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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5 , 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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NTL INCORPORATED
(EXACT NAME OF EACH OF THE REGISTRANTS AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4899 13-4051921
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
(212) 906-8440
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
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COPIES TO:
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RICHARD J. LUBASCH, ESQ. THOMAS H. KENNEDY, ESQ. ADRIAN J. S. DEITZ, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL SKADDEN, ARPS, SLATE, SKADDEN, ARPS, SLATE,
COUNSEL AND SECRETARY MEAGHER & FLOM LLP MEAGHER & FLOM LLP
NTL INCORPORATED FOUR TIMES SQUARE ONE CANADA SQUARE
110 EAST 59TH STREET NEW YORK, NEW YORK 10036 CANARY WHARF
NEW YORK, NEW YORK 10022 (212) 735-3000 LONDON E14 5DS
(212) 906-8440 ENGLAND +44 20 7519 7000
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(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times on and after which the Registration Statement becomes effective as
the Selling Stockholders may determine.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE
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Convertible Subordinated Notes Due 2009 of
NTL Incorporated......................... $1,200,000,000 100% $1,200,000,000 $316,800
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Common Stock, par value $0.01 per share of
NTL Incorporated (including the
associated Rights to Purchase Series A
Junior Participating Preferred
Stock)(2)................................ (3) 0 0 (4)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
(2) Prior to the occurrence of certain events, the Series A Junior Participating
Preferred Stock Purchase Rights will not be evidenced separately from shares
of Common Stock.
(3) Includes the shares of Common Stock initially issuable upon conversion of
the Convertible Notes at the rate of 9.2435 shares of Common Stock per
$1,000 principal amount of Convertible Notes. Pursuant to Rule 416 under the
Securities Act, such number of shares of Common Stock registered hereby
shall also include an indeterminate number of additional shares of Common
Stock that may be issued from time to time upon conversion of the
Convertible Notes by reason of adjustment of the conversion price in certain
circumstances outlined in the prospectus. See "Description of the
Convertible Notes -- Conversion."
(4) Pursuant to Rule 457(i) under the Securities Act, there is no filing fee
with respect to the shares of Common Stock issuable upon conversion of the
Convertible Notes, because no additional consideration will be received in
connection with the exercise of the conversion privilege.
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed.
The selling securityholders may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and the selling securityholders are not soliciting offers to
buy these securities in any state where the offer or sale is not
permitted.
Subject to completion, dated May 5, 2000
Prospectus
[LOGO GRAPHIC]
NTL INCORPORATED
5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2009
SHARES OF COMMON STOCK
- - Selling securityholders who are identified in this prospectus may offer and
sell an indeterminate number of:
-- 5 3/4% convertible subordinated notes due 2009 of NTL Incorporated
-- shares of common stock of NTL Incorporated
by using this prospectus.
- - The offering price for the convertible notes is not set but will be determined
according to negotiation between a selling securityholder and the prospective
purchaser. The offering price for the common stock will be negotiated or, if
sold on the Nasdaq National Market, at prevailing market price.
- - Our common stock is traded on the Nasdaq National Market under the symbol
NTLI. On May 4, 2000, the last reported sales price of our common stock was
$73.50 per share.
- - There is no public market for the convertible notes, and we do not intend to
apply to the Nasdaq National Market to list the convertible notes. Application
will be made to list the convertible notes on the Luxembourg Stock Exchange.
WE URGE YOU TO CAREFULLY READ THE RISK FACTORS SECTION BEGINNING ON PAGE 4,
WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH THESE SECURITIES, BEFORE YOU
MAKE YOUR INVESTMENT DECISION.
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 -- , 2000
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You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of the securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
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TABLE OF CONTENTS
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Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Use of Proceeds............................................. 14
Description of the Convertible Notes........................ 15
Registration Rights......................................... 42
Description of Capital Stock................................ 43
United States Federal Tax Considerations.................... 54
Selling Securityholders..................................... 56
Plan of Distribution........................................ 58
Legal Matters............................................... 60
Experts..................................................... 60
Enforceability of Civil Liabilities......................... 60
Where You Can Find More Information About Us................ 61
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PROSPECTUS SUMMARY
This summary highlights information about us which is contained elsewhere
or incorporated by reference in this prospectus. This summary may not contain
all the information that is important to you. You should read the entire
prospectus before making an investment decision. When we refer to NTL in this
prospectus, we mean NTL Incorporated and its consolidated subsidiaries, except
where we make it clear that we are only referring to NTL Incorporated.
ABOUT NTL
We are a leading broadband communications company in the United Kingdom and
the Republic of Ireland, and have expanded our operations through the
acquisition of broadband cable systems in France and the national broadcasting
network facilities in Australia and have recently completed an expansion into
Switzerland. Further expansion into Continental Europe is intended as, and when,
opportunities arise. This expansion may be effected by us either on our own, in
partnership or in co-ventures.
We provide residential, business and wholesale customers with the following
services:
- RESIDENTIAL SERVICES, including telephony, cable television, personal
computer and television-based Internet access and interactive services;
- NATIONAL TELECOMS SERVICES, including business telecoms, national and
international carrier telecommunications, Internet services and satellite
communications services; and
- BROADCAST TRANSMISSION AND TOWER SERVICES, including digital and analog
television and radio broadcast transmission services, wireless network
management and tower site rental services.
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THE NOTES
Maturity...................... December 15, 2009.
Interest Payment Dates........ June 15 and December 15 of each year,
commencing June 15, 2000.
Conversion.................... The convertible notes, unless previously
redeemed, are convertible at the option of the
holder at any time after March 21, 2000 and
before December 15, 2009 into shares of common
stock at a conversion price of $108.184 per
share, subject to adjustment in some events.
See "Description of the Convertible Notes --
Conversion."
Optional Redemption........... On or prior to December 18, 2002, NTL
Incorporated may redeem any of the convertible
notes at an initial redemption price of
105.750% of the aggregate principal amount of
the convertible notes to be redeemed if the
current market value of the common stock equals
or exceeds certain triggering levels. After
December 18, 2002, the convertible notes are
redeemable, in whole or from time to time in
part, at the option of NTL, on at least 30 but
not more than 60 days' prior notice at the
redemption prices set forth in this offering
memorandum together with accrued and unpaid
interest, if any, to the date of redemption.
See "Description of the Convertible
Notes -- Optional Redemption."
Subordination................. The convertible notes are general unsecured
obligations of NTL Incorporated and are
subordinate in right of payment to all existing
and future senior debt of NTL Incorporated. In
addition, the convertible notes are effectively
subordinated to all existing and future
liabilities of NTL Incorporated's subsidiaries,
partnerships and affiliated joint ventures,
including trade payables.The ability of NTL
Incorporated and its subsidiaries to incur
additional indebtedness and liabilities is not
limited by the terms of the indenture under
which the convertible notes are issued. See
"Description of the Convertible
Notes -- Subordination of Convertible Notes."
Change of Control............. In some circumstances involving a change of
control of NTL, holders of the convertible
notes will have the right, subject to some
restrictions and conditions, to require us to
repurchase all or any part of the
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convertible notes at a purchase price equal to
101% of the principal amount of those
convertible notes together with accrued and
unpaid interest, if any, to the date of
repurchase. NTL may not have sufficient funds
or the financial resources necessary to
satisfy, or may be precluded by the terms
governing NTL's indebtedness from satisfying,
its obligations to repurchase the convertible
notes and other debt that may become repayable
upon a change of control. See "Description of
the Convertible Notes -- Repurchase at the
Option of Holders."
Use of Proceeds............... The selling securityholders will receive all of
the net proceeds from the sale of the
securities sold pursuant to this prospectus.
NTL will not receive any proceeds from sales by
the selling securityholders of the offered
securities.
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RISK FACTORS
You should consider carefully all of the information set forth in this
prospectus and incorporated by reference in this prospectus. See "Where you can
find more information about us." You should particularly evaluate the following
risks before deciding to purchase the convertible notes or the common stock
issuable on conversion of the convertible notes.
THE CONVERTIBLE NOTES ARE SUBORDINATED TO OUR EXISTING AND FUTURE SENIOR DEBT
Our obligations under the convertible notes are unsecured and are
subordinated in right of payment to all our existing and future senior debt as
that term is defined in the indenture governing the convertible notes. This
means that we cannot make any payments on the convertible notes if we default on
a payment of any of those senior debts. In the event of the bankruptcy,
liquidation or dissolution of NTL Incorporated, our assets would be available to
pay our obligations under the convertible notes only after all payments have
been made on our senior debt. Our available assets may be insufficient to pay
all of our creditors. You may receive nothing and are likely to receive
proportionately less than the holders of our senior debt.
OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT THE FINANCIAL HEALTH OF THE
COMPANY
We are and, for the foreseeable future will continue to be, highly
leveraged. On December 31, 1999, the accreted value of our total long-term
indebtedness, including our 13% senior redeemable exchangeable preferred stock
was approximately $8.9 billion.
This debt represents approximately 81% of our total capitalization as of
December 31, 1999. The indentures governing our subsidiaries' outstanding
indebtedness permit those subsidiaries to incur additional indebtedness to
finance our working capital and capital expenditure requirements, finance the
construction of our network and finance the acquisition of assets, licenses and
computer software that are used in connection with a cable business, as well as
entities that are engaged in the cable business.
Our substantial indebtedness could adversely affect our financial health
by, among other things:
- increasing our vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates particularly if any
of our borrowings are at variable interest rates;
- limiting our ability to obtain the additional financing we need to
operate, develop and expand our business; and
- requiring us to dedicate a substantial portion of our cash flow from
operations to service our debt, which reduces the funds available for
operations and future business opportunities.
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WE ARE A HOLDING COMPANY THAT IS DEPENDENT UPON CASH FLOW FROM OUR SUBSIDIARIES
TO MEET OUR OBLIGATIONS -- OUR ABILITY TO ACCESS THAT CASH FLOW MAY BE LIMITED
IN SOME CIRCUMSTANCES
We are a holding company with no independent operations or significant
assets other than our investments in and advances to our subsidiaries and
affiliated joint ventures. We depend upon the receipt of sufficient funds from
our subsidiaries and affiliated joint ventures to meet our obligations. The
terms of existing and future indebtedness of our subsidiaries and the laws of
the jurisdictions under which those subsidiaries are organized may limit the
payment of dividends, loans and other distributions to us.
Your right to receive payments on or in respect of the convertible notes
could be adversely affected in the event of a bankruptcy of any of our
subsidiaries. Following the liquidation of one of our subsidiaries or joint
ventures, the creditors of that subsidiary or joint venture will generally be
entitled to be paid in full before we are entitled to a distribution of any
assets in the liquidation. On December 31, 1999, the total liabilities of our
subsidiaries were approximately $8.7 billion.
IN SOME CIRCUMSTANCES INVOLVING A CHANGE OF CONTROL, WE WILL BE REQUIRED TO
REPURCHASE SOME OF OUR INDEBTEDNESS INCLUDING THE CONVERTIBLE NOTES -- IF THIS
OCCURS, WE MAY NOT HAVE THE FINANCIAL RESOURCES NECESSARY TO MAKE THOSE
REPURCHASES
We may under some circumstances involving a change of control be obligated
to offer to repurchase outstanding debt securities, including the convertible
notes, before maturity. We cannot assure you that we will have available
financial resources necessary to repurchase those securities in those
circumstances. If we cannot repurchase those debt securities in the event of a
change of control, it would constitute an event of default under the indentures
under which those securities are issued and may result in a cross-default under
other indebtedness.
THE ANTICIPATED CONSTRUCTION COSTS OF OUR NETWORK WILL INCREASE AS A RESULT OF
OUR RECENT ACQUISITIONS AND WILL REQUIRE SUBSTANTIAL AMOUNTS OF ADDITIONAL
FUNDING
Following our recent acquisitions, our capital expenses and cost of
operations for the development, construction and operation of our combined
telecommunications networks will significantly increase. Given our most recent
acquisitions, we estimate that significant amounts of additional funding will be
necessary to meet these capital expenditure requirements.
We cannot be certain that:
- we will be able to obtain additional financing with acceptable terms,
- actual construction costs will meet our expectations,
- we will satisfy conditions precedent to advances under future credit
facilities,
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- we will not acquire additional businesses that require additional
capital,
- we will be able to generate sufficient cash from operations to meet
capital requirements, debt service and other obligations when required,
or
- we will withstand exposure to exchange and interest rate fluctuations.
We do not have any firm additional financing plans to address the factors
listed above.
WE WILL REQUIRE ADDITIONAL FINANCING BECAUSE WE DO NOT EXPECT TO GENERATE
SUFFICIENT CASH FLOW TO REPAY AT MATURITY THE ENTIRE PRINCIPAL AMOUNT OF OUR
OUTSTANDING INDEBTEDNESS
We anticipate that we will not generate sufficient cash flow from
operations to repay at maturity the entire principal amount of our outstanding
indebtedness. Some of the measures we may take to refinance our debt include:
- refinancing all or portions of that indebtedness,
- seeking modifications to the terms of that indebtedness, and
- seeking additional debt financing, which may require us to obtain the
consent of some of our lenders.
We cannot be certain that we will succeed in executing any of these
measures.
WE ARE CURRENTLY EVALUATING THE FEASIBILITY AND DESIRABILITY OF MAKING CWC
CONSUMERCO A SUBSIDIARY OF NTL COMMUNICATIONS AT SOME POINT IN THE FUTURE -- IF
THIS OCCURS, IN A BANKRUPTCY OR INSOLVENCY OF NTL, CREDITORS OF NTL
COMMUNICATIONS WOULD BE ENTITLED TO HAVE THEIR CLAIMS SATISFIED OUT OF ANY
ASSETS OF CWC CONSUMERCO AVAILABLE FOR DISTRIBUTION TO NTL COMMUNICATIONS BEFORE
ANY DISTRIBUTIONS OF ANY RESIDUAL ASSETS COULD BE MADE TO NTL INCORPORATED
As the proposed CWC ConsumerCo acquisition is currently structured, CWC
ConsumerCo will not become a subsidiary of NTL Communications on the closing of
the transaction. Together with NTL Communications, we are currently evaluating
from an operating, financial and legal perspective the feasibility and
desirability of making CWC ConsumerCo a subsidiary of NTL Communications in the
future. If this occurs, in a bankruptcy or insolvency of NTL, creditors of NTL
Communications would be entitled to have their claims satisfied out of any
assets of CWC ConsumerCo available for distribution to NTL Communications before
any distributions of any residual assets could be made to NTL Incorporated. As
of the date of this prospectus, no decision has been made regarding this issue.
We cannot currently predict when we will complete our evaluation or what the
result of our evaluation will be.
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OUR PROPOSED ACQUISITION OF CWC CONSUMERCO, IF COMPLETED, MAY NOT REALIZE
THE BENEFITS WE EXPECT, IT MAY BE MORE DIFFICULT THAN WE EXPECT TO INTEGRATE CWC
CONSUMERCO'S OPERATIONS WITH OUR OPERATIONS AND MAY SUBJECT US TO ADDITIONAL
RISKS
Integration of CWC ConsumerCo with NTL and our networks may be more
difficult than we expect or there may be unknown liabilities relating to CWC
ConsumerCo. We cannot be sure that the expected benefits from the CWC ConsumerCo
acquisition, if completed, will be realized, the potential risks will not occur
or that those risks can be managed without adversely affecting NTL. Any benefits
that may arise from the acquisition by us of CWC ConsumerCo could be less
significant than we anticipate.
WE CANNOT BE CERTAIN THAT WE WILL BE SUCCESSFUL IN INTEGRATING ACQUIRED
BUSINESSES INTO OURS, OR THAT WE WILL REALIZE THE BENEFITS WE ANTICIPATE FROM
ANY ACQUISITION
We will continue to consider strategic acquisitions and combinations that
involve operators or owners of licenses to operate cable, telephone, television
or telecommunications systems or services and related businesses. If
consummated, some of these transactions would significantly alter our holdings
and might require us to incur substantial indebtedness. We cannot assure you
that, with respect to our recent acquisitions, our proposed acquisition of CWC
ConsumerCo, as well as any future acquisitions, if they occur, that we:
- will realize any anticipated benefits,
- will successfully integrate the businesses with our operations, or
- will manage that integration without adversely affecting NTL.
WE HAVE HISTORICALLY INCURRED LOSSES AND GENERATED NEGATIVE CASH FLOWS AND
CANNOT ASSURE YOU THAT WE WILL BE PROFITABLE IN THE FUTURE
Construction and operating expenditures have resulted in negative cash
flow, which we expect will continue at least until we establish an adequate
customer base. We also expect to incur substantial additional losses. We cannot
be certain that we will achieve or sustain profitability in the future. Failure
to achieve profitability could diminish our ability to sustain operations and
obtain additional required funds.
