<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
- -------------------------------------------------------------------------------
(Name of Issuer)
NATIONAL TELEPHONE COMPANY OF VENEZUELA (CANTV)
- -------------------------------------------------------------------------------
(Translation of Name of Issuer Into English)
CLASS D COMMON SHARES,
NOMINAL VALUE Bs. 36.90182224915 PER SHARE (the "Class D Shares")
AMERICAN DEPOSITARY SHARES EACH REPRESENTING
SEVEN CLASS D SHARES (the "ADSs")
- -------------------------------------------------------------------------------
(Title of Class of Securities)
P3055Q103 (Class D Shares); 204421101 (ADSs)
- -------------------------------------------------------------------------------
(CUSIP Number)
Marianne Drost, 1255 Corporate Drive
Irving, Texas 75038 Tel: (972) 507-2105
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 23, 1998
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP No. P3055Q103 (Class D Shares) PAGE 2
204421101 (ADSs)
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GTE Venezuela Incorporated
IRS Identification No. 13-3634506
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
Not Applicable
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Class D Shares: 32,945,829
NUMBER OF ADSs: 4,706,547
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY Class D Shares: None
EACH ADSs: None
REPORTING ----------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH Class D Shares: 32,945,829
ADSs: 4,706,547
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
Class D Shares: None
ADSs: None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Class D Shares: 32,945,829
ADSs: 4,706,547
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Class D Shares: 8.5%
ADSs: 8.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE> 3
CUSIP No. P3055Q103 (Class D Shares) PAGE 3
204421101 (ADSs)
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GTE Corporation
IRS Identification No. 13-1678633
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
Not Applicable
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Class D Shares: 32,945,829
NUMBER OF ADSs: 4,706,547
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY Class D Shares: None
EACH ADSs: None
REPORTING ----------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH Class D Shares: 32,945,829
ADSs: 4,706,547
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
Class D Shares: None
ADSs: None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Class D Shares: 32,945,829
ADSs: 4,706,547
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Class D Shares: 8.5%
ADSs: 8.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE> 4
4
The following is a second amendment to the Statement on
Schedule 13D (the "Schedule 13D"), filed by GTE Corporation and GTE Venezuela
Incorporated on December 9, 1996 and amended on December 18, 1998, in connection
with the purchase by GTE Venezuela Incorporated of American Depositary Shares
each representing seven Class D Shares nominal par value Bs. 36.90182224915 of
Compania Anonima Nacional Telefonos de Venezuela (CANTV).
Item 1 of the Schedule 13D is amended in its entirety to read as follows:
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D relates to 4,706,547 American
Depository Shares (the "ADSs") each representing seven Class D Shares nominal
value Bs. 36.90182224915 per share (the "Class D Shares") of Compania Anonima
Nacional Telefonos de Venezuela (CANTV) (the "Issuer") owned beneficially by GTE
Corporation through its indirect wholly-owned subsidiary GTE Venezuela
Incorporated. CANTV has its principal executive offices at Edificio CANTV,
Primer Piso, Avenida Libertador, Caracas, Venezuela. The ADSs are evidenced by
American Depositary Receipts ("ADRs") issued under a Deposit Agreement dated as
of November 27, 1996 among CANTV, Citibank, N.A., as depositary (the
"Depositary"), and the holders and beneficial owners from time to time of ADRs
issued thereunder. The principal executive offices of the Depositary are 111
Wall Street, New York, New York 10005.
Item 2 of the Schedule 13D is amended in its entirety to read as follows:
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by GTE Corporation, which is
incorporated in New York, and by its indirect wholly-owned subsidiary, GTE
Venezuela Incorporated ("GTE Venezuela"), which is incorporated in Delaware. GTE
Corporation is one of the largest publicly held telecommunications companies in
the world and a leading provider of integrated telecommunications services. In
the United States, GTE provides local service in 28 states and wireless service
in 17 states; nationwide long-distance service and internetworking services
ranging from dial-up Internet access for residential and small business
consumers to Web-based applications for Fortune 500 companies; as well as video
service in selected markets. Outside the United States, the company serves 9
million telecommunications customers. In addition, GTE is also a leader in
government and defense communications systems and equipment, directories and
telecommunications-based information services, and aircraft-passenger
telecommunications. GTE Venezuela acts as a holding company for GTE
Corporation's investment in the Issuer. GTE Corporation and GTE Venezuela are
sometimes referred to herein as the "Reporting Persons." GTE Venezuela is a
wholly-owned subsidiary of GTE International Telecommunications Incorporated
("GTE International"), a Delaware corporation, which in turn is a wholly-owned
subsidiary of GTE Corporation. The principal business office of GTE Corporation,
GTE International and GTE Venezuela is 1255 Corporate Drive, Irving, Texas
75038-2518, U.S.A.
