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RULE 424(B)(3)
COMMISSION FILE NO. 33-63867
PROSPECTUS
15,252,128 SHARES
METROMEDIA INTERNATIONAL GROUP, INC.
COMMON STOCK
The 15,252,128 shares (the "Shares") of Common Stock, par value $1.00 per
share (the "Common Stock"), of Metromedia International Group, Inc. (formerly
known as The Actava Group Inc.) (the "Company") offered hereby are being offered
for the account of certain Selling Stockholders (the "Selling Stockholders").
The Company will not receive any proceeds from the sale of such securities. See
"Selling Stockholders."
The Selling Stockholders may sell the Shares offered hereby from time to
time on the American and The Pacific Stock Exchanges or such other national
securities exchange or automated interdealer quotation system on which shares of
the Company's Common Stock are then listed, through negotiated transactions or
otherwise at market prices prevailing at the time of the sale or at negotiated
prices. The Selling Stockholders directly, or through agents designated from
time to time, or through underwriters, brokers or dealers also to be designated,
may sell the Shares from time to time on terms to be determined at the time of
sale. Such underwriters, brokers or dealers may receive compensation in the form
of commissions or otherwise in such amounts as may be negotiated by them. As of
the date of this Prospectus, no agreements have been reached for the sale of the
Shares or the amount of any compensation to be paid to underwriters, brokers or
dealers in connection therewith. In the event that a Selling Stockholder does
not intend to effect the sale of the Shares through an underwriter, a broker or
a dealer, the Selling Stockholder must effect such transactions by notifying the
Company in advance of any intended transaction in order for the Company to
determine compliance with applicable federal and state securities laws, and then
upon receipt of notice from the Company that such transaction may proceed, the
Selling Stockholder may sell the Shares. The Company will bear all expenses in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders, other than commissions, concessions or discounts to
underwriters, brokers or dealers and certain fees and expenses of counsel or
other advisors to the Selling Stockholders. See "Plan of Distribution."
The Common Stock of the Company is listed on the American Stock Exchange
and The Pacific Stock Exchange under the trading symbol "MMG." Prior to November
2, 1995, the Company's Common Stock was listed on the New York Stock Exchange
and The Pacific Stock Exchange under the trading symbol "ACT." See "The
Company -- Recent Developments." On November 14, 1995, the last reported sale
price of the Company's Common Stock on the American Stock Exchange was $16.00
per share.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is November 15, 1995.
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No person has been authorized in connection with this offering to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company.
Neither the delivery of this Prospectus nor any sales hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any time subsequent to the date hereof or the dates as of which
information is otherwise set forth or incorporated by reference herein. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
purchase any securities other than those to which it relates or an offer to any
person in any jurisdiction where such offer or solicitation would be unlawful.
AVAILABLE INFORMATION
Additional information regarding the Company and the Shares offered hereby
is contained in the Registration Statement on Form S-3 (Registration No.
33-63867) (of which this Prospectus forms a part) and the exhibits relating
thereto (the "Form S-3 Registration Statement") filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "1933 Act"). The Company is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and in accordance therewith files reports, proxy statements,
information statements and other information with the Commission. Such reports,
proxy statements, information statements and other information can be inspected
and copied at the public reference facilities of the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports, proxy statements and other information also may
be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the 1934 Act hereby are incorporated by reference into this
Prospectus as of their respective dates:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994, Form 10-K/A Amendment No. 1 filed on April 28, 1995 and
Form 10-K/A Amendment No. 2 filed July 13, 1995 amending the Company's Form
10-K for the year ended December 31, 1994;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995;
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995;
(5) The Company's Current Report on Form 8-K dated April 12, 1995 and
Form 8-K/A Amendment No. 1 dated April 28, 1995 amending the Company's
Current Report on Form 8-K dated April 12, 1995;
(6) The Company's Current Report on Form 8-K dated September 27, 1995;
(7) The Company's Current Report on Form 8-K dated November 1, 1995;
and
(8) The description of the Common Stock as contained in the Company's
Registration Statement on Form 8-A (Registration No. 1-5706) as filed with
the Commission on October 30, 1995.
Also incorporated by reference into this Prospectus is the following
document filed by the Company with the Commission:
Registration Statement on Form S-4 (Registration No. 33-63003)
declared effective by the Commission on September 28, 1995, which includes
the Joint Proxy Statement/Prospectus (the "Form S-4 Registration
Statement") with respect to a Special Meeting of Stockholders of the
Company
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held on November 1, 1995, and all subsequent amendments thereof, but
excluding the material set forth under the following captions:
"Summary Information -- Opinion of Actava's Financial Advisor,"
"-- Opinion of Orion's Financial Advisor," "Opinion of MITI's Financial
Adviser," and "-- Opinion of Sterling's Financial Advisor."
"Proposal No. 1 -- The Proposed Mergers -- Opinions of Financial
Advisors"
"Appendix B -- Fairness Opinion of CS First Boston Corporation"
"Appendix C -- Fairness Opinion of Alex. Brown & Sons Incorporated"
"Appendix D -- Fairness Opinion of Gerard Klauer Mattison & Co.,
L.L.C."
"Appendix E -- Fairness Opinion of Houlihan, Lokey, Howard & Zukin,
Inc."
In addition, all reports and documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date hereof
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference herein
and made a part hereof from the date of the filing of such documents.
