
"Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock" or, if not, the Leverage Ratio
would immediately thereafter be no greater than the Leverage
Ratio immediately prior thereto; and
(4) each Subsidiary Guarantor, unless such Subsidiary Guarantor is
the Person with which the Company has entered into a
transaction under this covenant, shall have by amendment to
its Guarantee of the Notes confirmed that its Guarantee of the
Notes shall apply to the obligations of the Company or the
surviving entity in accordance with the Notes and the
Indentures.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the foregoing,
the successor corporation formed by such consolidation or into which the Company
is merged or to which such transfer is made shall succeed to and (except in the
case of a lease) be substituted for, and may exercise every right and power of,
the Company under the Indentures with the same effect as if such successor
corporation had been named therein as the Company, and (except in the case of a
lease) the Company shall be released from the obligations under the Notes and
the Indentures except with respect to any obligations that arise from, or are
related to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Limitation on Lines of Business
The Indentures provide that neither we nor any of our Subsidiaries will
directly or indirectly engage to any substantial extent in any line or lines of
business activity other than that which, in the reasonable good faith judgment
of our Supervisory Board, is a Related Business.
Limitation on Status as Investment Company
The Indentures prohibit us and our Subsidiaries from being required to
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.
Reports
The Indentures provide that whether or not we are subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, we will
deliver to the respective Trustee and to each Holder and to prospective
purchasers of Notes identified to us, within 15 days after we are or would have
been (if we were subject to such reporting obligations) required to file such
with the SEC, annual and quarterly financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
Commission, if we were subject to the requirements of Section 13 or 15(d) of the
Exchange Act, including, with respect to annual information only, a report
thereon by our certified independent public accountants as such would be
required in such reports to the Commission, and, in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required and, unless the Commission will not accept
such reports, file with the Commission the annual, quarterly and other reports
which it is or would have been required to file with the Commission.
Events of Default and Remedies
The Indentures define an "Event of Default" as:
(1) our failure to pay any installment of interest (or Liquidated
Damages, if any) on the Notes as and when the same becomes due
and payable and the continuance of any such failure for 30
days,
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(2) our failure to pay all or any part of the principal of,
Accreted Value (as applicable) of, or premium on, if any, the
Notes when and as the same becomes due and payable at
maturity, or on redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of
Control Purchase Price or the Asset Sale Offer Price, or
otherwise on Notes validly tendered and not properly withdrawn
pursuant to a Change of Control Offer or Asset Sale Offer, as
applicable,
(3) the failure by the Company or any Subsidiary of the Company to
observe or perform any other covenant or agreement contained
in the Notes or the Indentures and, except for the provisions
under "Repurchase of Notes at the Option of the Holder Upon a
Change of Control," "Limitations on Sale of Assets and
Subsidiary Stock," "Limitation on Merger, Sale or
Consolidation" and "Limitation on Restricted Payments," the
continuance of such failure for a period of 30 days after
written notice is given to the Company by the respective
Trustee or to the Company and the respective Trustee by the
Holders of at least 25% in aggregate principal amount
(principal amount at maturity in the case of the Senior
Discount Notes) of the respective series of Notes outstanding,
(4) certain events of bankruptcy, insolvency or reorganization in
respect of the Company or any of its Significant Subsidiaries,
(5) a default in Indebtedness of the Company or any of its
Subsidiaries with an aggregate amount outstanding in excess of
$50 million (or its foreign currency equivalent) (a) resulting
from the failure to pay principal at maturity or otherwise at
the end of any applicable grace period for such payment
pursuant to the original terms of such Indebtedness or (b) as
a result of which the maturity of such Indebtedness has been
accelerated prior to its stated maturity,
(6) final unsatisfied judgments not covered by insurance
aggregating in excess of $50 million (or its foreign currency
equivalent), at any one time rendered against the Company or
any of its Subsidiaries and not stayed, bonded or discharged
within 60 days.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (4) above relating to the Company) then in every
such case, unless the principal of all of the Notes shall have already become
due and payable, either the respective Trustees or the Holders of at least 25%
in aggregate principal amount (principal amount at maturity in the case of the
Senior Discount Notes) of the respective class of Notes then outstanding, by
notice in writing to us (and to the respective Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal, determined as set forth
below, and accrued interest (and Liquidated Damages, if any) thereon to be due
and payable immediately. If an Event of Default specified in clause (4), above,
relating to the Company occurs, all principal, Accreted Value and accrued
interest (and Liquidated Damages, if any) thereon will be immediately due and
payable on all outstanding Notes without any declaration or other act on the
part of the respective Trustee or the Holders. The Holders of a majority in
aggregate principal amount of Notes generally are authorized to rescind such
acceleration if all existing Events of Default, other than the non-payment of
the principal or Accreted Value of, premium, if any, and interest on the Notes
which have become due solely by such acceleration and except a Default with
respect to any provision requiring a supermajority approval to amend, which
Default may only be waived by such a supermajority, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes,
the Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any Default, except a Default
with respect to any provision requiring a supermajority approval to amend, which
Default may only be waived by such a supermajority, and except a Default in the
payment of principal of or interest on any Note not yet cured or a Default with
respect to any covenant or provision which cannot be modified or amended without
the consent of the Holder of each outstanding Note affected. Subject to the
provisions of the Indentures relating to the duties of the respective Trustee,
the respective Trustee will be under no obligation to exercise any of its rights
or powers under the Indentures at the request, order or direction of any of the
Holders, unless such Trustee is indemnified and secured to its satisfaction.
Subject to all provisions of the Indentures and applicable law, the Holders of a
majority in aggregate principal amount of the Notes at the time outstanding will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the respective Trustee, or exercising any trust or
power conferred on the respective Trustee.
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Legal Defeasance and Covenant Defeasance
The Indentures provide that we may, at our option and at any time prior
to the Stated Maturity of the respective series of Notes, elect to have our
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that we
shall be deemed to have paid and discharged the entire indebtedness represented
by the Notes, and the Indentures shall cease to be of further effect as to all
outstanding Notes, except as to:
(1) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest (and Liquidated
Damages, if any) on such Notes when such payments are due from
the trust funds;
(2) our obligations with respect to such 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, trust, duties, and immunities of the
respective Trustee, and our obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indentures.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants under the Indentures
("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 (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes. We may exercise our Legal Defeasance
option regardless of whether we previously exercised Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) we must irrevocably deposit with the respective Trustee, in
trust, for the benefit of the Holders of the Notes, U.S. legal
tender (with respect to the Senior Dollar Notes), legal tender
in the countries constituting the European Monetary Union
(with respect to the Senior Euro Notes), U.S. Government
Obligations (with respect to the Senior Dollar Notes), EEA
Government Obligations (with respect to the Senior Euro
Notes), or a combination thereof (respectively), 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 such Notes on
the stated date for payment thereof or on the redemption date
of such principal or installment of principal of, premium, if
any, or interest on such Notes, and the Holders of Notes must
have a valid, perfected, exclusive security interest in such
trust;
(2) in the case of Legal Defeasance, we shall have delivered to
the respective Trustee an opinion of counsel in the United
States reasonably acceptable to the respective Trustee
confirming that:
(A) we have received from, or there has been published by
the Internal Revenue Service, a ruling or
(B) since the date of the Indentures, there has been a
change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of such
Notes will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such Legal Defeasance and
will be subject to U.S. 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;
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(3) in the case of Covenant Defeasance, we shall have delivered to
the respective Trustee an opinion of counsel in the United
States reasonably acceptable to such Trustee confirming that
the Holders of such Notes will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such
Covenant Defeasance and will be subject to U.S. 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 on the date of such deposit insofar as Events of
Default from bankruptcy or insolvency events 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 shall not result
in a breach or violation of, or constitute a default under the
Indentures or any other material agreement or instrument to
which we or any of our Subsidiaries are a party or by which we
or any of our Subsidiaries are bound;
(6) we shall have delivered to the respective Trustee an Officers'
Certificate stating that the deposit was not made by us with
the intent of preferring the Holders of such Notes over any
other of our creditors or with the intent of defeating,
hindering, delaying or defrauding any other of our creditors
or others; and
(7) we shall have delivered to the respective Trustee an Officers'
Certificate and an opinion of counsel, each stating that the
conditions precedent provided for in, in the case of the
Officers' Certificate, (1) through (6) and, in the case of the
opinion of counsel, clauses (1), (with respect to the validity
and perfection of the security interest) (2), (3) and (5) of
this paragraph have been complied with and we shall have
delivered to the respective Trustee an Officers' Certificate,
subject to such qualifications and exceptions as the
respective Trustee deems appropriate, to the effect that,
assuming no Holder of the Notes is an insider of the Company,
the trust funds will not be subject to the effect of any
applicable Federal bankruptcy, insolvency, reorganization or
similar laws affecting creditors' right generally. If the
funds deposited with the respective Trustee to effect Covenant
Defeasance are insufficient to pay the principal of, premium,
if any, and interest on the Notes when due, then our
obligations under the Indentures will be revived and no such
defeasance will be deemed to have occurred.
Satisfaction and Discharge
The Indentures will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes) as to all outstanding Notes when either:
(a) all such Notes theretofore authorized and delivered (except
lost, stolen or destroyed Notes which have been replaced or
paid and Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by us and
thereafter repaid to us or discharged from such trust) have
been delivered to the respective Trustee for cancellation; or
(b)(1) we shall have given irrevocable and unconditional notice of
redemption for all of the outstanding Notes within 60 days of
such notice pursuant to the redemption provisions of the
Indentures or all Notes not theretofore delivered to the
respective Trustee for cancellation otherwise have become due
and payable, and the Company has irrevocably deposited or
caused to be deposited with the respective Trustee as trust
funds in the trust for such purpose an amount of money
sufficient to pay and discharge the entire indebtedness on the
Notes not theretofore delivered to the respective Trustee for
cancellation, for principal, premium, if any, and accrued
interest (and Liquidated Damages, if any),
(2) the Company has paid all other sums payable by it under the
Indentures,
(3) the Company has delivered irrevocable instructions to the
respective Trustee to apply the deposited money toward the
payment of the Notes at maturity or the redemption date, as
the case may be, which must be within 60 days thereof and
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(4) the Holders of the Notes have a valid, perfected, exclusive
security interest in such trust.
In addition, we must deliver an Officers' Certificate and an opinion of
counsel stating that all conditions precedent to satisfaction and discharge have
been complied with.
Amendments and Supplements
The Indentures contain provisions permitting the Company and the
respective Trustee to enter into supplemental Indentures for certain limited
purposes without the consent of the Holders. With the consent of the Holders of
not less than a majority in aggregate principal amount (principal amount at
maturity, in the case of the Senior Discount Notes) of the respective series of
Notes at the time outstanding, the Company and the respective Trustee are
permitted to amend or supplement the Indentures or any supplemental indenture or
modify the rights of the Holders; provided that no such modification may,
without the consent of Holders of at least 662/3% in aggregate principal amount
(principal amount at maturity, in the case of the Senior Discount Notes) of
Notes at the time outstanding, modify the provisions (including the defined
terms used therein) of the covenant "Repurchase of Notes at the Option of the
Holder upon a Change of Control" in a manner adverse to the Holders and,
provided that no such modification may, without the consent of each Holder
affected thereby:
(1) change the Stated Maturity of any Note, or reduce the
principal amount thereof or the rate of interest or accretion
(or extend the time for payment of interest, if any) thereon
or any premium payable upon the redemption thereof at the
option of the Company, or change the place of payment where,
or the coin or currency in which, any Note or any premium or
the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of
redemption at the option of the Company, on or after the
Redemption Date), or reduce the Change of Control Purchase
Price or the Asset Sale Offer Price after the corresponding
Change of Control or Asset Sale has occurred or alter the
provisions (including the defined terms used therein)
regarding the right of the Company to redeem the Notes in a
manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in
the Indentures, or
(3) modify any of the waiver provisions, except to increase any
required percentage or to provide that certain other
provisions of the Indentures cannot be modified or waived
without the consent of the Holder of each outstanding Note
affected thereby, or
(4) cause the Notes to become subordinate in right of payment to
any other Indebtedness.
Notices
All notices regarding the Notes will, so long as the rules of the
Luxembourg Stock Exchange require, be published in a daily newspaper of general
circulation in Luxembourg, which is expected to be the Luxembourger Wort.
Notices to holders of definitive Notes, if issued, shall also be mailed by first
class mail to each holder (or the first named of joint holders) at its address
appearing in the register on the appropriate date provided herein other than in
the case of a partial redemption of Notes, when notice shall be so mailed only
to each holder whose Notes are to be redeemed and a notice published as
aforesaid stating which Notes are to be redeemed. For so long as Notes are
represented by Global Notes, notice to holders shall (in addition to publication
as described above) also be given by delivery of the relevant notice to DTC,
Euroclear and Cedelbank for communication to the holders of the related
book-entry interests.
Concerning the Trustees
Each of the Indentures contain certain limitations on the rights of the
relevant Trustee, should it become a creditor of our company, 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. Each Trustee will be
permitted to engage in other transactions; provided, 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.
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Each of the Indentures provides that the Holders of a majority in
principal amount of the outstanding Notes issued thereunder will have the right
to direct the time, method and place of conducting any proceeding for exercising
any remedy available to the relevant Trustee, subject to certain exceptions.
Each Indenture provides that in case an Event of Default shall occur (which
shall not be cured), the relevant Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent person in the conduct of his
own affairs. Subject to such provisions, each Trustee will be under no
obligation to exercise any of its rights or powers under the relevant Indenture
at the request of any Holder of such Notes, unless such Holder shall have
offered to such Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
Each of the Indentures provides for the appointment of a successor
Trustee upon the resignation or removal of the Trustee. The Trustee may resign
at any time by giving written notice to the Company. The Holders of a majority
in principal amount of the outstanding Notes may remove the Trustee at any time,
upon the occurrence of certain conditions.
Governing Law
The Indentures provide that they and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
No Personal Liability of Partners, Stockholders, Officers, Directors
The Indentures provide that no direct or indirect stockholder,
employee, officer or director, as such, past, present or future of the Company,
or any successor entity shall have any personal liability in respect of the
obligations of the Company under the Indentures or the Notes solely by reason of
his or its status as such stockholder, employee, officer or director.
Certain Definitions
"Accreted Value" means, as of any date of determination, the sum
(rounded to the nearest whole dollar) of (a) the initial offering price of each
$1,000 in principal amount at maturity of Senior Discount Notes and (b) the
portion of the excess of the principal amount of Senior Discount Notes over such
initial offering price which shall have been accreted thereon through such date,
such amount to be so accreted on a daily basis at the rate of 13 3/4% per annum
(or such higher amount as may be required as set forth under "Description of the
Notes--Principal, Maturity and Interest--The Senior Discount Notes") compounded
semi-annually on each February 1 and August 1 from the date of issuance of the
Senior Discount Notes through the date of determination. On and after February
1, 2005, the Accreted Value of each Senior Discount Note shall be equal to its
principal amount at maturity, which amount may be greater than $1,000 per Senior
Discount Note.