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We had net losses for the years ended December 31,:
- 1999: $736 million,
- 1998: $535 million
- 1997: $333 million
- 1996: $254 million
- 1995: $91 million
As of December 31, 1999, our accumulated deficit was $2.0 billion.
WE HAVE HISTORICALLY HAD A DEFICIENCY OF EARNINGS TO FIXED CHARGES AND TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS AND OUR EARNINGS IN THE
FUTURE MAY NOT BE SUFFICIENT TO COVER THOSE FIXED CHARGES
For the years ended December 31, 1999, 1998, 1997, 1996 and 1995, our
earnings were insufficient to cover fixed charges by approximately $812.9
million, $565.7 million, $355.4 million, $257.1 million and $105.4 million,
respectively. Our earnings for the years ended December 31, 1999, 1998 and 1997
were insufficient to cover combined fixed charges and preferred stock dividends
by $886.6 million, $584.5 million and $367.4 million, respectively. Fixed
charges consist of interest expense, including capitalized interest,
amortization of fees related to debt financing and rent expense deemed to be
interest. Our earnings in the future may not be sufficient to cover those fixed
charges, including our obligations on the convertible notes.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION, WHICH WE EXPECT TO INTENSIFY, IN EACH
OF OUR BUSINESS AREAS -- IF WE ARE UNABLE TO COMPETE SUCCESSFULLY OUR FINANCIAL
HEALTH COULD BE ADVERSELY AFFECTED
We face significant competition from established and new competitors in
each of our businesses. As existing technology develops and new technologies
emerge, we believe that competition will intensify in each of our business
areas, particularly business telecommunications and the internet. Some of our
competitors have substantially greater financial and technical resources than we
do. If we are unable to compete successfully our business, financial condition
and results of operations could be adversely affected.
OUR PRINCIPAL BUSINESSES ARE SUBJECT TO GOVERNMENT REGULATION, INCLUDING PRICING
REGULATION, WHICH MAY CHANGE ADVERSELY TO US
Our principal business activities in the UK are regulated and supervised by
various governmental bodies. Changes in laws, regulations or governmental policy
or the interpretations of those laws or regulations affecting our activities and
those of our competitors, such as licensing requirements, changes in price
regulation and deregulation of interconnection arrangements, could have a
material adverse effect on us.
In addition, we are also subject to regulatory initiatives of the European
Commission. Changes in EU Directives may reduce the range of programing and
increase the costs of purchasing television programing or require us to provide
access
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to our cable network infrastructure to other service providers, which could have
a material adverse effect on us.
OUR UK BROADCAST SERVICES BUSINESS IS DEPENDENT UPON SITE SHARING ARRANGEMENTS
WITH OUR PRINCIPAL COMPETITOR
As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, Crown Castle International Corp. and NTL have made
arrangements to share a large number of tower sites. We cannot assure you that
the site sharing arrangements will not be terminated. Termination of the site
sharing arrangements would have a material adverse effect on us.
Under the present arrangements, one of the parties is the owner, lessor or
licensor of each site and the other party is entitled to request a license to
use specified facilities at that site. Each site license granted pursuant to the
site sharing agreement is for an initial period expiring on December 31, 2005,
subject to title to the site and to the continuation in force of the site
sharing agreement. Each site sharing agreement provides that, if requested by
the sharing party, it will be extended for further periods. Either party may
terminate the agreement by 5 years' notice in writing to the other expiring on
December 31, 2005 or at any date which is a date 10 years or a multiple of 10
years after December 31, 2005.
OUR UK BROADCAST SERVICES BUSINESS IS DEPENDENT UPON ITV AND OTHER CONTRACTS
Our UK broadcast services business is substantially dependent upon
contracts with the ITV contractors, Channel 4/Welsh Fourth Channel and Vodafone,
for the provision of transmission services. The prices that we may charge these
companies for transmission services are subject to regulation by OFTEL. The
contracts with the ITV contractors and Channel 4/Welsh Fourth Channel terminate
on December 31, 2002. Although, historically, the ITV contractors and Channel
4/Welsh Fourth Channel have renewed their contracts with us, we cannot assure
you that they will do so upon expiration of the current contracts, that they
will not negotiate terms for provision of transmission services by us on a basis
less favorable to us or that they would not seek to obtain from third parties a
portion of the transmission services currently provided by us. The loss of any
one of these contracts could have a material adverse effect on us.
FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD HAVE A MATERIAL ADVERSE EFFECT
ON US
We have experienced rapid growth and development in a relatively short
period, and to meet our strategic objectives will require a continuation of that
growth. Management of that growth will require, among other things:
- stringent control of construction and other costs,
- continued development of our financial and management controls,
- increased marketing activities, and
- the training of new personnel.
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Failure to manage our rapid growth and development successfully could have
a material adverse effect on us.
WE ARE DEPENDENT UPON A SMALL NUMBER OF KEY PERSONNEL
A small number of key executive officers manage our businesses, and the
loss of one or more of these executive officers could have a material adverse
effect on us. We believe that our future success will depend in large part on
our continued ability to attract and retain highly skilled and qualified
personnel. We have not entered into written employment contracts or non-compete
agreements with, nor have we obtained life insurance policies covering those key
executive officers. Some of our senior managers also serve as members of senior
management of other companies in the telecommunications business.
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND WE
CANNOT PREDICT THE EFFECT OF ANY CHANGES ON OUR BUSINESSES
The telecommunications industry is subject to rapid and significant changes
in technology and the effect of technological changes on our businesses cannot
be predicted. However, the cost of implementation for emerging and future
technologies could be significant, and our ability to fund such implementation
may depend on our ability to obtain additional financing.
WE ARE SUBJECT TO CURRENCY RISK BECAUSE WE OBTAIN A SUBSTANTIAL AMOUNT OF
FINANCING IN US DOLLARS BUT GENERALLY GENERATE REVENUES AND INCUR EXPENSES IN
OTHER CURRENCIES
We will encounter currency exchange rate risks because we generate revenues
and incur construction and operating expenses in other currencies, primarily in
British pounds sterling, while we pay interest and principal obligations with
respect to most of our existing indebtedness in US dollars. We cannot assure you
that any hedging transaction we might enter into will be successful and that
shifts in the currency exchange rates will not have a material adverse effect on
us.
WE DO NOT INSURE THE UNDERGROUND PORTION OF OUR NETWORK
We obtain insurance of the type and in the amounts that we believe are
customary for similar companies. Consistent with this practice, we do not insure
the underground portion of our cable network. Substantially all of our cable
network is constructed underground. Any catastrophe that affects a significant
portion of a system's underground cable network could result in substantial
uninsured losses.
ANTI-TAKEOVER MATTERS -- VARIOUS PROVISIONS OF THE INDENTURES GOVERNING OUR OR
OUR SUBSIDIARIES' INDEBTEDNESS AND OF OUR CERTIFICATE OF INCORPORATION MAY HAVE
THE EFFECT OF DELAYING, PREVENTING OR MAKING A CHANGE OF CONTROL OF NTL MORE
DIFFICULT
Some provisions of the indenture that governs the convertible notes and the
indentures governing our or our subsidiaries' outstanding indebtedness may have
the effect of delaying or preventing transactions involving a change of control
of NTL,
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including transactions in which stockholders might otherwise receive a possible
substantial premium for their shares over then current market prices, and may
limit the ability of stockholders to approve transactions that they may deem to
be in their best interest.
A change of control may require us and our subsidiaries to offer to
repurchase indebtedness under existing or future agreements governing that
indebtedness. As a consequence, a change of control may require us to refinance
substantial amounts of our indebtedness and would impose other significant
obligations on us. Our inability or the inability of one of our subsidiaries to
purchase all or some of the notes tendered for purchase, would also constitute
an event of default under the applicable indenture which would have a material
adverse effect on us.
Our certificate of incorporation contains provisions which may have the
effect, alone or in combination with each other or with the existence of
authorized but unissued common stock and any series of preferred stock, of
- preventing or making more difficult a hostile takeover,
- making it more difficult to remove or change the composition of our
incumbent board of directors and our officers,
- being adverse to stockholders who desire to participate in a tender
offer and
- depriving stockholders of possible opportunities to sell their shares
at temporarily higher prices.
In particular, the rights issuable under our stockholder rights plan have
anti-takeover effects as they will cause substantial dilution to a person or
group that acquires a substantial interest in NTL without the prior approval of
our board of directors. As a result of the provisions of the certificate of
incorporation and the ownership of NTL, no change of control requiring
stockholder approval is possible without the consent of the owners of the rights
preferred stock.
THE AGREEMENTS GOVERNING SOME OF OUR SUBSIDIARIES' INDEBTEDNESS MAY INDIRECTLY
LIMIT OUR ABILITY TO PAY DIVIDENDS
The indentures governing NTL Communications' senior notes impose
limitations on the payment of dividends to us and, because we are a holding
company with no independent operations, consequently restrict our ability to pay
dividends on our common stock. Further, the terms of other future indebtedness
of our subsidiaries may, subject to the terms of the indentures governing NTL
Communications' senior notes, restrict the ability of some of our subsidiaries
to distribute earnings to NTL Communications or make other payments to NTL
Communications.
Additionally, our bridge facility to finance our acquisition of Cablecom
prohibits us from paying dividends, subject to some limited exceptions.
We have never paid cash dividends on our common stock. In addition, the
payment of any dividends by us in the future will be at the discretion of our
board of directors and will depend upon, among other things, future earnings,
operations, capital
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<PAGE> 15
requirements, our general financial condition and the general financial
condition of our subsidiaries and general business conditions.
THE MARKET PRICE OF OUR COMMON STOCK AND THE CONVERTIBLE NOTES IS SUBJECT TO
VOLATILITY
The market price of our common stock has been subject to volatility and, in
the future, the market price of our common stock and the convertible notes could
be subject to wide fluctuations in response to numerous factors, many of which
are beyond our control. These factors include, among other things, actual or
anticipated variations in our operating results, our earnings releases and our
competitors' earnings releases, announcements of technological innovations,
changes in financial estimates by securities analysts, market conditions in the
industry and the general state of the securities markets, governmental
legislation or regulation, currency and exchange rate fluctuations, as well as
general economic and market conditions, such as recessions.
LACK OF PUBLIC MARKET FOR THE CONVERTIBLE NOTES
There has been no public market for the convertible notes prior to the
offering of the convertible notes in December 1999. The registration rights
agreement does not obligate us to keep the registration statement of which this
prospectus forms a part effective beyond December 22, 2001 except in limited
circumstances. Although the initial purchasers of the convertible notes have
advised us that they currently intend to continue to make a market in the
convertible notes, they are not obligated to do so and any such market making
may be discontinued at any time without notice. Accordingly, there can be no
assurance as to the ongoing development or liquidity of any market that may
develop for the convertible notes.
YOU SHOULD BE AWARE THAT ACTUAL RESULTS MAY TURN OUT TO BE MATERIALLY DIFFERENT
FROM ANY FORWARD-LOOKING STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS
This prospectus includes or incorporates by reference projections of
broadcast transmission revenues, build-out results and other forward-looking
statements, including those using words such as "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions. In reviewing information
included or incorporated by reference in this offering memorandum, it should be
kept in mind that actual results may differ materially from those expressed or
implied in those projections and forward-looking statements. Important
assumptions and factors that could cause actual results to differ materially
from those contemplated or projected, forecast, estimated or budgeted in or
expressed or implied by those projections and forward-looking statements include
those specified in this Risk Factors section, as well as:
- industry trends,
- our ability to
-- continue to design network routes and install facilities,
-- obtain and maintain any required government licenses or
approvals, and
-- finance construction and development,
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<PAGE> 16
all in a timely manner, at reasonable costs and on satisfactory terms and
conditions,
- assumptions about
-- customer acceptance,
-- churn rates,
-- overall market penetration and competition from providers of
alternative services and
-- availability, terms and deployment of capital.
We assume no obligation to update projections or other forward-looking
statements to reflect actual funding requirements, capital expenditures and
results, changes in assumptions or in the factors affecting these projections or
other forward-looking statements. We cannot assure you that:
- any financings will be obtained when required, on acceptable terms or at
all,
- actual amounts required to complete our planned build out will not exceed
the amount we estimate (see "-- The anticipated construction costs of our
network will increase as a result of our recent acquisitions and will
require substantial amounts of additional funding") or that additional
financing substantially in excess of that amount will not be required,
- we will not acquire franchises, licenses or other new businesses that
would require additional capital,
- operating cash flow will meet expectations or that we will be able to
access such cash from our subsidiaries' operations to meet any unfunded
portion of our capital requirements when required or to satisfy the terms
of the notes, or our other debt instruments and agreements for the
incurrence of additional debt financing (see "-- We are a holding company
that is dependent upon cash flow from our subsidiaries to meet our
obligations -- our ability to access that cash flow may be limited in
some circumstances"),
- we will not incur losses from our exposure to exchange rate fluctuations
or be adversely affected by interest rate fluctuations (see "-- We are
subject to currency risk because we obtain a substantial amount of
financing in US dollars but generally generate revenues and incur
expenses in other currencies"),
- there will not be adverse changes in applicable United States, United
Kingdom, Australian, Irish, French, Swiss or Bermuda tax laws, or
- the future effects of monetary union in Europe will not be materially
adverse to us.
All forward-looking statements included or incorporated by reference in this
prospectus are expressly qualified by the considerations described above.
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<PAGE> 17
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of the securities sold using this prospectus. We will not receive any of the
proceeds from sales by the selling securityholders of the offered securities.
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<PAGE> 18
DESCRIPTION OF THE CONVERTIBLE NOTES
GENERAL
The convertible notes were issued pursuant to an indenture dated as of
December 22, 1999, by and between NTL and The Chase Manhattan Bank, as trustee.
A copy of the indenture and the registration rights agreement are filed as
exhibits to the registration statement of which this prospectus forms a part.
The following summary of selected provisions of the convertible notes, the
indenture and the registration rights agreement is qualified in its entirety by
reference to the provisions of the convertible notes, the indenture and the
registration rights agreement including the definitions of some of the terms
used below. The definitions of selected terms used in the following summary are
set forth below under "-- Definitions." In this section "Description of the
Convertible Notes," the term "NTL" refers to NTL Incorporated only and not to
any of its subsidiaries.
The convertible notes are general unsecured obligations of NTL,
subordinated in right of payment to all existing and future Senior Debt of NTL
as described under "-- Subordination of Convertible Notes" and convertible into
common stock as described under "-- Conversion." The indenture does not contain
any financial covenants or restrictions on the payment of dividends, the
incurrence of Senior Debt or issuance or repurchase of securities of NTL. The
indenture contains no covenants or other provisions to afford protection to
holders of the convertible notes in the event of a highly leveraged transaction
or a change in control of NTL except to the extent described under
"-- Repurchase at the Option of Holders."
The operations of NTL are conducted through its subsidiaries, partnerships
and joint ventures and, as a result, NTL is dependent upon the cash flow of its
subsidiaries, partnerships and affiliated joint ventures to meet its
obligations, including its obligations under the convertible notes. As a result,
the convertible notes are effectively subordinated to all existing and future
liabilities of NTL's subsidiaries, partnerships and affiliated joint ventures,
including trade payables.
Application will be made to list the convertible notes on the Luxembourg
Stock Exchange.
PRINCIPAL, MATURITY AND INTEREST
The convertible notes are limited to $1,200,000,000 aggregate principal
amount. The convertible notes bear interest from December 22, 1999 at the rate
of 5 3/4% per annum and mature on December 15, 2009.
Interest on the convertible notes is payable semiannually on June 15 and
December 15 of each year (each an "Interest Payment Date"), commencing on June
15, 2000, to holders of record at the close of business on June 1 or December 1
(each a "Regular Record Date") immediately preceding such Interest Payment Date.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.
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<PAGE> 19
Interest on the convertible notes accrues from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance.
The convertible notes are payable as to principal, interest and liquidated
damages, if any, at the office or agency of NTL maintained for that purpose
within the City and State of New York or, at the option of NTL, payment of
interest may be made by check mailed to the holders of the convertible notes at
their respective addresses set forth in the register of holders of convertible
notes. A holder of convertible notes with an aggregate principal amount of
convertible notes in excess of $5,000,000 will be paid by wire transfer in
immediately available funds at the election of the holder if the holder
previously specified in writing to NTL and the paying agent wire transfer
instructions. Until otherwise designated by NTL, NTL's office or agency in New
York will be the office of the trustee maintained for such purpose. In addition,
as described under the caption "Listing," if and so long as the convertible
notes are listed on the Luxembourg Stock Exchange, an agent for making payments
on, and transfers of, convertible notes will be maintained in Luxembourg. The
convertible notes were issued in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000.