The Company will provide without charge to each person to whom this
Prospectus is delivered, at the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into the foregoing documents). The Company also will
provide without charge upon request a copy of the Company's latest Annual
Report. Written or telephonic requests should be directed to W. Tod Chmar,
Senior Vice President, Metromedia International Group, Inc., 945 East Paces
Ferry Road, Suite 2210, Atlanta, Georgia 30326; (404) 261-6190.
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THE COMPANY
GENERAL
The Company was organized in 1929 under Pennsylvania law and was
reincorporated in 1968 under Delaware law. On July 19, 1993, the Company changed
its name from Fuqua Industries, Inc. to The Actava Group Inc. and, as described
under "Recent Developments" below, on November 1, 1995, the Company changed its
name from The Actava Group Inc. to "Metromedia International Group, Inc." The
Company's principal executive offices are located at 945 East Paces Ferry Road,
Suite 2210, Atlanta, Georgia 30326, and its telephone number is (404) 261-6190.
Since the late 1960's, the Company has owned, operated and sold dozens of
companies in many diverse industries, including photofinishing, recreation,
sporting goods, yacht and sailboat manufacturing, outdoor power equipment,
manufactured housing, petroleum distribution, movie theaters, retailing,
broadcasting, trucking, food and beverages, grain storage bins, taxicabs,
seating and banking. At the beginning of 1994, the Company owned and operated
businesses in three industries: photofinishing, lawn and garden equipment, and
sporting goods. The Company sold its photofinishing subsidiary and its four
sporting goods subsidiaries during 1994. As a result of these transactions,
prior to the Mergers (as defined below) the Company operated only one business,
Snapper Power Equipment Company ("Snapper"), which is engaged in the manufacture
and sale of lawn and garden equipment. In addition, the Company owns at the date
of this Prospectus 19,169,000 shares or approximately 38% of the outstanding
common stock of Roadmaster Industries, Inc. ("Roadmaster"). These shares were
issued to the Company in connection with the sale of the Company's four sporting
goods subsidiaries to Roadmaster.
Following consummation of the Mergers, the Company is a holding company
which conducts business through its three principal subsidiaries. Through its
Orion Pictures Corporation subsidiary, it is engaged in the development,
production, acquisition, exploitation and worldwide distribution in all media of
motion pictures, video product and made-for-television product. Through its
Metromedia International Telecommunications, Inc. subsidiary, it currently owns
interests in and participates along with local partners in the management of
certain joint ventures which operate communications businesses in certain
countries in Eastern Europe and certain of the former Soviet Republics. Through
Snapper Inc., a subsidiary to which the business and assets of Snapper were
transferred, it is engaged in the manufacture and sale of lawn and garden
equipment. In addition, as described above, the Company owns at the date of this
Prospectus, 19,169,000 shares, or approximately 38% of the outstanding common
stock of Roadmaster.
RECENT DEVELOPMENTS
On September 27, 1995, the Company, Orion Pictures Corporation ("Orion"),
MCEG Sterling Incorporated ("Sterling") and Metromedia International
Telecommunications, Inc. ("MITI") entered into an Amended and Restated Agreement
and Plan of Merger (the "Merger Agreement"), which amends and restates in its
entirety an Agreement and Plan of Merger dated as of April 12, 1995 among the
Company, Orion, Sterling and MITI (the "Initial Merger Agreement"). The terms of
the Initial Merger Agreement were approved by the Board of Directors of the
Company by a vote of five to four at a meeting held on April 12, 1995 and,
following the resignation of two members of the Board of Directors, the Board of
Directors unanimously approved the Merger Agreement on September 15, 1995. The
Merger Agreement and the Mergers contemplated thereby were approved by the
stockholders of each of the Company, Orion, MITI and Sterling on November 1,
1995. Pursuant to the Merger Agreement, on November 1, 1995 (the "Effective
Time"), (i) Orion merged with and into OPC Merger Corp. ("OPC Mergerco"), a
newly formed, wholly-owned subsidiary of the Company (the "Orion Merger"), with
OPC Mergerco being the surviving corporation of the Orion Merger, (ii) MITI
merged with and into MITI Merger Corp. ("MITI Mergerco"), a newly formed,
wholly-owned subsidiary of the Company (the "MITI Merger"), with MITI Mergerco
being the surviving corporation of the MITI Merger, and (iii) Sterling merged
with and into the Company (the "Sterling Merger" and together with the Orion
Merger and the MITI Merger, the "Mergers") with the
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Company being the surviving corporation of the Sterling Merger. OPC Mergerco, as
the surviving corporation of the Orion Merger was renamed "Orion Pictures
Corporation" and continues the business and operations of Orion and Sterling
(see below). MITI Mergerco, as the surviving corporation of the MITI Merger, was
renamed "Metromedia International Telecommunications, Inc." and continues the
business and operations of MITI. The Company, as the surviving corporation of
the Sterling Merger, changed its name from The Actava Group Inc. to "Metromedia
International Group, Inc." and transferred the operating assets of Sterling to
OPC Mergerco. Pursuant to the Merger Agreement, Orion, a majority of the common
stock of which was owned by certain of the Selling Stockholders prior to the
Mergers, was entitled to nominate six of the ten members of the Company's Board
of Directors. Four of the directors nominated by Orion are Selling Stockholders
or officers of the Selling Stockholders. Each of the nominees was elected as a
director of the Company on November 1, 1995. In addition, certain of the Selling
Stockholders and affiliates of the Selling Stockholders serve as officers of the
Company. See "Selling Stockholders."
