As filed with the Securities and Exchange Commission on December 30, 1999
Registration No. 333-90711
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------
CINCINNATI BELL INC.
(Exact name of registrant as specified in its charter)
Ohio 31-1056105
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
Telephone: (513) 397-9900
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------------------------------
THOMAS E. TAYLOR, ESQ.
Cincinnati Bell Inc.
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
Telephone: (513) 397-9900
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------------------------------------
Copies To:
ROBERT A. KINDLER, ESQ.
ROBERT I. TOWNSEND, III, ESQ.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
---------
Approximate date of commencement of proposed sale to public: At such time
or times after the Registration Statement becomes effective as the selling
holders may determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Maximum Proposed
Title of Offering Maximum
Each Class Amount Price Aggregate Amount of
of Securities to be Per Offering Registration
to be Registered Registered(1) Security(1) Price(1) Fee(1)
6-3/4% Convertible
Subordinated Notes
due 2009 $400,000,000 100% $400,000,000 $111,200.00
Common Stock, $.01
par value (including
the associated
preferred stock
purchase rights) (3) 18,650,385 -- -- --
shares(2)
===============================================================================
(1) Equals the aggregate principal amount at issuance of the securities being
registered; the aggregate principal amount of such securities will
accrete at the rate of 6 3/4% per annum until July 21, 2004. Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457 under the Securities Act. The registration fee of
$111,200.00 was paid on November 10, 1999 in connection with the initial
filing of this Registration Statement on Form S-3.
(2) Such number represents the number of shares of Common Stock that are
issuable upon conversion of the Notes at maturity; pursuant to Rule 416
under the Securities Act, the Registrant is also registering such
indeterminate number of shares of common stock as may be issued from time
to time upon conversion of the Notes as a result of the antidilution
provisions of the Notes. Pursuant to Rule 457(i), no registration fee is
required for these shares.
(3) This Registration Statement also covers the associated preferred stock
purchase rights (the "Rights") issued pursuant to a Rights Agreement
dated as of April 29, 1997, as amended, between Cincinnati Bell and The
Fifth Third Bank, as rights agent. Prior to the occurrence of certain
events, the Rights will not be exercisable or evidenced separately from
Cincinnati Bell common stock.
<PAGE>
Prospectus December 30, 1999
$400,000,000
(original issue price)
Cincinnati Bell Inc.
d/b/a Broadwing Inc.
6 3/4% Convertible Subordinated Notes due 2009
18,650,385 Shares of Common Stock Issuable Upon Conversion of the Notes
Associated Rights to Purchase Series A Preferred Shares
Note holders may sell the notes and the underlying common stock with its
associated preferred stock purchase rights. See "Plan of Distribution". The
notes have the following terms:
o We will pay cash interest on the notes on January 21 and July 21 of each
year, commencing on January 21, 2005.
o Prior to July 21, 2004, the value of the notes will accrete at the rate
of 6 3/4% per annum, compounded semi-annually.
o The notes will mature on July 21, 2009.
o The notes are subordinated to all of our existing and future senior
indebtedness.
o We may redeem some or all of the notes at any time after July 21, 2004,
at a redemption price equal to the principal amount of the notes we
redeem plus a premium and accrued interest.
o The redemption price is described beginning on page 10 of this
prospectus.
o Each note holder has the right to require us to repurchase all or a
portion of the holder's notes upon a change of control.
o Holders may convert their notes at any time prior to maturity or
redemption into shares of our common stock at a conversion price of
$29.89 per share, which is equivalent to a conversion rate of 33.456
shares per $1,000 principal amount of notes, which is subject to
adjustment.
Our common stock is listed on the New York Stock Exchange under the symbol
"BRW." The last reported sale price of our common stock on the New York Stock
Exchange on December 29, 1999 was $35 13/16 per share.
Investing in the notes or the common stock into which the notes are
convertible involves risk. See "Risk Factors" beginning on page 4 of this
prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Prospectus dated December 30, 1999.
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<PAGE>
TABLE OF CONTENTS
Page
SUMMARY................................................................... 2
RATIO OF EARNINGS TO FIXED CHARGES........................................ 4
RISK FACTORS.............................................................. 4
USE OF PROCEEDS........................................................... 8
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................................. 8
DESCRIPTION OF NOTES...................................................... 9
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS.......................... 17
SELLING HOLDERS........................................................... 22
PLAN OF DISTRIBUTION...................................................... 24
LEGAL MATTERS............................................................. 25
EXPERTS................................................................... 25
WHERE YOU CAN FIND MORE INFORMATION....................................... 26
---------------------------
<PAGE>
SUMMARY
This summary highlights selected information from this prospectus, but
does not contain all information that may be important to you. This prospectus
includes specific terms of the notes, information about our business and
financial data. We encourage you to read this prospectus in its entirety
before making an investment decision. Cincinnati Bell conducts business and
our common stock is traded on the New York Stock Exchange under the name
"Broadwing Inc." In this prospectus we refer to Cincinnati Bell Inc. d/b/a
Broadwing Inc., and its wholly owned and majority-owned subsidiaries as "we,"
"us" or "Cincinnati Bell," unless the context clearly indicates otherwise.
About Cincinnati Bell
Cincinnati Bell is a full service, integrated communications company that
provides competitive local communications as well as data, Internet, wireless,
entertainment, directory, long distance and data networking services to
customers in the Cincinnati, Ohio metropolitan area and in many other
Midwestern cities.
The local communications services division provides local, long distance,
data networking and transport, Internet access and pay phone services, as well
as sales of communications equipment, in southwestern Ohio, northern Kentucky
and southeastern Indiana, to both residential and business customers. The
directory services division sells directory advertising and information
services primarily to customers in the geographic areas described above.
Cincinnati Bell also resells long distance and Internet access services and
provides data services and products to small- and medium-sized business
customers mainly in a five-state Midwestern area, and telecommunications and
computer equipment in the secondary market.
We are an Ohio corporation. Our principal executive offices are located
at 201 East Fourth Street, 102-760, Cincinnati, Ohio 45201-2301 and our
telephone number is (800) 345-6301.
Recent Developments
On November 9, 1999, we consummated our acquisition of IXC
Communications, Inc. IXC is a leading provider of data and voice
telecommunications transmission services. IXC owns and operates an advanced
coast-to-coast digital communications network that includes approximately
13,000 route miles of fiber optic transmission facilities. IXC's network-
based delivery solutions are designed to address the speed and capacity
requirements of the global telecommunications market. IXC offerings include
private line, fast packet (ATM and frame relay), Internet and long distance
switched and dedicated services. IXC is at the forefront of the industry's new
class of emerging domestic and international carriers. See "Where You Can Find
More Information." Following our merger with IXC, we began to use the business
name "Broadwing Inc." for the combined companies.
The Offering
We present below a summary of this offering:
Securities Offered.................. $400,000,000 aggregate principal
amount at issuance of 6 3/4%
convertible subordinated notes due
2009 and 18,650,385 shares of our
common stock and the associated
preferred stock purchase rights
issuable upon conversion of the notes,
assuming conversion of all of the notes
at maturity.
Maturity............................. July 21, 2009.
Cash Interest Payment Dates.......... January 21 and July 21, commencing
January 21, 2005.
Interest Rate........................ 6-3/4% per annum.
Accretion............................ Prior to July 21, 2004, the aggregate
principal amount of the notes will
accrete at the rate of 6 3/4% per
annum, compounded semi-annually.
Conversion........................... The notes are convertible at any time
prior to maturity or redemption into
shares of our common stock at a
conversion price of $29.89 per share,
which is equivalent to a conversion
rate of 33.456 shares per $1,000
principal amount of notes, and is
subject to adjustment under the terms
of the notes. See "Description of
Notes--Conversion Rights."
Optional Redemption.................. We may redeem some or all of the notes
at any time after July 21, 2004, at a
redemption price equal to the
principal amount of the notes we
redeem plus a premium and accrued
interest. See "Description of
Notes--Redemption."
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<PAGE>
Subordination....................... The notes are subordinated in right of
payment to all of our, and our
subsidiaries', existing and future
senior debt and other obligations,
except for trade payables and other
accrued current liabilities. See
"Description of Notes--Subordination."
Security............................ The notes are not secured.
Change of Control Repurchase Right Each note holder has the right to
require us to repurchase all or a
portion of the holder's notes upon a
change of control. See "Description of
Notes--Change of Control Repurchase."
Use of Proceeds..................... We will not receive any proceeds from
the sale by the note holders of the
notes and any common stock issuable
upon conversion of the notes. See "Use
of Proceeds."
Form and Denomination of Notes...... The notes were originally issued in
certificated form. The notes offered
pursuant to the offering contemplated
by this prospectus are represented by
a global note which has been deposited
with a custodian for, and registered
in the name of a nominee of, DTC in
New York City. Beneficial interests in
the global notes are shown on, and
transfers of the global notes will be
effected only through, records
maintained by DTC and its
participants. See "Description of
Notes -- Book-Entry, Delivery and
Form."
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RATIO OF EARNINGS TO FIXED CHARGES
We present below our ratio of earnings to fixed charges on a historical
basis for the years ended December 31, 1994 through 1998 and for the nine
months ended September, 1999. Also presented below is our deficiency of
earnings to fixed charges for the year ended December 31, 1998 and for the
nine months ended September 30, 1999 on a pro forma basis after giving effect
to the acquisition of IXC. For purposes of computing the ratio of earnings to
fixed charges (1) earnings consist of pretax income (loss) from continuing
operations, excluding minority interest in losses of consolidated subsidiaries
and equity investees income (losses), and (2) fixed charges consist of pretax
interest (including capitalized interest) on all indebtedness, amortization of
debt discount and expense, that portion of rental expense which we believe to
be representative of interest, and dividend requirements on mandatorily
redeemable preferred securities and preferred dividends.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pro Forma
Nine Months Ended Year Ended Nine Months Ended
Year Ended December 31, September 30, December 31, September 30,
1994 1995 1996 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ---- ---- ----
Ratio of earnings to
fixed charges........... 2.5 -- 6.0 5.7 5.5 3.3 -- --
Deficiency of earnings
to fixed charges.......... -- $45.1 -- -- -- -- $58.2 $192.7
(in millions)
</TABLE>
RISK FACTORS
In evaluating our business, prospective investors should carefully
consider the following risk factors in addition to the other information
presented in this prospectus.
Risk Factors Relating to the Merger of Cincinnati Bell and IXC
o The integration of Cincinnati Bell and IXC following the merger will
present significant challenges. Cincinnati Bell and IXC will face
significant challenges in consolidating functions, integrating their
organizations, procedures, operations and product lines in a timely and
efficient manner, and retaining key Cincinnati Bell and IXC personnel.
The integration of Cincinnati Bell and IXC will be complex and
time-consuming. The failure to successfully integrate Cincinnati Bell and
IXC and to successfully manage the challenges presented by the
integration process may result in Cincinnati Bell and IXC not achieving
the anticipated potential benefits of the merger.
o The merger may cause customers to delay purchasing decisions. There can
be no assurance that the customers of each of Cincinnati Bell and IXC
will continue to use and purchase Cincinnati Bell's or IXC's products or
services as they have in the past without regard to the merger.
Uncertainties regarding new product development by the combined company,
for example, may cause customers to delay purchasing decisions.
Regulatory and Competitive Risks
o Changes in the regulation of the industry present legal uncertainty and
have the potential to increase competition. Some of our operations are
regulated by the Federal Communications Commission (FCC) under the
Communications Act of 1934. In addition, some of our businesses are
regulated by state public utility or public service commissions.
Regulatory or interpretive changes in existing legislation or new
legislation that affects our operations could have a material adverse
effect on our business, financial condition and results of operations.
o The consequences of the Telecommunications Act of 1996 have yet to be
fully determined. In February 1996, Congress enacted the
Telecommunications Act of 1996 (the "1996 Act"), the primary purpose of
which was to introduce greater competition into the market for
telecommunications services. The 1996 Act seeks to facilitate competition
by eliminating many of the legal and regulatory barriers that, until
then, had operated to restrict competitive entry in the areas of local
exchange telephone service, long distance telephone service, and cable
television service. Since February 1996, the FCC has initiated numerous
rulemaking proceedings to adopt regulations pursuant to the 1996 Act.
Some of these regulations have already taken effect; others are currently
being challenged before various United States Circuit Courts of Appeal.
The 1996 Act and the FCC's rulemaking proceedings can be expected to
impact our in-territory local exchange operations in the form of greater
competition. However, these statutes and regulations also create
opportunities for us to expand the scope of our operations, both
geographically and in terms of products and services offered. At this
time, the full impact of the 1996 Act and any associated FCC regulations
cannot readily be determined.
o We are subject to Federal regulatory uncertainty. On February 25, 1999,
the FCC issued a Declaratory Ruling classifying dial-up traffic to
Internet service providers (ISPs) as interstate traffic. The FCC stated
this conclusion does not in itself determine whether reciprocal
compensation is due in any particular instance and that the parties
should be bound by their
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<PAGE>
existing interconnection agreements, as interpreted by state commissions.
