<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1999
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
METROMEDIA INTERNATIONAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE ONE MEADOWLANDS PLAZA 59-0971455
(State or other jurisdiction EAST RUTHERFORD, NEW JERSEY (I.R.S. Employer
of 07073-2137 Identification No.)
incorporation or organization) (201) 531-8000
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
</TABLE>
ARNOLD L. WADLER, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
METROMEDIA INTERNATIONAL GROUP, INC.
ONE MEADOWLANDS PLAZA
EAST RUTHERFORD, NEW JERSEY 07073-2137
(201) 531-8000
(Name, address, including zip code, and telephone number, including area code of
agent for service)
------------------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
DOUGLAS A. CIFU, ESQ. ALAN STRAUS, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON SKADDEN, ARPS, SLATE MEAGHER & FLOM LLP
1285 AVENUE OF THE AMERICAS 919 THIRD AVENUE
NEW YORK, NEW YORK 10019-6064 NEW YORK, NEW YORK 10022
(212) 373-3000 (212) 735-3000
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
--------------------------
If the only securities 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, 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 statement number of the earlier effective registration statement
for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED SHARE PRICE FEE
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value per share... 9,136,744(1) 100%(2) $39,402,209(2) $10,954(3)
</TABLE>
(1) The amount of shares to be registered has been determined based on the
product of (i) 14,381,780, the number of shares of PLD Telekom Inc. held by
the selling stockholders, multiplied by (ii) .6353, the exchange ratio for
the shares of common stock of Metromedia International Group to be received
by holders of common stock of PLD Telekom Inc. in the merger of PLD Telekom
Inc. with Metromedia International Group pursuant to the Agreement and Plan
of Merger, dated as of May 18, 1999, by and among Metromedia International
Group, Inc., PLD Telekom Inc. and Moscow Communications, Inc. in exchange
for their shares of common stock of PLD Telekom Inc.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933. This amount was
calculated by multiplying (1) 9,136,744, the amount of shares to be
registered, by (2) $4.3125, the average of the high and low prices of the
shares of common stock of Metromedia International Group, Inc. as reported
on the American Stock Exchange on September 27, 1999.
(3) The registration fee has been calculated pursuant to Rule 457(c) under the
Securities Act of 1933 by multiplying (1) $39,402,209, the proposed maximum
aggregate offering price by (2) .000278.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE 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 IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PRELIMINARY PROSPECTUS
9,136,744 SHARES
METROMEDIA INTERNATIONAL GROUP, INC.
COMMON STOCK
- - We are offering these shares solely for the account of the selling
stockholders: News America Incorporated, a Delaware corporation, and News PLD
LLC, a Delaware limited liability company.
- - These shares consist of 9,136,744 shares of our common stock currently held by
the selling stockholders.
- - We will not receive any proceeds from the sale of these shares. See "Use of
Proceeds."
- - We will pay all of the expenses incident to the registration, offering and
sale of these shares to the public under this registration statement other
than commissions, fees and discounts of underwriters, brokers, dealers and
agents. We have agreed to indemnify the selling stockholders against certain
liabilities, including liabilities under the Securities Act of 1933.
- - Our common stock is listed on the American Stock Exchange and the Pacific
Stock Exchange under the trading symbol "MMG." On September 27, 1999, the last
reported sale price of our common stock on the American Stock Exchange was
$4.3125 per share.
------------------------
<TABLE>
<CAPTION>
PROCEEDS TO SELLING
PRICE TO PUBLIC UNDERWRITING DISCOUNTS AND COMMISSIONS SHAREHOLDERS
----------------- --------------------------------------- -------------------------------
<S> <C> <C> <C>
Per Share................. (1) (1)(2) (1)(2)
Total..................... (1) (1)(2) (1)(2)
</TABLE>
- ------------------------
(1) The selling stockholders may sell these shares from time to time on the
American Stock Exchange or such other national securities exchange or
automated interdealer quotation system on which shares of our common stock
are then listed, through negotiated transactions or otherwise, including
private sales. The sale or distribution of the shares may be effected by the
selling stockholders, directly or through one or more underwriters, brokers,
dealers or agents, from time to time in one or more transactions in the
market. Any of these transactions may be effected at market prices
prevailing at the time of sale, at prices related to these prevailing market
prices, at varying prices determined at the time of sale or at negotiated or
fixed prices, in each case as determined by agreement between the selling
stockholder and underwriters, brokers, dealers or agents, or purchasers.
(2) In transactions effected by selling shares to or through underwriters,
brokers, dealers or agents, such underwriters, brokers, dealers or agents
may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders or commissions from purchasers of
the shares for whom they may act as agent, 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
selling stockholders and any brokers, dealers or agents that participate in
the distribution of the shares may be deemed to be underwriters, and any
profit on the sale of shares by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents
may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. We will pay the expenses incurred in connection with
the registration, offering and sale of these shares, estimated at $59,454.
We will not be responsible for any discounts, concessions, commissions or
other compensation due to any broker or dealer in connection with the sale
of any of the shares offered hereby, which expenses will be borne by the
selling stockholders.
Our principal executive offices are located at Metromedia International Group,
Inc., One Meadowlands Plaza, East Rutherford, New Jersey 07073-2137, and our
telephone number is (201) 531-8000.
BEFORE INVESTING IN THESE SHARES, SEE "RISK FACTORS" ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus summarizes material provisions of contracts and other
documents and may not contain all the information that you may find important.
Therefore, you should review the full text of these documents. We have filed a
registration statement on Form S-3 with the Securities and Exchange Commission
covering the shares of our common stock to be issued to the selling stockholders
in connection with our merger with PLD Telekom Inc., and this prospectus is part
of our registration statement. We have included copies of these contracts and
other documents as exhibits to our registration statement. For further
information on us and the shares, you should refer to our registration statement
and its exhibits.
We are currently subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934. Accordingly, we file
reports, proxy statements and other information with the Securities and Exchange
Commission. You can inspect and copy at prescribed rates the reports, proxy
statements and other information that we filed with the Securities and Exchange
Commission at the public reference facilities maintained by the Securities and
Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also at the regional offices of the Securities and
Exchange Commission located at 7 World Trade Center, Suite 1300, New York, New
York 10048 and the Citicorp Center at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. You may obtain information on the operation of the
public reference facilities by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission also maintains an
Internet web site at http://www.sec.gov that contains reports, proxy and
information statements and other information. You can also obtain copies of
these reports, proxy statements and other information from us upon request as
indicated below.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents and other materials which we or PLD Telekom have
filed with the Securities and Exchange Commission are incorporated in this
prospectus and specifically made a part of this prospectus by this reference:
(1) Registration Statement on Form S-4 of Metromedia International Group
(file No.333-86203) filed on August 31, 1999, and all subsequent
amendments thereof, but EXCLUDING the material set forth under the
following captions:
"Summary Information--Opinion of PLD's Financial Advisor"
"Summary Information--Opinion of Metromedia's Financial Advisor"
"Appendix B--Opinion of Salomon Smith Barney Inc."
"Appendix C--Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation".
(2) Annual report on Form 10-K/A (Amendment No. 2) of Metromedia
International Group (file no. 001-5706) filed on August 31, 1999, for its
fiscal year ended December 31, 1998.
(3) Quarterly report on Form 10-Q/A (Amendment No.1) of Metromedia
International Group (file no. 001-5706) filed on August 31, 1999, for its
fiscal quarter ended March 31, 1999.
(4) Quarterly report on Form 10-Q/A (Amendment No.1) of Metromedia
International Group (file no. 001-5706) filed on August 31, 1999, for its
fiscal quarter ended June 30, 1999.
(5) Current report on Form 8-K dated May 18, 1999 of Metromedia
International Group (file no. 001-5706) filed on May 20, 1999.
(6) Current report on Form 8-K dated August 4, 1999 of Metromedia
International Group (file no. 001-5706) filed on August 4, 1999.
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<PAGE>
(7) Current report on Form 8-K dated September 24, 1999 of Metromedia
International Group (file no. 001-5706) filed on September 27, 1999.
(8) Current report on Form 8-K dated September 28, 1999 of Metromedia
International Group (file no. 001-5706) filed on September 28, 1999.
(9) Registration Statement on Form S-4 of Metromedia International Group
(file no. 333-79325).
(10) The description of the shares of common stock of Metromedia
International Group contained in Metromedia International Group's
registration statement on Form 8-A (file no. 001-5706) filed on October
10, 1995.
(11) Annual report on Form 10-K/A (Amendment No. 2) of PLD Telekom (file no.
000-20444) filed on August 31, 1999, for its fiscal year ended December
31, 1998.
(12) Quarterly report on Form 10-Q/A (Amendment No.2) of PLD Telekom (file
no.000-20444) filed on August 31, 1999, for its fiscal quarter ended
March 31,1999.
(13) Quarterly report on Form 10-Q/A (Amendment No.1) dated May 18, 1999 of
PLD Telekom (file no.000-20444) filed on August 31, 1999, for its fiscal
quarter ended June 30, 1999.
(14) Current report on Form 8-K/A (Amendment No.1) dated May 18, 1999 of PLD
Telekom (file no.000-20444) filed on August 30, 1999.
Copies of these documents, other than exhibits to these documents that are
not specifically incorporated by reference in these documents, are available
without charge to any person to whom this prospectus is delivered, upon written
or oral request to Metromedia International Group, Inc., One Meadowlands Plaza,
East Rutherford, NJ 07073; Attention: General Counsel; Tel: (201) 531-8000, or
to PLD Telekom Inc., 505 Park Avenue, 21st Floor, New York, New York 10022;
Attention: Secretary; Tel.: (212) 527-3800.
In addition, all documents that we file with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 after the date of this prospectus and on or before the
termination of the offering of the shares will be deemed to be incorporated by
reference into this prospectus and to be a part of this prospectus from the date
of filing of these documents with the Securities and Exchange Commission. Any
statement contained in this prospectus or in a document incorporated or deemed
to be incorporated by reference in this prospectus will be deemed to be modified
or superseded for purposes of this prospectus if a statement contained in this
prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this prospectus modifies or supersedes
this statement. This statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE INFORMATION BELOW AS WELL AS ALL OTHER
INFORMATION PROVIDED TO YOU IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN THE
SHARES OFFERED HEREBY, INCLUDING INFORMATION IN THE SECTION OF THIS PROSPECTUS
ENTITLED "--OUR FUTURE RESULTS OF OPERATIONS MAY BE SUBSTANTIALLY DIFFERENT FROM
OUR STATEMENTS ABOUT OUR FUTURE PROSPECTS AND YOU SHOULD NOT UNDULY RELY ON
THESE STATEMENTS."
WE EXPECT TO CONTINUE TO INCUR LOSSES FROM OUR CONTINUING OPERATIONS, WHICH
COULD PREVENT US FROM PURSUING OUR GROWTH STRATEGIES AND COULD CAUSE US TO
DEFAULT UNDER OUR DEBT OBLIGATIONS.
We cannot assure you that we will succeed in establishing an adequate
revenue base or that our services will be profitable or generate positive cash
flow. We have reported substantial losses from operations over the previous
three years. For the six months ended June 30, 1999 and for the years ended
December 31, 1998, 1997 and 1996, we reported a loss from continuing operations
of approximately $22.9 million, $136.0 million, $130.9 million and $72.1
million, respectively, and a net loss of $22.9 million, $123.7 million, net
income of $88.4 million, and a net loss of $115.2 million, respectively. We
expect that we will report significant operating losses, including losses
attributable to Snapper, Inc., for the fiscal year ended December 31, 1999. In
addition, many of our joint ventures in our communications group are still in
the early stages of their development and we expect this group to continue to
generate significant losses as it continues to build-out and market its
services. Accordingly, we expect to generate consolidated losses for the
foreseeable future.
Continued losses and negative cash flow may prevent us from pursuing our
strategies for growth and could cause us to be unable to meet our debt service
obligations, including our obligations under the notes, capital expenditures or
working capital needs.
CHINESE GOVERNMENTAL AUTHORITIES ARE CAUSING THE TERMINATION OF CERTAIN OF OUR
JOINT VENTURES, WHICH COULD HAVE NEGATIVE EFFECTS ON OUR FINANCIAL POSITION AND
RESULTS OF OPERATIONS.
Because legal restrictions in China prohibit foreign participation in the
operation or ownership in the telecommunications sector, our telecommunications
joint ventures in China have been established so as to provide financing,
technical advice, consulting and other services for the construction and
development of telephony networks for China United Telecommunications
Incorporated, known as China Unicom, a Chinese telecommunications operator.