In addition, pursuant to a contribution agreement entered into at the
Effective Time (the "Contribution Agreement") by and among the Company and two
of the Selling Stockholders, Met International, Inc. ("Met International") and
MetProductions, Inc. ("MetProductions"), at the Effective Time, certain
obligations of Orion and MITI to such Selling Stockholders were contributed to
the Company in exchange for shares of Common Stock using the formulas specified
therein.
Effective November 2, 1995, the Company delisted its Common Stock from
trading on the New York Stock Exchange and listed its Common Stock for trading
on the American Stock Exchange under the symbol "MMG." On that date the Company
also changed its trading symbol on The Pacific Stock Exchange from "ACT" to
"MMG." Consequently, the Company's Common Stock currently is listed for trading
on the American Stock Exchange and The Pacific Stock Exchange under the trading
symbol "MMG." As of November 2, 1995, there were approximately 42,456,886 shares
of Common Stock outstanding. The number of outstanding shares of Common Stock
includes approximately 21,435,671 shares issued pursuant to the Merger Agreement
to the former stockholders of Orion, Sterling and MITI and approximately
3,530,314 shares issued pursuant to the Contribution Agreement.
The Mergers are described more fully in the Company's Current Report on
Form 8-K dated April 12, 1995, as amended, the Company's Current Report on Form
8-K dated September 27, 1995, the Company's Current Report on Form 8-K dated
November 1, 1995 and the Form S-4 Registration Statement relating to the Special
Meeting of the Stockholders of the Company held with respect to the Mergers. All
or a portion of such documents are incorporated by reference into this
Prospectus, and copies are available upon request to the Company. See
"Incorporation of Certain Documents By Reference."
Certain pro forma financial information of the Company, as the surviving
parent corporation in the Mergers, is set forth in Appendix A hereto under the
caption "Pro Forma Combining Financial Statements." Such information is
incorporated by reference herein, and should be read in conjunction with the
other financial statements incorporated by reference herein.
SELLING STOCKHOLDERS
Prior to the Effective Time, the Selling Stockholders collectively
beneficially owned approximately 56.1% of the outstanding voting stock of Orion
and 55.8% of the outstanding voting stock of MITI. In addition, prior to the
Effective Time, two of the Selling Stockholders, John W. Kluge ("Kluge") and
Stuart Subotnick ("Subotnick"), were directors and executive officers of each of
Orion and MITI. Pursuant to the Merger Agreement and the Contribution Agreement,
at the Effective Time, the stock owned by the Selling Stockholders in each of
Orion and MITI and certain obligations owed by Orion and MITI to certain of the
Selling Stockholders were converted into the Shares, as a result of which
conversion each of the Selling
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Stockholders beneficially own the number of Shares set forth below opposite the
name of such Selling Stockholder:
<TABLE>
<CAPTION>
NUMBER
SELLING STOCKHOLDERS OF SHARES
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<S> <C>
Metromedia Company, a Delaware general partnership ("Metromedia")......... 4,111,624
Kluge..................................................................... 2,605,448
Subotnick and Anita H. Subotnick, as joint tenants........................ 231,225
Met International......................................................... 2,884,577
Met Telcell, Inc., a Delaware corporation ("Met Telcell")................. 4,426,249
MetProductions............................................................ 993,005
</TABLE>
The Shares are being offered for the accounts of each of the respective
Selling Stockholders and in the respective amounts set forth above.
Subotnick and a trust affiliated with Kluge (the "Kluge Trust") are the
general partners of Metromedia. It is anticipated that the Shares held by Kluge
will be transferred to the Kluge Trust. Met International, Met Telcell and
MetProductions are corporations controlled by Kluge and Subotnick. The Shares
offered hereby represent approximately 35.9% of the outstanding shares of Common
Stock of the Company. If all of the Shares offered by the Selling Stockholders
are sold, the Selling Stockholders will have no beneficial ownership of any
shares of the Company's Common Stock.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on the American Stock Exchange or The Pacific Stock Exchange or such other
national securities exchange or automated interdealer quotation system on which
shares of Common Stock are then listed, through negotiated transactions or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price or in negotiated transactions. The Shares may be sold
pursuant to one or more of the following: (a) ordinary brokerage transactions
and transactions in which the broker solicits purchasers; (b) purchases by an
underwriter, a broker or a dealer as principal and resale by such underwriter,
broker or dealer for its account pursuant to this Prospectus; (c) a block trade
in which the broker or dealer so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (d) an exchange distribution in accordance with the
rules of such exchange; and (e) through the writing of options on the Shares. In
the event that a Selling Stockholder does not intend to effect the sale of the
Shares through an underwriter, a broker or a dealer, the Selling Stockholder
must effect such transactions by notifying the Company in advance of any
intended transaction in order for the Company to determine compliance with
applicable federal and state securities laws, and then upon receipt of notice
from the Company that such transaction may proceed, the Selling Stockholder may
sell the Shares. If necessary, a supplemental prospectus which describes the
method of sale in greater detail may be filed by the Company with the Commission
pursuant to Rule 424(c) under the 1933 Act under certain circumstances. In
effecting sales, underwriters, brokers or dealers engaged by the Selling
Stockholders and/or purchasers of the Shares may arrange for other underwriters,
brokers or dealers to participate. Underwriters, brokers or dealers will receive
commissions, concessions or discounts from the Selling Stockholders and/or the
purchasers of the Shares in amounts to be negotiated prior to the sale. In
addition, any Shares covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the 1933 Act may be sold under Rule 144 rather than pursuant
to this Prospectus.