In addition, the FCC issued a Notice of Proposed Rule Making, opening a
proceeding which will address, on a prospective basis, if Federal rules are
required to address reciprocal compensation issues for ISP traffic. At this
time, we cannot determine the full impact that the ultimate outcome of the
proceeding will have on the operations of Cincinnati Bell Telephone ("CB
Telephone"). CB Telephone is our principal local telephone service
operating company.
o We are subject to legal uncertainty with regards to certain Ohio state
regulation. In March 1998, CB Telephone and several intervening parties
reached agreement on the terms of a proposed settlement of most of the
outstanding issues associated with CB Telephone's application for approval
of an alternative regulation plan known as CB Telephone's Commitment 2000
plan. The proposed settlement was subsequently approved by the Public
Utilities Commission of Ohio ("PUCO") on April 9, 1998. The terms of the
Commitment 2000 plan approved by the PUCO include: the elimination of rate-
of-return regulation and greater pricing flexibility for most services; no
increase in basic residential access line rates for the term of the plan;
greater pricing flexibility for business services; a 30% reduction in basic
rates for qualified, low-income residential consumers. The plan has an
initial term of three and one-half years, which can be extended up to two
additional years at CB Telephone's discretion so long as certain service
quality benchmarks are maintained. The portion of CB Telephone's
alternative regulation case dealing with the rates CB Telephone can charge
to competitive local exchange carriers for unbundled network elements is
still pending. The hearing on this portion of the case was conducted in
March and April 1999. On November 4, 1999, the PUCO issued its Supplemental
Opinion and Order, specifying certain parameters and methods CB Telephone
must use to set its rates for unbundled network elements and requiring
compliant cost studies within three months. We have not yet been able to
assess the full impact of this decision on CB Telephone's rates, but
believe that most rates will be below the levels CB Telephone had
requested, particularly with respect to local loops. CB Telephone is
considering whether to seek a rehearing or an appeal of the decision.
o We face regulation in Kentucky which may have a material adverse effect on
operations. On June 29, 1998, CB Telephone filed an application with the
Public Service Commission of Kentucky ("PSCK") seeking approval of an
alternative regulation plan similar to the Commitment 2000 plan approved by
the PUCO in Ohio. On January 25, 1999, the PSCK issued an order approving
the Kentucky alternative regulation plan with certain modifications. One of
the modifications was the adoption of an earnings-sharing provision whereby
customers would receive one-half of earnings on equity in excess of 13.5%.
The PSCK also ordered that residential rates be frozen for three years and
required rate reductions of approximately $3 million per year versus
current rates. On February 12, 1999, CB Telephone filed a petition seeking
a rehearing of the PSCK's January 25, 1999 order. On July 26, 1999, the
PSCK issued an order which eliminated the automatic earnings-sharing
provision and revised the required rate reductions to $2.3 million per
year, instead of the $3 million per year previously ordered.
o The prospects for future growth of our subsidiaries are uncertain. Each of
the business segments in which our subsidiaries conduct their business has
grown significantly in the last several years. To the extent that growth in
these industry segments declines, this decline could adversely affect the
growth of each subsidiary's business.
o The communications industry is subject to rapid and significant changes in
technology. Our businesses are highly dependent on our computer,
communications and software systems. Our failure to maintain the
superiority of our technological capabilities or to respond effectively to
technological changes could have an adverse effect on our business, results
of operations or financial condition. Our future success also will be
highly dependent upon our ability to enhance existing services and
introduce new services or products to respond to changing technological
developments. There can be no assurance that we can successfully develop
and bring to market any new services or products in a timely manner, that
such services or products will be commercially successful or that
competitors' technologies or services will not render our products or
services noncompetitive or obsolete.
o We face significant competitive risks. Evolving technology, the preferences
of consumers, the legislative and regulatory initiatives of policy makers
and the convergence of other industries with the communications industry
are causes for increasing competition throughout the communications
industry. The range of communications services, the equipment available to
provide and access such services, and the number of competitors offering
such services, continue to increase. These initiatives and developments
could make it difficult for us to maintain current revenue and profit
levels. CB Telephone's current and potential competitors include other
incumbent local exchange carriers, wireless services providers,
interexchange carriers, competitive local exchange carriers and others.
o Our other subsidiaries face intense competition in their markets,
principally from larger companies. These subsidiaries primarily seek to
differentiate themselves by leveraging the strength and recognition of our
brand equity, by providing customers with superior service and by focusing
on niche markets and opportunities to develop and market customized
packages of services.
Risks relating to year 2000 compliance
o We face uncertainties with regard to year 2000 compliance. Since 1996, we
have devoted significant time and resources to achieve year 2000
compliance. A steering committee, chaired by a Senior Vice President of
Cincinnati Bell, and composed of upper-level management personnel, sets the
direction and monitors the activity of the year 2000 Program Management
Office. Our subsidiaries have completed all remediation, replacement, and
compliance testing efforts for critical components of their respective
networks, facilities, and information technology. Each of our subsidiaries
will spend the remainder of the
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year performing additional enterprise testing and testing interfaces with
outside business partners. Work will continue with suppliers and business
partners to monitor their progress. Although we anticipate minimal
business disruption as a result of the century change, if we were to be
unsuccessful in readying our software and systems for the year 2000 or
preparing adequate plans to avoid business interruption that could result
from the century change, this would have a material adverse impact on us.
This material adverse effect could include a disruption to the provision
of services to our customers, which could result in lost revenues, the
incurrence of material contractual penalties and damaged customer
relationships.
o The failure of one of our significant customers to modify their systems
for the year 2000 successfully or to provide the appropriate business
continuity planning also could have an adverse impact on us as we are, to
a certain extent, dependent on the success of our customers. Our success
in becoming year 2000 compliant largely depends on our vendors and
business partners being year 2000 compliant. We are working diligently
with our vendors and business partners to assure ourselves, to the extent
possible, that our vendors and business partners are taking the necessary
steps to become year 2000 compliant. To the extent that any of our
vendors or business partners experience year 2000 technology difficulties
which materially affect their businesses, such difficulties could have a
material adverse effect on the our business, results of operations and
financial condition.
Risks Relating to the Notes and Common Stock
o No public market for the notes may develop. The notes were issued in July
1999 to a small number of accredited investors. We do not intend to apply
for listing of the notes on any securities exchange. Accordingly, there
can be no assurance as to the development or liquidity of any market for
the notes. If an active market for the notes fails to develop or be
sustained, their trading price could be adversely affected.
o If we are unable to pay all our debts, then you will receive payments on
the notes only if we have funds remaining after we have repaid our
existing and future senior indebtedness. The notes are general unsecured
obligations. We may repay the notes only after we have paid all of our
existing and future senior indebtedness. Upon any distribution of our
assets because of insolvency, bankruptcy, dissolution, winding up,
liquidation or reorganization, we may pay the principal of and interest
on the notes only to the extent provided in the indenture, and only after
we pay all of our senior indebtedness in full. Senior indebtedness
includes all indebtedness for money borrowed, other than indebtedness
that is expressly junior or equal in right of payment to the notes. At
September 30, 1999, our senior indebtedness was approximately $340.0
million, all of which was secured. On November 9, 1999, we entered into a
$1.8 billion credit agreement among us and IXC Communications Services,
Inc., as borrowers, Citicorp USA, Inc., as administrative agent, Bank of
America, N.A., as syndication agent and certain lender parties thereto.
The terms of the notes do not limit the amount of additional
indebtedness, including senior indebtedness, which we can create, incur,
assume or guarantee. See "Description of Notes -- Subordination."
o Because we may be unable to raise the funds necessary to repurchase your
notes in the event of a change in control, we may default on the notes in
the event of a change in control. We cannot assure you that we will have
sufficient financial resources or be able to arrange financing to pay the
repurchase price of the notes in the event of a change in control. Our
ability to repurchase the notes may be limited by law, the indenture and
the terms of other agreements relating to our senior indebtedness. In
addition, we may not repurchase any notes in a change in control if the
provisions of the indenture would prohibit us from making payments of
principal on the notes. We may be required to refinance our senior
indebtedness in order to repurchase the notes. We may not have the
financial ability to repurchase the notes if our creditors accelerate
payment of our senior indebtedness.
o Our interest deduction with respect to the notes will be disallowed to
the extent that the notes are treated as "corporate acquisition
indebtedness" of the Company under Section 279 of the Internal Revenue
Code of 1986, as amended. Corporate acquisition indebtedness includes
subordinated convertible notes issued to provide consideration for the
acquisition of stock in another corporation if certain debt to equity or
earnings ratios are met. The notes will be treated as corporate
acquisition indebtedness to the extent their proceeds were used to fund
the acquisition of IXC Communications, Inc.
Litigation Risks Relating to IXC
o There are certain stockholder suits pending concerning IXC. On July 21,
1999, July 23, 1999 and July 27, 1999, five purported stockholder class
action suits were filed in the Delaware Court of Chancery against IXC,
certain present and former members of the IXC board of directors,
Cincinnati Bell and Ivory Merger Inc. These complaints allege, among
other things, that the IXC director defendants, aided and abetted by
Cincinnati Bell and Ivory Merger Inc., have breached their fiduciary
duties to IXC's stockholders by failing to maximize stockholder value in
connection with entering into the merger agreement in connection with the
Cincinnati Bell/IXC merger. The complaints seek damages and a court order
enjoining completion of the merger. On August 12, 1999, plaintiffs in the
various actions moved for a preliminary injunction to prevent the
completion of the merger pending a full hearing on the merits. A hearing
in connection with that motion was held on October 20, 1999. By
Memorandum Opinion dated October 27, 1999, the Delaware Court of Chancery
denied plaintiffs' request for a preliminary injunction, finding that
plaintiffs were not likely to succeed on the merits at trial.
o There are certain Equal Employment Opportunity Commission suits pending.
Twenty-two EEOC charges have been filed beginning in September 1999 by
current Eclipse Telecommunications employees located in the Houston
office (formerly Coastal Telephone, acquired May, 1999) alleging sexual
discrimination, race discrimination and retaliation. Discovery is
ongoing.
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Because this Prospectus Contains Forward-looking Statements, it May
Not Prove to Be Accurate
This prospectus, including the documents we incorporate by reference,
contains forward-looking statements and information relating to our company.
We generally identify forward-looking statements using words like "believe,"
"intend," "expect," "may," "should," "plan," "project," "contemplate,"
"anticipate" or similar statements. We base these statements on our beliefs as
well as assumptions we made using information currently available to us. As
these statements reflect our current views concerning future events, these
statements involve risks, uncertainties and assumptions. Actual results may
differ significantly from the results discussed in these forward-looking
statements. We do not undertake to update our forward-looking statements or
risk factors to reflect future events or circumstances.
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USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling holders
of the notes and the common stock into which the notes are convertible.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is traded on the New York Stock Exchange under the
symbol "BRW." The following table sets forth, for the periods indicated, the
range of high and low closing sales prices for our common stock, as reported
on the New York Stock Exchange Composite Transaction Tape. We have restated
the price data in the table to account for a two-for-one stock split effective
May 2, 1997, and the spin-off of Convergys Corporation on December 31, 1998.
For current price information, you are urged to consult publicly available
sources.
Consistent with maximizing the expanded growth opportunities available to
us following the IXC merger, we have ceased paying dividends on our common
stock after the dividend paid on August 3, 1999.
Cincinnati Bell
Common Stock
Dividends
Calendar Period High Low Declared
1997
First Quarter................ $33.75 $28.25 $0.10
Second Quarter............... 33.25 26.06 0.10
Third Quarter................ 32.25 23.06 0.10
Fourth Quarter............... 31.13 25.38 0.10
1998
First Quarter................ 36.31 30.13 0.10
Second Quarter............... 38.63 28.50 0.10
Third Quarter................ 33.19 22.50 0.10
Fourth Quarter............... 38.13 20.88 0.10
1999
First Quarter................ 23.44 16.06 0.10
Second Quarter............... 26.50 19.63 0.10
Third Quarter................ 26.50 16.31 --
Fourth Quarter (through
December 29, 1999)......... $36.50 $19.38 --
On December 29, 1999, the last reported sale price of the common stock on
the New York Stock Exchange was $35 13/16. As of December 27, 1999, there were
approximately 23,305 holders of record of the common stock.
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DESCRIPTION OF NOTES
The notes covered by this prospectus will be our general unsecured
obligations. The notes have been issued under an indenture dated as of July
21, 1999, between us and The Bank of New York, as trustee.