We have recently been notified by China Unicom that a department of the
Chinese government has requested termination of two of our telecommunications
joint ventures with China Unicom. Negotiations have commenced with
representatives of China Unicom on the amount of compensation and terms of the
resolution of all issues between the parties. The content of the negotiations
includes determining the investment principal of these joint ventures,
appropriate compensation and other matters related to termination of contracts.
We were further notified that due to technical reasons which were not specified,
the cash distribution plan for the first half of 1999 had not been decided and
that China Unicom also expected to discuss this subject with the joint ventures.
As a result, we cannot assure you that we will receive compensation from the
Chinese government for the termination of our telecommunications joint ventures
or that the compensation that we will receive, if any, will be adequate.
While the notification only involved two of our telecommunications joint
ventures, we expect that the other two telecommunications projects in which we
have invested will receive similar notifications. In addition, China Unicom has
suspended cooperation on further development of networks with these joint
ventures, which we believe reflects China Unicom's intention to negotiate the
termination of its relationship with these joint ventures as well.
4
<PAGE>
In light of the current uncertainty, we are unable to estimate the impact on
our financial condition and results of operations of such negotiations and
expected winding up of our other two Chinese telecommunications joint ventures.
We believe that negotiations, if adversely concluded, could have a materially
negative effect on our financial position and operating results. Depending on
the amount of compensation we receive, we will record a non cash charge equal to
the difference between the sum of the carrying values of our investment and
advances made to joint ventures plus goodwill less the cash compensation we
receive from the joint ventures which China Unicom has paid. Our investment in
and advances to joint ventures and goodwill balance at June 30, 1999 were
approximately $71 million and $67 million respectively. See "About Our
Business."
WE WILL BE UNABLE TO MEET OUR OBLIGATIONS IF WE DO NOT RECEIVE DISTRIBUTIONS
FROM OUR SUBSIDIARIES AND OUR SUBSIDIARIES HAVE NO OBLIGATIONS TO MAKE ANY
PAYMENTS TO US.
We are a holding company with no direct operations and no assets of
significance other than the stock of our subsidiaries. As such, we are dependent
on the earnings of our subsidiaries and the distribution or other payment of
these earnings to us to meet our obligations, including our ability to make
distributions to our stockholders. Our subsidiaries are separate legal entities
that will have no obligation to pay any amounts that we may owe to third
parties, whether by dividends, loans or other payments. Snapper, Inc.'s credit
facility contains substantial restrictions on dividends and other payments by
Snapper to us. In addition, many of our joint ventures are in their early stages
of development and are operating businesses that are capital intensive. As a
result, we will only be able to rely on cash on hand, proceeds from the
disposition of non-core assets and net proceeds from additional financings
through a public or private sale of debt or equity securities to meet our cash
requirements, including the making of any distributions to our stockholders.
WE HAVE SUBSTANTIAL DEBT WHICH MAY LIMIT OUR ABILITY TO BORROW, RESTRICT THE USE
OF OUR CASH FLOWS AND CONSTRAIN OUR BUSINESS STRATEGY AND WE MAY NOT BE ABLE TO
MEET OUR DEBT OBLIGATIONS.
We have substantial debt and debt service requirements. Our substantial debt
has important consequences, including:
- our ability to borrow additional amounts for working capital, capital
expenditures or other purposes is limited,
- a substantial portion of our cash flow from operations is required to make
debt service payments, and
- our leverage could limit our ability to capitalize on significant business
opportunities and our flexibility to react to changes in general economic
conditions, competitive pressures and adverse changes in government
regulation.
We cannot assure you that our cash flow and capital resources will be
sufficient to repay any outstanding indebtedness or any indebtedness we may
incur in the future, or that we will be successful in obtaining alternative
financing. If we are unable to repay our debts, we may be forced to reduce or
delay the completion or expansion of our networks, sell some of our assets,
obtain additional equity capital or refinance or restructure our debt. Please
refer to the section in this prospectus entitled "--Restrictions imposed by our
debt agreement may significantly limit our business strategy and increase the
risk of default under our debt obligations." If we are unable to meet our debt
service obligations or comply with our covenants, we will default under our
existing debt agreements. To avoid a default, we may need waivers from third
parties, which might not be granted.
5
<PAGE>
RESTRICTIONS IMPOSED BY OUR DEBT AGREEMENT MAY SIGNIFICANTLY LIMIT OUR BUSINESS
STRATEGY AND INCREASE THE RISK OF DEFAULT UNDER OUR DEBT OBLIGATIONS.
The indenture for our outstanding 10 1/2% senior discount notes contains a
number of significant covenants. These covenants limit our ability to, among
other things:
- borrow additional money,
- make capital expenditures and other investments,
- pay dividends,
- merge, consolidate, or dispose of our assets, and
- enter into transactions with related entities.
If we fail to comply with these covenants we will default under the
indenture. A default, if not waived, could result in acceleration of our
indebtedness, in which case the debt would become immediately due and payable.
If this occurs, we may not be able to repay our debt or borrow sufficient funds
to refinance it. Even if new financing is available, it may not be on terms that
are acceptable to us. Complying with these covenants may cause us to take
actions that we otherwise would not take, or not take actions that we otherwise
would take.
WE MAY NEED BUT MAY NOT BE ABLE TO RAISE THE SUBSTANTIAL ADDITIONAL FINANCING
THAT WILL BE REQUIRED TO SATISFY OUR LONG-TERM BUSINESS OBJECTIVES, WHICH WOULD
FORCE US TO SIGNIFICANTLY CURTAIL OUR BUSINESS OBJECTIVES AND MAY MATERIALLY AND
ADVERSELY AFFECT OUR RESULTS FROM OPERATIONS.
Many of our joint ventures operate businesses that are capital intensive and
require the investment of significant amounts of capital in order to construct
and develop operational systems and market their services. As a result, we will
require substantial additional financing to satisfy our long-term business
objectives, including our on-going working capital, acquisition and expansion
requirements. We may seek to raise this additional capital through the public or
private sale of debt or equity securities. We cannot assure you that additional
financing will be available to us on acceptable terms, if at all. If we incur
additional debt, we may become subject to additional or more restrictive
financial covenants and ratios. If adequate additional funds are not available,
we may be required to curtail significantly our long-term business objectives
and our results from operations may be materially and adversely affected. Please
refer to the sections in this prospectus entitled "--We have substantial debt
which may limit our ability to borrow, restrict the use of our cash flows and
constrain our business strategy and we may not be able to meet our debt
obligations" and "--Restrictions imposed by our debt agreement may significantly
limit our business strategy and increase the risk of default under our debt
obligations."
WE MAY BE MATERIALLY AND ADVERSELY AFFECTED BY COMPETITION FROM LARGER GLOBAL
COMMUNICATIONS COMPANIES OR THE EMERGENCE OF COMPETING TECHNOLOGIES IN OUR
CURRENT OR FUTURE MARKETS.
We operate in businesses which are highly competitive and we compete with
many other well-known communications and media companies, many of which have
established operating infrastructures and have substantially greater financial,
management and other resources than us.
We also face potential competition from competing technologies which could
emerge over time in Eastern Europe, the republics of the former Soviet Union and
other selected emerging markets and compete directly with our operations. For
example, we believe that we will not be able to effectively compete for our
traditional paging customers in markets where GSM technology is combined with
calling party pays and prepaid calling card service. Similarly, we cannot assure
you that PLD Telekom's nationwide cellular network in Kazakhstan will be able to
compete with the development of the newly-introduced GSM technology in this
market.
6
<PAGE>
In addition, each of the principal partners in PLD Telekom's operating
businesses have interests that may conflict with those of PLD Telekom and in
certain instances could compete directly with PLD Telekom and its networks. This
competition could seriously undermine the local support for PLD Telekom's
networks, affect PLD Telekom's results of operations in these countries and
jeopardize our ability to fully realize the value of our economic investments in
these countries. See "--We do not fully control certain of our joint ventures'
operations, strategies and financial decisions and cannot assure you that we
will be able to maximize our return on our investments" and "--Our dependence on
certain local operators, interconnect parties or local customers may materially
and adversely affect our operations." For example, PLD Telekom's partner in PLD
Telekom's operating business in St. Petersburg has recently completed the
installation of a fiber optic network in St. Petersburg which could provide
serious competition to PLD Telekom's network in this area. The cellular network
of PLD Telekom's operating business in Kazakhstan directly competes with the
public switched telephone network of Kazakhtelekom, PLD Telekom's partner in
this operating business, and a recently established GSM mobile phone service
joint venture in which Kazakhtelekom has an interest. PLD Telekom's long
distance network in Moscow is in direct competition with the long distance
national network operated by Rostelecom, PLD Telekom's partner in its Moscow
operating business.
In addition, we do not expect to maintain or to be granted exclusive
licenses to operate our communications businesses in any of the markets where we
currently provide or plan to provide our services.
WE MAY NOT BE ABLE TO ATTRACT CONSUMERS TO OUR SERVICES, WHICH WOULD NEGATIVELY
IMPACT OUR OPERATING RESULTS.
Our operating results are dependent upon our ability to attract and maintain
subscribers to our cable, paging and telephony systems and the sale of
commercial advertising time on our radio stations. These in turn depend on the
following factors, several of which are beyond our control:
- the general economic conditions in the markets where our cable, telephone
systems, paging and radio stations are located,
- the relative popularity of our systems, including our radio stations,
- the demographic characteristics of the potential subscribers to our
systems and audience of our radio stations,
- the technical attractiveness to customers of the equipment and service of
our systems, and
- the activities of our competitors.
WE CANNOT ASSURE YOU THAT WE WILL SUCCESSFULLY COMPLETE THE CONSTRUCTION OF OUR
SYSTEMS, WHICH WOULD JEOPARDIZE LICENSES FOR OUR SYSTEMS OR PROVIDE
OPPORTUNITIES TO OUR COMPETITORS.
Most of our joint ventures require substantial construction of new systems
and additions to the physical plants of existing systems. We cannot assure you
that we will complete construction on time or within our budget. Construction
projects may be adversely affected by cost overruns and delays not within our
control or the control of our subcontractors, such as those caused by
governmental changes and material or equipment shortages or delays in delivery
of material or equipment. Our failure to complete construction of a
communications system on a timely basis could jeopardize the franchise or
license for our system or provide opportunities to our competitors. Cost
overruns may obligate us to incur additional debt. Please refer to the section
in this prospectus entitled "--We may need but may not be able to raise the
substantial additional financing that will be required to construct and develop
operational systems and market our services, which would adversely affect our
long-term business strategy."
7
<PAGE>
WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT AND MANAGE THE GROWTH OF OUR
VENTURES, WHICH WOULD AFFECT OUR GROWTH STRATEGY.
Many of our ventures are either in developmental stages or have only
recently commenced operations and we have incurred significant operating losses
to date. We are currently pursuing additional investments in a variety of
communications businesses both in our existing markets and in additional
markets. In implementing and managing our strategy of growing our businesses, we
must:
- assess the strengths and weaknesses of development opportunities,
- evaluate the costs and uncertain returns of developing and constructing
the facilities for operating systems, and
- integrate and manage the operations of our existing and additional
systems.
We cannot assure you that we will successfully implement our growth
strategy.
THE GOVERNMENT LICENSES ON WHICH WE DEPEND TO OPERATE MANY OF OUR BUSINESSES
COULD BE CANCELED OR NOT RENEWED, WHICH WOULD IMPAIR THE DEVELOPMENT OF OUR
SERVICES.
Our joint ventures' operations are subject to governmental regulation and
approvals in the markets in which we operate. We cannot assure you that we will
retain or obtain the necessary approvals to operate existing or future
businesses in any of the markets in which we operate or are seeking to establish
our business. Our joint ventures operate under licenses that are issued for
limited periods. Some of these licenses expire over the next several years, and
some are renewable annually. Our failure to renew these licenses may have a
material adverse effect on our operations. Seven licenses held or used by our
joint ventures will expire during 1999. For most of the licenses held or used by
our joint ventures, no statutory or regulatory presumption exists for renewal by
the current license holder and we cannot assure you that these licenses will be
renewed upon the expiration of their current terms.
Additionally, some of the licenses pursuant to which our businesses operate
contain network build-out milestones. Our failure to renew any of these licenses
or meet these milestones could result in the loss of these licenses, which may
have a material adverse effect on our operations. In addition, we cannot assure
you that our joint ventures will obtain the necessary approvals to operate
additional cable television, fixed telephony or paging systems or radio
broadcast stations in any of the markets in which we are seeking to establish
our business. PLD Telekom has exceeded the number of lines which the main
license of its operating business in St. Petersburg allows it to operate in St.