The Company will bear all expenses in connection with the registration and
sale of the Shares, other than commissions, concessions or discounts to
underwriters, brokers or dealers and fees and expenses of counsel or other
advisors to the Selling Stockholders.
The Selling Stockholders and any underwriter, broker or dealer who acts in
connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the 1933
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Act, and any compensation received by them and any profit on any resale of the
Shares as principals might be deemed to be underwriting discounts and
commissions under the 1933 Act. Pursuant to a registration rights agreement, the
Company has agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities under the 1933 Act as underwriters or
otherwise.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for the
Company by Long, Aldridge & Norman, Atlanta, Georgia, counsel to the Company.
LAN is the beneficial owner of approximately 52,708 shares of Common Stock as of
the date hereof.
EXPERTS
The consolidated financial statements and related schedule of Orion as of
February 28, 1995 and 1994 and for each of the years in the three-year period
ended February 28, 1995, have been incorporated by reference herein and in the
Form S-3 Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP on the February 28, 1995, 1994 and 1993
consolidated financial statements of Orion contains an explanatory paragraph
that states that Orion is a defendant in certain litigation which alleges
various breaches of agreements by Orion, and seeks certain damages. It is not
possible to assess the ultimate damages, if any, at this time.
The report of KPMG Peat Marwick LLP on the February 28, 1995 consolidated
financial statements of Orion contains an explanatory paragraph that states that
based upon Orion's inability to meet required debt payments that are due within
the next year under the terms of its Indentures (as defined in Note 6 of the
Notes to Consolidated Financial Statements) there exists substantial doubt about
the entity's ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
The report of KPMG Peat Marwick LLP on the February 28, 1994 consolidated
financial statements of Orion includes an explanatory paragraph on the Company's
change in method of accounting for income taxes.
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, 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 upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of MITI as of December 31, 1994 and
1993 and for each of the years in the two-year period ended December 31, 1994,
have been incorporated by reference herein and in the Form S-3 Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP on the December 31, 1994 and 1993,
consolidated financial statements of MITI contains an explanatory paragraph that
states that MITI's significant recurring losses and negative operating and
investing cash flows raise substantial doubt about MITI's ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.
The independent auditor's report for the years ended December 31, 1994 and
1993, refers to a change in policy of accounting for investments in Joint
Ventures in 1994.
The combined financial statements of International Telcell, Inc. (ITI) and
International Telcell Group Limited Partnership (ITGLP) (predecessor entities of
MITI) as of December 31, 1992 and for the year then ended have been incorporated
by reference herein and in the Form S-3 Registration Statement in reliance
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upon the report of Arthur Andersen LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing in giving said reports.
The report of Arthur Andersen LLP covering the December 31, 1992 combined
financial statements of ITI and ITGLP contains an explanatory paragraph that
states that MITI's significant recurring losses and negative operating and
investing cash flows raise substantial doubt about MITI's ability to continue as
a going concern. The combined financial statements do not include any
adjustments that might result from the outcome of that uncertainty.
The financial statements of Kosmos TV as of December 31, 1993 and September
30, 1994, and for the year ended December 31, 1994 and for the nine months ended
September 30, 1994 have been incorporated by reference herein and in the Form
S-3 Registration Statement in reliance upon the report of KPMG, independent
auditors, incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
The report of KPMG on the December 31, 1993 and September 30, 1994
financial statements of Kosmos TV contains an explanatory paragraph that states
that Kosmos TV's recurring losses from operations and net capital deficiency
raise substantial doubt about Kosmos TV's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
The audited consolidated financial statements and related schedules of
Sterling as of March 31, 1995 and 1994 and for each of the fiscal years ended
March 31, 1995, 1994 and 1993, incorporated by reference herein and in the Form
S-3 Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said reports.
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APPENDIX A
PRO FORMA COMBINING FINANCIAL STATEMENTS
The information set forth below should be read in conjunction with the
information set forth in the Form S-4 Registration Statement, portions of which
are incorporated herein by reference. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the Form S-4
Registration Statement.
The following unaudited Pro Forma Combining Balance Sheet of Orion (the
acquiror for accounting purposes only) as of August 31, 1995 and unaudited Pro
Forma Combining Statement of Operations of Orion for the six months ended August
31, 1995 and the year ended February 28, 1995, illustrate the effect of the
Mergers (see "Accounting Treatment" below), the associated refinancing of the
Orion Senior Indebtedness and the Orion Subordinated Indebtedness, the
contribution for equity of inventory and certain amounts owed to MetProductions,
the conversion to equity of certain amounts owed to Met International, the
settlement of certain Orion liabilities, each as of October 24, 1995 for
illustrative purposes only, and accounting for the results of the Company's
sporting goods subsidiaries for the period from January 1, 1994 through December
6, 1994 on the equity method as a result of the exchange of such subsidiaries
for approximately 39% of Roadmaster's outstanding common stock on December 6,
1994. The unaudited Pro Forma Combining Balance Sheet assumes that the Mergers
and other aforementioned transactions occurred on August 31, 1995 and the
unaudited Pro Forma Combining Statements of Operations assume that the Mergers
and other aforementioned transactions occurred at the beginning of the periods
presented.