OPTIONAL REDEMPTION
Provisional Redemption
At any time on or prior to December 18, 2002 (the "Provisional Redemption
Date"), we may redeem the convertible notes, in whole or in part (the
"Provisional Redemption"), at the following redemption prices if the "Daily
Market Price" (as defined below) of the common stock equals or exceeds the
following trigger percentages of the prevailing conversion price (as described
below) then in effect for at least 20 trading days in any consecutive 30-day
trading period ending on the trading day prior to the date of mailing of the
notice of Provisional Redemption (the "Notice Date"), if called for redemption
in the 12-month period ending on December 15 in the case of 2000 or 2001 and
December 18 in the case of 2002:
<TABLE>
<CAPTION>
TRIGGER REDEMPTION
YEAR PERCENTAGE PRICE
- ---- ---------- ----------
<S> <C> <C>
2000.......................................... 170% 105.750%
2001.......................................... 160% 105.175%
2002.......................................... 150% 104.600%
</TABLE>
Upon any provisional redemption, we will make an additional payment in cash
(the "make-whole payment") with respect to the convertible notes converted into
common stock between the Notice Date and the Provisional Redemption Date. The
make-whole payment will be equal to the sum of the aggregate amount of interest
payments that would otherwise have accrued from the Provisional Redemption Date
through December 18, 2002 (the "make-whole period").
Subsequent Optional Redemption
Except as referred to in this prospectus under "-- Optional Tax
Redemption," the convertible notes are redeemable, in whole or from time to time
in part in any integral
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<PAGE> 20
multiple of $1,000, at the option of NTL at any time after December 18, 2002, at
the following redemption prices which are expressed as percentages of the
principal amount set forth below, upon not less than 30 nor more than 60 days'
prior notice, if redeemed during the 12-month period beginning December 15 of
the years indicated (or December 18 in the case of 2002):
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2002...................................................... 104.025%
2003...................................................... 103.450%
2004...................................................... 102.875%
2005...................................................... 102.300%
2006...................................................... 101.725%
2007...................................................... 101.150%
2008...................................................... 100.575%
2009 and after............................................ 100.000%
</TABLE>
In the case of a redemption of any convertible notes referred to under
"-- Optional Tax Redemption," redemption of such convertible notes shall be made
at the principal amount of these convertible notes together with accrued and
unpaid interest and liquidated damages, if any, to the applicable redemption
date.
OPTIONAL TAX REDEMPTION
The convertible notes may be redeemed at the option of NTL, in whole but
not in part, upon not less than 30 nor more than 60 days' prior notice, at any
time at a redemption price equal to the principal amount of the convertible
notes together with accrued and unpaid interest to the date fixed for redemption
if after the date on which the provisions described under "-- Additional
Amounts" become applicable (the "Relevant Date") there has occurred any change
in or amendment to the laws (or any regulations or official rulings promulgated
thereunder) of the United Kingdom, the Netherlands, Netherlands Antilles,
Bermuda or the Cayman Islands, (or any political subdivision or taxing authority
thereof or therein), or any change in or amendment to the official application
or interpretation of such laws, regulations or rulings (a "Change in Tax Law")
which becomes effective after the Relevant Date, as a result of which the
Company is or would be so required on the next succeeding Interest Payment Date
to pay Additional Amounts with respect to the Convertible Notes with respect to
withholding taxes imposed by the United Kingdom, the Netherlands, Netherlands
Antilles, Bermuda or the Cayman Islands, (or any political subdivision or taxing
authority thereof or therein)(a "Withholding Tax") and such Withholding Tax is
imposed at a rate that exceeds the rate (if any) at which Withholding Tax was
imposed on the Relevant Date; provided, however, that
(1) this paragraph shall not apply to the extent that, at the Relevant
Date it was known or would have been known had professional advice
of a nationally recognized accounting firm in the United Kingdom,
the Netherlands, Netherlands Antilles, Bermuda or the Cayman
Islands, as the case may be, been sought, that a Change in Tax Law
in the United
17
<PAGE> 21
Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the
Cayman Islands, was to occur after the Relevant Date,
(2) no such notice of redemption may be given earlier than 90 days
prior to the earliest date on which NTL would be obliged to pay
such Additional Amounts were a payment in respect of the
convertible notes then due,
(3) at the time such notice of redemption is given, such obligation to
pay such Additional Amounts remains in effect and
(4) the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to NTL.
The convertible notes may also be redeemed, in whole but not in part, at
any time at a redemption price equal to the principal amount of the convertible
notes plus accrued and unpaid interest and liquidated damages, if any, to the
date fixed for redemption if the person formed after the Relevant Date by a
consolidation, amalgamation, reorganization or reconstruction or other similar
arrangement of NTL or the person into which NTL is merged after the Relevant
Date or to which NTL conveys, transfers or leases its properties and assets
after the Relevant Date substantially as an entirety (collectively, a
"Subsequent Consolidation") is required, as a consequence of such Subsequent
Consolidation and as a consequence of a Change in Tax Law in the United Kingdom,
the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands
occurring after the date of such Subsequent Consolidation to pay Additional
Amounts with respect to Withholding Tax on the convertible notes and such
Withholding Tax is imposed at a rate that exceeds the rate (if any) at which
Withholding Tax was or would have been imposed on the date of such Subsequent
Consolidation; provided, however, that this paragraph shall not apply to the
extent that, at the date of such Subsequent Consolidation it was known or would
have been known had professional advice of a nationally recognized accounting
firm in the United Kingdom been sought, that a Change in Tax Law in the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands was to occur after such date. NTL will also pay, or make available for
payment, to holders on the redemption date any Additional Amounts (as described,
but subject to the exceptions referred to, under "Additional Amounts") resulting
from the payment of such redemption price.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," NTL
is not required to make mandatory redemption or sinking fund payments with
respect to the convertible notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Change of Control, each holder of convertible
notes shall have the right to require NTL to repurchase all or any part, equal
to $1,000 or an integral multiple of $1,000, of such holder's convertible notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of
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<PAGE> 22
the principal amount thereof, plus accrued and unpaid interest if any, on those
convertible notes to the Change of Control Payment Date (the "Change of Control
Payment"). Within 40 days following any Change of Control, NTL shall mail a
notice to each holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all convertible
notes tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days from the date such notice is
mailed (the "Change of Control Payment Date");
(3) that any convertible notes not tendered will continue to accrue
interest;
(4) that, unless NTL defaults in the payment of the Change of Control
Payment, all convertible notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(5) that holders electing to have any convertible notes purchased
pursuant to a Change of Control Offer will be required to surrender
the convertible notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the convertible notes completed,
to the paying agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the
Change of Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
paying agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of convertible notes
delivered for purchase, and a statement that such holder is
withdrawing his election to have such convertible notes purchased;
and
(7) that holders whose convertible notes are being purchased only in
part will be issued new convertible notes equal in principal amount
to the unpurchased portion of the convertible notes surrendered,
which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple of $1,000.
NTL will comply with the requirements of Rules 13e-4 and 14e-1 under the
Exchange Act, and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the convertible notes in connection with a Change of Control.
On the Change of Control Payment Date, NTL will, to the extent lawful,
(1) accept for payment convertible notes or portions thereof tendered
pursuant to the Change of Control Offer,
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<PAGE> 23
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all convertible notes or portions
thereof so tendered and
(3) deliver or cause to be delivered to the trustee the convertible
notes so accepted together with an Officers' Certificate stating
the convertible notes or portions thereof tendered to NTL. The
paying agent shall promptly mail to each holder of convertible
notes so accepted for payment (or, if such holder of convertible
notes holds an aggregate principal amount in excess of $5,000,000
will be paid by wire transfer in immediately available funds at the
election of such holder if such holder previously specified in
writing to NTL and the paying agent) an amount equal to the
purchase price for such convertible notes, and, if the convertible
notes are in certificated form, payment may be made at the office
of the paying agent in Luxembourg. The trustee shall promptly
authenticate and mail to each holder a new convertible note equal
in principal amount to any unpurchased portion of the convertible
notes surrendered, if any; provided that each such new convertible
note shall be in a principal amount of $1,000 or an integral
multiple of $1,000. NTL will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
indenture does not contain any other provisions that permit the holders of the
convertible notes to require that NTL repurchase or redeem the convertible notes
in the event of a takeover, recapitalization or similar restructuring. Although
the indenture contains several covenants, including the provision described
under "-- Merger, Consolidation or Sale of Assets" below, the provisions of the
indenture may not necessarily afford holders of the convertible notes protection
in the event of a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction involving NTL that may adversely affect the
holders of the convertible notes.
The Change of Control Offer requirement of the convertible notes may in
some circumstances make more difficult or discourage a takeover of NTL, and, as
a result, the removal of incumbent management. The Change of Control Offer
requirement, however, is not the result of management's knowledge of any
specific effort to accumulate NTL's stock or to obtain control of NTL by means
of a merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of antitakeover provisions. Instead, the Change of
Control Offer requirement is a result of negotiations between NTL and the
initial purchasers. Management has no present intention to engage in a
transaction involving a Change of Control, although it is possible that NTL
would decide to do so in the future. Subject to the limitations discussed below,
NTL could, in the future, enter into transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change of
Control under the indenture, but that could increase the amount of indebtedness
outstanding at such time or otherwise affect NTL's capital structure or credit
ratings.
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<PAGE> 24
Change of control provisions are contained in each of the indentures for
NTL Communications' notes. The Partners 11.20% Debentures also contain change of
control provisions.
NTL's ability to pay cash to the holders of convertible notes pursuant to a
Change of Control Offer may be limited by NTL's then existing financial
resources. Future credit agreements or other agreements relating to indebtedness
of NTL may contain prohibitions or restrictions on NTL's ability to effect a
Change of Control Payment. In the event a Change of Control occurs at a time
when such prohibitions or restrictions are in effect, NTL could seek the consent
of its lenders to the purchase of the convertible notes and other indebtedness
containing change of control provisions or could attempt to refinance the
borrowings that contain such prohibition. If NTL does not obtain such a consent
or repay such borrowings, NTL will be effectively prohibited from purchasing the
convertible notes. In such case, NTL's failure to purchase tendered convertible
notes would constitute an Event of Default under the indenture. Moreover, the
events that constitute a Change of Control under the indenture constitute events
of default under future debt instruments or credit agreements of NTL or NTL's
subsidiaries. Such events of default may permit the lenders under such debt
instruments or credit agreements to accelerate the debt and, if such debt is not
paid or repurchased, to enforce their security interests in what may be all or
substantially all of the assets of NTL's subsidiaries. Any such enforcement may
limit NTL's ability to raise cash to repay or repurchase the convertible notes.
For the reasons described in the three immediately preceding paragraphs,
there can be no assurance that NTL will be able to repurchase the convertible
notes upon a Change of Control.
The Board of Directors of NTL may not, by itself, waive or modify the
Change of Control provisions of the indenture. All the provisions of the
indenture, including the Change of Control provision, may only be waived or
modified pursuant to the provisions described under "-- Amendment, Supplement
and Waiver" below.
SELECTION AND NOTICE
If less than all of the convertible notes are to be redeemed at any time,
selection of convertible notes for redemption will be made by the trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the convertible notes are listed, or, if the convertible notes
are not so listed, on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and appropriate, provided that no convertible notes of $1,000 or
less shall be redeemed in part. Notice of redemption shall be mailed by first
class mail at least 30 but not more than 60 days, prior to the redemption date
to each holder of convertible notes to be redeemed at its registered address,
and, if and so long as the convertible notes are listed on the Luxembourg Stock
Exchange, publish a notice in a leading newspaper with circulation in
Luxembourg. If any convertible note is to be redeemed in part only, the notice
of redemption that relates to such convertible note shall state the portion of
the principal amount thereof to be redeemed. A new convertible note in principal
amount equal to the
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<PAGE> 25
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original convertible note. On and after the redemption date,
interest ceases to accrue on convertible notes or portions of them called for
redemption.
CONVERSION
The holder of any convertible note will have the right, exercisable at any
time after 90 days following the date of original issuance of that convertible
note and prior to maturity, to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $1,000) into shares of common
stock at a conversion price of $108.184 per share of common stock, subject to
adjustment as described below (the "Conversion Price"), except that if a
convertible note is called for redemption, the conversion right will terminate
at the close of business on the business day immediately preceding the date
fixed for redemption. Upon conversion, no adjustment or payment will be made for
interest, but if any holder surrenders a convertible note for conversion after
the close of business on the record date for the payment of an installment of
interest and prior to the opening of business on the next interest payment date,
then, notwithstanding such conversion, the interest payable on such interest
payment date will be paid to the registered holder of such convertible note on
such record date. In such event, such convertible note, when surrendered for
conversion, need not be accompanied by payment of an amount equal to the
interest payable on such interest payment date on the portion so converted. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest.
The Conversion Price is subject to adjustment upon the occurrence of
certain events, including:
(1) the issuance of shares of common stock as a dividend or
distribution on the Common Stock;
(2) the subdivision or combination of the outstanding common stock;
(3) the issuance to substantially all holders of common stock of rights
or warrants to subscribe for or purchase common stock (or
securities convertible into common stock) at a price per share less
than the then current market price per share, as defined;
(4) the distribution of shares of capital stock of NTL (other than
common stock), evidences of indebtedness or other assets (excluding
dividends in cash, except as described in clause (5) below) to all
holders of common stock;
(5) the distribution, by dividend or otherwise, of cash to all holders
of common stock in an aggregate amount that, together with the
aggregate of any other distributions of cash that did not trigger a
Conversion Price adjustment to all holders of its common stock
within the 12 months preceding the date fixed for determining the
stockholders entitled to such distribution and all Excess Payments
in respect of each tender offer or other negotiated transaction by
NTL or any of its Subsidiaries for common
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<PAGE> 26
stock concluded within the preceding 12 months not triggering a
conversion price adjustment, exceeds 10% of the product of the
current market price per share (determined as set forth below) on
the date fixed for the determination of stockholders entitled to
receive such distribution times the number of shares of common
stock outstanding on such date;
(6) payment of an Excess Payment in respect of a tender offer or other
negotiated transaction by NTL or any of its subsidiaries for common
stock, if the aggregate amount of such Excess Payment, together
with the aggregate amount of cash distributions made within the
preceding 12 months not triggering a conversion price adjustment
and all Excess Payments in respect of each tender offer or other
negotiated transaction by NTL Company or any of its subsidiaries
for common stock concluded within the preceding 12 months not
triggering a conversion price adjustment, exceeds 10% of the
product of the current market price per share on the expiration of
such tender offer times the number of shares of common stock
outstanding on such date; and
(7) the distribution to substantially all holders of common stock of
rights or warrants to subscribe for securities (other than those
referred to in clause (3) above).
In the event of a distribution to substantially all holders of common stock
of rights to subscribe for additional shares of NTL's capital stock (other than
those referred to in clause (3) above), NTL may, instead of making any
adjustment in the Conversion Price, make proper provision so that each holder of
a convertible note who converts such convertible note after the record date for
such distribution and prior to the expiration or redemption of such rights shall
be entitled to receive upon such conversion, in addition to shares of common
stock, an appropriate number of such rights. No adjustment of the Conversion
Price will be made until cumulative adjustments amount to one percent or more of
the Conversion Price as last adjusted.
If NTL reclassifies or changes its outstanding common stock, or
consolidates with or merges into or transfers or leases all or substantially all
of its assets to any person, or is a party to a merger that reclassifies or
changes its outstanding common stock, the convertible notes will become
convertible into the kind and amount of securities, cash or other assets which
the holders of the convertible notes would have owned immediately after the
transaction if the holders had converted the convertible notes immediately
before the effective date of the transaction.
The indenture also provides that if rights, warrants or options expire
unexercised the Conversion Price shall be readjusted to take into account the
actual number of such warrants, rights or options which were exercised.
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In the indenture, the "current market price" per share of common stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of
(1) 30 consecutive business days ending on the last full trading day on
the exchange or market referred to in determining such Daily Market
Prices prior to the time of determination (as defined in the
indenture) or
(2) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such
distribution through such last full trading day prior to the time
of determination.
NTL is permitted to make such reductions in the Conversion Price as it, in
its discretion, determines to be advisable in order that any stock dividend,
subdivision of shares, distribution or rights to purchase stock or securities or
distribution of securities convertible into or exchangeable for stock made by
NTL to its stockholders will not be taxable to the recipients.
SUBORDINATION OF CONVERTIBLE NOTES
The convertible notes are subordinate in right of payment to all existing
and future Senior Debt. The indenture does not restrict the amount of Senior
Debt or other Indebtedness of NTL or any Subsidiary of NTL. On December 31,
1999, NTL had no Senior Debt outstanding.