<PAGE> 5
5
The name, residence or business address, principal occupation
or employment and citizenship of each of the executive officers and directors of
the Reporting Persons are set forth in Schedule A hereto.
Within the last five years, neither GTE Corporation, GTE
International, GTE Venezuela nor, to the best of the Reporting Persons'
knowledge, any of persons listed on Schedule A have been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or have been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3 of the Schedule 13D is hereby amended in its entirety to read as follows:
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
GTE Corporation made capital contributions aggregating
approximately US$190,000,000 from its working capital to GTE International which
in turn made capital contributions to GTE Venezuela in the same aggregate amount
to enable GTE Venezuela to purchase the ADSs to which this Schedule 13D relates.
Item 4 of the Schedule 13D is hereby amended in its entirety to read as follows:
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons acquired beneficial ownership of the
ADSs to which this Schedule 13D relates in the recent SEC-registered initial
public offering of ADSs and Class D Shares by the Republic of Venezuela and in
open market transactions following such public offering. At the time of such
offering, GTE Corporation had announced its intention to purchase ADSs up to an
aggregate of US$200,000,000 and that it had placed an order with the global
coordinators for such offering.
In addition to the ADSs to which this Schedule 13D relates, in December 1991 the
Reporting Persons, through a subsidiary 51% owned by GTE Venezuela, VenWorld,
Telecom, C.A. ("VenWorld"), a company organized under the laws of Venezuela,
acquired operational control and 40% of the equity share capital of the Issuer
from the Government of Venezuela for a purchase price of approximately US$1.885
billion. The shares owned by VenWorld constitute all of the issued and
outstanding Class A shares, nominal value Bs. 36.90182224915 per share (the
"Class A Shares"), of the Issuer. The 49% of VenWorld not held by the
Reporting Persons was held directly or by wholly-owned subsidiaries of T.I.
Telefonica Internacional de Espana, S.A. (16%), La Electricidad de Caracas,
S.A.C.A., S.A. I.C.A. (16%), Banco Mercantil as trustee for 239 trusts
established as a result of the liquidation of Inversiones Cimatel, C.A. (12%),
and AT&T Corporation (5%) (collectively, together with the Reporting Persons,
the "Consortium Participants").
On December 22, 1998, GTE Venezuela Incorporated and Banco
Mercantil C.A., as trustee for certain of the trusts established as a result of
the liquidation of Inversiones Cimatel, C.A., entered into a private transaction
to exchange 7,728,307 of Banco Mercantil's common shares in VenWorld for
3,116,653 ADSs, owned by GTE Venezuela. As a result of this transaction, GTE
Venezuela's holdings of CANTV ADSs declined to 4,706,547 or approximately 8.5%
of the Issuer's total Class D shares. Additionally, GTE Venezuela now owns 57.8%
of the common shares of VenWorld and Banco Mercantil's ownership in VenWorld
declines to 5.2% from 12.0%.
<PAGE> 6
6
The Reporting Persons acquired the ADSs and increased their
equity position in VenWorld, to which this Schedule 13D relates, because they
believe that the ADSs and the ownership in VenWorld represent an attractive
investment opportunity. In connection with GTE Corporation's acquisition of
shares of the Issuer in the initial public offering of the Class D Shares by the
Republic of Venezuela, GTE Corporation issued a press release in which GTE
Corporation's Chairman and Chief Executive Officer, Charles R. Lee, said "We are
extremely pleased with CANTV's progress and remain committed to Venezuela and
optimistic about its future. We are seeing an improvement in both the country
and the Company, and believe GTE's further investment makes good sense for our
shareholders and reinforces our commitment to Venezuela". The increased equity
position in VenWorld to which this Schedule 13D relates principally provides to
the Reporting Persons an increased economic stake in the Issuer. In addition,
after January 1, 2001 the holders of ADSs will be entitled to vote together with
holders of shares of classes other than Class D Shares in the election of a
majority of the directors of the Issuer, and the purchase of the ADSs will
increase the Reporting Persons' voting power at that time. See Item 6 below. The
Reporting Persons may make additional purchases of ADSs or Class D Shares or
other securities of the Issuer either in the open market, in private
transactions or otherwise depending on such factors as the Reporting Persons'
evaluation of the Issuer's business, prospects and financial condition, the
market for such securities, other opportunities available to the Reporting
Persons, prospects for the Reporting Persons' own businesses, general economic
conditions, including economic conditions in the Republic of Venezuela, the
Issuer's principal market, stock market conditions and other future
developments. Depending on similar factors, the Reporting Persons may decide to
sell all or part of their investment in the ADSs or other securities of the
Issuer, although they have no current intention to do so. The Reporting Persons
may from time to time seek to influence business strategies of the Issuer with
respect to such matters as acquisitions, dispositions, and changes in management
or dividend policies or other extraordinary transactions.