We have summarized selected provisions of the indenture and the notes
below. This summary is not complete. We have filed the indenture and the
form of the notes with the SEC as an exhibit to this registration
statement, and you should read the indenture for provisions that may be
important to you. The terms of the notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939, as amended.
General
The notes represent unsecured general obligations of Cincinnati Bell and
are subordinate in right of payment to all of our existing and future senior
debt, and are convertible into common stock as described under "--Conversion
Rights." The notes are limited to $400,000,000 aggregate principal amount at
issuance, and will mature on July 21, 2009, unless earlier redeemed at our
option or repurchased by us at the option of the holder upon the occurrence of
a change of control. See "--Change of Control Repurchase."
The notes bear interest at the rate of 6 3/4% annually which will be
payable semiannually in cash beginning January 21, 2005, on January 21 and
July 21, to holders of record at the close of business on the preceding
January 6 and July 6, respectively. Prior to July 21, 2004, interest on the
notes will be paid in kind by increasing the value of the respective note,
which will accrete in value on a daily basis, compounded semi-annually on
January 21 and July 21 of each year, at the annual rate of 6 3/4% of the daily
accreted value of the note. Cash interest on notes will be paid by wire
transfer in immediately available funds to a United States bank account
designated by the note holder. Interest is computed on the basis of a 360-day
year comprised of twelve 30-day months.
Principal is payable, and the notes may be presented for conversion,
registration of transfer and exchange, without service charge, at the office
that we will maintain for such purpose in New York, New York, which initially
is the office or agency of the trustee in New York, New York.
The indenture does not contain any financial covenants or any
restrictions on the payment of dividends on our other securities, the
repurchase of our securities or the incurrence of senior debt or other
indebtedness, other than with regard to adjustments to the conversion price.
The indenture contains no covenants or other provisions to afford protection
to note holders in the event of a highly leveraged transaction or a change in
control of Cincinnati Bell except to the extent described under "--Change of
Control Repurchase" below.
Conversion Rights
A note holder may, at any time (i) after the expiration or early
termination of any applicable waiting period under the HSR Act with respect to
the acquisition of shares of common stock upon conversion of notes or (ii) in
connection with a change of control of Cincinnati Bell, as described under "-
Change of Control Repurchase," convert a note or any portion of a note that is
an integral multiple of $1,000 into shares of common stock and the associated
preferred stock purchase rights initially at a conversion price of $29.89 per
share. This conversion price is initially equivalent to a conversion rate of
33.456 shares per $1,000 principal amount of notes. The right to convert a
note called for redemption will terminate at the close of business on the
business day immediately preceding the date fixed for redemption or the
maturity date, unless we default in making the payment due on that date. For
information as to notices of redemption, see "--Optional Redemption."
The conversion price will be subject to adjustment upon the occurrence of
certain events, including:
o the issuance of capital stock as a dividend or distribution on
common stock, or a dividend or distribution of any Cincinnati Bell
securities on common stock as part of a shareholder rights plan or
poison pill;
o the issuance of capital stock in a reclassification of common stock;
o the issuance of common stock or rights, warrants or options to
subscribe for or purchase common stock at less than the current
market price per share, which is defined as the average market price
for the 10 trading days prior to that issuance (adjusted to take
into account "ex" dates for events that occur during these 10
trading days);
o subdivisions and combinations of common stock;
o distributions to all holders of common stock of:
o cash, but not including regular dividends;
o evidences of indebtedness of Cincinnati Bell or another issuer;
o securities of Cincinnati Bell or another issuer;
o assets;
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o rights or warrants to purchase Cincinnati Bell securities; or
o the completion of a tender or exchange offer made by us or one of
our subsidiaries for the common stock in which we are required to
pay aggregate consideration with a fair market value that exceeds
the current market price per share of common stock, which is defined
as the average market price for the 10 trading days prior to the day
after the expiration of the tender offer.
No adjustment of the conversion price will be required to be made until
cumulative adjustments amount to 1% or more of the conversion price as last
adjusted.
If the holders of 51% or more of the aggregate accreted value of the
notes elect to receive a dividend or distribution declared by Cincinnati Bell
of any
o cash
o capital stock, including options, warrants or other rights to
acquire capital stock
o assets
o dividend or distribution resulting from a redemption or a triggering
event under a shareholder rights plan
Cincinnati Bell will pay this dividend or distribution into an account
maintained by the trustee. This dividend or distribution will be held in such
account, and accrue interest, until the note to which it relates is redeemed
by us or converted into common stock.
If the common stock is converted into the right to receive other
securities, cash or other property as a result a reclassification,
consolidation, merger, sale or transfer of assets or other transactions, each
note then outstanding will also become convertible into the kind and amount of
securities, cash and other property receivable upon the transaction by a
holder of the number of shares of common stock which would have been received
by a note holder immediately prior to such transaction if the note holder had
converted its note.
We will not issue fractional shares of common stock to a holder who
converts a note. In lieu of issuing fractional shares, we will pay a cash
adjustment based upon the market price per share of common stock on the day
preceding the day of the conversion.
Optional Redemption
At any time on or after July 21, 2004, we will be entitled at our option
to redeem all or a portion of the notes, in minimum multiples of at least $100
million of the original issue price, upon at least 30 and not more than 60
days' notice by mail to the holders of the notes, at the following redemption
prices expressed as percentages of the full accreted value of the note on the
redemption date, plus accrued and unpaid interest to the redemption date
(subject to the rights of holders of record on any relevant record date to
receive interest due on any relevant interest payment date that is on or prior
to such redemption date), if redeemed during the twelve-month periods set
forth below:
REDEMPTION
YEAR PRICE
July 21, 2004 through July 20, 2005.......................... 103.375%
July 21, 2005 through July 20, 2006.......................... 102.250%
July 21, 2006 through July 20, 2007.......................... 101.125%
July 21, 2007 and thereafter .......................... 100.000%
Change in Control Repurchase
Upon the occurrence of a change of control, each holder of notes will
have the right to require that we repurchase all or a portion of such holder's
notes at a repurchase price in cash equal to the greater of
o the sum of (x) 101% of the accreted value of the notes to be repurchased
and (y) the product obtained by multiplying (i) the difference between
the full accreted value of the note at a maturity and the accreted value
of the note on the day the change of control occurs by (ii) the
percentage of the total consideration received by our shareholders in the
change of control transaction that is paid in cash, and
o the fair market value of the consideration that such holder would have
received had it converted its notes to be repurchased at the above stated
sum into shares of common stock immediately prior to the change of
control,
in each case plus any accrued and unpaid cash interest to the date of
repurchase.
In addition, if a change of control occurs on or prior to July 21, 2004,
and all or a portion of the consideration received by our shareholders is in
cash, each holder that elects to have its notes repurchased may also elect to
receive a payment in an amount equal to the product set forth in clause (y)
above.
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Immediately before any change of control transaction occurs, we will at
our option either
o deposit with the trustee for the benefit of the holders of the notes an
amount in cash sufficient to fully satisfy our payment obligations with
respect to the change of control; or
o cause the payment obligations of the company with respect to such change
of control to be assumed by the entity or entities issuing or paying, as
the case may be, the stock, other securities or other property or assets
(including cash) issued or paid with respect to or in exchange for our
common stock in connection with such change in control.
However, we may not repurchase any notes at any time when the
subordination provisions of the indenture otherwise would prohibit us from
making payments of principal in respect of the notes. If we fail to repurchase
the notes when required under the preceding paragraph, such failure will
constitute an event of default (as defined under the caption "-- Events of
Default") under the indenture whether or not such repurchase is permitted by
the subordination provisions of the indenture.
A change of control means the occurrence of any of the following:
o a tender offer shall be made and consummated for the ownership of 30% or
more of the outstanding voting securities of Cincinnati Bell;
o Cincinnati Bell is merged or consolidated with another corporation and as
a result of such merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting corporation is owned in
the aggregate by the former shareholders of Cincinnati Bell, other than
affiliates (within the meaning of the Exchange Act) of any party to such
merger or consolidation as the same shall have existed immediately prior
to such merger or consolidation;
o we sell substantially all of our assets to another corporation which is
not a wholly owned subsidiary of ours;
o a person within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as
in effect on December 5, 1988) of the Exchange Act acquires 20% or more
of our outstanding voting securities, or a person within the meaning of
Section 3(a)(9) or Section 13(d)(3) (as in effect on December 5, 1988) of
the Exchange Act controls in any manner the election of a majority of our
directors;
o within any period of two consecutive years commencing on or after
December 5, 1988, individuals who at the beginning of such period
constitute our Board of Directors cease for any reason to constitute a
majority of the Board, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in
office who were directors at the beginning of the period (for purposes
hereof, ownership of voting securities shall take into account and shall
include ownership as determined by applying the provisions of Rule
13(d)-3(d)(1)(i) pursuant to the Exchange Act); or
o a merger, consolidation or similar transaction (regardless of whether
Cincinnati Bell is a constituent corporation in such transaction and
other than those transactions of the type referred to above, where less
than 75% of the outstanding voting securities of the surviving or
resulting corporation is owned by the former shareholders of Cincinnati
Bell) with respect to which persons who were beneficial owners of voting
securities immediately prior to that transaction own less than 50% of the
voting securities (including securities of any successor corporation of
Cincinnati Bell having the ordinary power to vote in the election of
directors of such successor corporation) upon the consummation of such
transaction.
Within 30 days following a change in control, we will be required to mail to
the trustee and all holders of record of the notes a notice of the occurrence
of the change in control, stating:
o that an offer is being made and that all notes tendered and not withdrawn
will be accepted for payment;
o the circumstances and relevant facts regarding such change of control
(including information with respect to pro forma historical income, cash
flow and capitalization, each after giving effect to such change of
control);
o the repurchase price and the repurchase date, which shall be not later
than 60 days from the date such notice is mailed;
o that any notes not tendered will continue to accrue accreted value and
interest according to their terms, but holders who do not tender will not
receive the purchase price for those notes;
o that, unless we default in the payment of the change of control payment,
all notes accepted for payment pursuant to the repurchase offer made
pursuant to the change in control repurchase shall cease to accrue
accreted value and interest on and after the repurchase date; and
o the procedures that holders of notes must follow to accept the change of
control offer.
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We will leave the change of control repurchase offer open for at least 20
business days or for such longer period as is required by law.
To exercise the repurchase right, the holder of a note will be required
to deliver, on or before the 20th day after the date of the notice, an
irrevocable written notice to us (or an agent designated by us for such
purpose) and the trustee of the holder's exercise of the repurchase right,
together with the certificates evidencing the note or notes to be repurchased,
properly endorsed for transfer.
Under certain circumstances, we may not be permitted to repurchase the notes
or make other payments. If we default on senior indebtedness (as defined under
"-- Subordination" below) and the default is continuing, or in the event of
our insolvency, bankruptcy, reorganization, dissolution or other winding up
where senior indebtedness is not paid in full, under the terms of the
indenture the senior indebtedness is to be paid in full before any payment can
be made to holders of the notes. Our ability to pay cash to holders of notes
following the occurrence of a change in control may be limited by our then
existing financial resources. There can be no assurance that sufficient funds
will be available when necessary to make any required repurchases. See "Risk
Factors -- Because we may be unable to raise the funds necessary to repurchase
your notes in the event of change in control we may default on the notes in
the event of a change in control."
If a change in control occurs and the holders exercise their rights to
require us to repurchase notes, we intend to comply with applicable tender
offer rules under the Exchange Act, including Rules 13e-4 (other than SEC
filing requirements if not then applicable) and 14e-1, as then in effect, with
respect to any such purchase.
Consolidation, Merger and Sale of Assets
We may, without the consent of any of the note holders, consolidate with
or merge into any other person or convey, transfer or lease our properties
substantially as an entirety to, any other person, if:
o the successor, transferee or lessee, if other than us, expressly assumes
our obligations under the indenture and the notes by means of a
supplemental indenture; and
o at the time of the transaction, the other person has not received a
notice of payment default under a material indenture or any other
material indebtedness of the other person that has not been cured within
the applicable period.
Events of Default
Each of the following are events of default under the indenture:
o a default in the payment of the principal of and premium, if any, on any
of the notes when due and payable, whether at maturity or a date fixed
for prepayment or by acceleration or otherwise, and whether or not such
payment is prohibited by the subordination provisions of the indenture;
o a default in the payment of any cash interest upon any of the notes when
due and payable, continued for 20 days, whether or not such payment is
prohibited by the subordination provisions of the indenture;
o a default by us or any of our subsidiaries in the performance, or breach,
of any of our other covenants in the indenture which are not remedied by
the end of a period of 50 days after written notice to us by the trustee
or to us and the trustee by the holders of at least 25% in aggregate
accreted value of the outstanding notes;
o a default by us or any of our subsidiaries on any agreement or condition
relating to our senior indebtedness in excess of $250 million, which
results in the acceleration of that senior indebtedness;
o certain events of bankruptcy, insolvency or reorganization.
