As filed with the Securities and Exchange Commission on April 19, 2000
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------
United Pan-Europe Communications N.V.
(Exact name of registrant as specified in its charter)
The Netherlands 4841
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
98-0191997
(I.R.S. Employer Identification
No.)
Fred. Roeskestraat 123
P.O. Box 74763
1076 EE Amsterdam, The Netherlands
+31 20 778 9840
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
----------------
Michael T. Fries, Chairman
c/o UnitedGlobalCom, Inc.
4643 South Ulster Street, Suite 1300
Denver, Colorado 80237
(303) 770-4001
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
Nick Nimmo, Esq.
Holme Roberts & Owen LLP
1700 Lincoln Street, Suite 4100
Denver, Colorado 80203
(303) 861-7000
----------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
----------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
----------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
<TABLE>
<CAPTION>
----------------
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Offering maximum maximum
Title of each class of to be price aggregate amount of
securities to be registered registered per unit(1) offering price(1) registration fee(2)
- --------------------------- ----------------- ----------- ----------------- -------------------
<S> <C> <C> <C> <C>
11 1/2% Senior Notes due
2010................... $ 300,000,000 99.261% $297,783,000
11 1/4% Senior Notes due
2010................... $ 600,000,000 99.254% $595,524,000
11 1/4% Senior Notes due
2010................... (Euro)200,000,000 99.254% $198,508,000
13 3/4% Senior Discount
Notes due 2010......... $ 1,000,000,000 51.224% $512,240,000 $423,985
</TABLE>
- --------------------
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act of 1933, as amended.
(2) Calculated pursuant to Rule 457(f)(2) based on the $1,606,004,508 book
value on April 13, 2000 of the notes to be received by the Registrant in
the exchange described herein.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
<PAGE>
[LOGO OF UPC]
Offer to Exchange
$300,000,000 11 1/2% Senior Notes due 2010
$600,000,000 11 1/4% Senior Notes due 2010
(Euro)200,000,000 11 1/4% Senior Notes due 2010
$1,000,000,000 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
. The exchange offer expires at 12:00 p.m. New York City time (5:00 p.m.,
London time) on May , 2000, unless we extend the expiration date.
. We will exchange all old notes that you validly tender and do not validly
withdraw.
. You may withdraw tenders of old notes any time prior to the expiration of the
exchange offer.
. 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.
. We will not receive any proceeds from the exchange offer.
. Your exchange of old notes for new notes will not be a taxable exchange for
U.S. federal income tax purposes.
. 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.
. 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 35 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 11 for a discussion of the risks that you should consider prior
to tendering your old notes for exchange.
-----------
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.
-----------
The date of this prospectus is April , 2000
<PAGE>
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
----
Prospectus Summary...................................................... 3
Risk Factors............................................................ 11
Disclosure Regarding Forward Looking Statements......................... 16
The Exchange Offer...................................................... 17
Use of Proceeds......................................................... 23
Capitalization.......................................................... 25
Description of the Notes................................................ 27
Description of Other Debt............................................... 72
Certain Tax Consequences................................................ 74
Legal Matters........................................................... 87
Experts................................................................. 87
Enforcement of Civil Liabilities........................................ 88
Available Information................................................... 88
General Information..................................................... 89
2
<PAGE>
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.
3
<PAGE>
The Exchange Offer
On January 20, 2000, we issued $300,000,000 11 1/2% Senior Notes due 2010,
$600,000,000 11 1/4% Senior Notes due 2010, (Euro)200,000,000 11 1/4% Senior
Notes due 2010 and $1,000,000,000 13 3/4% Senior Discount Notes due 2010 to the
following initial purchasers:
. Goldman, Sachs & Co.
. Morgan Stanley Dean Witter
. Credit Suisse First Boston
. ING Barings
. Merrill Lynch & Co.
. TD Securities
. ABN AMRO Incorporated
. Banc of America Securities LLC
. 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:
. $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;
. $600,000,000 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 dollar notes;
. (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
. $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 34% senior discount
notes.
4
<PAGE>
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:
. you acquire the new notes in the ordinary
course of your business;
. 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
. 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; Withdrawal The exchange offer expires at, and you may
rights ..................... withdraw your tender of old notes at any time
before, 12:00 p.m., New York City time (5:00
p.m., London time), on May , 2000, unless
we extend the expiration date.
Procedures for tendering We issued the old notes as global securities.
old notes .................. 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
5
<PAGE>
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 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 12:00 p.m., New York
City time (5:00 p.m., London time), on the
expiration date.
Special procedures for
beneficial owners.......... If:
. you beneficially own old notes,
. these notes are registered in the name of
a broker, dealer, commercial bank, trust
company or other nominee, and
. 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.
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).
6
<PAGE>
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 __ for a detailed description of the terms and conditions of the new
notes.
Notes Offered.............. $300,000,000 in aggregate principal amount of
11 1/2% senior notes due 2010 (the "11 1/2%
senior notes due 2010").
$600,000,000 in aggregate principal amount of
11 1/4% senior notes due 2010 (the "11 1/4%
senior dollar notes due 2010") and 200,000,000
in aggregate principal amount of 11 1/4% senior
notes due 2010 (the "11 1/4% senior euro notes
due 2010" and together with the 11 1/4% senior
dollar notes due 2010, the "11 1/4% senior notes
due 2010"). Except as otherwise specified, the
11 1/2% senior notes due 2010 and the 11 1/4%
senior notes due 2010 are referred to
collectively as the "senior notes."
$1,000,000,000 in aggregate principal amount at
maturity of 13 3/4% senior discount notes due
2010 (the "senior discount notes"). Except as
otherwise specified, the senior discount notes
and the senior notes are referred to herein as
the "notes."
Issue Prices.............. 99.261% plus accrued interest, if any, from
January 20, 2000, in the case of the 11 1/2%
senior notes due 2010, 99.254% plus accrued
interest, if any, from January 20, 2000, in the
case of the 11 1/4% senior notes due 2010,
$512.24 per $1,000 principal amount at maturity
plus accrued amortization of original issue
discount, if any, from January 20, 2000, in the
case of the senior discount notes.
Accretion................... The senior discount notes will accrete at a rate
of 13 3/4% per annum, compounded semi-annually,
to an aggregate principal amount of
$1,000,000,000 on February 1, 2005, except as
described under the caption "Description of the
Notes--Principal, Maturity and Interest."
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, except as described under
the caption "Description of the Notes--
Principal, Maturity and Interest." Interest on
the senior notes will be payable semi-annually
in cash in arrears on February 1 and August 1 of
each year, commencing August 1, 2000.
The senior discount notes will accrue interest
payable in cash at the rate of 13 3/4% per
annum, commencing February 1, 2005, except as
described under the caption "Description of the
Notes--Principal, Maturity and Interest."
Interest on the senior discount notes will be
payable semi-annually in cash in arrears on
February 1 and August 1 of each year, commencing
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:
. cause the registration statement to become
effective on or before ____________, 2000;
and
. consummate the exchange offer within 45
days after the effective date of the
registration statement.
7
<PAGE>
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
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 and from time
to 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 senior notes, in whole but not
in part, at the principal amount thereof and, in
the case of the senior discount notes, the
accreted value thereof, plus accrued and unpaid
interest and liquidated damages (as defined), if
any, thereon to the date of redemption in
8
<PAGE>
certain circumstances in which we would be
required to pay additional amounts (as defined).
See "Description of the Notes--Redemption for
Changes in Withholding Taxes."
Mandatory Offer to Repurchase If we undertake certain sales of assets or
experience specific kinds of changes in control,
we must offer to repurchase the notes.
Ranking..................... The notes will be senior, general, unsecured
obligations of United Pan-Europe Communications,
N.V. They will rank equally with all of our
current and future senior, unsecured
indebtedness. The notes will be 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.
Original Issue Discount..... We will issue 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 indentures (as defined) will contain certain
covenants that, among other things, 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 the
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.
9
<PAGE>
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.
10
<PAGE>
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."
11
<PAGE>
We expect to continue to make net losses for the next five to ten years.
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,
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.
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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
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.
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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 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.
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THE EXCHANGE OFFER
Purpose of the exchange offer
On January 20, 2000, we privately placed $300,000,000 11 1/2% Senior Notes
due 2010, $600,000,000 11 1/4% Senior Notes due 2010, (Euro)200,000,000 11 1/4%
Senior Notes due 2010 and $1,000,000,000 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 January 27, 2000, declared effective by April 27, 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 12:00 p.m., New York City time
(5:00 p.m., London time), on May , 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 "Risk Factors--You may have difficulty selling any notes that
you do not exchange" for more information regarding notes outstanding after the
exchange offer.
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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:
. to delay the acceptance of the old notes;
. 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;
. to extend the expiration date of the exchange offer and keep all old
notes tendered other than those notes properly withdrawn; and
. 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:
. delays the acceptance or exchange of any old notes, or
. extends the exchange offer, or
. 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."