"Acquired Indebtedness" means Indebtedness (including Disqualified
Capital Stock) of any Person existing at the time such Person becomes a
Subsidiary of the Company, including by designation, or is merged or
consolidated into or with the Company or one of its Subsidiaries.
"Acquisition" means the purchase or other acquisition of any Person or
all or substantially all the assets of any Person by any other Person, whether
by purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise; provided that with respect to ownership interest in the Company
and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting
power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
"Annualized Consolidated EBITDA" means Consolidated EBITDA for the
Reference Period multiplied by four.
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"Asset Acquisition" means (i) an Investment or capital contribution (by
means of transfers of cash or other property to others or payments for property
or services of the account or use of others, or otherwise) by the Company or any
Subsidiary in any other Person, or any acquisition or purchase of Capital Stock
of another Person by the Company or any Subsidiary, or (ii) an acquisition by
the Company or any Subsidiary of the property and assets (other than Capital
Stock) of any Person other than the Company or any Subsidiary which constitute
substantially all of a division, operating unit or line of business of such
Person or which is otherwise outside the ordinary course of business.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (1) the sum of the
products (a) of the number of years from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (2) the sum of all such principal (or redemption)
payments.
"Beneficial Owner" or "beneficial owner" for purposes of the definition
of Change of Control and Affiliate has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether
or not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
and Amsterdam, The Netherlands are authorized or obligated by law or executive
order to close.
"Capital Contribution" means any contribution to the equity of the
Company from a direct or indirect parent of the Company for which no
consideration other than the issuance of Qualified Capital Stock is paid.
"Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.
"Cash Equivalent" means:
(1) securities issued or directly and fully guaranteed or insured
by (i) the United States of America or any agency or
instrumentality thereof, or (ii) any member of the European
Economic Area or Switzerland, or any agency or instrumentality
thereof provided that such country, agency or instrumentality
has a credit rating at least equal to that of the United
States of America (provided that, in each case, the full faith
and credit of such respective nation is pledged in support
thereof), or
(2) time deposits and certificates of deposit and commercial paper
issued by the parent corporation of any domestic (United
States) commercial bank of recognized standing having capital
and surplus in excess of $500 million (or the foreign currency
equivalent thereof), or
(3) commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at
least P-2 or the equivalent thereof by Moody's Investors
Service, Inc.
and in the case of each of (1), (2), and (3) maturing within one year after the
date of acquisition, or
(4) Euro or dollar 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 domestic (United States)
commercial bank having capital and surplus in excess of $500
million (or the foreign currency equivalent thereof) and a
Keefe Bank Watch Rating of "B" or better; provided, in
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the case of (1) through (4), that with respect to any
non-domestic Person, Cash Equivalents shall also mean those
investments that are comparable to clauses (ii) and (iv) above
in such Person's country of organization or country where it
conducts business operations.
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of the Subsidiaries with those of such Person, all in accordance
with GAAP; provided that "consolidation" will not include consolidation of the
accounts of any Unrestricted Subsidiary with the accounts of such Person. The
term "Consolidated" has a correlative meaning to the foregoing.
"Consolidated Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and business permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such Person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such Person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date (and
the application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day of
such Reference Period, and (iv) the Consolidated Fixed Charges of such Person
attributable to interest on any Indebtedness or dividends on any Disqualified
Capital Stock bearing a floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect from the beginning of the
Reference Period to the Transaction Date had been the applicable rate for the
entire period, unless such person or any of its Subsidiaries is a party to an
Interest Swap or Hedging Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of
(1) Consolidated income tax expense,
(2) Consolidated depreciation and amortization expense,
(3) Consolidated Fixed Charges, and
(4) non-cash stock based compensation
less the amount of all cash payments made by such Person or any of its
Subsidiaries during such period to the extent such payments relate to non-cash
charges that were added back in determining Consolidated EBITDA for such period
or any prior period; provided that consolidated income tax expense, depreciation
and amortization of a Subsidiary that is not a Wholly Owned Subsidiary shall
only be added to the extent of the equity interest of such Person in such
Subsidiary.
"Consolidated Fixed Charges" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of:
(a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the
following sentence, interest attributable to Capitalized Lease
Obligations) of such Person and its Consolidated Subsidiaries
during such period, including (1) original issue discount and
non-cash interest payments or accruals on any Indebtedness,
(2) the interest portion of all deferred payment obligations,
and (3) all commissions, discounts and other fees and charges
owed with respect
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to bankers' acceptances and letters of credit financings and
currency and Interest Swap and Hedging Obligations, in each
case to the extent attributable to such period,
(b) the amount of dividends accrued or payable (or guaranteed) by
such Person or any of its Consolidated Subsidiaries in respect
of Preferred Stock (other than by Subsidiaries of such Person
to such Person or such Person's Wholly Owned Subsidiaries).
For purposes of this definition, (x) interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"Consolidated Invested Equity Capital" means, with respect to any
Person as of any date, the sum of the Invested Equity Capital of such Person as
of such date and, without duplication, the Invested Equity Capital of each of
its Subsidiaries as of such date. For purposes of calculating the Consolidated
Invested Equity Capital of any Person as of any date, in order to avoid
duplication, the Invested Equity Capital of a Subsidiary of such Person shall
not include any amounts that would be included in the Consolidated Invested
Equity Capital of any equity owner of such Subsidiary, to the extent that such
amounts were utilized by such equity owner prior to such date to permit the
incurrence of Indebtedness pursuant to clauses 2(iii) and (c)(3) of the
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock" covenant. For example, if a direct Subsidiary of the Company has
Consolidated Invested Equity Capital of $100 and incurs $225 of such
Indebtedness, then a direct or indirect Subsidiary of such Subsidiary will not
be deemed to have any Invested Equity Capital based on contributions or loans to
it by such first Subsidiary. In addition, the Invested Equity Capital of a
Subsidiary of a Person will never be considered to be greater than the Invested
Equity Capital of such Person, except as a result of contributions of Invested
Equity Capital to such Subsidiary by third parties.
"Consolidated Net Income" means, with respect to any Person for any
period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication):
(a) all gains (but not losses) which are either extraordinary (as
determined in accordance with GAAP) or are nonrecurring
(including any gain from the sale or other disposition of
assets outside the ordinary course of business or from the
issuance or sale of any capital stock),
(b) the net income, if positive, of any Person, other than a
Consolidated Subsidiary, in which such Person or any of its
Consolidated Subsidiaries has an interest, except to the
extent of the amount of any dividends or distributions
actually paid in cash to such Person or a Consolidated
Subsidiary of such Person during such period, but in any case
not in excess of such Person's pro rata equity interest share
of such Person's net income for such period,
(c) the net income or loss of any Person acquired in a pooling of
interests transaction for any period prior to the date of such
acquisition, and
(d) the net income, if positive, of any such Person's Consolidated
Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions is not at the time
permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such
Consolidated Subsidiary other than the Indentures.
"Consolidated Subsidiary" means, for any Person, each Subsidiary
(excluding all Unrestricted Subsidiaries) of such Person (whether now existing
or hereafter created or acquired) the financial statements of which are
consolidated for financial statement reporting purposes with the financial
statements of such Person in accordance with GAAP.
"Consolidated Tangible Assets" of any Person means the total amount of
assets less applicable reserves and other properly deductible items which under
GAAP would be calculated on a consolidated balance sheet of the Person
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and its Subsidiaries after deducting all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles,
which, in each case under GAAP, would be included on such consolidated balance
sheet.
"Continuing Director" means during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Supervisory Board of the Company (together with any new
supervisory directors whose election by the shareholders was from a list of
candidates drawn up by the holder or holders of our priority shares and new
supervisory directors designated in or provided for in an agreement regarding
the merger, consolidation or sale, transfer or other conveyance, of all or
substantially all of the assets of the Company or the Parent, if such agreement
was approved by a vote of such majority of supervisory directors).
"Credit Agreement" means the loan and note issuance agreement dated
July 27, 1999 between certain Subsidiaries of the Company and Bank of America
International Limited, CIBC World Markets plc, Citibank N.A., MeesPierson N.V.,
Paribas, The Royal Bank of Scotland plc, Toronto Dominion Bank Europe Limited
and The Toronto Dominion Bank, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such agreement and/or related documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time to time whether
or not with the same agent, trustee, representative lenders or Holders, and,
subject to the proviso to the next succeeding sentence, irrespective of any
changes in the terms and conditions thereof. Without limiting the generality of
the foregoing, the term "Credit Agreement" shall include agreements in respect
of Interest Swap and Hedging Obligations with lenders party to the Credit
Agreement and shall also include any amendment, amendment and restatement,
renewal, extension, restructuring, supplement or modification to any Credit
Agreement and all refundings, refinancings and replacements of any Credit
Agreement, including any agreement:
(1) extending the maturity of any Indebtedness incurred thereunder
or contemplated thereby,
(2) adding or deleting borrowers or guarantors thereunder, so long
as borrowers and guarantors include one or more of the Company
and its Subsidiaries and their respective successors and
assigns,
(3) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder; provided that on the date
such Indebtedness is incurred it would not be prohibited by
the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock," or
(4) otherwise altering the terms and conditions thereof in a
manner not prohibited by the other terms of the Indentures.
"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 Capital Stock" means (a) except as set forth in clause
(b), with respect to any Person, Equity Interests of such Person that, by its
terms or by the terms of any security into which it is convertible, exercisable
or exchangeable, is, or upon the happening of an event or the passage of time or
both would be, required to be redeemed or repurchased (including at the option
of the holder thereof) by such Person or any of its Subsidiaries, in whole or in
part, on or prior to 91 days following the Stated Maturity of the respective
series of Notes and (b) with respect to any Subsidiary of the Company, any
Equity Interests of such Subsidiary other than (i) any common equity with no
economic preference, privileges, or redemption or repayment provisions or (ii)
preferred stock convertible into such common equity of such Subsidiary with no
payment of dividends or liquidation preference due or payable thereon on or
prior to 91 days following the Stated Maturity of the respective series of
Notes.
"EEA Government Obligation" means direct non-callable obligations of,
or non-callable obligations guaranteed by, any member nation of the European
Union for the payment of which obligation or guarantee the full faith and credit
of the respective nation is pledged; provided that such nation has a credit
rating at least equal to that of the highest rated member nation of the European
Economic Area.
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"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership, participation or membership interests in, such Person.
"Equity Offering" means (i) an underwritten public offering or
floatation of ordinary shares of the Company which has been registered under the
Securities Act or admitted to listing on the Amsterdam Stock Exchange or its
equivalent in any other European Union jurisdiction, in any case resulting in
Net Cash Proceeds to the Company of at least $100 million (or its foreign
currency equivalent), or (ii) a sale of Qualified Capital Stock of the Company
to any Person which is (or a controlled Affiliate of a Person which is), engaged
principally in a Related Business, resulting in Net Cash Proceeds to the Company
of at least $100 million (or its foreign currency equivalent); provided,
however, that a sale of Qualified Capital Stock of the Company to any subsidiary
of the Company or any Person that is a controlled Affiliate of the Company shall
not be an Equity Offering.
"Euro" or "" means the currency adopted by those countries
participating in the third stage of European Monetary Union.
"European Economic Area" means the member nations of the European
Economic Area pursuant to the Oporto Agreement on the European Economic Area
dated May 2, 1992 as amended.
"European Union" means the member nations to the third stage of
economic and monetary union pursuant to the Treaty of Rome establishing the
European Community, as amended by the Treaty on European Union, signed at
Maastricht on February 7, 1992.
"Event of Loss" means, with respect to any property or asset, any (1)
loss, destruction or damage of such property or asset or (2) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
"Exempted Affiliate Transaction" means (i) Restricted Payments
comprised of pro rata dividends paid in cash on any class of Equity Interests
and made in compliance with the Indentures, (ii) transactions, at arms-length
and as so set forth in a Board Resolution, between or among holders of any
Equity Interest of any Subsidiary of the Company and such Subsidiary, so long as
such holder is not otherwise an Affiliate of the Company, (iii) transactions
between or among the Company, and its Subsidiaries, (iv) the Company or any of
its Subsidiaries entering into or performing any employment agreement, stock
option agreement or other agreement relating to the terms of employment,
compensation or termination of employment in the ordinary course of business of
the Company or such Subsidiary, (v) any contract, agreement, arrangement or
transaction with any Affiliate in effect as of the Issue Date and any amendment,
waiver, variation or other modification in respect of any such contract,
agreement, arrangement or transaction so long as such amendment, waiver,
variation or other modification is not disadvantageous to the Company and its
Subsidiaries in any material respect, (vi) Restricted Payments and Investments
permitted under the Indentures described under the covenant "Limitation on
Restricted Payments," (vii) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the ordinary course
of business and otherwise in compliance with the terms of the Indentures which
are fair to the Company and its Subsidiaries, in the reasonable determination of
the Company or Subsidiary, as the case may be, or are on terms no less favorable
to the Company or the Subsidiary than those that could be obtained in a
comparable arm's length transaction with an entity that is not an Affiliate or
Principal and is in the best interests of the Company or the Subsidiary, and
(viii) transactions with respect to network capacity or dark or lit
communications fiber capacity or telecommunications conduit between the Company
or any Subsidiary and any Unrestricted Subsidiary or other Affiliate and joint
sales and marketing pursuant to an agreement or agreements between the Company
or any Subsidiary and any Unrestricted Subsidiary or other Affiliate, provided
that in the case of this clause (viii), such agreements are on terms that are no
less favorable to the Company or the Subsidiary than those that could be
obtained in an arm's-length transaction with an entity that is not an Affiliate
or Principal and are in the best interests of the Company and the Subsidiary
entered into in the ordinary course of business.
"Existing Agreements" means (i) any and all instruments, as in effect
on the Issue Date, between the Company or any of its Subsidiaries and a
commercial lending institution or institutions, which makes borrowing of funds
available
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to the Company or any such Subsidiary from such institution or institutions and
(ii) any replacements of the instruments in clause (i) entered into by the
respective Subsidiary that was party to the instrument so replaced or their
respective successors and a commercial lending institution or institutions for
an amount up to the maximum amount of the instrument so replaced.
"Existing Indebtedness" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the Issue Date reduced to the extent such amounts are repaid.
"GAAP" means United States 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 approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as verb has a corresponding meaning.