Pursuant to the terms of the Merger Agreement, each holder of Orion Common
Stock, MITI Common Stock and Sterling Common Stock is entitled to receive the
number of whole shares of Common Stock equal to the number of shares of Orion
Common Stock, MITI Common Stock and Sterling Common Stock, as the case may be,
owned immediately prior to the Effective Time multiplied by the Orion Exchange
Ratio, the MITI Exchange Ratio and the Sterling Exchange Ratio, respectively,
plus cash in lieu of fractional shares and cash issued in respect of dissenters
rights of appraisal, if any (which is expected to be immaterial). The Orion
Exchange Ratio is based upon the Actava Average Closing Price and the number of
shares of Orion Common Stock outstanding immediately prior to the Determination
Date (October 27, 1995). The MITI Exchange Ratio is based upon the Actava
Average Closing Price and the number of shares of MITI Common Stock outstanding
immediately prior to the Determination Date. The Sterling Exchange Ratio is
based upon the Actava Average Closing Price and the number of shares of Sterling
Common Stock outstanding immediately prior to the Determination Date. These pro
forma combining financial statements have been prepared based on an assumed
Actava Average Closing Price of $17.6875 and assuming 20.0 million shares of
Orion Common Stock outstanding and an Orion Exchange Ratio of .57143, 1.7
million shares of MITI Common Stock outstanding and a MITI Exchange Ratio of
5.54937, and 11.2 million shares of Sterling Common Stock outstanding and a
Sterling Exchange Ratio of .04627, each as of October 24, 1995 for illustrative
purposes only. The actual Orion Exchange Ratio, MITI Exchange Ratio and Sterling
Exchange Ratio were determined on the Determination Date in accordance with the
formulas set forth in the Merger Agreement. The Actava Options remain
outstanding after the Effective Time with the same terms and subject to the same
conditions as in effect prior to the Effective Time. The MITI Options were
converted into options to purchase shares of Common Stock, with a proportional
adjustment being made to the exercise price of and the number of shares issuable
upon exercise of each such option to reflect the MITI Exchange Ratio in the
Mergers.
ACCOUNTING TREATMENT
The Metromedia Holders had the right to appoint a majority of the members
of the Board of Directors of the Company at the Effective Time as a result of
their majority ownership of the Orion Common Stock and their control, with a
member of Orion's management, of the Board of Directors of Orion. In addition,
the Metromedia Holders, collectively, are now the Company's single largest
stockholder. Due to the existence of common control of Orion and MITI, their
combination pursuant to the Mergers will be accounted for as a combination of
entities under common control. As a result, the combination of Orion and MITI
will be
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effected utilizing historical costs for the ownership interests of the
Metromedia Holders. The remaining ownership interests of MITI other than those
of the Metromedia Holders will be accounted for based on the fair value of such
ownership interests, as determined by the value of the shares received by the
holders of such interests at the Effective Time, in accordance with the purchase
method of accounting. For accounting purposes only, Orion and MITI have been
deemed to be the joint acquiror of the Company and Sterling. The acquisition of
the Company and Sterling will be accounted for as a purchase. As a result of the
reverse acquisition of the Company by Orion, the historical financial statements
of the Surviving Corporation for periods prior to the Mergers will be those of
Orion rather than the Company.
The pro forma adjustments are based upon currently available information
and upon certain assumptions that management of each of the Company, Orion, MITI
and Sterling (collectively "Management") believes are reasonable. The mergers of
the Company and Sterling will be recorded based upon the estimated fair market
value of the net tangible assets acquired at the date of acquisition. The
adjustments included in the unaudited pro forma combining financial statements
represent management's preliminary determination of these adjustments based upon
available information. There can be no assurance that the actual adjustments
will not differ significantly from the pro forma adjustments reflected in the
pro forma financial information.
The unaudited pro forma combining financial statements are not necessarily
indicative of either future results of operations or results that might have
been achieved if the foregoing transactions had been consummated as of the
indicated dates. The unaudited pro forma combining financial statements should
be read in conjunction with the historical financial statements of the Company,
Orion, MITI and Sterling, together with the related notes thereto, incorporated
by reference herein.