If an event of default (other than of certain events of bankruptcy,
insolvency, or reorganization) occurs and is continuing, either the trustee or
the holders of at least 25% of the aggregate accreted value of the outstanding
notes may declare the accreted value of and accrued interest on all notes to
be immediately due and payable. Such declaration may be rescinded by the
holders of a majority of the aggregate accreted value of the outstanding notes
if all existing events of default have been cured or waived, except nonpayment
of principal or interest or other amounts that have become due because of the
declaration, and if the recision would not conflict with any judgment or
decree. If an event of default occurs due to the bankruptcy, insolvency, or
reorganization of Cincinnati Bell, the accreted value of and premium, if any,
and accrued interest on the outstanding notes will automatically become
immediately due and payable.
The holders of not less than a majority in principal amount of the
outstanding notes affected may direct the time, method and place of conducting
any proceedings for any remedy available to the trustee, or exercising any
trust or power conferred on the trustee; provided that such direction does not
conflict with any rule of law or with the indenture. The trustee may take any
other action it thinks proper which is not inconsistent with the direction
given to it by the majority of the holders.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the holders of the notes
unless the holders have offered to the trustee reasonable indemnity or
security against any loss, liability or
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expense. Except to enforce the right to receive payment of principal, premium
(if any) or interest when due or the right to convert any note in accordance
with the indenture, no holder may institute any action or proceeding or pursue
any remedy with respect to the indenture or the notes unless:
o such holder has previously given the trustee notice that an event of
default is continuing;
o holders of at least 25% in principal amount of the outstanding notes
have requested the trustee to pursue the remedy;
o such holders have offered the trustee security or indemnity
satisfactory to the trustee against any loss, liability or expense;
o the trustee has not complied with such request within 60 days after
the receipt thereof and the offer of security or indemnity; and
o the holders of a majority in principal amount of the outstanding
notes have not given the trustee a direction inconsistent with such
request within such 60-day period.
In addition, we are required to deliver to the trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the
officers signing such certificate know of any default by us in the performance
or observance of any of the terms of the indenture. If such officers do know
of a default, the certificate must specify the status and nature of all such
defaults.
Modification and Waiver
Subject to certain exceptions, any amendment, supplement or modification
to the indenture or waiver or consent to depart from the provisions of the
notes requires the written consent of the holders of at least 51% of the
aggregate accreted value of the notes then outstanding. However, without the
consent of each holder of an outstanding note affected thereby, no amendment
may, among other things:
o change the stated maturity or the principal or accreted value on any
note
o reduce the rate of, or extend the time of payment of, interest on
any note
o change the time of prepayment when, or the currency in which, any
note is payable
o modify the subordination provisions of the indenture in a manner
adverse to the holders of the notes
o make any change in the requirement stated above that the written
consent of 51% of the aggregate accreted value of the notes
outstanding is required for any such modification or amendment of
the indenture or for any waiver of compliance with certain
provisions of, or of any departure by Cincinnati Bell from the
provisions of, the indenture.
Subordination
The payment of the principal of, premium, if any, and interest on the
notes will, to the extent set forth in the indenture, be subordinated in right
of payment to the prior payment in full of all senior indebtedness. When there
is a payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of Cincinnati Bell, the holders of all senior indebtedness will
first be entitled to receive payment in full in respect of the senior
indebtedness of all amounts due or to become due, before the holders of the
notes will be entitled to receive any payment in respect of the principal of,
premium, if any, or interest on the notes. No payments on account of
principal, premium, if any, or interest on the notes or on account of the
purchase or acquisition of notes may be made if a default in any payment with
respect to senior indebtedness has occurred and is continuing or if any
judicial proceeding is pending with respect to any such default.
Our senior indebtedness includes the principal of and premium, if any,
and interest on all our indebtedness for money borrowed, other than the notes,
whether outstanding on the date of the execution of the indenture or
thereafter incurred, created or assumed, except (i) indebtedness or
obligations owed by Cincinnati Bell to any of its direct or indirect
subsidiaries, (ii) indebtedness that by the terms of the instrument or
instruments by which such indebtedness was created or incurred expressly
provides that it is junior in right of payment to the notes or any other
indebtedness of ours or ranks pari passu in right of payment to the notes or
(iii) trade payables or other accrued current liabilities incurred in the
ordinary course of business.
The term "indebtedness for money borrowed," when used with respect to us,
means:
o indebtedness of Cincinnati Bell for money borrowed or evidenced by
bonds, debentures, notes, guarantees, or similar instruments
o reimbursement, payment, and other obligations of ours with respect
to letters of credit, bankers' acceptances and similar facilities
issued for our account
o every deferred payment obligation of, or any such obligation assumed
by, us for the payment of the purchase price of property or services
purchased by us
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o any obligation of, or any such obligation guaranteed by, us for the
payment of rent or other amounts under a lease of property or assets
which obligation is required to be classified and accounted for as a
capitalized lease on our balance sheet under generally accepted
accounting principles
o all our obligations with respect to interest rate hedging
arrangements to hedge interest rates relating to our senior
indebtedness
o any obligation of, or any obligation guaranteed by, us or secured by
our property or assets for the repayment of borrowed money, whether
or not the obligation is assumed by us or is non-recourse to our
credit
o any indebtedness arising under a conditional sale or other title
retention agreement with respect to property we acquire
o indebtedness of the kinds described above that we have assumed or
guaranteed, including the dividends and distributions of others
At September 30, 1999 our senior indebtedness was approximately $340.0
million, all of which was secured. We expect from time to time to incur
additional indebtedness. The indenture does not limit or prohibit us from
incurring additional senior indebtedness or additional indebtedness. On
November 9, 1999, we entered into a $1.8 billion credit agreement among us
and IXC Communications Services, Inc., as borrowers, Citicorp USA, Inc., as
administrative agent, Bank of America, N.A., as syndication agent and
certain lender parties thereto. See "Risk Factors -- Risks Relating to the
Notes and Common Stock -- If we are unable to pay all our debts, then you
will receive payments on the notes only if we have funds remaining after we
have repaid our existing and future senior indebtedness."
Book-Entry, Delivery and Form
We will issue the notes in the form of one or more global notes except as
described under "-- Certificated Notes" below. The global notes will be
deposited with, or on behalf of, the clearing agency registered under the
Exchange Act that is designated to act as depositary for the notes and
registered in the name of the depositary or its nominee. The Depository Trust
Company will be the initial depositary. Except as described below, the global
notes may be transferred, in whole and not in part, only to the depositary or
another nominee of the depositary. You may hold your beneficial interests in
the global notes directly through the depositary if you have an account with
the depositary or indirectly through organizations which have accounts with
the depositary.
The depositary has advised us that it is:
o a limited-purpose trust company organized under the laws of the
State of New York;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
The depositary was created to hold securities of institutions that have
accounts with the depositary and to facilitate the clearance and settlement of
securities transactions among those institutions through electronic book-entry
changes. This eliminates the need for physical movement of certificates
representing securities. These institutions, known as participants, include
securities brokers and dealers, banks, trust companies, clearing corporations
and other organizations. Access to the depositary's book-entry system is also
available to others that clear through or maintain a custodial relationship
with a participant, whether directly or indirectly.
Ownership of beneficial interests in a global note is limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests in the global notes is shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by the depositary and the participants. The laws of some
jurisdictions may require that purchasers of securities take physical delivery
of securities in definitive form. These limits and laws may impair your
ability to transfer or pledge beneficial interests in a global note.
So long as the depositary or its nominee is the registered holder and
owner of a global note, the depositary or the nominee will be considered the
sole legal owner and holder of the related notes for all purposes. Except as
described below, as an owner of a beneficial interest in a global note, you
will be subject to the following limitations:
o you will not be entitled to have the notes represented by the global
notes registered in your name;
o you will not receive or be entitled to receive physical delivery of
certificated notes; and
o you will not be considered to be the owner or holder of any notes
under the global notes.
We understand that under existing industry practice, in the event an owner of
a beneficial interest in a global note desires to take any action that the
depositary, as the holder of the global notes, is entitled to take, the
depositary would authorize the participants to take the action. The
participants would authorize beneficial owners owning through them to take the
action or would otherwise act upon the instructions of beneficial owners
owning through them.
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Payment of principal of, premium, if any, and interest on notes
represented by a global note registered in the name of and held by the
depositary or its nominee will be made to the depositary or its nominee as the
registered owner and holder of the global notes.
We expect that the depositary or its nominee, upon receipt of any payment
of principal of, premium, if any, or interest on a global note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global notes as
shown on the records of the depositary or its nominee. We also expect that
payments by participants to owners of beneficial interests in a global note
held through the participants will be governed by standing instructions and
customary practices and will be the responsibility of the participants. We
will not have any responsibility or liability:
o for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in the global notes;
o for maintaining, supervising or reviewing any records relating to
beneficial ownership interests;
o for any other aspect of the relationship between the depositary and
its participants; or
o for any other aspect of the relationship between participants and
the owners of beneficial interests in the global notes owning
through participants.
Unless and until the global notes are exchanged in whole or in part for
certificated notes, the global notes may not be transferred except as a whole
by the depositary to a nominee of the depositary or by a nominee of such
depositary to another nominee of such depositary.
Although the depositary has agreed to these procedures in order to
facilitate transfers of interests in the global notes among participants of
the depositary, it is under no obligation to perform or continue to perform
and may discontinue these procedures at any time. Neither we nor the trustee
will have any responsibility for the performance by the depositary or its
participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
Year 2000 Issues Relating to The Depository Trust Company
We have been advised by The Depository Trust Company that it is aware
that some computer applications, systems and the like for processing dates
that are dependent upon calendar dates, including dates before, on or after
January 1, 2000, may encounter "year 2000 problems." DTC has informed its
participants and other members of the financial community that it has
developed and is implementing a program so that its systems, as the same
relate to the timely payment of distributions, including principal and income
payments, to securityholders, book-entry deliveries and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which DTC expects to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service
providers, among others. DTC has informed the industry that it is contacting,
and will continue to contact, third-party vendors from whom DTC acquired
services to impress upon them the importance of their services being year 2000
compliant and determine the extent of their efforts for year 2000 testing and
remediation of their services. In addition, DTC is in the process of
developing contingency plans that it deems appropriate.
According to DTC, this information with respect to DTC has been provided
to the industry for informational purposes only and is not intended to serve
as a representation, warranty or contract modification of any kind.
Certificated Notes
The notes represented by the global notes are exchangeable for
certificated notes in definitive form of like tenor in denominations of $1,000
in original issue price and integral multiples of $1,000 if:
o the depositary notifies us that it is unwilling or unable to
continue as depositary for the global notes;
o the depositary ceases to be a clearing agency registered under the
Exchange Act or announces an intention permanently to cease business
or in fact ceases business;
o we at any time determine not to have all of the notes represented by
the global notes; or
o an event of default, as described under the caption "-- Events of
Default," has occurred and is continuing.
Any note that becomes exchangeable as described above is exchangeable for
certificated notes issuable in authorized denominations and registered in
whatever names the depositary directs. Subject to the foregoing, the global
notes are not
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exchangeable, except for global notes of the same aggregate denomination to be
registered in the name of the depositary or its nominee.
Regarding the Trustee
The Bank of New York is the trustee under the indenture.
Governing Law
The indenture and the notes will be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a general discussion of the material U.S. federal income
tax considerations relevant to purchasing, owning and disposing of the notes
and the common stock into which you may convert the notes. This discussion is
based on currently existing provisions of the Internal Revenue Code of 1986,
as amended, existing and proposed Treasury regulations promulgated under the
Code and administrative and judicial interpretations, all as presently in
effect or proposed and all of which are subject to change, possibly with
retroactive effect, or different interpretations.
This discussion does not deal with all aspects of U.S. federal income
taxation that may be important to holders of the notes or shares of the common
stock received upon conversion, and it does not include any description of the
tax laws of any state, local or foreign government. This discussion is limited
to beneficial owners who hold the notes and the shares of common stock
received upon conversion as capital assets. Moreover, this discussion is for
general information only and does not address all of the U.S. federal income
tax consequences that may be relevant to particular purchasers. Particular
purchasers may be subject to special rules.