"Guarantor" is defined to mean any Person obligated under a Guarantee.
"Indebtedness" of any Person means, without duplication,
(a) all liabilities and obligations, contingent or otherwise, of such
Person, to the extent such liabilities and obligations would
appear as a liability upon the consolidated balance sheet of such
Person in accordance with GAAP, (1) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (2)
evidenced by bonds, notes, debentures or similar instruments, (3)
representing the balance deferred and unpaid of the purchase
price of any property or services, except (other than accounts
payable or other obligations to trade creditors which have
remained unpaid for greater than 90 days past their original due
date) those incurred in the ordinary course of its business that
would constitute ordinarily a trade payable to trade creditors;
(b) all liabilities and obligations, contingent or otherwise, of such
Person (1) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (2) relating to any
Capitalized Lease Obligation, or (3) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect
to any letter of credit (other than obligations with respect to
letters of credit securing obligations (excluding those
obligations described in (a)(1) through (3) above) entered into
in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon);
(c) all net obligations of such Person under Interest Swap and
Hedging Obligations;
(d) all liabilities and obligations of others of the kinds described
in the preceding clauses (a), (b) or (c) that such Person has
guaranteed or provided credit support or that is otherwise its
legal liability or which are secured by any assets or property of
such Person;
(e) any and all deferrals, renewals, extensions, refinancing and
refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a), (b), (c) or (d),
or this clause (e), whether or not between or among the same
parties; and
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(f) all Disqualified Capital Stock of such Person (measured at the
greater of its voluntary or involuntary maximum fixed repurchase
price, plus accrued and unpaid dividends).
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indentures, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value to be determined in good faith by the
Supervisory Board of the Company.
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, but the accretion of original issue discount in accordance with
the original terms of Indebtedness issued with an original issue discount will
not be deemed to be an incurrence and (2) the principal amount thereof,
excluding any interest thereon, in the case of any other Indebtedness.
"Interest Swap and Hedging Obligation" means any obligation of any
Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Invested Equity Capital" means, with respect to any Person as of any
date, without duplication, the sum of (i) the total dollar amount contributed in
cash plus the value of all property contributed (valued at fair market value at
the time of contribution, determined in good faith by the Supervisory Board) to
such Person since the date of its creation in the form of common equity, plus,
(ii) the total dollar amount contributed in cash plus the value of all property
contributed (valued at fair market value at the time of contribution, determined
in good faith by the Supervisory Board) to such Person since the date of
creation by the holders of its common equity (and their Affiliates) in
consideration of the issuance of preferred equity or Indebtedness, on a basis
that is substantially proportionate to their common equity interests (with any
disproportionately large equity interests received by the Company or a
Subsidiary relative to their respective contributions being ignored for this
purpose), plus, (iii) the total dollar amount contributed in cash plus the value
of all property contributed (valued at fair market value at the time of
contribution, determined in good faith by the Supervisory Board) to such Person
since the date of its creation by the Company or a Wholly Owned Subsidiary of
the Company in consideration of the issuance of preferred equity or
Indebtedness, and less (iv) the value of all interest, returns in respect of
Indebtedness, dividends and other distributions (in whatever form and however
designated, valued at fair market value as determined in good faith by the
Supervisory Board) made by such Person since the date of its creation to the
holders of its common equity (and their Affiliates); provided that in no event
shall the aggregate amount of interest, dividends and other distributions made
to any holder of common equity of a Person (or its Affiliates) operate to reduce
the Invested Equity Capital of such Person by more than the total contributions
to such Person (per clauses (i) through (iii) above) by such equity holder (and
its Affiliates).
"Investment" by any Person in any other Person means (without
duplication):
(a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property,
services, securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or
other securities, including any options or warrants, of such
other Person or any agreement to make any such acquisition;
(b) the making by such Person of any deposit with, or advance,
loan or other extension of credit to, such other Person
(including the purchase of property from another Person
subject to an understanding or agreement, contingent or
otherwise, to resell such property to such other Person) or
any commitment to make any such advance, loan or extension
(but excluding accounts receivable, endorsements for
collection or deposits arising in the ordinary course of
business);
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(c) other than guarantees of Indebtedness of the Company or to the
extent permitted by the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock," the
entering into by such Person of any guarantee of, or other
credit support or contingent obligation with respect to,
Indebtedness or other liability of such other Person;
(d) the making of any capital contribution by such Person to such
other Person; and
(e) the designation by the Supervisory Board of the Company of any
Person to be an Unrestricted Subsidiary.
The Company shall be deemed to make an Investment in an amount equal to
the fair market value of the net assets of any subsidiary (or, if neither the
Company nor any of its Subsidiaries has theretofore made an Investment in such
subsidiary, in an amount equal to the Investments being made), at the time that
such subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from the Company or a Subsidiary of
the Company shall be deemed an Investment valued at its fair market value at the
time of such transfer. Investments shall be measured by the fair market value
attributed to the Investment at the time made or returned, as applicable.
"Issue Date" means the date of first issuance of the Notes under the
Indentures.
"Leverage Ratio" on any date of determination (the "Transaction Date")
for any Person means the ratio, on a pro forma basis, of (a) the aggregate
amount of Indebtedness of such Person and its Subsidiaries on a Consolidated
basis to (b) the aggregate amount of Annualized Consolidated EBITDA of such
Person attributable to continuing operations and business (exclusive of amounts
attributable to operations and businesses permanently discontinued or disposed
of); provided that for purposes of calculating Annualized Consolidated EBITDA
for this definition,
(1) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the
Transaction Date shall be assumed to have occurred on the first
day of the Reference Period,
(2) transactions giving rise to the need to calculate the Leverage
Ratio shall be assumed to have occurred on the first day of the
Reference Period,
(3) the incurrence of any Indebtedness or issuance of any
Disqualified Capital Stock during the Reference Period or
subsequent to the Reference Period and on or prior to the
Transaction Date (and the application of the proceeds therefrom
to the extent used to refinance or retire other Indebtedness)
shall be assumed to have occurred on the first day of the
Reference Period, and
(4) the Consolidated Fixed Charges of such Person attributable to
interest on any Indebtedness or dividends on any Disqualified
Capital Stock bearing a floating interest (or dividend) rate
shall be computed on a pro forma basis as if the average rate in
effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire
period, unless such Person or any of its Subsidiaries is a party
to an Interest Swap or Hedging Obligation (which shall remain in
effect for the 12-month period immediately following the
Transaction Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate (whether
higher or lower) shall be used.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired. For purposes of this definition, the
sale, lease, conveyance, or other transfer by the Company or any Subsidiary of
the Company, in the ordinary course of its business and not constituting a
security interest in assets serving as collateral for any of their respective
obligations, including the granting of indefeasible rights of use or equivalent
arrangements with respect to, network capacity, communications fiber capacity or
conduit, shall not be a Lien.
"Liquidated Damages" means all liquidated damages then owing pursuant
to the Registration Rights Agreement.
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"Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Company in the case of a sale, or Capital
Contribution in respect, of Qualified Capital Stock and by the Company and its
Subsidiaries in respect of an Asset Sale, plus, in the case of an issuance of
Qualified Capital Stock upon any exercise, exchange or conversion of securities
(including options, warrants, rights and convertible or exchangeable debt) of
the Company that were issued for cash on or after July 30, 1999, the amount of
cash originally received by the Company upon the issuance of such securities
(including options, warrants, rights and convertible or exchangeable debt) less,
in each case, the sum of all payments, fees, commissions and (in the case of
Asset Sales, reasonable and customary), expenses (including, without limitation,
the fees and expenses of legal counsel and investment banking fees and expenses)
incurred in connection with such Asset Sale or sale of Qualified Capital Stock,
and, in the case of an Asset Sale only, less the amount (estimated reasonably
and in good faith by the Company) of income, franchise, sales and other
applicable taxes required to be paid by the Company or any of its respective
Subsidiaries in connection with such Asset Sale in the taxable year that such
sale is consummated or in the immediately succeeding taxable year, the
computation of which shall take into account the reduction in tax liability
resulting from any available operating losses and net operating loss carryovers,
tax credits and tax credit carryforwards, and similar tax attributes.
"Non-Recourse Indebtedness" means Indebtedness of a Person to the
extent that under the terms thereof and pursuant to applicable law, no personal
recourse could be had against the Company or its Subsidiaries (giving effect to
the designations of such Person as an Unrestricted Subsidiary) for the Payment
of the principal of or interest or premium or other amounts with respect to such
Indebtedness or for any claim based on such Indebtedness and that enforcement of
obligations on such Indebtedness is limited solely to recourse against interests
in specified assets.
"Obligation" means any principal, premium or interest payment, or
monetary penalty, or damages, due by the Company under the terms of the Notes or
the Indentures, including any Liquidated Damages due pursuant to the terms of
the Registration Rights Agreement.
"Offering" means the offering of the Notes by the Company.
"Officers' Certificate" means the officers' certificate to be delivered
upon the occurrence of certain events as set forth in the Indentures.
"Parent" means UnitedGlobalCom, Inc. or its successor(s).
"Parent Stock Instrument" means either (a) Indebtedness (including
Disqualified Capital Stock) and Qualified Capital Stock of the Company that is
convertible or exchangeable into, at the option of the Company or any holder
thereof, or secured by, or whose value to the holder thereof is dependent upon,
any shares of Parent's Capital Stock that were owned by the Company or any of
its Subsidiaries as of July 30, 1999, provided that such Indebtedness and
Capital Stock of the Company shall have been issued in consideration of cash,
the net proceeds of which shall have been received by the Company or (b) the
Class A Common Stock of Parent owned by the Company or any of its Subsidiaries
as of July 30, 1999 or, any like number of shares of Class B Common Stock of
Parent issued in exchange for the shares of the Class A Common Stock of Parent
held as of July 30, 1999.
"Permitted Indebtedness" means that:
(a) the Company may incur Indebtedness evidenced by the Notes and
issued pursuant to the Indentures up to the amounts being issued
on the original Issue Date;
(b) the Company may incur Refinancing Indebtedness with respect to
any Indebtedness (including Disqualified Capital Stock),
described in clause (a) or this clause (b) of this definition or
incurred pursuant to clause (2) of the second paragraph, and any
Subsidiary may incur Refinancing Indebtedness (including
Disqualified Capital Stock), described in this clause (b) or
clause (c) of the third paragraph, of the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital
Stock," and the Company and its Subsidiary may incur Refinancing
Indebtedness with respect to Indebtedness which is outstanding on
the Issue Date (after giving effect to the New Acquisitions)
(less the amount of any such Existing Indebtedness repaid on or
after the Issue Date or which was refinanced pursuant to this
clause (b));
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(c) the Company and its Subsidiaries may incur Indebtedness solely in
respect of bankers acceptances, letters of credit and performance
and surety bonds and completion guarantees (to the extent that
such incurrence does not result in the incurrence of any
obligation to repay any obligation relating to borrowed money of
others), all in the ordinary course of business in accordance
with customary industry practices, in amounts and for the
purposes customary in the Company's industry;
(d) the Company may incur Indebtedness to any Subsidiary, and any
Subsidiary may incur Indebtedness to any other Subsidiary or to
the Company; provided that in the case of Indebtedness of the
Company, such obligations shall be unsecured and subordinated in
all respects to the Company's obligations pursuant to the Notes
and any event that causes such Subsidiary no longer to be a
Subsidiary (including by designation to be an Unrestricted
Subsidiary) shall be deemed to be a new incurrence of such
Indebtedness, if then outstanding, subject to the covenant
"Limitation on Incurrence of Additional Indebtedness and
Disqualified Stock";
(e the Company and its Subsidiaries may incur Interest Swap and
Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate or currency risk with respect to any
fixed or floating rate Indebtedness that is permitted by the
Indentures to be outstanding or any receivable or liability the
payment of which is determined by reference to a foreign
currency; provided that the notional amount of any such Interest
Swap and Hedging Obligation does not exceed the principal amount
of Indebtedness to which such Interest Swap and Hedging
Obligation relates;
(f) we and our Subsidiaries may guarantee Indebtedness of any of our
Subsidiaries, provided that the incurrence of such Indebtedness
by such Subsidiary is permitted under the Indentures; and
(g) Subsidiaries of the Company may issue preferred stock or
Indebtedness to the holders (or their Affiliates) of the common
equity of such Subsidiary on a basis that is substantially
proportionate to their common equity interests (with any
disproportionately large equity interests received by the Company
or a Subsidiary of the Company relative to their respective
contributions being ignored for this purpose).
"Permitted Investment" means:
(a) Cash Equivalents;
(b) intercompany Indebtedness to the extent permitted under clause
(d) of the definition of "Permitted Indebtedness ";
(c) an Investment by the Company or a Subsidiary of the Company in
a Person engaged primarily in a Related Business if as a
result of such Investment such Person becomes a Subsidiary of
the Company or is merged with or into the Company or a
Subsidiary of the Company, so long as the surviving entity is
the Company or a Subsidiary of the Company;
(d) an Investment in any Subsidiary of the Company;
(e) other Investments in any Person or Persons engaged primarily
in a Related Business with respect to which the Company
maintains the power to influence or participate in the
management of such Person by virtue of representation on such
Person's board of directors or through a contractual
relationship with such Person or its holders of Capital Stock;
(f) other Investments in any Person or Persons engaged primarily
in a Related Business with respect to which the Supervisory
Board of the Company or of the relevant Subsidiary determines
in its good faith reasonable judgment that the Company or any
of its Subsidiaries will receive as a result of such
Investment commensurate network services benefits (including
by becoming a customer, client, supplier, purchaser or seller
of goods or services of or to such Person or Persons) from the
arrangements entered into as a result of such Investment;
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(g) other Investments in any Person or Persons engaged primarily in a
Related Business; provided that, after giving pro forma effect to
each such Investment, the amount of all such Investments made
solely in reliance upon this clause (g) on and after July 30,
1999 that are outstanding at any time does not exceed in the
aggregate $100 million (or the foreign currency equivalent
thereof measured on the date of the making of such Investment),
plus, unless such amounts shall have been credited under clause
(3) of the "Limitation on Restricted Payments" covenant and
utilized to make a Restricted Payment, (w) the amount of the Net
Cash Proceeds to the Company from the sale of Qualified Capital
Stock (other than (i) to a Subsidiary of the Company, and (ii) to
the extent applied in a Qualified Exchange), (x) an amount equal
to 50% of the Net Cash Proceeds from Special Character Asset
Sales, (y) an amount equal to the Net Cash Proceeds to the
Company or any of its Subsidiaries of any sale of securities
constituting a Parent Stock Instrument (other than (i) to a
Subsidiary of the Company, and (ii) to the extent applied in
connection with a Qualified Exchange) and (z) the amount of
Investments made pursuant to this clause (g) after July 30, 1999
that are returned to the Company or any Subsidiary on or prior to
the date of any such calculation, which amount shall be the
lesser of (i) the amount of the cash invested plus the value of
all noncash investments (valued at the fair market value at the
time of the Investment, determined in the good faith reasonable
judgment of the Company or the relevant Subsidiary) and (ii) the
amount of the Net Cash Proceeds received plus the value of
noncash proceeds received (valued at the fair market value at the
time of the return of such Investment, determined in the good
faith reasonable judgment of the Company or the relevant
Subsidiary);
(h) Investments made in the ordinary course of business as partial or
full payment for constructing a network relating principally to a
Related Business of the Company or any Subsidiary;
(i) Investments solely in the form and consisting of Capital Stock of
the Company (other than Disqualified Capital Stock);
(j) any Investment acquired by the Company or any of its restricted
Subsidiaries (a) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary
in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other
investment or accounts receivable or (b) as a result of a
foreclosure by the Company or any of its restricted Subsidiaries
with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default;
(k) an Investment in prepaid expenses and lease, utility and workers'
compensation, performance and other similar deposits in the
ordinary course of business;
(l) loans, advances, or extensions of credit to employees, officers,
directors made in the ordinary course of business;
(m) the net obligations of any counterparty under Interest Swap and
Hedging Obligations obtained in conformity with industry
practices;
(n) Investments made on or after July 30, 1999 in SBS not to exceed
the amounts required to be held by the Company pursuant to the
Investment Agreement by and between, SBS, the Company and United
International Holdings Inc., dated June 29, 1999, relating to the
acquisition by the Company of Equity Interests in SBS; and
(o) Investments made on or after July 30, 1999 directly or indirectly
in ARA Cable Services Inc. or ARA Programming & Distribution Ltd.
of Saudi Arabia, not to exceed $75 million.