In tendering old notes, you must warrant in the letter of transmittal or in
an agent's message, which is described below, that:
. you have full power and authority to tender, exchange, sell, assign
and transfer old notes,
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. 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
. 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 12:00 p.m., New
York City time (5:00 p.m., 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
(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.
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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 12:00 p.m., New York City time (5:00 p.m., 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 12:00 p.m., New York City time (5:00 p.m., 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
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.
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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:
. cannot rely on the staff's interpretations in the above mentioned
interpretive letters;
. cannot tender old notes in the exchange offer; and
. 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:
. are not an "affiliate" of UPC;
. are acquiring the new notes in the ordinary course of your business;
. 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
. 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:
. that any statement contained or incorporated by reference in this
prospectus makes the prospectus untrue in any material respect, or
. 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
. on the occurrence of other events specified in the registration
rights agreement,
the participating broker-dealer will suspend the sale of new notes.
21
<PAGE>
Each participating broker-dealer agrees not to resell the new notes until:
. 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
. 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.
22
<PAGE>
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 1.5 billion ($1.6 million), 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.
23
<PAGE>
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 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.
24
<PAGE>
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.
<TABLE>
<CAPTION>
As of December 31, 1999
--------------------------
Actual Adjusted
------------- -----------
<S> <C> <C>
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 captalization......................... 5,923,610 8,893,744
============= ===========
</TABLE>
25
<PAGE>
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 will be 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.
26
<PAGE>
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
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;
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 will be 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
27
<PAGE>
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 will be 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 payin
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 will be 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 will be 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
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.
28
<PAGE>
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 will be 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;
(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
29
<PAGE>
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 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"):
30
<PAGE>
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
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).
31
<PAGE>
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.
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.
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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 will 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 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.
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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 will 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 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);
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(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 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.
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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 will 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 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
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(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.
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 will 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;
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(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
(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.
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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 will 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 will 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:
(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
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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
(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 will 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.
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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 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 will 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
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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 will 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,
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.
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Limitation on Lines of Business
The Indentures will 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 will 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 will 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 will 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,
(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.
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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.
Legal Defeasance and Covenant Defeasance
The Indentures will 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.
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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;
(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.
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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
(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 will 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
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(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 will 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.
Each of the Indentures will provide 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 will provide 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 will provide 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 will 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.
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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.
"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.
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"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 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.
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"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 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):
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(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 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
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(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.
"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
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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 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;
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(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
(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
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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);
(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
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(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.
"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.
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"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));
(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;
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(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;
(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;
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(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;
(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.
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"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.
"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 being Refinanced was
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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 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.
"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.
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"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
Denomination
The Notes are being offered and sold to qualified institutional buyers in
reliance on Rule 144A ("Rule 144A Notes"). Notes also may be offered and sold in
offshore transactions in reliance on Regulation S ("Regulation S Notes"). Except
as set forth below, Notes will be issued in registered, global form in minimum
denominations of $1,000 or 1,000, as applicable, and integral multiples of
$1,000 or 1,000, as applicable, in excess thereof. Notes will be issued at the
closing of the offering only against payment in immediately available funds.
Form
Rule 144A Notes which are dollar notes will be represented by one or more
global notes in definitive, fully registered form without interest coupons
(collectively, the "restricted dollar global note") and will be deposited with
or on behalf of The Depository Trust Company ("DTC") and registered in the name
of a nominee of DTC.
Rule 144A Notes which are euro notes will be represented by one or more
global notes in definitive, fully registered form without interest coupons
(collectively, the "restricted euro global note" and, together with the
restricted dollar global note, the "restricted global note") and will be
deposited with a common depositary for Morgan Guaranty Trust Company of New York
as operator of the Euroclear System ("Euroclear") and Cedelbank (the "Common
Depositary") and registered in the name of a nominee of the Common Depositary.
The restricted global note (and any notes issued in exchange therefor) will be
subject to certain restrictions on transfer set forth therein and in the
Indentures and will bear the legend regarding such restrictions set forth under
"Notice to Investors."
Regulation S Notes which are dollar notes will be represented by one or
more global notes in fully registered form without interest coupons
(collectively, the "Regulation S dollar global note") and will be registered in
the name of a nominee of DTC and deposited with DTC.
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Regulation S Notes which are euro notes will be represented by one or more
global notes in fully registered form without interest coupons (collectively,
the "Regulation S euro global note" and together with the Regulation S dollar
global note, the "Regulation S global note") and will be deposited with the
Common Depositary and registered in the name of a nominee of the Common
Depositary.
Through and including the 40th day after the later of the commencement of
the offering and the original issue date of the notes (such period through and
including such 40th day, the "Restricted Period") beneficial interests in the
Regulation S global note may be held only through DTC, Euroclear or Cedelbank,
unless delivery is made through the restricted global note in accordance with
the certification requirements described below.
The Regulation S global note (and any notes issued in exchange therefor)
will bear a legend (in the form provided in the Indentures) to the effect that
the Notes have not been registered under the Securities Act and may not be
offered, sold or delivered in the United States or to, or for the account or
benefit of, any U.S. person unless such notes are registered under the
Securities Act or an exemption from such registration requirements is available
(the "Regulation S Legend").
Transfers and Exchanges Between Regulation S Notes and Rule 144A Notes
Prior to the expiration of the Restricted Period, a beneficial interest in
the Regulation S global note may be transferred to a person who takes delivery
in the form of an interest in the restricted global note only upon receipt by
the respective Trustee of a written certification from the transferor (in the
form provided in the Indentures) to the effect that such transfer is being made
to a person who the transferor reasonably believes is a qualified institutional
buyer acquiring for its own account or the account of a qualified institutional
buyer in a transaction complying with Rule 144A and in accordance with any
applicable securities laws of the states of the United States and other
jurisdictions (a "restricted global note certificate"). After the expiration of
the relevant Restricted Period, such certification requirement will no longer
apply to such transfers.
Beneficial interests in a restricted global note may be transferred to a
person who takes delivery in the form of an interest in the Regulation S global
note, whether before or after the expiration of the Restricted Period, only upon
receipt by the respective Trustee of a written certification from the transferor
(in the form provided in the Indentures) to the effect that such transfer is
being made in accordance with Rule 903 or Rule 904 of Regulation S or Rule 144
under the Securities Act (a "Regulation S global note certificate") and that, if
such transfer occurs prior to the expiration of the Restricted Period, the
interest transferred will be held immediately thereafter through Euroclear or
Cedelbank.
Any beneficial interest in one of the restricted global note and the
Regulation S global note (each a "global note") that is transferred to a person
who takes delivery in the form of an interest in the other global note will,
upon transfer, cease to be an interest in such global note and will become an
interest in the other global note and, accordingly, will thereafter be subject
to all transfer restrictions and other procedures applicable to beneficial
interests in such other global note for as long as it remains such an interest.
Transfer Procedure
Transfers involving an exchange of a beneficial interest in a Regulation S
dollar global note for a beneficial interest in a restricted dollar global note
or vice versa will be effected in DTC by means of an instruction approved by the
respective Trustee through the DTC Deposit/Withdraw at Custodian system.
Transfers involving an exchange of a beneficial interest in a Regulation S euro
global note for a beneficial interest in a restricted euro global note or vice
versa will be effected in accordance with the rules and procedures of Euroclear
and Cedelbank. Accordingly, in connection with any such transfer, appropriate
adjustments will be made to reflect a decrease in the principal amount of such
Regulation S global note and a corresponding increase in the principal amount of
such restricted global note or vice versa, as applicable. The policies and
practices of DTC may prohibit transfers of beneficial interests in the
Regulation S global note prior to the expiration of the Restricted Period.
Except in the limited circumstances described below, owners of beneficial
interests in global notes will not be entitled to receive physical delivery of
certificated notes. Transfers of beneficial interests in the global notes will
be subject to the applicable rules and procedures of DTC, Euroclear and
Cedelbank and their respective direct or indirect participants which rules and
procedures may change from time to time.
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Book-Entry Procedures
Global Notes. The following description of the operations and procedures
of DTC, Euroclear and Cedelbank are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. We take
no responsibility for these operations and procedures and we urge investors to
contact the system or their participants directly to discuss these matters.
Dollar Global Notes. Upon the issuance of the Regulation S dollar global
note and the restricted dollar global note (collectively, the "dollar global
notes"), DTC will credit, on its internal system, the respective principal
amount of the individual beneficial interests represented by such dollar global
notes to the accounts of persons who have accounts with such depositary. Such
accounts initially will be designated by or on behalf of the Initial Purchasers.