For the purpose of this discussion, a "U.S. holder" refers to a
beneficial owner of a note or common stock who or which is:
o a citizen or resident of the U.S. for U.S. federal income tax
purposes;
o a corporation or other entity taxable as a corporation created or
organized in or under the laws of the U.S. or political subdivision
of the U.S.;
o an estate the income of which is subject to U.S. federal income
taxation regardless of its source;
o a trust, if a U.S. court is able to exercise primary supervision
over the administration of the trust and one or more U.S.
fiduciaries have authority to control all substantial decisions of
the trust; or
o otherwise subject to U.S. federal income tax on a net income basis
in respect of its worldwide taxable income.
The term "non-U.S. holder" refers to any beneficial owner of a note or
common stock who or which is not a U.S. holder.
Prospective purchasers are urged to consult their own tax advisors as to
the particular federal, state, local and foreign tax consequences to them of
the acquisition, ownership and disposition of the notes, including the
conversion of the notes into shares of common stock, and the effect that their
particular circumstances may have on these tax consequences.
Federal Tax Considerations Applicable to U.S. Holders
Interest and Original Issue Discount
The notes were initially issued with original issue discount, or OID. OID
is the stated redemption price at maturity of a note minus its issue price.
The stated redemption price at maturity of a note is the sum of all
payments provided by the instrument. The issue price of a note is the first
price at which a substantial amount of the notes are sold to the public for
cash (excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity as underwriters, placement agents or
wholesalers).
Because the notes have OID, the following consequences arise:
o A holder must report the total amount of OID as ordinary income over
the life of the note.
o All holders of notes, even those on the cash method of accounting,
are required to report OID income as the OID accrues on the notes.
This means that holders are required to report OID income, and in
some cases pay tax on that income, before they receive the cash that
corresponds to that income.
o OID accrues on a note on a constant yield method. This method takes
into account the compounding of interest. Under this method, the
accrual of OID on a note will result in the holder being taxable at
approximately a constant percentage of the unrecovered investment in
the note.
o In general, the amount of OID that a holder will have to include in
income is the sum of the daily portions of OID for each day during
the taxable year (or portion of the taxable year) in which a holder
held the note. The daily portion is determined by allocating the OID
for an accrual period equally to each day in that accrual period.
The accrual period for a note may be of any length and may vary in
length over the term of the note. However, no accrual period may be
longer than one year and each scheduled payment of principal or
interest must occur either on the first or final day of an accrual
period. The amount of OID for an accrual period is generally equal
to the product of the note's adjusted issue price at the beginning
of such accrual period and its yield to maturity. The adjusted issue
price of a note at the beginning of any accrual period is the sum of
the issue price of the note plus the amount of OID allocable to all
prior accrual periods minus the amount of any prior payments on the
note.
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o The accruals of OID on a note will generally be less in the early
years and more in the later years.
o A holder's tax basis in a note is initially its cost. It increases
by any OID (and accrued market discount, if any, as described below)
a holder reports as income. It decreases by any principal payments
and interest payments (and amortized bond premium, if any, as
described below) a holder receives on the note.
Market Discount
The tax treatment of U.S. holders with respect to the notes may be
altered if the notes are purchased at a "market discount". Market discount on
a note will generally equal the amount, if any, by which the revised issue
price of the note exceeds the holder's initial tax basis in the note
(generally the note's acquisition price). The revised issue price of a note
for a particular U.S. holder equals the original issue price of the note plus
the aggregate amount of OID includible in the gross income of all other
holders for periods before the acquisition of the note by such U.S. holder.
Subject to a de minimis exception, a U.S. holder of a note acquired at a
market discount is generally required to treat as ordinary income any gain
recognized on the disposition of such note to the extent of the "accrued
market discount" at the time of disposition. Market discount on a note will be
treated as accruing on a straight-line basis over the term of such note or, at
the election of the holder, under a constant-yield method. A U.S. holder of a
note acquired at a market discount may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to purchase
or carry the note until the note is disposed of in a taxable transaction,
unless the holder elects to include market discount in income as it accrues.
If a note with accrued market discount is converted into common stock, the
amount of such accrued market discount at the time of conversion generally
will be taxable to the U.S. holder as ordinary income upon disposition of the
common stock.
Premium
A U.S. holder that purchases a note at a premium over its stated
principal amount generally may elect to amortize such premium (amortizable
bond premium) from the purchase date to the note's maturity date under a
constant-yield method. Amortizable bond premium, however, will not include any
premium attributable to a note's conversion feature. The premium attributable
to the conversion feature is the excess, if any, of the note's purchase price
over what the note's fair market value would be if there were no conversion
feature. Amortized bond premium is treated as an offset to interest income on
a note and not as a separate deduction. However, since a note may be
optionally redeemed after acquisition at a price in excess of its stated
redemption price at maturity, special rules may apply that could result in a
deferral of the amortization of some bond premium until later in the term of
the note. In general, a U.S. holder's tax basis in the notes will be reduced
by the amount of any bond premium as it is amortized or used to offset
interest income. Such amortization will cease upon conversion of the notes
into common stock.
A U.S. holder that purchases a note for an amount that is greater than
its revised issue price as of the purchase date and less than or equal to the
stated redemption price at maturity will be considered to have purchased the
note at an "acquisition premium." Under the acquisition premium rules, the
amount of OID which such U.S. holder must include in its gross with respect to
such note for any taxable year (or portion of a taxable year during which the
U.S. holder holds the note) will be reduced (but not below zero) by the
portion of the acquisition premium properly allocable to the period.
Constructive Dividends
Some corporate transactions, such as distributions of assets to holders
of common stock, may cause a deemed distribution to the holders of the notes
if the conversion price or conversion ratio of the notes is adjusted to
reflect the corporate transaction. These distributions will be taxable as a
dividend, return of capital or capital gain in accordance with the earnings
and profits rules discussed under "--Dividends on Shares of Common Stock."
Sale of Exchange of Notes or Shares of Common Stock
In general, a U.S. holder of notes will recognize gain or loss upon the
sale, redemption, retirement or other disposition of the notes measured by the
difference between:
o the amount of cash and the fair market value of any property
received, except to the extent attributable to the payment of
accrued interest and
o the U.S. holder's adjusted tax basis in the notes.
In general, each U.S. holder of common stock into which the notes have
been converted will recognize gain or loss upon the sale, exchange,
redemption, or other disposition of the common stock under rules similar to
those applicable to the notes. Special rules may apply to redemptions of the
common stock which may result in the amount paid being treated as a dividend.
Gain or loss on the disposition of the notes or shares of common stock will be
capital gain or loss and will be long-term capital gain or loss if the holding
period of the notes or the common stock that was disposed of exceeded one
year. Net capital gain realized by individual taxpayers is taxable at a
maximum rate of 20%.
Conversion of Notes
A U.S. holder of notes generally will not recognize gain or loss on the
conversion of the notes into shares of common stock, other than with respect
to cash received in lieu of fractional shares. The U.S. holder's tax basis in
the shares of common stock
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received upon conversion of the notes will be equal to the holder's aggregate
tax basis in the notes converted, less any portion allocable to cash received
in lieu of a fractional share. The holding period of the shares of common
stock received by the holder upon conversion of notes generally will include
the period during which the holder held the notes prior to the conversion.
Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for the fractional share rather than as a
dividend. Gain or loss recognized on the receipt of cash paid in lieu of
fractional shares generally will equal the difference between the amount of
cash received and the amount of tax basis allocable to the fractional share
exchanged.
Dividends on Shares of Common Stock
Distributions on shares of common stock will constitute dividends for
U.S. federal income tax purposes to the extent of our current or accumulated
earnings and profits as determined under U.S. federal income tax principles.
Dividends paid to holders that are U.S. corporations may qualify for the
dividends-received deduction.
To the extent that a U.S. holder receives distributions on shares of
common stock that would otherwise constitute dividends for U.S. federal income
tax purposes but that exceed the Company's current and accumulated earnings
and profits, the distribution will be treated first as a non-taxable return of
capital reducing the holder's basis in the shares of common stock. Any
distribution in excess of the holder's basis in the shares of common stock
will be treated as capital gain.
Federal Tax Considerations Applicable to Non-U.S. Holders
Interest on Notes
Generally, interest paid on the notes to a non-U.S. holder will not be
subject to U.S. federal income tax if:
o the interest is not effectively connected with the conduct of a
trade or business within the U.S. by the non-U.S. holder;
o the non-U.S. holder does not actually or constructively own 10% or
more of the total voting power of all classes of Company stock
entitled to vote and is not a controlled foreign corporation with
respect to which the Company is a "related person" within the
meaning of the Code; and
o the beneficial owner, under penalty of perjury, certifies that the
owner is not a U.S. person and provides the owner's name and
address.
The certification described in the last clause above may be provided by a
securities clearing organization, a bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business.
Under recently adopted U.S. Treasury regulations, which generally are
effective for payments made after December 31, 2000, the certification may
also be provided by a qualified intermediary on behalf of one or more
beneficial owners, or other intermediaries, provided that the intermediary has
entered into a withholding agreement with the Internal Revenue Service and
other conditions are met. A holder that is not exempt from tax under these
rules will be subject to U.S. federal income tax withholding at a rate of 30%
unless the interest is effectively connected with the conduct of a U.S. trade
or business, in which case the interest will be subject to the U.S. federal
income tax on net income that applies to U.S. persons generally. Corporate
non-U.S. holders that receive interest income that is effectively connected
with the conduct of a trade or business within the U.S. may also be subject to
an additional "branch profits" tax on such income. Non-U.S. holders should
consult applicable income tax treaties, which may provide different rules.
Sales or Exchange of Notes or Shares of Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income
tax on gain recognized upon the sale or other disposition of the notes or
shares of common stock unless:
o the gain is, or is treated as, effectively connected with the
conduct of a trade or business within the U.S. by the non-U.S.
holder;
o in the case of non-U.S. holder who is a nonresident alien individual
and holds the common stock as a capital asset, the holder is present
in the U.S. for 183 or more days in the taxable year; or
o the Company is or has been a "U.S. real property holding
corporation" for U.S. federal income tax purposes and the non- U.S.
holder owned (or, by virtue of the conversion right of the notes,
was treated as owning) more than 5 percent of the Company's common
stock during certain statutory testing periods. The Company is not
certain whether it is currently, has been or will become a "U.S.
real property holding corporation."
Conversion of Notes
A non-U.S. holder generally will not be subject to U.S. federal income
tax on the conversion of a note into shares of common stock. To the extent a
non-U.S. holder receives cash in lieu of a fractional share on conversion, the
cash may give rise to gain that would be subject to the rules described above
with respect to the sale or exchange of a note or common stock.
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Dividends on Shares of Common Stock
Generally, any distribution on shares of common stock to a non-U.S.
holder will be subject to U.S. federal income tax withholding at a rate of 30%
unless the dividend is effectively connected with the conduct of a trade or
business within the U.S. by the non-U.S. holder, in which case the dividend
will be subject to the U.S. federal income tax on net income that applies to
U.S. persons generally. Corporate non-U.S. holders that receive dividend
income that is effectively connected with the conduct of a trade or business
within the U.S. may also be subject to an additional "branch profits" tax on
such income. Non-U.S. holders should consult any applicable income tax
treaties, which may provide different rules. A non-U.S. holder and any
entities, partners, shareholders or other beneficiaries of non-U.S. holders
may be required to satisfy certification requirements in order to claim a
reduction of or exemption from withholding under the foregoing rules.
Federal Estate Taxes
A note beneficially owned by an individual who is a non-U.S. holder at
the time of his or her death generally will not be subject to U.S. federal
estate tax as a result of the individual's death; provided that:
o the individual does not actually or constructively own 10% or more
of the total combined voting power of all classes of Company stock
entitled to vote within the meaning of Section 871(h)(3) of the
Code; and
o interest payments with respect to such note would not have been, if
received at the time of the individual's death, effectively
connected with the conduct of a U.S. trade or business by the
individual.
Common stock owned or treated as owned by an individual who is a non-U.S.
holder at the time of his or her death will be included in the individual's
estate for U.S. federal estate tax purposes and thus will be subject to U.S.
federal estate tax, unless an applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding
United States Holders
Information reporting and backup withholding may apply to payments of
interest or dividends on or the proceeds of the sale or other disposition of
the notes or shares of common stock made by the Company with respect to
non-corporate U.S. holders. These holders generally will be subject to backup
withholding at a rate of 31% unless the recipient of the payment supplies a
taxpayer identification number and other information, certified under
penalties of perjury, or otherwise establishes, in the manner prescribed by
law, an exemption from backup withholding. Any amount withheld under backup
withholding is allowable as a credit against the U.S. holder's federal income
tax, upon furnishing the required information to the Internal Revenue Service.
Non-United States Holders
Generally, information reporting and backup withholding of U.S. federal
income tax at a rate of 31% may apply to payments of principal, interest,
dividends and premium, if any, to a non-U.S. holder if the holder fails to
certify that the holder is a non-U.S. person or if the Company or its paying
agent has actual knowledge that the holder is a U.S. person.