Petersburg and the surrounding region and we cannot assure you that the Russian
licensing authorities will not terminate or renegotiate this license or
otherwise force PLD Telekom to reduce the number of its subscribers or impose
other penalties on PLD Telekom.
WE MAY BE LIABLE FOR SUBSTANTIAL PENALTIES IF WE DO NOT FOLLOW BURDENSOME
CURRENCY LICENSING REQUIREMENTS.
Our joint ventures often require specific licenses from the central banks of
many of the countries in which they operate for certain types of foreign
currency loans, leases and investments. Our joint ventures' failure to obtain
currency licenses could result in the imposition of fines and penalties,
significant delays in delivering equipment to our operating businesses and
resulting difficulties in generating cash flows from our operating businesses.
The documentary requirements for obtaining the currency licenses are burdensome
and we cannot assure you that the licensing entity will not impose additional,
substantive requirements for the grant of a license or deny a request for a
license on an arbitrary basis. Furthermore, the time typically taken by the
relevant central banks to issue these licenses can be lengthy, in some cases up
to one year or more.
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WE DO NOT FULLY CONTROL CERTAIN OF OUR JOINT VENTURES' OPERATIONS, STRATEGIES
AND FINANCIAL DECISIONS AND CANNOT ASSURE YOU THAT WE WILL BE ABLE TO MAXIMIZE
OUR RETURN ON OUR INVESTMENTS.
We have invested in virtually all of our joint ventures with local partners.
In certain cases, the degree of our voting power and the voting power and veto
rights of our joint venture partners may limit us from effectively controlling
the operations, strategies and financial decisions of the joint ventures in
which we have an ownership interest. In addition, in certain cases, we may be
dependent on the continuing cooperation of our partners in the joint ventures
and any significant disagreements among the participants could have a material
adverse effect on our ventures. In addition, in some markets where we conduct or
may in the future conduct business, certain decisions of a joint venture also
require governmental approval. As a result, we cannot assure you that we will be
able to maximize our return on all of our investments.
In addition, in many instances, our partners include governmental entities
or affiliates of a governmental entity. This poses a number of risks, including:
- the possibility of decreased governmental support or enthusiasm for the
venture as a result of a change of government or government officials,
- a change of policy by the government, and
- the ability of the governmental entities to exert undue control or
influence over the project in the event of a dispute or otherwise.
In addition, to the extent our joint ventures become profitable and generate
sufficient cash flows in the future, we cannot assure you that the joint
ventures will pay dividends or return capital at any time. Moreover, our equity
interests in these investments generally are not freely transferable. Therefore,
we cannot assure you of our ability to realize economic benefits through the
sale of our interests in our joint ventures.
OUR DEPENDENCE ON LOCAL OPERATORS, INTERCONNECT PARTIES OR LOCAL CUSTOMERS MAY
MATERIALLY AND ADVERSELY AFFECT OUR OPERATIONS.
We are dependent on local operators or interconnect parties for a
significant portion of our operations. For example, we have recently been
notified by the Chinese telecommunications operator with which we operate our
Chinese telecommunications joint ventures that a department of the Chinese
government had requested termination of two of our telecommunications joint
ventures. See "About Our Business." Also, PLD Telekom's operating business in
St. Petersburg is dependent on Russian operators for the completion of most of
its calls. We cannot assure you that this operating business will continue to
have access to these operators' networks or that we will be able to have access
to these networks with favorable tariffs. The loss of access to these networks
or increases in tariffs could have a material adverse effect upon PLD Telekom.
PLD Telekom's operating business in Kazakhstan is also entitled to
interconnection free of charge to networks operated by Kazakhtelekom, the
Kazakhstan public switched telephone network operator, for the completion of its
local, long distance and international calls. The loss of, or any significant
limitation on, its access to this network could have a material adverse effect
on PLD Telekom. Further, Kazakhtelekom may try to use its authority to endeavor
to assess interconnection charges on PLD Telekom's operating business in
Kazakhstan, which may materially impact this operating business' profitability.
We are also dependent on local operators or interconnect parties' facilities
for certain of our operations. For example, PLD Telekom's operating business in
St. Petersburg is dependent on Russian operators' buildings, ducts and tunnels
in order to house its exchanges and to reach its customers. The loss of access
to these facilities or the availability of access only on unfavorable terms
could have a material adverse effect upon PLD Telekom. Similarly, PLD Telekom's
operating business in Moscow is also dependent upon the facilities of local
operators for the operation of its existing network in Moscow and to
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terminate certain traffic to users. The loss of the right to use these
facilities could have a material adverse effect on PLD Telekom.
Certain customers account for a significant portion of the total revenues of
certain of PLD Telekom's operations and the loss of these customers would
materially and adversely affect PLD Telekom's results of operations.
In addition, several of PLD Telekom's customers, interconnect parties or
local operators experience liquidity problems from time to time. PLD Telekom's
dependence on these parties may make it vulnerable to their liquidity problems,
both in terms of pressure for financial support for the expansion of their
operations and facilities, and in PLD Telekom's ability to achieve prompt
settlement of accounts.
WE CANNOT ASSURE YOU THAT OUR EQUIPMENT WILL BE APPROVED BY THE AUTHORITIES
REGULATING THE MARKETS IN WHICH WE OPERATE, WHICH COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR OPERATIONS IN THESE MARKETS.
Many of our operations or proposed operations are dependent upon approval of
our equipment by the communications authorities of the markets in which we and
our joint ventures operate or plan to operate. We cannot assure you that our
equipment in any of these markets will be approved. The failure to obtain
approval for our equipment could have a materially adverse effect on many of our
proposed operations.
WE MAY NOT BE ABLE TO KEEP PACE WITH THE EMERGENCE OF NEW TECHNOLOGIES AND
CHANGES IN MARKET CONDITIONS WHICH WOULD MATERIALLY AND ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.
The communications industry has been characterized in recent years by rapid
and significant technological changes and changes in market conditions.
Competitors could introduce new or enhanced technologies with features which
would render our technology obsolete or significantly less marketable. Our
ability to compete successfully will depend to a large extent on our ability to
respond quickly and adapt to technological changes and advances in our industry.
We cannot assure you that we will be able to keep pace, or will have the
financial resources to keep pace, with the technological demands of the
marketplace. Please refer to the section in this prospectus entitled "--We may
be materially and adversely affected by competition from larger global
communications companies or the emergence of competing technologies in our
current or future markets."
CERTAIN FAILURES TO ADDRESS THE YEAR 2000 PROBLEM MAY CAUSE DISRUPTIONS IN THE
OPERATION OF OUR NETWORKS AND OUR SERVICES TO CUSTOMERS.
Many computer and communications network systems, terminal devices, software
products and manufacturing devices will not function properly in the year 2000
and beyond due to a once-common programming standard that represents years using
two digits. This problem is often referred to as the year 2000 problem. It is
possible that our and our joint venture partners' currently installed computer
and communications network systems, terminal devices, software products and
manufacturing devices or other information technology systems, including
embedded technology, or those of our and our joint venture partners' suppliers,
contractors, interconnect parties or major systems developers working either
alone or in conjunction with other softwares or systems, will not properly
function in the year 2000 because of the year 2000 problem. We are not directly
responsible for the year 2000 readiness of many of our joint ventures and in
some cases have no access to the joint ventures' management regarding these
matters. Russia and the other republics of the former Soviet Union appear to be
substantially behind Western countries in their year 2000 compliance and
readiness. We have been unable to determine with any degree of certainty the
extent to which our interconnect partners in the former Soviet Union are
non-compliant because those parties have generally been reluctant to share this
information. If we or our joint venture partners, or our customers, suppliers,
contractors, interconnect parties and major systems developers are unable to
address their year 2000 issues in a timely manner, a material adverse effect on
our results of
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operations and financial condition could result. We and our joint venture
partners are currently working to evaluate and resolve the potential impact of
the year 2000 on our processing of date-sensitive information and network
systems. We cannot assure you that the year 2000 problem will only have a
minimal cost impact or that our joint venture partners and other companies will
convert their systems on a timely basis and that their failure to do so will not
have an adverse effect on our systems.
METROMEDIA COMPANY EFFECTIVELY CONTROLS METROMEDIA INTERNATIONAL GROUP AND HAS
THE POWER TO INFLUENCE THE DIRECTION OF OUR OPERATIONS AND PREVENT A CHANGE OF
CONTROL.
Metromedia Company and its affiliates collectively beneficially own
approximately 20% of the outstanding shares of common stock of Metromedia
International Group and are our largest stockholders. They have nominated or
designated a majority of the members of the board of directors. Metromedia
International Group's charter and Delaware law provide that the majority of the
members of the board of directors will nominate the directors for election to
the board of directors. However, for the foreseeable future it is likely that
directors designated or nominated by Metromedia Company will continue to
constitute a majority of the members of the board of directors. As a result,
Metromedia Company will likely control the direction of future operations of
Metromedia International Group, including decisions regarding acquisitions and
other business opportunities, the declaration of dividends and the issuance of
additional shares of capital stock and other securities. This concentration of
ownership may have the effect of delaying, deferring or preventing a change of
control of Metromedia International Group. Our certificate of incorporation and
by-laws also contain provisions which may also have the effect of delaying,
deferring or preventing a change of control of Metromedia International Group.
WE COULD INCUR ENVIRONMENTAL LIABILITIES AS A RESULT OF OUR CURRENT OPERATIONS
AND PAST DIVESTITURES, THE COST OF WHICH COULD MATERIALLY AFFECT OUR RESULTS OF
OPERATIONS.
We have been in operation since 1929 through our predecessors and, over the
years, have operated in diverse industries, including equipment, sporting goods
and furniture manufacturing, sheet metal processing and trucking. We have
divested almost all of our non-communications and non-media-related operations.
However, in the course of these divestitures, we have retained certain
indemnification obligations for environmental cleanup matters and, in one case,
a contaminated parcel at which we have undertaken cleanup activities. In other
cases, particularly for operations that we divested in the past, we could incur
unanticipated environmental cleanup obligations, to the extent they may exist or
arise in the future, as a result of changes in legal requirements that have
occurred since these divestitures or otherwise. Because some divestitures may
have occurred many years ago, we cannot assure you that environmental matters
will not arise in the future that could have a material adverse effect on our
results of operations or financial condition.
WE OPERATE IN COUNTRIES WITH SIGNIFICANT POLITICAL, SOCIAL AND ECONOMIC
UNCERTAINTIES, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS IN
THESE AREAS.
We operate in countries in Eastern Europe, the republics of the former
Soviet Union, China and other selected emerging markets. These countries face
significant political, social and economic uncertainties which could have a
material adverse effect on our operations in these areas. These uncertainties
include:
- possible internal military conflicts,
- civil unrest fueled by economic and social crises in those countries,
- political tensions between national and local governments which often
result in the enactment of conflicting legislation at various levels and
may result in political instability,
- bureaucratic infighting between government agencies with unclear and
overlapping jurisdictions,
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- high unemployment, high inflation, high foreign debt, weak currencies and
the possibility of widespread bankruptcies,
- unstable governments,
- pervasive regulatory control of the state over the telecommunications
industry (see "--Laws restricting foreign investments in the
telecommunications industry could adversely affect our operations in these
countries" and "--Chinese governmental authorities are causing the
termination of certain of our joint ventures, which could have negative
effects on our financial position and results of operations"),
- uncertainties over whether many of the countries in which we operate will
continue to receive the substantial financial assistance they have
received from several foreign governments and international organizations
which helps to support their economic development,
- the failure by government entities to meet their outstanding foreign debt
repayment obligations, and
- the risk of increased support for a renewal of centralized authority and
increased nationalism resulting in possible restrictions on foreign
ownership and/or discrimination against foreign owned businesses. We
cannot assure you that the pursuit of economic reforms by the governments
of any of these countries will continue or prove to be ultimately
effective, especially in the event of a change in leadership, social or
political disruption or other circumstances affecting economic, political
or social conditions. See "About Our Business."
WE FACE ENHANCED ECONOMIC, LEGAL AND PHYSICAL RISKS BY OPERATING ABROAD.