"Permitted Lien" means:
(a) Liens existing on the Issue Date;
(b) Liens securing the Notes;
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(c) Liens securing Indebtedness, or any agreement (including any
Equity Interest) relating to any property, asset, or business
acquired, of a Person existing at the time such Person becomes
a Subsidiary (including by designation) or is merged with or
into the Company or a Subsidiary or Liens securing
Indebtedness incurred in connection with an Acquisition,
provided that such Liens were in existence prior to the date
of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any
other assets than those of the Person (or its businesses)
being acquired (or so designated);
(d) leases or subleases granted to other Persons in the ordinary
course of business not materially interfering with the conduct
of the business of the Company or any of its Subsidiaries or
materially detracting from the value of the relative assets of
the Company or any Subsidiary;
(e) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered
into by the Company or any of its Subsidiaries in the ordinary
course of business;
(f) Liens securing Refinancing Indebtedness incurred to refinance
any Indebtedness that was previously so secured in a manner no
more adverse to the Holders of the Notes than the terms of the
Liens securing such refinanced Indebtedness, provided that the
Indebtedness secured is not increased and the Lien is not
extended to any additional assets or property that would not
have been security for the Indebtedness refinanced;
(g) Liens securing Indebtedness incurred under the Credit
Agreement and other Indebtedness solely of Subsidiaries of the
Company incurred in accordance with the terms of the
Indentures;
(h) Liens in favor of the Company or Liens on assets of
Subsidiaries of the Company in favor of other such
Subsidiaries;
(i) Liens securing Refinancing Indebtedness that complies with the
definition of "Refinancing Indebtedness";
(j) Liens securing Acquired Indebtedness and Indebtedness assumed
in acquiring Related Assets, provided that such Liens were not
put in place in contemplation of the incurrence by the Company
or its Subsidiaries of such Indebtedness, such Liens do not
extend to any property or assets of the Company or any of its
Subsidiaries other than those acquired in connection
therewith, and the Investment that is the subject of such
acquisition is a Permitted Investment;
(k) statutory liens of carriers, warehousemen, mechanics, material
men, landlords, repairmen or other like Liens arising by
operation of law in the ordinary course of business, provided
that (1) the underlying obligations are not overdue for a
period of more than 30 days, or (2) such Liens are being
contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the
books of the Company in accordance with GAAP; and
(l) Liens not otherwise permitted by the Indentures in an amount
not to exceed 5% of the Company's Consolidated Tangible
Assets.
"Person" or "person" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership, limited
liability partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Preferred Stock" means any Equity Interest of any class or classes of
a Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Equity Interests
of any other class of such Person.
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"Principals" means Albert M. Carollo, Lawrence F. DeGeorge, Lawrence J.
DeGeorge, Curtis Rochelle, Marian Rochelle, Rochelle Investments, Ltd. (so long
as it is controlled by Curtis or Marian Rochelle), Gene W. Schneider, G.
Schneider Holdings, Co. and The Gene W. Schneider Family Trust (so long as each
is controlled by Gene W. Schneider or trustees appointed by him), Janet S.
Schneider and Mark L. Schneider, and with respect to any such Person means: (A)
any controlling stockholder or 80% (or more) owned Subsidiary of such Person, or
with respect to each individual Person, (i) family partnerships, corporations or
other entities holding Equity Interests in the Company, the transferee(s) or the
surviving entities or entities solely for the benefit of such Person or any of
the Persons listed in (ii), (iii), (iv) or (v) below, (ii) such Person's spouse,
(iii) such Person's children, grandchildren, stepchildren, step grandchildren
and their spouses, (iv) heirs, legatees and devisees, and (v) trusts solely for
the benefit of any of the foregoing; or (B) any trust corporation, partnership
or other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
such Person and/or such other Persons referred to in the immediately preceding
clause (A).
"Pro Forma" or "pro forma" shall have the meaning set forth in
Regulation S-X of the Securities Act, unless otherwise specifically stated
herein.
"Purchase Money Indebtedness" of any Person means any Indebtedness of
such Person to any seller or other Person incurred solely to finance the
acquisition (including in the case of a Capitalized Lease Obligation, the
lease), construction, installation or improvement of any after acquired real or
personal tangible property which, in the reasonable good faith judgment of the
Supervisory Board of the Company, is directly related to a Related Business.
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"Qualified Exchange" means:
(1) any legal defeasance, redemption, retirement, repurchase or
other acquisition of Capital Stock, or Indebtedness of the
Company issued on or after July 30, 1999 with the Net Cash
Proceeds received by the Company from the substantially
concurrent sale of its Qualified Capital Stock or, to the
extent used to retire Indebtedness (other than Disqualified
Capital Stock) of the Company issued on or after July 30,
1999, Subordinated Indebtedness of the Company,
(2) any exchange of Qualified Capital Stock of the Company for any
Capital Stock or Indebtedness of the Company issued on or
after July 30, 1999, or
(3) any issuance of Subordinated Indebtedness of the Company in
exchange for Indebtedness (other than Disqualified Capital
Stock) of the Company issued on or after July 30, 1999.
"Reference Period" with regard to any Person means the full fiscal
quarter ended immediately preceding any date upon which any determination is to
be made pursuant to the terms of the Notes or the Indentures, for which
consolidated financial statements of the Company are available.
"Refinancing Indebtedness" means Indebtedness (including Disqualified
Capital Stock) (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness (including Disqualified Capital Stock and Refinancing Indebtedness)
in a principal amount (or, if issued with an original issue discount, an
original accreted value, determined in accordance with GAAP) or, in the case of
Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing and the amount of any premium paid in connection with such
Refinancing in accordance with the terms of the documents governing the
Indebtedness (including Disqualified Capital Stock and Refinancing Indebtedness)
refinanced without giving effect to any modification thereof made in connection
with or in contemplation of such refinancing) the lesser of (1) the principal
amount or, in the case of Disqualified Capital Stock, liquidation preference, of
the Indebtedness (including Disqualified Capital Stock and Refinancing
Indebtedness) so Refinanced and (2) if such Indebtedness issued with an original
issue discount, the accreted value thereof (as determined in accordance with
GAAP) at the time of such Refinancing; provided that (A) such Refinancing
Indebtedness
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shall only be used to refinance outstanding Indebtedness (including Disqualified
Capital Stock) of such Person issuing such Refinancing Indebtedness (except that
the Company may refinance outstanding Indebtedness of a Subsidiary), (B) such
Refinancing Indebtedness shall (x) not have an Average Life shorter than the
Indebtedness (including Disqualified Capital Stock) to be so refinanced at the
time of such Refinancing and (y) in all respects, be no less contractually
subordinated or junior, if applicable, to the rights of Holders of the Notes
than was the Indebtedness (including Disqualified Capital Stock) to be
refinanced, (C) such Refinancing Indebtedness shall have a final stated maturity
or redemption date, as applicable, no earlier than the final stated maturity or
redemption date, as applicable, of the Indebtedness (including Disqualified
Capital Stock) to be so refinanced, and (D) such Refinancing Indebtedness shall
be secured (if secured) in a manner no more adverse to the Holders of the Notes
than the terms of the Liens (if any) securing such refinanced Indebtedness,
including, without limitation, the amount of Indebtedness secured shall not be
increased.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Related Assets" means all assets, rights, contractual or otherwise,
and properties, whether tangible or intangible, used or intended for use in
connection with a Related Business; provided that Related Assets shall not
include any Equity Interests or Indebtedness of, or interests in, any Person.
"Related Business" means the business of constructing, creating,
developing, marketing or operating one or more cable, telephone or
communications systems, including, without limitation, any system for
transmitting, or providing service or product for the transmission of, voice,
video or data through transmission facilities, Internet service providers or any
business reasonably related to any of the foregoing and any business conducted
by the Company or any Subsidiary of the Company on the Issue Date; provided that
the determination of what constitutes a Related Business shall be made in good
faith by the Supervisory Board of the Company.
"Related Business Acquisition" means an Asset Acquisition of (i)
properties or assets to be used in a Related Business, (ii) of the Capital Stock
of any Person that becomes a Restricted Subsidiary as a result of such Asset
Acquisition or (iii) of the Capital Stock of any Person that becomes an
Unrestricted Subsidiary as a result of such Asset Acquisition, but only if such
asset Acquisition would be permitted pursuant to the covenant "Limitation on
Restricted Payments" or as a Permitted Investment; provided that, in the case of
clauses (ii) and (iii), such Person's assets and properties consist principally
of properties or assets that will be used in a Related Business.
"Replacement Assets" means property or assets that will be used in a
Related Business of the Company or any Subsidiary and Equity Interests of a
Person that becomes a Subsidiary of the Company.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than other Permitted Investments.
"Restricted Payment" means, with respect to any Person:
(a) the declaration or payment of any dividend or other
distribution in respect of Equity Interests of such
Person or any parent or Subsidiary of such Person,
(b) any payment on account of the purchase, redemption or other
acquisition or retirement for value of Equity Interests of
such Person or any Subsidiary or parent of such Person,
(c) other than with the proceeds from the substantially concurrent
sale of, or in exchange for, Refinancing Indebtedness, any
purchase, redemption, or other acquisition or retirement for
value of, any payment in respect of any amendment of the terms
of or any defeasance of, any Subordinated Indebtedness,
directly or indirectly, by such Person or a parent or
Subsidiary of such Person prior to the scheduled maturity, any
scheduled repayment of principal, or scheduled sinking fund
payment, as the case may be, of such Indebtedness and
(d) any Restricted Investment by such Person;
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provided, however, that the term "Restricted Payment" does not include (1) any
dividend, distribution or other payment on or with respect to Equity Interests
of a Person or the parent of such Person to the extent payable solely in shares
of Qualified Capital Stock of such Person, or (2) any dividend, distribution or
other payment to the Company or any of its Subsidiaries by the Company or any of
its Subsidiaries, or (3) any payment on account of the exchange of shares of
Common Stock of Parent for a like number of substantially identical (except with
regard to voting rights) shares of Common Stock of Parent, or (4) payments to or
for the account of the Stichting Administratiekantor UPC (the "Foundation") or
its successors of amounts related to taxes payable upon the grant of options to
certain employees in shares of the Company held by the Foundation, provided
that, for purposes of this clause (4), neither the Company nor any of its
Subsidiaries shall be liable to any Person in respect of such amounts, other
than for the payment of such amounts actually received or to be received by it,
to the Foundation.
"Securities Act" means the United States Securities Act of 1933, as
amended
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Special Character Asset Sale" means any Asset Sale solely consisting
of assets and property or interests therein comprising its interests in chello
broadband, UPC tv or Priority Telecom determined by the Company in its good
faith reasonable judgment.
"Stated Maturity," when used with respect to any Note, means the date
specified in any Note as the fixed date on which the final payment of principal
and interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company that is
subordinated in right of payment by its terms or the terms of any document or
instrument relating thereto to the Notes, in any respect or when used in the
definitions of Restricted Payment or Qualified Exchange has a final stated
maturity on (except for the Notes) or after the Stated Maturity.
"Subsidiary," with respect to any Person, means (1) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (2) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has majority ownership interest, or (3) a
partnership in which such Person or a Subsidiary of such Person is, at the time,
a general partner and in which such Person, directly or indirectly, at the date
of determination thereof has a majority ownership interest. Notwithstanding the
foregoing, an Unrestricted Subsidiary shall not be a Subsidiary of the Company
or of any Subsidiary of the Company. Unless the context requires otherwise,
Subsidiary means each direct and indirect Subsidiary of the Company.
"Supervisory Board" means, with respect to any Person, the supervisory
board of such Person or any committee of the supervisory board of such Person
authorized, with respect to any particular matter, to exercise the power of the
supervisory board of such Person.
"Tax" or "Taxes" means any and all present or future taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, and all liabilities
with respect thereto, together with any penalties, interest, or additions
thereto.
"Tax Event" means that as a result of any change in or amendment to the
laws, treaties or regulations of any Taxing Authority (or any official or
administrative pronouncement or action or judicial decision) interpreting or
applying such laws, treaties or regulations where such change or amendment is
proposed and becomes effective on or after the Issue Date, in making any payment
due or to become due under the Notes, we are or would be required on the next
succeeding payment date to pay Additional Amounts and the payment of such
Additional Amounts cannot be avoided by the use of any reasonable measures
available to us.