Except as indicated above, the Reporting Persons have no plans or proposals that
relate to or would result in (a) the acquisition by any person of additional
securities of the Issuer, or the disposition of securities of the Issuer; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Issuer or any of its
subsidiaries; (d) any change in the present board of directors of management of
the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the Issuer; (f) any
other material change in the Issuer's business or corporate structure; (g)
changes in the Issuer's charter, bylaws or instruments corresponding thereto or
other actions that may impede the acquisition of control of the Issuer by any
person; (h) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934; or (j) any action similar to any of those enumerated above.
<PAGE> 7
7
Item 5 of the Schedule 13D is hereby amended in its entirety to read as follows:
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Reporting Persons and GTE International beneficially
own 4,706,547 ADSs each representing seven Class D Shares. The Class D Shares
represented by these ADSs represent 8.5% of the total number of outstanding
Class D Shares on December 23, 1998, or approximately 3.3% of the Issuer's total
share capitalization. To the best of the Reporting Persons' knowledge, none of
the persons listed in Schedule A hereto owns beneficially any Class D Shares or
ADSs representing Class D Shares, except as follows:
<PAGE> 8
8
<TABLE>
<CAPTION>
ADSs
Name and Position owned beneficially % of Class D Shares represented
----------------- ------------------ ---------------------------------
<S> <C> <C>
Charles R. Lee, 11,000 *
Chairman, Chief
Executive Officer
GTE Corporation;
Director,
GTE Corporation
Kent B. Foster, 1,000 *
President,
GTE Corporation;
Director,
GTE Corporation
Michael T. Masin, 4,350 *
Vice Chairman and
President-
International,
GTE Corporation;
Director,
GTE Corporation
Armen Der 1,000 *
Marderosian, Senior
Vice President-
Technology and
Systems,
GTE Corporation
Russell E. Palmer, 2,000 *
Director,
GTE Corporation
</TABLE>
_______________
*Less than .1%.
<PAGE> 9
9
<TABLE>
<CAPTION>
ADSs
Name and Position owned beneficially % of Class D Shares represented
----------------- ------------------ ---------------------------------
<S> <C> <C>
Fares F. Salloum 3,000 *
President,
GTE Venezuela
Alfred C. Giammarino,
Vice President-Finance 2,000 *
and Planning,
GTE Venezuela
Andrew T. Jones, 4,000 *
Vice President,
GTE Venezuela
</TABLE>
_______________
*Less than .1%.
(b) The Reporting Persons and, to the best of the Reporting
Persons' knowledge, the persons listed in the above chart each has the sole
power to vote and the sole power to dispose of the ADSs and the Class D Shares
represented thereby as held by each of them, except Mr. Foster and Mr. Palmer
who own their ADSs jointly with their spouses.
(c) Except as described in Item 4 above, in the past sixty days
from the date of this statement, none of the Reporting Persons have purchased or
sold any of the acquired ADSs each representing seven Class D Shares. Except as
described in Item 4 above in the past sixty days from the date of this
statement, none of the persons listed in paragraph (a) above have purchased or
sold any of the acquired ADSs each representing seven Class D Shares.