The payment of the principal of, interest on or any other amounts due on
the convertible notes is subordinated in right of payment to the prior payment
in full of all Senior Debt of NTL. No payment on account of principal of,
redemption of, interest on or any other amounts due on the convertible notes,
including, without limitation, any payments on the Change of Control Offer, and
no redemption, purchase or other acquisition of the convertible notes may be
made unless
(1) full payment of amounts then due on all Senior Debt have been made
or duly provided for pursuant to the terms of the instrument
governing such Senior Debt, and
(2) at the time for, or immediately after giving effect to, any such
payment, redemption, purchase or other acquisition, there shall not
exist under any Senior Debt or any agreement pursuant to which any
Senior Debt has been issued, any default which shall not have been
cured or waived and which shall have resulted in the full amount of
such Senior Debt being declared due and payable.
In addition, the indenture provides that if any of the holders of any issue
of Senior Debt notify (the "Payment Blockage Notice") NTL and the trustee that a
default has occurred giving the holders of such Senior Debt the right to
accelerate the maturity thereof, no payment on account of principal, redemption,
interest, liquidated damages, if any, or any other amounts due on the
convertible notes and no purchase, redemption or other acquisition of the
convertible notes will be made for the period (the "Payment
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Blockage Period") commencing on the date notice is received and ending on the
earlier of
(A) the date on which such event of default shall have been cured or
waived or
(B) 180 days from the date notice is received.
Notwithstanding the foregoing, only one Payment Blockage Notice with
respect to the same event of default or any other events of default existing and
known to the person giving such notice at the time of such notice on the same
issue of Senior Debt may be given during any period of 360 consecutive days
unless such event of default or such other events of default have been cured or
waived for a period of not less than 90 consecutive days. No new Payment
Blockage Period may be commenced by the holders of Senior Debt during any period
of 360 consecutive days unless all events of default which triggered the
preceding Payment Blockage Period have been cured or waived.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of NTL or acceleration of the
principal amount due on the convertible notes because of an Event of Default,
all Senior Debt must be paid in full before the holders of the convertible notes
are entitled to any payments whatsoever.
As a result of these subordination provisions, in the event of NTL's
insolvency, holders of the convertible notes may recover ratably less than
general creditors of NTL.
If payment of the convertible notes is accelerated because of an Event of
Default, NTL or the trustee shall promptly notify the holders of Senior Debt or
the trustee(s) for such Senior Debt of the acceleration. NTL may not pay the
convertible notes until five days after such holders or trustee(s) of Senior
Debt receive notice of such acceleration and, thereafter, may pay the
convertible notes only if the subordination provisions of the Indenture
otherwise permit payment at that time.
The convertible notes are obligations exclusively of NTL. Since the
operations of NTL are conducted through its Subsidiaries, the cash flow and the
consequent ability to service debt, including the convertible notes, of NTL, are
dependent upon the earnings of its Subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those Subsidiaries to,
NTL. The payment of dividends and the making of loans and advances to NTL by its
Subsidiaries may be subject to statutory or contractual restrictions, are
dependent upon the earnings of those Subsidiaries and are subject to various
business considerations.
Any right of NTL to receive assets of any of its Subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
convertible notes to participate in those assets) will be effectively
subordinated to the claims of that Subsidiary's creditors (including trade
creditors), except to the extent that the NTL is itself recognized as a creditor
of such Subsidiary, in which case the claims of NTL would still be subordinate
to any security interests in the assets of such Subsidiary and any indebtedness
of such Subsidiary senior to that held by NTL.
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On December 31, 1999, NTL had no senior debt outstanding and NTL had no
indebtedness outstanding that would have constituted Senior Debt (excluding
liabilities of a type not required to be reflected as a liability on the balance
sheet of NTL in accordance with GAAP) and approximately $8.7 billion of
indebtedness outstanding and other obligations of Subsidiaries of NTL (excluding
intercompany liabilities and liabilities of a type not required to be reflected
as a liability on the balance sheet of such subsidiaries in accordance with
GAAP) as to which the convertible notes would have been structurally
subordinated. The indenture will not limit the amount of additional
indebtedness, including Senior Debt, which NTL can create, incur, assume or
guarantee, nor will the indenture limit the amount of indebtedness and other
liabilities which any Subsidiary can create, incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the trustee or any holder
of convertible notes receives any payment or distribution of assets of NTL of
any kind in contravention of any of the terms of the indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, in respect of the convertible notes before all Senior Debt is paid in
full, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Debt, and will be immediately paid over or
delivered to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full of all Senior
Debt remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior Debt.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The indenture provides that NTL may not consolidate or merge with or into
(whether or not NTL is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions to another corporation, person or
entity unless
(1) NTL is the surviving corporation or the entity or the person formed
by or surviving any such consolidation or merger (if other than
NTL) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation
organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda, the Cayman Islands
or of the United States, any state thereof or the District of
Columbia;
(2) the entity or person formed by or surviving any such consolidation
or merger (if other than NTL) or the entity or person to which such
sale, assignment, transfer, lease, conveyance or other disposition
will have been made assumes all the Obligations (including the due
and punctual payment of Additional Amounts if the surviving
corporation is a corporation organized or existing under the laws
of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman
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Islands) of NTL under the convertible notes and the indenture,
pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists;
(4) NTL or any entity or person formed by or surviving any such
consolidation or merger or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been
made will have a ratio of Indebtedness to Annualized Pro Forma
EBITDA equal to or less than the ratio of Indebtedness to
Annualized Pro Forma EBITDA of NTL immediately preceding the
transaction; provided, however, that, if the ratio of Indebtedness
to Annualized Pro Forma EBITDA of NTL immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to
Annualized Pro Forma EBITDA of NTL may be 0.5 greater than such
ratio immediately preceding such transaction; and
(5) such transaction would not result in the loss of any material
authorization or Material License of NTL or its Subsidiaries.
For all purposes of the indenture, the assignment of NTL's rights under the
Transaction Agreement relating to the acquisition of CWC ConsumerCo to a holding
company of NTL shall be deemed not to be a disposition of substantially all of
the assets of NTL.
ADDITIONAL AMOUNTS
The following provisions of this paragraph will apply only in the event
that NTL becomes, or a successor to NTL is, a corporation organized or existing
under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands. All payments made by NTL on the convertible notes
will be made without deduction or withholding, for or on account of, any and all
present or future taxes, duties, assessments, or governmental charges of
whatever nature unless the deduction or withholding of such taxes, duties,
assessments or governmental charges is then required by law. If any deduction or
withholding for or on account of any present or future taxes, assessments or
other governmental charges of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) shall at any time be
required in respect of any amounts to be paid by NTL under the convertible
notes, NTL will pay or cause to be paid such additional amounts ("Additional
Amounts") as may be necessary in order that the net amounts received by a holder
of a convertible note after such deduction or withholding shall be not less than
the amounts specified in such convertible note to which such holder is entitled;
provided, however, that NTL shall not be required to make any payment of
Additional Amounts for or on account of:
(a) any tax, assessment or other governmental charge to the extent such
tax, assessment or other governmental charge would not have been
imposed but for
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(1) the existence of any present or former connection between
such holder (or between a fiduciary, settlor, beneficiary,
member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, nominee, trust,
partnership or corporation), other than the holding of a
convertible note or the receipt of amounts payable in respect
of a convertible note and the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands or any political subdivision or taxing authority
thereof or therein, including, without limitation, such
holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or
resident thereof or being or having been present or engaged
in trade or business therein or having or having had a
permanent establishment therein or
(2) the presentation of a convertible note (where presentation is
required) for payment on a date more than 30 days after the
date on which such payment became due and payable or the date
on which payment thereof is duly provided for, whichever
occurs later, except to the extent that the holder would have
been entitled to Additional Amounts had the convertible note
been presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure to comply by the holder of a
convertible note, or, if different, the beneficial owner of the
interest payable on a convertible note, with a timely request of
NTL addressed to such holder or beneficial owner to provide
information, documents or other evidence concerning the
nationality, residence, identity or connection with the taxing
jurisdiction of such holder or beneficial owner which is required
or imposed by a statute, regulation or administrative practice of
the taxing jurisdiction a precondition to exemption from all or
part of such tax, assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of
principal amount at maturity, redemption amount, Change of Control
Payment, interest with respect to a convertible note or withholding
from the proceeds of a sale or exchange of a convertible note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount
at maturity, redemption amount, Change of Control Payment or
interest with respect to a convertible note, if such payment can be
made, and is in fact made, without such withholding by any other
paying agent located inside the United States;
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(f) any tax, assessment or other governmental charge imposed on a
holder that is not the beneficial owner of a convertible note to
the extent that the beneficial owner would not have been entitled
to the payment of any such Additional Amounts had the beneficial
owner directly held such convertible note; or
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any convertible note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the holder of such
convertible note. All references to interest on the convertible notes in the
indenture or the convertible notes shall include any Additional Amounts payable
to NTL pursuant to this paragraph.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any convertible notes are outstanding, NTL will file with the Commission
and furnish to the holders of the convertible notes all quarterly and annual
financial information required to be contained in a filing with the Commission
on Forms 10-Q and 10-K (or the equivalent thereof under the Exchange Act for
foreign private issuers in the event NTL becomes a corporation organized under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands), including a "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and with respect to
the annual information only, a report thereon by the NTL's certified independent
accountants, in each case, as required by the rules and regulations of the
Commission as in effect on the Issuance Date. NTL does not publish
unconsolidated financial reports.
EVENTS OF DEFAULT AND REMEDIES
The indenture provides that each of the following constitutes an Event of
Default:
(1) default for 30 days in the payment when due of interest (and
Additional Amounts, if applicable) on the convertible notes;
(2) default in payment when due of principal on the convertible notes;
(3) failure by NTL to comply with the provisions described under
"-- Repurchase at the Option of the Holders";
(4) failure by NTL for 60 days after notice to comply with certain
other covenants and agreements contained in the indenture or the
convertible notes;
(5) default (other than any default with respect to (a) any bank
facility at completion and (b) the sterling or US dollar
denominated bonds of Cable & Wireless Communications plc, in each
case, acquired in the
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acquisition by NTL of CWC ConsumerCo) under any mortgage,
indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money
borrowed by NTL or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by NTL or any of its Restricted
Subsidiaries), whether such Indebtedness or guarantee now exists,
or is created after the Issuance Date, which default
(a) is caused by a failure to pay when due principal or interest
on such Indebtedness within the grace period provided in such
Indebtedness (which failure continues beyond any applicable
grace period) (a "Payment Default") or
(b) results in the acceleration of such Indebtedness prior to its
express maturity and in each case, the principal amount of
any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so
accelerated, aggregates $10 million or more;
(6) failure by NTL or any Restricted Subsidiary of NTL to pay final
judgements (other than any judgment as to which a reputable
insurance company has accepted full liability) aggregating in
excess of $5 million, which judgments are not stayed within 60 days
after their entry;
(7) certain events of bankruptcy or insolvency with respect to the
Company or any of its Material Subsidiaries; and
(8) the revocation of a Material License.
If any Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding convertible
notes may declare all the convertible notes to be due and payable immediately,
subject to the provisions limiting payment described in "-- Subordination of
Convertible Notes." Notwithstanding the above, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
NTL or any Material Subsidiary, all outstanding convertible notes will become
due and payable without further action or notice. Holders of the convertible
notes may not enforce the indenture or the convertible notes except as provided
in the indenture. Subject to some limitations, holders of a majority in
principal amount of the then outstanding convertible notes may direct the
Trustee in its exercise of any trust or power. The trustee may withhold from
holders of the convertible notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest or liquidated damages, if any) if it determines that
withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the convertible
notes then outstanding by notice to the trustee may on behalf of the holders of
all of the convertible notes waive any existing Default or Event of Default and
its consequences
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under the indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the convertible notes.
NTL is required to deliver to the trustee annually a statement regarding
compliance with the indenture, and NTL is required, upon becoming aware of any
Default or Event of Default, to deliver to the trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of NTL, as
such, shall have any liability for any Obligations of NTL under the convertible
notes or the indenture or for any claim based on, in respect of, or by reason
of, such Obligations or their creation. Each holder of the convertible notes by
accepting a convertible note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the convertible notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
BOOK-ENTRY, DELIVERY AND FORM
The convertible notes were originally issued in the form of one or more
Global Notes (the "Global Notes"). The Global Notes were deposited with or on
behalf of, DTC and registered in the name of DTC or its nominee (the "Global
Note Holder"). Except as set forth below, the Global Notes may be transferred,
in whole and not in part, only to DTC or another nominee of DTC. Investors may
hold their beneficial interests in the Global Notes directly through DTC if they
are Participants in such system or indirectly through organizations that are
Participants in such system such as Euroclear and Clearstream Banking, societe
anonyme ("Clearstream").
DTC is a limited purpose trust company that was created to hold securities
for its participating organizations (collectively, the "Participants" or "DTC's
Participants") and to facilitate the clearance and settlement of transactions in
such securities between Participants through electronic book-entry changes in
accounts of its Participants. DTC's Participants include securities brokers and
dealers (including the initial purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or "DTC's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through DTC's
Participants or DTC's Indirect Participants.
We expect that pursuant to procedures established by DTC ownership of the
convertible notes evidenced by the Global Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the interests of the Depositary's Participants), DTC's
Participants and DTC's
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Indirect Participants. Prospective purchasers are advised that the laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer convertible
notes evidenced by the Global Notes will be limited to that extent.
Persons who beneficially own securities held by or on behalf of DTC through
Euroclear or Clearstream, Luxembourg will be subject to the procedures of such
Participant. We understand as follows with respect to Euroclear and Clearstream,
Luxembourg: Euroclear and Clearstream, Luxembourg 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. Euroclear and Clearstream, Luxembourg also deal with domestic
securities markets in several countries through established deposits and
custodial relationships. Clearstream, Luxembourg and Euroclear have established
an electronic bridge between their two systems across which their respective
participants may settle trades with each other. Euroclear and Clearstream,
Luxembourg customers are world-wide financial institutions including
underwriters securities brokers and dealers, banks, trust companies and clearing
corporations. An account holder's overall contractual relations with Euroclear
and Clearstream, Luxembourg are governed by the respective rules and operating
procedures of Euroclear and Clearstream, Luxembourg and any applicable laws.
Euroclear and Clearstream, Luxembourg act under such rules and operating
procedures only on behalf of its account holders and has no record of or
relationship with any persons who are not direct account holders.
Investors who hold accounts with Euroclear may acquire, hold and transfer
security entitlements with respect to Global Notes against Euroclear and its
respective property by book-entry to accounts with Euroclear, which has an
account with DTC and subject at all times to the procedures and requirements of
Euroclear. Investors who hold accounts with Clearstream, Luxembourg may acquire,
hold and transfer security entitlements with respect to Global Notes against
Clearstream, Luxembourg and its respective property by book-entry to accounts
with Clearstream, Luxembourg, which has an account with DTC and subject at all
times to the procedures and requirements of Clearstream, Luxembourg. "Security
entitlement" means the rights and property interests of an account holder
against its securities intermediary under applicable law in or with respect to a
security, including any ownership, co-ownership contractual or other rights.
So long as the Global Note Holder is the registered owner of any
convertible notes, the Global Note Holder will be considered the sole holder
under the indenture of any convertible notes evidenced by the Global Notes.
Beneficial owners of convertible notes evidenced by the Global Notes will not be
considered the owners or holders thereof under the indenture for any purpose
including with respect to the giving of any directions, instructions or
approvals to the Trustee thereunder. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the
convertible notes.
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Payments in respect of the principal of, interest and liquidated damages,
if any, on any convertible notes registered in the name of the Global Note
Holder on the applicable record date will be payable by the trustee to or at the
direction of the Global Note Holder in its capacity as the registered holder
under the indenture. Under the terms of the indenture, we and the trustee may
treat the persons in whose names convertible notes, including the Global Notes
are registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither we nor the trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of convertible
notes (including principal, interest and liquidated damages, if any). We
believe, however, that it is currently the policy of DTC to immediately credit
the accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of DTC. Payments by DTC's Participants
and DTC's Indirect Participants to the beneficial owners of convertible notes
will be governed by standing instructions and customary practice and will be the
responsibility of DTC's Participants or DTC's Indirect Participants.
TRANSFER AND EXCHANGE
A holder may transfer or exchange convertible notes in accordance with the
indenture. The registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and NTL may
require a holder to pay any taxes and fees required by law or permitted by the
indenture. NTL is not required to transfer or exchange any convertible note
selected for redemption. Also, NTL is not required to transfer or exchange any
convertible note for a period of 15 days before a selection of convertible notes
to be redeemed. All transfers or exchanges of certificated convertible notes may
be effected at the offices of the transfer agent in Luxembourg.
The registered holder of a convertible note will be treated as the owner of
it for all purposes.