A-2
<PAGE> 11
METROMEDIA INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA COMBINING BALANCE SHEET
<TABLE>
<CAPTION>
AUGUST 31,
1995
------------
METROMEDIA
AUGUST 31, INTERNATIONAL
1995 JUNE 30, 1995 GROUP
------------ ---------------------------------------- PRO FORMA PRO FORMA
ORION MITI ACTAVA STERLING MERGER FOR MERGER
HISTORICAL HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash and marketable securities..... $ 18,504 $ 1,840 $ 38,851 $ 613 $ 1,907 (25) $ 61,715
Accounts receivable................ 33,749 1,439 109,938 3,140 -- 148,266
Notes receivable................... -- -- 108,177 -- -- 108,177
Other current assets............... 60,131 410 50,255 -- 15,323 (1) 136,371
10,252 (2)
------------ ------------ ------------ ------ ------------ ------------
Current assets..................... 112,384 3,689 307,221 3,753 27,482 454,529
Film inventories................... 149,648 -- -- 2,891 558 (3) 153,097
Property and equipment, net........ 2,314 2,891 32,871 -- -- 38,076
Intangibles........................ -- 9,507 955 -- 314,730 (4) 320,054
(955)(5)
(4,183)(6)
Other assets....................... 42,759 34,586 85,792 430 (15,236)(7) 147,331
(1,000)(8)
------------ ------------ ------------ ------ ----------- ------------
Total assets............... $ 307,105 $ 50,673 $ 426,839 $ 7,074 $ 321,395 $ 1,113,086
======== ======== ========= ======== ========== ==========
Accrued expenses................... $ 25,341 $ 8,056 $ 75,519 $ 398 $ 6,500 (9) $ 137,738
7,423(10)
15,356(11)
(855)(12)
Short-term debt.................... 79,697 46,294 69,816 495 (11,994)(12) 184,308
Other current liabilities.......... 53,541 3,269 6,383 2,183 -- 65,376
------------ ------------ ------------ ------ ----------- ------------
Current liabilities................ 158,579 57,619 151,718 3,076 16,430 387,422
Deferred income taxes.............. -- -- 6,709 -- -- 6,709
Deferred revenues.................. 29,385 -- -- 232 -- 29,617
Long-term debt..................... 117,839 628 156,674 -- (14,661)(8) 260,480
Other liabilities.................. 28,640 160 3,752 -- -- 32,552
Stockholders' equity:
Common stock..................... 5,000 2 22,768 11 (4,808)(4) 41,124
15,950(4)
976(2)
1,224(12)
Additional paid-in capital....... 265,811 35,794 34,705 1,989 339,454(4) 677,612
(15,950)(4)
9,276(2)
11,625(12)
(4,183)(6)
(909)(25)
Retained earnings (accumulated
deficit)....................... (298,149) (43,530) 156,385 1,766 (1,766)(4) (322,430)
(156,385)(4)
19,249(4)
Treasury stock................... -- -- (105,872) -- 103,056(4) 0
2,816(25)
------------ ------------ ------------ ------ ------------ ------------
Total stockholders' equity
(deficiency)............. (27,338) (7,734) 107,986 3,766 319,626 396,306
------------ ------------ ------------ ------ ------------ ------------
Total liabilities and
stockholders' equity
(deficiency)............. $ 307,105 $ 50,673 $ 426,839 $ 7,074 $ 321,395 $ 1,113,086
======== ======== ========= ======== ========== ==========
<CAPTION>
AUGUST 31, 1995
-----------------------------
METROMEDIA
INTERNATIONAL
PRO FORMA GROUP
REFINANCING PRO FORMA
ADJUSTMENTS COMBINED
------------ ------------
<S> <C> <C>
Cash and marketable securities..... $ (39,782)(13) $ 14,051
(7,882)(24)
Accounts receivable................ -- 148,266
Notes receivable................... (53,795)(14) 54,382
Other current assets............... -- 136,371
------------ ------------
Current assets..................... (101,459) 353,070
Film inventories................... -- 153,097
Property and equipment, net........ -- 38,076
Intangibles........................ -- 320,054
Other assets....................... 6,727 (13) 149,589
(4,469)(13)
------------ ------------
Total assets............... $ (99,200) $ 1,013,886
========== ==========
Accrued expenses................... $ (4,882) $ 132,856
Short-term debt.................... (78,269)(13) 131,907
(33,839)(14)
59,707 (13)
Other current liabilities.......... -- 65,376
------------ ------------
Current liabilities................ (57,283) 330,139
Deferred income taxes.............. -- 6,709
Deferred revenues.................. (3,000)(24) 26,617
Long-term debt..................... (90,993)(13) 257,531
108,000 (13)
(19,956)(14)
Other liabilities.................. -- 32,552
Stockholders' equity:
Common stock..................... -- 41,124
Additional paid-in capital....... -- 677,612
Retained earnings (accumulated
deficit)....................... (35,969)(13) (358,399)
Treasury stock................... -- 0
------------ ------------
Total stockholders' equity
(deficiency)............. (35,969) 360,337
------------ ------------
Total liabilities and
stockholders' equity
(deficiency)............. $ (99,200) $ 1,013,886
========== ==========
</TABLE>
A-3
<PAGE> 12
METROMEDIA INTERNATIONAL GROUP, INC.