<PAGE> 10
10
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
2(a)* Press release of GTE Corporation dated November 20, 1996
2(b) Share Exchange Agreement dated December 18, 1998
3(a)* Stock Purchase and Sale Agreement dated December 3, 1991
3(b)* Provisions of the Association Agreement dated August 1, 1991
relating to voting and transfer
</TABLE>
* Previously Filed
<PAGE> 11
11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
GTE CORPORATION
Date: December 23, 1998 By: /s/ MARIANNE DROST
-----------------------------
Marianne Drost, Secretary
GTE VENEZUELA INCORPORATED
Date: December 23, 1998 By: /s/ MARIANNE DROST
-----------------------------
Marianne Drost, Secretary
<PAGE> 12
12
SCHEDULE A
GTE CORPORATION
<TABLE>
<CAPTION>
(a) Executive Officers
Name and Address Principal Occupation Citizenship
---------------- -------------------- -----------
<S> <C> <C>
Charles R. Lee* Chairman, Chief Executive Officer United States
and Chief Operating Officer, GTE
Corporation
Kent B. Foster* President, GTE Corporation United States
Michael T. Masin* Vice Chairman and President - United States
International, GTE Corporation
Thomas W. White* Senior Executive Vice President- United States
Market Operations, GTE Corporation
William P. Barr* Executive Vice President Government United States
and Regulatory Advocacy and
General Counsel, GTE Corporation
James A. Attwood, Jr.* Executive Vice President - United States
Strategic Development and Planning,
GTE Corporation
Armen Der Marderosian* Executive Vice President - United States
Technology and Systems, GTE
Corporation
Daniel P. O'Brien* Executive Vice President - Finance, United States
GTE Corporation
J. Randall MacDonald* Executive Vice President - Human United States
Resources and Administration, GTE
Corporation
Mary Beth Bardin* Senior Vice President - United States
Public Affairs and Communications,
GTE Corporation
Paul R. Shuell* Vice President and Controller, United States
GTE Corporation
Jan L. Deur* Acting Treasurer, GTE United States
Corporation
(b) Directors
Name and Address Principal Occupation Citizenship
---------------- -------------------- -----------
Edwin L. Artzt* Chairman of the Executive United States
Committee and Director of The
Procter & Gamble Company
James R. Barker* Chairman of The Interlake Steamship United States
Co. and Vice Chairman of Mormac
Marine Group, Inc. and the Moran
Towing Company
</TABLE>
<PAGE> 13
13
<TABLE>
<S> <C> <C>
Edward H. Budd* Retired Chairman of the Board United States
of the Travelers Group
Robert F. Daniell* Retired Chairman of United United States
Technologies Corporation
Kent B. Foster* President, GTE Corporation United States
James L. Johnson* Chairman Emeritus, GTE United States
Corporation
James L. Ketelsen* Retired Chairman of Tenneco Inc., United States
GTE Corporation
Charles R. Lee* Chairman, Chief Executive Officer United States
and Chief Operating Officer, GTE
Corporation
Michael T. Masin* Vice Chairman and President- United States
International, GTE Corporation
Sandra O. Moose* Senior Vice President, Director United States
and Chair of the East Coast
Practice, The Boston Consulting
Group, Inc.
Russell E. Palmer* Chairman and Chief Executive United States
Officer of The Palmer Group
John W. Snow* Chairman President and United States
Chief Executive Officer
CSX Corporation
Robert D. Storey* Partner with the Cleveland law United States
firm of Thompson, Hine and Flory
LLP
GTE VENEZUELA INCORPORATED
(a) Executive Officers
Name and Address Principal Occupation Citizenship
---------------- -------------------- -----------
Fares F. Salloum* President, GTE Venezuela Canada
Incorporated
Alfred C. Giammarino* Vice President-Finance and United States
Planning, GTE Venezuela
Incorporated; Vice President-
Finance, International Operations
Group of GTE Service Corporation
</TABLE>
<PAGE> 14
14
<TABLE>
<S> <C> <C>
Andrew T. Jones* Vice President, GTE Venezuela United States
Incorporated; Vice President-
Operations Support, International
Operations Group of GTE Service
Corporation
Paul R. Shuell* Controller, GTE Venezuela United States
Incorporated; Vice President and
Controller, GTE Corporation
Marianne Drost* Secretary, GTE Venezuela United States
Incorporated and GTE Corporation
Daniel P. O'Brien* Vice President and Treasurer, United States
GTE Venezuela Incorporated;
Executive Vice President-Finance,
GTE Corporation
J. Goodwin Bennett* Assistant Secretary, United States
GTE Venezuela Incorporated
Ronald B. Spring* Assistant Secretary, United States
GTE Venezuela Incorporated
Londa C. Perrett* Assistant Secretary, United States
GTE Venezuela Incorporated
Jan L. Deur* Assistant Treasurer, United States
GTE Venezuela Incorporated
Bernd A. Meier* Assistant Treasurer, United States
GTE Venezuela Incorporated
(b) Directors
Name and Address Principal Occupation Citizenship
---------------- -------------------- -----------
Marianne Drost* Secretary, GTE Corporation United States
Alfred C. Giammarino* Vice President-Finance, United States
International Operations Group of
GTE Service Corporation
Fares F. Salloum* President, GTE Venezuela Canada
Incorporated
</TABLE>
*Business address at 1255 Corporate Drive, Irving, Texas 75038
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2(b) SHARE EXCHANGE AGREEMENT DATED DECEMBER 18, 1998
</TABLE>
<PAGE> 1
EXHIBIT 2(b)
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is made and entered into
as of this 22nd day of December, 1998, by and between BANCO MERCANTIL C.A., a
banking corporation organized under the laws of Venezuela ("Bank"), and GTE
VENEZUELA INCORPORATED ("GTE"), a corporation organized under the laws of
Delaware.