UNCLAIMED MONEY, PRESCRIPTION
If money deposited with the trustee or paying agent for the payment of
principal or interest remains unclaimed for two years, the trustee and the
paying agent shall pay the money back to NTL at its written request. After that,
holders of convertible notes entitled to the money must look to NTL for payment
unless an abandoned property law designates another person and all liability of
the trustee and such paying agent shall cease. Other than as set forth in this
paragraph, the indenture does not provide for any prescription period for the
payment of interest and principal on the convertible notes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the convertible notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
convertible notes (including
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consents obtained in connection with a tender offer or exchange offer for
convertible notes), and any existing default or compliance with any provision of
the indenture or the convertible notes may be waived with the consent of the
holders of a majority in principal amount of the then outstanding convertible
notes (including consents obtained in connection with a tender offer or exchange
offer for convertible notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any convertible notes held by a nonconsenting holder of
convertible notes)
(1) reduce the principal amount of convertible notes whose holders must
consent to an amendment, supplement or wavier,
(2) reduce the principal of or change the fixed maturity of any
convertible note or alter the provisions with respect to the
redemption of the convertible notes,
(3) reduce the rate of or change the time for payment of interest on
any convertible note,
(4) waive a default in the payment of principal of or interest on any
convertible notes (except a rescission of acceleration of the
convertible notes by the holders of at least a majority in
aggregate principal amount of the convertible notes and a waiver of
the payment default that resulted from such acceleration),
(5) make any convertible note payable in money other than that stated
in the convertible notes,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of convertible
notes to receive payments of principal of or interest on the
convertible notes,
(7) waive a redemption payment with respect to any convertible note,
(8) impair the right to convert the convertible notes into common
stock,
(9) modify the conversion or subordination provisions of the indenture
in a manner adverse to the holders of the convertible notes or
(10) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
convertible notes, NTL and the trustee may amend or supplement the indenture or
the convertible notes to cure any ambiguity, defect or inconsistency, to provide
for uncertificated convertible notes in addition to or in place of certificated
convertible notes, to provide for the assumption of NTL's obligations to holders
of the convertible notes in the case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the holders of
the convertible notes or that does not adversely affect the legal rights under
the indenture of any such holder, or to comply with requirements of the
Commission in order to maintain the qualification of the indenture under the
Trust Indenture Act.
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NOTICES
Any notice or communication to a holder of convertible notes shall be
mailed by first-class mail to such holder's address as shown in the register
kept by the registrar. If a notice or communication is mailed in the manner
provided in the preceding sentence within the time period prescribed, it is duly
given, whether or not the addressee receives it. If the convertible notes are
listed on the Luxembourg Stock Exchange, NTL will publish a notice in a daily
newspaper with general circulation in Luxembourg.
CONCERNING THE TRUSTEE
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of NTL, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The indenture will provide that the holders of a majority in principal
amount of the then outstanding convertible notes will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy available to the trustee, subject to certain exceptions. The indenture
provides that, in case an Event of Default shall occur (which shall not have
been cured), the trustee will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. The
indenture will provide that subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any holder of convertible notes, unless such holder shall have
offered to the trustee security and indemnity satisfactory to it against any
loss, liability or expense.
LISTING
Application will be made to list the convertible notes on the Luxembourg
Stock Exchange. The legal notice relating to the issue of the convertible notes
and the articles of association of NTL will be registered prior to the listing
with the Registrar of the District Court in Luxembourg, where such documents are
available for inspection and where copies thereof can be obtained upon request.
In addition, if and as long as the convertible notes are listed on the
Luxembourg Stock Exchange, an agent for making payments on, and transfers of,
convertible notes will be maintained in Luxembourg. NTL has initially designated
Chase Manhattan Bank Luxembourg S.A. as its agent for such purposes.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
the registration rights agreement without charge by writing to NTL, 110 East
59th Street, New York, New York 10022, Attention: Richard J. Lubasch, Esq.,
Executive-Vice President, General Counsel and Secretary.
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DEFINITIONS
Set forth below are selected defined terms used in the indenture. Reference
is made to the indenture and the registration rights agreement for a full
disclosure of all such terms, as well as any other capitalized terms used in
this section of the prospectus for which no definition is provided.
"Annualized Pro Forma EBITDA" means, with respect to any person, such
person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Change of Control" means
(1) the sale, lease or transfer of all or substantially all of the
assets of NTL to any "Person" or "group" (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing, including any group acting
for the purpose of acquiring, holding or disposing of securities
within the meaning of Rule 13d-5(b)(1) under the Exchange Act)
(other than any Permitted Holder),
(2) the approval by the requisite stockholders of NTL of a plan of
liquidation or dissolution of NTL,
(3) any "Person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act or any successor provision to either
of the foregoing, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than any Permitted
Holder, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 50% of the total voting power
of all classes of the voting stock of NTL and/or warrants or
options to acquire such voting stock, calculated on a fully diluted
basis, unless, as a result of such transaction, the ultimate direct
or indirect ownership of NTL is substantially the same immediately
after such transaction as it was immediately prior to such
transaction, or
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted NTL's Board of Directors
(together with any new directors whose election or appointment by
such board or whose nomination for election by the shareholders of
NTL was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of NTL's
Board of Directors then in office.
"Consolidated Interest Expense" means, for any person, for any period, the
amount of interest in respect of Indebtedness (including amortization of
original issue discount, amortization of debt issuance costs, and noncash
interest payments on any Indebtedness
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and the interest portion of any deferred payment obligation and after taking
into account the effect of elections made under any Interest Rate Agreement,
however denominated, with respect to such Indebtedness), the amount of
Redeemable Dividends, Restricted Subsidiary Preferred Stock Dividends and the
interest component of rentals in respect of any capital lease obligation paid,
in each case whether accrued or scheduled to be paid or accrued by such person
and its Subsidiaries (other than Non-Restricted Subsidiaries) during such period
to the extent such amounts were deducted in computing Consolidated Net Income,
determined on a consolidated basis in accordance with GAAP. For purposes of this
definition, interest on a capital lease obligation shall be deemed to accrue at
an interest rate reasonably determined by such person to be the rate of interest
implicit in such capital lease obligation in accordance with GAAP consistently
applied.
"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the Net Income of such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) for such period, on a consolidated basis,
determined in accordance with GAAP; provided that
(1) the Net Income of any person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid
to the referent person or a Wholly Owned Subsidiary,
(2) the Net Income of any person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having
ordinary voting power for the election of directors or other
governing body of such Subsidiary is owned by the referent person
directly or indirectly through one or more Subsidiaries) shall be
included only to the extent of the amount of dividends or
distributions paid to the referent person or a Wholly Owned
Subsidiary,
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition
shall be excluded and
(4) the cumulative effect of a change in accounting principles shall be
excluded.
"Default" means any event that is or, with the passage of time or the
giving of notice or both, would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the convertible notes mature.
"EBITDA" means, for any person, for any period, an amount equal to
(a) the sum of
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(1) Consolidated Net Income for such period (exclusive of any
gain or loss realized in such period upon an Asset Sale),
plus
(2) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in
computing Consolidated Net Income and any provision for taxes
utilized in computing net loss under clause (1) hereof, plus
(3) Consolidated Interest Expense for such period, plus
(4) depreciation for such period on a consolidated basis, plus
(5) amortization of intangibles for such period on a consolidated
basis, plus
(6) any other noncash item reducing Consolidated Net Income for
such period, minus
(b) all noncash items increasing Consolidated Net Income for such
period, all for such person and its Subsidiaries determined in
accordance with GAAP consistently applied.
"Excess Payment" means the excess of
(1) the aggregate of the cash and value of other consideration paid by
NTL or any of its Subsidiaries with respect to shares acquired in a
tender offer or other negotiated transaction over
(2) the market value of such acquired shares after giving effect to the
completion of a tender offer or other negotiated transaction.
"Exchange Rate Contract" means, with respect to any person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates. An Exchange Rate
Contract may also include an Interest Rate Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes,
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debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to capital leases and
sale-and-leaseback transactions) or representing any hedging obligations under
an Exchange Rate Contract or an Interest Rate Agreement, except any such balance
that constitutes an accrued expense or trade payable if and to the extent any of
the foregoing indebtedness (other than obligations under an Exchange Rate
Contract or an Interest Rate Agreement) would appear as a liability upon a
balance sheet of such person prepared in accordance with GAAP, and also include
to the extent not otherwise included, the Guarantee of items which would be
included within this definition.
"Interest Rate Agreement" means, for any person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Issuance Date" means the date on which the convertible notes are first
authenticated and issued.
"Material License" means a license to operate a cable or telephone system
held by the Company or any its Subsidiaries which system at the time of
determination covers a number of Net Households which equals exceeds 5% of the
aggregate number of Net Households covered by all of the licenses to operate
cable telephone systems held by NTL and its Subsidiaries at such time.
"Material Subsidiary" means
(1) NTL UK Group, Inc. (formerly known as OCOM Sub II, Inc.), NTL Group
Limited, CableTel Surrey, CableTel Cardiff Limited, CableTel
Glasgow, CableTel Newport and CableTel Kirklees and
(2) any other Subsidiary of NTL which is a "significant subsidiary" as
defined in Rule 1-02(w) of Regulation S-X under the Securities Act
and the Exchange Act (as such Regulation is in effect on the date
of the indenture).
"Net Income" means, with respect to any person for a specific period, the
net income (loss) of such person during such period, determined in accordance
with GAAP, excluding, however, any gain (but not loss) during such period,
together with any related provision for taxes on such gain (but not loss),
realized during such period in connection with any Asset Sale (as defined in the
indenture) (including, without limitation, dispositions pursuant to
sale-and-leaseback transactions), and excluding any extraordinary gain (but not
loss) during such period, together with any related provision for taxes on such
extraordinary gain (but not loss).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
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"Permitted Designee" means
(1) a spouse or a child of a Permitted Holder,
(2) trusts for the benefit of a Permitted Holder or a spouse or child
of a Permitted Holder,
(3) in the event of the death or incompetence of a Permitted Holder,
his estate, heirs, executor, administrator, committee or other
personal representative or
(4) any person so long as a Permitted Holder owns at least 50% of the
voting power of all classes of the voting stock of such person.
"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with GAAP
consistently applied after giving effect to the following:
(1) if, during or after such period, such Person or any of its
Subsidiaries shall have made any Asset Sale (as defined in the
indenture), Pro Forma EBITDA of such Person and its Subsidiaries
for such period shall be reduced by an amount equal to the Pro
Forma EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Sale for the period or
increased by an amount equal to the Pro Forma EBITDA (if negative)
directly attributable thereto for such period and
(2) if, during or after such period, such Person or any of its
Subsidiaries completes an acquisition of any Person or business
which immediately after such acquisition is a Subsidiary of such
Person or whose assets are held directly by such Person or a
Subsidiary of such Person, Pro Forma EBITDA shall be computed so as
to give pro forma effect to the acquisition of such Person or
business;
and provided further that, with respect to NTL, all of the foregoing references
to "Subsidiary" or "Subsidiaries" shall be deemed to refer only to a "Restricted
Subsidiary" or "Restricted Subsidiaries" of NTL.
"Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Stock.
"Restricted Subsidiary" means any Subsidiary of the Company which is not a
Non-Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, the quotient of the
dividend divided by the difference between one and the maximum statutory federal
income tax rate
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(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such preferred stock.
"Senior Debt" means the principal of, interest on and other amounts due on
(1) Indebtedness of NTL, whether outstanding on the date of the
indenture or thereafter created, incurred, assumed or guaranteed by
NTL, for money borrowed from banks or other financial institutions;
(2) Indebtedness of NTL, whether outstanding on the date of the
indenture or thereafter created, incurred, assumed or guaranteed by
NTL; and
(3) Indebtedness of NTL under interest rate swaps, caps or similar
hedging agreements and foreign exchange contracts, currency swaps
or similar agreements:
unless, in the instrument creating or evidencing or pursuant to which
Indebtedness under (1) or (2) is outstanding, it is expressly provided that
such Indebtedness is not senior in right of payment to the convertible
notes. Senior Debt includes, with respect to the obligations described in
clauses (1) and (2) above, interest accruing, pursuant to the terms of such
Senior Debt, on or after the filing of any petition in bankruptcy or for
reorganization relating to NTL, whether or not post-filing interest is
allowed in such proceeding, at the rate specified in the instrument
governing the relevant obligation. Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include:
(a) Indebtedness of or amounts owed by NTL for compensation to
employees, or for goods or materials purchased in the ordinary
course of business, or for services; or
(b) Indebtedness of NTL to a Subsidiary of NTL.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by NTL.
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REGISTRATION RIGHTS
The following summary of selected provisions of the registration rights
agreement is subject to, and is qualified in its entirety by reference to, all
the provisions of the registration rights agreement, which is incorporated by
reference into the registration statement of which this prospectus forms a part.
NTL entered into the registration rights agreement pursuant to which it
agreed, at its expense, for the benefit of the holders of the offered securities
to file with the Commission the registration statement covering resale of the
offered securities, by May 5, 2000. NTL will use its best efforts to cause the
registration statement to become effective as promptly as is practicable, but in
any event by September 2, 2000, and to keep the registration statement effective
until the earlier of
(1) the sale pursuant to the registration statement of all the offered
securities registered thereunder and
(2) the expiration of the holding period applicable to such offered
securities held by persons that are not affiliates of NTL under Rule 144(k)
under the Securities Act, or any successor provision, subject to certain
permitted exceptions.
NTL will be permitted to suspend the use of this prospectus under some
circumstances relating to pending corporate developments, public filings with
the Commission and similar events. NTL agreed to pay predetermined liquidated
damages as described below ("Liquidated Damages") to holders of offered
securities if the Registration Statement is not timely filed or made effective
or if this Prospectus is unavailable for periods in excess of those permitted
above. Such Liquidated Damages shall accrue to each holder of convertible notes
until such failure to file or become effective or unavailability is cured at a
rate per annum equal to $0.05 per $1,000 aggregate principal amount of the
convertible notes held by such holder for the first 90 day period after the
occurrence of such event. The amount of the liquidated damages will increase by
an additional $0.05 per week per $1,000 aggregate principal amount of the
convertible notes held by each holder with respect to each subsequent 90-day
period until all registration defaults have been cured, up to a maximum amount
of liquidated damages of $0.50 per week per $1,000 aggregate principal amount of
the convertible notes held by each holder.
Selling securityholders must complete and deliver to us a notice and
questionnaire the form of which was sent to all holders of record known to us,
at least three business days prior to any intended distribution of offered
securities pursuant to the registration statement. Holders of offered securities
are required to complete and deliver the questionnaire prior to the
effectiveness of the registration statement so that such holders may be named as
selling securityholders in this prospectus at the time of effectiveness. Upon
receipt of such a completed questionnaire, together with such other information
as may be reasonably requested by us, from a selling securityholder following
the effectiveness of the registration statement, we will, as promptly as
practicable but in any event within five business days of such receipt, file any
amendments to the registration statement or supplements to this prospectus as
are necessary to permit such selling securityholder to deliver this prospectus,
including any supplements, to purchasers of offered securities, subject to our
right to suspend the use of this prospectus as described above.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 800,000,000 shares of common
stock, par value $.01 per share, and 10,000,000 shares of preferred stock, par
value $.01 per share. At the close of business on May 2, 2000:
- approximately 142,441,000 shares of common stock were issued and
outstanding;
- no shares of common stock were held in our treasury;
- approximately 147,000 shares of 13% preferred stock were issued and
outstanding;
- 1,000,000 shares of series A junior participating preferred stock, the
"rights preferred stock", were reserved for issuance pursuant to the
rights agreement;
- approximately 15,288,000 shares of common stock were reserved for
issuance pursuant to the conversion of the 7% convertible notes;
- approximately 11,092,000 shares of common stock were reserved for
issuance upon conversion of the 5 3/4% convertible notes;
- approximately 4,356,000 shares of common stock were reserved for issuance
upon the exercise of warrants;
- approximately 28,337,000 shares of common stock were reserved for
issuance pursuant to various employee and director stock options;
- 52,217 shares of 9.9% non-voting mandatorily redeemable preferred stock,
series B, the "9.9% preferred stock, series B", were issued and
outstanding;
- 750,000 shares of 5% convertible participating preferred stock, series A
were issued and outstanding;
- 5,000 shares of 5% convertible participating preferred stock, series C
were issued and outstanding;
- 9,437.5 shares of 5% convertible participating preferred stock, series D
were issued and outstanding;
- 9,555.47 shares of 5% convertible participating preferred stock, series E
were issued and outstanding, and together with the 5% convertible
participating preferred stock, series A, the 5% convertible participating
preferred stock, series C, and the 5% convertible participating preferred
stock, series D, are referred to as the 5% Preferred Stock, and
- 1,850,000 shares of 5% cumulative preferred stock, series A were issued
and outstanding.