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"Taxing Authority" means any nation or government or any political
subdivision thereof or any agency or instrumentality therein and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Unrestricted Subsidiary" means any subsidiary of the Company that does
not own any Equity Interest of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the
Supervisory Board of the Company); provided that such Subsidiary at the time of
such designation (a) has no Indebtedness other than Non-Recourse Indebtedness;
(b) is not party to any agreement, contract, arrangement or understanding with
the Company or any Subsidiary of the Company, unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Subsidiaries. The Supervisory Board of the Company may
designate any Unrestricted Subsidiary to be a Subsidiary, provided that (1) no
Default or Event of Default is existing or will occur as a consequence thereof
and (2) immediately after giving effect to such designation, on a pro forma
basis, the Company could incur at least $1.00 (or its foreign currency
equivalent) of Indebtedness pursuant to the Debt Incurrence Ratio of the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock." Each such designation shall be evidenced by filing with the
respective Trustee a certified copy of the resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations of,
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"Wholly Owned Subsidiary" means a Subsidiary all the Equity Interests
of which (other than directors' qualifying shares) are owned by the Company or
one or more Wholly Owned Subsidiaries of the Company.
Transfer and Exchange
A holder may transfer or exchange the notes in accordance with the
Indentures. We, the registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and may
require a holder to pay any taxes and fees required by law or permitted by the
Indentures.
Book-Entry, Delivery and Form
A holder may transfer or exchange the notes in accordance with the
Indentures. We, the registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and may
require a holder to pay any taxes and fees required by law or permitted by the
Indentures.
Form of notes, clearance and settlement
The old dollar denominated notes are, and the new dollar denominated
notes will be, represented by one or more notes in registered, global form. The
new dollar global notes will be deposited on the date of the closing date for
exchange of the old dollar denominated notes and the issuance of the new dollar
denominated notes with the trustee as custodian for DTC and registered in the
name of Cede & Co. as nominee of DTC, in each case for credit to the accounts of
DTC participants and indirect participants including, without limitation, Morgan
Guaranty Trust Company of New York, Brussels office, as operator of Euroclear,
and Cedelbank. The old euro denominated notes are, and the new euro denominated
notes will be, represented by a note in registered, global form. The new euro
global note will be deposited on the date of the acceptance for exchange of the
old euro denominated notes and the issuance of the new euro denominated notes
with the paying agent in London as common depositary for Euroclear and
Cedelbank. The euro notes will not be eligible for clearance through DTC, except
indirectly through DTC's participation in Euroclear or Cedelbank.
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Except in the limited circumstances set forth below, notes in
certificated form will not be issued.
Investors who purchased euro denominated notes pursuant to Rule 144A
and investors who purchased euro denominated notes pursuant to Regulation S who
exchange their euro denominated notes for euro notes in the exchange offer will
each hold their interests through the euro global note.
Depositary procedures
DTC. DTC has advised UPC as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons who have accounts with it and to facilitate the clearance
and settlement of securities transactions between DTC participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. DTC participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include other organizations. Indirect access to the DTC
system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC
participant, either directly or indirectly.
Euroclear and Cedelbank. UPC understands as follows with respect to
Euroclear and Cedelbank: Euroclear and Cedelbank each hold securities for their
account holders and facilitate the clearance and settlement of securities
transactions by electronic book-entry transfer between their respective account
holders, thereby eliminating the need for physical movements of certificates and
any risk from lack of simultaneous transfers of securities. Euroclear and
Cedelbank each provide various services, including safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Each of Euroclear and Cedelbank can settle securities
transactions in any of more than 30 currencies, including euros. Euroclear and
Cedelbank each also deal with domestic securities markets in several countries
through established depository and custodialrelationships. The respective
systems of Euroclear and Cedelbank have established an electronic bridge between
their two systems across which their respective account holders may settle
trades with each other. Account holders in both Euroclear and Cedelbank are
world-wide financial institutions including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
both Euroclear and Cedelbank is available to other institutions that clear
through or maintain a custodial relationship with an account holder of either
system. An account holder's overall contractual relations with either Euroclear
or Cedelbank are governed by the respective rules and operating procedures of
Euroclear or Cedelbank and any applicable laws. Both Euroclear and Cedelbank act
under such rules and operating procedures only on behalf of their respective
account holders, and have no record of or relationship with any persons who are
not direct account holders.
Dollar notes. With respect to the dollar global notes, DTC has advised
UPC that pursuant to procedures established by it,
(1) upon initial deposit of a dollar global note, DTC will credit
the accounts of DTC participants, designated by the exchange
agent, with portions of the principal amount of such dollar
global note deposited,
(2) for DTC participants, initial ownership of interests in such
dollar global notes will be shown on, and the transfer of
ownership thereof will be effected through, records maintained
by DTC and
(3) for non-DTC participant owners, ownership interests in such
dollar global notes will only be shown on, and the transfer of
ownership thereof will only be effected through, the records
of the DTC participants, including Euroclear and Cedelbank, or
others through which they hold their account.
All interests in a dollar global note deposited with DTC, including
those held through Euroclear or Cedelbank, are subject to the procedures and
requirements of DTC. Those interests held through Euroclear or Cedelbank are
also subject to the procedures and requirements of such system.
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Euro notes. With respect to the euro global note, investors who hold
accounts with the Euroclear operator or Cedelbank may acquire, hold and transfer
security entitlements with respect to the euro global note against the Euroclear
operator or Cedelbank and their respective property by book-entry to accounts
with the Euroclear operator or Cedelbank, each of which has an account with the
common depositary, and subject at all times to the procedures and requirements
of Euroclear or Cedelbank, as the case may be. "Security entitlement" means the
rights and property interests of an accountholder against its securities
intermediary under applicable law in or with respect to a security, including
any ownership, co-ownership, contractual or other rights. Investors who do not
have accounts with the Euroclear operator or Cedelbank may acquire, hold and
transfer security entitlements with respect to the euro global note against the
securities intermediary and its property with which such investors hold accounts
by book-entry to accounts with such securities intermediary, which in turn may
hold a security entitlement with respect to the euro global note through the
Euroclear operator or Cedelbank. Investors electing to acquire security
entitlements with respect to the euro global note through an account with the
Euroclear operator or Cedelbank or some other securities intermediary must
follow the settlement procedures of their securities intermediary with respect
to the settlement of new issues of securities. Security entitlements with
respect to the euro global note to be acquired through an account with the
Euroclear operator or Cedelbank will be credited to such account as of the
settlement date against payment in euro for value as of the settlement date.
Investors electing to acquire, hold or transfer security entitlements with
respect to a euro global note through an account with the Euroclear operator,
Cedelbank or some other securities intermediary other than in connection with
the initial distribution of the euro notes must follow the settlement procedures
of their securities intermediary with respect to the settlement of secondary
market transactions in securities.
Except as described below, owners of interests in the dollar global
notes and the euro global note will not have notes registered in their names,
will not receive physical delivery of notes in certificated form and will not be
considered the registered owners or holders of notes for any purpose. So long as
DTC or its nominee, or the common depositary, as the case may be, is the
registered owner or holder of a global note, such party will be considered the
sole owner or holder of the notes represented by such global note for all
purposes under the indentures and the notes. Accordingly, each person owning a
beneficial interest in a global note must rely on the procedures of DTC,
Euroclear and Cedelbank, as the case may be, and their participants or account
holders to exercise any rights and remedies of a holder of notes under the
indentures. Payments of principal and interest on the global notes will be made
to DTC or its nominee, or to the common depositary on behalf of Euroclear and
Cedelbank, as the case may be, as the registered owners thereof.
The laws of some countries and some states in the United States require
that persons take physical delivery in definitive form of securities that they
own. Consequently, the ability to transfer beneficial interests in a global note
to such persons may be limited to that extent. Because DTC, Euroclear and
Cedelbank can act only on behalf of their respective participants or account
holders, as the case may be, the ability of a person having beneficial interests
in a global note to pledge such interests to persons or entities that do not
participate in the relevant clearing system, or otherwise take actions in
respect of such nterests, may be affected by the lack of a physical certificate
evidencing such nterests.
Payments on the global notes
Payments in respect of the principal of, premium, if any, and interest
on a global note will be made through a paying agent appointed pursuant to the
applicable indenture and will be payable to DTC or its nominee, or the common
depositary on behalf of Euroclear and Cedelbank, as the case may be, each in its
capacity as the registered holder of such notes under such indentures. Under the
terms of the indentures, UPC and the trustee will treat the persons in whose
names the notes, including the global notes, are registered as the owners of the
notes for the purpose of receiving such payments and for any and all other
purposes whatsoever. Consequently, none of UPC, the trustee, or any agent of UPC
or the trustee has or will have any responsibility or liability for
(1) any aspect or accuracy of the records of the relevant clearing
system, the participants therein or the account holders
thereof, as the case may be, relating to payments made on
account of beneficial ownership interests in the global notes,
or for maintaining, supervising or reviewing any records of
such clearing system, participant or account holder relating
to beneficial ownership interests in the global notes, or
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(2) any other matter relating to the actions and practices of the
relevant clearing system or the participants therein or the
account holders thereof.
DTC, Euroclear or Cedelbank, as the case may be, upon receipt of any
such payment, will immediately credit the accounts of their relevant
participants or account holders, as the case may be, with payments in amounts
proportionate to their respective holdings in principal amount of beneficial
interests in the relevant global note, as shown on the records of DTC, Euroclear
or Cedelbank, as the case may be. UPC expects that payments by such participants
or account holders, as the case may be, to the beneficial owners of global notes
will be governed by standing instructions and customary practices and will be
the responsibility of such participants or account holders. Neither UPC nor the
trustee will have responsibility or liability for the payment of amounts owing
in respect of beneficial interests in the global notes held by DTC or by the
common depositary for Euroclear and Cedelbank.
Transfers of global securities and interests therein
Unless definitive securities are issued,
(1) the dollar global notes may be transferred, in whole and not
in part, only to another nominee of DTC or to a successor of
DTC or its nominee, and
(2) the euro global note may be transferred, in whole and not in
part, only by Euroclear and Cedelbank to the common
depositary, as the case may respectively, or to another
nominee or successor of such parties or a nominee of such
successor.
Transfers of beneficial interests in the dollar global notes will be
subject to the applicable rules and procedures of DTC and its direct and
indirect participants including, if applicable, those of Euroclear and
Cedelbank, which are subject to change from time to time. Transfers of
beneficial interests in the euro global note will be subject to the applicable
rules and procedures of Euroclear and Cedelbank, as the case may be, and their
respective account holders and intermediaries. Any secondary market trading
activity in beneficial interests in the global notes is expected to occur
through the participants or account holders and intermediaries, as the case may
be, of DTC, Euroclear and Cedelbank, and the securities custody accounts of
investors will be credited with their holdings against payment in same-day funds
on the settlement date.
No service charge will be made for any registration of transfer or
exchange of notes, but the trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Although DTC, Euroclear and Cedelbank have agreed to certain procedures
to facilitate transfers of interests in the global notes among participants in
DTC and account holders in Euroclear and Cedelbank, they are under no obligation
to perform or to continue to perform such procedures. These procedures may be
discontinued at any time. None of UPC, the trustee, or any agent of UPC or the
trustee will have any responsibility for the nonperformance or misperformance,
as a result of insolvency, mistake, misconduct or otherwise, by DTC, Euroclear
or Cedelbank or their respective participants, indirect participants, account
holders or intermediaries of their respective obligations under the rules and
procedures governing their operations.
UPC understands that under existing industry practices, if either UPC
or the trustee requests any action of holders of notes, or if an owner of a
beneficial interest in a global note desires to give instructions or take an
action that a holder is entitled to give or take under the indentures, DTC,
Euroclear or Cedelbank, as the case may be, would authorize their respective
participants or account holders, as the case may be, owning the relevant
beneficial interest to give instructions or take the action. The participants or
account holders would authorize indirect participants or intermediaries to give
instructions or take such action, or would otherwise act upon the instructions
of such indirect participants or intermediaries.
UPC understands that under existing practices of DTC, Euroclear and
Cedelbank, if less than all of the respective class of notes are to be redeemed
at any time, DTC, Euroclear or Cedelbank, as the case may be, will credit their
participants' or account holders' accounts on a proportionate basis, with
adjustments to prevent fractions, or by lot or
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on such other basis as DTC, Euroclear or Cedelbank, as the case may be, deems
fair and appropriate, provided that no beneficial interests of less than $1,000
or (Euro)1,000, as the case may be, may be redeemed in part.
Certificated notes
As long as DTC or the Common Depositary, or its respective nominee, is
the registered holder of a global note, DTC or the Common Depositary or such
nominee, as the case may be, will be considered the sole owner and holder of the
Notes represented by such global note for all purposes under the Indentures and
the Notes.
Unless
1) in the case of a dollar global note DTC notifies us that it is
unwilling or unable to continue as depositary for a global
note or ceases to be a "Clearing Agency" registered under the
Exchange Act;
(2) in the case of a euro global note, Euroclear and Cedelbank
notify us that they are unwilling or unable to continue as
clearing agency;
(3) in the case of a euro global note, the Common Depositary
notifies us that they are unwilling or unable to continue as
Common Depositary and a successor Common Depositary is not
appointed within 120 days of such notice; or
(4) in the case of any Note, an event of default has occurred and
is continuing with respect to such Note, described below under
"-- Certificated Notes," owners of beneficial interests in a
global note will not be entitled to have any portions of such
global note registered in their names, will not receive or be
entitled
to receive physical delivery of Notes in certificated form and will not
be considered the owners or holders of the global note (or any notes
represented thereby) under the Indentures or the Notes. In addition, no
beneficial owner of an interest in a global note will be able to
transfer that interest except in accordance with DTC's and/or
Euroclear's and Cedelbank's applicable procedures (in addition to those
under the Indentures referred to herein).
In the case of the issuance of certificated notes in the limited
circumstances set forth above, the holder of any such certificated note may
transfer the note by surrendering it at the offices or agencies of UPC
maintained for such purpose within the city and state of New York, and at the
office of the transfer agent in London. Until otherwise designated by UPC, UPC's
office or agency in the city and state of New York and London, England,
respectively, will be the offices of the trustee maintained for that purpose. In
the event of a partial transfer of a holding of notes represented by one
certificate, or partial redemption of such a holding represented by one
certificate, a new certificate shall be issued to the transferee in respect of
the part transferred or redeemed and a further new certificate in respect of the
balance of the holding not transferred or redeemed shall be issued to the
transferor, provided that no certificate in denominations less than $1,000 or
(Euro)1,000 as the case may be, shall be issued. Each new certificate to be
issued shall be available for delivery within ten business days at the office of
the trustee or the transfer agent in London. The cost of preparing, printing,
packaging and delivering the certificated notes shall be borne by UPC.
UPC shall not be required to register the transfer or exchange of
certificated notes for a period of 15 days preceding:
o the due date for any payment of principal of or interest on
the notes or
o a selection of notes to be redeemed.
Also, UPC is not required to register the transfer or exchange of any
notes selected for redemption. In the event of the transfer of any certificated
note, the trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and UPC may require a holder to
pay any taxes and fees required by law and permitted by the indentures and the
notes.