W I T N E S S E T H:
WHEREAS, Bank currently owns, in its capacity as trustee for 239 trusts
established as a result of the liquidation of Inversiones Cimatel, C.A.
(collectively, the "Liquidation Trusts"), 13,730,352 shares of the issued and
outstanding shares of Common Stock of VenWorld Telecom, C.A. ("VenWorld"), a
corporation organized under the laws of Venezuela; and
WHEREAS, GTE currently owns 7,823,200 American Depositary Shares of
Compania Anonima Nacional Telefonos de Venezuela, C.A. (CANTV), a corporation
organized under the laws of Venezuela ("CANTV");
WHEREAS, each CANTV American Depositary Share represents seven (7) issued
and outstanding shares of Class D Common Stock of CANTV; and
WHEREAS, subject to the following terms and conditions, Bank, acting in
its capacity as trustee for those Liquidation Trusts which have agreed to
participate in the transactions described herein (such Liquidation Trusts so
participating being hereinafter collectively referred to as the "Trusts"),
desires to exchange 7,728,307 shares of the Common Stock of VenWorld
(collectively, the "VenWorld Shares"), and GTE desires to acquire the VenWorld
Shares, in exchange for 3,116,653 of the CANTV American Depositary Shares that
are owned by GTE (the "CANTV ADSs").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties agree as follows:
ARTICLE I
THE TRANSACTION
Section 1.1. Exchange of VenWorld Shares for CANTV ADSs. Bank hereby
exchanges with GTE the VenWorld Shares for the CANTV ADSs (such exchange being
hereinafter referred to as the "Transaction").
Section 1.2. Exchange of Certificates for Irrevocable Transfer
Instructions. GTE hereby delivers a certificate for the CANTV ADSs in the name
of Banco Mercantil C.A. in accordance with instructions received from BANK, in
exchange for a duly executed irrevocable letter of transfer instructions
ordering VenWorld C.A. to register the transfer of the VenWorld Shares in the
name of GTE. Bank agrees to take such further actions as GTE may reasonably
request to consummate the transfer of the VenWorld Shares to GTE.
Section 1.3. Condition Precedent to Closing. If the share price of CANTV
ADS exceeds twenty-six dollar U.S. ($26.00) per share at 10:00 a.m. on the day
of closing, GTE shall not be obligated to consumate the exchange.
1
<PAGE> 2
ARTICLE II
THE CLOSING
Section 2.1. The Closing. The closing (the "Closing") under this
Agreement shall take place at the offices of Citibank, N.A. at 111 Wall Street,
New York, New York at 10:00 a.m. on December 22, 1998 (the "Closing Date").
Section 2.2. Effect of Closing. All transactions entered into on the
Closing Date, and all stock certificates and documents delivered at the Closing,
shall be deemed to have occurred and to have been delivered simultaneously as of
the close of business on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Bank hereby represents and warrants to GTE as follows:
Section 3.1. Organization. Bank is a banking corporation duly organized,
validly existing and in good standing under the laws of Venezuela and has
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted.
Section 3.2. The VenWorld Shares. Bank owns of record the VenWorld Shares
as trustee for the Trusts, free and clear of all liens, pledges, charges and
encumbrances. Other than this Agreement and the Association Agreement among the
initial investors in VenWorld dated as of August 1, 1991 (as in effect on the
date hereof, the "VenWorld Agreement"), there are no outstanding options,
warrants, rights, transfer restrictions, convertible securities, contracts or
commitments relating to the issuance, sale, voting, redemption, repurchase or
transfer of any of the Shares.