The payment of the proceeds on the disposition of notes or shares of
common stock to or through the U.S. office of a U.S. or foreign broker will be
subject to information reporting and backup withholding unless the owner
provides the certification described above or otherwise establishes an
exemption. The proceeds of the disposition by a non-U.S. holder of notes or
shares of common stock to or through a foreign office of a broker will not be
subject to backup withholding. However, if the broker is a U.S. person, a
controlled foreign corporation for U.S. tax purposes, or a foreign person 50%
or more of whose gross income from all sources is from activities that are
effectively connected with a U.S. trade or business or, after December 31,
2000, a foreign partnership, if at any time during its tax year, (i) one or
more of its partners are U.S. persons also, in the aggregate, hold more than
50% of the income or capital interest in the partnership or (ii) it is engaged
in the conduct of a trade or business in the United States, information
reporting will apply unless:
o the broker has documentary evidence in its files of the owner's
foreign status; or
o the owner otherwise establishes an exemption.
Both backup withholding and information reporting will apply to the
proceeds from dispositions if the broker has actual knowledge that the holder
is a U.S. holder.
Recently adopted U.S. Treasury regulations, which generally are effective
for payments made after December 31, 2000, alter the rules described above.
Among other things, these regulations provide presumptions under which a
non-U.S. holder is subject to information reporting and backup withholding at
the rate of 31% unless we receive certification from the holder of non-U.S.
status. Depending on the circumstances, this certification will need to be
provided:
o directly by the non-U.S. holder;
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o in the case of a non-U.S. holder that is treated as a partnership or
other fiscally transparent entity, by the partners, shareholders or
other beneficiaries of the entity; or
o qualified financial institutions or other qualified entities on
behalf of the non-U.S. holder.
The Preceding Discussion of Certain United States Federal Income Tax
Consequences Is for General Information Only and Is Not Tax Advice.
Accordingly, Each Investor Should Consult its Own Tax Adviser as to Particular
Tax Consequences to it of Purchasing, Holding and Disposing of the Notes and
the Common Stock of the Company, Including the Applicability and Effect of Any
State, Local or Foreign Tax Laws, and of Any Proposed Changes in Applicable
Laws.
ERISA CONSIDERATIONS
The United States Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code set forth certain restrictions on (a) employee
benefit plans (as defined in section 3(3) of ERISA), (b) plans described in
Section 4975(e)(1) of the Code, including individual retirement accounts and
Keogh plans, (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in such entity (each of (a), (b) and (c)
hereinafter referred to as a "Plan" or "Benefit Plan") and (d) persons who
have certain specified relationships to such Plans ("Parties in Interest"
under ERISA and "Disqualified Persons" under the Code). The Company will be a
Party in Interest and Disqualified Person with respect to each Plan covering
its employees or the employees of its subsidiaries or affiliates.
ERISA imposes specific requirements on fiduciaries of Benefit Plans
subject to ERISA, namely, that they make prudent investments, that they
diversify investments, and that they make investments in accordance with the
Benefit Plan documents and in the best interests of participants and their
beneficiaries. In accordance with these general fiduciary standards, before
investing in the notes or converting the notes to shares of our common stock,
a Benefit Plan fiduciary should determine whether such an investment or
conversion is permitted under the governing Plan instruments and is
appropriate for the Benefit Plan in view of its overall investment policy and
the composition and diversification of its portfolio.
In addition to imposing fiduciary requirements, ERISA prohibits a Party
in Interest under ERISA and a Disqualified Person under the Code from engaging
in certain transactions with respect to Benefit Plans or their assets
("Prohibited Transactions"). A violation of these Prohibited Transaction rules
may result in a breach of fiduciary duty under ERISA and/or the imposition of
an excise tax or other penalties and liabilities under ERISA and/or the Code
for such persons. If the Company, the Initial Purchaser or any of their
respective affiliates were a Party in Interest or a Disqualified Person with
respect to a Benefit Plan, a Prohibited Transaction could occur upon (i) the
subscription for, acquisition or holding of the notes by a Benefit Plan or
(ii) the conversion of the notes by a Benefit Plan into shares of our common
stock.
However, both ERISA and the Code provide for certain statutory and
administrative exemptions from the Prohibited Transaction rules which could
apply in this case. Further, the U.S. Department of Labor has issued a number
of class exemptions that may apply to otherwise Prohibited Transactions
arising from the acquisition or holding of notes, including: Class Exemption
75-1 (Transactions Involving Employee Benefit Plans and Certain
Broker-Dealers, Reporting Dealers and Banks), Class Exemption 84-14 (Plan
Asset Transactions Determined by Independent Qualified Professional Asset
Managers), Class Exemption 90-1 (Acquisition or Holding of Employer Securities
or Real Property by Insurance Company Pooled Separate Accounts), Class
Exemption 91-38 (Transactions Involving Bank Collective Investment Funds),
Class Exemption 95-60 (Transactions Involving Insurance Company General
Accounts) and Class Exemption 96-23 (Transactions Involving In-House Asset
Managers). The availability of each of these statutory, administrative and
class exemptions is subject to a number of important conditions which each
Benefit Plan investor's fiduciary must consider in determining whether such
exemption applies.
Prior to making an investment in the notes, prospective Benefit Plan
investors should consult with their legal advisers concerning the impact of
ERISA and the Code and the potential consequences of such investment in light
of their specific circumstances. Each Benefit Plan fiduciary must determine
that the subscription for, acquisition and holding of the notes and any
conversion of the notes into shares of our common stock is consistent with its
fiduciary duties under ERISA and does not result in the occurrence of a
non-exempt Prohibited Transaction.
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SELLING HOLDERS
The notes were originally issued and sold by us in a transaction exempt
from the registration requirements of the Securities Act to persons reasonably
believed by us to be institutional accredited investors. Selling holders,
which term includes certain pledgees foreclosing on a pledge of registrable
securities with respect to a bona fide financing transaction with the holder
(as described in the registration rights agreement), may from time to time
offer and sell pursuant to this prospectus any or all of the notes and common
stock into which the notes are convertible.
The selling holders have represented to us that they purchased the notes
and the common stock issuable upon conversion for their own account for
investment only and not with a view toward selling or distributing them,
except through sales registered under the Securities Act or exemptions. We
agreed with the selling holders pursuant to a registration rights agreement to
file this registration statement to register the resale of the notes and the
common stock. We agreed to use our reasonable best efforts to prepare and file
all necessary amendments and supplements to the registration statement to keep
it effective until the date on which the notes and the common stock into which
the notes are convertible no longer qualify as "registrable securities" under
the registration rights agreement. We can suspend the effectiveness of the
registration statement for up to 90 days in any 365-day period, provided that
if certain selling holders have pledged registrable securities pursuant to a
bona fide financing, and have notified us of such arrangements, for so long as
the registrable securities may be transferred or sold by the pledgee
foreclosing on such pledge, the 90-day limitation is reduced to 45 days in any
365-day period. A holder who elects to sell any securities pursuant to this
registration statement:
o will be required to be named as selling security holder;
o will be required to deliver a prospectus to purchasers;
o will be subject to the civil liability provisions under the
Securities Act in connection with any sales; and
o will be bound by the provisions of the registration rights agreement
which are applicable, including indemnification obligations.
If required, additional selling holders may from time to time be
identified and information with respect to such selling holders will be
provided in a supplement to this prospectus.
The following table sets forth information, as of December 29, 1999,
with respect to the selling holders and the respective principal amounts at
issuance of notes and common stock beneficially owned by each selling holder
that may be offered pursuant to this prospectus. The information is based on
information provided by or on behalf of the selling holders. The selling
holders may offer all, some or none of the notes or common stock into which
the notes are convertible. Because the selling holders may offer all or some
portion of the notes or the common stock, no estimate can be given as to the
amount of the notes or the common stock that will be held by the selling
holders upon termination of any such sales. In addition, the selling holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information
regarding their notes in transactions exempt from the registration
requirements of the Securities Act.
Principal Amount of Number of
Notes Shares of
Beneficially Owned Common Stock
Selling Holder and Offered Hereby(1)(2) Beneficially Owned(3)
- -------------- ------------------------ ---------------------
OHCP Ocean I, LLC 40,441,373.93 0
OHCP Ocean III, LLC 234,200,254.67 0
OHCP Ocean IV, LLC 9,100,000.00 0
OHCP Ocean V, LLC 41,258,371.40 0
Oak Hill Securities Fund L.P. 37,500,000.00 104,880 (4)
Oak Hill Securities Fund II L.P. 37,500,000.00 0
- ------------------------------------
(1) Interest on the notes will accrete at an annual rate of 6.75% until July
21, 2004 and thus the aggregate principal amount of the notes and the
stock which they are convertible into may include additional accreted
value of the notes until cash payment of interest begins.
(2) Includes notes that the Selling Holder has the right to acquire pursuant
to forward purchase commitments.
(3) Excludes shares of common stock issuable upon conversion of notes.
(4) Represents shares of common stock issued upon conversion of IXC common
stock in the merger of IXC and Cincinnati Bell.
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Relationship with Selling Holders
On July 21, 1999, Cincinnati Bell entered into an investment agreement
with Oak Hill Capital Partners L.P. and certain related parties of Oak Hill
(collectively, the "purchasers"). Under the investment agreement:
o a designee of an affiliate of Oak Hill was elected to our board of
directors, and that affiliate is entitled to have a designee on our
board of directors as long as the purchasers retain 66 2/3% of the
shares of common stock issued or issuable upon conversion of the
notes (including all notes originally issued to the purchasers, but
excluding any redeemed by us);
o Oak Hill itself is entitled to appoint a non-voting representative
to observe meetings of our board of directors as long as the
purchasers retain 66 2/3% of the shares of common stock issued or
issuable upon conversion of the notes (including all notes
originally issued to the purchasers, but excluding any redeemed by
us);
o until the later of the close of business of July 21, 2004 or one
year after the date on which the purchasers no longer own any notes
or common stock issued upon conversion of the notes, the purchasers
may not:
o advise, assist, or encourage others to buy or otherwise
acquire, or agree to acquire, beneficial ownership of voting
securities of Cincinnati Bell if the purchasers and their
affiliates would beneficially own voting securities
representing more than 1.0% of the total voting power of all
then outstanding voting securities (excluding the beneficial
ownership of securities owned by the purchasers when the
investment agreement was entered into, issued in connection
with the IXC transaction or upon conversion of the notes,
otherwise received or receivable under the terms of the notes,
issued as dividends or as distributions on the converted
shares, and certain other exceptions);
o make or participate in any solicitation of proxies relating to
any shares of our voting securities;
o call, consent to, or participate in a special meeting of our
shareholders;
o request or obtain a list of holders of voting securities;
o initiate, propose or participate in the making of any
shareholder proposal relating to Cincinnati Bell;
o deposit any of our voting securities in a voting trust,
agreement, or irrevocable proxy or otherwise participate in a
group which would make any of the purchasers the beneficial
owner of our voting securities;
o make any proposal for the acquisition of us or any of our
assets or any business combination, change of control,
restructuring, recapitalization or other extraordinary
transaction;
o seek representation on our board of directors, or otherwise
seek to change its composition or size, aside from the designee
described above;
o disclose any intent, plan, or proposal with respect to us that
is inconsistent with the forgoing prohibitions, including any
proposal that would require a change in the forgoing
prohibitions; or
o make any request for us to waive or consent to any action
inconsistent with the forgoing prohibitions, or any action that
would require us to make a public disclosure relating to any
such intent, plan or proposal;
o the purchasers agreed to take any actions required so that all
voting securities they beneficially own will be present for quorum
purposes, in person or represented by proxy, at all of our
shareholder's meetings and will vote at every such meeting for our
nominees to our board of directors, so long as any director that the
Oak Hill affiliate is entitled to designate, if any, is included
among those nominees;
o until the earlier of July 21, 2004 or the date on which the
purchasers and their affiliates own less than 50% of the common
stock issued or issuable upon conversion of the notes (including all
notes originally issued to the purchasers, but excluding any
redeemed by us), the purchasers may not, directly or indirectly,
sell or transfer any notes or other securities having the ordinary
power to vote in the election of our directors without our prior
written consent except:
o to any person who would beneficially own less than 5% of our
outstanding voting securities after such sale or transfer;
o to us;
o to an affiliate of the purchasers;
o in a registered broadly distributed public offering (including
sales pursuant to this prospectus);
o in a tender offer;
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o after providing notice to us and a right of first refusal; or
o that any pledgee of the purchaser's notes or shares of common
stock issuable upon conversion of the notes foreclosing on a
pledge in connection with a bona fide financing transaction by
the purchasers may transfer such notes and conversion shares
without such restrictions.