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If certificated notes are issued and a holder of a certificated note
claims that the note has been lost, destroyed or wrongfully taken or if the note
is mutilated and is surrendered to the trustee, UPC shall issue and the trustee
shall authenticate a replacement note if the trustee's and UPC's requirements
are met. If required by the trustee or UPC, an indemnity bond sufficient in the
judgment of both to protect UPC, the trustee or any paying agent or
authenticating agent appointed pursuant to the indentures from any loss which
any of them may suffer if a note is replaced must be posted. UPC may charge for
its expenses in replacing a note.
In case any such mutilated, destroyed, lost or stolen note has become
or is about to become due and payable, or is about to be redeemed or purchased
by UPC pursuant to the provisions of the indentures, UPCn its discretion may,
instead of issuing a new note, pay, redeem or purchase such note, as the case
may be.
Exchange Offer; Registration Rights
We and the initial purchasers of the old notes entered into the
registration rights agreement. Pursuant to the registration rights agreement, we
have filed with the SEC the exchange offer registration statement of which this
prospectus is a part.
We will file with the SEC a shelf registration statement to cover
resales of the notes by holders who satisfy certain conditions relating to the
provision of information in connection with the shelf registration statement if:
o we are not required to file the exchange offer registration
statement or permitted to consummate the exchange offer
because the exchange offer is not permitted by applicable law
or SEC policy; or
o any holder of Transfer Restricted Securities notifies us prior
to the 20th day following consummation of the exchange offer
that:
--it is prohibited by law or SEC policy from participating in
the exchange offer; or
--it may not resell the new notes acquired by it in the
exchange offer to the public without delivering a prospectus
and the prospectus contained in the exchange offer
registration statement is not appropriate or available for
such resales; or
--it is a broker-dealer and owns notes acquired directly from
us or an affiliate of our company.
We will use our best efforts to cause the applicable registration
statement to be declared effective as promptly as possible by the SEC.
For purposes of the foregoing, "Registrable Securities" means each Note
until:
o the date on which such Note has been exchanged by a person
other than a broker-dealer for a new Note in the exchange
offer;
o following the exchange by a broker-dealer in the exchange
offer of a note for a new note, the date on which such new
note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the exchange offer registration
statement;
o the date on which such note has been effectively registered
under the Securities Act and disposed of in accordance with
the shelf registration statement; or
o the date on which such note is distributed to the public
pursuant to Rule 144 under the Securities Act.
The registration rights agreement provides that:
o we will file an exchange offer registration statement with the
SEC on or prior to 90 days after the closing date;
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o we will use our best efforts to have the exchange offer
registration statement declared effective by the SEC on or
prior to 180 days after the closing date;
o unless the exchange offer would not be permitted by applicable
law or SEC policy or would be required to remain open for a
longer period, we will commence the exchange offer and use our
best efforts to issue, on or prior to 45 business days after
the date on which the exchange offer registration statement
was declared effective by the SEC, new notes in exchange for
all notes tendered prior thereto in the exchange offer; and
o if obligated to file the shelf registration statement, we will
use our bestefforts to file the shelf registration statement
with the SEC on or prior to the later of (a) the date on which
we would have been required to file an exchange offer
registration statement and (b) 60 days after our obligation to
file a shelf registration statement arises, and to cause the
shelf registration to be declared effective by the SEC on or
prior to 180 days after such obligation arises.
We will pay Liquidated Damages to each holder of notes if:
o we fail to file any of the registration statements required by
the registration rights agreement on or before the date
specified for such filing;
o any of such registration statements is not declared effective
by the SEC on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date");
o we fail to consummate the exchange offer within 45 business
days of the Effectiveness Target Date with respect to the
exchange offer registration statement; or
o the shelf registration statement or the exchange offer
registration statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of
Registrable Securities during the periods specified in the
registration rights agreement (each such event referred to in
the four bullet points of this paragraph, a "Registration
Default").
If a Registration Default occurs, liquidated damages will accrue on the
notes from and including the date on which the event shall occur up to but
excluding the date on which all those events have been cured. Liquidated damages
will be payable in cash semiannually in arrears each February 1 and August 1, at
a rate per annum equal to 0.50% of the principal amount of the notes during the
90-day period immediately following the occurrence of any Registration Default
and shall increase by 0.25% per annum of the principal amount of the notes at
the end of each subsequent 90-day period, but in no event shall the rates exceed
1.50% per annum in the aggregate regardless of the number of Registration
Defaults. All accrued liquidated damages will be paid by us to the global note
holder by wire transfer of immediately available funds or by federal funds check
and to holders of certificated securities by wire transfer to the accounts
specified by them or by mailing checks to their registered addresses if no such
accounts have been specified. Following the cure of all Registration Defaults,
the accrual of liquidated damages will cease.
Holders of notes will be required to make certain representations to,
as described in the registration rights agreement, in order to participate in
the exchange offer and will be required to deliver certain information to be
used in connection with the shelf registration statement and to provide comments
on the shelf registration statement within the time periods set forth in the
registration rights agreement in order to have their notes included in the shelf
registration statement and benefit from the provisions regarding liquidated
damages set forth above.
Holders of notes will also be required to suspend their use of the
prospectus included in the shelf registration statement under certain
circumstances upon receipt of written notice to that effect from us.
We will apply to list the new notes on the Luxembourg Stock Exchange.
The new notes will have new common codes and new ISINs and will be accepted for
clearance through the accounts of Euroclear and Cedelbank. All necessary actions
and services in respect of the exchange offer may be done at the office of the
paying and transfer agent in
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Luxembourg. The paying and transfer agent for these purposes is Citibank, N.A.
acting through Banque Internationale a Luxembourg.
The summary herein of certain provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement. Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the registration rights agreement.
DESCRIPTION OF OTHER DEBT
We and our consolidated and unconsolidated affiliates had the following
principal long-term and short-term debt facilities outstanding as of December
31, 1999. Debt denominated in currencies other than Euros has been translated to
Euros for the outstanding balance at of December 31, 1999. Several of the debt
facilities listed below have financial covenants and other restrictions which
could limit access to funds. See our notes to consolidated financial statements
incorporated by reference into this prospectus for additional detail.
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<TABLE>
<CAPTION>
Facility Size or Outstanding
Final Principal At December 31,
Description (Borrower) Maturity Interest Rate Amount 1999
---------------------- -------- ------------- ------ ----
(in millions) (in millions Euro)
UPC and Consolidated Subsidiaries:
Long-Term Debt
<S> <C> <C> <C> <C> <C>
Senior Notes 2007 EURIBOR + 4.80% and 9.92% Euro190.7 190.7
2007 10.875% Euro100.0 100.0
2009 EURIBOR + 4.80% and 9.92% Euro240.2 238.4
2009 11.25% Euro101.0 100.3
2009 EURIBOR + 4.15% and 8.54% Euro754.7 754.7
2009 10.875% Euro300.0 300.0
Senior Discount Notes 2009 12.50% USD735.0 (2) 419.1
2009 13.375% USD478.0(2) 254.2
2009 13.375% Euro191.0(2) 102.2
PCI Notes 2003 9.875% per annum USD130.0(2) 16.4
@Entertainment 1998 Senior
Discount Notes 2008 14.5% per annum USD224.2(2) 115.3
@Entertainment 1999 Senior
Discount Notes 2009 14.5% per annum USD235.5(2) 140.9
@Entertainment 1999 Series C 2008 7% per annum on USD36.0(2) 11.8
Senior Discount Notes principal at maturity
UPC Senior Credit Facility 2006 EURIBOR/LIBOR + 0.75% to Euro1,000.0 357.5
2.0% per annum
New TeleKabel Facility 2007 EURIBOR + 0.75% to 2.0% per Euro340.0 255.3
annum
CNBH Facility 2008 AIBOR + 0.6% to 1.6% per NLG274.0 121.6
annum
A2000 Group Facilities (1) 2005-2006 AIBOR + 0.7/0.75% or a fixed NLG458.0 207.8
rate advance + 0.7/0.75%
Mediareseaux Facility 2007 LIBOR + 0.75% to 2.0% FFR680.0 44.9
RCF Credit Facility Dec 2005 PIBOR +1.5% FFR252.4 31.7
Rhone Vision Cable Facility June 2002 LIBOR + 1% FFR680.0 61.0
Videopole Facility 2006 6.60% per annum FFR65.0 7.7
DIC Loan 2000 8.0% per annum + 6.0% of USD45.0 39.1
principal amount at maturity
Monor Facility 2006 6.66% / 7.79% USD42.0 33.3
Short-Term Debt
Stjarn Facilities March 2000 NBU + 0.60% / STIBOR + 1.25% SEK521.0 39.1
Stjarn Seller's Note August 2000 8.0% per annum USD 100.0 99.4
A2000 Working Capital
Facility (1) 2000 4.85% per annum NLG52.0 20.5
Unconsolidated Affliates:
Tevel Facilities 2007-2010 Fixed rate ranging from NIS977.5 205.8
5.5%-6.00%
Melita Facility 2007 6.75% - 7.50% Lm14.0 27.5
</TABLE>
(1) Subsequent to December 31, 1999 A2000 replaced these facilities by a
new credit facility.
(2) At maturity.
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Restrictions under our July, October and January Indentures
Our activities are restricted by the covenants of our indentures dated
July 30, October 29, 1999 and January 20, 2000, under which senior notes and
senior discount notes were issued. Among other things, our indentures place
certain limitations on its ability, and the ability of its subsidiaries, to
borrow money, issue capital stock, pay dividends in stock or repurchase stock,
make investments, create certain liens, engage in certain transactions with
affiliates, and sell certain assets or merge with or into other companies.
Under the terms of our July, October and January indentures, if we
raise additional equity, UPC will be permitted to incur additional debt.
Restrictions under United Indentures
As a subsidiary of United, our activities are restricted by the
covenants in United's indenture dated February 5, 1998 and April 29, 1999. The
United indentures generally limit the additional amount of debt that we or our
subsidiaries or controlled affiliates may borrow, or preferred shares that we or
they may issue.
CERTAIN TAX CONSEQUENCES
The following is a summary of certain Netherlands tax consequences to
Netherlands resident holders and non-Netherlands resident holders and certain
United States federal income tax consequences to U.S. holders (as defined below)
under current law related to the ownership of the notes and the exchange of the
notes for exchange notes pursuant to the registration rights agreement. This
summary is for general information purposes only. A prospective investor should
not construe the contents hereof as tax advice. Each prospective investor is
urged to consult its tax advisor to determine all of the tax consequences of
owning the notes and exchanging the notes for registered notes, including the
applicability and effect of all state, local or foreign tax laws, and of any
changes in Netherlands or United States federal tax law or administrative or
judicial interpretation thereof after the date of this offering memorandum. The
notes and the exchange notes are referred to collectively in this tax section as
the "notes."
Certain Netherlands Tax Consequences
This overview is a summary of the principal Netherlands tax consequences that
will apply to holders of the notes. This summary is not exhaustive of all the
possible tax consequences that may be relevant to holders in light of their
particular circumstances. In particular, this summary does not cover all tax
consequences applicable to joint venture vehicles, such as limited liability
companies and partnership structures. This summary represents Arthur Andersen's
interpretation of existing law. No assurance can be given that tax authorities
or courts in The Netherlands will agree with such interpretation. The laws on
which this summary is based are subject to change, perhaps with retroactive
effect. A change to such laws may invalidate a part or all of this summary,
which will not be updated to reflect changes in laws.
Substantial Interest
An individual resident shareholder or a non-resident shareholder (entity or
individual) that owns, either via shares, conversion rights or options, directly
or indirectly, 5% or more of any class of shares, or 5% or more of the total
issued share capital of a company resident in The Netherlands (a "substantial
interest") is subject to special rules. Profit participation rights which give
the holder rights to 5% or more of the annual profit or 5% or more of the
liquidation proceeds of a company resident in The Netherlands will also qualify
as a substantial interest. With respect to individuals, certain attribution
rules exist in determining the presence of a substantial interest. A shareholder
is deemed to own a substantial interest if (part of) a substantial interest has
been disposed of, on a non-recognition basis, and the shareholder continues to
own share in The Netherlands company.
In the situation that a holder has or is deemed to have a substantial interest
in the Company, then all the notes such holder holds will form a part of this
Substantial Interest.
The above description does not cover all possible situations where a (deemed)
substantial interest may exist. If there is any doubt whether the "substantial
interest" regulations may apply, each holder of notes should consult its tax
advisor
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regarding the tax consequences. Unless indicated otherwise, the term
"shareholder" as used herein, includes individuals and entities as defined under
Netherlands tax law holding notes, but does not include any such person having a
substantial interest in the company.
Netherlands Tax Consequences for Resident Holders
The amount of the discount in the senior discount notes will be regarded as
interest and will as such be subject to the following Netherlands corporate
income tax and Netherlands individual income tax rules.
Individual Income Tax and Corporate Income Tax on Income Derived from the Notes.
If the Notes are held by an individual who resides, or is deemed to reside, in
The Netherlands, income derived from the Notes is subject to Netherlands income
tax on a net income basis at graduated rates. An individual generally is
entitled to an interest exemption of NLG 1,000 a year (NLG 2,000 a year for
married couples). The interest exemption is not available to an individual
holder if the Notes are:
1. attributable to a trade or business carried on by the
shareholder, or
2. form part of a Substantial Interest
Interest received from Notes by a corporate holder that resides, or is deemed to
reside, in the Netherlands will be subject to Netherlands corporation tax on net
basis if the Notes are (deemed) attributable to a trade or business carried on
(or deemed to be carried on) by the holder. Interest received from Notes by a
pension fund as defined in the Corporation Tax Act is not subject to Netherlands
corporate tax.
Capital gains derived from the sale of the Notes by an individual holder will
not be subject to individual income tax provided the individual holder does not
own a (deemed) substantial interest in UPC and provided the Notes are not assets
of a business. Any interest or accretion received on the Notes and any interest
accrued in the period between the date of the latest interest payment and the
date of disposal of the Notes by individuals will be subject to Netherlands
individual income tax.
Capital gains derived from the sale of the Notes, interest and accretion
received by a corporate holder that resides, or is deemed to reside, in The
Netherlands will be subject to Netherlands corporate income tax if the Notes are
(deemed) attributable to a trade or business carried on (or deemed to be carried
on) by the holder.
Withholding Tax. The Netherlands will not levy withholding taxes from resident
holders on any payment under the notes.
Net Wealth Tax. Individuals will be subject to Netherlands net wealth tax at a
rate of 0.7% on the fair market value of the Notes if the notes are held at
January 1 of a year. The Netherlands net wealth tax does not apply to
corporations.