Ownership of beneficial interests in a dollar global note will be limited to DTC
participants or persons who hold interests through DTC participants. Ownership
of beneficial interests in the dollar global notes will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Euro Global Notes. Upon the issuance of the Regulation S euro global note
and the restricted euro global note (collectively, the "euro global notes"), the
Common Depositary will credit, on its internal system, the respective principal
amount of the beneficial interests represented by such euro global notes to the
accounts of Euroclear and Cedelbank. Euroclear and Cedelbank will credit, on
their internal systems, the respective principal amounts of the individual
beneficial interests in such euro global notes to the accounts of persons who
have accounts with Euroclear and Cedelbank.
Such accounts initially will be designated by or on behalf of the Initial
Purchasers. Ownership of beneficial interests in a euro global note will be
limited to participants or persons who hold interests through participants in
Euroclear or Cedelbank. Ownership of beneficial interests in the euro global
notes will be shown on, and the transfer of that ownership will be effected only
through, records maintained by Euroclear and Cedelbank or their respective
nominees (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
As long as DTC or the Common Depositary, or their respective nominees, is
the registered holder of a global note, DTC or the Common Depositary or such
nominees, 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 dollar 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 it is 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).
Investors may hold their interests in the Regulation S global note and the
restricted euro global note through Cedelbank or Euroclear, if they are
participants in such systems, or indirectly through organizations which are
participants in such systems. After the expiration of the Restricted Period (but
not earlier), investors may also hold interests in the Regulation S dollar
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global note through organizations other than Cedelbank and Euroclear that are
participants in the DTC system. Cedelbank and Euroclear will hold interests in
the Regulation S global note and the restricted euro global note on behalf of
their participants through customers' securities accounts in their respective
names on the books of the Common Depositary. Investors may hold their interests
in the restricted dollar global note directly through DTC, if they are
participants in such system, or indirectly through organizations (including
Euroclear and Cedelbank) which are participants in such system. All interests in
a global note may be subject to the procedures and requirements of DTC and/or
Euroclear and Cedelbank.
Payments on the Notes
Payments of the principal of and interest on dollar global notes will be
made to DTC or its nominee as the registered owner thereof. Payments of the
principal of and interest on euro global notes will be made to the order of the
Common Depositary or its nominee as the registered owner thereof. Neither we,
the Trustees, DTC, the Common Depositary nor any of their respective agents will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the global
notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a dollar global note representing any Notes
held by it or its nominee, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such dollar global note for such Notes as shown on the
records of DTC or its nominee.
We expect that the Common Depositary, in its capacity as paying agent,
upon receipt of any payment of principal or interest in respect of a euro global
note representing any Notes held by it or its nominee, will immediately credit
the accounts of Euroclear and Cedelbank which in turn will immediately credit
accounts of participants in Euroclear and Cedelbank with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such euro global note for such Notes as shown on the records of Euroclear and
Cedelbank.
We also expect that payments by participants to owners of beneficial
interests in such global notes held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name." Such
payments will be the responsibility of such participants.
Because DTC, Euroclear and Cedelbank can only act on behalf of their
respective participants, who in turn act on behalf of indirect participants and
certain banks, the ability of a holder of a beneficial interest in global notes
to pledge such interest to persons or entities that do not participate in the
DTC, Euroclear or Cedelbank systems, or otherwise take actions in respect of
such interest, may be limited by the lack of a definitive certificate for such
interest. The laws of some countries and some U.S. states require that certain
persons take physical delivery of securities in certificated form. Consequently,
the ability to transfer beneficial interests in a global note to such persons
may be limited. Because DTC, Euroclear and Cedelbank can act only on behalf of
participants, which, in turn, act on behalf of indirect participants and certain
banks, the ability of a person having a beneficial interest in a global note to
pledge such interest to persons or entities that do not participate in the DTC
system or in Euroclear and Cedelbank, as the case may be, or otherwise take
actions in respect of such interest, may be affected by the lack of a physical
certificate evidencing such interest.
Except for trades involving only Euroclear and Cedelbank participants,
interests in the dollar global notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. Transfers of interests in
dollar global notes between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds. Transfers of
interests in euro global notes and dollar global notes between participants in
Euroclear and Cedelbank will be effected in the ordinary way in accordance with
Euroclear and Cedelbank's respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Notes described above, cross-market transfers of interests in the dollar global
notes between DTC participants, on the one hand, and Euroclear or Cedelbank
participants, on the other hand, will be effected in DTC in accordance with
DTC's rules on behalf of Euroclear or Cedelbank, as the case may be by its
respective depositary; however such cross-market transactions will require
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delivery of instructions to Euroclear or Cedelbank, as the case may be, by the
counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
Cedelbank, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant dollar global note in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and Cedelbank participants may not deliver
instructions directly to the depositories for Euroclear or Cedelbank.
Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in a dollar global note from a DTC
participant will be credited, and any such crediting will be reported to the
relevant Euroclear or Cedelbank participant, during the securities settlement
processing day (which much be a business day for Euroclear and Cedelbank
immediately following the DTC settlement date). Cash received in Euroclear or
Cedelbank as a result of sales of interests in a global note by or through a
Euroclear or Cedelbank participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the relevant Euroclear
or Cedelbank cash account only as of the business day for Euroclear or Cedelbank
following the DTC settlement date.
DTC, Euroclear and Cedelbank have advised us that they will take any
action permitted to be taken by a holder of Notes (including the presentation of
Notes for exchange as described below) only at the direction of one or more
participants to whose account with DTC or Euroclear or Cedelbank, as the case
may be, interests in the global notes are credited and only in respect of such
portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given such direction. However, if there
is an event of default under the Notes, DTC, Euroclear and Cedelbank reserve the
right to exchange the global notes for legended notes in certificated form, and
to distribute such Notes to their respective participants.
Depositary Procedures
DTC. DTC has advised us 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 its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical transfer
and delivery of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system is available to
other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either directly
or indirectly ("indirect participants").
Euroclear and Cedelbank. Euroclear and Cedelbank have advised us as
follows: 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. Euroclear and Cedelbank each
also deal with domestic securities markets in several countries through
established depository and custodial relationships. 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, 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 persons holding
through their respective account holders.
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Although DTC, Euroclear and Cedelbank currently follow the foregoing
procedures to facilitate transfers of interests in global notes among
participants of DTC, Euroclear and Cedelbank, they are under no obligation to do
so, and such procedures may be discontinued or modified at any time. Neither we
nor the Trustees will have any responsibility for the performance by DTC,
Euroclear or Cedelbank or their respective participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
Certificated Notes
If any depositary is at any time unwilling or unable to continue as a
depositary for notes for the reasons set forth above under "--Book-Entry
Procedures," we will issue certificates for such Notes in definitive, fully
registered, non-global form without interest coupons in exchange for the
Regulation S global note or the restricted global note, as the case may be.
Certificates for Notes delivered in exchange for any global note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by DTC, Euroclear, Cedelbank or the Common Depositary
(in accordance with their customary procedures).
Certificates for non-global notes issued in exchange for a restricted
global note (or any portion thereof) will bear the legend referred to under
"Notice to Investors" and certificates for non-global notes issued in exchange
for a Regulation S global note (or any portion thereof) will bear the Regulation
S Legend (in each case unless we determine otherwise in accordance with
applicable law). The holder of a non-global note may transfer such note, subject
to compliance with the provisions of the applicable legend, by surrendering it
at the office or agency maintained by us for such purpose in the Borough of
Manhattan, The City of New York, which initially will be the office of the
Trustees. Upon the transfer, change or replacement of any Note bearing a legend,
or upon specific request for removal of a legend on a Note, we will deliver only
Notes that bear such legend, or will refuse to remove such legend, as the case
may be, unless there is delivered to us such satisfactory evidence, which may
include an opinion of counsel, as may reasonably be required by us that neither
such legend nor any restrictions on transfer set forth therein are required to
ensure compliance with the provisions of the Securities Act. Before any Note in
non-global form may be transferred to a person who takes delivery in the form of
an interest in any global note, the transferor will be required to provide the
respective Trustee with a restricted global note certificate or a Regulation S
global note certificate, as the case may be.
All exchanges for certificated notes may be effected at the offices of the
paying and transfer agent in Luxembourg. All payments of interest may be
received at the offices of the Luxembourg paying agent upon presentation of
certificated notes and all payments of principal may be received at such offices
upon surrender of the Notes.
Notwithstanding any statement herein, we and the Trustees reserve the
right to impose such transfer, certification, exchange or other requirements,
and to require such restrictive legends on certificates evidencing Notes, as
they may determine are necessary to ensure compliance with the securities laws
of the United States and the states therein and any other applicable laws or as
DTC, Euroclear or Cedelbank may require.