Cincinnati Bell, Oak Hill and certain related parties of Oak Hill
also entered into an agreement, pursuant to which Oak Hill received $5 million
on execution of the Investment Agreement, and $20 million on completion of the
IXC merger. Other alternative transactions would have required payment of a
different amount.
PLAN OF DISTRIBUTION
The selling holders and certain pledgees foreclosing on a pledge of
registrable securities with respect to bona fide financing transactions with
the purchasers (as described in the registration rights agreement) may sell
the notes and the common stock into which the notes are convertible directly
to purchasers or through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, concessions or commissions from
the selling holders or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
The notes and the common stock into which the notes are convertible may
be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at prices related to such prevailing market
prices, at varying prices determined at the time of sale or at negotiated
prices. These sales may be effected in transactions:
o on any national securities exchange or quotation service on which
the notes or the common stock may be listed or quoted at the time of
sale;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services or in
the over-the-counter market;
o through the writing of options, whether listed on an options
exchange or otherwise;
o through the making or covering of short sales;
o through the distribution by a holder to its partners, members or
stockholders;
o through a block trade in which a broker or dealer will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal in order to facilitate the transaction;
o through purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this prospectus;
o through ordinary brokerage transactions and transactions in which
the broker solicits purchasers; or
o through a combination of any of the above.
In connection with the sale of the notes and the common stock into which
the notes are convertible or otherwise, the selling holders may enter into
hedging transactions with broker-dealers or other financial institutions which
may in turn engage in short sales of the notes or the common stock into which
the notes are convertible and deliver these securities to close out such short
positions, or loan or pledge the notes or the common stock into which the
notes are convertible to broker-dealers that in turn may sell these
securities.
The aggregate proceeds to the selling holders from the sale of the notes
or common stock into which the notes are convertible will be the purchase
price of the notes or common stock less discounts and commissions, if any.
Each of the selling holders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of notes or common stock to be made directly or through agents. We
will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the New York Stock
Exchange. We do not intend to list the notes for trading on any national
securities exchange or on the New York Stock Exchange. We cannot assure you
that a trading market for the notes will develop. If a trading market for the
notes fails to develop, the trading price of the notes may decline.
In order to comply with the securities laws of some states, if
applicable, the notes and common stock into which the notes are convertible
may be sold in these jurisdictions only through registered or licensed brokers
or dealers. In addition, in some states the notes and common stock into which
the notes are convertible may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
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<PAGE>
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling holders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M, and have agreed that they will not
engage in any transaction in violation of such provisions.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A or another exemption from the
requirements of the Securities Act may be sold under Rule 144 or Rule 144A or
such other exemption rather than in connection with this prospectus. A selling
holder may not sell any notes or common stock described in this prospectus and
may not transfer, devise or gift such securities by other means not described
in this prospectus.
To the extent required, the specific notes or common stock to be sold,
the names of the selling holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this
prospectus is a part.
We entered into a registration rights agreement for the benefit of
holders of the notes to register resales of their notes and common stock under
applicable federal and state securities laws. The registration rights
agreement provides for cross-indemnification of the selling holders and
Cincinnati Bell and their directors, officers and controlling persons against
liabilities in connection with the offer and sale of the notes and the common
stock, including liabilities under the Securities Act. We will pay all of our
expenses and substantially all of the expenses incurred by the selling holders
because of the offering and sale of the notes and the common stock, provided
that each selling holder will be responsible for payment of commissions,
concessions and discounts of underwriters, broker-dealers or agents.
LEGAL MATTERS
The legality of the notes and common stock offered by this prospectus
will be passed upon for Cincinnati Bell by Thomas E. Taylor, Esq., General
Counsel and Secretary of Cincinnati Bell. As of December 29, 1999, Mr. Taylor
owned approximately 62,000 shares of Cincinnati Bell common stock (a
substantial majority of which are subject to vesting restrictions) and options
to purchase 158,750 shares of Cincinnati Bell common stock.
EXPERTS
The consolidated balance sheets of Cincinnati Bell as of December 31,
1998, and December 31, 1997, and the consolidated statements of income and
comprehensive income (loss), common shareowners' equity and cash flows for
each of the three fiscal years in the period ended December 31, 1998,
incorporated in this prospectus by reference to Cincinnati Bell's Annual
Report on From 10-K for the fiscal year ended December 31, 1998, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the IXC
consolidated balance sheets as of December 31, 1998 and 1997, and the
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1998, as
set forth in their report, which is incorporated in this prospectus by
reference to Cincinnati Bell's Form 8-K filed November 10, 1999, and, to the
extent set forth below, Ernst & Young states that with respect to certain
acquired entities, its opinion is based on the reports of other independent
auditors. The IXC financial statements are incorporated by reference in
reliance on Ernst & Young's report, given on their authority as experts in
accounting and auditing.
The consolidated financial statements of Network Long Distance, Inc. as
of March 31, 1998, and for each of the two fiscal years in the period ended
March 31, 1998 and 1997, have been audited by Arthur Andersen LLP, independent
public accountants. In their report, which is incorporated in this prospectus
by reference to Cincinnati Bell's Form 8-K filed November 10, 1999, such firm
states that with respect to certain acquired entities, its opinion is based on
the reports of other independent accountants. The report has been incorporated
by reference herein in reliance upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Grupo Marca Tel S.A. de C.V., as
of December 31, 1998 and 1997, and for each of the two fiscal years in the
period ended December 31, 1998 and 1997, have been audited by Arthur Andersen
LLP, independent public accountants. Their report, which is incorporated in
this prospectus by reference to Cincinnati Bell's Form 8-K filed November 10,
1999, has been incorporated by reference in this registration statement in
reliance upon the authority of such firm as experts in accounting and
auditing. Reference is made to their report, which includes an explanatory
paragraph with respect to the uncertainty regarding Marca Tel's ability to
continue as a going concern.
The consolidated financial statements of National Teleservices, Inc., as
of and for the year ended March 31, 1997 incorporated in this prospectus by
reference to Cincinnati Bell's Form 8-K filed November 10, 1999, have been
audited by
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<PAGE>
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The Exchange Act file number
for our SEC filings is 001-8519. You may read and copy any reports, statements
or other information that we file with the SEC's public reference rooms at the
following locations:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public
from commercial document retrieval services and at the Internet worldwide web
site maintained by the SEC at "http://www.sec.gov". Reports, proxy statements
and other information concerning Cincinnati Bell may also be inspected at the
offices of the New York Stock Exchange, which is located at 20 Broad Street,
New York, New York 10005. Reports, proxy statements and other information
pertaining to IXC may also be inspected at the offices of The Nasdaq Stock
Market, which is located at 1735 K. Street, N.W., Washington, D.C. 20006.
This prospectus is a part of Cincinnati Bell's registration statement and
constitutes a prospectus of Cincinnati Bell. As allowed by SEC rules, this
prospectus does not contain all the information you can find in that
registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that the companies can disclose important information
to you by referring you to other documents filed separately with the SEC. The
information incorporated by reference is considered part of this prospectus,
except for any information superseded by information contained directly in
this prospectus or in later filed documents incorporated by reference in this
prospectus.
This prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC and any filing we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act following
the date of this prospectus. These documents contain important business and
financial information about us that is not included in or delivered with this
prospectus.
Cincinnati Bell Filings
(File No. 1-8519) Period
- ------------------------------ ------
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999, June
30, 1999, and September 30, 1999
Current Reports Filed January 15, 1999, February 8,
on Form 8-K 1999, April 20, 1999, July 21, 1999,
July 23, 1999, October 14, 1999,
October 22, 1999, November 12,
1999, and December 30, 1999
Current Reports on Form 8-K which Filed November 10, 1999 and
include certain historical December 30, 1999
financial statements of IXC
Description of Cincinnati Bell Filed under the Securities Act on
capital stock and unaudited Filed September 13, 1999
under the Securities Act on
September 13, 1999 pro forma
financial information relating to
the Cincinnati Bell/IXC transaction
contained in the Proxy
Statement/Prospectus included in
Cincinnati Bell's Registration
Statement on Form S-4
Proxy Statement Filed March 24, 1999
The description of Cincinnati Bell Filed under the Securities Act on
common stock set forth in the October 8, 1996
Cincinnati Bell Registration
Statement on Form S-3
The description of Cincinnati Bell Filed under Section 12 of the Exchange
rights to acquire preferred stock Act on May 1, 1997
set forth in the Cincinnati Bell
Registration Statement on Form 8-A
26
<PAGE>
We will provide a copy of the documents we incorporate by reference, at
no cost, to any person who receives this prospectus. To request a copy of any
or all of these documents, you should write or telephone us at:
Cincinnati Bell Inc.
d/b/a Broadwing, Inc.
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
Telephone: (800) 345-6301
Attention: Director of Investor Relations
We furnish our stockholders with annual reports that contain audited
financial statements and quarterly reports for the first three quarters of
each year that contain unaudited interim financial information.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different information. The selling
holders are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of the document.
27
<PAGE>
$400,000,000
(original issue price)
Cincinnati Bell Inc.
d/b/a Broadwing Inc.
6 3/4% Convertible Subordinated
Notes due 2009
PROSPECTUS
December 30, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses to be paid by the
Registrant in connection with the sale and distribution of the securities
being registered, other than underwriting discounts and commissions. All of
the amounts shown are estimated except the SEC registration fee and the New
York Stock Exchange additional listing fee.
SEC registration fee............................ $111,200.00
NYSE additional listing fee..................... $1,500.00
Legal fees and expenses......................... $50,000.00
Accounting fees and expenses.................... $50,000.00
Miscellaneous expenses.......................... 0.00
Total......................................... $212,700.00
===========
Item 15. Indemnification of Directors and Officers.
Section 1701.59(D) of the Ohio Revised Code provides that a director
shall be liable in damages for any action he takes or fails to take as a
director only if it is proved by clear and convincing evidence in a court of
competent jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation
or undertaken with reckless disregard for the best interests of the
corporation. This limitation on the liability of directors does not apply to
liability asserted against a director pursuant to Section 1701.95 of the Ohio
Revised Code concerning unlawful loans, dividends and distributions of assets.
The Ohio Revised Code provides that the Cincinnati Bell amended articles
of incorporation and amended regulations may provide that the limitation on
the liability of directors provided in Section 1701.59(D) described above are
not applicable to Cincinnati Bell, however, the Cincinnati Bell amended
articles of incorporation and amended regulations do not exempt Cincinnati
Bell from this provision.
Section 1701.13(E) of the Ohio Revised Code provides that a corporation
may indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order, settlement, or conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, that he
had reasonable cause to believe that his conduct was unlawful.
Section 1701.13(E)(2) further specifies that a corporation may indemnify
or agree to indemnify any person who was or is a party, or is threatened to be
made a party, to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor, by reason of
the fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of (a) any claim, issue, or matter as
to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless, and only
to the extent that, the court of common pleas or the court in which such
action or suit was brought determines, upon application, that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
as the court of common pleas or such other court shall deem proper, and (b)
any action or suit in which the only liability asserted against a director is
pursuant to Section 1701.95 of the Ohio Revised Code concerning unlawful
loans, dividends and distributions of assets.
In addition, Section 1701.13(E) requires a corporation to pay any
expenses, including attorney's fees, of a director in defending an action,
suit, or proceeding referred to above as they are incurred, in advance of the
final disposition of the action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the director in which he agrees to both (i)
repay such amount if it is proved by clear and convincing evidence in a court
of competent jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation
or undertaken with reckless disregard for the best interests of the
corporation and (ii) reasonably cooperate with the corporation concerning the
action, suit, or proceeding. The
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<PAGE>
indemnification provided by Section 1701.13(E) shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled
under the Cincinnati Bell articles of incorporation or amended regulations.
The Cincinnati Bell amended regulations provide that Cincinnati Bell will
indemnify directors to the fullest extent permitted by law.
Cincinnati Bell has in effect insurance policies in the amount of $100
million for directors and officers liability insurance. A separate insurance
program exists for the directors and officers who left Cincinnati Bell
concurrent with the spin-off of Convergys Corporation.
Item 16. Exhibits.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
2.1* Agreement and Plan of Merger dated as of July 20, 1999
among Cincinnati Bell, Ivory Merger Inc. and IXC.
2.2* Agreement Governing the IXC internal Reorganization dated
as of August 16, 1999, between IXC and IXC Merger Sub,
Inc.
4.1 Provisions of the Amended Articles of Incorporation of
Cincinnati Bell effective November 9, 1989, which defined
the rights of security holders of Cincinnati Bell
(incorporated by reference to Exhibit (3)(a) to Cincinnati
Bell's Annual Report on Form 10-K filed March 31, 1999,
SEC File #1-8519).