COMMON STOCK
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of our stockholders and do not
have cumulative voting rights in the election of directors. Holders of common
stock are entitled to receive proportionately such dividends as may from time to
time be declared by our board of directors out of funds legally available for
the payment of dividends. In the event of our liquidation, dissolution or
winding up, holders of common stock would be entitled to share proportionately
in all of our assets available for distribution to holders of common stock
remaining after payment of liabilities and liquidation preference of any
outstanding preferred stock. Holders of common stock have no preemptive rights
and have no rights
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to convert their common stock into any other securities, and there are no
redemption provisions with respect to such shares.
PREFERRED STOCK
Our board of directors has the authority to issue preferred stock in one or
more series and to fix as to any series of preferred stock the designation,
title, voting powers and any other preferences, and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions, without any further vote or action by our stockholders.
13% Preferred Stock. The 13% preferred stock ranks prior to the common
stock, rights preferred stock, 9.9% preferred stock and 5% preferred stock with
respect to dividend rights and rights on liquidation, winding up and
dissolution, and each share of 13% preferred stock has a liquidation preference
of $1,000. Holders of shares of 13% preferred stock are entitled to receive,
when, as and if declared by our board of directors, quarterly dividends per
share at a rate of 13% per annum. Dividends accruing on or prior to February 15,
2004, may, at our option, be paid in cash, by issuing additional shares of 13%
preferred stock having an aggregate liquidation preference equal to the amount
of such dividends, or in any combination of cash and additional shares of
preferred stock. Dividends accruing after February 15, 2004 must be paid in
cash. We may redeem any or all of the 13% preferred stock on or after February
15, 2002 at declining redemption prices as set forth in the certificate of
designation with respect to the 13% preferred stock, plus accrued and unpaid
dividends to the date of redemption. We must redeem all outstanding shares of
13% preferred stock on February 15, 2009 at a price equal to 100% of the
liquidation preference of the 13% preferred stock, plus accrued and unpaid
dividends to the date of redemption.
Holders of 13% preferred stock have no general voting rights, except as
otherwise required under the DGCL and except in some circumstances as set forth
in the certificate of designation with respect to the 13% preferred stock
including:
- amending certain rights of the holders of the 13% preferred stock
- the issuance of any class of equity securities that ranks on a parity
with or senior to the 13% preferred stock, other than additional
shares of the 13% preferred stock issued instead of cash dividends or
parity securities issued to finance the redemption by us of the 13%
preferred stock.
In addition, if:
- dividends are in arrears for six quarterly periods (whether or not
consecutive) or
- we fail to make a mandatory redemption or an offer to purchase all of
the outstanding shares of 13% preferred stock following a 13%
preferred stock change of control triggering event, as defined in the
certificate of designation with respect to the 13% preferred stock,
as required or fail to pay pursuant to that redemption or offer,
- holders of a majority of the outstanding shares of 13% preferred
stock, voting as a class, will be entitled to elect two directors to
our board of directors.
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In the event of a 13% preferred stock change of control triggering event,
we will, subject to some conditions, offer to purchase all outstanding shares of
13% preferred stock at a purchase price equal to 101% of the liquidation
preference of the 13% preferred stock, plus accrued and unpaid dividends to the
date of purchase. Moreover, in the event of a 13% preferred stock change of
control call event, as defined in the certificate of designation with respect to
the 13% preferred stock, we will have the option to redeem all of the
outstanding shares of 13% preferred stock at a redemption price equal to 100% of
the liquidation preference of the 13% preferred stock plus the applicable
premium and accrued and unpaid dividends to the date of repurchase.
On any scheduled dividend payment date, we may, at our option, exchange
all, but not less than all, of the shares of 13% preferred stock then
outstanding into our 13% series B subordinated exchange debentures due 2009.
9.9% preferred stock, series B. The 9.9% preferred stock, series B ranks
prior to the common stock and the rights preferred stock with respect to
dividend rights and rights on liquidation, winding up and dissolution, and each
share of 9.9% preferred stock, series B has a liquidation preference of $1,000
per share. Holders of shares of 9.9% preferred stock, series B are entitled to
receive, when, as and if declared by our board of directors, dividends at a rate
of 9.9% per annum of the stated value of $1,000. Dividends are payable on the
9.9% preferred stock, series B on the date that the 9.9% preferred stock, series
B is redeemed. Dividends may, at our option, be paid in cash, by issuing shares
of common stock, or in any combination of cash and common stock. We may redeem
any or all of the 9.9% preferred stock, series B at any time at a redemption
price equal to $1,000 per share, plus accrued and unpaid dividends to the date
of redemption. We must redeem all outstanding shares of 9.9% preferred stock,
series B on December 21, 2008 at a redemption price equal to $1,000 per share,
plus accrued and unpaid dividends to the date of redemption. If we have not
exercised our right to optionally redeem the 9.9% preferred stock, series B by
June 15, 2000, we shall mandatorily redeem all of the outstanding shares of 9.9%
preferred stock, series B at a redemption price equal to $1,000 per share plus
accrued and unpaid dividends to the date of redemption. We must also redeem all
outstanding shares of 9.9% preferred stock, series B in the event of a
reorganization, as defined in the certificate of designation with respect to the
9.9% preferred stock, series B, subject to some exceptions. We, at our option,
may effect the mandatory redemption of the 9.9% preferred stock, series B in
cash, in exchange for shares of common stock, or in any combination of cash and
common stock.
Holders of the 9.9% preferred stock, series B have no general voting
rights, except as otherwise required under the DGCL and except in some
circumstances as set forth in the certificate of designation with respect to the
9.9% preferred stock, series B, including amending certain rights to the holders
of the 9.9% preferred stock, series B.
5% convertible preferred stock. The 5% preferred stock ranks prior to the
common stock, the rights preferred stock, and the 9.9% preferred stock, series
B, and junior only to the 13% preferred stock with respect to dividend rights
and rights on liquidation, winding up and dissolution, and each share of 5%
preferred stock has a liquidation preference of $1,000, plus any accrued and
unpaid dividends. Holders of shares of 5%
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preferred stock are entitled to receive, when, as and if declared by our board
of directors quarterly dividends per share at a rate of 5% per annum. Dividends
may be paid, at our option, either in
- cash,
- common stock or
- additional shares of preferred stock having terms substantially
similar to the series of 5% preferred stock upon which the additional
shares of preferred stock are issued as a dividend, except that the
conversion rate of such additional preferred shall be increased for
each dividend payment date after the first dividend payment date by a
compounding factor set forth in the certificate of designations with
respect to the 5% preferred stock.
We may redeem any or all of the 5% preferred stock on the earlier of
- seven years from the issue date and
- that date when the common stock has for a period of over 25 trading
days traded at a value over $120 per share, at our option, for either
(A) cash in an amount of $1,000 per share of 5% preferred stock,
plus accrued and unpaid dividends,
(B) common stock valued at $1,025 per share of 5% preferred
stock, plus accrued and unpaid dividends, in the case of a
redemption occurring at the earliest, seven years from the
issue date,
(C) common stock valued at $1,000 per share of 5% preferred
stock, plus accrued and unpaid dividends, in the case of a
redemption due to the trading value of the common stock over
a 25-day period, or
(D) any combination of cash and common stock at a redemption
price based on the respective combination of the
consideration.
Holders of shares of 5% preferred stock have the option to require us to
redeem all outstanding shares of 5% preferred stock on and after August 13,
2009, at a price equal to 100% of the liquidation preference thereof, payable in
cash, common stock, or any combination thereof.
We must redeem all shares of 5% preferred stock that remain outstanding on
the twentieth anniversary of the issue date at a redemption price equal to
$1,000 per share, payable at our option in cash, common stock or any combination
of cash and common stock, plus accrued and unpaid dividends.
Holders of shares of 5% preferred stock have no general voting rights,
except as otherwise required by law and except in some circumstances as set
forth in the certificate of designation, including:
- if dividends on the preferred stock are in arrears for six quarterly
periods (whether or not consecutive);
- if NTL fails to honor a redemption request made upon the occurrence
of a mandatory redemption event;
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- if NTL files for voluntary bankruptcy or if an involuntary petition
is filed against NTL;
- for purposes of amending the certificate of incorporation in a way
that adversely affects the rights of the holders of shares of 5%
preferred stock; or
- to approve the issuance of any equity securities that rank on parity
with or senior to the 5% preferred stock or to increase the
authorized amounts of any such other class or series, other than
shares of additional NTL preferred stock issued as dividends or to
refinance, redeem or refund the 13% preferred stock or the 5 1/4%
preferred stock provided that the maximum accrual value of such
securities may not exceed the maximum accrual value of the 13%
preferred stock or the 5 1/4% preferred stock, respectively.
Holders of shares of the 5% preferred stock, voting separately as a class,
will have the right to elect one director to serve on our board in accordance
with the certificate of designation, so long as France Telecom or any of its
affiliates holds at least one share of the 5% preferred stock and is also the
holder of at least 75% of its initial investment in NTL on a common stock
equivalent basis.
Holders of shares of 5% preferred stock have the right, at any time and
from time to time, to convert any or all outstanding shares of 5% preferred
stock held by them (but not any fractional shares) into common stock, such that
each share of the 5% preferred stock is convertible into 10 shares of common
stock, subject to adjustment in accordance with the certificate of designation.
5% cumulative preferred stock. On February 17, 2000, NTL, France Telecom,
and a group of commercial banks, referred to as the Banks, consisting of Banque
Nationale de Paris, Credit Agricole Indosuez, Deutsche Bank AG and Westdeutsche
Landesbank Girozentrale, entered into an arrangement involving the issuance of
1,850,000 shares of 5% cumulative preferred stock, series A, par value $0.01 per
share. Of the 1,850,000 shares of the 5% cumulative preferred stock being issued
under this arrangement, 750,000 shares were sold to France Telecom.
The 5% cumulative preferred stock ranks prior to the common stock, rights
preferred and 9.9% preferred stock with respect to dividend rights and rights on
liquidation, winding up and dissolution, equal to the 5% convertible preferred
stock and junior to the 13% preferred stock. Each share of 5% cumulative
preferred stock has a liquidation preference of $1,000. Holders of 5% cumulative
preferred stock are entitled to receive, when, as and if declared by our board
of directors, quarterly dividends at the rate of 5% per annum. Dividends may, at
our option, be paid by issuing additional shares of 5% cumulative preferred
stock having a liquidation preference equal to the amount of such dividends, or
in any combination of cash and additional shares of 5% cumulative preferred
stock. Under the arrangement, at the option of the holder, the 5% cumulative
preferred stock is mandatorily redeemable for cash on and after the second
anniversary of the issuance. Any holder of the 5% cumulative preferred stock,
other than a commercial bank or its affiliate, has a right, exercisable at any
time after the 5% cumulative preferred stock shall have been outstanding for six
months and subject to certain conditions, to exchange shares of 5% cumulative
preferred stock for shares of
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<PAGE> 51
Eurotel Stock, having a value equal to the redemption price together with any
accrued and unpaid dividends. "Eurotel Stock" is defined as capital stock of a
direct or indirect wholly-owned subsidiary of NTL, which entity owns all of the
outstanding capital stock of entities that are primarily engaged in the
broadband communications, broadcasting and cable television business in
Continental Europe outside of France.
If at the time of any exchange of all of the 5% cumulative preferred stock,
the Eurotel Stock acquired as a result of such exchange does not constitute 50%
of the outstanding shares of Eurotel Stock, any holder of the 5% cumulative
preferred stock, other than a commercial bank or its affiliate, may, subject to
certain conditions, acquire from NTL an additional amount of Eurotel Stock for
cash, at the same value per share as applicable to the exchange, such that the
total holding in Eurotel Stock of the holders of 5% cumulative preferred stock,
other than a commercial bank or its affiliate, shall equal 50% of the
outstanding shares of Eurotel Stock. The maximum amount of Eurotel Stock that
may be acquired upon an exchange shall be 50% of the outstanding amount of
Eurotel Stock.
On and after the date that is the earlier of (1) the second anniversary of
the issue date of the 5% cumulative preferred stock or (2) the date of an
exchange for Eurotel Stock, NTL has the right to redeem the outstanding 5%
cumulative preferred stock, in part or in whole, from any holder of the 5%
cumulative preferred stock, other than a commercial bank or its affiliate, for
cash at the redemption price together with any accrued and unpaid dividends. Any
time after a period of six months from an exchange for Eurotel Stock, any holder
of 5% cumulative preferred stock, other than a commercial bank or its affiliate,
at the holder's option and subject to certain conditions, is entitled to convert
any or all of the shares of 5% cumulative preferred stock that remain
outstanding after the exchange for Eurotel Stock into fully paid and
non-assessable shares of NTL common stock together with any accrued and unpaid
dividends. The rate of conversion is calculated and is subject to adjustment
according to the formulas described in the form of certificate of designation
that sets forth the terms of the 5% cumulative preferred stock.
Under separate arrangements, NTL and France Telecom have agreed to certain
corporate governance arrangements relating to the Eurotel entity in the event
the 5% cumulative preferred stock is exchanged for shares of Eurotel Stock.
Contemporaneously with the execution of the purchase agreement described
above, France Telecom and the Banks entered into a put and call option agreement
with respect to the shares of 5% cumulative preferred stock that were proposed
to be sold to them by NTL. The put and call option agreement generally provides
that (1) France Telecom will have the right exercisable at any time following
the issue date but no later than five business days before the second
anniversary of the issue date to purchase the 5% cumulative preferred stock held
by the Banks and (2) the Banks will also have the right in certain circumstances
to require France Telecom to acquire their shares of 5% cumulative preferred
stock.
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SPECIAL CHARTER PROVISIONS
Our certificate of incorporation, which we refer to as the "charter",
contains the provisions described below. Those charter provisions may have the
effect, alone or in combination with each other or with the existence of
authorized but unissued common stock and any series of preferred stock, of
precluding or rendering more difficult a hostile takeover making it more
difficult to remove or change the composition of our incumbent board of
directors and its officers, being adverse to stockholders who desire to
participate in a tender offer and depriving stockholders of possible
opportunities to sell their shares at temporarily higher prices.
Classified board and filling of vacancies on the board of directors. The
charter provides that the directors shall be divided into three classes, each of
which shall serve a staggered three-year term, and that vacancies on our board
of directors that may occur between annual meetings may be filled by our board
of directors. In addition, this provision specifies that any director elected to
fill a vacancy on our board of directors will serve for the balance of the term
of the replaced director.
Removal of directors. The charter provides that directors can be removed
only by the stockholders for cause and then only by the affirmative vote of the
holders of not less than two-thirds of our combined voting power.
Voting requirement for certain business combinations. The charter also
provides that, in addition to any affirmative vote required by law, the
affirmative vote of holders of two-thirds of our voting power shall be necessary
to approve any "business combination", as defined below, proposed by an
"interested stockholder", as defined below. The additional voting requirements
will not apply, however, if:
- the business combination was approved by not less than a majority of
the continuing directors or
- a series of conditions are satisfied requiring, in summary, the
following:
(A) that the consideration to be paid to our stockholders in the
business combination must be at least equal to the higher of
(1) the highest per-share price paid by the interested
stockholder in acquiring any shares of common stock
during the two years prior to the announcement date of
the business combination or in the transaction in which
it became an interested stockholder, such date is
referred to herein as the "determination date",
whichever is higher or
(2) the fair market value per share of common stock on the
announcement date or determination date, whichever is
higher, in either case appropriately adjusted for any
stock dividend, stock split, combination of shares or
similar event (non-cash consideration is treated
similarly) and
(B) various "procedural" requirements are complied with, such as
the consent solicitation of proxies pursuant to the rules of
the SEC and no decrease in regular dividends, if any, after
the interested
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<PAGE> 53
stockholder became an interested stockholder (except as
approved by a majority of the continuing directors).
An "interested stockholder" is defined as anyone who is the beneficial
owner of more than 15% of the voting power of the voting stock, other than NTL
and any employee stock plans sponsored by us, and includes any person who is an
assignee of or has succeeded to any shares of voting stock in a transaction not
involving a public offering that were at any time within the prior two-year
period beneficially owned by an interested stockholder. The term "beneficial
owner" includes persons directly and indirectly owning or having the right to
acquire or vote the stock. Interested stockholders participate fully in all
stockholder voting.
A "business combination" includes the following transactions:
- merger or consolidation of us or any subsidiary of ours with an
interested stockholder or with any other corporation or entity which
is, or after such merger or consolidation would be, an affiliate of
an interested stockholder;
- the sale or other disposition by us or a subsidiary of ours of assets
having a fair market value of $5,000,000 or more if an interested
stockholder (or an affiliate thereof) is a party to the transaction;
- the adoption of any plan or proposal for our liquidation or
dissolution proposed by or on behalf of an interested stockholder (or
an affiliate of an interested stockholder); or
- any reclassification of securities, recapitalization, merger with a
subsidiary, or other transaction which has the effect, directly or
indirectly, of increasing the proportionate share of any class of our
outstanding stock (or securities convertible into stock) or a
subsidiary owned by an interested stockholder (or an affiliate of an
interested stockholder).