Same-Day Settlement and Payment
The Indentures will require that payments in respect of the Notes
represented by the global notes, including principal, premium, if any, interest
and Liquidated Damages, if any, be made by wire transfer of immediately
available funds to the accounts specified by the global note holder. With
respect to Notes in certificated form, we will make all payments of principal,
premium, if any, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the holders thereof or,
if no such account is specified, by mailing a check to each such holder's
registered address. The Notes represented by the global notes will be eligible
to trade in the PORTAL market and in DTC's Same-Day Firm Settlement System, and
any permitted secondary market trading activity in such notes will, therefore,
be required by DTC to be settled in immediately available funds. We expect that
secondary trading in any certificated notes will also be settled in immediately
available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in a global note from a participant
in DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedelbank participant, during the securities settlement processing
day (which must be a business day for Euroclear and Cedelbank) immediately
following the settlement date of DTC. Cash received in Euroclear or Cedelbank as
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a result of sales of interests in a global note by or through a Euroclear or
Cedelbank participant to a participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or
Cedelbank cash account only as of the business day for Euroclear or Cedelbank
following DTC's settlement date.
Exchange Offer; Registration Rights
On or prior to the closing date, we and the Initial Purchasers will enter
into the registration rights agreement. Pursuant to the registration rights
agreement, we will file with the SEC the exchange offer registration statement
on the appropriate form under the Securities Act with respect to the exchange
notes. Upon the effectiveness of the exchange offer registration statement,
holders of Registrable Securities (as defined below) pursuant to the exchange
offer who are able to make certain representations will have the opportunity to
exchange their Registrable Securities for exchange notes.
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 exchange notes acquired by it in the
exchange offer to the public without delivering an offering
memorandum and the offering memorandum 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 self 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 will provide that:
o we will file an exchange offer registration statement with the SEC on
or prior to 90 days after the closing date;
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 its 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, exchange
notes in exchange for all Notes tendered prior thereto in the exchange
offer, and
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o if obligated to file the shelf registration statement, we will use our
best efforts 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 agree to 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, liquidation damages ("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 if 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, 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 who sell such Notes pursuant to the shelf registration
statement will also be: (i) required to be named as selling security holders in
the related prospectus and to deliver a prospectus to purchasers; (ii) subject
to certain of the civil liability provisions under the Securities Act in
connection with such sales; and (iii) bound by the provisions of the
registration rights agreement which are applicable to such Holders, including
certain indemnification and contribution rights and obligations.
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.
Application will be made to list the exchange notes on the Luxembourg
Stock Exchange. The exchange notes will have new common codes and new ISINs and
will be accepted for clearance through the accounts of Euroclear and Cedelbank.
We will publish, in accordance with the procedures described under "Notices," a
notice of the commencement of the exchange offer, as well as the results of the
exchange offer and the new identifying numbers of the securities (the common
codes and ISINs). All documents prepared in connection with the exchange offer
will be available for inspection at the office of the paying and transfer agent
in Luxembourg and all necessary actions and services in respect of the exchange
offer may be done at the office of the paying and transfer agent in Luxembourg.
The paying and transfer agent for these purposes is Citibank N.A. acting through
Banque Internationale a Luxembourg.
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The summary herein of certain provisions of the registration rights
agreements does not purport to be complete and is subject to, and is qualified
to 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 right agreement.
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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.
<TABLE>
<CAPTION>
Facility Size or Outstanding
Final Principal At December 31,
Description (Borrower) Maturity Interest Rate Amount 1999
--------------------- -------- ------------- ------ ----
<S> <C> <C> <C> <C>
(in millions) (in millions Euro)
UPC and Consolidated Subsidiaries:
Long-Term Debt
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.
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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.
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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 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.
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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.
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
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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.
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.
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.
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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.
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
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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.
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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 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
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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
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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 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.
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<PAGE>
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
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<PAGE>
(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) 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,
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<PAGE>
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.
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 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 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.
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<PAGE>
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. 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
The description of our common stock set
forth in the Form 8-A filed by us on
February 9, 1999, Registration Number
000-25365, including any amendment or report
filed with the SEC for purposes of
updating the description.
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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<PAGE>
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.
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.
Clearing Systems
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>
144A.............. 911300AX9 911300BA8 -- 911300BD2
Regulation S...... N90168AN0 N90168AP5 -- 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 December
17, 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.
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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<PAGE>
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
[LOGO OF UPC]
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has entered into indemnification agreements with its directors
and executive officers, providing for indemnification by the Company against
any liability to which a director or executive officer may be subject for
judgments, settlements, penalties, fines and expenses of defense (including
attorneys' fees, bonds and costs of investigation), arising out of or in any
way related to acts or omissions as a member of the Management or Supervisory
Board, or an executive officer, or in any other capacity in which services are
rendered to the Company or its subsidiaries. The Company believes that the
indemnification agreements will assist the Company in attracting and retaining
qualified individuals to serve as directors and executive officers. The
agreements provide that a director or officer is not entitled to
indemnification under such agreements (i) if indemnification is expressly
prohibited under applicable law, (ii) for certain violations of securities laws
or (iii) for certain claims initiated by the officer or director. Generally,
under Dutch law, a director will not be held personally liable for decisions
made with reasonable business judgment, absent self dealing. In addition,
indemnification may not be available to directors or officers under Dutch law
if any act or omission by a director or officer would qualify as willful
misconduct or gross negligence. Due to the lack of applicable case law, it is
not clear whether indemnification is available in case of breach of securities
laws of the United States.
ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES.
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
3.1(a) Amended and Restated Articles of Association of UPC(1)
3.1(b) Amendment to the Articles of Association of UPC dated March 17, 2000 (2)
4.1 Indenture dated as of January 20, 2000, between UPC and Citibank N.A., as
Trustee with respect to 11 1/2% Senior Notes due 2010 (3)
4.2 Indenture dated as of January 20, 2000, between UPC and Citibank N.A., as
Trustee with respect to 11 1/4% Senior Notes due 2010 (3)
4.3 Indenture dated as of January 20, 2000, between UPC and Citibank N.A., as
Trustee with respect to 13 3/4% Senior Discount Notes due 2010 (3)
5.1 Opinion of Allen & Overy regarding the legality of the 10 7/8%
Senior Notes due 2007, 11 1/4% Senior Notes and 13 3/8% Senior Discount
Notes due 2009.
5.2 Opinion of Holme Roberts & Owen LLP regarding the legality of the 10 7/8%
Senior Notes due 2007, 11 1/4% Senior Notes and 13 3/8% Senior Discount
Notes due 2009.
8.1 Opinion of Holme Roberts & Owen LLP regarding certain United States
federal income tax matters.
8.2 Opinion of Arthur Andersen Belastingadviseurs regarding certain
Netherlands tax matters.
II-1
<PAGE>
12.1 Computation of Earnings to Fixed Charges(3)
23.1 Consent of Arthur Andersen (UPC)
23.2 Consent of Arthur Andersen (United TeleKabel Holding N.V.)
23.3 Consent of Arthur Andersen (ENECO KabelTV and Telecom Group)
23.4 Consent of Ernst & Young (SBS BROADCASTING SA)
23.5 Consent of KPMG Polska Sp.z o.o (@Entertainment)
23.6 Consent of Ernst & Young AB (NBS Nordic Broadband Services AB)
23.7 Consent of PricewaterhouseCoopers (Singapore Telecom International
Svenska AB)
23.8 Consent of ATAG Ernst & Young Ltd. (TV3 Ltd., Schlieren)
23.9 PricewaterhouseCoopers Auditing Standards Letter
24.1 Powers of Attorney
25.1 Form T-1, Statement of Eligibility of Citibank N.A.
- --------------------
(1) Incorporated by reference from Amendment No. 1 to Form S-1 Registration
Statement filed by UPC on September 23, 1999 (File No. 333-84427).
(2) Incorporated by reference from Form 8-K filed by UPC, dated March 17,
2000 (File No. 000-25365).
(3) Incorporated by reference from Form 10-K filed by UPC for the year ended
December 31, 1999 (File No. 000-25365).
II-2
<PAGE>
(b) Financial Statement Schedules. Incorporated by reference from Form 10-K
filed by UPC for the year ended December 31, 1999 (File No. 000-25365).
ITEM 22. UNDERTAKINGS.
(a) The undersigned hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) under the Securities Act of 1933, as amended
(the "Securities Act"), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415 under the Securities Act, will
be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(c) The undersigned hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(d) The undersigned hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
(e) The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(f) The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
Prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the undersigned pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed part of the registration
statement as of the time it was declared effective.
The undersigned hereby undertakes to file an application for the purpose of
determining the eligibility of the applicable trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act of 1939 ("Act") in accordance
with the rules and regulations of the Commission under Section 305(b)(2) of the
Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement Amendment to be signed on its behalf
by the undersigned, thereunto duly authorized, in Amesterdam, The Netherlands,
on this 19th day of April 2000.