4.2** Form of Certificate of Amendment by the Board of Directors
to the Amended Articles of Incorporation of Cincinnati
Bell including the description of each of, and a specimen
certificate of each of, the Cincinnati Bell 7 1/4% Junior
Convertible Preferred Stock Due 2007 and the Cincinnati
Bell 6 3/4% Cumulative Convertible Preferred Stock.
4.3** Provisions of the Amended Regulations of Cincinnati Bell
which define the rights of security holders of Cincinnati
Bell (incorporated by reference to Exhibit 3.2 to
Cincinnati Bell's Registration Statement on Form S-3 filed
February 26, 1985, SEC File #2-96054).
4.4* Specimen certificate of Cincinnati Bell common stock, par
value $0.01.
4.5** Rights Agreement dated as of April 29, 1997, as amended,
between Cincinnati Bell and The Fifth Third Bank, as
Rights Agent, including the form of rights certificate
attached as Exhibit B thereto (incorporated by reference
to Exhibit 4.1 to Cincinnati Bell's Registration Statement
on Form 8-A filed May 1, 1997, SEC File #1-8519, Exhibit 1
to Amendment No. 1 to the Registration Statement on Form
8-A/A, filed August 6, 1999, SEC File #1-8519).
4.7** Indenture dated as of April 21, 1998, between IXC and IBJ
Schroder Bank & Trust Company, as Trustee, in respect of
the IXC 9% Senior Subordinated Notes due 2008
(incorporated by reference to Exhibit 4.3 to IXC's Current
Report on Form 8-K filed April 22, 1998, SEC File
#0-20803).
4.8** Indenture dated as of November 30, 1998, among Cincinnati
Bell Telephone Company, as Issuer, Cincinnati Bell, as
Guarantor, and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4-A to Cincinnati
Bell's Current Report on Form 8-K filed November 30, 1998,
SEC File #1-8519).
4.9* Investment Agreement dated as of July 21, 1999, among
Cincinnati Bell, Oak Hill Capital Partners L.P. and
certain related parties of Oak Hill.
4.10** Indenture dated as of July 21, 1999, between Cincinnati
Bell Inc., and The Bank of New York, as Trustee.
5.1** Opinion of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell, regarding the legality of the securities
being registered.
12.1*** Computation of Ratio of Earnings to Fixed Charges.
23.1*** Consent of PricewaterhouseCoopers LLP.
23.2*** Consent of Deloitte & Touche LLP.
II-2
<PAGE>
23.3 *** Consents of Arthur Andersen LLP.
23.4 *** Consent of Ernst & Young LLP.
23.5** Consent of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell (included in Exhibit 5.1).
24.1** Power of Attorney.
25.1** Statement of Eligibility of The Bank of New York under the
Trust Indenture Act of 1939, as amended, on Form T-1 in
its capacity as Trustee.
* Incorporated by reference to our Registration Statement on Form S-4
(Registration No. 333-86971) filed with the SEC on September 13, 1999.
** Previously filed with our Registration Statement on Form S-3
(Registration No. 333-90711) filed with the SEC on November 10, 1999.
*** Filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made
hereunder, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) will not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein, 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.
(b) 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 this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) 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 foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Cincinnati Bell
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Cincinnati, State of
Ohio, on December 30, 1999.
CINCINNATI BELL INC.
By:
/s/ Thomas E. Taylor, Esq.
-----------------------------
Name: Thomas E. Taylor, Esq.
Title: General Counsel and
Secretary
Signature Title Date
*
----------------------- President, Chief Executive
Richard G. Ellenberger Officer and Director (Chief
Executive Officer)
*
----------------------- Chief Financial Officer
Kevin W. Mooney (Principal Accounting and
Financial Officer)
*
----------------------- Director
Phillip R. Cox
*
----------------------- Director
J. Taylor Crandall
*
----------------------- Director
William A. Friedlander
*
----------------------- Director
Karen M. Hoguet
*
----------------------- Director
Daniel J. Meyer
*
----------------------- Director
James D. Kiggen
*
----------------------- Director
John T. LaMacchia
*
----------------------- Director
Mary D. Nelson
*
----------------------- Director
David B. Sharrock
----------------------- Director
Richard D. Irwin
----------------------- Director
John M. Zrno
* By /s/ Thomas E. Taylor, Esq. December, 30 1999
---------------------------
Thomas E. Taylor, Esq.
Attorney-in-Fact
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<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
2.1* Agreement and Plan of Merger dated as of July 20, 1999
among Cincinnati Bell, Ivory Merger Inc. and IXC.
2.2* Agreement Governing the IXC internal Reorganization dated
as of August 16, 1999, between IXC and IXC Merger Sub,
Inc.
4.1 Provisions of the Amended Articles of Incorporation of
Cincinnati Bell effective November 9, 1989, which defined
the rights of security holders of Cincinnati Bell
(incorporated by reference to Exhibit (3)(a) to Cincinnati
Bell's Annual Report on Form 10-K filed March 31, 1999,
SEC File #1-8519).
4.2** Form of Certificate of Amendment by the Board of Directors
to the Amended Articles of Incorporation of Cincinnati
Bell including the description of each of, and a specimen
certificate of each of, the Cincinnati Bell 7 1/4% Junior
Convertible Preferred Stock Due 2007 and the Cincinnati
Bell 6 3/4% Cumulative Convertible Preferred Stock.
4.3** Provisions of the Amended Regulations of Cincinnati Bell
which define the rights of security holders of Cincinnati
Bell (incorporated by reference to Exhibit 3.2 to
Cincinnati Bell's Registration Statement on Form S-3 filed
February 26, 1985, SEC File #2-96054).
4.4* Specimen certificate of Cincinnati Bell common stock, par
value $0.01.
4.5** Rights Agreement dated as of April 29, 1997, as amended,
between Cincinnati Bell and The Fifth Third Bank, as
Rights Agent, including the form of rights certificate
attached as Exhibit B thereto (incorporated by reference
to Exhibit 4.1 to Cincinnati Bell's Registration Statement
on Form 8-A filed May 1, 1997, SEC File #1-8519, Exhibit 1
to Amendment No. 1 to the Registration Statement on Form
8-A/A, filed August 6, 1999, SEC File #1-8519).
4.7** Indenture dated as of April 21, 1998, between IXC and IBJ
Schroder Bank & Trust Company, as Trustee, in respect of
the IXC 9% Senior Subordinated Notes due 2008
(incorporated by reference to Exhibit 4.3 to IXC's Current
Report on Form 8-K filed April 22, 1998, SEC File
#0-20803).
4.8** Indenture dated as of November 30, 1998, among Cincinnati
Bell Telephone Company, as Issuer, Cincinnati Bell, as
Guarantor, and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4-A to Cincinnati
Bell's Current Report on Form 8-K filed November 30, 1998,
SEC File #1-8519).
4.9* Investment Agreement dated as of July 21, 1999, among
Cincinnati Bell, Oak Hill Capital Partners L.P. and
certain related parties of Oak Hill.
4.10** Indenture dated as of July 21, 1999, between Cincinnati
Bell Inc., and The Bank of New York, as Trustee.
5.1** Opinion of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell, regarding the legality of the securities
being registered.
12.1*** Computation of Ratio of Earnings to Fixed Charges.
23.1*** Consent of PricewaterhouseCoopers LLP.
23.2*** Consent of Deloitte & Touche LLP.
23.3*** Consents of Arthur Andersen LLP.
23.4*** Consent of Ernst & Young LLP.
23.5** Consent of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell (included in Exhibit 5.1).
24.1** Power of Attorney.
25.1** Statement of Eligibility of The Bank of New York under the
Trust Indenture Act of 1939, as amended, on Form T-1 in
its capacity as Trustee.
* Incorporated by reference to our Registration Statement on Form S-4
(Registration No. 333-86971) filed with the SEC on September 13, 1999.
** Previously filed with our Registration Statement on Form S-3
(Registration No. 333-90711) filed with the SEC on November 10, 1999.
*** Filed herewith.
II-6
<PAGE>
EXHIBIT 12.1
Cincinnati Bell Inc.
d/b/a Broadwing Inc.
Computation of Ratio of Earnings to
Fixed Charges
(Dollars in millions)
<TABLE>
<CAPTION>
Pro Forma
-----------------------------
Nine Nine
months Months
Year Ended December 31, ended Year Ended Ended
--------------------------------------------- September 30, December 31, September 30,
1994 1995 1996 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income (loss) from
continuing operations
before minority interests
in consolidated subsidiaries
and income or loss from
equity investees............ $ 67.4 $(45.1) $153.2 $158.6 $126.1 $82.8 $ 3.1 $(135.3)
Fixed charges:
Interest expense,
including amortization.... 40.1 45.4 27.9 30.1 24.2 31.9 87.2 81.0
Interest portion of
rental expense............ 4.2 4.0 3.0 3.9 3.9 4.1 48.0 40.0
----- ----- ----- ----- ----- ---- ------ ----
44.3 49.4 30.9 34.0 28.1 36.0 135.2 121.0
Pre-tax income (loss) from
continuing operations before
minority interests in
consolidated subsidiaries and
income or loss from equity
investees plus fixed
charges.................... $111.7 $ 4.3 $184.1 $192.6 $154.2 $118.8 $138.3 $ (14.3)
====== ====== ====== ======= ====== ====== ====== ========
Fixed Charges
Interest expensed and
capitalized.............. 40.1 45.4 27.9 30.1 24.2 31.9 99.7 98.0
Interest portion of
rental expense........... 4.2 4.0 3.0 3.9 3.9 4.1 48.0 40.0
Preferred stock dividend
requirements of majority
owned subsidiaries....... - - - - - - 48.8 40.4
Total fixed charges........... $ 44.3 $ 49.4 $ 30.9 $ 34.0 $ 28.1 $36.0 $196.5 $178.4
======= ======= ======= ======= ======= ===== ====== ======
Ratio of earnings to
fixed charges............ 2.5 - 6.0 5.7 5.5 3.3 - -
Deficiency of earnings to
fixed charges............ - $ 45.1 - - - - $ 58.2 $192.7
</TABLE>
II-7
EXHIBIT 23.1
Consent of PricewaterhouseCoopers LLP
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of Cincinnati Bell Inc. of our report dated
March 12, 1999, relating to the financial statements, which appears in
Cincinnati Bell Inc.'s 1998 Annual Report to Shareholders, which is
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1998. We also consent to the incorporation by reference of our
report dated March 29, 1999, relating to the financial statement schedule,
which appears in such Annual Report on Form 10-K. We also consent to the
references to us under the heading "Experts" in such Registration Statement.
by: /s/PricewaterhouseCoopers LLP
-----------------------------
PricewaterhouseCoopers LLP
Cincinnati, Ohio
December 29, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement of Cincinnati Bell, Inc. on Form S-3 of our report on
National Teleservices, Inc. dated July 28, 1997, which is incorporated by
reference to the Current Report on Form 8-K of Cincinnati Bell, Inc. dated
November 8, 1999. We also consent to the reference to us under the heading
"experts" in this Registration Statement.
by: /s/Deloitte & Touche LLP
--------------------------
Deloitte & Touche LLP
Minneapolis, Minnesota
December 29, 1999
<PAGE>
EXHIBIT 23.3
Consent of Independent Public Accountants
The consolidated financial statements of Grupo Marcatel, S.A. de C.V. and
subsidiaries as of December 31, 1998 are for the year then ended, have been
audited by Arthur Andersen, independent public accountants. Their reports have
been incorporated by reference in this registration statement in reliance upon
the authority of such firm as experts in accounting and auditing. Reference is
made to their report, which includes an explanatory paragraph with respect to
the uncertainty to continue as a going concern.
by: /s/Arthur Andersen LLP
----------------------
Arthur Andersen LLP
Monterrey, Nuevo Leon
December 29, 1999
<PAGE>
EXHIBIT 23.3
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to Registration Statement on Form S-3 of our
report dated May 18, 1998 included in Cincinnati Bell Inc.'s Form 8-K dated
November 8, 1999 and to all references to our Firm included in this
Registration Statement.
by: /s/Arthur Andersen LLP
----------------------
Arthur Andersen LLP
Jackson, Mississippi
December 29, 1999.
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation of our report dated February 28, 1999, with respect to the
financial statements of IXC Communications, Inc. in the Registration Statement
(Amendment No. 1 to Form S-3) and related Prospectus of Cincinnati Bell Inc.
for the registration of $400 million of 6 3/4% Convertible Subordinated Notes
and shares of its common stock issuable upon conversion of the 6 3/4%
Convertible Subordinated Notes by reference to the Form 8-K filed by
Cincinnati Bell Inc. on November 10, 1999.
by: /s/Ernst & Young LLP
--------------------
Ernst & Young LLP
Austin, Texas
December 29, 1999