Gift, Estate or Inheritance Taxes. Generally, Netherlands gift tax or
inheritance tax will be due with respect to a gift or inheritance of the notes
from a person who resided, or was deemed to have resided, in The Netherlands at
the time of the gift or his or her death.
For the purposes of The Netherlands gift and inheritance tax, an individual with
Netherlands nationality is deemed to be a resident of The Netherlands if he or
she has been resident of The Netherlands at any time during the ten years
preceding the time of gift or death. For the purpose of The Netherlands gift
tax, any person is deemed to be a resident of The Netherlands if that person has
been resident of The Netherlands at any time within the twelve months preceding
the time of the gift. The ten-year and twelve-month residency rules may be
modified by treaty.
However, in case of a gift by an individual who at the time of the gift was
neither resident nor deemed to be resident in The Netherlands and such
individual dies within 180 days after the date of the gift, while being resident
or deemed to be resident in The Netherlands, such tax will be due.
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Liability for payment of the gift tax or inheritance tax rests with the donee or
heir, respectively. The rate at which these taxes are levied is primarily
dependent on the fair market value of the gift or inheritance and the
relationship between the donor and donee or the deceased and his or her heir(s).
Exemptions may apply under specific circumstances.
Netherlands Tax Consequences for Non-resident Holders
Netherlands Income Tax. A person (entity or individual) is a "non-resident
holder" if that person:
(i) is not and has not been a resident or deemed resident of The
Netherlands for purposes of Netherlands tax legislation;
(ii) does not have or will not obtain an enterprise or an interest in
an enterprise which, in whole or in part, is carried on through a permanent
establishment or a permanent representative in The Netherlands and to which
enterprise or part of an enterprise the notes are attributable;
(iii) is not directly entitled (the term directly means, in this
context, not through the (beneficial) ownership of shares or similar securities)
to all or a share to the profit of an enterprise that is managed and controlled
in The Netherlands while the notes form part of the assets for, or are otherwise
attributable to, such enterprise;
(iv) does not have or will not obtain a substantial interest (as
defined above) or deemed substantial interest in UPC according to the criteria
under Netherlands tax law currently in force or in the event such holder does
have such an interest, it qualifies as an asset of, or is otherwise attributable
to an enterprise; and
(v) does not carry out and has not carried out employment activities on
the territory of The Netherlands, or as director or board member of an entity
resident in The Netherlands or as a civil servant of a Netherlands public body
with which the holding of the notes is connected.
A non-resident holder is not subject to Netherlands corporate income tax or
Netherlands individual income tax with respect to interest (including the amount
of the discount under the senior discount notes) and capital gains.
Withholding Tax. The Netherlands will not levy withholding taxes from
non-resident holders on payments under the notes.
Net Wealth Tax. A non-resident individual shareholder will not be subject to
Netherlands net wealth tax in respect of the notes provided the non-resident
holder does not or has not
1. carried on a business in The Netherlands through a permanent
establishment or a permanent representative that included in its
assets the Notes, and
2. shared directly (not through the beneficial ownership of shares
or similar securities) in the profits of an enterprise managed or
controlled in The Netherlands, which owned or was deemed to have
owned notes.
Gift, Estate or Inheritance Taxes. No gift, estate or inheritance taxes will
arise in The Netherlands in respect of the transfer of a note by way of gift by
a non-resident holder, or on the death of such person, provided the transfer is
not construed as an inheritance or gift made by or on behalf of a person who is
a resident or deemed resident of The Netherlands.
For the purpose of the Netherlands gift and inheritance tax, an individual with
Netherlands nationality is deemed to be a resident of The Netherlands if that
person has been resident of The Netherlands at any time during the ten years
preceding the time of gift or death. For the purpose of the Netherlands gift
tax, any person is deemed to be a resident of The Netherlands if that person has
been resident of The Netherlands if at any time within twelve months preceding
the date of the gift. The ten-year and twelve-month residency rules may be
modified by treaty.
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However, in case of a gift by an individual who at the time of the gift was
neither resident nor deemed to be resident in The Netherlands and such
individual dies within 180 days after the date of the gift, while being resident
or deemed to be resident in The Netherlands, such tax will be due.
Liability for payment of the gift tax or inheritance tax rests with the donee or
heir, respectively. The rate at which these taxes are levied is primarily
dependent on the fair market value of the gift or inheritance and the
relationship between the donor and donee or the deceased and his or her heir(s).
Exemptions may apply under specific circumstances.
Exchange Offer
The exchange of notes for exchange notes will have no Netherlands tax
consequences provided the terms of the exchange notes, such as the face amount,
the interest rate or return, and the repayment schedule, do not differ from the
notes before the exchange.
Tax Reform 2001
On February 3, 2000, the Lower House of the Netherlands Parliament adopted a
proposal on new Netherlands tax legislation. If the new legislation will be
adopted by the Upper House as well, it will become effective as of January 1,
2001.
If enacted, the new legislation will in particular change the taxation in
relation to Securities held by individual holders resident or deemed resident of
the The Netherlands which are neither business assets, nor part of a so-called
substantial interest. According to the proposed legislation, Netherlands
individual resident holders or deemed Netherlands individual resident holders of
shares will generally be taxed annually on a deemed income of 4% of the average
annual value of the shares less associated debt, at a rate of 30%, regardless
whether any income is received, capital gains are realized or capital losses are
suffered. On the other hand, the net wealth tax will be abolished. Since this
legislation is still pending, it may be subject to change.
European Union Proposal
In 1998, the European Commission submitted to the Council of Ministers of the
European Union a proposal requiring paying agents in a member state to withhold
tax at a minimum rate of 20% from interest, discount and premium payments to
individuals residing in other member states or institute an information exchange
system to report these payments to the tax authorities of the other member
state. The tax would not be withheld if an individual due such payments provides
the paying agent a certificate obtained from the tax authorities of the member
state in which the individual is resident, confirming that the authorities are
aware of the payment due the individual. The information exchange system would
require a member state to supply other member states the details of any payments
made by paying agents within its jurisdiction to individuals resident in such
other member state. At this time, the European Commission is considering
alternatives to the proposal, although no one alternative has been formally
proposed. If the proposal is adopted in its current form, it will apply to
payments made after December 31, 2000.
Certain United States Federal Income Tax Consequences
The following is a general summary of certain United States federal income tax
consequences applicable to U.S. holders of the notes who are initial purchasers
of the notes and hold the notes as capital assets. This discussion is intended
as a descriptive summary only and does not purport to be a complete analysis or
listing of all potential tax considerations that may be relevant to holders.
This discussion is based on the current provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the applicable Treasury Regulations (the
"Regulations") and public administrative and judicial interpretations of the
Code and the Regulations, all of which are subject to change, which changes
could be applied retroactively. This discussion is also based on the information
contained in this offering memorandum and the related documents. This discussion
does not cover all aspects of United States federal taxation that may be
relevant to, or the actual tax effect that any of the matters described herein
will have on, particular U.S. holders and does not address state, local, or
foreign tax consequences.
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The tax consequences to a U.S. holder may vary depending on the U.S. holder's
particular situation or status. U.S. holders that are subject to special rules
under the Code, (including insurance companies, tax-exempt organizations, mutual
funds, retirement plans, financial institutions, dealers in securities or
foreign currency, persons that hold the notes as part of a straddle,
constructive sale, hedge or synthetic security transaction, persons that have a
functional currency other than the United States dollar, investors in
pass-through entities, traders in securities that elect to mark to market and
certain expatriates) may be subject to special rules not discussed below.
As used in this discussion, the term "U.S. holder" means an initial purchaser of
a note who is a beneficial owner of a note and who is for United States federal
income tax purposes (i) a citizen or resident of the United States, (ii) a
corporation, partnership, or other entity created or organized in or under the
laws of the United States, of the District of Columbia, or of any State (except,
in the case of a partnership, to the extent provided in the Regulations), (iii)
an estate the income of which is subject to United States federal income tax,
regardless of its source, or (iv) a trust (A) if (1) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (2) one or more United States persons have the authority to control
all substantial decisions of the trust, or (B) that was in existence on August
20, 1996, was treated as a U.S. Person under the Code on the previous date, and
elected to continue to be so treated.
Interest
Interest on the notes (other than in the case of discount notes which are
subject to the rules described below under "Discount Notes--Original Issue
Discount") and Additional Amounts, if any, paid in respect of taxes withheld
from payments on the senior notes (as described in "Description of the
Notes--Additional Amounts") generally will be subject to tax to a U.S. holder as
ordinary income at the time accrued or received, in accordance with such U.S.
holder's regular method of accounting for United States federal income tax
purposes. The amount of interest required to be included in income by a U.S.
holder will also include the amount of taxes, if any, withheld by UPC. Interest
income on the senior notes will constitute foreign source income and a U.S.
holder may generally claim either a deduction or, subject to certain
limitations, a foreign tax credit, in respect of any foreign tax imposed on such
interest payments for United States federal income tax purposes. The rules
relating to foreign tax credits and the timing thereof are complex and U.S.
holders are urged to consult their tax advisors with regard to the availability
of a foreign tax credit and the application of the foreign tax credit
limitations to their particular situations.
A cash method U.S. holder receiving an interest payment in euros on a senior
euro note will be required to include in income the United States dollar value
of such payment (determined using the spot rate on the date such payment is
received) regardless of whether such payment is in fact converted into United
States dollars. No ordinary gain or loss will be recognized by such holder if
the euros are converted to United States dollars on the date received. The
United States federal income tax consequences of the conversion of euros into
United States dollars under other circumstances is described below. See
"--Transactions in Euros."
An accrual method U.S. holder will be required to include in income the United
States dollar value of the amount of interest income that has accrued on a
senior euro note in a taxable year, determined by translating such income into
United States dollars at the average rate of exchange for the relevant accrual
period (or portion thereof). The average rate of exchange for an accrual period
(or portion thereof) is the simple average of the exchange rates for each
business day of such period (or such other average that is reasonably derived
and consistently applied). In the alternative, an accrual method holder may
elect to translate interest income on a senior euro note using the spot rate on
the last day of an accrual period (or the last day of the taxable year for the
portion of such period within the taxable year). In addition, a holder may elect
to translate interest income on a senior euro note using the spot rate on the
date of receipt or payment if such date is within five business days of the last
day of an accrual period. Such elections (i) must be made in a statement filed
with the U.S. holder's United States federal income tax return, (ii) are
applicable to all debt instruments held by the U.S. holder for such year and
thereafter acquired, and (iii) may not be changed without the consent of the
Internal Revenue Service.
Upon actual receipt of a payment of interest on a senior euro note, an accrual
method U.S. holder will recognize ordinary gain or loss in an amount equal to
the difference between the United States dollar value of the payment received
(determined using the spot rate on the date such payment is received) and the
United States dollar value of the interest
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income previously accrued during such accrual periods as described in the
preceding paragraph. Any such ordinary gain or loss will generally be treated as
United States source ordinary income or loss and not as an adjustment to
interest income. The United States federal income tax consequences of the
conversion of euros into United States dollars under other circumstances is
described below. See "-- Transactions in Euros."
Senior Discount Notes--Original Issue Discount
The senior discount notes will be issued with a significant amount of original
issue discount for United States federal income tax purposes. As a result, a
U.S. holder who purchases a senior discount note will generally be required to
include original issue discount in gross income as it accrues for United States
federal income tax purposes regardless of the U.S. holder's regular method of
tax accounting. Therefore, the inclusion of original issue discount in gross
income will take place in advance of the receipt of cash payments on the senior
discount notes. However, U.S. holders of senior discount notes generally will
not be required to include separately in income cash payments of stated interest
received on the senior discount notes.
The amount of original issue discount with respect to each senior discount note
will be the excess of the "stated redemption price at maturity" of such senior
discount note over its "issue price." The "stated redemption price at maturity"
of each senior discount note will include all payments, whether denominated as
principal or interest, required to be made thereunder through and including
maturity. The "issue price" of a senior discount note will be equal to the first
price at which a substantial amount of the senior discount notes are sold for
money, excluding sales to persons acting in an underwriting capacity.
Each U.S. holder will be required to include in gross income an amount equal to
the sum of the "daily portions" of the original issue discount on the senior
discount note for all days during the taxable year in which such holder holds
the senior discount note. The daily portion is determined by allocating to each
day in accrual period a ratable portion of the original issue discount that
accrued during that period. The amount of the original issue discount
attributable to each full accrual period will be equal to the product of the
"adjusted issue price" of the senior discount note (at the beginning of the
accrual period) and the "yield to maturity" of the senior discount notes (taking
into account the length of the particular accrual period). The adjusted issue
price of a senior discount note at the beginning of an accrual period will be
the original issue price of the senior discount note plus the aggregate amount
of original issue discount that has accrued in all prior accrual periods less
any payments (other than payments not taken into account in determining the
stated redemption price) made on the senior discount note. The yield to maturity
is the discount rate that, when used in computing the present value of all
principal and interest payments to be made on the senior discount note, produces
an amount equal to its issue price.
A U.S. holder of a senior euro discount note must include in income the United
States dollar value of the amount of original issue discount that has accrued on
a senior euro discount note in a taxable year, which is determined by
translating such original issue discount into United States dollars at the
average rate of exchange for the relevant accrual period (or portion thereof).
The average rate of exchange for an accrual period (or portion thereof) is the
simple average of the exchange rates for each business day of such period (or
such other average that is reasonably derived and consistently applied). In the
alternative, a U.S. holder may elect to translate the original issue discount on
a senior euro discount note using the spot rate on the last day of an accrual
period (or the last day of the taxable year for the portion of such period
within the taxable year). In addition, a holder may elect to use the spot rate
on the date of receipt of payment for such purpose if such date is within five
business days of the last date of an accrual period. Such elections (i) must be
made in a statement filed with the U.S. holder's United States federal income
tax return, (ii) are applicable to all debt instruments held by the U.S. holder
for such year and thereafter acquired, and (iii) may not be changed without the
consent of the Internal Revenue Service.
Upon actual receipt of a payment attributable to previously accrued original
issue discount on a senior euro discount note (including amounts received upon a
sale or other disposition of a senior euro discount note attributable to such
original issue discount), a U.S. holder will recognize ordinary gain or loss
with respect to accrued original issue discount for each accrual period in an
amount equal to the difference between the United States dollar value of the
payment received (determined using the spot rate on the date such payment is
received) in respect of such accrual period and the United States dollar value
of the original issue discount that has accrued during such accrual period (as
determined in the preceding paragraph). Any such ordinary gain or loss will
generally be treated as United States source ordinary income
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or loss and not as an adjustment to interest income. The United States federal
income tax consequences of the conversion of euros into United States dollars
under other circumstances is described below. See "--Transactions in Euros."