United Pan-Europe Communications N.V.
a Dutch Public limited liability company
By: /s/ Charles H. R. Bracken
---------------------------
Charles H. R. Bracken,
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has caused this Registration Statement Amendment to be signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Chairman of Board of Management April 19, 2000
- ---------------------------------------- and Chief Executive Officer
Mark L. Schneider
* President, Vice Chairman April 19, 2000
- ----------------------------------------
John F. Riordan
/s/ Charles H. R. Bracken Chief Financial Officer April 19, 2000
- ----------------------------------------
Charles H. R. Bracken
* Managing Director, Eastern April 19, 2000
- ---------------------------------------- Europe and Executive Chairman,
Nimrod J. Kovacs UPC Central Europe
* General Counsel April 19, 2000
- ----------------------------------------
Anton M. Tuijten
* Managing Director, Finance and April 19, 2000
- ---------------------------------------- Accounting (Chief Accounting Officer)
Ray D. Samuelson
* Chairman of Supervisory Board April 19, 2000
- ---------------------------------------- and Authorized U.S. Representative
Michael T. Fries
* Supervisory Board Member April 19, 2000
- ----------------------------------------
John P. Cole
* Supervisory Board Member April 19, 2000
- ----------------------------------------
Richard De Lange
* Supervisory Board Member April 19, 2000
- ------------------------------------
Ellen P. Spangler
* Supervisory Board Member April 19, 2000
- ------------------------------------
Tina M. Wildes
</TABLE>
*By /s/ Charles H. R. Bracken
--------------------------------
Charles H. R. Bracken
Attorney-in-fact
II-5
<PAGE>
EXHIBIT 5.1
To: United Pan-Europe Communications N.V. 18th April, 2000
One New Change
London EC4M 9QQ
[GRAPHIC OMITTED]
THE QUEEN'S AWARD
FOR EXPORT
ACHIEVEMENT
A list of the names of partners and their professional
qualifications is open to inspection at the above
office. The partners are either solicitors or
registered foreign lawyers.
AMSTERDAM BANGKOK BEIJING BRATISLAVA BRUSSELS BUDAPEST DUBAI FRANKFURT HONG KONG
LONDON LUXEMBOURG MADRID MILAN MOSCOW NEW YORK PARIS PRAGUE ROME SINGAPORE
TIRANA TOKYO TURIN WARSAW
Telephone: (0207) 330 3000
Fax (Group 3): (0207) 330 9999
Fax (Group 4): (0207) 248 1100
DX No. 73
Our Ref: VDS/lrm/PG:162615.2
Amsterdam, 18th April, 2000
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
PO Box 74763
1070 BT Amsterdam
The Netherlands
Dear Sirs,
We, the undersigned, have acted as special counsel on certain matters of
Netherlands law to United Pan-Europe Communications N.V. (the "Company") in
connection with the filing by the Company of a Registration Statement, on Form
S-4 (the "Registration Statement"), including a Prospectus (the "Prospectus"),
under the Securities Act of 1933, as amended, with the United States Securities
and Exchange Commission, relating to an offer to exchange (i) $300.000.000 11
1/2% Senior Dollar Notes due 2010 (the "11 1/2% Senior Dollar Notes"), (ii)
$600.000.000 11 1/4% Senior Dollar Notes due 2010 (the "11 1/4% Senior Dollar
Notes", and together with the 11 1/2% Senior Dollar Notes, the "Senior Dollar
Notes"), (iii) (Euro)200.000.000 11 1/4% Senior Euro Notes due 2010 (the "Senior
Euro Notes") and (iv) $1.000.000.000 13 3/4% Senior Dollar Discount Notes due
2010 (the "Senior Dollar Discount Notes", and together with the Senior Dollar
Notes and the Senior Euro Notes, the "Outstanding Notes") for (i) $300.000.000
Series B 11 1/2% Senior Dollar Notes due 2010, (ii) $600.000.000 Series B 11
1/4% Senior Dollar Notes due 2010, (iii) (Euro)200.000.000 Series B 11 1/4%
Senior Euro Notes due 2010, and (iv) $1.000.000.000 Series B 13 3/4% Senior
Dollar Discount Notes due 2010 respectively (together the "Exchange Notes"). The
Outstanding Notes have been issued pursuant to a Purchase Agreement between the
Company and the Purchasers named therein, dated January 14, 2000, a Registration
Rights Agreement between the Company and the Purchasers named therein, dated
January 20, 2000 (the "Registration Rights Agreement"), an Indenture between the
Company and Citibank, N.A. (London Branch), dated January 20, 2000 relating to
the 11 1/2% Senior Dollar Notes (the "11 1/2% Senior Dollar Notes Indenture"),
an Indenture between the Company and Citibank, N.A. (London Branch), dated
January 20, 2000 relating to the 11 1/4% Senior Dollar Notes (the "11 1/4%
Senior Dollar Notes Indenture", and together with the 11 1/2% Senior Dollar
Notes Indenture, the "Senior Dollar Notes Indentures") and an Indenture between
the Company and Citibank, N.A. (London Branch), dated January 20, 2000 relating
to the Senior Dollar Discount Notes (the "Senior Dollar Discount Notes
Indenture", and together with the Senior Dollar Notes Indentures, the
"Indentures").
In rendering this opinion, we have examined and relied upon the following
documents:
1. a copy of a draft Registration Statement dated April 12, 2000;
2. a copy of a draft Prospectus dated April 12, 2000;
3. a copy of the executed Registration Rights Agreement;
4. copies of the executed Indentures;
5. an excerpt dated April 17, 2000 of the registration of the Company in
the Trade Register (the "Trade Register") of the Chamber of Commerce
of Amsterdam, The Netherlands, confirmed by telephone to be correct on
the date hereof (the "Excerpt");
6. a copy of the articles of association (statuten) of the Company, dated
March 17, 2000 (the "Articles") as, according to the Excerpt, in force
on the date hereof;
and such other documents and such treaties, laws, rules, regulations, and the
like, as we have deemed necessary as a basis for the opinions hereinafter
expressed.
We have further relied on the statements made by a managing director of the
Company in a certificate dated April 18, 2000 (the "Company Certificate") and we
have assumed without independent verification, except as indicated otherwise
herein, that such statements are correct as of the date hereof.
We have further relied on a legal opinion rendered by Holme Roberts & Owen LLP
as US counsel to the Company dated April 18, 2000 (the "HRO Opinion"), and we
have assumed without independent verification that the contents of the HRO
Opinion are correct as of the date hereof.
For the purpose of the opinions expressed herein, we have further assumed:
(i) the genuineness of all signatures, the authenticity of all
agreements, certificates, instruments and other documents submitted
to us as originals and the conformity to the originals of all
agreements, certificates, instruments and other documents submitted
to us as faxed or photostatic copies;
(ii) the Registration Statement and the Prospectus will be executed,
authenticated and delivered in the form referred to under 1 and 2
respectively, above;
(iii) that the Registration Rights Agreement and the Indentures constitute
the legal, valid and binding obligations of the Company and are
enforceable against the Company in accordance with their terms under
the laws of the State of New York by which they are expressed to be
governed and under the laws of any other relevant jurisdiction other
than the laws of The Netherlands;
(iv) that the Exchange Notes, when duly executed, authenticated and
delivered pursuant to the Indentures, constitute the legal, valid and
binding obligations of the Company and are enforceable against the
Company in accordance with their terms under the laws of the State of
New York by which they are expressed to be governed (for this
assumption we have relied solely on the HRO Opinion) and under the
laws of any other relevant jurisdiction other than the laws of The
Netherlands;
(v) that the Company has not been dissolved (ontbonden), granted a
suspension of payment (surseance verleend) or declared bankrupt
(failliet verklaard). Although not constituting conclusive evidence
thereof, our assumption is supported by (a) the contents of the
Company Certificate, (b) the contents of the Excerpt and (c)
information obtained today by telephone from the bankruptcy clerks
office (faillissementsgriffie) of the district court in Amsterdam;
(vi) that the selling restrictions for The Netherlands as set out in the
section `The Exchange Offer' of the Prospectus have been and will be
complied with.
Based upon such assumptions and subject to such qualifications and subject to
factual matters or documents not disclosed to us in the course of our
investigation, we are of the opinion that:
Status
The Company has been duly incorporated as a public company with limited
liability (naamloze vennootschap) and is validly existing under the laws of The
Netherlands.
Choice of Law
The choice of the laws of the State of New York as the law governing the
Exchange Notes is valid and binding on the Company under the laws of The
Netherlands, except (i) to the extent that any term of the Exchange Notes or any
provision of the laws of the State of New York applicable to the Exchange Notes
is manifestly incompatible with the public policy of The Netherlands, and (ii) a
Netherlands court may give effect to mandatory rules of the laws of another
jurisdiction with which the situation has a close connection, if and insofar as,
under the laws of that other jurisdiction (including The Netherlands) those
rules must be applied, whatever the governing law chosen by the parties. With
the express reservation that we are not qualified to assess the exact meaning
and consequences of the respective terms of the Exchange Notes under the laws of
the State of New York, none of such terms on its face is manifestly incompatible
with the public policy of The Netherlands or should be expected to give rise to
situations where mandatory rules of Netherlands law will be applied by a
Netherlands court irrespective of the law otherwise applicable thereto.