We have invested substantially all of our resources in operations outside of
the United States and plan to make additional international investments in the
near future. We run a number of risks by investing in foreign countries
including:
- loss of revenue, property and equipment from expropriation,
nationalization, war, insurrection, terrorism and other political risks
(see "--Laws restricting foreign investments in the telecommunications
industry could adversely affect our operations in these countries" and
"Chinese governmental authorities are causing the termination of certain
of our joint ventures, which could have negative effects on our financial
position and results of operations"),
- increases in taxes and governmental royalties and involuntary changes to
the licenses issued by, or contracts with, foreign governments or their
affiliated commercial enterprises,
- official data published by the governments of many of the countries in
which we operate is substantially less reliable than that published by
Western countries,
- changes in foreign and domestic laws and policies that govern operations
of overseas-based companies,
- amendments to, or different interpretations or implementations of, foreign
tax laws and regulations that could adversely affect the profitability
after tax of our joint ventures and subsidiaries,
- criminal organizations in certain of the countries in which we operate
that could threaten and intimidate our businesses. We cannot assure you
that pressures from criminal organizations will not increase in the future
and have a material adverse effect on our operations, and
- high levels of corruption and non-compliance with the law exists in many
of the countries in which we operate businesses. This problem
significantly hurts economic growth in these countries and our ability to
compete on an even basis with other parties.
See "About Our Business."
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LAWS RESTRICTING FOREIGN INVESTMENTS IN THE TELECOMMUNICATIONS INDUSTRY COULD
ADVERSELY AFFECT OUR OPERATIONS IN THESE COUNTRIES.
We may also be materially and adversely affected by laws restricting foreign
investment in the field of communications. Some countries in which we operate,
including the Russian Federation and China, have extensive restrictions on
foreign investments in the communications field. There is no way of predicting
whether additional ownership limitations will be enacted in any of these
markets, or whether any of these laws, if enacted, would force us to reduce or
restructure our ownership interest in any of our ventures. If additional
ownership limitations are enacted in any of these markets and we are required to
reduce or restructure our ownership interests in any ventures, it is unclear how
this reduction or restructuring would be implemented, or what impact this
reduction or restructuring would have on us or on our financial condition or
results of operations.
Current Chinese laws and regulations prohibit foreign companies and joint
ventures in which they participate from providing telephony services to
customers in China and generally limit the role that foreign companies or their
joint ventures may play in the telecommunications industry. Since mid-1998,
there has been uncertainty regarding possible significant changes in the
regulation of, and policy concerning, foreign participation in and financing of
the telecommunications industry in China and the continued viability of the
structure that we currently use for our investments in the Chinese
telecommunications industry. If the Chinese laws or regulations change and
restrict further the participation of foreign companies in the Chinese
telecommunications market or the Chinese authorities challenge the validity of
our operations in China:
- our licenses to operate in China could be invalidated,
- the legal validity of our contracts could be challenged which would
deprive us of avenues of legal recourse,
- we could be exposed to fines or criminal sanctions, or
- we could not obtain financing within China or abroad.
See "--Chinese governmental authorities are causing the termination of
certain of our joint ventures, which could have negative effects on our
financial position and results of operations."
The Russian Federation has periodically proposed legislation that would
limit the ownership percentage that foreign companies can have in radio and
television businesses and/or limit the number of radio and television businesses
that any company could own in a single market. While this proposed legislation
has not been enacted, it is possible that this legislation could be enacted in
Russia and that other countries in Eastern Europe and the republics of the
former Soviet Union may enact similar legislation which could have a material
adverse effect on our business operations, financial condition of prospects.
CURRENCY CONTROL RESTRICTIONS IN OUR MARKETS MAY HAVE A NEGATIVE EFFECT ON OUR
BUSINESS.
The existence of currency control restrictions in certain of our markets may
make it difficult for us to convert or repatriate our foreign earnings and
adversely affect our ability to pay overhead expenses, meet our debt obligations
and continue to expand our communications business. Our joint ventures often
require specific licenses from the central banks of many of the countries in
which they operate for certain types of foreign currency loans, leases and
investments. The joint ventures' failure to obtain these currency licenses could
result in the imposition of fines and penalties, significant delays in
purchasing equipment and resulting difficulties in generating cash flows. The
documentary requirements for obtaining the currency licenses are burdensome and
we cannot assure you that the licensing entity will not impose additional,
substantive requirements for the grant of a license or deny a request for a
license on an arbitrary basis. Furthermore, the time typically taken by the
relevant central banks to issue these licenses can be lengthy, in some cases up
to one year or more.
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RECENT ECONOMIC DIFFICULTIES IN THE RUSSIAN FEDERATION AND OTHER EMERGING
MARKETS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS IN THESE
COUNTRIES.
In 1998, a number of emerging market economies suffered significant economic
and financial difficulties resulting in liquidity crises, devaluation of
currencies, higher interest rates and reduced opportunities for financing. At
this time, the prospects for recovery for the economies of the Russian
Federation and other republics of the former Soviet Union and Eastern Europe
negatively affected by the economic crisis remain unclear. The economic crises
has resulted in a number of defaults by borrowers in the Russian Federation and
other countries and a reduced level of financing available to investors in these
countries. The devaluation of many of the currencies in the region has also
negatively affected the U.S. dollar value of the revenues generated by some of
our joint ventures and may lead to certain additional restrictions on the
convertibility of some local currencies. We expect that these problems will
negatively affect the financial performance of some of our cable television,
telephony, radio broadcasting and paging ventures.
HIGH INFLATION IN OUR MARKETS MAY HAVE A NEGATIVE EFFECT ON OUR BUSINESS.
Some of our subsidiaries and joint ventures operate in countries where the
inflation rate is extremely high. Since the break-up of the Soviet Union, the
economies of many of the former republics have been characterized by high rates
of inflation. Inflation in Russia increased dramatically following the August
1998 financial crisis and there are increased risks of inflation in Kazakhstan.
The inflation rates in Belarus have been at hyperinflationary levels for some
years and as a result, the currency has essentially lost all intrinsic value.
Our operating results will be hurt if we are unable to increase our prices
enough to offset any increase in the rate of inflation, or if anti-inflationary
legislation holding down prices is enacted.
FLUCTUATIONS IN CURRENCY EXCHANGE RATES IN THE COUNTRIES IN WHICH WE OPERATE
COULD NEGATIVELY IMPACT OUR RESULTS OF OPERATIONS IN THESE COUNTRIES.
The value of the currencies in the countries in which we operate tends to
fluctuate, sometimes significantly. For example, during 1998 and in the early
part of 1999, the value of the Russian Rouble has been under considerable
economic and political pressure and has suffered significant declines against
the U.S. dollar and other currencies. We currently do not hedge against exchange
rate risk and therefore could be negatively impacted by declines in exchange
rates between the time one of our joint ventures receives its funds in local
currency and the time it distributes these funds in U.S. dollars to us.
THE TAX RISKS OF INVESTING IN THE MARKETS IN WHICH WE OPERATE CAN BE SUBSTANTIAL
AND CAN MAKE EFFECTIVE TAX PLANNING DIFFICULT, WHICH WOULD MATERIALLY AFFECT OUR
FINANCIAL CONDITION.
Taxes payable by our joint ventures are substantial and we may be unable to
obtain the benefits of tax treaties due to:
- the documentary and other requirements imposed by the government
authorities,
- the unfamiliarity of those administering the tax system with the
international tax treaty system of their country, or their unwillingness
to recognize the treaty system, and
- the absence of applicable tax treaties in many of the countries in which
we operate.
Our tax planning initiatives to reduce our overall tax obligations may be
negated or impaired by the need to deal with these issues. Furthermore, the
taxation systems in the countries in which we operate are at an early stage of
development and are subject to varying interpretations, frequent changes and
inconsistent and arbitrary enforcement at the federal, regional and local
levels. In certain instances, new taxes and tax regulations have been given
retroactive effect, which makes effective tax planning difficult.
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THE COMMERCIAL AND CORPORATE LEGAL STRUCTURES ARE STILL DEVELOPING IN SOME OF
OUR TARGET MARKETS WHICH CREATES UNCERTAINTIES AS TO THE PROTECTION OF OUR
RIGHTS AND OPERATIONS IN THESE MARKETS.
Commercial and corporate laws in the countries in which we operate are
significantly less developed or clear than comparable laws in the United States
and countries of Western Europe and are subject to frequent changes, preemption
and reinterpretation by local or administrative regulations, by administrative
officials and, in the case of Eastern Europe and the republics of the former
Soviet Union, by new governments. There are also often inconsistencies among
laws, presidential decrees and governmental and ministerial orders and
resolutions, and conflicts between local, regional and national laws and
regulations. In some cases, laws are imposed with retroactive force and punitive
penalties. In other cases, laws go unenforced. The result has been considerable
legal confusion which creates significant obstacles to creating and operating
our joint ventures. We cannot assure you that the uncertainties associated with
the existing and future laws and regulations in our markets will not have a
material adverse effect on our ability to conduct our business and to generate
profits. See "About Our Business."
There is also significant uncertainty as to the extent to which local
parties and entities, particularly government authorities, in these markets will
respect contractual and other rights and also the extent to which the "rule of
law" has taken hold and will be upheld in each of these countries. The courts in
many of these markets often do not have the experience, resources or authority
to resolve significant economic disputes and enforce their decisions and may not
be insulated from political considerations and other outside pressures. We
cannot assure you that the licenses held by our businesses or the contracts
providing our businesses access to the airwaves or other rights or agreements
essential for operations will not be significantly modified, revoked or canceled
without justification. If that happens, our ability to seek legal redress may be
substantially delayed or even unavailable in these cases. See "About Our
Business."
RUSSIAN LAW MAY HOLD US LIABLE FOR THE DEBTS OF OUR SUBSIDIARIES, WHICH COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION.
Generally, under the Civil Code of the Russian Federation and the Law of the
Russian Federation on Joint Stock Companies, shareholders in a joint stock
company are not liable for the obligations of the joint stock company, and only
bear the risk of loss of their investment. However, if a parent company has the
capability under its charter or by contract to direct the decision-making of a
subsidiary company, the parent company will bear joint and several
responsibility for transactions concluded by its subsidiary in carrying out its
direction. In addition, a parent company capable of directing the actions of its
subsidiary is secondarily liable for its subsidiary's debts if the subsidiary
becomes insolvent or bankrupt as a result of the action or inaction of its
parent. In this instance, other shareholders of the subsidiary could claim
compensation for the subsidiary's losses from the parent company which caused
the subsidiary to take action or fail to take action, knowing that this action
or failure to take action would result in losses. It is possible that we may be
deemed to be this type of parent company of some of our subsidiaries, and we
could therefore be liable in some cases for the debt of these subsidiaries,
which could have a material adverse effect on us.
WE OPERATE IN COUNTRIES WHERE THE LAWS MAY NOT ADEQUATELY PROTECT OUR
SHAREHOLDER RIGHTS, WHICH WOULD PREVENT US FROM REALIZING FULLY THE ECONOMIC
BENEFITS OF OUR INVESTMENTS IN THESE COUNTRIES.
Shareholders have limited rights and legal protections under the laws of
many of the countries in which we operate. The concept of fiduciary duties of
management or directors owed to their companies is also new and is not well
developed. In some cases, the officers of a company may take actions without
regard to or in contravention of the directions of the shareholders or the board
of directors appointed by the shareholders. In other cases, a shareholder's
ownership interest may be diluted without its knowledge or approval or even
erased from the shareholders' ownership registry. We cannot assure you that we
could obtain legal redress as a shareholder for any such action in the court
systems of these countries.
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WE MAY DEFAULT UNDER OUR SNAPPER CREDIT FACILITY, WHICH COULD MATERIALLY AND
ADVERSELY AFFECT OUR BUSINESS STRATEGY AND RESULTS OF OPERATION.
Snapper has defaulted in compliance with financial covenants under its
credit facilities and, although these defaults have been waived, we cannot
assure you that it will not default again under its credit facility. Any default
could materially and adversely affect Snapper and our results of operations. See
"--We have substantial debt which may limit our ability to borrow, restrict the
use of our cash flows and constrain our business strategy and we may not be able
to meet our debt obligations."
WE ARE INVOLVED IN LEGAL PROCEEDINGS, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL
CONDITION.
We are involved in several legal proceedings in connection with our
investment in RDM Sports Group, Inc.
If we are unsuccessful in defending against the allegations made in these
proceedings, an award of the magnitude being sought in these legal proceedings
would have a material adverse affect on our financial condition and results of
operations. In addition, we cannot assure you that we will not determine that
the advantages of entering into a settlement outweigh the risk and expense of
protracted litigation or that ultimately we will be successful in defending
against these allegations.
OUR FUTURE RESULTS OF OPERATIONS MAY BE SUBSTANTIALLY DIFFERENT FROM OUR
STATEMENTS ABOUT OUR FUTURE PROSPECTS AND YOU SHOULD NOT UNDULY RELY ON THESE
STATEMENTS.