PRO FORMA COMBINING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
AUGUST 31,
SIX MONTHS 1995
ENDED -------------
AUGUST 31, SIX MONTHS ENDED METROMEDIA
1995 JUNE 30, 1995 PRO FORMA INTERNATIONAL
---------- ------------------------------------ MERGER AND GROUP
ORION MITI ACTAVA STERLING REFINANCING PRO FORMA
HISTORICAL HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ---------- ---------- ----------- -------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues............................... $ 73,419 $ 3,316 $ 98,848 $4,364 $ -- $ 179,947
Cost of revenues....................... 66,532 -- 78,426 2,049 22(15) 147,029
Operating expenses..................... 11,468 12,635 25,984 1,890 (101)(16) 51,876
Depreciation and amortization.......... 319 725 3,804 44 6,192(17) 11,084
---------- ---------- ---------- ---------- ----------- -------------
Operating income (loss)................ (4,900) (10,044) (9,366) 381 (6,112) (30,041)
Other income (expense):
Interest expense..................... (13,671) (926) (10,903) -- 12,992(18) (19,919)
1,131(19)
(5,948)(20)
(1,278)(21)
(1,316)(22)
Other................................ -- (2,152) 1,411 -- -- (741)
---------- ---------- ---------- ---------- ----------- -------------
Income (loss) before tax............... (18,571) (13,122) (18,858) 381 (531) (50,701)
Provision for income taxes............. 300 -- -- 166 -- 466
---------- ---------- ---------- ---------- ----------- -------------
Net income (loss) from continuing
operations........................... $(18,871) $ (13,122) $ (18,858) $ 215 $ (531) $ (51,167)
========= ========= ========= ======== ========== ==========
Number of shares issued and
outstanding.......................... 41,124
Loss per share......................... $ (1.24)
==========
</TABLE>
A-4
<PAGE> 13
METROMEDIA INTERNATIONAL GROUP, INC.
PRO FORMA COMBINING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
FEBRUARY 28,
1995
YEAR ENDED YEAR ENDED YEAR ENDED -------------
FEBRUARY 28, DECEMBER 31, 1994 MARCH 31, METROMEDIA
1995 ------------------------------------------ 1995 PRO FORMA INTERNATIONAL
------------ ACTAVA SPORTING ---------- MERGER AND GROUP
ORION MITI ACTAVA GOODS STERLING REFINANCING PRO FORMA
HISTORICAL HISTORICAL HISTORICAL SUBSIDIARIES(23) HISTORICAL ADJUSTMENTS COMBINED
------------ ---------- ---------- ---------------- ---------- ----------- -------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $191,244 $ 3,545 $ 551,828 $ (302,326) $8,443 $ -- $ 452,734
Cost of revenues........ 187,477 -- 461,175 (265,707) 4,656 43(15) 387,644
Operating expenses...... 21,278 19,312 77,638 (36,565) 3,240 (204)(16) 84,699
Depreciation and
amortization.......... 767 1,149 13,336 (4,900) 90 12,384(17) 22,826
------------ ---------- ---------- ---------------- ---------- ----------- -------------
Operating income
(loss)................ (18,278) (16,916) (321) 4,846 457 (12,223) (42,435)
Other income (expense):
Interest expense...... (29,082) (213) (28,434) 5,299 -- 29,884(18) (36,762)
2,867(19)
(11,897)(20)
(2,555)(21)
(2,631)(22)
Other................. (1,610) (2,012) 5,299 82 -- -- 1,759
------------ ---------- ---------- ---------------- ---------- ----------- -------------
Income (loss) before
tax................... (48,970) (19,141) (23,456) 10,227 457 3,445 (77,438)
Provision for income
taxes................. 1,300 -- -- (417) 198 -- 1,081
------------ ---------- ---------- ---------------- ---------- ----------- -------------
(50,270) (19,141) (23,456) 10,644 259 3,445 (78,519)
Equity in loss of Actava
Sporting Goods
Subsidiaries.......... -- -- -- (10,644) -- -- (10,644)
------------ ---------- ---------- ---------------- ---------- ----------- -------------
Net income (loss) from
continuing
operations............ $(50,270) $ (19,141) $ (23,456) $ -- $ 259 $ 3,445 $ (89,163)
========== ========= ========= ============= ========= ========== ==========
Number of shares issued
and outstanding....... 41,124
==========
Loss per share.......... $ (2.17)
==========
</TABLE>
A-5
<PAGE> 14
FOOTNOTES
(1) Reflects Actava's inventory at estimated fair market value.
(2) Reflects contribution of film inventory and the conversion of indebtedness
by certain affiliates of Metromedia in exchange for 976,373 shares of
Common Stock.
(3) Reflects Sterling's film inventory at estimated fair market value.
(4) Reflects the excess of cost over the estimated fair value of net tangible
assets acquired in the Mergers, the elimination of Actava's and Sterling's
historical additional paid-in capital and retained earnings (accumulated
deficit), the elimination of MITI's accumulated deficit attributable to the
minority stockholders, the retirement of Actava's treasury stock and the
value of the Common Stock issued to the Actava and Sterling stockholders
and MITI minority stockholders in the Mergers.