Legal Validity
Provided that the choice of the laws of the State of New York as the law
governing the Exchange Notes will be held valid and binding upon the Company as
discussed above, the Exchange Notes, when duly executed, authenticated and
delivered pursuant to the Indentures, will constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms.
This opinion is subject to the following qualifications:
a. The opinions expressed herein may be affected or limited by the
provisions of any applicable bankruptcy (faillissement), insolvency,
fraudulent conveyance (actio Pauliana), reorganisation, moratorium
(surseance van betaling), and other or similar laws of general
application now or hereafter in effect, relating to or affecting the
enforcement or protection of creditors' rights.
b. In the absence of an applicable convention between the State of New
York and The Netherlands, a judgement rendered by a court in the State
of New York will not be enforced by the courts of The Netherlands. In
order to obtain a judgement which is enforceable in The Netherlands
the claim must be relitigated before a competent Netherlands court. A
judgement rendered by a court in the State of New York will, under
current practice, be recognised by a Netherlands court (i) if that
judgement results from proceedings compatible with Netherlands
concepts of due process, and (ii) if that judgement does not
contravene the public policy of The Netherlands. If the judgement is
recognised by a Netherlands court, that court will generally grant the
same claim without relitigation on the merits. The enforcement in The
Netherlands of foreign judgements and the Exchange Notes will be
subject to the rules of civil procedure as applied by The Netherlands
courts.
c. Under the laws of The Netherlands each power of attorney (volmacht) or
mandate (lastgeving), whether or not irrevocable, granted by the
Company in the Indentures or in the Exchange Notes will terminate by
force of law, and without notice, upon insolvency or bankruptcy of the
Company. To the extent that the appointment by the Company of a process
agent would be deemed to constitute a power of attorney or a mandate,
this qualification would apply.
d. Any provision in the Indentures or in the Exchange Notes permitting
that concurrent proceedings are brought in different jurisdictions may
not be enforceable in The Netherlands.
e. If a facsimile signature will be used for the Exchange Notes, each
signatory should approve such use of his signature and evidence of such
approval may be required for the enforcement of the Exchange Notes in
The Netherlands. If any of the Exchange Notes were executed by
attaching thereto the facsimile signature of any person who does not
hold office at the issue date of such Notes, or if such Exchange Notes
will be issued on a date on which the person whose facsimile signature
is attached thereto no longer holds office, it may be necessary for the
enforcement of such Exchange Notes in The Netherlands that the holder
of such Exchange Notes shall present both such Exchange Notes and
evidence of such approval.
We express no opinion on any law other than the law of The Netherlands
(unpublished case law not included) as it currently stands. We express no
opinion on any laws of the European Communities (insofar as not directly
applicable or having direct effect in The Netherlands).
In this opinion Netherlands legal concepts are expressed in English terms and
not in their original Dutch terms. The concept concerned may not be identical to
the concepts described by the same English term as they exist under the laws of
other jurisdictions. This opinion may, therefore, only be relied upon under the
express condition that any issues of interpretation or liability arising
thereunder will be governed by Netherlands law and be brought before a
Netherlands court.
This opinion is strictly limited to the matters stated herein and may not be
read as extending by implication to any matters not specifically referred to.
Nothing in this opinion should be taken as expressing an opinion in respect of
any representations or warranties contained in the Registration Statement, the
Prospectus, the Registration Rights Agreement, the Indentures or any other
document examined in connection with this opinion except as expressly confirmed
herein.
This opinion is addressed to you and may only be relied upon by you in
connection with the issue of the Exchange Notes, and may not be relied upon by,
or (except as required by applicable law) be transmitted to, or filed with any
other person, firm, company, or institution, without our prior written consent.
Yours sincerely,
/s/ Victor de Seriere /s/ Niels van de Vijver
EXHIBIT 5.2
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
1070 BT AMSTERDAM
The Netherlands
Ladies and Gentlemen:
We have acted as special United States counsel to United Pan-Europe
Communications N.V., a Netherlands company (the "Company"), in connection with
the filing by the Company under the Securities Act of 1933, as amended (the
"Act"), of a registration statement on Form S-4 (the "Registration Statement")
with the United States Securities and Exchange Commission (the "Commission") on
April 19, 2000. Pursuant to the Registration Statement, up to U.S.$300,000,000
of the Company's outstanding 11 1/2% Senior Notes due 2010, $600,000,000 and
(Euro)200,000,00 of the Company's outstanding 11 1/4% Senior Notes due 2010 and
$1,000,000,000 aggregate principal amount at maturity of the Company's
outstanding 13 3/4% Senior Discount Notes due 2010 (the "Outstanding Notes") are
exchangeable for up to like amounts of the Company's 11 1/2% Series B Senior
Notes due 2010, 11 1/4% Series B Senior Notes due 2010 and 13 3/4% Series B
Senior Discount Notes due 2010 (the "Exchange Notes"). The Outstanding Notes
were, and the Exchange Notes will be, issued pursuant to indentures (the
"Indentures") dated as of January 20, 2000 between the Company and Citibank
N.A., as trustee (the "Trustee"), registrar, paying agent and transfer agent.
In our capacity as special United States counsel to the Company, we have
examined the Registration Statement, the Indentures filed as exhibits to the
Registration Statement, the Outstanding Notes, a form of the Exchange Notes
contained in such Indenture and originals or copies certified or otherwise
identified to our satisfaction of such documents as we have deemed necessary or
appropriate to enable us to render the opinions expressed below.
In rendering this opinion we have assumed that the Indentures have been duly
authorized, executed and delivered by the Trustee and the Company.
Based upon the foregoing, it is our opinion that when the Exchange Notes are
exchanged for the Outstanding Notes as contemplated in the Registration
Statement, assuming they have been duly authorized, executed, issued and
delivered by the Company under the laws of The Netherlands and have been duly
authenticated by the Trustee, the Exchange Notes will constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium and other similar laws
relating to or affecting enforcement of creditors' rights generally and by
possible judicial action giving effect to foreign governmental actions or
foreign laws affecting creditors' rights and except as enforcement thereof is
subject to general principles of equity (regardless of whether such enforcement
may be sought in a proceeding in equity or law).
We express no opinion as to matters governed by any law other than laws of
the State of New York and the federal laws of the United States. In rendering
the opinion expressed herein, we have, with your approval, relied without
independent investigation as to all matters governed by or involving conclusions
under the law of the Netherlands upon the opinion (including the qualifications,
assumptions and limitations expressed therein) of Loeff Claeys Verbeke, Dutch
counsel for the Company, of even date herewith, a copy of which is being filed
as Exhibit 5.1 to the Registration Statement.
We hereby consent to the filing of this opinion as Exhibit 5.2 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" contained in the prospectus which is included in the Registration
Statement.
Very truly yours,
/s/ Holme Roberts & Owen LLP
EXHIBIT 8.1
April 19, 2000
United Pan-Europe Communications
Fred. Roeskestraat 123
P.O. Box 74763
1076 EE Amsterdam
The Netherlands
Re: 1 11/2% Senior Notes Due 2010
1 11/4% Senior Dollar Notes Due 2010
1 11/4% Senior Euro Notes Due 2010
13 3/4% Senior Discount Notes Due 2010
S-4 Registration Statement
Ladies and Gentlemen:
We have acted as United States tax counsel to United Pan-Europe Communications
N.V., a Netherlands company (the "Company"), in connection with the filing by
the Company under the Securities Act of 1933, as amended, of a registration
statement on form S-4 with the United States Securities and Exchange Commission
(the "Registration Statement"). Pursuant to the Registration Statement, (i) up
to $300,000,000 aggregate principal amount at maturity of the Company's
outstanding 11 1/2% Senior Notes due 2010 (the "11 1/2% Outstanding Senior Notes
due 2010") are exchangeable for up to a like principal amount of the Company's
11 1/2% Series B Senior Notes due 2010 (the "11 1/2% Exchange Senior Notes due
2010"), (ii) up to $600,000,000 aggregate principal amount at maturity of the
Company's outstanding 11 1/4% Senior dollar Notes due 2010 (the "11 1/4%
Outstanding Senior Dollar Notes due 2010) are exchangeable for up to a like
principal amount of the Company's 11 1/4% Series B Senior dollar Notes due 2010
(the "11 1/4% Exchange Senior Dollar Notes due 2010"). (iii) up to euro
200,000,000 aggregate principal amount at maturity of the Company's outstanding
11 1/4% Senior euro Notes due 2010 (the "11 1/4% Outstanding Senior Euro Notes
due 2010") are exchangeable for up to a like principal amount at maturity of the
Company's 11 1/4% Series B Senior euro Notes due 2010 (the "11 1/4% Exchange
Senior Euro Notes due 2010") and (iv) up to $1,000,000,000 aggregate principal
amount at maturity of the Company's outstanding 13 3/4% Senior Discount Notes
due 2010 (the "Outstanding Discount Notes") are exchangeable for up to a like
principal amount at maturity of the Company's 13 3/4% Series B Senior Discount
Notes due 2010 (the "Exchange Discount Notes"). Collectively the above mentioned
notes are referred to as the "Notes". The Outstanding Notes were and the
Exchange Notes will be, issued pursuant to indentures dated as of January 20,
2000 between the Company and Citibank, N.A. (the "Indentures").