Any statements in this prospectus about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are often but not always made through the use
of words or phrases like "believes," "expects," "may," "will," "should" or
"anticipates" or the negative of these words or phrases or other variations on
these words or phrases or comparable terminology, or by discussions of strategy
that involves risks and uncertainties.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements or industry results to be materially different from any future
results, performance or achievements expressed or implied by these forward-
looking statements. These risks, uncertainties and other factors include, among
others:
- general economic and business conditions, which will, among other things,
impact demand for our products and services,
- industry capacity, which tends to increase during strong years of the
business cycle,
- changes in public taste, industry trends and demographic changes,
- competition from other communications companies, which may affect our
ability to generate revenues,
- political, social and economic conditions and changes in laws, rules and
regulations or their administration or interpretation, particularly in
Eastern Europe, the former Soviet Union, China and other selected emerging
markets, which may affect our results of operations,
- timely completion of construction projects for new systems for the joint
ventures in which we have invested, which may impact the costs of these
projects,
- developing legal structures in Eastern Europe, the former Soviet Union,
China and other selected emerging markets, which may affect our ability to
enforce our legal rights,
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- cooperation of local partners for our communications investments in
Eastern Europe, the former Soviet Union, China and other selected emerging
markets, which may affect our results of operations,
- exchange rate fluctuations,
- license renewals for our communications investments in Eastern Europe,
theformer Soviet Union, China and other selected emerging markets,
- the loss of any significant customers,
- changes in business strategy or development plans,
- the quality of management,
- the availability of qualified personnel,
- changes in or the failure to comply with government regulations, and
- other factors referenced in this prospectus.
Accordingly, any forward-looking statement is qualified in its entirety by
reference to these risks, uncertainties and other factors and you should not
place any undue reliance on them. Furthermore, any forward-looking statement
speaks only as of the date on which it is made. New factors emerge from time to
time and it is not possible for us to predict which will arise. In addition, we
cannot assess the impact of each factor on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statement.
Furthermore, this document constitutes a Year 2000 Readiness Disclosure
Statement, and the statements in this prospectus are subject to the Year 2000
Information and Readiness Disclosure Act and we hereby claim the protection of
this Act for this document and all the information contained in it.
USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling stockholders
of any of the shares offered with this prospectus. We will pay all of the costs
of this offering other than commissions, fees and discounts of underwriters,
brokers, dealers and agents, if any.
DETERMINATION OF OFFERING PRICE
The selling stockholders have advised us that they may sell these shares
from time to time on the American Stock Exchange or such other national
securities exchange or automated interdealer quotation system on which shares of
our common stock are then listed, through negotiated transactions or otherwise,
including private sales. They may also sell these shares, directly or through
one or more underwriters, brokers, dealers or agents from time to time in one or
more transactions in the market. Any of these transactions may be effected at
market prices prevailing at the time of sale, at prices related to these
prevailing market prices, at varying prices determined at the time of sale or at
negotiated or fixed prices, in each case as determined by agreement between the
selling stockholders and underwriters, brokers, dealers or agents, or
purchasers.
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ABOUT OUR BUSINESS
GENERAL
We are a global communications company. Through our communications group, we
are engaged in the development and operation of a variety of communications
businesses in Eastern Europe, the republics of the former Soviet Union, the
People's Republic of China and other selected emerging markets. These businesses
include telephony, cable television, paging and radio broadcasting. We also own
Snapper, Inc., which manufactures premium-priced power lawnmowers, lawn
tractors, garden tillers, snow throwers and related parts and accessories under
the Snapper-Registered Trademark- brand.
Our objective is to establish ourselves as a major multiple-market provider
of modern communications services in Eastern Europe, the former Soviet Union and
other selected emerging markets.
As of June 30, 1999, we owned interests in and participated with partners in
the management of joint ventures that had 48 operational systems. These
operational systems consisted of 12 cable television systems, two GSM cellular
telephone systems, one joint venture that is building out an operational GSM
system and providing financing, technical assistance and consulting services to
the local system operator, one international and long distance telephony
provider, two wireless local loop operator, 13 paging systems and 17 radio
broadcasting stations. In addition, we have interests in and participate with
partners in the management of several joint ventures that, as of June 30, 1999,
had four pre-operational systems. In Eastern Europe and the former Soviet Union,
we generally own 50% or more of the operating joint ventures in which we invest.
Our joint ventures experienced significant growth in 1998. At the end of
1998, we had approximately 520,182 subscribers compared to 305,198 at the end of
1997, which represents an increase of approximately 70%. The total combined
revenues of our communications group's consolidated and unconsolidated joint
ventures for the years ended December 31, 1998, 1997 and 1996 were $130.1
million, $91.2 million and $57.2 million, respectively. As many of our joint
ventures are not consolidated in our results of operations, our communications
group reported consolidated revenues of $30.2 million for the year ended
December 31, 1998, or approximately 12.6% of our total reported revenues for the
year ended December 31, 1998. We expect that this percentage will increase as
our communication group's joint ventures grow their businesses.
Recent adverse economic conditions in the Russian Federation and Eastern
Europe and the uncertainties associated with the governmental policies to
address these conditions could affect our cable television, paging and radio
broadcasting businesses in Russia, Belarus and other emerging countries. The
recent slowdown in growth in China and possible significant changes in the
regulation of foreign participation in and financing of the telecommunications
industry in China could affect the ability of our Chinese joint ventures to
generate revenue, cash flows or net income.
Because legal restrictions in China prohibit foreign participation in the
operation or ownership in the telecommunications sector, our joint ventures in
China are limited to providing financing, technical advice, consulting and other
services for the construction and development of telephony networks for China
United Telecommunications Incorporated, known as China Unicom, a Chinese
telecommunications operator. The completed networks are operated by China
Unicom. We receive payments in return from China Unicom based on the
distributable cash flow generated by the networks.
Ningbo Ya Mei Telecommunications, Ltd., one of our two telecommunications
joint ventures in Ningbo Municipality, China, has received a letter from China
Unicom stating that the supervisory department of the Chinese government had
requested that China Unicom terminate the project with Ningbo Ya Mei. China
Union subsequently informed us that the notification also applies to our other
telecommunications joint venture in Ningbo Municipality. The notification letter
from China Unicom requested that negotiations begin immediately regarding the
amounts to be paid to Ningbo Ya Mei, including return of investment made and
appropriate compensation and other matters related to the
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winding up of Ningbo Ya Mei's activities as a result of this notice.
Negotiations regarding the terms of the termination have begun and are
continuing. The content of the negotiations includes determining the investment
principal of our Ningbo joint ventures, appropriate compensation and other
matters related to termination of contracts. The letter further stated that due
to technical reasons which were not specified, the cash distribution plan for
the first half of 1999 had not been decided, and that China Unicom also expected
to discuss this subject with Ningbo Ya Mei. As a result, we cannot currently
determine the amount of compensation that the Ningbo joint ventures will
receive.
While there can be no assurance that China Unicom will provide similar
letters to our other two sino-sino foreign telephony-related joint ventures, we
expect that these joint ventures will also be the subject of project termination
negotiations. China Unicom has suspended cooperation on further development of
networks with these joint ventures and we believe that this action reflects
China Unicom's intention to negotiate the termination of our relationship with
these joint ventures as well. We cannot yet predict the effect on us of the
Ningbo joint ventures' negotiations and the expected winding up of our other two
telephony-related joint ventures, but we believe such negotiations, if adversely
concluded, or the failure to make scheduled cash distributions, could have a
material adverse effect on our financial position and results of operations.
Depending on the amount of compensation we receive, we will record a non-cash
charge equal to the difference between the sum of the carrying values of our
investment and advances made to joint ventures plus goodwill less the cash
compensation we receive from the joint ventures which China Unicom has paid. Our
investment in and advances to joint ventures and goodwill balance at June 30,
1999 were approximately $71 million and $67 million, respectively. We are
currently evaluating other investment opportunities in China and recently
announced the establishment of a new joint venture in China to develop and
create an e-commerce system.
We owned Snapper before the shift in our business focus to a global
communications company. Accordingly, we view Snapper as a non-core asset and
manage Snapper in order to maximize stockholder value. Snapper manufactures
Snapper brand power lawn and garden equipment for sale to both residential and
commercial customers. The residential equipment includes self-propelled and
push-type walk-behind lawnmowers, rear-engine riding lawnmowers, garden
tractors, zero-turn radius lawn equipment, garden tillers, snow throwers, and
related parts and accessories. The commercial mowing equipment includes
commercial quality self-propelled walk-behind lawnmowers, and wide-area and
front-mount zero-turn radius lawn equipment.
Snapper products are premium-priced, generally selling at retail from $300
to $10,500. Snapper sells to and supports directly an approximately 5,000-dealer
network for the distribution of its products. Snapper also sells its products
through foreign distributors.
A large percentage of the residential and commercial sales of lawn and
garden equipment are made during a 17-week period from early spring to
mid-summer. Although some sales are made to the dealers and distributors prior
and subsequent to this period, the largest volume of sales is made during this
time. The majority of revenues during the late fall and winter periods are
related to snow thrower shipments. Snapper has an agreement with a financial
institution which makes floor-plan financing for Snapper products available to
dealers. If there is a default by a dealer, Snapper is obligated to repurchase
any new and unused equipment recovered from the dealership. At December 31,
1998, there was approximately $96.4 million outstanding under this floor-plan
financing arrangement. We have guaranteed Snapper's payment obligations under
this arrangement.
Snapper also makes available, through General Electric Credit Corporation, a
retail customer revolving credit plan. This credit plan allows consumers to pay
for Snapper products over time. Consumers also receive Snapper credit cards
which can be used to purchase additional Snapper products.
Snapper manufactures its products in McDonough, Georgia, at facilities
totaling approximately 1.0 million square feet. Excluding engines, transmission
and tires, Snapper manufactures a substantial
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<PAGE>
portion of the component parts for its products. Most of the parts and material
for Snapper's products are commercially available from a number of sources.
For the year ended December 31, 1998, Snapper reported revenues of $210.0
million, or approximately 87.4% of our total consolidated revenues for the year
ended December 31, 1998. We expect that this percentage will decrease as the
communications group's consolidated joint ventures grow their businesses.
On September 23, 1999, we agreed to settle our outstanding litigation with
the plaintiffs in SIDNEY H. SAPSOWITZ AND SID SAPSOWITZ & ASSOCIATES, INC. V.
JOHN W. KLUGE, STUART SUBOTNICK, METROMEDIA INTERNATIONAL GROUP, INC., ORION
PICTURES CORPORATION, LEONARD WHITE ET AL. described in greater detail in our
Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998
incorporated by reference in this prospectus. On September 23, 1999, the jury in
this litigation returned a verdict of $4.5 million in compensatory damages and
$3.4 million in other damages against us. Before the conclusion of the
proceedings relating to punitive damages, we agreed to a settlement with the
plaintiffs. Under the terms of the settlement, we will be obligated to pay $5
million immediately, an additional $5 million on September 30, 2000 and an
additional $4 million on September 30, 2001. This settlement fully resolves all
litigation among us and the other parties in this litigation. We will record a
$12.8 million charge against discontinued operations in our third quarter
results of operation as a result of this settlement.
ABOUT OUR MERGER WITH PLD TELEKOM
On the date of this prospectus, we completed a merger with PLD Telekom, a
Delaware corporation. In the merger, PLD Telekom became one of our wholly owned
subsidiaries. In connection with this merger, each share of common stock of PLD
Telekom held by the selling stockholders was exchanged for shares of our common
stock that are offered with this prospectus.
PLD Telekom, through its operating subsidiaries, is a major provider of
local, long distance and international telecommunications services in the
Russian Federation, Kazakhstan and Belarus.
PLD Telekom's objective is to be a leading participant in the targeted
development of telecommunications infrastructure, products and services in the
emerging markets of the Russian Federation and other countries of the former
Soviet Union.
Its five principal operating businesses are:
- PeterStar Company Limited: a provider of integrated local, long distance
and international telecommunications services in St. Petersburg through a
fully digital fiber optic network;
- Technocom Limited: a provider, through Teleport-TP, of dedicated
international telecommunications services to Russian and foreign
businesses in Moscow and an operator of a satellite-based pan-Russian long
distance network;
- Baltic Communications Limited: a provider of dedicated international
telecommunications services in St. Petersburg;
- ALTEL (formerly BECET International): a provider of a national cellular
service in Kazakhstan; and
- Belarus-Netherlands Belcel Joint Venture: a provider of the only national
cellular service in Belarus.
In addition, PLD Telekom is developing a portfolio of international long
distance products and services under the name "PLDncompass" targeted at carriers
and corporate customers in the United States, the United Kingdom and Europe
which require telecommunications services to and from the countries of the
former Soviet Union.