We are required to furnish certain information to the Internal Revenue Service
regarding the original issue discount amounts. In addition, we will furnish
annually to record holders of the senior discount notes information with respect
to original issue discount accruing during the calendar year.
Effect of Liquidated Damages.
We intend to treat the Liquidated Damages contingency described in
"Description of Senior Notes--Registration Rights; Liquidated Damages" as a
remote and incidental contingency for United States federal income tax purposes.
In the event Liquidated Damages are paid, such amounts will result in additional
income to U.S. holders when such payment is made.
Exchange Offer.
While there is no direct authority on the United States federal income
tax consequences of an exchange of notes for exchange notes, in the opinion of
Holme Roberts & Owen LLP, counsel to UPC, an exchange of notes for exchange
notes should not be a taxable event for U.S. federal income tax purposes. A U.S.
holder should therefore have the same tax basis and holding period in the
exchange notes as the U.S. holder had in the notes.
Dispositions.
Upon the sale, exchange, retirement at maturity or other disposition of
a note (collectively, a "disposition"), a U.S. holder will generally recognize
gain or loss equal to the difference between:
o the amount realized by such holder, except to the extent such
amount is attributable to accrued but unpaid stated interest
(in the case of notes other than the senior discount notes),
which will be treated as ordinary interest income, and
o such holder's adjusted tax basis in the note.
A U.S. holder's adjusted tax basis in a senior note generally will
equal the cost of the senior note, net of accrued but unpaid stated interest, to
such holder. A U.S. holder's adjusted tax basis in a senior discount note
generally will equal the cost of the senior discount note, increased by the
amount of original issue discount previously included in the U.S. holder's
income and reduced by the amount of any cash payments received on the senior
discount note. Except with respect to gains or losses attributable to changes in
currency exchange rates, as described below, any gain or loss recognized on a
note will be capital gain or loss and will generally be treated as United States
source gain or loss. In the case of an individual U.S. holder, such capital gain
will generally be taxable at a preferential rate if the U.S. holder's holding
period exceeds one year at the time of disposition. The deductibility of capital
losses is subject to limitations.
Upon the sale, exchange or redemption of a senior euro note, a holder
generally will recognize gain or loss equal to the difference between the amount
realized on the disposition (or, if it is realized in other than United States
dollars, the United States dollar value of the amount using the spot rate on the
date of such disposition) and the holder's adjusted tax basis in such senior
euro note. A U.S. holder's tax basis in a senior euro note generally will be the
United States dollar value of the purchase price of such senior euro note on the
date of a purchase (determined by translating the purchase price into United
States dollars at the spot rate in effect on the date of purchase). A U.S.
holder will recognize exchange gain or loss on the disposition of a senior euro
note equal to the difference between (i) the amount realized on the disposition
(or the United States dollar amount if the amount received is denominated in
other than United States dollars) and (ii) the U.S. holder's purchase price
converted into U.S. dollars at the spot rate on the date of purchase.
Upon the sale, exchange or redemption of a senior euro discount note, a
holder generally will recognize gain or loss equal to the difference between the
amount realized on the disposition (or, if it is realized in other than United
States dollars, the United States dollar value of the amount using the spot rate
in effect on the date of such disposition)
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and the holder's adjusted tax basis in such senior euro discount note. A U.S.
holder's tax basis in a senior euro discount note generally will be the United
States dollar value of the issue price of such senior euro discount note on the
issue date (determined by translating the purchase price into United States
dollars at the spot rate on the issue date), increased by the U.S. dollar amount
of previously accrued original issue discount (as determined above), less the
U.S. dollar amount of any cash payments received on the senior euro discount
note (determined by translating the amount of such payments into United States
dollars at the spot rate on the date such payment is received). A U.S. holder
will recognize exchange gain or loss on the disposition of a senior euro
discount note equal to the difference between U.S. dollar value of the issue
price of the senior euro discount note on date of disposition and the U.S.
dollar value of the issue price of the senior euro discount note on the issue
date.
Any exchange gain or loss on a senior euro note or senior euro discount
note will be treated as United States source ordinary income or loss and will
generally not be treated as an adjustment to interest income. Such foreign
currency gain or loss is recognized on the disposition of a senior euro note or
senior euro discount note only to the extent of total gain or loss recognized on
such disposition.
Transactions in Euros.
Euros received as interest on a note, or as proceeds of the sale,
exchange or redemption of, a senior euro note will have a tax basis equal to
their United States dollar value at the time of receipt. A U.S. holder of euros
will recognize United States source income or loss on a sale or other
disposition of such euros equal to the difference between (1) the amount of
United States dollars, or the United States dollar value of the other currency
or property received in such sale or other disposition and (2) the tax basis of
such euros.
A U.S. holder that purchases a senior euro note with previously owned
euros would generally recognize gain or loss in an amount equal to the
difference, if any, between such holder's tax basis in such euros and the United
States dollar fair market value of such senior euro note on the date of
purchase. Generally, any such gain or loss will be United States source ordinary
income or loss. However, a holder that converts United States dollars to euros
and immediately uses such euros to purchase a senior euro note ordinarily would
not recognize any exchange gain or loss in connection with such conversion or
purchase.
Information Reporting and Backup Withholding.
Certain non-corporate U.S. holders may be subject to backup withholding
at a rate of 31% on payments of principal, premium and interest on, and the
proceeds of the disposition of, the notes. In general, backup withholding will
be imposed only if the U.S. holder
o fails to furnish its taxpayer identification number ("TIN"),
which, for an individual, would be his or her Social Security
number,
o furnishes an incorrect TIN,
o is notified by the IRS that it has failed to report payments
of interest or dividends or o under certain circumstances,
fails to certify, under penalty of perjury, that it has
furnished
a correct TIN and has been notified by the IRS that it is
subject to backup withholding tax for failure to report
interest or dividend payments.
In addition, such payments of principal and interest to U.S. holders
will generally be subject to information reporting.
LEGAL MATTERS
Holme Roberts & Owen LLP, London, England, has advised us on certain
U.S. securities law matters in connection with this offering. Certain legal
matters relating to Dutch law will be passed upon for us by Allen & Overy,
Amsterdam, The Netherlands.
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EXPERTS
The consolidated financial statements of United Pan-Europe
Communications N.V. incorporated by reference in this Registration Statement for
the year ended December 31, 1999 have been audited by Arthur Andersen,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein upon the authority of said
firm as experts in giving said reports.
The consolidated financial statements of United TeleKabel Holding N.V.
incorporated by reference in this Registration Statement for the period from
commencement of operations (August 6, 1998) until December 31, 1998 have been
audited by Arthur Andersen, independent public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein upon
the authority of said firm as experts in giving said report.
The consolidated financial statements of @Entertainment, Inc.
incorporated by reference in this Registration Statement have been audited by
KPMG Polska Sp.z o.o, independent auditors, as indicated in their report with
respect thereto, and are incorporated by reference herein upon the authority of
said firm as experts in giving said report.
The consolidated financial statements of NBS Nordic Broadband Services
AB incorporated by reference in this Registration Statement have been audited by
Ernst & Young AB, independent auditors, as indicated in their report with
respect thereto, and are incorporated by reference herein upon the authority of
said firm as experts in giving said report.
The consolidated financial statements of Singapore Telecom
International Svenska AB, as of and for the year ended March 31, 1998 and the
Reconciliation of Significant Differences between U.S. and Swedish Generally
Accepted Accounting Principles incorporated by reference in this Registration
Statement from the United Pan-Europe Communications N.V. Form 8-K/A dated
September 17, 1999 on pages F-70 through F-91 have been so incorporated in
reliance on the reports of PricewaterhouseCoopers, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of SBS Broadcasting SA for the
years ended December 31, 1997, 1998 and 1999 incorporated by reference in this
Registration Statement have been audited by Ernst & Young, independent auditors,
as indicated in their report with respect thereto, and are incorporated by
reference herein upon the authority of said firm as experts in giving said
report.
The combined financial statements of the ENECO KabelTV and Telecom
Group as of December 31, 1999 and for the year then ended incorporated by
reference in this Registration Statement have been audited by Arthur Andersen,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein upon the authority of said
firm as experts in giving said report.
The financial statements of TV3 Ltd., Schlieren for the period from
July 8, 1998 to December 31, 1999 incorporated by reference in this Registration
Statement have been audited by ATAG Ernst & Young, independent auditors, as
indicated in their report with respect thereto, and are incorporated by
reference herein upon the authority of said firm as experts in giving said
report.
ENFORCEMENT OF CIVIL LIABILITIES
We are incorporated under the laws of The Netherlands and certain
members of our Supervisory Board, our Board of Management and certain of the
experts named herein are residents of The Netherlands or other countries outside
the United States. Substantially all of our assets and the assets of such
persons are located outside the United States. As a result, it may not be
possible for investors to effect service of process within the United States
upon us or such persons, or to enforce against us or such persons in courts in
the United States, judgments of such courts predicated upon the civil liability
provisions of United States securities laws. We have been advised by legal
counsel in The Netherlands, Loeff Claeys Verbeke, that because there is no
convention on reciprocal recognition and enforcement of judgments in civil and
commercial matters between the United States and The Netherlands, a final
judgment rendered by a United States court will not automatically be enforced by
the courts in The Netherlands. In order to obtain a judgment that is enforceable
in the The Netherlands, the relevant claim will have to be relitigated before a
competent Dutch court.
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Under current practice, however, a final and conclusive judgment rendered by a
United States court will be recognized by a Dutch court if it finds that (1) the
final judgment results from proceedings compatible with Dutch concepts of due
process and (2) the final judgment does not contravene public policy of The
Netherlands. If the final judgment is recognized by a Dutch court, that court
generally will grant the same judgment without relitigation on the merits. In
addition, Dutch law does not recognize a shareholder's right to bring a
derivative action on behalf of a corporation.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements and
other information we file at the SEC's public reference rooms in Washington,
D.C., New York, New York, and Chicago, Illinois. Please call 1-800-SEC-0330 for
further information on the public reference rooms. Our filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at http://www.sec.gov. We have filed a
Registration Statement on Form S-4 to register with the SEC the new notes to be
issued in exchange for the old notes. This prospectus is part of that
Registration Statement. As allowed by the SEC's rules, this prospectus does not
contain all of the information you can find in the Registration Statement or the
exhibits to the Registration Statement.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus, except
for any information that is superseded by information that is included directly
in this document.
This prospectus includes by reference the documents listed below that we have
previously filed with the SEC and that are not included in or delivered with
this document. They contain important information about us and our financial
condition.
FILING PERIOD
Annual Report on Form 10-K Year ended December 31, 1999
Current Report on Form 8-K/A September 17, 1999
Current Report on Form 8-K February 18, 2000
Current Report on Form 8-K March 14, 2000
Current Report on Form 8-K March 20, 2000
Current Report on Form 8-K April 19, 2000
Quarterly Report on Form 10-Q
of @Entertainment June 30, 1999
We incorporate by reference additional documents that we may file with the SEC
between the date of this prospectus and the date of the closing of this
offering. These documents include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
You can obtain any of the documents incorporated by reference in this document
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit to this prospectus. You can
obtain documents incorporated by reference in this prospectus by requesting them
in writing or by telephone at the following address:
Investor Relations
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
1076 EE Amsterdam
The Netherlands
Telephone number +31 20 778 9840
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We also comply with our obligations under Dutch law to prepare annual
financial statements complying with the corporate law of The Netherlands and to
deposit the same at the Commercial Register of the Chamber of Commerce and
Industry in Amsterdam, The Netherlands.
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GENERAL INFORMATION
Listing
A notice relating to the issue of the notes and the Charter of our
company have been filed with the Chief Registrar of the District Court of
Luxembourg (Greffier en Chef du Tribunal d'Arrondissement de et a Luxembourg)
where such documents are available for inspection and where copies of such
documents will be obtainable upon request.
The notes have been accepted for clearance by Cedelbank and by Morgan
Guaranty Trust Company of New York, Brussels office as operator of the Euroclear
System. The CUSIPs and the International Security Identification Numbers (ISINs)
for the notes are as follows:
<TABLE>
<CAPTION>
11 1/2% Senior 11 1/4% Senior 11 1/4% Senior 13 3/4% Senior
Notes Dollar Notes Euro Notes Discount Notes
CUSIP Numbers:
<S> <C> <C> <C> <C> <C> <C> <C>
144A.............. 911300AX9 911300BA8 -- 911300BD2
Regulation S...... N90168AN0 N90168AP5 N90168AR1 N90168AQ3
ISINs................ USN90168AN00 USN90168AP57 -- USN90168AQ31
ISINs:
144A.............. -- -- XS0106746976 --
Regulation S...... -- -- XS0106746893 --
Common Codes:
144A.............. -- -- 010674697 --
Regulation S...... -- -- 010674689 --
</TABLE>
Authorization
The issue of the notes was authorized by our Supervisory Board on
October 19, 1999.
Documents
Copies of an English translation of our Statutes and By-laws will be
available for inspection so long as any notes are outstanding at the specified
office of the Paying Agent in Luxembourg.
Copies of the latest Annual Report and interim financial statements of
UPC will be available at the specified office of the Paying Agent in Luxembourg,
so long as any notes are outstanding.
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Copies of the Purchase Agreement, Registration Rights Agreement and the
Indentures and the Paying and Transfer Agency Agreements will be available for
inspection at the specified office of the Paying Agent in Luxembourg so long as
any notes are outstanding.
Material Adverse Change
Except as disclosed in this prospectus, there has been no material
adverse change in the financial position of UPC, since December 31, 1999.
Litigation
Except as disclosed in this prospectus, we are not involved in any
litigation or arbitration proceedings relating to claims or amounts which are
material in the context of the issue of the notes nor, so far as we are aware,
is any such litigation or arbitration pending or threatened.
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PRINCIPAL OFFICE OF UPC
Fred. Roeskestraat 123
PO Box 74763
1076 EE Amsterdam
The Netherlands
AUDITORS OF UPC
Arthur Andersen
PO Box 75381
1070 AJ Amsterdam
The Netherlands
LEGAL ADVISORS TO UPC
Holme Roberts & Owen LLP
Heathcoat House
20 Savile Row
London W1X 1AE
United Kingdom
Allen & Overy
Apollolaan 15
1077 AB Amsterdam
The Netherlands
TRUSTEE, REGISTRAR, TRANSFER AGENT AND PRINCIPAL PAYING AGENT
CITIBANK N.A.
5 Carmelite Street
London EC4Y 0PA
United Kingdom
PAYING AGENT AND LISTING AGENT
Banque Internationale a Luxembourg
69 route d'Esch
L-2953 Luxembourg
Luxembourg
[GRAPHIC OMITTED]
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