We have prepared the discussion included in the Registration Statement relating
to the Notes under the caption "Certain United States Federal Income Tax
Consequences." The discussion under that caption is our opinion of the material
United States federal income tax consequences
-1-
<PAGE>
expected to result to the U.S. holders, as defined therein, subject to the
conditions, limitations, and assumptions described therein.
The 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
therein will have on, any particular U.S. holder, and it does not address
foreign, state, or local tax consequences. The discussion does not cover the tax
consequences that might be applicable to U.S. holders that are subject to
special rules under the Code (including insurance companies, tax-exempt persons,
financial institutions, regulated investment companies, retirement accounts,
dealers in securities, and persons that hold the Notes as part of a hedging,
straddle, constructive sale or a conversion transaction). The discussion does
not address the United States federal income tax consequences that may result
from a modification of the Notes.
Our opinion 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. Our opinion also is based on the facts and
agreements contained in (i) the Registration Statement, (ii) the Indentures,
(iii) the Note Registration Rights Agreement, dated January 20, 2000, among the
Company and the Initial Purchasers, and (iv) the Purchase Agreement, dated as of
January 20, 2000, among the Company and the Initial Purchasers (collectively,
the "Note Documents"). We understand that the Note Documents set forth the
complete agreement among the parties with respect to the Notes. We also have
relied on certain representations from you with respect to factual matters,
which representations we have not independently verified.
Our opinion may change if (i) the applicable law changes, (ii) any of the facts
with respect to the Notes (as included in the Note Documents, and the
representations made by you) are inaccurate, incomplete, or change, (iii) if the
conduct of the parties is materially inconsistent with the facts reflected in
the Note Documents or the representations or (iv) any of the assumptions we have
made herein are not correct.
Our opinion represents only our legal judgment based on current law and the
facts as described above. Our opinion has no binding effect on the Internal
Revenue Service or the courts. The Internal Revenue Service may take a position
contrary to our opinion, and if the matter is litigated, a court may reach a
decision contrary to the opinion.
Very truly yours,
Holme Roberts & Owen LLP
By: /s/ Mark Hrenya, Partner
EXHIBIT 8.2
United Pan-Europe Communications N.V.
April 19, 2000
Page 2
April 19, 2000
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
1076 EE AMSTERDAM
The Netherlands
Re.: 11.500% Series B Senior Notes due 2010
11.250% Series B Senior Notes due 2010
13.750% Series B Senior Discount Notes due 2010
Form S-4 Registration Statement, File No. 333-92679
Ladies and Gentlemen:
We have acted as Netherlands tax counsel to United Pan-Europe Communications
N.V., a Netherlands company (the "Company"), in connection with the filing by
the Company under the Securities Act of 1933, as amended (the "Act"), of a
registration statement on Form S-4 with the United States Securities and
Exchange Commission (the "Registration Statement").
Pursuant to the Registration Statement, (1) an aggregate of $300,000,000
principal amount of its outstanding 11.500% Senior Notes due 2010 (the "11 1/2%
Senior Notes due 2010") are exchangeable for up to a like principle amount of
the Company's 11.500% Series B Senior Notes due 2010 (the "11 1/2% Senior
Exchange Notes"), (2) an aggregate of $600,000,000 principal amount of its
outstanding 11.250% Senior Notes due 2010 and an aggregate of ?200,000,000
principal amount of its outstanding 11.250% Senior 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") are exchangeable for up to a principle amount of the
Company's 11.250% Series B Senior Notes due 2010 (the "11 1/4 Senior Exchange
Notes", and together with the 11 1/2 Senior Exchange Notes the "Senior Exchange
Notes"), and (3) an aggregate of $1,000,000,000 principal amount at maturity of
its outstanding 13.750% Senior Discount Notes due 2010 (the "Senior Discount
Notes" and together with the Senior Notes, the " Outstanding Notes") are
exchangeable for a principle amount of the Company's 13 3/4% Series B Senior
Discount Notes due 2010 (the "Discount Exchange Notes", together with the Senior
Exchange Notes the "Exchange Notes" and the Outstanding Notes together with the
Exchange Notes the "Notes" and the offer of the Company to exchange the
Outstanding Notes for the Exchange Notes the "Exchange Offer"). The Outstanding
Notes were, and the Exchange Notes are to be issued pursuant to the respective
indentures dated as of January 20, 2000 between the Company and Citibank N.A. as
trustee (the "Indentures")
We have prepared the discussion in the Registration Statement under the caption
"Certain Tax Consequences - Certain Netherlands Tax Consequences," which is only
addressing the Dutch fiscal aspects applicable to holders of the Notes. The
discussion under that caption is our opinion of the expected material Dutch
fiscal consequences of the Exchange for holders of the Notes, subject to the
conditions, limitations and assumptions described therein.
We express no opinion as to any law other than the tax laws of The Netherlands
in force at the date hereof as applied and interpreted according to present case
law of the Netherlands courts, administrative rulings and authoritative tax law
scholars. We have no obligation to update this opinion. Our opinion has no
binding effect on the Dutch tax authorities and/or Dutch courts. The Dutch tax
authorities may take a position contrary to our opinion and if the matter is
litigated, a court may reach a decision contrary to our opinion.
Our opinion is based on the facts and agreements set forth in the Registration
Statement, the Indentures and the Registration Rights Agreement, dated January
20, 2000, among the Company and the Initial Purchasers (collectively, the "Note
Documents"), which we assume set forth the complete agreement among the parties
with respect to the Notes. We assume that the Note Documents will be properly
executed in the form submitted to and examined by us and referred to herein and
will be valid and binding when executed.
Our opinion may change if (i) applicable law changes (which may have retroactive
effect), (ii) any of the facts with respect to the Exchange are inaccurate,
incomplete or change or (iii) the conduct of the parties with respect to the
Exchange is materially inconsistent with the facts reflected in the Note
Documents.
We hereby consent to the filing of this opinion letter with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name therein.
Yours sincerely,
ARTHUR ANDERSEN
Belastingadviseurs
/s/ Sander Kloosterhof /s/ Hugo Everaerd
CONSENT OF ARTHUR ANDERSEN (UPC)
Exhibit 23.1
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated March 28, 2000 on
the consolidated financial statements of United Pan-Europe Communications N.V.
("UPC") included in UPC's Form 10-K for the year ended December 31, 1999 and to
all references to our Firm included in this Registration Statement.
Arthur Andersen
Amstelveen, The Netherlands
April 19, 2000
CONSENT OF ARTHUR ANDERSEN (UTH)
Exhibit 23.2
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated March 19, 1999 on
the consolidated financial statements of United Telekabel Holding N.V. included
in United Pan-Europe Communications N.V.'s Form 10-K for the year ended December
31, 1999, and to all references to our Firm included in this Registration
Statement.
Arthur Andersen
Amstelveen, The Netherlands
April 19, 2000
CONSENT OF ARTHUR ANDERSEN (ENECO)
Exhibit 23.3
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated April 14, 2000 on
the combined financial statements of ENECO KabelTV and Telecom Group included in
United Pan-Europe Communications N.V.'s Form 8-K filed April 19, 2000 and to all
references to our Firm included in this Registration Statement.
Arthur Andersen
Rotterdam, The Netherlands
April 19, 2000
CONSENT OF ERNST & YOUNG (SBS BROADCASTING SA)
EXHIBIT 23.4
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 1, 2000, with respect to the consolidated
financial statements of SBS Broadcasting SA for the year ended December 31,
1999, which report appears in the Form 8-K of United Pan-Europe Communications
N.V. dated April 19, 2000, incorporated by reference in the Form S-4 of United
Pan-Europe Communications N.V. dated April 19, 2000.
Ernst & Young
Statsautoriseret Revlsionsaktiesclskab
Copenhagen, Denmark
April 19, 2000
EXHIBIT 23.5
The Board of Directors
@Entertainment, Inc.:
We hereby consent to the use in this Registration Statement of our report,
dated March 29, 1999, on @Entertainment, Inc.'s financial statements as of
December 31, 1998 and 1997 and for the years ended December 31, 1998, 1997 and
1996, incorporated by reference in this Registration Statement, and to the
reference to our Firm under the heading "Experts" in the prospectus.