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The fostering of existing, and the creation of new, partnerships with local
and regional partners is crucial to the long-term success of PLD Telekom in this
environment. In its operating businesses, PLD Telekom's partners include:
- Petersburg Telephone Network: the local telephone system operator in St.
Petersburg.
- St. Petersburg Intercity & International Telephone: the gateway for
national and international long distance calls to and from St. Petersburg.
Together with Petersburg Telephone Network, it holds an indirect 14%
interest in PeterStar Company Limited.
- Kazakhtelekom: the state-owned national telecommunications operator in
Kazakhstan and the holder of a 50% interest in ALTEL.
- AO Rostelecom: the primary long distance and international carrier in the
Russian Federation and a 44% stockholder in Teleport-TP.
Recent adverse economic conditions in the Russian Federation and Eastern
Europe and the uncertainties associated with the governmental policies to
address these conditions could affect PLD Telekom's businesses in Russia,
Belarus and other countries of the former Soviet Union. See "Risk Factors."
In the merger, each share of common stock of PLD Telekom was exchanged for
.6353 shares of our common stock. Each share of preferred stock of PLD Telekom
was redeemed for cash at a redemption price of Cdn. $1.00 per share. Each
outstanding option and warrant to acquire shares of PLD Telekom was converted
into options and warrants to purchase a number of our shares of common stock
determined based on the exchange ratio described above.
In connection with the completion of our merger with PLD Telekom, the
holders of $123,000,000 in principal amount of PLD Telekom's 14% senior discount
notes due 2004 and the holders of $25,000,000 in principal amount of PLD
Telekom's 9% convertible subordinated notes due 2006 exchanged their notes and
all accrued but unpaid interest on these notes through the date of the merger
for an aggregate of $163,084,182 in accreted value or $210,631,000 in principal
amount at maturity, of our 10 1/2% senior discount notes due 2007.
Also in connection with the completion of our merger with PLD Telekom, PLD
Telekom repaid The Travelers Insurance Company and The Travelers Indemnity
Company $8.5 million of amounts due under their revolving credit and warrant
agreement dated November 26, 1997 with PLD Telekom. PLD Telekom has agreed to
repay Travelers the remaining $4.92 million due under this agreement on August
30, 2000. At the closing of the merger, Travelers was issued 100,000 shares of
PLD Telekom common stock that were converted into shares of our common stock at
the exchange ratio described above in the merger. Travelers was also issued
10-year warrants to purchase 700,000 shares of our common stock with an exercise
price to be determined in December 2000 between $10.00 and $15.00 per share.
However, if the amount outstanding has not been fully repaid by August 30, 2000,
then the exercise price of the warrants will be reset to $.01. Travelers will
maintain its existing security interests in certain PLD Telekom assets and its
debt will be guaranteed by us and three of PLD Telekom's subsidiaries.
Also in connection with our merger with PLD Telekom, PLD Telekom purchased
all of the shares of Technocom Limited from its existing minority shareholders
for an aggregate purchase price of $12.6 million. Technocom Limited is now
wholly owned by PLD Telekom.
SELLING STOCKHOLDERS
Before the completion of our merger with PLD Telekom, the selling
stockholders beneficially owned approximately 38% of the outstanding voting
stock of PLD Telekom. Pursuant to our agreement to merge with PLD Telekom, all
of the shares of PLD Telekom common stock held by the selling stockholders were
be converted into shares of our common stock. As of September 30, 1999, the
selling stockholders
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beneficially owned approximately 9,136,744 shares of our common stock or
approximately 9.8% of our outstanding voting stock. All of their shares are
covered by this prospectus.
In connection with our agreement to merge with PLD Telekom, the selling
stockholders agreed to vote in favor of the merger and against any competing
proposal. As a result, we have agreed to put in place and have declared
effective no later than six months after the merger is consummated the shelf
registration statement of which this prospectus is a part for the shares of our
common stock that the selling stockholders received in the merger in exchange
for their shares of PLD Telekom common stock.
Metromedia Company, which with its partners is our largest stockholder, has
agreed to grant the selling stockholders tag-along rights on sales by Metromedia
Company of our common stock. So long as the selling stockholders own more than
5% of our outstanding common stock, each time Metromedia Company and its
partners sell any shares of our common stock, the selling stockholders will have
the right to sell a proportionate amount of their shares of our common stock to
the buyer of the shares sold by Metromedia Company.
In addition, before the completion of the merger, the selling stockholders
had the right to nominate four directors to PLD Telekom's board of directors.
However, I. Martin Pompadur, an officer of News America Incorporated, was the
sole nominee of the selling stockholders on PLD Telekom's board of directors at
that time. In connection with the merger, we expanded the size of our board of
directors from nine to eleven members and permitted the selling stockholders to
designate a nominee, I. Martin Pompadur, to fill one of the newly-created
vacancies.
Also in connection with the merger, the selling stockholders agreed not to
convert their outstanding loans to PLD Telekom into shares of common stock of
PLD Telekom before the closing of the merger. At the closing, all principal
($6.45 million outstanding as of the date of the merger) and accrued interest,
payable at a reduced 10% interest rate, were paid in full and the selling
stockholders were also released from their obligations under $3.1 million of
guarantees made on behalf of PLD Telekom to The Travelers Insurance Company and
The Travelers Indemnity Company.
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
our 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:
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- 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;
- 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;
- an exchange distribution in accordance with the rules of such exchange;
- through the writing of options on the shares; and
- directly or through brokers or agents in private sales at negotiated
prices.
If necessary, we may file with the Securities and Exchange Commission a
supplemental prospectus which describes the method of sale in greater detail
pursuant to Rule 424(c) under the Securities Act of 1933 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
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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 Securities Act of 1933 may be sold under Rule 144 rather than pursuant
to this prospectus.
We will bear all expenses in connection with the registration, offering and
sale of the shares, other than commissions, fees and discounts of underwriters,
brokers or dealers and fees and expenses of counsel or other advisors to the
selling stockholders. We have agreed to indemnify the selling stockholders
against certain liabilities, including liabilities under the Securities Act of
1933.
The selling stockholders and any underwriter, broker or dealer who acts in
connection with the sale of the shares with this prospectus may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, 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 Securities Act of 1933.
LEGAL MATTERS
The validity of the shares of our common stock offered hereby and certain
other legal matters in connection with this offering will be passed upon on our
behalf by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York.
EXPERTS
The consolidated financial statements of Metromedia International Group,
Inc. and its subsidiaries at December 31, 1998 and 1997 and for each of the
years in the three-year period ended December 31, 1998, have been audited by
KPMG LLP, independent certified public accountants, as set forth in their report
with respect to these consolidated financial statements. These consolidated
financial statements are included in our annual report on Form 10-K/A for the
year ended December 31, 1998, and are incorporated by reference in this
prospectus in reliance upon the report given and upon the authority of such firm
as experts in accounting and auditing.
The consolidated financial statements of PLD Telekom Inc. and subsidiaries
as of December 31, 1998 and 1997 and for the years then ended, have been audited
by KPMG LLP, independent certified public accountants, as set forth in their
report with respect to these consolidated financial statements. The report of
KPMG LLP covering the December 31, 1998 consolidated financial statements
contains an explanatory paragraph that states that PLD Telekom Inc.'s recurring
losses, working capital deficiency, and lack of sufficient funds to meet its
current debt obligations raise 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.
These consolidated financial statements are included in PLD Telekom Inc.'s
annual report on Form 10-K/A for the year ended December 31, 1998, and are
incorporated by reference in this prospectus in reliance upon the report given
and upon the authority of said firm as experts in accounting and auditing.
The consolidated statements of operations, shareholders' equity and cash
flows of PLD Telekom Inc. and subsidiaries for the year ended December 31, 1996,
have been audited by KPMG LLP, chartered accountants, as set forth in their
report with respect to these consolidated financial statements. These
consolidated financial statements are included in PLD Telekom Inc.'s annual
report on Form 10-K/A for the year ended December 31, 1998, and are incorporated
by reference in this prospectus in reliance upon the report given and upon the
authority of said firm as experts in accounting and auditing.
The financial statements of PLD Capital Asset (U.S.) Inc. as of December 31,
1998 and for the year then ended, have been audited by KPMG LLP, independent
certified public accountants, as set forth in
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their report with respect to these financial statements. The report of KPMG LLP
covering the December 31, 1998 financial statements contains an explanatory
paragraph that states that PLD Capital Asset (U.S.) Inc.'s parent, PLD Telekom
Inc., does not presently have sufficient funds on hand to meet its current debt
obligations. PLD Telekom Inc.'s failure to make payment in full when required
could result in a cross-default under and acceleration of other debt obligations
for which PLD Capital Asset (U.S.) Inc. is a guarantor. These factors raise
substantial doubt about the entity'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. These financial statements are included in PLD
Telekom Inc.'s annual report on Form 10-K/A for the year ended December 31,
1998, and are incorporated by reference in this prospectus in reliance upon the
report given and upon the authority of said firm as experts in accounting and
auditing.
The financial statements of Baltic Communications Limited as of December 31,
1998 and 1997 and for the years ended December 31, 1998 and 1997 and the nine
months ended December 31, 1996, have been audited by KPMG, independent auditors,
as set forth in their report with respect to these financial statements. The
report of KPMG covering the December 31, 1998 financial statements contains an
explanatory paragraph that states that Baltic Communications Limited's parent,
PLD Telekom Inc., does not presently have sufficient funds on hand to meet its
current debt obligations. Baltic Communications Limited is a guarantor of such
obligations. PLD Telekom Inc.'s failure to make payments in full when required
could result in a claim being made against Baltic Communications Limited under
its guaranty and a cross-default under and acceleration of other debt
obligations for which Baltic Communications Limited is also a guarantor. These
factors raise substantial doubt about the entity'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. These financial statements
are included in PLD Telekom Inc.'s annual report on Form 10-K/A for the year
ended December 31, 1998, and are incorporated by reference in this prospectus in
reliance upon the report given and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of NWE Capital (Cyprus) Ltd. and
subsidiaries as of December 31, 1998 and 1997 and for each of the years in the
three-year period ended December 31, 1998, have been audited by KPMG,
independent auditors, as set forth in their report with respect to these
consolidated financial statements. The report of KPMG covering the December 31,
1998 consolidated financial statements contains an explanatory paragraph that
states that NWE Capital (Cyprus) Ltd.'s parent, PLD Telekom Inc., does not
presently have sufficient funds on hand to meet its current debt obligations.
PLD Telekom Inc.'s failure to make payments in full when required could result
in a cross default under and acceleration of other debt obligations for which
NWE Capital (Cyprus) Ltd. is a guarantor. These factors raise substantial doubt
about the entity's ability to continue as a going concern. These consolidated
financial statements do not include any adjustments that might result from the
outcome of that uncertainty. These consolidated financial statements are
included in PLD Telekom Inc.'s annual report on Form 10-K/A for the year ended
December 31, 1998, and are incorporated by reference in this prospectus in
reliance upon the report given and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Technocom Limited and subsidiaries
as of December 31, 1998 and 1997 and for each of the years in the three-year
period ended December 31, 1998, have been audited by KPMG, chartered
accountants, as set forth in their report with respect to these consolidated
financial statements. The report of KPMG covering the December 31, 1998
consolidated financial statements contains an explanatory paragraph that states
that Technocom Limited's recurring losses, working capital deficiency and lack
of sufficient funds on hand to meet its current obligations raise 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. These consolidated financial
statements are included in PLD Telekom Inc.'s annual report on Form 10-K/A for
the year ended December 31, 1998, and are incorporated by reference in this
prospectus in reliance upon the report given and upon the authority of said firm
as experts in accounting and auditing.
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The consolidated financial statements of Wireless Technology Corporations
Limited and subsidiary as of December 31, 1998 and 1997 and for each of the
years in the three-year period ended December 31, 1998, have been audited by
KPMG, independent auditors, as set forth in their report with respect to these
consolidated financial statements. The reports of KPMG covering the December 31,
1998 consolidated financial statements contains an explanatory paragraph that
states that Wireless Technology Corporation Limited's parent, PLD Telekom Inc.,
does not presently have sufficient funds on hand to meet its current debt
obligations. Wireless Technology Corporation Limited is a guarantor of such
obligations. PLD Telekom Inc.'s failure to make payment in full when required
could result in a claim being made against Wireless Technology Corporations
Limited under its guaranty and a cross-default under and acceleration of other
debt obligations for which Wireless Technology Corporations Limited is also a
guarantor. These factors raise 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.
These consolidated financial statements are included in PLD Telekom Inc.'s
annual report on Form 10-K/A for the year ended December 31, 1998, and are
incorporated by reference in this prospectus in reliance upon the report given
and upon the authority of said firm as experts in accounting and auditing.