Section 3.3. Authority; Binding Effect. Bank has full power and authority
to enter into this Agreement and carry out the transactions contemplated hereby.
The Board of Directors of Bank has duly authorized the execution and delivery of
this Agreement and the transactions contemplated hereby, and no other corporate
proceeding on the part of Bank or actions by the beneficial owners of the Trusts
(collectively, the "Beneficial Owners") of the VenWorld Shares are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement is the valid and binding obligation of Bank, enforceable against Bank,
in accordance with its terms, subject to bankruptcy, insolvency and other
similar laws affecting the rights of creditors generally and subject to the
exercise of judicial discretion in accordance with principles of equity.
Section 3.4. No Violation. The transfer of the VenWorld Shares to GTE and
the performance by Bank of the terms and provisions of this Agreement (i) will
not conflict with, or result in a breach of the terms or provisions of, the
articles of association or bylaws (or equivalent documents) of Bank or of any
document governing any of the Trusts; (ii) will not constitute a violation or
breach of any law, rule, regulation, order, injunction, decree, or other
judicial or regulatory prohibition or restriction against Bank or any Beneficial
Owner; and (iii) will not conflict with, or constitute an event of default
under, the terms or provisions of any contract, lease, note or other obligation
of Bank, any Trust or any Beneficial Owner.
2
<PAGE> 3
Section 3.5. Consents. (i) No consent, approval, or authorization of, or
declaration, filing or registration with, any federal, state or local government
or any court of competent jurisdiction, administrative agency or commission or
other governmental authority (each, a "Governmental Entity") and (ii) no consent
of any person is required by, or on behalf of Bank, any of the Trusts, any
Beneficial Owner or any of their respective Affiliates, in connection with the
execution, delivery, and performance of this Agreement or the consummation of
the transactions contemplated by this Agreement, other than consents, approvals,
authorizations, declarations, filings and registrations, which have been
obtained and described in writing to GTE, including, without limitation, all
required consents from the Beneficial Owners.
Section 3.6. Purchase for Investment. Bank is acquiring the CANTV ADSs as
trustee for the Trusts for investment and not with a view to, or for sale in
connection with, any distribution thereof except as permitted by applicable
laws, including Venezuelan and US securities laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
GTE hereby represents and warrants to Bank as follows:
Section 4.1. Organization. GTE is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has requisite power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted.
Section 4.2. Authority, Binding Effect. GTE has full corporate power to
enter into this Agreement and carry out the transactions contemplated hereby.
The Board of Directors of GTE has duly authorized the execution and delivery of
this Agreement and the transactions contemplated hereby, and no other corporate
proceedings on its part are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement is the valid and binding
obligation of GTE, enforceable against GTE in accordance with its terms, subject
to bankruptcy, insolvency and other similar laws affecting the rights of
creditors generally and subject to the exercise of judicial discretion in
accordance with principles of equity.
Section 4.3. No Violation. The transfer of the CANTV ADSs to Bank, and
the performance by GTE of the terms and provisions of this Agreement (i) will
not conflict with, or result in a breach of the terms or provisions of, the
Certificate of Incorporation or Bylaws of GTE; (ii) will not constitute a
violation or breach of any order, injunction, decree, or other judicial or
regulatory prohibition or restriction against or affecting GTE; and (iii) will
not conflict with, or constitute an event of default under, the terms or
provisions of any material contract, lease, note or other obligation of GTE.
Section 4.4. Consents. (i) No material consent, approval, or
authorization of, or declaration, filing or registration with, any Governmental
Entity; and (ii) no consent of any person is required by, or on behalf of, GTE,
in connection with the execution, delivery, and performance of this Agreement or
the consummation of the transactions contemplated by this Agreement.
Section 4.5. Purchase for Investment. GTE is acquiring the VenWorld
Shares for investment and not with a view to, or for sale in connection with,
any distribution thereof except as permitted by applicable laws, including
Venezuelan and US securities laws.
3
<PAGE> 4
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1. Survival; Indemnity. (a) The representations and warranties
herein shall survive the closing of the Transaction.