<TABLE>
<CAPTION>
(IN THOUSANDS
EXCEPT SHARE
AND PER SHARE
SHARE DATA)
-------------
<S> <C>
Actava shares outstanding at October 24, 1995................. 17,490,901
Common Stock to be owned by MITI minority stockholders........ 4,221,432
Common Stock to be owned by Sterling stockholders............. 480,451
-------------
Number of shares issued to acquire Actava, MITI minority and
Sterling.................................................... 22,182,783
Per share price at closing (assumed at October 24, 1995 for
illustrative purposes)...................................... $ 18 1/4
-------------
Value of stock................................................ $ 404,836
Value of Actava options....................................... 7,423
Value of MITI options......................................... 18,922
Transaction costs............................................. 6,500
-------------
Purchase price of Actava, MITI minority and Sterling.......... 437,681
Less -- Estimated fair value of net tangible assets
acquired.................................................... 122,952
Excess of cost over fair value of the net tangible assets
acquired.................................................... $ 314,730
==========
</TABLE>
These adjustments reflect the conversion of each outstanding share of
Orion Common Stock and MITI Common Stock into 0.57143 and 5.54937 shares
of Common Stock, respectively. Based on the number of shares of Orion
Common Stock and MITI Common Stock outstanding October 24, 1995 and
assuming an Actava Average Closing Price of $17.68750, the MITI Common
Stock owned by the Metromedia Holders and all of the Orion Common Stock
will be converted into an aggregate of 16,740,986 shares of Common
Stock, excluding shares issued in connection with the conversion of
certain amounts owed to Met Productions and Met International as
described in footnotes (2) and (12) to the Pro Forma Financial
Statements, respectively. Excess of cost over fair value of the net
tangible assets acquired is presented in the pro forma balance sheet
utilizing estimated amounts at October 24, 1995 and will be determined
at the Effective Time. Such amount will also be allocated according to
the estimated fair values of assets at the Effective Time.
(5) Reflects elimination of historical goodwill at Actava.
(6) Reflects elimination of historical goodwill of MITI attributable to MITI
minority stockholders.
(7) Reflects Actava's equity investment in Roadmaster at fair market value at
October 24, 1995.
(8) Reflects fair market value of Actava's debentures based on trading quotes
as of October 24, 1995 and the elimination of $1.0 million of historical
debt issuance cost.
(9) Reflects transaction costs incurred in connection with the Mergers.
(10) Reflects estimated fair market value of Actava's stock options at October
24, 1995.
(11) Reflects excess of estimated fair market value at October 24, 1995 of
MITI's stock options over amounts accrued at June 30, 1995.
(12) Reflects conversion of $7.3 million of indebtedness owed to certain
affiliates of Metromedia and $5.5 million of indebtedness as of June 30,
1995 to be refinanced by certain affiliates of Metromedia into 1,223,733
shares of Common Stock. In addition, $12.1 million borrowed from certain
affiliates of
A-6
<PAGE> 15
FOOTNOTES -- (CONTINUED)
Metromedia subsequent to June 30, 1995 and outstanding as of October 24,
1995 will be converted into 1,152,382 shares of Common Stock at the
Effective Time.
(13) Reflects refinancing of Orion Senior Indebtedness (including unamortized
discount) and the Orion Subordinated Indebtedness with the Term Loan and
the MIG Credit Facility (as described elsewhere herein). Debt issuance
costs are assumed to be paid in cash. A loss of $36.0 million on the
retirement of this debt will be reflected as an extraordinary loss in the
fiscal period following the consummation of the Mergers and this financing.
<TABLE>
<CAPTION>
IN THOUSANDS
DR. (CR.)
------------
<S> <C>
Elimination of the current portion of Orion Existing
Indebtedness (comprised of the Orion Senior Indebtedness and
the current portion of the Orion Subordinated
Indebtedness)............................................... $ 78,269
Elimination of the non-current portion of the Orion
Subordinated Indebtedness................................... 90,993
Capitalization of financing fees.............................. 6,727
Loss on refinancing of debt................................... 35,969
Refinancing with current portion of Term Loan ($27,000) and
the MIG Credit Facility ($32,707)........................... (59,707)
Refinancing with non-current portion of Term Loan............. (108,000)
Reduction of Surviving Corporation's cash needed to effect
refinancing................................................. (39,782)
Reduction of Other Assets due to write off of deferred
financing fees related to the Existing Orion Indebtedness... (4,469)
------------
Net................................................. $ 0
==========
</TABLE>
(14) Reflects the settlement of amounts due to and from the participants in the
Mergers and Metromedia.
(15) Reflects additional amortization expense associated with the purchase price
allocation to film inventories.
(16) Reflects elimination of Plan distribution costs as a result of Mergers and
refinancing.
(17) Reflects amortization of the excess of cost over the fair value of net
tangible assets acquired in the Mergers by use of the straight-line method
over 25 years.
(18) Reflects elimination of interest expense attributable to Orion Senior
Indebtedness and Orion Subordinated Indebtedness as a result of the
refinancing.
(19) Reflects reduction in interest expense due to the repayment of Actava's
Swiss Franc Senior Subordinated Debentures, net of a reduction in interest
income (assumed interest rate of 4.5%) related to cash equivalents utilized
to retire redeemable common stock on February 17, 1995.
(20) Reflects interest expense on the Term Loan (assumed interest rate of 8.8%).
(21) Reflects interest on the MIG Credit Facility (assumed interest rate of
8.8%).
(22) Reflects amortization of debt issuance costs related to the Term Loan and
the MIG Credit Facility.
(23) Reflects the results of Actava's Sporting Goods subsidiaries on the equity
method for the period from January 1, 1994 through December 6, 1994. The
Actava Sporting Goods subsidiaries were combined with Roadmaster in
exchange for approximately 19.2 million shares of Roadmaster Common Stock.
Actava consolidated the results of operations of the Sporting Goods
subsidiaries with the results of Actava for periods ending prior to
December 6, 1994. Actava's investment in Roadmaster is accounted for by the
equity method.
(24) Reflects the settlement of certain Orion liabilities at the Effective Time.
(25) Reflects the exercise of 144,175 Actava options subsequent to June 30,
1995.
A-7