The financial statements of PLD Asset Leasing Limited as of December 31,
1997 and 1996 and for each of the years in the two-year period ended December
31, 1997 have been audited by Moore Stephens, chartered accountants, as set
forth in their report with respect to these financial statements. These
financial statements are included in PLD Telekom Inc.'s annual report on Form
10-K/A for the year ended December 31, 1998, and are incorporated by reference
in this prospectus in reliance upon the report given and upon the authority of
said firm as experts in accounting and auditing.
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METROMEDIA INTERNATIONAL GROUP, INC.
------------------------
PROSPECTUS
, 1999
------------------------
No person has been authorized to give any information or to make any
representation other than those contained in this prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy
these securities in any circumstances in which this offer or solicitation is
unlawful. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of Metromedia International Group since the date of this
prospectus or that the information contained in this prospectus is correct as of
any time subsequent to its date.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 10,954
AMEX Additional listing fee........................................ 17,500
Accountant's fees and expenses..................................... 5,000
Legal fees and expenses............................................ 25,000
Miscellaneous...................................................... 1,000
---------
Total.......................................................... $ 59,454
---------
---------
</TABLE>
The foregoing items, except for the Securities and Exchange Commission
registration fee, are estimated. We will pay all of the above expenses. The
selling stockholders will pay their own expenses, including expenses of their
own counsel, broker or dealer fees, commissions, discounts and expenses, and all
transfer and other taxes on the sale of the shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the Delaware General Corporation Law provides that a
Delaware corporation may 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 the person 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 enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with such action, suit or proceeding if the person
in good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe the person's conduct was
unlawful.
Section 145(b) of the Delaware General Corporation Law provides that a
Delaware corporation may 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 right of the corporation to procure a judgment in its favor by
reason of the fact that the person acted in any of the capacities described
above, against expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of this
action or suit if the person acted under similar standards as those described
above, 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 in which such action or
suit was brought shall determine that, despite the adjudication of liability but
in view of all the circumstances of the case, this person is fairly and
reasonably entitled to be indemnified for these expenses which the court shall
deem proper.
Section 145 of the Delaware General Corporation Law further provides that to
the extent a present or former 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, this person must be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by this person in connection therewith. Section 145 also provides that
this indemnification shall not be deemed exclusive of any other rights to which
the party seeking indemnification may be entitled and that the corporation may
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation or, at the corporation's request, as such in another
corporation, partnership, trust or other enterprise against any liability
asserted against this person or incurred by this person in any such capacity or
arising out of this
II-1
<PAGE>
person's status as such whether or not the corporation would have the power to
indemnify this person against these liabilities under Section 145 of the
Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
corporation in its certificate of incorporation may eliminate or limit personal
liability of members of its board of directors or governing body to the
corporation or its stockholders for monetary damages for breach of a director's
fiduciary duty. However, no such provision may eliminate or limit the liability
of a director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating a law, unlawfully
paying a dividend or approving a stock repurchase which was illegal, or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission, for
breach of fiduciary duty.
In accordance with Section 145 of the Delaware General Corporation Law, our
restated certificate of incorporation provides that we will indemnify our
officers and directors against, among other things, any and all judgments,
fines, penalties, amounts paid in settlements and expenses paid or incurred by
virtue of the fact that this officer or director was acting in that capacity to
the extent not prohibited by law. In addition, as permitted by Section 102(b)(7)
of the Delaware General Corporation Law, our restated certificate of
incorporation contains a provision limiting the personal liability of our
directors for violations of their fiduciary duties to the fullest extent
permitted by the Delaware General Corporation Law. The general effect of this
provision is to eliminate a director's personal liability for monetary damages
for actions involving a breach of his or her fiduciary duty of care, including
any action involving gross negligence. Also, in accordance with the Delaware
General Corporation Law and pursuant to our restated certificate of
incorporation, we are authorized to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of Metromedia
International Group, is or was serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against this person and incurred
by this person in that capacity, or arising out of this person's status as such,
whether or not we would have the power to indemnify this person against
liability under the Delaware General Corporation law.
We have entered into agreements with certain of our directors and officers
which require us to indemnify each of our directors and officers against, and to
advance expenses incurred by each of them in the defense of, any claim arising
out of their employment to the fullest extent permitted under law. These
indemnification agreements also provide, among other things, for (1) advancement
by Metromedia International Group of expenses incurred by the director or
officer in defending certain litigation, (2) the appointment of an independent
legal counsel to determine whether the director or officer is entitled to
indemnity and (3) the continued maintenance by Metromedia International Group of
directors' and officers' liability insurance providing each director or officer
who is a party to any such agreement with $5 million of primary coverage and an
excess policy providing $5 million of additional coverage. These indemnification
agreements were approved by our stockholders at their 1993 annual meeting.
We are a party to a management agreement with Metromedia Company dated
November 1, 1995 pursuant to which Metromedia Company provides us with
management services, including legal, insurance, payroll and financial
accounting systems and cash management, tax and benefit plans in return for a
management fee. We are also obligated to reimburse Metromedia Company for all
its out-of-pocket costs and expenses incurred and advances paid by Metromedia
Company in connection with the agreement. We have also agreed to indemnify and
hold harmless Metromedia Company from and against any and all damages,
liabilities, losses, claims, actions, suits, proceedings, fees, costs or
expenses (including reasonable attorneys' fees and other costs and expenses to
any suit, proceeding or investigation of any kind) imposed on, incurred by or
asserted against Metromedia Company in connection with the management agreement.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------
<S> <C>
2.1** Agreement and Plan of Merger, dated as of May 18, 1999, by and among Metromedia
International Group, Moscow Communications, Inc. and PLD Telekom Inc.
(incorporated by reference from Metromedia International Group's current report
on Form 8-K filed with the Securities and Exchange Commission for the event dated
May 18, 1999).
2.3** Amended and Restated Agreement and Plan of Merger dated as of September 27, 1995
by and among The Actava Group Inc., Orion Pictures Corporation, MCEG Sterling
Incorporated, Metromedia International Telecommunications, Inc., OPG Merger Corp.
and MITI Merger Corp. and exhibits thereto (incorporated by reference from
Metromedia International Group's current report on Form 8-K for the event
occurring on September 27, 1995).
2.5** Agreement and Plan of Merger dated as of January 31, 1996 by and among Metromedia
International Group, Inc., The Samuel Goldwyn Company and SGC Merger Corp. and
exhibits thereto (incorporated by reference from Metromedia International Group's
current report on Form 8-K for the event dated January 31, 1996).
3.1** Restated Certificate of Incorporation of Metromedia International Group, Inc.
(incorporated by reference from Metromedia International Group's Registration
Statement on Form S-3 (Registration No. 33-63853)).
3.2** By-laws of Metromedia International Group, Inc. (incorporated by reference from
Metromedia International Group's Registration Statement on Form S-3 (Registration
No. 33-63853)).
3.3** Certificate of Amendment to the Restated Certificate of Incorporation of
Metromedia International Group, Inc. (incorporated by reference from Metromedia
International Group's Schedule 14A, dated August 6, 1996, for the annual meeting
of stockholders dated August 29, 1996).
4.1** Form of Common Stock Certificate for Metromedia International Group, Inc.
(incorporated by reference from Metromedia International Group's Registration
Statement on Form S-4 (Registration No. 333-86203)).
4.2** Form of Indenture for the 10 1/2% Senior Discount Notes due 2007 of Metromedia
International Group, between Metromedia International Group and U.S. Bank Trust
National Association as Trustee (incorporated by reference from Metromedia
International Group's Registration Statement on Form S-4 (Registration No.
333-79325)).
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison regarding the legality of the
securities being offered.
10.1** 1982 Stock Option Plan of The Actava Group Inc. (incorporated by reference from
Metromedia International Group's proxy statement dated March 31, 1982).
10.2** 1989 Stock Option Plan of The Actava Group Inc. (incorporated by reference from
Metromedia International Group's proxy statement dated March 31, 1989).
10.3** 1969 Restricted Stock Plan of The Actava Group Inc. (incorporated by reference
from Metromedia International Group's Annual Report on Form 10-K for the year
ended December 31, 1990).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------
<S> <C>
10.4** 1991 Non-Employee Director Stock Option Plan (incorporated by reference from
Metromedia International Group's Annual Report on Form 10-K for the year ended
December 31, 1991).
10.5** Amendment to 1991 Non-Employee Director Stock Option Plan (incorporated by
reference from Metromedia International Group's Annual Report on Form 10-K for
the year ended December 31, 1992).
10.6** Snapper Power Equipment Profit Sharing Plan (incorporated by reference from
Metromedia International Group's Annual Report on Form 10-K for the year ended
December 31, 1987).
10.7** Retirement Plan executed November 1, 1990, as amended effective January 1, 1989
(incorporated by reference from Metromedia International Group's Annual Report on
Form 10-K for the year ended December 31, 1990).
10.8** Supplemental Retirement Plan of The Actava Group Inc. (incorporated by reference
from Metromedia International Group's Annual Report on Form 10-K for the year
ended December 31, 1983).
10.9** Supplemental Executive Medical Reimbursement Plan (incorporated by reference from
Metromedia International Group's Annual Report on Form 10-K for the year ended
December 31, 1990).
10.10** Amendment to Supplemental Retirement Plan of The Actava Group Inc., effective
April 1, 1992 (incorporated by reference from Metromedia International Group's
Annual Report on Form 10-K for the year ended December 31, 1991).
10.11** 1992 Officer and Director Stock Purchase Plan (incorporated by reference from
Metromedia International Group's Annual Report on Form 10-K for the year ended
December 31, 1991).
10.12** Form of Restricted Purchase Agreement between certain officers of The Actava
Group Inc. and The Actava Group Inc. (incorporated by reference from Metromedia
International Group's Annual Report on Form 10-K for the year ended December 31,
1991).
10.14** Form of Indemnification Agreement between Actava and certain of its directors and
executive officers (incorporated by reference from Metromedia International
Group's Annual Report on Form 10-K for the year ended December 31, 1993).
10.21** Environmental Indemnity Agreement dated as of December 6, 1994 between The Actava
Group Inc. and Roadmaster (incorporated by reference from Metromedia
International Groups Annual Report on Form 10-K for the year ended December 31,
1994).
10.37** Management Agreement dated November 1, 1995 between Metromedia Company and
Metromedia International Group, Inc. (incorporated by reference from Metromedia
International Group's Annual Report on Form 10-K for the year ended December 31,
1995).
10.38** The Metromedia International Group, Inc. 1996 Incentive Stock Plan (incorporated
by reference from Metromedia International Group's Proxy Statement dated August
6, 1996).
10.39** License Agreement dated November 1, 1995 between Metromedia Company and
Metromedia International Group, Inc. (incorporated by reference from Metromedia
International Group's Annual Report on Form 10-K for the year ended December 31,
1995).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------
<S> <C>
10.41** Metromedia International Telecommunications, Inc. 1994 Stock Plan (incorporated
by reference from Metromedia International Group's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996).
10.45** Loan and Security Agreement, dated November 11, 1998 among Snapper, Inc., the
lenders named therein and Fleet Capital Corporation, as agent (incorporated by
reference from Metromedia International Group's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998).
10.46** Limited Guaranty Agreement dated November 11, 1998 by Metromedia International
Group, Inc. in favor of Fleet Capital Corporation (incorporated by reference from
Metromedia International Group's Annual Report on Form 10-K for the year ended
December 31, 1998).
10.47** Amendment No. 1 to License Agreement dated June 13, 1996 between Metromedia
Company and Metromedia International Group, Inc. (incorporated by reference from
Metromedia International Group's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.48** Amendment No. 1 to Management Agreement dated as of January 1, 1997 between
Metromedia Company and Metromedia International Group, Inc. (incorporated by
reference from Metromedia International Group's Annual Report on Form 10-K for
the year ended December 31, 1996).
10.49** Amended and Restated Agreement and Plan of Merger, dated as of May 17, 1996
between Metromedia International Group, Inc., MPCA Merger Corp. and Bradley
Krevoy and Steven Stabler and Motion Picture Corporation of America (incorporated
by reference from Metromedia International Group's Annual Report on Form 10-K for
the year ended December 31, 1996).
10.50** Asset Purchase Agreement dated as of December 17, 1997 (incorporated by reference
from Metromedia International Group's Annual Report on Form 10-K for the year
ended December 31, 1997).
10.51** Voting Agreement, dated as of May 18, 1999, by and among Metromedia International
Group, News America Incorporated, News PLD LLC and Metromedia Company
(incorporated by reference from Metromedia International Group's Current Report
on Form 8-K for the event dated May 18, 1999).