(b) Bank hereby agrees to indemnify, defend and hold harmless GTE and its
affiliates and their respective officers, directors, employees and agents from
and against any losses, damages, or expenses (including reasonable attorneys
fees) incurred or sustained by such person as a result of (i) any breach by Bank
of any of the representations or warranties made by Bank in this Agreement or
(ii) any claim made by any Trust or any Beneficial Owner relating, directly or
indirectly, to the Transaction; or
(c) GTE hereby agrees to indemnify, defend and hold harmless Bank and its
respective officers, directors, employees and agents from and against any
losses, damages, or expenses (including reasonable attorneys fees) incurred or
sustained by such person as a result of any breach by GTE of any of the
representations or warranties made by GTE in this Agreement.
Section 5.2. Notices. All notices, certificates, requests, demands, and
other communications hereunder shall be in writing and may be personally served
or sent by telecopier or private courier or express delivery service. All such
notices, certificates, requests, demands and other communications shall be
delivered to the party to receive same at the addresses indicated below (or at
such other address(es)) as a party may specify in a written notice given in
accordance with this Section 11.2):
If to Bank, to:
Banco Mercantil
Av. Andres Bello, Edif. Mercantil, Piso 27
Inversora Marasima
San Bernadino 1010
Caracas, Venezuela
Attention: Alberto Benshimol
Fax: 582-503-0515
With a copy to:
----------------
----------------------------
Caracas, Venezuela
Attention: Vice President
----------------
Fax:
----------------
If to GTE, to:
c/o GTE International Telecommunications Incorporated
1255 Corporate Drive
Irving, Texas 75038
USA
Attention: Vice President-International Administration
Fax: 972-791-2913
4
<PAGE> 5
With a copy to
GTE Corporation
695 East Main Street, Suite 600
Stamford, CT 06912
Attention: Vice President and Assistant General Counsel
Fax: 203-965-2129
or to such other person or address as any party hereto shall furnish to the
other parties hereto in writing pursuant to this Section 4.2.
Section 5.3. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by a party without the prior written
consent of the other party.
Section 5.4. Governing Law; Consent to Jurisdiction.
(a) This Agreement shall be governed by the laws of the State of New York
regardless of the laws that might otherwise govern applicable conflicts of laws.
(b) Each of GTE and Bank, for itself and as trustee of the Trusts,
irrevocably submits to the non-exclusive jurisdiction of any federal or state
courts sitting in New York, New York for the purposes of resolving or enforcing
any dispute, controversy, difference or claim arising among the Parties
concerning the interpretation, performance or enforcement of this Agreement
(each a "Dispute"). Each of GTE and Bank, for itself and as trustee of the
Trusts, further agrees that service of any process, summons or notice at the
address set forth in Section 4.2 shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth above. Each of GTE and Bank, for
itself and as trustee of the Trusts, irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in any federal or
state court located in the State of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
(c) To the extent that Bank or any of its subsidiaries or affiliates or
any Trust or any Beneficial Owner has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, or
otherwise) with respect to itself or its property, Bank, for itself and on
behalf of all of such persons and entities, hereby irrevocably waives such
immunity in respect of its obligations under this agreement and, without
limiting the generality of the foregoing, agrees that the waivers set forth in
this paragraph shall have the fullest scope permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States and are intended to be
irrevocable for purposes of such Act.
Section 5.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5
<PAGE> 6
Section 5.6. Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 5.7. Entire Agreement. This Agreement and the VenWorld Agreement
embody the entire agreement and understanding of the parties in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to any potential sale of the
VenWorld Shares or the exchange of the VenWorld Shares for the CANTV ADSs.
Section 5.8. Third Parties. Except for the indemnity provisions of
Section 4.1, which are also for the benefit of the parties identified therein,
nothing in this Agreement, whether express or implied, is intended to: (i)
confer any rights or remedies on any person other than Bank and GTE, and their
respective successors and permitted assignees; (ii) to relieve or discharge the
obligation or liability of any third party; or (iii) to give any third party any
right of subrogation or action against Bank or GTE.
Section 5.9. Waiver. No failure or delay on the part of any Party in the
exercise of any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude other
or further exercise thereof or of any other right or power. The waiver by any
Party or Parties hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or subsequent breach hereunder.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties, acting through their duly authorized
representatives, have executed this Agreement as of the day and year first above
written.
WITNESS GTE VENEZUELA INCORPORATED
By: /s/ By: /s/
----------------------------- -----------------------------
Its: President
By: /s/
-----------------------------
Its: Vice President
WITNESS BANCO MERCANTIL C.A.
By: /s/ By: /s/
----------------------------- -----------------------------
Its: Power of Attorney
7