Determinations of the fair market value of non-cash consideration are made
by a majority of the continuing directors.
The term "continuing directors" means any member of our board of directors,
while that person is a member of our board of directors, who is not an affiliate
or associate or representative of the interested stockholder and was a member of
our board of directors prior to the time that the interested stockholder became
an interested stockholder, and any successor of a continuing director while that
successor is a member of the our board of directors, who is not an affiliate or
associate or representative of the interested stockholder and is recommended or
elected to succeed the continuing director by a majority of continuing
directors.
Voting requirements for certain amendments to the charter. The charter
provides that the provisions set forth in this section under the heading
"Special Charter Provisions" may not be repealed or amended in any respect,
unless that action is approved by the affirmative vote of the holders of not
less than two-thirds of our voting power. The requirement of an increased
stockholder vote is designed to prevent a stockholder who controls a majority of
our voting power from avoiding the requirements of the provisions discussed
above by simply amending or repealing such provisions.
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SECTION 203 OF THE DGCL
Generally, Section 203 of the DGCL prohibits a publicly held Delaware
corporation from engaging in any business combination with an interested
stockholder for a period of three years following the time that such stockholder
becomes an interested stockholder, unless
- prior to such time either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder
is approved by the board of directors of the corporation,
- upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding, for
purposes of determining the number of shares outstanding, those
shares held by persons who are both directors and officers and
certain employee stock plans or
- at or after such time the business combination is approved by the
board and authorized at an annual or special meeting of stockholders,
and not by written consent, by the affirmative vote of at least
two-thirds of the outstanding voting stock which is not owned by the
interested stockholder. A business combination includes certain
mergers, consolidations, asset sales, transfers and other
transactions resulting in a financial benefit to the interested
stockholder. An interested stockholder is a person who, together with
affiliates and associates, owns (or within the preceding three years,
did own) 15% or more of the corporation's voting stock.
TRANSFER AGENT AND REGISTRAR
Our transfer agent and registrar for the common stock is Continental Stock
Transfer & Trust Company.
RIGHTS AGREEMENT
On August 27, 1993, our board of directors adopted a rights agreement. The
rights agreement provides that .48 of a right will be issued with each share of
common stock issued, whether originally issued or from our treasury, on or after
October 13, 1993 and prior to the rights distribution date, which we define
below. The rights are not exercisable until the rights distribution date and
will expire at the close of business on October 13, 2003 unless previously
redeemed by us as described below. When exercisable, each right entitles the
owner to purchase from us one one-hundredth of a share of rights preferred stock
at a purchase price of $100.00.
Except as described below, the rights will be evidenced by the common stock
certificates. The rights will separate from the common stock and a "rights
distribution date" will occur upon the earlier of
(1) 10 days following a public announcement that a person or group of
affiliated or associated persons, an "acquiring person", has
acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the outstanding shares of the common stock, the
"stock acquisition date", and
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(2) 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an
acquiring person.
After the rights distribution date, rights certificates will be mailed to
holders of record of the common stock as of the rights distribution date and
after that time the separate rights certificates alone will represent the
rights.
The rights preferred stock issuable upon exercise of the rights will be
entitled to a minimum preferential quarterly dividend payment of $0.01 per share
and will be entitled to an aggregate dividend of 208.33 times the dividend, if
any, declared per share of common stock other than one payable in common stock.
In the event of liquidation, the holders of the rights preferred stock will be
entitled to a minimum preferential liquidation payment of $1.00 per share plus
accrued and unpaid dividends and will be entitled to an aggregate payment of
208.33 times the payment made per share of the common stock. Each share of
rights preferred stock will have 208.33 votes and will vote together with the
common stock. In the event of any merger, consolidation or other transaction in
which shares of the common stock are changed or exchanged, each share of rights
preferred stock will be entitled to receive 208.33 times the amount received per
share of the common stock. These rights are protected by customary antidilution
provisions. Because of the nature of the rights preferred stock's dividend,
liquidation and voting rights, the value of one one-hundredth of a share of
rights preferred stock purchasable upon exercise of each right should
approximate the value of one share of the common stock.
In the event that a person becomes an acquiring person (except pursuant to
a tender offer or an exchange offer for all outstanding shares of common stock
at a price and on terms determined by at least a majority of the members of our
board of directors who are not our officers and who are not representatives,
nominees, affiliates or associates of an acquiring person, to be fair to our
stockholders and otherwise in our best interests and the best interests of our
stockholders, a "qualifying offer"), each holder of a right will after that time
have the right to receive, upon the exercise of that right at the then current
exercise price, the common stock (or, in some circumstances, cash, property or
other of our securities) having a value equal to two times the exercise price of
the right. Notwithstanding any of the foregoing, following the occurrence of any
such event, all rights that are or (under some circumstances specified in the
rights agreement) were beneficially owned by any acquiring person (or related
parties) will be null and void. However, rights are not exercisable following
the occurrence of the event set forth above until such time as the rights are no
longer redeemable by us as set forth below.
In the event that, at any time following the stock acquisition date,
(1) we are acquired in a merger or other business combination
transaction in which we are not the surviving corporation or the
common stock is changed or exchanged (other than a merger which
follows a qualifying offer and satisfies certain other
requirements) or
(2) 50% or more of our assets, cash flow or earning power is sold or
transferred, each holder of a right (except rights which previously
have
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been voided as set forth above) shall after that time have the
right to receive, upon the exercise thereof at the then current
exercise price, common stock of the acquiring company having a
value equal to two times the exercise price of the right.
At any time until 10 days following the stock acquisition date, we may
redeem the right in whole, but not in part, at a price of $0.01 per right.
Immediately upon the action of our board of directors ordering redemption of the
rights, the rights will terminate and the only right of the holders of the
rights will be to receive the $0.01 redemption price.
Until a right is exercised, the holder of a right, as such, shall have no
rights as our stockholder, including without limitation, the right to vote or to
receive dividends. While the distribution of the rights will not be taxable to
stockholders or to us, stockholders may, depending upon the circumstances,
recognize taxable income in the event that the rights become exercisable for the
common stock (or other consideration) or for common stock of the acquiring
company as set forth above.
Other than those provisions relating to the principal terms of the rights,
any of the provisions of the rights agreement may be amended by our board of
directors prior to the rights distribution date. After the rights distribution
date, the provisions of the rights agreement may be amended by our board of
directors in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of rights (excluding the interests of any
acquiring person) or to shorten or lengthen any time period under the rights
agreement, provided that no amendment to adjust the time period governing
redemption shall be made at such time as the rights are not redeemable.
On March 31, 1999, in connection with a holding company merger that we
entered into with other affiliated parties, the rights agreement was amended to
provide that NTL would assume the obligations of the rights agreement from the
predecessor to NTL. On October 23, 1999, in connection with the acquisition by
France Telecom of shares of common stock from certain existing holders of common
stock, we amended the rights agreement so that such acquisition of our common
stock when aggregated with France Telecom's and its affiliate's holdings of
shares of our common stock as of such date would not result in France Telecom
becoming an acquiring person. The rights agreement remained in full force and
effect after each amendment and otherwise was unaffected.
The rights have anti-takeover effects as they will cause substantial
dilution to a person or group that acquires a substantial interest in us without
the prior approval of our board of directors. The effect of the rights may be to
inhibit a change in control of NTL (including through a third party tender offer
at a price which reflects a premium to then prevailing trading prices) that may
be beneficial to our stockholders.
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UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of selected anticipated U.S. federal income
tax consequences of the purchase, ownership and disposition of the convertible
notes as of the date of this prospectus. It deals only with convertible notes
held as capital assets by initial holders, and does not deal with special
situations including those that may apply to a particular holder such as exempt
organizations, dealers in securities, financial institutions, insurance
companies, persons who are not U.S. holders, and holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to straddle or
"hedging transactions." The federal income tax considerations set forth below
are based upon the Internal Revenue Code of 1986, as amended and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified (possibly retroactively) so as
to result in federal income tax consequences different from those discussed
below. As used herein, the term "U.S. holder" means a beneficial owner of a
convertible note that is for United States federal income tax purposes
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision
thereof,
(3) an estate or trust, described in Section 7701(a)(30) of the
Internal Revenue Code, or
(4) a person whose worldwide income or gain is otherwise subject to
United States federal income taxation on a net income basis.
Prospective investors are urged to consult their tax advisors regarding the
particular tax consequences of purchasing, holding and disposing of the
convertible notes or our common stock, including the tax consequences arising
under any state, local or foreign laws.
Payments of interest on convertible notes generally will be taxable to U.S.
Holders as ordinary interest income at the time such payments are accrued or
received (in accordance with the U.S. holder's method of accounting for federal
income tax purposes).
A U.S. holder will not recognize gain or loss upon conversion of the
convertible notes solely into our common stock (except with respect to cash
received in lieu of fractional shares, or any amounts attributable to accrued
and unpaid interest on the convertible notes, which will be treated as interest
for federal income tax purposes). The U.S. holder's basis in the common stock
received on conversion will be the same as such holder's adjusted tax basis in
the convertible notes at the time of conversion, and the holding period for the
common stock received on conversion will include the holding period of the
convertible notes that were converted.
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A U.S. holder will recognize gain or loss upon the sale, redemption or
other taxable disposition of the convertible notes in an amount equal to the
difference between such holder's adjusted tax basis in the convertible note and
the amount received therefor (other than amounts attributable to accrued and
unpaid interest on the convertible notes, which will be treated as interest for
federal income tax purposes). Such gain or loss generally will be long-term
capital gain or loss if the convertible notes were held for more than one year.
The conversion price of the convertible notes is subject to adjustment
under certain circumstances. Under Section 305 of the Internal Revenue Code and
the Treasury Regulations issued thereunder, adjustments or the failure to make
such adjustments to the conversion price of the convertible notes may result in
a taxable constructive distribution to U.S. holders of convertible notes,
resulting in ordinary income (subject to a possible dividends received deduction
in the case of corporate holders) to the extent of our current and accumulated
earnings and profits if, and to the extent that, certain adjustments in the
conversion price that may occur in limited circumstances (particularly an
adjustment to reflect a taxable dividend to holders of our common stock)
increase the proportionate interest of a U.S. holder of a convertible note
convertible into fully diluted common stock, whether or not the holders ever
convert the convertible notes. Generally, a U.S. holder's tax basis in a
convertible note will be increased by the amount of any such constructive
dividend.
We intend to take the position that the likelihood of paying Liquidated
Damages described under "Description of Convertible Notes -- Registration
Rights" is remote and that Liquidated Damages, if paid, would be taxable to a
U.S. holder of convertible notes as ordinary interest income in accordance with
such holder's method of accounting for income tax purposes. The Internal Revenue
Service may take a different position, however, which could affect the timing to
the U.S. holder's income with respect to Liquidated Damages.
The preceding discussion of certain United States federal income tax
consequences is for general information only and is not tax advice. Accordingly,
each investor should consult its own tax adviser as to particular tax
consequences to it of purchasing, holding, and disposing of the convertible
notes and our common stock, including the applicability and effect of any state,
local or foreign tax laws, and of any proposed changes in applicable laws.
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SELLING SECURITYHOLDERS
The following table sets forth, as of May 5, 2000, the respective principal
amount of convertible notes beneficially owned and offered hereby by each
selling securityholder, the common stock owned by each selling securityholder
and the common stock issuable upon conversion of such convertible notes, which
may be sold from time to time by such selling securityholder pursuant to this
prospectus. Such information has been obtained from the selling securityholders.
The shares of common stock to be registered by this prospectus are
calculated on an "as converted" basis using the conversion rate in effect on the
date of this prospectus of 9.2435 shares of common stock per $1,000 principal
amount of convertible notes.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CONVERTIBLE NOTES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE REGISTERED BY
OWNED AND OFFERED OUTSTANDING OWNED PRIOR TO THIS PROSPECTUS
SELLING SECURITY HOLDERS BY THIS PROSPECTUS CONVERTIBLE NOTES ORIGINAL OFFERING (1)
- ------------------------ ------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
AIG SoundShore Opportunity Holding
Fund Ltd. ....................... 2,750,000 * -- 25,419.63
AIG SoundShore Strategic Holding
Fund Ltd. ....................... 2,500,000 * -- 23,108.75
AIM Balanced Fund.................. 11,700,000 * -- 108,148
AIM Constellation Fund............. 55,000,000 4.58 -- 508,392
AIM Global Infrastructure Fund..... 420,000 * -- 3,882
AST AIM Balanced Fund.............. 1,900,000 * -- 17,563
AIM Global Utilities Fund.......... 3,000,000 * -- 27,730
AIM VI Balanced Fund............... 200,000 * -- 1,848
AIM VI Global Utilities Fund....... 310,000 * -- 2,865
Allstate Insurance Company......... 6,500,000 * -- 60,082
Argent Classic Convertible
Arbitrage Fund (Bermuda) L.P..... 1,500,000 * -- 13,865
Bank Austria Cayman Island, Ltd.... 1,000,000 * -- 9,243
BNP Arbitrage SNC.................. 7,500,000 * -- 69,326
Chrysler Corporation Master
Retirement Trust................. 5,340,000 * -- 49,360
Delta Air Lines Master Trust....... 1,665,000 * -- 15,390
Donaldson, Lufkin & Jenrette
Securities Corporation........... 3,031,000 * -- 28,017.05
Grace Brothers, Ltd................ 1,000,000 * -- 9,243
JMG Capital Partners, LP........... 11,288,000 * -- 104,340
Morgan Stanley Dean Witter......... 25,000,000 2.1 -- 231,087
Motion Picture Industry Health Plan
- Active Member Fund............. 625,000 * -- 5,777
Motion Picture Industry Health Plan
- Retiree Member Fund............ 315,000 * -- 2,911
OCM Convertible Trust.............. 2,700,000 * -- 24,957
Partner Reinsurance Company Ltd.... 1,155,000 * -- 10,676
State Employees' Retirement Fund of
the State of Delaware............ 2,715,000 * -- 25,096
TQA Master Plus Fund............... 2,000,000 * -- 18,487
Vanguard Convertible Notes Fund,
Inc.............................. 5,895,000 * -- 54,490
Wasserstein Perella Securities,
Inc.............................. 2,000,000 * -- 18,487
</TABLE>
- ---------------
* Less than one percent.
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None of the selling securityholders listed above has, or within the past
three years has had, any position, office or other material relationship with us
or any of our predecessors or affiliates. Because the selling securityholders
may offer all or some portion of the above referenced securities pursuant to
this prospectus or otherwise, no estimate can be given as to the amount or
percentage of such securities that will be held by the selling securityholders
upon termination of any such sale. In addition, the selling securityholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of such securities since May 5, 2000 in transactions exempt from the
registration requirements of the Securities Act. The selling securityholders may
sell all, part or none of the securities listed above.
Generally, only selling securityholders identified in the foregoing table
who beneficially own the offered securities set forth opposite their respective
names may sell such offered securities pursuant to the registration statement,
of which this prospectus forms a part. We may from time to time include
additional selling securityholders in supplements to this prospectus.
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PLAN OF DISTRIBUTION
The offered securities are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this prospectus. NTL will not receive any of the proceeds from the sale
by the selling securityholders of the offered securities. NTL will bear all fees
and expenses incident to its obligation to register the offered securities.
The selling securityholders may sell all or a portion of the offered
securities beneficially owned by them and offered hereby from time to time
directly through one or more underwriters, broker-dealers or agents. If the
offered securities are sold through underwriters or broker-dealers, the selling
securityholder will be responsible for underwriting discounts or commissions or
agent's commissions. Such offered securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
Such sales may be effected in transactions (which may involve crosses or block
transactions)
(1) on any national securities exchange or quotation service on which
the offered securities may be listed or quoted at the time of sale
(including the Nasdaq National Market for the common stock),
(2) in the over-the-counter market, or
(3) through the writing of options (whether such options are listed on
an options exchange or otherwise).
In connection with sales of the offered securities or otherwise, the
selling securityholder may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the offered securities in the course
of hedging in positions they assume. The selling securityholder may also sell
offered securities short and deliver offered securities to close out short
positions, or loan or pledge offered securities to broker-dealers that in turn
may sell such offered securities. If the selling securityholders effect such
transactions by selling offered securities to or through underwriters, broker-
dealers or agents, such underwriters, brokers, dealers or agents may receive
commissions in the form of discounts, concessions or commissions from the
selling securityholders or commissions from purchasers of offered securities for
whom they may act as agent or to whom they may sell as principal (which
discounts, concessions or commissions as to particular underwriters,
brokers-dealers or agents may be in excess of those customary in the types of
transactions involved).