10.52** Registration Rights Agreement, dated as of May 18, 1999, among Metromedia
International Group, News America Incorporated and News PLD LLC (incorporated by
reference from Metromedia International Group's Current Report on Form 8-K for
the event dated May 18, 1999).
10.53** Agreement to Consent and Exchange, dated as of May 18, 1999, by and among
Metromedia International Group, PLD Telekom Inc. and certain note holders named
therein (incorporated by reference from Metromedia International Group's Current
Report on Form 8-K for the event dated May 18, 1999).
10.54** Letter Agreement, dated as of May 18, 1999, by and among Metromedia International
Group, The Travelers Insurance Company and The Travelers Indemnity Company
(incorporated by reference from Metromedia International Group's Current Report
on Form 8-K for the event dated May 18, 1999).
10.55** Letter Agreement, dated as of May 18, 1999, between Metromedia International
Group and News America Incorporated (incorporated by reference from Metromedia
International Group's Current Report on Form 8-K for the event dated May 18,
1999).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------
<S> <C>
10.56** Modification Agreement, dated as of May 18, 1999, among PLD Telekom, Metromedia
International Group, Technocom Limited, Plicom Limited, Elite International
Limited, Mark Klabin and Boris Antoniuk (incorporated by reference from
Metromedia International Group's Current Report on Form 8-K for the event dated
May 18, 1999).
10.57** Modification Agreement, dated as of May 18, 1999, among PLD Telekom, Metromedia
International Group, Technocom Limited, Elite International Limited and Boris
Antoniuk (incorporated by reference from Metromedia International Group's Current
Report on Form 8-K for the event dated May 18, 1999).
10.58** Bridge Loan Agreement, dated as of May 18, 1999, between PLD Telekom Inc. and
Metromedia International Group (incorporated by reference from Metromedia
International Group's Current Report on Form 8-K for the event dated May 18,
1999).
10.59** Pledge Agreement, dated as of May 18, 1999, between Metromedia International
Group and PLD Telekom Inc. (incorporated by reference from Metromedia
International Group's Current Report on Form 8-K for the event dated May 18,
1999).
21.1** List of Subsidiaries of Metromedia International Group, Inc.
23.1* Consent of KPMG LLP.
23.2* Consent of KPMG LLP.
23.3* Consent of KPMG LLP.
23.4* Consent of KPMG LLP.
23.5* Consent of KPMG.
23.6* Consent of KPMG.
23.7* Consent of KPMG.
23.8* Consent of KPMG.
23.9* Consent of Moore Stephens.
23.10* Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in the opinion
filed as Exhibit 5.1 to this Registration Statement).
24.1** Power of Attorney (included on the signature page of this Registration
Statement).
</TABLE>
- ------------------------
* Filed herewith
** Previously Filed
(b) Financial Data Schedules
Schedule II, Condensed financial information of the registrant, and Schedule
V, Valuation and qualifying accounts are incorporated by reference from
Metromedia International Group's annual report on Form 10-K for the fiscal year
ended December 31, 1998.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 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,
II-6
<PAGE>
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of their 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 of 1933 and will be
governed by the final adjudication of such issue.
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 to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 30th day of
September, 1999.
<TABLE>
<S> <C> <C>
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ STUART SUBOTNICK
-----------------------------------------
Name: Stuart Subotnick
Title: President and Chief Executive
Officer
</TABLE>
KNOWN ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Silvia Kessel and Arnold L. Wadler
and each of them, his or her true and lawful agent, proxy and attorney-in-fact,
each acting alone, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities to (i)
act on, sign and file with the Securities and Exchange Commission any and all
amendments (including post-effective amendments) to this registration statement
together with all schedules and exhibits thereto and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, together with all schedules and exhibits thereto, (ii) act on, sign and
file such certificates, instruments, agreements and other documents as may be
necessary or appropriate in connection therewith, (iii) act on and file any
supplement to any prospectus included in this registration statement or any such
amendment or any subsequent registration statement filed pursuant to Rule 426(b)
under the Securities Act of 1933, as amended, and (iv) take any and all actions
which may be necessary or appropriate in connection therewith, granting unto
such agents, proxies and attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing necessary or
appropriate to be done, as fully for all intents and purposes as he or she might
or could do in person, hereby approving, ratifying and confirming all that such
agents, proxies and attorneys-in-fact, any of them or any of his or her or their
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated, on September 30, 1999.
<TABLE>
<C> <S>
/s/ JOHN W. KLUGE
- -------------------------------------------- Chairman of the Board of Directors
John W. Kluge
Vice Chairman of the Board of Directors,
/s/ STUART SUBOTNICK President and Chief Executive Officer
- -------------------------------------------- (Principal Executive Officer) Stuart
Stuart Subotnick Subotnick
/s/ SILVIA KESSEL Executive Vice President, Chief Financial
- -------------------------------------------- Officer, Treasurer and Director (Principal
Silvia Kessel Financial Officer) Silvia Kessel
/s/ ARNOLD L. WADLER
- -------------------------------------------- Executive Vice President, General Counsel,
Arnold L. Wadler Secretary and Director
/s/ VINCENT D. SASSO, JR.
- -------------------------------------------- Vice President (Principal Accounting Officer)
Vincent D. Sasso, Jr.
</TABLE>
II-8
<PAGE>
<TABLE>
<C> <S>
- -------------------------------------------- Director
John P. Imlay, Jr.
/s/ CLARK A. JOHNSON
- -------------------------------------------- Director
Clark A. Johnson
- -------------------------------------------- Director
Carl E. Sanders
/s/ RICHARD J. SHERWIN
- -------------------------------------------- Director
Richard J. Sherwin
- -------------------------------------------- Director
Leonard White
</TABLE>
II-9
<PAGE>
Exhibit 5.1
[PAUL, WEISS, RIFKIND, WHARTON & GARRISON LETTERHEAD]
September 30, 1999
Metromedia International Group, Inc.
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Metromedia International Group, Inc.
Registration Statement on Form S-3
Dear Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3 (the
"Registration Statement") filed by Metromedia International Group, Inc., a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations promulgated thereunder (the "Rules"), we have been
requested by the Company to render our opinion as to the legality of the
securities being registered under the
<PAGE>
Metromedia International Group, Inc. 2
Registration Statement. The Registration Statement relates to 9,136,744 shares
(the "Shares") of common stock, par value $1.00 per share (the "Common Stock"),
of the Company, which will be issued in exchange for shares of common stock of
PLD Telekom Inc. ("PLD") held by News America Incorporated and News PLD LLC
pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of May 18, 1999, among the Company, PLD and Moscow Communications, Inc., a
Delaware corporation and wholly owned subsidiary of the Company ("Moscow"),
providing for the merger of PLD with and into Moscow, with PLD as the surviving
corporation in the merger.
In connection with the furnishing of this opinion, we have
examined originals, conformed copies or photocopies, certified or otherwise
identified to our satisfaction, of the following documents (collectively, the
"Documents"):
1. the Registration Statement;
2. the Merger Agreement;
3. the Restated Certificate of Incorporation of the
Company, as amended, included as Exhibits 3.1 and 3.3
to the Registration Statement, and the By-laws of the
Company, included as Exhibit 3.2 to the Registration
Statement (collectively, the "Charter Documents");
and
4. the form of certificate for the shares of Common
Stock of the Company included as Exhibit 4.1 to the
Registration Statement.
In addition, we have examined those corporate records of the
Company as we have considered appropriate and those other certificates,
agreements and documents as we deemed relevant and necessary as a basis for the
opinion expressed below.
In our examination of the documents referred to above, we have
assumed, without independent investigation, (i) the authorization, execution and
<PAGE>
Metromedia International Group, Inc. 3
delivery of the Documents by each party to them other than the Company, (ii) the
enforceability of the documents reviewed by us against each party to them other
than the Company, (iii) that the Shares will be issued substantially as
described in the Registration Statement, (iv) the genuineness of all signatures,
(v) the authenticity of all documents submitted to us as originals, (vi) the
conformity to the original documents of all documents submitted to us as
certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (vii) the authenticity of the latter documents;
(viii) that the statements regarding matters of fact in the certificates,
records, agreements, instruments and documents that we examined are accurate and
complete, and (ix) the legal capacity of all individuals who have executed any
of the documents which we examined.
In expressing the opinion set forth below, we have relied upon
the factual matters contained in the representations and warranties of the
Company made in the Documents and in certificates of officers of the Company and
upon certificates of public officials.
Based on the foregoing, and subject to the stated assumptions,
exceptions and qualifications, we are of the opinion that the Shares have been
duly authorized for issuance and that such Shares, when issued and delivered by
the Company as contemplated by the Merger Agreement and as described in the
Registration Statement, will be validly issued, fully paid and nonassessable.
Our opinion expressed above is limited to the laws of the
State of New York, the General Corporation Law of the State of Delaware and the
Federal laws of the United States of America. Our opinion is also rendered only
with respect to the laws and the rules, regulations and orders under those laws
that are currently in effect.
We hereby consent to the use of our name in the Registration
Statement
<PAGE>
Metromedia International Group, Inc. 4
and in the prospectus in the Registration Statement as it appears in the
caption "Legal Matters" and to the filing of this opinion as an exhibit to
the Registration Statement. In giving this consent, we do not hereby agree
that we come within the category of persons whose consent is required by the
Act or the Rules.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Metromedia International Group, Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the headings "Experts" in the registration
statement.
KPMG LLP
New York, New York
September 24, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
PLD Telekom Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Our report dated March 30, 1999 contains an explanatory paragraph that
states the Company has suffered recurring losses, has a working capital
deficiency, and does not presently have sufficient funds on hand to meet its
current debt obligations. These factors raise substantial doubt the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
KPMG LLP
New York, New York
September 24, 1999
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
PLD Capital Asset (U.S.) Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Our report dated March 30, 1999 contains an explanatory paragraph that
states that the Company's parent, PLD Telekom Inc. (PLD) does not presently have
sufficient funds on hand to meet its current debt obligations. PLD's failure to
make payment in full when required could result in a cross-default under and
acceleration of other debt obligations for which the Company is a guarantor.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
KPMG LLP
New York, New York
September 24, 1999
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
PLD Telekom Inc.:
We consent to the use of our report dated March 21, 1997 incorporated herein
by reference and to the reference to our firm under the heading "Experts" in the
registration statement.
KPMG LLP
Chartered Accountants
Calgary, Canada
September 24, 1999
<PAGE>
EXHIBIT 23.5
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
NWE Capital (Cyprus) Ltd.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Our report dated March 30, 1999 contains an explanatory paragraph that
states that the Company's parent, PLD Telekom Inc. (PLD) does not presently have
sufficient funds on hand to meet its current debt obligations. PLD's failure to
make payment in full when required could result in a cross-default under and
acceleration of other debt obligations for which the Company is a guarantor.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
KPMG
St. Petersburg, Russia
September 24, 1999
<PAGE>
EXHIBIT 23.6
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Baltic Communications Limited:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Our report dated March 30, 1999 contains an explanatory paragraph that
states that the Company's parent, PLD Telekom Inc. (PLD) does not presently have
sufficient funds on hand to meet its current debt obligations. The Company is a
guarantor of such obligations. PLD's failure to make payment in full when
required could result in a claim being made against the Company under its
guaranty and a cross-default under and acceleration of other debt obligations
for which the Company is also a guarantor. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
KPMG
St. Petersburg, Russia
September 24, 1999
<PAGE>
EXHIBIT 23.7
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Wireless Technology Corporations Limited:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Our report dated February 17, 1999 contains an explanatory paragraph that
states that the Company's parent, PLD Telekom Inc. (PLD) does not presently have
sufficient funds on hand to meet its current debt obligations. The Company is a
guarantor of such obligations. PLD's failure to make payment in full when
required could result in a claim being made against the Company under its
guaranty and a cross-default under and acceleration of other debt obligations
for which the Company is also a guarantor. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
KPMG
Almaty, Kazakhstan
September 24, 1999
<PAGE>
EXHIBIT 23.8
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Technocom Limited:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Our report dated March 30, 1999 contains an explanatory paragraph that
states that the Company has suffered recurring losses, has a working capital
deficiency, and does not presently have sufficient funds on hand to meet its
current obligations. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
KPMG
Chartered Accountants
Dublin, Ireland
September 24, 1999
<PAGE>
EXHIBIT 23.9
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
PLD Asset Leasing Ltd.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the registration
statement.
Moore Stephens
Chartered Accountants
Nicosia, Cyprus
September 24, 1999