KPMG
Warsaw, Poland
April 19, 2000
EXHIBIT 23.6
As independent public auditors, we hereby consent to the incorporation by
reference in this Registration Statement of United Pan-Europe Communications
N.V. on Form S-4 of the English translation of our report dated May 4, 1999,
relating to the financial statements as of December 31, 1998 of NBS Nordic
Broadband Services AB (publ) Org No 556536-1598, which report appears in United
Pan-Europe Communications N.V.'s Form 8-K/A dated September 17, 1999. The
original copy of this report is in the Swedish language. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
Ernst & Young AB
Stockholm, Sweden
April 19, 2000
EXHIBIT 23.7
The Board of Directors
StjarnTVnatet AB
We hereby consent to the incorporation by reference in this Registration
Statement of United Pan-Europe Communications N.V. on Form S-4 of the English
translation of our report dated May 29, 1998, relating to the financial
statements and the financial statement schedules of Singapore Telecom
International Svenska AB (now StjarnTVnatet AB) org No 556497-8210, which appear
in the United Pan-Europe Communications N.V.'s Form 8-K/A dated September 17,
1999 of pages F-70 through F-88. The original signed copy of this report is in
the Swedish language. We also consent to the incorporation by reference of our
report dated September 17, 1999 relating to the Reconciliation of Significant
Differences between US and Swedish Generally Accepted Accounting Principles of
Singapore Telecom International Svenska AB which appear in the Registration
Statement. We also consent to the references to us under the heading "Experts"
in such Registration Statement.
PricewaterhouseCoopers
Stockholm, Sweden
April 19, 2000
CONSENT OF ERNST & YOUNG (TV3 Ltd., Schlieren)
EXHIBIT 23.8
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 28, 2000, with respect to the financial
statements of TV3 Ltd., Schlieren for the period July 9, 1998 to December 31,
1999, which report appears in the annual report on Form 20-F of SBS Broadcasting
S.A. for the year ended December 31, 1999, and in the Form 8-K of United
Pan-Europe Communications N.V. dated April 19, 2000, which is incorporated by
reference in the Form S-4 of United Pan-Europe Communications N.V. dated April
19, 2000.
ATAG Ernst & Young Ltd.
Zurich, Switzerland
April 19, 2000
To the Board of Directors of Stjarn AB
(formerly Singapore Telecom International Svenska AB)
We conducted our audit of the financial statements of the Singapore Telecom
International Svenska AB for the year ended March 31, 1998 in accordance with
auditing standards generally accepted in Sweden, which are substantially the
same as those generally accepted in the United States.
PricewaterhouseCoopers
Stockholm, Sweden
September 17, 1999
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Mark L. Schneider, Charles H.R. Bracken, Anton M.
Tuijten and Ray D. Samuelson, and each of them, his or her attorneys-in-fact,
with full power of substitution, for him or her in any and all capacities, to
sign a registration statement to be filed with the Securities and Exchange
Commission (the "Commission") on Form S-4 in connection with the registration by
United Pan-Europe Communications N.V., a Dutch Public limited liability company
(the "Company"), of 11 1/2 %Senior Notes due 2010, 11 14 %Senior Notes due 2010
and 13 3/4% Senior Discount Notes due 2010 to be offered in exchange for other
Senior Notes and Senior Discount Notes, and all amendments (including
post-effective amendments) thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Commission; and
to sign all documents in connection with the qualification and issuance of such
notes with Blue Sky authorities; granting unto said attorneys-in-fact full power
and authority to perform any other act on behalf of the undersigned required to
be done in the premises, hereby ratifying and confirming all that said
attorneys-in-fact may lawfully do or cause to be done by virtue hereof.
Date: April ___, 2000 /s/ Charles H.R. Bracken
-------------------------------
Charles H.R. Bracken, Board of Management Member and
Chief Financial Officer
Date: March 24, 2000 /s/ John P. Cole, Jr.
---------------------------
John P. Cole, Jr., Supervisory Board Member
Date: March ___, 2000 ----------------------------
Richard De Lange, Supervisory Board Member
s
Date: March 24, 2000 /s/ Michael T. Fries
--------------------------
Michael T. Fries, Chairman of the Supervisory Board
Date: April 13, 2000 /s/ Nimrod J. Kovacs
--------------------------
Nimrod J. Kovacs, Board of Management Member,
Managing Director, Eastern Europe and Executive
Chairman, UPC Central Europe
Date: March 24, 2000 /s/ John F. Riordan
-------------------------
John F. Riordan, President and Vice Chairman
Date: April ___, 2000 -------------------------
Ray D. Samuelson, Chief Accounting Officer
Date: March 24, 2000 /s/ Mark L. Schneider
---------------------------
Mark L. Schneider, Chairman of the Board of
Management and Chief Executive Officer
Date: March 24, 2000 /s/ Ellen P. Spangler
---------------------------
Ellen P. Spangler, Supervisory Board Member
Date: April ___, 2000 ------------------------
Anton M. Tuijten, Board of Management Member and
General Counsel
Date: March 24, 2000 /s/ Tina M. Wildes
------------------------
Tina M. Wildes, Supervisory Board Member
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305(b)(2) _____
-------------------------------------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
-------------------------------------
United Pan-Europe Communications N.V.
(Exact name of obligor as specified in its charter)
The Netherlands 98-0191997
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
Fred. Roeskestraat 123 Michael T. Fries, Chairman
P.O. Box 74763 c/o UnitedGlobalCom, Inc.
1076 EE Amsterdam, The Netherlands 4643 South Ulster Street, Suite 1300
(+31 20 778 9840 Denver, Colorado 80237
(Address and telephone number of Telephone: (303) 770-4001
principal executive offices) (Name, address and telephone
number of agent for service)
-------------------------------------
Debt Securities
(Title of the indenture securities)
<PAGE>
1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of New York
35 Liberty Street, New York, NY
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation
None.
16. List of Exhibits.
-----------------
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as exhibits hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now
in effect. (Exhibit 1 to T-1 to Registration Statement
No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration
Statement No. 2-29577)
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to
Registration Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to
T-1 to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
2
<PAGE>
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to
Registration Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of the Trustee
dated as of March 31, 1998
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
---------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Citibank, N.A., a national banking association organized and existing under the
laws of the United States of America, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 14th day
of April, 2000.
CITIBANK, N.A.
By/s/
Jillian Hamblin
Assistant Vice President
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
Citibank, N.A.
of New York in the State of New York, at the close of busi-ness on December 31,
1999, published in response to call made by Comptroller of the Currency, under
Title 12, United States Code, Section 161. Charter Number 1461 Comptroller of
the Currency Northeastern District.
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306,337,000
EQUITY CAPITAL Perpetual preferred stock and related surplus . . . . . . . . . . 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 751,000
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,836,000
Undivided profits and capital re- serves . . . . . . . . . . . . . . . . . . . . 11,565,000
Net unrealized holding gains (losses) on available-for-sale securities. . . . . 116,000
Accumulated net gains (losses) on cash flow hedges . . . . . . . . . . . . . . . 0
Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . (706,000)
TOTAL EQUITY CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,562,000
TOTAL LIABILITIES, LIMITED-LIFE
PREFERRED STOCK, AND
EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$327,899,000
Cash and balances due from de- pository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . .$ 10,648,000
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,916,000
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . 40,494,000
Federal funds sold and securities purchased under agreements to resell. . . . . 7,255,000
Loans and lease financing receivables:
Loans and Leases, net of unearned income . . . . . . . . . . . . . . . . . . . .$209,214,000
LESS: Allowance for loan and lease losses . . . . . . . . . . . . . . . . . . . 4,647,000
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . 204,567,000
Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,321,000
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . 3,808,000
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365,000
Investments in unconsolidated subsidiaries and associated com- panies . . . . . 1,212,000
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . 1,134,000
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,244,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,890,000
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$327,899,000
LIABILITIES
Deposits: In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,525,000
Noninterest- bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 15,373,000
Interest- bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,152,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . . . . . 188,307,000
Noninterest- bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,313,000
Interest- bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,994,000
Federal funds purchased and securities sold under agree- ments to repurchase . . 8,039,000
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . 0
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,196,000
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less . . . . . . . . . . . . . . . . . 11,978,000
With a remaining maturity of more than one year through three years. . . . . . . 1,170,000
With a remaining maturity of more than three years . . . . . . . . . . . . . . . 2,827,000
Bank's liability on acceptances ex- ecuted and outstanding . . . . . . . . . . . 1,222,000
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . 6,850,000
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,223,000
</TABLE>
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
ROGER W. TRUPIN CONTROLLER We, the undersigned directors, attest to the
correctness of this Report of Condition. We declare that it has been examined by
us, and to the best of our knowledge and belief has been prepared in conformance
with the instructions and is true and correct.
JOHN S. REED
WILLIAM R. RHODES
PAUL J. COLLINS
DIRECTORS