The outstanding common stock of NTL is listed for trading on the Nasdaq
National Market under the symbol "NTLI." We do not intend to apply for listing
of the convertible notes on any securities exchange except for the Luxembourg
Stock Exchange or for quotation through the National Association of Securities
Dealers Automated Quotation System. Accordingly, no assurance can be given as to
the development of liquidity or any trading market for the convertible notes.
See "Risk Factors--Lack of public market for the convertible notes."
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The selling securityholders and any broker-dealer participating in the
distribution of the offered securities may be deemed to be "underwriters" within
the meaning of the Securities Act, and any commissions paid, or any discounts or
concessions allowed to any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.
Under the securities laws of certain states, the offered securities may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in certain states the offered securities may not be sold unless the
offered securities have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling securityholder will sell any or
all of the convertible notes or offered securities registered pursuant to the
shelf registration statement, or which this prospectus forms a part. In
addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any
of the offered securities by the selling securityholders and any other such
person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of the offered securities to engage in market-making
activities with respect to the particular offered securities being distributed.
All of the foregoing may affect the marketability of the offered securities and
the ability of any person or entity to engage in market-making activities with
respect to the offered securities.
All expenses of the registration of the convertible notes and common stock
pursuant to the registration rights agreement will be paid by NTL, including,
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the selling
securityholders will pay all underwriting discounts and selling commissions, if
any. The selling securityholders will be indemnified by NTL against certain
civil liabilities, including certain liabilities under the Securities Act, or
will be entitled to contribution in connection therewith. The company will be
indemnified by the selling securityholders against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
Upon sale pursuant to the shelf registration statement, of which this
prospectus forms a part, the offered securities will be freely tradable in the
hands of persons other than affiliates of NTL.
59
<PAGE> 63
LEGAL MATTERS
The validity of the issuance of the convertible notes and the common stock
issuable upon conversion of the convertible notes will be passed upon for NTL
Incorporated by Skadden, Arps, Slate, Meagher & Flom LLP, London, England,
special counsel for NTL Incorporated.
EXPERTS
The consolidated financial statements and schedules of NTL Incorporated
appearing in NTL Incorporated's Annual Report (Form 10-K) for the year ended
December 31, 1999 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The combined financial statements of CWC ConsumerCo as of March 31, 1998
and 1999 and for the three years ended March 31, 1999 incorporated by reference
in this prospectus have been audited by Arthur Andersen, Chartered Accountants,
as indicated in their report, and are incorporated by reference in this
prospectus in reliance upon the report of said firm as experts in giving said
report.
The consolidated financial statements of Cablecom Holding AG as of December
31, 1998 and 1997 and for each of the two years in the period ended December 31,
1998 included in this prospectus have been so included in reliance on the report
of PricewaterhouseCoopers AG, independent accountants, given on the said
authority of said firm as experts in auditing and accounting.
ENFORCEABILITY OF CIVIL LIABILITIES
A substantial majority of our assets are located outside the United States.
As a result, it may not be possible for you to realize in the United States upon
judgments of courts of the United States predicated upon the civil liability
under the federal securities laws of the United States. The United States and
England do not currently have a treaty providing for the reciprocal recognition
and enforcement of judgments, other than arbitration awards, in civil and
commercial matters. Therefore, a final judgment for the payment of a fixed debt
or sum of money rendered by any United States court based on civil liability,
whether or not predicated solely upon the United States federal securities laws,
would not automatically be enforceable in England. In order to enforce in
England a United States judgment, proceedings must be initiated by way of common
law action before a court of competent jurisdiction in England. An English court
will, subject to what is said below, normally order summary judgment on the
basis that there is no defense to the claim for payment and will not
reinvestigate the merits of the original dispute. In such an action, an English
court will treat the United States judgment as creating a valid debt upon which
the judgment creditor could bring an action for payment, as long as
(1) the United States court had jurisdiction over the original proceeding,
60
<PAGE> 64
(2) the judgment is final and conclusive on the merits,
(3) the judgment does not contravene English public policy,
(4) the judgment must not be for a tax, penalty or a judgment arrived at by
doubling, trebling or otherwise multiplying a sum assessed as
compensation for the loss or damage sustained and
(5) the judgment has not been obtained by fraud or in breach of the
principles of natural justice.
Based on the foregoing, there can be no assurance that you will be able to
enforce in England judgments in civil and commercial matters obtained in any
United States court. There is doubt as to whether an English court would impose
civil liability in an original action predicated solely upon the United States
federal securities laws brought in a court of competent jurisdiction in England.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We are currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended. We file reports, proxy statements,
information statements and other information with the Commission under the
Exchange Act. You can inspect and copy any reports, proxy statements,
information statements and other information we file with the Commission at the
public reference facilities the Commission maintains at:
Room 1024, Judiciary Plaza,
450 Fifth Street, N.W.,
Washington, D.C. 20549,
and at the Commission's Regional Offices located at:
Suite 1400, Northwestern Atrium Center,
500 West Madison Street,
Chicago, Illinois 60661
and
13th Floor, Seven World Trade Center,
New York, New York 10048,
and you may also obtain copies of such material by mail from the Public
Reference Section of the Commission at:
450 Fifth Street, N.W.,
Washington, D.C. 20549,
at prescribed rates.
The Commission also maintains a site on the World Wide Web, the address of
which is http://www.sec.gov. That site also contains our reports, proxy and
information statements and other information. Reports, proxy statements and
other information
61
<PAGE> 65
concerning the Company may also be inspected at the offices of the Nasdaq Stock
Market, Reports Section, at:
1735 K Street, N.W.,
Washington, D.C. 20006.
This prospectus is part of a registration statement filed by us with the
Commission. It does not contain all the information included or incorporated in
the registration statement. The full registration statement can be obtained from
the Commission as indicated above or from us.
The Commission allows us to incorporate by reference some information about
NTL Incorporated that we file with the Commission. This allows us to disclose
important information to you by referencing those filed documents. Any
information that we reference this way is considered part of this prospectus.
The following documents filed by us with the Commission are incorporated by
reference into this prospectus:
(a) NTL Incorporated's Annual Report on Form 10-K for the year ended
December 31, 1999, dated March 17, 2000;
(b) NTL Incorporated's Current Reports on Form 8-K dated
January 6, 2000 (filed January 21, 2000),
January 25, 2000 (filed January 25, 2000),
February 4, 2000 (filed February 10, 2000),
February 15, 2000 (filed February 16, 2000),
February 17, 2000 (filed February 22, 2000), and
March 16, 2000 (filed March 29, 2000),
April 27, 2000 (filed April 27, 2000), and
May 4, 2000 (filed May 4, 2000).
(c) NTL Communications' Form 8-B dated October 14, 1993 (filed on
October 18, 1993), with a description of the common stock and
associated rights;
(d) NTL Incorporated's Proxy Statement on Schedule 14A dated February
11, 2000; and
(e) NTL Incorporated's Definitive Proxy Statement on Schedule 14A dated
April 27, 2000.
We are incorporating by reference the documents listed above and any
current reports and proxy statements we file with the commission until the end
of the exchange offer. Any information incorporated by reference this way will
automatically be deemed to update and supersede this information.
62
<PAGE> 66
We will provide you without charge on your request, a copy of any or all
documents which are incorporated by reference to this prospectus, except for
exhibits which are specifically incorporated by reference into those documents.
You should make your request in writing or by telephone to:
NTL Incorporated
110 East 59th Street
26th Floor
New York NY 10022
Attention: Richard J. Lubasch
Tel: (212) 906-8440
Copies of these documents will be available if and so long as any
convertible notes are listed on the Luxembourg Stock Exchange at the specified
office of the listing agent in Luxembourg.
63
<PAGE> 67
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[NTL LOGO]
NTL INCORPORATED
5 3/4% CONVERTIBLE
SUBORDINATED NOTES
DUE 2009
COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the offering.
<TABLE>
<S> <C>
SEC registration fee........................................ $316,800.00
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Printing and engraving fees................................. *
Miscellaneous expenses...................................... *
-----------
Total.................................................... $ *
===========
</TABLE>
- ---------------
(*) To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102 of the Delaware General Corporation Law (the
"DGCL"), the Registrant's Certificate of Incorporation eliminates a director's
personal liability for monetary damages to the Company and its stockholders
arising from a breach or alleged breach of a director's fiduciary duty except
for liability under Section 174 of the DGCL or liability for a breach of the
director's duty of loyalty to the Company or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law or for any transaction in which the director derived an
improper personal benefit. The effect of these provisions in the certificate of
incorporation is to eliminate the rights of the Registrant and its stockholders
(through stockholders, derivative suits on behalf of the Registrant) to recover
monetary damages against a director for breach of fiduciary duty as a director
(including breaches resulting from negligent or grossly negligent behavior)
except in the situations described above.
NTL Incorporated's By-laws provide that directors and officers of the
Registrant shall be indemnified against liabilities arising from their service
as directors and officers to the full extent permitted by law. Section 145 of
the DGCL empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the corporation, and, with
II-1
<PAGE> 69
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the fight of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
The Registrant has entered into director and officer indemnity agreements
("Indemnity Agreements") with each officer and director of the Registrant (an
"Indemnitee"). Under the bylaws and these Indemnity Agreements, the Registrant
must indemnify an Indemnitee to the fullest extent permitted by the DGCL for
losses and expenses incurred in connection with actions in which the indemnitee
is involved by reason of having been a director or officer of the Registrant.
The Registrant is also obligated to advance expenses an indemnitee may incur in
connection with such actions before any resolution of the action.
ITEM 16. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by
and among NTL Incorporated, NTL Communications Corp. and NTL
Mergerco, Inc.(1)
4.1 Indenture, dated as of December 22, 1999, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the Convertible Notes
</TABLE>
II-2
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.2 Registration Rights Agreement dated as of December 22, 1999,
with respect to the Convertible Notes*
4.3 Form of Convertible Notes (included in Exhibit 4.2)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the Convertible Notes and Common Stock being
registered hereby**
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Arthur Andersen
23.3 Consent of PricewaterhouseCoopers AG
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)*
24.1 Powers of Attorney (included on signature page)
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.1*
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 333-72335
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant 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 section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Securities
Exchange Act) 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.
(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants 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 proceeding) 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 such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 71
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this Registration Statement as of the time it was
declared effective.
(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus
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.
(D) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) 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;
(c) 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 provided, however, that paragraphs
(D)(1)(a) and (D)(1)(b) do not apply if the registration
statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective
amendment by those paragraphs is contained in a periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference 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.
II-4
<PAGE> 72
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on the Fourth day of May,
2000.
NTL Incorporated
By /s/ RICHARD J. LUBASCH
------------------------------------
Richard J. Lubasch
Executive Vice President --
General Counsel and Secretary
POWER OF ATTORNEY
KNOWN BY ALL PERSONS BY THESE PRESENTS, that each person whose signatures
appears below, constitutes and appoints Richard J. Lubasch, John F. Gregg and
Gregg Gorelick, or any of them, acting alone, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in his name, place and stead, in any and all capacities, in
connection with the registrant's Registration Statement in the name and on
behalf of the registrant or on behalf of the undersigned as a director or
officer of the registrant, on Form S-3 under the Securities Act of 1933, as
amended, including, without limiting the generality of the foregoing, to sign
the Registration Statement and any and all amendments (including post-effective
amendments) to the Registration Statement, and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent or either of them, acting alone, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done and perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, thereby ratifying and confirming all that said
attorney-in-fact and agent or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
II-5
<PAGE> 73
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GEORGE S. BLUMENTHAL Chairman of the Board, Treasurer May 4, 2000
- --------------------------------- and Director
George S. Blumenthal
/s/ J. BARCLAY KNAPP President, Chief Executive May 4, 2000
- --------------------------------- Officer and Director
J. Barclay Knapp
/s/ JOHN F. GREGG Senior Vice President, Chief May 4, 2000
- --------------------------------- Financial Officer
John F. Gregg
/s/ ROBERT T. GOAD Director May 4, 2000
- ---------------------------------
Robert T. Goad
/s/ GREGG N. GORELICK Vice President -- Controller May 4, 2000
- ---------------------------------
Gregg N. Gorelick
/s/ SIDNEY R. KNAFEL Director May 4, 2000
- ---------------------------------
Sidney R. Knafel
/s/ TED H. MCCOURTNEY Director May 4, 2000
- ---------------------------------
Ted H. McCourtney
/s/ DEL MINTZ Director May 4, 2000
- ---------------------------------
Del Mintz
/s/ ALAN J. PATRICOF Director May 4, 2000
- ---------------------------------
Alan J. Patricof
/s/ WARREN POTASH Director May 4, 2000
- ---------------------------------
Warren Potash
/s/ MICHAEL S. WILLNER Director May 4, 2000
- ---------------------------------
Michael S. Willner
Director May 4, 2000
- ---------------------------------
Jean-Louis Vinciguerra
</TABLE>
II-6
<PAGE> 74
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by
and among NTL Incorporated, NTL Communications Corp. and MTL
Mergerco, Inc.(1)
4.1 Indenture, dated as of December 22, 1999, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the Convertible Notes.*
4.2 Registration Rights Agreement dated as of December 22, 1999,
with respect to the Convertible Notes.*
4.3 Form of Convertible Notes (included in Exhibit 4.2)*
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the convertible notes and common stock being
registered hereby*
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(1)
12.1 Computation of Ratio of Earnings to Fixed charges and
Combined fixed Charges and Preferred Stock Dividends
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Arthur Andersen
23.3 Consent of PricewaterhouseCoopers
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)*
24.1 Powers of Attorney (included on signature page)
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.1*
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on
Form S-3, File No. .
(14) Incorporated by reference to NTL Communications Corp.'s Registration
Statement on Form S-4, File No. 333-78405.
(15) Incorporated by reference to NTL Communications Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1998.
<PAGE> 1
EXHIBIT 12.1
NTL INCORPORATED
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest.............................. $ 722,538,000 $ 356,575,000 $ 209,340,000 $ 147,326,000 $ 40,562,000
Amortization of debt expense.......... 17,120,000 10,227,000 7,831,000 8,873,000 1,424,000
Interest portion of rental expense.... 12,226,000 9,785,000 6,016,000 4,957,000 647,000
------------- ------------- ------------- ------------- ------------
Fixed charges......................... 751,884,000 376,587,000 223,187,000 161,156,000 42,633,000
Preferred stock dividend
requirement......................... 73,709,000 18,761,000 11,978,000 -- --
------------- ------------- ------------- ------------- ------------
Combined fixed charges and preferred
stock dividend........................ $ 825,593,000 $ 395,348,000 $ 235,165,000 $ 161,156,000 $ 42,633,000
============= ============= ============= ============= ============
Earnings:
(Loss) from operations................ $(771,064,000) $(537,943,000) $(348,648,000) $(246,801,000) $(93,262,000)
Fixed charges......................... 751,884,000 376,587,000 223,187,000 161,156,000 42,633,000
Less: Capitalized interest............ (41,810,000) (27,760,000) (6,770,000) (10,294,000) (12,183,000)
------------- ------------- ------------- ------------- ------------
$ (60,990,000) $(189,116,000) $(132,231,000) $ (95,939,000) $(62,812,000)
============= ============= ============= ============= ============
Ratio of Earnings to Fixed Charges(1)... -- -- -- -- --
</TABLE>
- ---------------
The ratio of earnings to fixed charges and combined fixed charges and preferred
stock dividends is not meaningful for the periods that result in a deficit.
(1) For the years ended December 31, 1999, 1998, 1997, 1996 and 1995, the
deficit of earnings to fixed charges was $812,874,000, $565,703,000,
$355,418,000, $257,095,000 and $105,445,000, respectively. For the years
ended December 31, 1999, 1998 and 1997, the deficit of earnings to combined
fixed charges and preferred stock dividends was $886,583,000, $584,464,000
and $367,396,000, respectively.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of NTL Incorporated for
the registration of its 5 3/4% Convertible Subordinated Notes due 2009 and to
the incorporation by reference therein of our report dated March 6, 2000, with
respect to the consolidated financial statements and schedules of NTL
Incorporated included in its Annual Report (Form 10-K) for the year ended
December 31, 1999, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
New York, New York
May 4, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated February 10, 2000 on our audit of the combined
financial statements of CWC Consumer Co as of March 31, 1998 and 1999 and for
the three years ended March 31, 1999. We also consent to the references to our
firm under the Caption "Experts".
Arthur Andersen
London, England
May 4, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-3 of
NTL Incorporated of our report dated April 23, 2000, except for Note 19 relating
to a restatement of previously issued financial statements and Note 20 relating
to differences between Swiss and United States accounting principles which is as
of January 14, 2000, relating to the financial statements of Cablecom Holding
AG, which appear in such Registration Statement. We also consent to us under the
headings "Experts" in such Registration Statement.
PricewaterhouseCoopers AG
Hansjorg Sagesser Julie Fitzgerald
Berne, Switzerland
May 4, 2000
